International sale of goods laws: Australia and China

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China and Australia are both among the fastest growing economy in the world. Despite their difference of economical origins, both countries have managed to strike its influence in international business immensely. In recent days, both countries have signed a mutual FTA feasibility studies to explore the potential business among them. Actually, how different are their economics structure[1].

Are they moving towards uniformity of international trade laws as suggested by the Vienna Convention? This paper will displayed a brief overview of the countries current economical condition, described their current relationship, and then try to find fundamental differences exist among the two countries Furthermore, this paper will show that the International trade of goods laws between the compared countries: China and Australia are different in nature.

This is due to each country evolve from different trading culture. China, for example, in its early years tends to promote a steady commitment in producing a uniform legal rules and regulations globally although later the country shows less commitment in permitting a fair atmosphere of global trading then the Australian. In contrast, Australia was a party at the Vienna Convention, and it is now actively promoting the uniform laws of international trading.

The situation drives the country to encourage international relationships (export and import) since they believe the relationship is important means for the survival of the nation’s economy and the increase in living standards, therefore, a fair export and import law is maintained as an important merit. [1] “A Successfull Global Trader. ” Australia Now, 2003. Http://www. dfat. gov. au/facts/search. Accessed 22 April 2005 I. Introduction In this era of globalization, entrepreneurs would no longer give in to national or regional boundaries. Businesses are expanding worldwide causing increasing importance of adequate laws and regulations.

Before the times of globalization, laws and regulations were made by each and individual countries. On Seldom cases of transactions between entrepreneurs of different nationality, the laws and regulations are chosen among the nationality involved. The following decade however, cross-national, cross regional and multinational transaction happens each and every day, posing an inadequacy to the previous method of selecting laws and regulations applied. Considering the frequency of foreign transactions, it is a tremendous waste of time and energy to dispute about the basic rules implied in every transaction practiced.

The need of a basic set of rules and regulations which can be implied in every multinational transaction grew from the vast developing idea of globalization. In this situation, the most well known and trustworthy regulations naturally transformed into a swift solution. The English international trade laws are somewhat the popular solution for the international trade law uniformity problem. A considerable amount of multinational businessmen are using English Laws based contracts to manage their transactions, even if the transactions have no reasonable connections with the United Kingdom.

One of the known examples is an Argentinean selling products of Soya bean meal in bulk to a Swiss buyer using US dollar as transactional currency (a transaction has little or no connection to the United Kingdom), applying CIF Antwerp shipping terms for a base of contract agreement[1]. Despite becoming a trend, the solution still does not provide a legal and strong set of order to bind the world into a single trading place. To achieve the purpose, an international convention must be made.

The United Nations Commission on International Trade (UNCITRAL) is a strong international gathering dedicated to pursue uniformed trade laws. In 1980’s The Vienna Convention was held. The United States and most of the European countries attended it. Contracts for the International Sale of Goods (CIGS) are the product assembled by the convention. The product is considered to be one of the most ambitious efforts to create a world legal order in international trade transaction. The convention takes 12 years in preparation and the product (CIGS) is still actively worldwide promoted by nations present at the convention[2].

It is said however, that despite its proven achievement of being an effective international trade instrument, the CIGS should not be applied with the basic assumption that all transactions are alike. A single uniform law should not be applied with a “one size fits all basis”[3]. Studies on whether the appropriate treatment has been applied by the Vienna Convention to the variety of international sales transactions is being made; reflecting a certain amount of doubt existed towards the CISG. The campaign of making uniform international sale of goods laws has yet to meet its success.

Natural differences of various transactions are still a field too vast to be united in a single treaty. We will have a clearer view as we analyze the differences between 2 countries contrasted by economical conditions, culture and mostly basic law foundation. II. The Countries’ Economical Backgrounds and Laws The International trade laws and regulations assembled by a country emerged from various national backgrounds. Countries possessing different geographical structure for example, would produce different export commodities, thus results a different ‘tone’ of trade laws.

