          
               EXPORT REGULATIONS, CUSTOMS BENEFITS AND TAX INCENTIVES
          
          
          This chapter covers a wide range of regulations, 
          procedures, and practices that fall into three categories: 
          (1) regulations that exporters must follow to comply with 
          U.S. law; (2) procedures that exporters should follow to 
          ensure a successful export transaction; and (3) programs 
          and certain tax procedures that open new markets or provide 
          financial benefits to exporters.
          
          EXPORT REGULATIONS
          
          Although export licensing is a basic part of exporting, it 
          is one of the most widely misunderstood aspects of 
          government regulations for exporting. The export licensing 
          procedure may appear complex at first, but in most cases it 
          is a rather straightforward process. Exporters should 
          remember, however, that violations of the Export 
          Administration Regulations (EAR) carry both civil and 
          criminal penalties. Export controls are administered by the 
          Bureau of Export Administration (BXA) in the U.S. 
          Department of Commerce. Whenever there is any doubt about 
          how to comply with export regulations, Department of 
          Commerce officials or qualified professional consultants 
          should be contacted for assistance.
          
          The EAR are available by subscription from the 
          Superintendent of Documents, U.S. Government Printing 
          Office, Washington, DC 20401; telephone 202-275-2091. 
          Subscription forms may be obtained from local Commerce 
          Department district offices or from the Office of Export 
          Licensing, Exporter Counseling Division, Room 1099D, U.S. 
          Department of Commerce, Washington, DC 20230; telephone 
          202-377-4811.
          
          Types of license
          
          Export License
          
          For reasons of national security, foreign policy, or short 
          supply, the United States controls the export and reexport 
          of goods and technical data through the granting of two 
          types of export license: general licenses and individually 
          validated licenses (IVLs). There are also special licenses 
          that are used if certain criteria are met, for example, 
          distribution, project, and service supply. Except for U.S. 
          territories and possessions and, in most cases, Canada, all 
          items exported from the United States require an export 
          license. Several agencies of the U.S.  government are 
          involved in the export license procedure.
          
          General License
          
          A general license is a broad grant of authority by the 
          government to all exporters for certain categories of 
          products. Individual exporters do not need to apply for 
          general licenses, since such authorization is already 
          granted through the EAR; they only need to know the 
          authorization is available.
          
          Individually Validated License_
          
          An IVL is a specific grant of authority from the government 
          to a particular exporter to export a specific product to a 
          specific destination if a general license is not available. 
          The licenses are granted on a case-by-case basis for either 
          a single transaction or for many transactions within a 
          specified period of time. An exporter must apply to the 
          Department of Commerce for an IVL. One exception is 
          munitions, which require a Department of State application 
          and license.  Other exceptions are listed in the EAR.
          
          Determining which license to use
          
          The first step in complying with the export licensing 
          regulations is to determine whether a product requires a 
          general license or an IVL. The determination is based on 
          what is being exported and its destination.  The 
          determination is a three-step procedure:
          
          1.   Determine the destination. Check the schedule of 
               country groups in the EAR (15 CFR Part 770, Supp. 1) 
               to see under which country group the export 
               destination falls.
          
          2.   Determine the export control commodity number (ECCN). 
               All dual-use items (items used for both military and 
               civilian purposes) are in one of several categories of 
               commodities controlled by the Department of Commerce. 
               To determine what ECCN applies to a particular 
               commodity, see the Commodity Control List in the EAR 
               (15 CFR Part 799.1, Supp. 1).
          
          3.   Determine what destinations require an IVL. Refer to 
               the specified ECCN in Part 799.1 of the EAR. Look 
               under the paragraph "Validated License Required" to 
               check which country groups require an IVL. If the 
               country group in question is not listed there, no IVL 
               is required. If it is listed there, an IVL is required 
               unless the commodity meets one of the technical 
               exceptions cited under the ECCN.
          
          To avoid confusion, the exporter is strongly advised to 
          seek assistance in determining the proper license. The best 
          source is the Department of Commerce's Exporter Counseling 
          Division. Telephone or write to Exporter Counseling 
          Division, Room 1099D, U.S. Department of Commerce, 
          Washington, DC 20230; telephone 202-377-4811. Or the 
          exporter may check with the local Commerce district office. 
          An exporter can also request a preliminary, written 
          commodity classification opinion from the Office of 
          Technology and Policy Analysis, U.S. Department of 
          Commerce. P.O. Box 273, Washington, DC 20044.
          
