OVERVIEW OF INTERNATIONAL TRADE LAW
ARIZONA STATE UNIVERSITY
ECN 736 - INTERNATIONAL TRADE THEORY
WEEK 1
A.
Definition of International Trade Law:
International trade is trade carried out between countries or governments of countries with
other countries that undergo a trade relationship in accordance with the agreement between
the two parties to the international trade. International trade is trade carried out by residents of
a country with residents of other countries on the basis of mutual agreement. The population
in question can be between individuals (individuals with individuals), between individuals
and the government of a country, or the government of a country with the government of
another country.
International trade is a process of exchange based on the voluntary will of each country.
The motive is to gain from trade. Trade is a very important economic activity today, so there
are no countries in the world that are not involved in trade, whether trade between regions,
between regions, or between countries. The definition of international trade is a relationship
of economic activity between countries that is realized by the process of exchanging goods or
services on a voluntary and mutually beneficial basis. There are various motives or reasons
why countries or legal subjects (actors in trade) conduct international trade transactions. The
fact that is currently happening is that international trade has become the backbone for
countries to become prosperous, prosperous and strong. This has been proven in the history of
world development. Despite the rapid development of the field of law, there is still no
agreement on a definition for the field of international trade law. Until now, there are various
definitions that differ from each other, namely:
1.
Definition According to Schmitthoff:
International trade law is the set of rules that govern civil commercial relationships. These
legal rules govern transactions between different countries. The above definition clearly
indicates that these rules are commercial in nature. In his definition, Schmitthoff emphasizes
that the scope of this field of law does not include international commercial relations
characterized by public law. Included in this field of public law are rules that regulate the
behavior or conduct of states in regulating trade behavior that affects their territory.
2.
Definition According to M. Rafiqul Islam:
In his attempt to define international trade law, M. Rafiqul Islam emphasizes the close
relationship between international trade and financial relations. Given the close relationship
between international trade and financial relations, he defines trade and financial law as a
collection of rules, principles, norms, and practices that create an arrangement for
international trade transactions and payment systems, which have an impact on the
commercial behavior of trading institutions.
3.
Definition According to Michelle Sanson
Sanson demarcates this field according to the meaning of the words of this field of law,
namely law, trade, and international. Sanson divides international trade law into two areas
The main parts are public international trade law and private international trade law. Public
international law is the law that governs trade behavior between countries. Private
international law, on the other hand, is the law that governs trading behavior between
individuals in different countries.
4.
Definition According to Hercules Booysen:
Booysen, a South African scholar, did not give a strict definition. He realized that the science
of law is very complex. Therefore, attempting to define a field of law, including international
trade law, is very difficult and rarely precise. Therefore, in his attempt to give a definition,
Hercules Booysen only revealed the elements of the definition of international trade law.
According to Hercules Booysen, there are three elements, as follows:
a.
International trade law can be viewed as a specialized branch of international law.
b.
International trade law is the rules of international law that apply to trade in goods, services,
and the protection of intellectual property rights (IPR).
c.
International trade law consists of national legal rules that have or directly affect international
trade in general. Due to the nature of these national legal rules, they form part of international
trade law.
In accordance with the above definition, international trade is trade conducted by
residents of a country with residents of other countries on the basis of mutual agreement. The
population in question can be between individuals (individuals with individuals), between
individuals and the government of a country, or the government of a country with the
government of another country. When compared to the implementation of domestic trade,
international trade is very complicated and complex. This complexity is caused by factors
such as:
a.
buyers and sellers are separated by national boundaries;
b.
goods must be shipped and transported from one country to another through a variety of
regulations, such as customs, that sourced from restrictions issued by each government;
c.
There are differences between one country and another in language, currency, weights and
measures, laws of trade, and so on.
In many countries, international trade is one of the main factors to increase Gross
Domestic Product (GDP). Although international trade has occurred for thousands of years,
its impact on economic, social and political interests has only been felt in the last few
centuries. International trade has also driven industrialization, transportation advances,
globalization, and the presence of multinational corporations.
According to Sadono Sukirno, international trade has many benefits, including:
a.
Obtaining goods that cannot be produced in one's own country
There are many factors that influence the differences in production in each country. These
factors include geography, climate, level of mastery of science and technology, and others.
With international trade, each country is able to fulfill needs that it does not produce itself.
b.
Gains from specialization
The main reason for foreign trade activities is to gain profit, which is realized by
specialization. Although a country can produce the same type of goods as those produced by
other countries, there are times when it is better for the country to import these goods from
abroad.
c.
Expanding markets and increasing profits
Sometimes entrepreneurs do not run their machines (means of production) to the maximum
because they are worried about overproduction, which results in a decrease in the price of
their products. With international trade, entrepreneurs can run their machines to the maximum
and sell the excess products abroad.
d.
Transfer of modern technology
Foreign trade allows a country to learn more efficient production techniques and more modern
ways of management.
B.
Principles, Objectives, and Scope of Commercial Law
International Principles of International Trade Law:
In international trade activities, the term trade contract is known. The making of this
international trade contract is based on legal principles. Thus, the export and import activities
of a country can run in an orderly manner without any party being harmed. The rules for
making this trade contract also exist in international trade law. Furthermore, it is necessary to
know the principles in trade contracts, especially to protect the rights and obligations of both
sellers and buyers:
1.
the principle of freedom of contract;
2.
recognition of the customs and practices of trade between countries (international trade);
3.
principles of good faith and fair dealing;
4.
The principle of voidability of a contract when there is a wide gap between the rights and
obligations of the parties to the contract.
C.
Objectives of International Trade Law:
Every law or rule is made for a specific purpose. So it is with international trade law. These
rules are made with a purpose:
1.
protection of trade activities that are the only way to build a country's economy;
2.
achieve stable international trade;
3.
avoid national trade policies and practices that disadvantage other countries;
4.
increase the volume of world trade;
5.
creating favorable trade for each country's economic development;
6.
improve human living standards;
7.
provide more employment opportunities;
8.
develop a multilateral trading system that creates fair and open trade policies for all countries;
9.
increase utilization in the use of the world's resources so as to increase buying and selling
transactions.
D.
Scope of International Trade Law:
International trade law is a fast-growing field of law. The scope of this field of law is quite
broad. Trading relationships that cross borders can include many types, from simple forms,
namely barter, buying and selling of goods or commodities, to complex trading relationships
or transactions. The complexity of international trade relationships or transactions is at least
partly due to the existence of technological services (especially information technology) so
that trade transactions are getting faster. State borders are no longer an obstacle in
transactions. There are several motives or reasons why countries or legal subjects (actors in
trade) conduct international trade transactions. The awareness to conduct international trade
transactions has also been realized by traders in the country since the 17th century. One of
them was Amanna Gappa, a Bugis tribal chief who realized the importance of trade (sailing)
for the welfare of his tribe. The Bugis tribe's superiority in sailing using only small Bugis
boats had sailed the vast seas as far as Malaya (now Singapore and Malaysia).
