Imagine that you have been recently hired for the job of Export Sales Manager by a Spanish manufacturer of ladies fashion garments with the aim of selling these products in other European markets. During your first participation in an international trade fair in Europe, you receive a visit from an important Commercial Agent in France. After the exhibition he sends you an email confirming his interest in being your Agent in France and asks you to send him a first draft in order to start negotiating an agreement.
Having discussed in the classroom some cases relating to international trade contracts negotiation and the main legal aspects of commercial agency contract, how would this learning experience apply to your work?
a) Summarize the main do’s and don’ts regarding the negotiation process and make your remarks and comments;
b) Summarize the main legal aspects regarding agent’s protection that you should take into consideration and make your remarks and comments.
1. Negotiation process
In this part, it is required to shed light on some do’s and don’ts at the time of international trade negotiation.
i. Proper use of language
Initially, focus must be shed on proper use of language as clear as possible. It can be seen that the trade union guide towards two-sided negotiation has successfully in an effort to beginning to fill the information gap, such that trade unions can be provided with the potentialities to get more involved in their negotiation with the government and implementation of the bilateral and the regional trade agreements (Bhatia 2014).
ii. Business terms
The second most important part is defining the terms of the business in details and not mentioning the business terms clearly might hinder the path of business expansion in the foreign country. Piekkari et al (2014), has stated that it is required to use short and articulate language at the time of business negotiation, otherwise two business parties might misinterpret each other and this might affect the business.
Besides that, mentioning clear time description, spelling out the name, month, date etc are some of the major and must do activities. It has been already seen that the Spain women fashion garment manufacturer has been planning to take entry into the other European market and thus, it is required to mention that they must be prepared for any kind of compromise, as this is one of the major parts of the business negotiation procedure (Brooks 2013).
iii. Flexible attitude
Both the business parties are required to have a flexible attitude, unless they have a flexible attitude, it would be tough for the business expansion into the other foreign markets (Tsai 2013). The organization is a fashion garment manufacturing company and thus they are required to mention the technical terms based on necessary at the time of business negotiation.
iv. Be Creative
Another major thing that is required to mention here is that this fashion garments manufacturing organization is required to make sure to stand out from the crowd. This organization is required to think creatively regarding how to grab the attention of the visitors walking past the strands (Rios, McConnell and Brue 2013).
Now, it is required to mention some don’ts in this regards, as these might affect the business expansion in the foreign markets. Initially, it is required to mention that at the time of negotiation, no one is required to use of doubting words like “reasonable”, as this might affect the business in future. Apart from that, use of long and complex sentences is completely prohibited, as the explanation of the long sentences might hamper the understanding of the business claws (Piekkari et al. 2014).
ii. Lingering language
Besides these, at the time of negotiation procedure, no one must use the vague time descriptions because this can hamper the reputation of the organization. Garcia et al (2015), have stated that use of the lingering language is not at all accepted and thus they must not use this language during negotiation process.
iii. Lengthy descriptions
Most importantly, it is necessary to avoid any somewhat lengthy description, as this might create miscommunication among the business parties regarding the business terms and conditions. Therefore, from the above discussion, some of the dos and don’ts have been clearly figured out at the time of business negotiation procedure.
It is very important to develop a personal relationship and certain level of trust with the Commercial agent prior to starting the negotiation process. In order to build and establish a healthier working relationship, the meeting should begin with the discussion about the general matters and catching up with each other. Relationships and feelings play an important role for French than facts (Holsti 2016). The building of a healthier relationship should be the primary focus of the negotiation process on an International Standard.
It is very important to follow an agenda such that to lead the discussion in the right direction and preventing the same from any deviation. Moreover, it also should be ensured that the presentation should be clear and can be easily understandable and followed by each and every individuals being present in the meeting.
2. Main legal aspects regarding protection of agents
As the agent belongs to France and the company would be dealing its business and would be providing its products in the French market, there needs to have some protective measures to safeguard against the unfair termination of the agencies. With the advancement of trade liberalization, the manufactured products of company including the ladies clothing has been subject to increasing non tariff barriers and thereby increasing the need of protectionism (Akhtar and Jones 2013). The various legal aspects for the protection of the agents dealing with the International Trade between the two countries are described below as:
The terms and conditions of the agency agreements are generally governed by the European Union law viz., “Commercial Agents Regulations 1993”. The regulations incorporated in this agreement covers the duties and rights of the agents (Twigg-Flesner 2013). These regulations are automatically incorporated within the agency contract.
2.1.2 World Economic Environment
GATT is the abbreviated form of the General Agreement on Tariffs and Trade. The main objectives of the regulation is to reduce down the barriers and discriminatory conduct among the parties under a contract. The law as incorporated in the GATT is to govern the rules of recognition of the tariff relating to the tariff schedule. It also provides the forum for consulting among the members (Desmarais 2012).
Article 1: “Non Discrimination”
The Non Discrimination governs the prevention of any discriminatory acts and providing some benefits to the members of the GATT, Free trade Zones and Custom Unions in the EU (McGovern 2016).
Article XX: “Conservation laws not prohibited”
The law relates to the protection of the life or health of the agents not arbitrary unjustifiable or disguised discrimination or restriction on the International trade between two countries.
2.1.3 WTO (World Trade Organization)
The Intellectual property agreement governs the identification of the products which amounts to rules for the investment and trade and is required to be protected when the agents get involved with the trade (Sands 2014).
DSB is the abbreviated from of the Dispute Settlement Body that is responsible for hearing the appeals related to the law legal interpretation (Chi 2014). France could be bringing disputes to the WTO if their rights, as they believe, under the agreements would be infringed.
TRIMS (Trade Related Investment Measures) Agreement
The agreements prevents the agents to conduct the business operations from the foreign investors of a particular country that requires to buy certain amount of items being sold by the ladies garment manufacturing company in Spain (Raman 2014).
GATS is the abbreviated form of the General Agreement on Trade in Services with the main objective is to regulate the foreign exchange among the members of the EU (Batista 2012). It also deals in regulating the members to follow the rules and regulations related to the exchange controls.
The EU has a well organized administration comprising of the parliament, council of ministers, commission, auditors, advisory committees and courts of justice that abide by the substantive laws dealing in the protection of the rights of the agents dealing in the foreign trade (Egeberg et al. 2013). Some of the countries including the EU have resorted to imposition the non tariff barriers including the provision of strict quality standards in order to safeguard the domestic internets and to ensure the safety to the heath of the members and the environment as well. The main objective of an agent in an International Trade is to promote and sell the products being manufactured by a particular company with their acts.
Akhtar, S.I. and Jones, V.C., 2013. Proposed transatlantic trade and investment partnership (TTIP): In brief. Current Politics and Economics of Europe, 24(1), pp.107-122.
Batista, J.P., 2012. General agreement on trade in services. The Wiley-Blackwell Encyclopedia of Globalization.
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Brooks, A., 2013. Stretching global production networks: The international second-hand clothing trade. Geoforum, 44, pp.10-22.
Chi, M., 2014. ‘Exhaustible Natural Resource’in WTO Law: GATT Article XX (g) Disputes and Their Implications. Journal of World Trade, 48(5), pp.939-966.
Desmarais, A.A., 2012. La V?a Campesina. John Wiley & Sons, Ltd.
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Holsti, K., 2016. Governance without government: polyarchy in nineteenth-century European international politics. In Kalevi Holsti: Major Texts on War, the State, Peace, and International Order (pp. 149-171). Springer International Publishing.