          Shipments under a general license
          
          If, after reviewing the EAR or after consulting with the 
          Department of Commerce, it is determined that an IVL is not 
          required, an exporter may ship its product under a general 
          license.
          
          A general license does not require a specific application. 
          Exporters who are exporting under a general license must 
          determine whether a destination control statement is 
          required. (See the "Antidiversion, Antiboycott, and 
          Antitrust Requirements" section of this chapter.)
          
          Finally, if the shipment is destined for a free-world 
          destination and is valued at more than $2,500 or requires a 
          validated export license, the exporter must complete a 
          shipper's export declaration (SED). SEDs are used by 
          Customs to indicate the type of export license being used 
          and to keep track of what is exported. They are also used 
          by the Bureau of Census to compile statistics on U.S. trade 
          patterns.
          
          Shipments under an individually validated license
          
          If an IVL is required, the U.S. exporter must prepare a 
          Form BXA-622P, "Application for Export License," and submit 
          it to BXA. The applicant must be certain to follow the 
          instructions on the form carefully. In some instances, 
          technical manuals and support documentation must also be 
          included.
          
          If the application is approved, a Validated Export License 
          is mailed to the applicant. The license contains an export 
          authorization number that must be placed on the SED. Unlike 
          some goods exported under a general license, all goods 
          exported under an IVL must be accompanied by an SED.
          
          The final step in complying with the IVL procedure is 
          recordkeeping. The exporter must keep records of all 
          shipments against an IVL. All documents related to an 
          export application should be retained for five years. 
          Section 787.13 of the EAR covers recordkeeping 
          requirements.
          
          Avoiding Delays in Receiving an Individually Validated 
          License
          
          In filling out license applications, exporters commonly 
          make four errors that account for most delays in processing 
          applications:
          
          1.   Failing to sign the application.
          
          2.   Handwriting, rather than typing, the application.
          
          3.   Responding inadequately to section 9b of the 
               application, "Description of Commodity or Technical 
               Data," which calls for a description of the item or 
               items to be exported. The applicant must be specific 
               and is encouraged to attach additional material to 
               explain the product fully.
          
          4.   Responding inadequately to section 12 of the 
               application, where the specific end use of the 
               products or technical data is to be described. Again, 
               the applicant must be specific. Answering vaguely or 
               entering "Unknown" is likely to delay the application 
               process.
          
          In an emergency, the Department of Commerce may consider 
          expediting the processing of an IVL application, but this 
          procedure cannot be used as a substitute for the timely 
          filing of an application. An exporting firm that feels it 
          qualifies for emergency handling should contact the 
          Exporter Counseling Division.
          
          Additional Documentation_
          
          Certain applications for an IVL must be accompanied by 
          supporting documents supplied by the prospective purchaser 
          or the government of the country of ultimate destination. 
          By reviewing Part 775 of the EAR, the exporter can 
          determine whether any supporting documents are required.
          
          The most common supporting documents are the international 
          import certificate and the statement of ultimate consignee 
          and purchaser. The international import certificate (Form 
          ITA-645P/ATF-4522/DSP-53) is a statement issued by the 
          government of the country of destination that certifies 
          that the imported products will be disposed of responsibly 
          in the designated country. It is the responsibility of the 
          exporter to notify the consignee to obtain the certificate. 
          The import certificate should be retained in the U.S. 
          exporter's files, and a copy should be submitted with the 
          IVL application.
          
          
          The statement of ultimate consignee and purchaser (BXA Form 
          629P) is a written assurance that the foreign purchaser of 
          the goods will not resell or dispose of goods in a manner 
          contrary to the export license under which the goods were 
          originally exported. The exporter must send the statement 
          to the foreign consignee and purchaser for completion. The 
          exporter then submits this form along with the export 
          license application.
          