This essence of trade is the philosophical basis for the emergence of trade. As stated
earlier, trade is a "fundamental freedom". With this freedom, anyone should have the freedom
to trade. This freedom should not be limited by differences in religion, ethnicity, beliefs,
politics, legal systems, and so on. The charter of economic rights and duties of states also
recognizes that every state has the right to conduct international trade. Although the
development of the field of law is proceeding rapidly, it turns out that there is still no legal
framework for international trade agreement on a definition for this area of international
commercial law. Only today are there various definitions of international commercial law that
differ from one another.
Schmitthoff defines international trade law as: "...the body of rules governing commercial
relationships of a private law nature involving different nations."
The definition shows the following elements:
1.
International trade law is a set of rules governing commercial relationships that are civil law
in nature.
2.
These legal rules govern transactions between different countries. The above definition makes
it clear that these rules are commercial in nature, meaning that Schmitthoff clearly
distinguishes between the private law nature and the public law nature.
In his definition, Schmitthoff asserts that the scope of the field of international
commercial law does not include international commercial relations characterized by public
law. In other words, Schmitthoff asserts that the area of international trade law does not
include or exclude public international law rules governing commercial relations, such as
international law rules governing trade relations within the framework of GATT or rules
governing regional trading blocs, rules governing commodities, and so on. The background of
the definition has an impact on the scope of international trade law coverage. Schmitthoff
outlines the following areas as the scope of the field of international trade law, such as:
1.
international trade and commerce, which includes the formation of contracts, the regulation of
trade representatives, and the regulation of exclusive sales;
2.
securities;
3.
the law of conduct regarding international trade;
4.
Insurance;
5.
transportation by land and rail, sea, air, and inland waterways;
6.
industrial property rights;
7.
commercial arbitration.
The definition of international trade law according to M. Rafiqul Islam, in his efforts to
provide limitations or definitions of international trade law, Rafiqul Islam emphasizes the
close relationship between international trade and financial relations. Financial relations are
closely related to international trade. This close connection is apparent because these financial
relations accompany trade transactions between traders (with the exception of barter or
counter trade transactions). Given the close relationship between international trade and
finance law, Rafiqul Islam defines trade and finance law as a collection of rules, principles,
norms, and practices that create a regulatory regime for transnational trade transactions and
payment systems, which have an impact on the commercial behavior of trading institutions.
These commercial activities can be divided into those that fall within the scope of
international civil law or conflict of law; intergovernmental or interstate trade that is governed
by public international law.
In this regard, Rafiqul Islam defines international trade as: "... a wide ranging,
transnational, commercial exchange of goods and services between individual business
persons, trading bodies, and states." From this limitation, it appears that the scope of
international trade law is very broad. Because the scope of study of this field of law is
transboundary or transnational in nature, the consequence is that more than one different legal
system is involved.
The definition of international trade law according to Michelle Sanson, a scholar from
Australia. International trade law according to Sanson's definition is: "...can be defined as the
regulation of the conduct of parties involved in the exchange of goods, services, and
technology between nations."
Sanson does not specify whether the field of international commercial law falls under
private, public, or common law international. Sanson simply calls this area of law the
regulation of the conduct of parties. Although Sanson gives a floating definition, he divides
international trade law into two main parts, namely public international trade law and private
international trade law. Public international trade law is the law that regulates trade behavior
between countries. Meanwhile, private international trade law is the law that governs the
trading behavior of individuals in different countries.
The definition of international trade law according to Hercules Booysen, a South African
scholar, does not provide a firm definition. Booysen realizes that the science of law is very
complex. Therefore, attempts to make a definition of the field of law including international
trade law are very difficult and rarely precise. Therefore, in his attempt to give a definition,
Booysen only revealed the elements of the definition of international trade law. According to
Booysen, there are three elements, namely:
1.
International trade law may also be regarded as a specialized branch of international law.
2.
International trade law can be described as those rules of international law which are
applicable to trade in goods, services, and the protection of intellectual property.
3.
International trade law consists of national legal rules that have or directly affect international
trade in general.
E.
International Trade Law Approach:
The breadth of coverage in international trade law makes it difficult not to overlap with other
fields, such as international economic law, international business transaction law,
international commercial law, and others. The problem is where to draw the line between
trade law and other areas of law, especially international economic law. Meanwhile, the
approach taken to distinguish these two fields of law is to look at the legal subjects that are
subject to the two fields of law. International economic law mostly regulates legal subjects
that are public in nature, while international trade law emphasizes more on legal relationships
carried out by private legal entities.
In reality, this opinion is not so valid. International economic law in reality also regulates
the activities or transactions of private legal entities or those related to private interests, for
example regarding the protection and nationalization or expropriation of foreign companies.
In addition, although international economic law regulates subjects of public or state law,
these rules will nevertheless have an impact on individuals or other legal subjects within the
territory of a state. Another characteristic of international trade law is its interdisciplinary
approach. In order to comprehensively understand this area of law, more or less the help of
other disciplines is required. This area of law is related to the field of transportation (land, air,
and sea). This requires assistance from understanding the discipline of shipping.
F.
Basic Principles of International Trade Law:
According to Professor Alexander Goldstajn, there are three principles in international trade
law, namely:
1.
Basic Principles of Freedom of Contract:
The principle of freedom of contract is actually a universal principle in international trade
law. Every legal system in commercial law recognizes the freedom of parties to make
(international) trade contracts. Schmitthoff responded positively to this freedom of contract by
stating:
"The autonomy of the parties' will in the law of contract is the foundation on which an
autonomous law of international trade can be built. The national sovereign has. No objection
that in that area an autonomous law of international trade is developed by the parties,
provided always that law respects in every national jurisdiction the limitations imposed by
public policy."
This freedom covers a fairly broad area of law, including the freedom to enter into the
types of contracts agreed upon by the parties. The principle of freedom of contract also
includes the freedom to choose the forum for resolving trade disputes and includes the
freedom to choose the law that will apply to the contracts made. Of course, this freedom must
not conflict with the law, public interest, decency, modesty, and other requirements set by
each legal system.
2.
Basic Principles of Pacta Sunt Servanda:
The principle of pacta sunt servanda is a principle that requires that an agreement or contract
that has been signed must be implemented as well as possible (in good faith). This principle
applies universally.
3.
Basic Principles of Dispute Resolution Through Arbitration:
Arbitration in international trade is a commonly used dispute resolution forum. Arbitration
clauses have increasingly been included in trade contracts. Goldstajn outlines the advantages
and reasons why the use of arbitration is a basic principle in international trade law, namely:
"Moreover to the extent that the settlement of differences is referred to arbitration, a uniform
legal order is being created. Arbitration tribunals often apply criteria other than those
applied in courts. Arbitrators appear more ready to interpret rules freely, taking into account
customs, usage and business practice. Further, the fact that the enforcement of foreign
arbitral awards is generally easier than the enforcement of foreign court decisions is
conducive to a preference for arbitration."
4.