Other factors such as the culture of citizens and national politic tendencies have also significant contributions in making a country’s international trade laws. II. 1. Australia Australia is a multicultural country with migrants coming from 200 countries. It is an English speaking country with 20 million population and 4. 1 million of them speak a second language. It has approximately 10 million highly trained workforce including diploma and university graduates. Its underlying economic health describes an increased achievement as follows: O  Reduction of Government Debt pf $66. 6 billion since 1996

O  Controlled inflation between 2 and 3 percent since 1991 O  The IMF has forecasted Australia to have 3. 5 percent growth for 2004 O  Government’s financial outline describe a financial surplus since 1998 O  Productivity experienced an immense growth[4] Australian export reached A$ 151 billion in 2002. Its highest export destinations are Japan (A$ 22. 1 billion), United States (A$ 11. 5 billion), and Korea (A$ 10 billion) (“Export, growth and technology” 2003). Its export of international services totalled over $ 10 billion during 2003[5]. II. 1. 1. Australia’s Current Cross-Border Trade Activities.

Multinational transactions or cross border transactions always involved legal risks. Australia has been trying to reduce legal risks suffered by its firms, trough cross border transactions. Currently, Australian firms have dealt with the issue by four ways: O  By transferring the risk into another party O  By avoiding or quarantine the impact of foreign laws on the business O  By pricing increased risk into the fees O  By taking the risk without compensation or protection[6] Certain efforts have been conducted by the country to the betterments of dealing with the issue.

The government has focused into specific issues needed swift solutions: O  The major cross border risks O  The particular countries and industries where legal issues are important for the continuance of Australian business firms O  Bilateral, regional and other important matters to Australia O  The non-legal solutions and options O  The time frame which the problems need to be resolved[7] II. 1. 2. Australian Export and Import Laws Australia’s export and quarantine laws are design to meet certain standard of quality exports goods. It emphasizes on protection towards Australia’s animals, plants, human health and the overall environment.

It also emphasizes strict standard regarding certain quality requirements to meet foreign countries’ satisfaction. They believe that export trade is vital to Australia’s prosperity and high standard of living. The commitment to ensure export goods and services quality goes all the way, as Australia implement their steps of ensuring quality, which are: 1. In cooperation with the industry involved AQIS makes standard requirements on export goods and services and state them in the legislation. 2. Industry are guided to implement management systems to achieve compliance with the stated laws 3.

AQIS systems are obligated to verify the compliance between the goods/service and the laws by investigations. 4. AQIS takes a final action of allowing exports activities or not allowing, in case of non compliance[8]. II. 1. 3   Australian International Initiatives Australia has a long time commitment to the global trade liberalization. The country is a member of GATT (General Agreements on Tariffs and Trade) and the World Trade Organization. Trough membership of these two organizations, Australia pursued the reduction of tariffs and other trade barriers of bilateral, regional or multilateral transactions.

In 2003 and 2004, the country has concluded negotiations on FTA (Free Trade Agreements) with the United States, and Thailand. It has also signed a Trade and Economic Frame work with Japan, and currently commenced a joint feasibility study on an FTA with China[9]. Australia has also take part in the international law reformation to achieve uniformity.

One of them was held by UNCITRAL. UNCITRAL has carried out its works in five main areas; one of them is the international sale of goods law. Australian is also a party at the Hague Conference of Private International Law.

In 1980, Australia takes place in the United Nations Convention on Contracts for the International Sale of Goods[10]. II. 1. 4   Australia’s Principle of International Agreements Overall priorities of Australia’s legal work consist of three principles which developed into a more detailed program to reduce international trading risks towards Australian firms. Those three principles are: 1. Every international agreement must have in its body, an expected outcome of better management or reduction of legal risks faced by Australian Firms.

The outcomes must be able to be measured sufficiently to judge success or failure regarding to the previous sentence. 2. Every International Agreement must be assed carefully to ensure its achievability. Achievability depends on political will and other factors. This principle is important due to experience that some conventions have results great agreements, but lack in implementation. 3. Australia’s priorities in its legal work are assembled according to the value of achievable outcomes[11]. [1].

Bridge, Michael G. “Uniformity and Diversity in the Law of International Sale. ” 2003.Http://www. cisg. law. pace. edu/cisg/biblio/bridge. html [2] Idem 2 [3] Idem 2 [4] “A Successfull Global Trader. ” Australia Now, 2003. Http://www. dfat. gov. au/facts/search.

Accessed 22 April 2005 [5] “Exports: growth and diversity. ” Australia Now, 2003.. Http://www. dfat. gov. au/facts/search [6]  “Remedies, Commerce and Cross Border Risk. ” The Australian Law Reform Commission, Http://www. alrc. gov. au/publications/search [7]  Idem 7 [8] Idem 5 [9] Idem 5 [10] “International Initiatives” The Australian Law Reform Commission. Http://www. alrc. gov. au/publications/search [11] Idem 11.

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