          In addition to obtaining the appropriate export license, 
          U.S. exporters should be careful to meet all other 
          international trade regulations established by specific 
          legislation or other authority of the U.S.  government. The 
          import regulations of foreign countries must also be taken 
          into account. The exporter should keep in mind that even if 
          help is received with the license and documentation from 
          others, such as banks, freight forwarders or consultants, 
          the exporter remains responsible for ensuring that all 
          statements are true and accurate.
          
          ANTIDIVERSION, ANTIBOYCOTT, AND ANTITRUST REQUIREMENTS
          
          Antidiversion clause
          
          To help ensure that U.S. exports go only to legally 
          authorized destinations, the U.S. government requires a 
          destination control statement on shipping documents. Under 
          this requirement, the commercial invoice and bill of lading 
          (or air waybill) for nearly all commercial shipments 
          leaving the United States must display a statement 
          notifying the carrier and all foreign parties (the ultimate 
          and intermediate consignees and purchaser) that the U.S. 
          material has been licensed for export only to certain 
          destinations and may not be diverted contrary to U.S. law. 
          Exceptions to the use of the destination control statement 
          are (1) shipments to Canada and intended for consumption in 
          Canada and (2) shipments being made under certain general 
          licenses. Advice on the appropriate statement to be used 
          can be provided by the Department of Commerce, the Commerce 
          district office, an attorney, or the freight forwarder.
          
          Antiboycott regulations
          
          The United States has an established policy of opposing 
          restrictive trade practices or boycotts fostered or imposed 
          by foreign countries against other countries friendly to 
          the United States. This policy is implemented through the 
          antiboycott provisions of the Export Administration Act 
          enforced by the Department of Commerce and through the Tax 
          Reform Act of 1977 enforced by the Department of the 
          Treasury.
          
          In general, these laws prohibit U.S. persons from 
          participating in foreign boycotts or taking actions that 
          further or support such boycotts. The antiboycott 
          regulations carry out this general purpose by
          
          *    prohibiting U.S. persons from refusing to do business 
               with blacklisted firms and boycotted friendly 
               countries pursuant to foreign boycott demands;
          
          *    prohibiting U.S. persons from discriminating against 
               other U.S.  persons on the basis of race, religion, 
               sex, or national origin in order to comply with a 
               foreign boycott;
          
          *    prohibiting U.S. persons from furnishing information 
               about their business relationships with blacklisted 
               friendly foreign countries or blacklisted companies in 
               response to boycott requirements;
          
          *    prohibiting U.S. persons from appearing to perform any 
               of these prohibited acts;
          
          *    providing for public disclosure of requests to comply 
               with foreign boycotts; and
          
          *    requiring U.S. persons who receive requests to comply    
               with foreign boycotts to disclose publicly whether 
               they have complied with such requests.
          
          The antiboycott provisions of the Export Administration Act 
          apply to all U.S. persons, including intermediaries in the 
          export process, as well as foreign subsidiaries that are 
          "controlled in fact" by U.S. companies and U.S. officials.
          
          The Department of Commerce's Office of Antiboycott 
          Compliance (OAC) administers the program through ongoing 
          investigations of corporate activities. OAC operates an 
          automated boycott-reporting system providing statistical 
          and enforcement data to Congress and to the public, issuing 
          interpretations of the regulations for the affected public, 
          and offering nonbinding informal guidance to the private 
          sector on specific compliance concerns. U.S. firms with 
          questions about complying with antiboycott regulations 
          should call OAC at 202-377-2381 or write to Office of 
          Antiboycott Compliance, Bureau of Export Administration, 
          Room 6098, U.S. Department of Commerce, Washington, DC 
          20230.
          
          Antitrust laws
          
          The U.S. antitrust laws reflect this nation's commitment to 
          an economy based on competition. They are intended to 
          foster the efficient allocation of resources by providing 
          consumers with goods and services at the lowest price that 
          efficient business operations can profitably offer. Various 
          foreign countries -- including the EC, Canada, the United 
          Kingdom, Federal Republic of Germany, Japan, and Australia 
          -- also have their own antitrust laws that U.S. firms must 
          comply with when exporting to such nations.
          
          The U.S. antitrust statutes do not provide a checklist of 
          specific requirements. Instead they set forth broad 
          principles that are applied to the specific facts and 
          circumstances of a business transaction. Under the U.S. 
          antitrust laws, some types of trade restraints, known as 
          per se violations, are regarded as conclusively illegal. 
          Per se violations include price-fixing agreements and 
          conspiracies, divisions of markets by competitors, and 
          certain group boycotts and tying arrangements.
          