Basic Principles of Freedom of Communication (Navigation):
In addition to these three basic principles, the basic principle that is relevant to the basic
principles recognized in international economic law is the principle of freedom to
communicate (in a broad sense, including freedom of navigation). Communication or
navigation is the freedom of the parties to communicate for the purpose of negotiation trade
with anyone through any means of navigation or communication, whether by land, sea, air, or
electronic media. This freedom of communication is essential for the implementation of
international trade. In communication for the purpose of trade, the freedom of the parties
should not be limited by economic, political, or legal systems.
G.
Weaknesses of International Trade Law:
The objectives of international trade law are actually no different from the objectives of
GATT (General Agreement on Tariffs and Trade, 1974), which are contained in its preamble.
The objectives of international trade law are:
1.
to achieve stable international trade and avoid national trade policies and practices that harm
other countries;
2.
to increase the volume of world trade by creating attractive and profitable trade for the
economic development of all countries;
3.
improve humanity's standard of living;
4.
increase employment;
5.
developing the multilateral trading system; and
6.
increase the utilization of the world's resources and increase the products and transactions of
buying and selling goods.
Despite the aforementioned objectives in international trade law, international trade law
still has quite a few weaknesses. These weaknesses can be found in other areas of law, namely
the existence of exceptions or "saving" clauses that relax legal obligations.
Those specific weaknesses:
1.
International trade law is largely pragmatic and permissive. This results in the rules of
international trade law lacking objectivity in "forcing" countries to comply with the law. In
reality, countries that have the political power and economies utilize trade as a means of
political policy.
2.
The rules of international trade law are conciliatory and persuasive (not coercive). This
weakness is at the same time a strength for the development of international trade law,
causing or enabling the development of this law in the midst of a crisis.
H.
Development of International Trade Law
International trade law has existed since the birth of the state in the modern sense. Since then,
international trade law has developed quite rapidly in accordance with the development of
trade relations. Judging from the development of its legal sources (in the material sense), the
development of international trade law can be grouped into three stages, namely:
1.
International trade law in its infancy.
2.
International trade law incorporated into national law.
3.
The creation of the legal rules of international trade and the emergence of international
institutions that deal with international trade.
I.
Theories of International Trade Law
No country can fulfill the needs of its own population. Many of the goods we use on a daily
basis come from abroad, including: computers, cars, motorcycles, TVs, cotton for our clothes,
and more. What if these foreign goods are not available? We would have to replace them with
domestically made goods. However, unfortunately we cannot make all of these goods,
because we do not master the technology and may not have the raw materials. This means we
have to cooperate with other nations to exchange our products. International trade is the
exchange of goods between countries by exchanging money with other cities. International
trade is an export activity and imports between countries. Exporting is selling or sending
goods abroad, while importing is buying/importing goods from abroad. Before discussing the
theory of international trade, you first need to know the benefits of studying the theory of
international trade. The benefits of studying international trade theory include the following:
1.
Helps explain the direction and composition of trade between countries, as well as its effects
on the structure of a country's economy.
2.
Can demonstrate the gains arising from international trade.
3.
Can solve the problem of a deficit balance of payments.
The theories of international trade can be described as follows:
1.
Views of the Mercantilists:
Mercantilism is a group that reflects the ideals and ideology of commercial capitalism, as well
as a view of the politics of a country's prosperity aimed at strengthening the position and
prosperity of the state over individual prosperity.
The international trade theory of mercantilism developed rapidly around the 16th century
based on the idea of developing national economies and economic development, with the goal
of exports exceeding imports. In the foreign trade sector, mercantilist policy centered on two
main ideas, namely:
a.
The fertilization of precious metals, the goal is the establishment of a strong national state and
the fertilization of national prosperity to maintain and develop the strength of the state.
b.
Any trade policy is aimed at supporting an excess of exports over imports (an active balance
of trade). To achieve an active balance of trade, exports must be encouraged and imports must
be restricted. This is because the main purpose of foreign trade is to acquire additional
precious metals.
Thus, in international trade or foreign trade, the focus of mercantilist policy was to
increase exports over imports, and excess exports could be paid for with precious metals.
Another mercantilist policy was the policy of attempting to monopolize trade and other
related matters, in an effort to acquire colonies to market industrial products. Pioneers of
mercantilist theory include Sir Josiah Child, Thomas Mun, Jean Bodin, Von Hornich, and
Jean Baptiste Colbert.
2.
Adam Smith's Absolute Advantage Theory:
In the theory of absolute advantage, Adam Smith put forward the following ideas:
a.
There is a division of labor (international division of labor) in producing a type of good with a
division of labor. A country can produce goods at a lower cost than other countries, so that in
conducting trade the country gains an absolute advantage.
b.
International specialization and production efficiency. With specialization, a country will
specialize in the production of goods that have advantages. A country will import goods that
if produced by itself (domestically) are inefficient or less profitable, so an absolute advantage
is obtained when a country specializes in producing goods.
Absolute profit is defined as the profit expressed in terms of the number of hours/day of
labor required to produce the good. A country will export a particular good because it can
produce that good at an absolute lower cost than other countries. In other words, the country
has an absolute advantage in the production of the good. So, absolute advantage occurs when
a country is superior to one kind of product produced, with a lower production cost when
compared to production costs in other countries. Based on the above review, it can be seen
that Indonesia is superior for Indonesia produces spices and Japan is superior for electronics,
so Indonesia should specialize in spices and Japan should specialize in electronics. Thus, if
the two countries were to trade or export and import, both would benefit. The amount of profit
can be calculated as follows:
a.
For Indonesia, the Domestic Exchange Rate (DTD) of 1 kg of spices will get 1 unit of
electronics, while Japan 1 kg of spices will get 4 units of electronics. Thus, if Indonesia
exchanges its spices for electronics Japan will gain a profit of 3 units of electronics, which is
obtained from (4 electronics - 1 electronics).
b.
For Japan, its Domestic Exchange Base (DTD) of 1 unit of electronics will get 0.25 spices,
while in Indonesia 1 unit of electronics will get 1 kg of spices. Thus, if Japan trades or
exchanges its electronics with Indonesia, it will gain a profit of 0.75 kg of spices, which is
obtained from (1 kg of spices - 0.25 spices).
3.
Theory of Comparative Advantage by David Ricardo:
David Ricardo said that the theory of absolute advantage proposed by Adam Smith has
weaknesses, including the following:
a.
What if a country is more productive in producing two types of goods than other countries?
As an initial illustration, on the one hand a country has more favorable labor and natural
factors of production compared to other countries, so that the country is superior and more
productive in producing goods than other countries. On the other hand, other countries lag
behind in producing goods. From the description above, it can be concluded that if a country
is more productive in two types of goods, then the country cannot enter into an exchange or
trade relationship.
b.
Whether the country can also conduct international trade. In the concept of comparative
advantage (comparable cost differences), the basis for international trade is the amount of
labor used to produce a good. So, the motive for trading is not just absolutely more productive
(more profitable) in producing a type of goods, but according to David Ricardo even if a
country is left behind in all ways, it can still participate in international trade, as long as the
country produces goods at a cheaper cost (labor) than others. So, comparative advantage
occurs when a country is superior to both kinds of products produced, with cheaper labor
costs when compared to labor costs in other countries.
