International Business Planning: Practice and Procedure

This new casebook is a study of international business transactions using a transaction-based approach. The coverage includes foreign direct investment, international transfer of technology, and the sale of goods and services in light of the trade and economic relationships that may exist between countries. The different types of international agreements and how they are converted into rights enforceable in domestic legal systems is also discussed. A basic analysis of international transactions under relevant Internal Revenue Code and bilateral tax treaty provisions is also included.

There is a discussion on the history of economic integration agreements in the Americas, and the effect that differences in culture, political and legal systems, and economic development levels have on economic integration among countries. A brief overview of the civil law legal system in general and the Mexican legal system in particular -- including the differences between a civil law and common law notary -- are also included. Although the casebook focuses on transactions between nationals of Mexico and the United States (and related cross-cultural issues), the strategies used are applicable to international business transactions occurring anywhere in the world.

The foreign direct investment (FDI) materials analyze the international agreements (NAFTA and Bilateral Investment Treaties) and domestic rules (United States and Mexico) that regulate the inbound and outbound FDI. There are three important factors that investors consider in the making of a foreign direct investment--control, limiting the risk, and profit maximization and distribution. These three important factors are used in developing strategies and methods in making and structuring the FDI including the choice of entity decision, financial statement review, due diligence, and business valuation. There is also an analysis of various collateral issues-the movement of cash across national borders, business immigration Visas, and the illegal payments to corrupt foreign officials.

The outbound FDI is also examined through the use of an International Equity Joint Venture (IEJV). The materials consider the pros and cons of the IEJV, and the key factors in its negotiation and structure including the role of the lawyer. There is also attention given to the capitalization, valuation, and termination issues as well as the U.S. federal income tax implications of capitalizing and operating the IEJV. The transfer of technology materials examines the relationship between a Licensor and Licensee in an International Licensing Agreement. The focus is on the international and domestic laws protecting the ownership of intellectual property, the value of the intellectual property and the tax implications of the transfer pricing decision. The sale of goods materials include contract formation issues, tax implications on the transfer pricing decision, financing through the use of documentary letters of credit, carriage of goods, and trade regulation issues including free trade zones and Maquiladoras. The materials on the international sale of services include market access, government procurement, and the tax implications of the transfer pricing decision.