          Most restraints of trade in the United States are judged 
          under a second legal standard known as the rule of reason. 
          The rule of reason requires a showing that (1) certain acts 
          occurred and (2) such acts had an anticompetitive effect. 
          Under the rule of reason, various factors are considered, 
          including business justification, impact on prices and 
          output in the market, barriers to entry, and market shares 
          of the parties.
          
          In the case of exports by U.S. firms, there are special 
          limitations on the application of the per se and rule of 
          reason tests by U.S. courts.  Under Title IV of the Export 
          Trading Company Act (also known as the Foreign Trade 
          Antitrust Improvements Act), there must be a "direct, 
          substantial and reasonably foreseeable" effect on the 
          domestic or import commerce of the United States or on the 
          export commerce of a U.S. person before an activity may be 
          challenged under the Sherman Antitrust Act or the Federal 
          Trade Commission Act (two of the primary federal antitrust 
          statutes). This provision clarifies the particular 
          circumstances under which the overseas activities of U.S. 
          exporters may be challenged under these two antitrust 
          statutes. Under Title III of the Export Trading Company Act 
          (see chapter 4) the Department of Commerce, with the 
          concurrence of the U.S. Department of Justice, can issue an 
          export trade certificate of review that provides certain 
          limited immunity from the federal and state antitrust laws.
          
          Although the great majority of international business 
          transactions do not pose antitrust problems, antitrust 
          issues may be raised in various types of transactions, 
          among which are
          
          *    overseas distribution arrangements;
          
          *    overseas joint ventures for research, manufacturing, 
               construction, and distribution;
          
          *    patent, trademark, copyright, and know-how licenses;
          
          *    mergers and acquisitions involving foreign firms; and
          
          *    raw material procurement agreements and concessions.
          
          The potential U.S. and foreign antitrust problems posed by 
          such transactions are discussed in greater detail in 
          chapter 16. Where potential U.S. or foreign antitrust 
          issues are raised, it is advisable to obtain the advice and 
          assistance of qualified antitrust counsel.
          
          For particular transactions that pose difficult antitrust 
          issues, and for which an export trade certificate of review 
          is not desired, the Antitrust Division of the Department of 
          Justice can be asked to state its enforcement views in a 
          business review letter. The business review procedure is 
          initiated by writing a letter to the Antitrust Division 
          describing the particular business transaction that is 
          contemplated and requesting the department's views on the 
          antitrust legality of the transaction.
          
          Certain aspects of the federal antitrust laws and the 
          Antitrust Division's enforcement policies regarding 
          international transactions are explored in the Department 
          of Justice's Antitrust Enforcement Guidelines for 
          International Operations (1988).
          
          FOREIGN CORRUPT PRACTICES ACT (FCPA)
          
          The FCPA makes it unlawful for any person or firm (as well 
          as persons acting on behalf of the firm) to offer, pay, or 
          promise to pay (or to authorize any such payment or 
          promise) money or anything of value to any foreign official 
          (or foreign political party or candidate for foreign 
          political office) for the purpose of obtaining or retaining 
          business. It is also unlawful to make a payment to any 
          person while knowing that all or a portion of the payment 
          will be offered, given, or promised directly or indirectly, 
          to any foreign official (or foreign political party, 
          candidate, or official) for the purposes of assisting the 
          person or firm in obtaining or retaining business. Knowing 
          includes the concepts of conscious disregard and willful 
          blindness. The FCPA also contains provisions applicable to 
          publicly held companies concerning financial recordkeeping 
          and internal accounting controls.
          
          The Department of Justice enforces the criminal provisions 
          of the FCPA and the civil provisions against "domestic 
          concerns." The Securities and Exchange Commission (SEC) is 
          responsible for civil enforcement against "issuers." The 
          Department of Commerce supplies general information to U.S. 
          exporters who have questions about the FCPA and about 
          international developments concerning the FCPA.
          