Japan excels in both electronics and spices, but its strongest advantage is in the
production of electronics. In contrast, Indonesia is weak in both spices and electronics, but its
smallest weakness is in the production of spices. So, Japan should specialize in electronics
and Indonesia should specialize in spices. If the two countries were to trade, both would
benefit. The amount of profit can be calculated as follows:
a. In Japan 1 unit of electronics = 0.625 kg of spices, while in Indonesia 1 unit of electronics = 1
kg of spices. If Japan exchanges electronics for spices in Indonesia, it will get a profit of
0.375, which is obtained from (1 spice - 0.625 spices).
b. In Indonesia 1 kg of spices = 1 unit of electronics, while in Japan 1 kg of spices = 1.6 units of
electronics. If Indonesia exchanges its spices for electronics, it will gain a profit of 0.6, which
is obtained from (1.6 electronics - 1 electronics).
4.
Reciprocal Demand Theory by John Stuart Mill:
The theory proposed by J.S. Mill actually continues David Ricardo's Theory of Comparative
Advantage, which is to find the balance point of exchange between two goods by two
countries by comparing their exchanges or by determining the Domestic Exchange Base
(DTD). The purpose of the reciprocity theory is to balance demand with supply because both
demand and supply determine the amount of goods exported and goods imported. So,
according to J.S. Mill as long as there is a difference in the consumption-production ratio
between the two countries, the benefits of trade can always be implemented in both countries.
And a country will benefit if the number of hours of labor required to produce all its export
goods is less than the number of hours of labor required if all the imported goods are
produced in-house.
J.
Causes of International Trade:
International trade is caused by the differences between each country, among others:
1.
The difference in population in comparison to land area.
2.
Differences in natural resources owned.
3.
Differences in the level of intelligence and civilization of the nation.
4.
Differences in climate and natural conditions.
5.
Differences in science and technology mastered.
6.
Political, social and cultural differences.
K.
The Impact of International Trade on
Indonesian Economy:
In this modern era people often say that the world has become borderless. Things that happen
in other countries can be known and can quickly affect people in our country, so it is often
called the era of globalization.
1.
Positive Impact of Exports:
a.
Expanding employment.
b.
Increase foreign exchange reserves.
c.
Expanding the market as we can market our products all over the world.
2.
Negative Impact of Exports:
a.
Causing scarcity of goods in the country.
b.
Led to massive exploitation of natural resources.
For example: the export of mining goods has led to the depletion of mining reserves and
caused damage to the environment.
3.
Positive Impact of Imports:
a.
Improving consumer welfare as Indonesians can use goods that are not available domestically.
b.
Improve domestic industries, especially those whose raw materials come from overseas.
c.
With imports allowing for technology transfer, our country is gradually trying to develop
modern technology to reduce our lag with developed nations.
4.
Negative Impact of Imports:
a.
Create competitors for the domestic industry.
b.
Creating unemployment means that we have lost the opportunity to create jobs.
c.
Consumerism, meaning excessive consumption, especially of luxury goods.
Examples: luxury clothing, luxury cars, and luxury household appliances.
L.
Barriers to International Trade:
Here are the barriers to international trade, among them:
1.
Currency differences.
2.
Import policies of protective countries.
3.
Import quotas.
4.
War and recession.
5.
There is a tariff charged on crossing the customs area.
6.
Export manufacturers are still complicated and it takes a long time.
M.
International Trade Policy:
The various policies that a country may implement to benefit from international trade
activities include protection, free trade, and political dumping.
1.
Protection:
Protection is an international trade policy that aims to protect domestic production. The forms
of protection that a country can implement include:
a.
Import Ban
Prohibit the import of certain products that are also produced domestically, especially for
goods that have weak foreign power.
b.
Import Tariffs
Impose high import tariffs on certain goods to reduce their entry.
c.
Quota
Restricting the entry of a certain quantity of goods into the country.
d.
Subsidies
Subsidize producers to increase production to meet the needs of the domestic market.
e.
Premium
Provide premiums to producers who are able to achieve a certain amount of production with
good quality so that they have competitiveness.
2.
Free Trade:
Free trade policy is a policy in international trade to remove barriers to international trade.
Determination and pricing are left free, it only applies to member countries that are members
of the free trade group.
3.
Dumping Politics:
Political dumping is an international trade policy that sells products cheaper abroad than at
home. The purpose of political dumping is to increase competitiveness to expand the market.
N.
International Trade Law Born from Transactions
International and Incoterm:
An international trade agreement is binding based on the agreement of the parties that make it.
Therefore, as with international agreements in general, an international trade agreement will
only bind a country if the country agrees to sign and ratify it. In order for an agreement to
work, the rights and obligations between buyers and sellers must be clear, because the lack of
clarity on the rights and obligations between buyers and sellers will make it difficult for
buyers to calculate the cost of purchases, and sellers find it difficult to set prices for goods
sold. However, even though the contents of the contract or agreement are clear, sometimes
problems arise due to differences in understanding of the contents of the contract or
agreement. To anticipate this, the International Chamber of Commerce (ICC), a non-
governmental International Chamber of Commerce Organization, formulated the
International Commercial Term or Incoterm, and was first published in 1936.
Incoterms or terms of trade is a supplement to the "sales contract" that regulates the
rights and obligations between the seller and the buyer:
1.
Delivery of goods from the seller to the buyer.
2.
Risk sharing between seller and buyer.
3.
Responsibility for obtaining import-export licenses.
The above is very necessary because with the times, the global economy has provided
wider market access for the business world, so that in every international trade it is not
uncommon to find differences in understanding between sellers and buyers, to avoid this, the
International Chamber of Commerce (ICC) created Incoterms (International Commercial
Terminologies).
Incoterms aims to provide a set of international rules to provide a uniform interpretation
of terms commonly used in international trade. The scope of Incoterms is limited to matters
relating to the rights and obligations of sellers and buyers of "tangible" goods or materials
related to the contract of sale and purchase, which are concerned with the delivery of tangible
goods. Incoterms basically regulates trade that crosses national borders, but can also be used
for domestic trade.
Incoterms has a function to be able to explain the rights and obligations of buyers and
sellers related to the delivery of goods, including the process of shipping goods, the person in
charge of the export-import process, the bearer of costs incurred and the risk bearer in the
event of changes in the condition of the goods that occur due to the shipping process. One of
the guidelines established by Incoterms 1990 is the "ex-work" provision, which means that the
"seller" fulfills his obligation to deliver the goods when the seller has prepared his goods on
the means of transportation provided by the buyer. If agreed, the seller may clear the goods
for export. In this connection the buyer bears all costs and risks involved in taking the goods
from the seller's premises to the destination. In every trade transaction that is carried out based
on an agreement that has been made and agreed upon. By the seller and buyer, of course, it
has created a legal relationship between the two parties, each of which has rights and
obligations which are responsibilities that must be fulfilled, because if they are not fulfilled, it
will certainly have strict legal consequences. Thus, to clarify the understanding of the
obligations between sellers and buyers, based on its function Incoterms explains the rights and
obligations of buyers and sellers related to the delivery of goods, namely:
1.
