Luis Masse Session - Legal Topics PDF

SGM3 Global Supply Chains Legal and Regulatory Framework Luis Masse – Guest Professor International Trade of Services  “It is the supply of a service provided by a resident of a country to another non- resident in that country” – WTO  Intangible and perishable economic activity that requires...

SGM3 Global Supply Chains Legal and Regulatory Framework Luis Masse – Guest Professor International Trade of Services  “It is the supply of a service provided by a resident of a country to another non- resident in that country” – WTO  Intangible and perishable economic activity that requires direct interaction between supplier and client/consumer.  “Services: That international economic activity that does not involve a transaction on tangible goods” Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Services export modalities (General Agreement on Trade in Services - WTO)  Cross-border supply. The one that travels is the service.  Consumption abroad. A foreigner makes use of the service in another country.  Physical movement of people. Physical movement of a resident of one country to another country to provide the service.  Commercial presence. Residents of one country conducting business in another country. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Commercial Presence  The service provider establishes a branch, subsidiary, representative office or operating unit in the territory of another country to provide the service  Example: Banks, commercial companies, production companies, subsidiaries. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Foreign Direct Investment  Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International Commercial Strategies Ladder Installation of distributors, franchisees, concessionaires- branches and/or direct production FDI Agents, brokers, operations representatives Usual Export Eventual Export Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Legal Framework for FDI  FDI National regulations (Laws)  Bilateral and Multilateral Investment Treaties (BIT’s and TIP’s)  Investment Related Instruments (IRI’s)  Commercial Agreements and Treaties (USMCA) Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Key aspects to cover  National Industry protection  Investor-State mutual protection  Environmental care and sustainability  Human rights  Legality and transparency of activities  Fair and equitable treatment (FET) obligations  Intellectual and industrial property rights Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Mexico´s Legal Framework for FDI  FDI Law  FDI Law Regulations  Bilateral Investment Treaties (APPRI’s)  Other correlated laws (Income Tax Law, Fiscal Code, VAT Law)  Free Trade Agreements Chapters about FDI Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Other laws and rules for FDI in Mexico  Industrial Property Mexican Institute  Federal Law on Protection to Industrial Property  Federal Economic Competition Commission  Economic Competence Law  General Directorate of Foreign Investment  Department of the Ministry of Economy on Foreign Investment Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International contracts  Types of contracts  Sales of Goods  Services  Frame Contracts  Professional Services  Agency  Representation  Distribution  Franchise  Joint Venture  Consortium  Piggyback Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Strategic aspects of International Contracts in Mexico International Contracts Indirect Direct Exports Exports Direct Direct Sales Consortium Investment Agents Commercial Association Branch Representatives Productive Franchise Branch Distributor Merge License Wholesalers Acquisition Piggy Back Joint Venture Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Strategic aspects of International Contracts in Mexico International Contracts Indirect Direct Exports Exports Direct Direct Sales Consortium Investment Agents Commercial Association Branch Representatives Productive Franchise Branch Distributor Merge License Wholesalers Acquisition Piggy Back Joint Venture Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Types of clauses in international contracts  Mandatory (Boilerplate). Subject, Price, Payment Terms, Delivery Terms, Warranty, Acceptance, Effective period or expiration  Optional. Extension, Transfer of risks, Notifications, Non-Disclosure  Specific. Other duties and obligations, service levels, any other obligation.  Exhaust. Advanced termination, Penalties and Fines, Default.  Legal. Choice of Law, Entire Agreement, Indemnity, Representation. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Types of clauses in international contracts  Mandatory (Boilerplate). Subject, Price, Payment Terms, Delivery Terms, Warranty, Acceptance, Effective period or expiration  Optional. Extension, Transfer of risks, Notifications, Non-Disclosure  Specific. Other duties and obligations, service levels, any other obligation.  Exhaust. Advanced termination, Penalties and Fines, Default.  Legal. Choice of Law, Entire Agreement, Indemnity, Representation. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International contracts legal framework  UNCITRAL. United Nations Commission on International Trade Law  CISG. Convention for the International Sale of Goods (United Nations)  UNIDROIT. International Institute for the Unification of Private Law  WTO. World Trade Organization  ICC. International Chamber of Commerce Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Delivery terms in international transactions – Incoterms® 2020  What are Incoterms® 2020?  Rules of interpretation published by the International Chamber of Commerce in 1936 to define rights and obligations of all international business actors (Sellers, buyers, carriers, logistics services providers) in each logistics stage with regards to the risks and costs associated Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Why are the Incoterms® 2020 useful? Provide elements for the calculation of They allow to transit times calculate the logistics costs associated with the commercial transaction They define the ownership and risk in the transfer and the obligations of the actors Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Incoterms® 2020 Chart Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Key aspects of Incoterms® 2020  Seller’s obligations and responsibilities  Buyer’s obligations and responsibilities  Carriers’ obligations and responsibilities  Documents that formalize delivery Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International payment terms  Transfer of money or goods and services in exchange for another product or service.  