Seller Obligations
a.
Provide goods according to the contract.
b.
Assist buyers upon request, in obtaining export licenses and other procedures to be followed.
c.
Placing the goods that have been purchased at the place of delivery at the specified time, at
the usual place and time for delivery.
d.
Risk transfer. The seller bears the risk of loss or damage to the goods until such time as the
goods are delivered to the buyer in accordance with the terms.
e.
Pay the fee to the place designated by the buyer.
f.
Informing the buyer of sufficient time about the goods that the buyer intends to purchase.
g.
Pay the cost of checking the quality, weight, unit size of goods for the buyer, also including
packaging.
2.
Buyer's Liability
a.
Pay the price of the goods according to the contract.
b.
Arrange for export and import licenses and other procedures.
c.
Pick up the goods as soon as possible after they arrive.
d.
Assume the risk of loss or damage.
e.
Pay the full cost of the goods from the time the goods arrive in accordance with the
provisions.
f.
Provide the seller with evidence of having taken delivery of the goods.
g.
Pay for pre-shipment inspection fees, unless otherwise agreed.
h.
Pay the entire bill for obtaining the document or similar electronic message and reimburse the
seller for the cost of assistance.
For use in an international trade contract, the parties must make the original text of
Incoterms 2000 that has been officially published by the ICC the only reference in order to
achieve the goal of mono interpretation.
1.
EXW (Name the Place) "Ex Works":
This means that the seller only provides the goods to be picked up by the buyer at the seller's
own premises or other places, such as warehouses, showrooms, and others. The seller is not
responsible for the transfer (loading) of the goods onto any means of transportation that takes
the goods from his premises, including any export procedures. In short, all costs and risks of
damage and loss of goods pass from the seller to the buyer at that point.
2.
FCA (Name the Place) "Free Carrier":
This means that the seller is responsible for delivering the goods to the carrier appointed by
the buyer to the agreed place. The term "carrier" refers to any person or legal entity who
under a transportation agreement is obliged to perform or provide transportation services by
rail, road, air, sea, inland waterways, or a combination of these modes of transportation. This
terminology applies to all modes of transportation.
3.
FAS (Name the Port of Loading) "Free Alongside Ship":
This means that the goods are handed over by the seller alongside the ship at the named port
of loading. So the responsibility for the goods passes from the seller to the buyer from that
point on. This terminology obliges the seller to perform all export procedures. This
terminology in Incoterms 2000 is the opposite of its predecessor, Incoterms 1990, which
requires the buyer to complete all export procedures. However, if it is desired that the buyer
should be responsible for the export procedures, this should be expressly mentioned in the
contract. This terminology can only be used for sea transportation and inland waterways.
4.
FOB (State the Name of the Port of Loading) "Free on Board":
This means that the transfer of all risks for the goods from the seller to the buyer occurs when
the goods have passed through the ship's rail (ship's safety fence) at the port mentioned. FOB
applies specifically only to sea transportation and inland waters.
5.
CFR (Name the Port of Destination) "Cost and Freight":
This means that all risks for damage or loss of goods as well as all kinds of costs incurred
after the goods pass through the ship's rail pass from the seller to the buyer. However, under
this terminology, the seller is obliged to bear all transportation costs required for the goods to
reach the stated port of destination. This terminology also obliges the seller to make any
export arrangements required by the goods. CFR only applies to sea transportation and inland
waterways.
6.
CIF (Name the Port of Destination) "Cost, Insurance, and Freight":
This means that all risks for damage or loss of goods as well as all kinds of costs incurred
after the goods pass through the ship's rail pass from the seller to the buyer. However, based
on this terminology, the seller is obliged to bear all transportation costs required for the goods
to reach the stated port of destination, including providing sea freight insurance to cover the
buyer's risk of loss or damage to the goods during the sea transportation period. It should be
noted that the seller is only obliged to pay an insurance premium with minimal coverage. If
the buyer wants greater insurance coverage, then the buyer must obtain the following It is
important to agree with the seller beforehand because it is the seller who has to pay for it.
However, if the seller does not agree, then the buyer will have to pay for additional insurance
themselves to provide greater protection. CIF requires the seller to take care of export
procedures. This terminology only applies to sea transportation and inland waterways.
7.
CPT (State the Name of the Destination) "Carriage Paid to...":
This means that the transfer of risk for damage or loss of goods passes from the seller to the
buyer at the time the goods are handed over to the carrier appointed by the seller, but the
seller still has to bear the necessary transportation costs until the goods arrive at the stated
destination. If there is a change or transfer of means of transportation, then the transfer of risk
occurs when the goods are handed over to the first carrier. This terminology applies to all
types of transportation.
8.
CIP (State the Name of the Destination) "Carriage and Insurance Paid to...":
This means that the risk of damage or loss of the goods passes from the seller to the buyer
when the goods are handed over to the carrier appointed by the seller, but the seller still has to
bear the necessary transportation costs until the goods arrive at the stated destination. In CIP,
the seller must provide transportation insurance that covers the buyer's risk of loss or damage
to the goods during the transportation period. It should be noted that the seller is only obliged
to pay an insurance premium with minimal coverage. If the buyer wants more insurance
coverage, then the buyer must get prior agreement with the seller because it is the seller who
must pay for it. However, if the seller does not agree, then the buyer must pay for additional
insurance on their own to provide greater protection. If there is a change or transfer of means
of transportation, then the transfer of risk occurs when the goods are handed over to the first
carrier. This terminology applies to all types of transportation.
9.
DAF (Name the Place) "Delivered at Frontier":
What this means is that the seller is deemed to have performed the obligation to deliver the
goods when the goods have been placed in a condition to be ready for the buyer, are still in
the last means of transport carrying them, have not been unloaded, have taken care of the
export procedures, but have not taken care of the import procedures, at a point and place on
the border mentioned, but before reaching the customs border of a neighboring country. The
word "frontier" or "border" can be used for all borders, including the borders of export
countries. Therefore, the point and name of the frontier in question should always be clearly
stated. If the parties agree that the seller is responsible for unloading the goods from the last
means of transportation that brought them to the frontier, including assuming any risks
involved in unloading the goods, this should be explicitly stated in the sale agreement. This
terminology applies to any type of transportation that carries the goods across the land border.
However, if the delivery takes place at the port of destination, in the hull or deck of a vessel,
or at the dock, then DES or DEQ should be used.
10.
DES (State the Name of the Destination Port) "Delivered Ex Ship":
What this means is that the seller is deemed to have undertaken the obligation to deliver the
goods when the goods have been placed in a condition to be ready to be carried by the buyer
on the deck of the ship, not yet taken care of the import procedures at the port of destination.
The seller is obliged to bear all costs and risks of bringing the goods to the port of destination
before the goods are unloaded or unloaded. If the parties want the seller to bear all risks and
costs until the goods are unloaded or unloaded, then the terminology that should be used is
DEQ. This terminology is used for sea or inland waterway transportation or multimodal
transportation in a water vehicle at the port of destination.
11.
DEQ (State the Name of the Destination Port) "Delivered Ex Quay":
What this means is that the seller is deemed to have performed the obligation to deliver the
goods when the goods have been placed in a condition ready to be carried by the buyer at the
dock of the port of destination, but the import procedures have not yet been taken care of. The
seller bears all risks and costs of getting the goods to the port of destination and unloading
them at the dock. If the parties want the seller to take part in the payment of import duties or
their processing, either partially or fully, then this must be clearly stated in the contract. This
term is used for sea or inland waterway transportation or multimodal transportation in a water
vehicle that unloads goods at the dock.
12.
DDU (State the name of the destination) "Delivered Duty Unpaid":
This means that the seller delivers the goods to the buyer to the stated destination, has not
cleared the import procedures, and has not been unloaded or dismantled from the last means
of transportation that carried them. The seller must bear all the risks and costs of getting the
goods to the stated destination, but not the import duties and other import taxes. All such
import formalities are the responsibility of the buyer, and he must also bear any risks arising
from his failure to take care of the import procedures in a timely manner. However, if the
parties wish for the seller to also be responsible for the import procedures, this must be
explicitly mentioned in the contract. This terminology applies to all means of transportation.
However, if the delivery takes place at the port of destination in the hull or deck of the ship, or
at the dock, the terminology should be DES or DEQ.
13.
DDP (State the Name of the Destination) "Delivered Duty Paid":
This means that the seller delivers the goods to the buyer to the stated destination, has taken
care of the import procedures, and has not been unloaded from the vehicle carrying them. In
short, this term imposes all risks and costs on the seller to deliver the goods to the intended
destination. If EXW imposes the heaviest obligation on the buyer, then DDP imposes the
heaviest obligation on the seller. DDP cannot be used if the seller is unable to handle the
import procedures. If the parties want the buyer to take care of the import procedures and bear
all the risks, then the DDU terminology should be used. If the parties want the obligation to
bear part of the import duties or other import taxes, such as value-added tax, to pass from the
seller to the buyer, this should be clearly stated in the contract. If delivery takes place at the
port of destination in the hull or deck of the ship, or at the wharf, the terminology should be
DES or DEQ.
Incoterms has been recognized in almost all countries in the world as the main reference
for the interpretation of various terms commonly used in international trade transactions. This
will reduce the risk of differences in understanding for international trade actors, because
there is already an agreement that is known together. Therefore, international trade actors in
Indonesia must begin to pay attention to the importance of understanding Incoterms, because
a good and thorough understanding of Incoterms can reduce risks and unexpected costs for
actors who carry out international trade, and also the potential for problems in international
trade will be reduced. Thus, the competitiveness of Indonesian exporters and importers in
international trade activities will increase. In this case, the group argues that the matters
stipulated in Incoterms will be very influential to determine the success of the company in
international trade activities. Therefore, international trade actors need to raise awareness
about the existence of Incoterms, because by understanding Incoterms thoroughly in
accordance with the discussion that has been discussed previously, the benefits that will be
obtained by the existence of Incoterms are:
a. Reduce differences in trading understanding when selling contracts
does not cover it.
b. Regulate domestic and international trade.
c. Reduce the risk of complication of provisions in each country.
The standardized and practical international trade practices guided by a simple form cut
across the boundaries of traditional and complex contract law. Important aspects and elements
of standard contracts, particularly sale contracts and related ones are outlined below:
a. Commercial law for international trade transactions based on the International Chamber of
Commerce (Incoterms) 2000:
1)
Institutions that deal with international trade or "export merchants"
It is a company that handles the shipment of goods to the destination in the contractual
agreement. Export merchant companies include export houses, confirming houses, and
merchant shippers (purchasing, confirming, and shipping).
2)
Some of the institutions that take care of and/or are involved in international trade
transactions include:
a)
Banks
b)
Non-bank financial institutions
c)
Insurance company
d)
Transportation companies
e)
Expedition company (veem)
b. Obligations of the seller in a sale and purchase transaction (Incoterm 2000):
1)
Provide goods according to contact.
2)
Assist buyers upon request, in obtaining export licenses and other procedures that must be
followed.
3)
Placing the purchased goods at the place of delivery at the specified time, at the usual place
and time for delivery.
4)
Pay the fee to the place designated by the buyer.
5)
Risk transfer.
6)
Tell the buyer enough time about the goods that the buyer intends to purchase.
7)
Pay to check the quality, weight, unit size of goods for buyers, also including packaging.
c. The obligations of the buyer in a sale-purchase transaction:
1)
Pay the price according to the contract.
2)
Arrange for export and import licenses and other procedures.
3)
Pick up the goods as soon as possible after they arrive.
4)
Assume the risk of loss or damage.
5)
Pay the entire cost of goods from the time the goods arrive according to the provisions.
6)
Pay for pre-shipment inspection fees, unless otherwise agreed.
7)
Pay the entire bill for obtaining documents for similar electronic messages and reimburse the
seller for the cost of assistance.
O.
Shifting Characteristics of Commercial Law
1.
Sources of Indonesian Commercial Law:
The main sources of Indonesian commercial law are the KUHD and KUHPdt (Book 1-III).
Commercial law is lex-specialis and civil law on ties is lex-generalis, which means that as
long as commercial law (KUHD) does not regulate, the law of ties (KUHPdt Book III) will
apply. In the practice of increasingly widespread and transnational trade, Indonesian trade law
based on the KUHD and KUHPdt (Book III) is outdated and requires "alignment" with the
reality of the needs of the world of trade, among others by utilizing international trade law
contained in bilateral and multilateral agreements. Such as international trade law or world
trade law, which includes international instruments on trade.
2.
Difficulties in Indonesian Trade Law Reform:
KUHD and KUHPdt (Book III) have characteristics, as private law that emphasizes
agreements between parties that, once agreed upon, will bind each party as law. While
binding agreements or obligatory agreements adhere to The principle of freedom of contract,
so that Indonesian commercial law containing simple principles can be described as follows:
a.
Indonesian Trade Law Based on the Agreement of Parties:
In the current national legal system, relationships covering the field of trade, Western law is
applied, namely the KUHPdt (Book III) and of course the KUHD. Agreement law plays an
important role in the business world. The law of agreement emphasizes the nature of the
individual, and raises legal symptoms as a result of legal relations between one party and
another.
b.
Aspects of Freedom of Contract in Commercial Law:
1) On the Occurrence of an Agreement
The principle is called consensualism. This means that according to civil law (KUHPdt) an
agreement has occurred if there is an agreement of will between the parties.
2) About the content of the agreement
It is entirely up to the parties concerned.
3) About the Effects of the Agreement
That the agreement has binding force between the parties themselves. This principle is
emphasized in Article 1338 (1) KUHPdt which emphasizes that agreements made legally
between parties, apply as laws for the parties to the agreement.
3.