It’s an obligation that the buyer assumes at the time of signing the contract and that becomes enforceable upon receipt of the merchandise.  Credit means the trust that the selling party expresses to the buying party when delivering the thing sold without having yet received the corresponding payment. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Payment elements  Form. Indicates the relationship of the time of payment in relation to the time of delivery (Before, in, after)  Term. It is the time that the parties agree to comply with the payment obligation. It is usually fixed based on a certain fact or an uncertain fact.  Mean. It is the operational instrument encrypted in a convertible currency accepted by the parties to satisfy the payment obligation.  Currency. It is the legal currency in which the transaction was made and in which the payment must be made. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International Payment Methods Counter trade Check Open Account (Wire transfer) Consignment Bank Draft International payment order International remittance International Documentary Credits (L/C) Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International Documentary Credits  Payment instrument through which a bank (Issuing Bank) that acts at the request and account of the buyer (Originator) and undertakes to pay another bank (correspondent) the amount of the operation, which delivers the payment to the seller (Beneficiary) when it meets the requirements established in the contract. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Elements of Documentary Credits  Originator. Physical or legal person who assumes and accepts the payment obligation. Generally, the buyer of the merchandise.  Issuing bank. Buyer's bank acting at the request and on his behalf and which undertakes to support the payment obligation.  Correspondent Bank. Bank located in the seller's country that will oversee notifying, making and, where appropriate, supporting the payment to the seller once it complies with the established requirements.  Beneficiary. The seller, who will receive the payment according to the terms established in the credit agreement. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Documentary credits process Notifies the characteristics of Issues the the credit or documentary credit Message via SWIFT adheres to the payment commitment Corresponden Issuing bank L / C request: credit line t bank establishment Seller Buyer Delivery of goods Payer Contractual relationship Beneficiary Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences International Legal Framework  The International Chamber of Commerce developed three useful tools for the regulation of commercial, stand-by and guarantee letters of credit.  These rules are UCP 600, ISBP 98 and URDG 758. Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Basics of contract management  A strategic relationship is dynamic and requires monitoring to ensure that the parties comply with the commitments made.  Some actions are:  Performance reports  Business Review Meetings  Preventive and corrective actions  Modifications or updates to the contract Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Service Level Agreements structure  Heading or Foreground. Describing the type of contract (SLA) and the main contract (MSA) it is related to (Number, date of signature, reference) 1. Control Strategy. How the performance of supplier will be measured 1. KRA’s with brief description and the specifics chart in Annexes 2. KPI’s with brief description and the specifics chart in Annexes (May be included in KRA’s chart) 3. BRM’s defining frequency, attendants (mandatory and optional), place and actions (Corrective/Preventive/Improvement) 2. Consequences Scheme 1. Penalties and fines. Instrumental (Economical if applicable and agreed), Fundamental (Suppliers’ evaluation as Approved, Conditioned, Non-Approved, Banned) 2. Recognition and awards. Instrumental (Prizes, Awards as preferred suppliers) Fundamental (Volume increase, assignment of new categories, categorization as Strategic) 3. Legal Clauses 1. Related to the legal clauses of main contract 4. Signatures 5. Annexes 1. KRA’s Chart 2. KPI’s Chart 3. Representatives list Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Customs regimes in Mexico – Customs Law  Permanent - Export and Import  Temporary – Import  To return abroad in the same condition  For manufacturing, transformation or repair in manufacturing or export programs.  Temporary – Export  To return to the country in the same condition  For processing, transformation or repair.  Fiscal Deposit  In-bond goods  Domestic  International  Production, transformation or repair in a bonded warehouse  Strategic bonded warehouse Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Customs regimes in Mexico – for FDI  Permanent - Export and Import  Temporary – Import  To return abroad in the same condition  For manufacturing, transformation or repair in manufacturing or export programs.  Temporary – Export  To return to the country in the same condition  For processing, transformation or repair.  Fiscal Deposit  In-bond goods  Domestic  International  Production, transformation or repair in a bonded warehouse  Strategic bonded warehouse Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Current foreign trade promotion programs  Drawback – Import tax refund program for exporters  ALTEX - Highly exporting companies' program (Only current, not new)  ECEX - Program for foreign trade merchant companies (Only current, not new)  PROSEC - Sectoral promotion program (Industrial)  IMMEX - Export manufacturing and services maquila industry program Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences Key facts to consider to invest in Mexico  Type of entry mode (FDI, partnership, other)  Foreign trade regimes to use (Permanent, temporary, special)  Foreign trade promotion programs applicability definition and selection (Drawback, PROSEC, IMMEX)  Contracts to sign with suppliers and strategic partners, both local and international  Define delivery terms, payment terms and relation management strategy Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences  Q&A’s Berner Fachhochschule | Haute école spécialisée bernoise | Bern University of Applied Sciences