Shifting Characteristics of Indonesian Trade Law:
As the law governing parties entering into post-independence commercial agreements, the
individualistic and liberalistic characteristics of commercial law have shifted with the
application of the social function doctrine that limits the absoluteness of eigendom rights in
business contracts based on freedom of contract. The characteristics of commercial law that
originally adhered to the principle of freedom of contract This is reinforced by the interests of
international business practices that are bound by treaties, both bilateral and multilateral. This
is reinforced by the interests of international business practices that are bound by treaties, both
bilateral and multilateral.
P.
Sources of International Trade Law:
International trade is one part of economic activity that has recently experienced rapid
development. The world's attention to international business is also increasing, this can be
seen from the growing flow of trade in goods, services, capital, and labor between countries.
The scope of international trade law is quite broad, due to the cross-border nature of trade
relations. There are various reasons why countries or legal subjects are willing to conduct
international trade transactions. The fact is that international trade has become the backbone
for countries to become prosperous, prosperous, and strong. In the beginning, trade relations
were only limited to one particular country's territory, but with the development of trade
flows, the trade relations were not only carried out between entrepreneurs in one country's
territory, but also involved traders from other countries. Import-export activities are based on
the condition that no country is truly independent because each other needs and complements
each other. Each country has different characteristics, including natural resources, climate,
geography, demographics, economic structure, and social structure. These differences lead to
differences in the commodities produced. Therefore, countries need to establish a trade
relationship to meet the needs of each country.
International trade law was originally born out of the practices of merchants. The law
created by these merchants is commonly referred to as lex mercatoria (law of merchants). At
the beginning of its development lex mercatoria grew out of four factors, first, the birth of
rules arising from customs in various fairs (the law of the fairs); second, the birth of customs
in the law of the sea; third, the birth of customs. Fourth, the role of notaries in providing trade
law services. At this stage of development, countries began to realize the need to regulate
international trade law. They then included the rules of international trade in their legal codes.
For example, France created the Code de Commerce in 1807 and Germany published the
Allgemeine Handelsgezetbuch in 1861. After the development of trade law marked by
inclusion in the national laws of each country, the next development was marked by the
emergence of international organizations that take care of international trade. The rules of
international trade were born largely because they were influenced by the increasing number
of international agreements signed, whether bilaterally, regionally or multilaterally. In
particular, this stage emerged significantly after the end of the World War
II. One of the multilateral agreements signed during this period was the GATT in 1947. The
second feature in the development at this stage is the emergence of international
organizations. One of the prominent bodies is the United Nations, although in fact the role of
the UN in the field of international trade is not directly involved. However, the role of the UN
in the field of economics and trade is contained in the UN Charter, which regulates the
purpose of the UN, namely to achieve international cooperation, including resolving
international economic problems. The third feature of this stage of development is the
agreement on the establishment of regional economic bodies in a particular region. The first
regional trading blocs to have a wide impact were the European Single Market in 1982 and
the North American Free Trade Area in 1994.
It cannot be denied that the development of international trade law is very significant,
where the country's need to improve the welfare of its people is the main driver of this law.
However, the definition of international trade law does not have a concrete understanding.
Schmitthoff in Adolf (2005) defines international trade law as, "The body of rules governing
commercial relationships of a private law nature involving different nations." Departing from
this definition there are several elements, that international trade law is a set of rules
governing commercial relationships of a private law nature and these legal rules regulate
transactions that are different countries. Based on the background of the definition given by
Schmitthoff, it has an impact on the scope of coverage of international trade law. First,
international trade and commerce including contract formation, trade representation, and
exclusive sales arrangements; second, securities; third, the law of conduct concerning
international trade; fourth, insurance; fifth, transportation by land and rail, sea, air, and inland
waterways; sixth, industrial property rights; and seventh, commercial arbitration.
In practice, international trade law adopts several important principles that support trade
activities between countries. Adolf mentions that the first principle of international trade law
is freedom of contract, which is a universal principle in international trade law. Every legal
system in the field of commercial law recognizes this freedom of parties to make international
trade contracts. This freedom includes the freedom to enter into the types of contracts agreed
upon, as well as the freedom to choose the forum for resolving trade disputes, and to choose
the applicable law in the contract. The second principle, namely pacta sunt servanda, requires
that the agreement or contract that has been signed must be implemented as well as possible.
The third principle is the use of arbitration as a basis for dispute resolution. Arbitration
clauses have been increasingly included in trade contracts. The last principle, which is the
basis of freedom of communication, is the freedom of the parties to communicate for trade
purposes with anyone through various means of communication whether by land, sea, air, or
including electronic means.
The source of international trade law is an important point, because that is where we can
find the law to be applied to a fact in international trade. International treaties are one of the
sources of law, which in general, international treaties are divided into three forms, namely
multilateral, regional and bilateral agreements. The point is agreements in the field of trade
made by the parties. The second source of law is customary international law, which is one of
the guidelines in interpreting business contracts, including international trade law. Since the
beginning of its development, international trade law was actually born from the repeated
practices of traders so that the repeated habits were binding in such a way. The next source of
law is general legal principles, as discussed earlier. This source of law only functions when
international treaty law and customary international law do not provide an answer to a
problem. Judicial decisions and doctrine emerge as the fourth source of international
commercial law, and have a complementary function and role, like general principles of law.
However, the difference is that the use of these sources of law is limited to considerations and
not binding obligations of international trade law. The main source of international trade law
is actually the contract made by the parties concerned. Therefore, the contract is a very
essential source of law and acts as a source that needs to be used first and foremost as an
important reference in exercising the rights and obligations of the parties in international
trade. The last source of law is national law. The authority of national law can be in the form
of international trade transactions. In this case, the national law made by a country can include
tax law, customs, labor, fair competition, consumer protection, health, and export-import
licensing of a product.
Indonesia clearly has its own trade law rules contained in its national legal provisions.
The governing law is explained in the provisions of trade law, which is defined as the law that
regulates the behavior of humans who participate in trade for profit or the law that regulates
legal relations between humans and legal entities with each other in the field of trade.
Initially, trade law was based on civil law. However, over time trade law codified its legal
rules so as to create the Kitab Undang-Undang Hukum Dagang (KUHD) which now stands
alone or separate from the Civil Code (KUHP). The source of commercial law is the place
where regulations regarding commercial law can be found. First, the Indonesian Wetboek van
Koophandel regulates various associations related to the development of the field of corporate
law. Secondly, the Civil Code where according to Article 1 of the KUHD, the Civil Code is
the source of trade law as long as the KUHD does not regulate certain matters and these
matters are regulated in the Civil Code. In addition to the KUHD, there are still several other
laws and regulations governing commercial law, including: Law Number 10 of 1998 on
Banking; Law Number 1 of 1995 on Limited Liability Companies (PT); Law Number 7 of
1987 on Copyright; Law Number 5 of 1999 on Business Competition; and Law Number 8 of
1995 on Capital Markets.
International trade is a cross-border buying and selling transaction. The parties involved
are from different countries or have different nationalities. International trade actually took
place several centuries ago, but of course based on primitive trade. The trade system that
prevailed at that time was still based on the barter system between goods and goods. As
human civilization progressed, there was a drastic change in the international trade system.
With the rapid advancement of technology, the distribution of goods and services became
easier and international trade showed its complexity. The provisions of international trade law
act as the main rules governing the course of trade in practice, which is carried out by the
subjects of international trade. Trade that occurs in Indonesia has also occurred since the last
century and the applicable laws regarding trade have been regulated since Indonesia was
under Dutch colonization. Over time, the source of trade law codified from Dutch law, then
later laws were raised and associated with the applicable civil law in Indonesia.
International trade, which is beneficial for all mankind, requires international
arrangements that will regulate international trade. As stated by the former Director General
of GATT and WTO, Peter Sutherland in 1997 stated that the challenge the world faces is the
challenge to establish an international economic system that can increase economic growth to
the maximum, but can also create justice. This system is one that can integrate strong and
weak countries in their efforts to expand economic growth rates. Sutherland argues that the
envisioned system must also be able to create peace and prosperity in the future and this can
only be realized through the creation of an international cooperation to find effective
international approaches and institutions.
The attitudes, actions or activities of a state may not be pleasing, may be unfavorable or
detrimental to other states or countries. The attitudes, actions or activities of a state may fall
into the category of wrongful acts or acts against international law (internationally) complex
international life, the interests of states meet each other, intersect with each other. Even facing
each other, so that the attitude or actions of a country can directly or indirectly harm or
threaten the interests of other countries. So that in terms of international law, legal
responsibility can be demanded based on the principle of state responsibility. Here, the state
that is the victim of such attitudes, actions, or activities against international law can submit a
legal responsibility claim against the state that violates international law based on the
principle of state responsibility. While military and political power are generally used as
coercive tools in achieving a state's goals, economic power is also often used as a coercive
tool to other weaker countries to take an action or not to take an action which will certainly
have an impact on the country's own government system.
The use of economic power is carried out, among others, in the form of threats or the
application of trade sanctions in the form of certain policies. Multilateral trade sanctions,
which are sanctions applied collectively by a number of countries or trade sanctions applied
based on a decision of an international organization (multilateral trade sanction) are generally
more acceptable as an instrument to enforce international legal or moral standards. Economic
power can also be used by a particular country to threaten or implement trade sanctions
against other countries. Rusli Pandika stated that unilateral trade sanctions are often used as a
foreign policy tool, namely as a means of coercion so that other countries change their
domestic or foreign policies.
These actions certainly undermine the sovereignty or disrupt the economic growth of
sanctioned countries. State intervention is needed to regulate the market so that it can run
well. However, the economic motive is not the only reason why the state provides trade
policy, there are still political and cultural motives that become the background of
determining trade policy. Political motives include protecting the position of the leader
himself who will falter if domestic economic conditions decline due to inappropriate policies
and will lead to public reluctance to vote for the leader. In addition, trade policy can also be
used to respond to trade from other countries that are considered unfair.
In general, there are two types of trade policies: trade policies to increase trade and trade
policies to restrict trade. These trade policies have their own implications for international
trade. For example, in the economic motive of goods subsidy policy, the state imposes trade
policy to protect newly established industries in order to compete. Meanwhile, cultural
motives can influence the implementation of trade policies because countries try to protect its
culture and national identity from being eroded by foreign cultures and popular culture
inherent in imported foreign products. Can make the level of competitiveness of domestic
products in the international market increase due to the flow of aid funds from the
government.
The sources of international trade law are as follows:
1.
International Agreements:
International treaties are one of the most important sources of law. In general, international
treaties are divided into three forms, namely multilateral, regional and bilateral treaties.
International or multilateral treaties are written agreements that bind more than two parties
(countries) and are subject to the rules of international law. Some international agreements
establish a common trade arrangement between the parties. Regional agreements are
agreements in the field of international trade made by countries that belong to or are in a
particular region. For example, the agreement to establish the ASEAN Free Trade Area
(AFTA) in Southeast Asia. An agreement is said to be bilateral when the agreement binds two
subjects of international law. Included in this group of agreements are double taxation
avoidance agreements.
2.
Customary International Law:
In the study of international trade law, this source of law is also referred to as lex mercatoria
or the law of the merchants. The provisions of the lex mercatoria can be found, among others,
in the customs developed and set out in international trade contracts, for example in the form
of standard contract clauses or contracts in the field of transportation.
3.
General Legal Principles:
This source of law comes into play when treaty law and customary international law do not
provide an answer issue. Some examples of these common law principles include: the
principle of good faith, the principle of pacta sunt servanda, and the principle of
compensation.
4.
Judicial Decisions and Doctrine:
This source of law in international trade law does not have the force of law, as recognized in
the common law system. Thus, there is a non-binding obligation for tribunals to take into
account previous court decisions.
5.
Contract:
The main and most important source of international trade law is the agreements or contracts
made by the traders themselves. The contract is the law for the parties who make it. Thus, the
contract acts as a source of law that they need and first make an important reference in
exercising their rights and obligations in international trade.
6.
National Law:
The significance of national law as a source of international trade law can be seen in the
description of contracts. The role of national law will begin to emerge when a dispute arises
as a result of a contract. In such a case, the court (arbitral body) will first look at the choice of
law clause in the contract to determine the law that will be used to resolve the dispute.
Q.
Problems in Commercial Law
International:
The laws utilized in international trade, because they involve many countries, also involve
many non-uniform laws, which often present problems. Some of the discussion points below
try to address them.
1.
Legal Power of Negotiation:
The legal force of a negotiation varies from country to country. There are legal systems that
require that a negotiated contract is not binding at all before the contract is signed. The
Indonesian legal system (based on the Civil Code) follows this system.
2.
Acceptance that is Not the Same as an Offer:
It often happens that the acceptance of an offer by one party in an international sale or
purchase is not exactly the same as the offer made to the other party. In such instances, the
legal arrangements vary from one country to another. Indonesian law, for example, considers
that if there is a discrepancy between the offer by one party and the acceptance by the other
party, the agreement is deemed not formed, so the contract is deemed not to have occurred
(Article 1320 KUHPdt).
3.
Cancellation of an Offer:
Often the juridical issue in terms of offer rescission is whether an offer, such as an offer to sell
goods by a seller, can be rescinded by the party making the offer. Countries such as Indonesia,
and also generally in the USA, as well as in many other countries, consider that an offer can
always be canceled before it becomes a contract (before there is an agreement). This is
because the offer is a unilateral act which can therefore also be canceled unilaterally.
4.
"Consideration" in Sale and Purchase:
Consideration in a contract is an act done by one party in return for a performance done by
another party under a contract. Without such contact, there is no obligation for him to do or
not do the act.
5.
Written Contract Requirement:
With the advancement of communication technology, merchants are getting faster and more
varied ways of communicating business with each other. Facsimiles have become
increasingly common. There are even orders for goods that can only be placed over the
interlocal telephone. The issue is whether a contract must be written and signed by both
parties to be valid or whether it does not need to be in writing.
6.
Time at which an agreement is reached:
Some countries provide that an acceptance has occurred, and therefore an agreement has been
reached, when the offeree reasonably sends an acceptance to the offeror. However, there are
also countries that consider that acceptance occurs upon receipt of the acceptance by the
offeror.