          There is an exception to the antibribery provisions for 
          "facilitating payments for routine governmental action." 
          Actions "similar" to the examples listed in the statute are 
          also covered by this exception. A person charged with 
          violating the FCPA's antibribery provisions may assert as a 
          defense that the payment was lawful under the written laws 
          and regulations of the foreign country or that the payment 
          was associated with demonstrating a product or performing a 
          contractual obligation.
          
          Firms are subject to a fine of up to $2 million. Officers, 
          directors, employees, agents, and stockholders are subject 
          to a fine of up to $100,000 and imprisonment for up to five 
          years. The U.S. attorney general can bring a civil action 
          against a domestic concern (and the SEC against an issuer) 
          for a fine of up to $10,000 as well as against any officer, 
          director, employee, or agent of a firm or stockholder 
          acting on behalf of the firm, who willfully violates the 
          antibribery provisions.  Under federal criminal law other 
          than the FCPA, individuals may be fined up to $250,000 or 
          up to twice the amount of the gross gain or gross loss if 
          the defendant derives pecuniary gain from the offense or 
          causes a pecuniary loss to another person.
          
          The attorney general (and the SEC, where appropriate) may 
          also bring a civil action to enjoin any act or practice 
          whenever it appears that the person or firm (or a person 
          acting on behalf of a firm) is in violation or about to be 
          in violation of the antibribery provisions.
          
          A person or firm found in violation of the FCPA may be 
          barred from doing business with the federal government. 
          Indictment alone can lead to a suspension of the right to 
          do business with the government.
          
          Conduct that constitutes a violation of the FCPA may give 
          rise to a private cause of action under the 
          Racketeer-Influenced and Corrupt Organizations Act.
          
          The Department of Justice is establishing an FCPA opinion 
          procedure to replace the current FCPA review procedure. The 
          details of the opinion procedure will be provided in 28 CFR 
          Part 77 (1991). Under the opinion procedure, any party will 
          be able to request a statement of the Department of 
          Justice's present enforcement intentions under the 
          antibribery provisions of the FCPA regarding any proposed 
          business conduct. Conduct for which Justice has issued an 
          opinion stating that the conduct conforms with current 
          enforcement policy will be entitled in any subsequent 
          enforcement action to a presumption of conformity with the 
          FCPA.
          
          FOOD AND DRUG ADMINISTRATION (FDA) AND ENVIRONMENTAL 
          PROTECTION AGENCY (EPA) RESTRICTIONS
          
          In addition to the various export regulations that have 
          been discussed, rules and regulations enforced by FDA and 
          EPA also affect a limited number of exporters.
          
          Food and Drug Administration
          
          FDA enforces U.S. laws intended to assure the consumer that 
          foods are pure and wholesome, that drugs and devices are 
          safe and effective, and that cosmetics are safe. FDA has 
          promulgated a wide range of regulations to enforce these 
          goals. Exporters of products covered by FDA's regulations 
          are affected as follows:
          
          *    If the item is intended for export only, meets the 
               specifications of the foreign purchaser, is not in 
               conflict with the laws of the country to which it is 
               to be shipped, and is properly labeled, it is exempt 
               from the adulteration and misbranding provisions of 
               the Federal Food, Drug, and Cosmetic Act (see 801(e)). 
               This exemption does not apply to "new drugs" or "new 
               animal drugs" that have not been approved as safe and 
               effective or to certain devices.
          
          *    If the exporter thinks the export product may be 
               covered by FDA, it is important to contact the nearest 
               FDA field office or the Public Health Service, Food 
               and Drug Administration, 5600 Fishers Lane, Rockville, 
               MD 20857.
          
          Environmental Protection Agency
          
          EPA's involvement in exports is limited to hazardous waste, 
          pesticides, and toxic chemicals. Although EPA has no 
          authority to prohibit the export of these substances, it 
          has an established notification system designed to inform 
          receiving foreign governments that materials of possible 
          human health or environmental concern will be entering 
          their country.
          
          Under the Resource Conservation and Recovery Act, 
          generators of waste who wish to export waste considered 
          hazardous are required to notify EPA before shipping a 
          given hazardous waste to a given foreign consignee.  EPA 
          then notifies the government of the foreign consignee. 
          Export cannot occur until written approval is received from 
          the foreign government.
          
          As for pesticides and other toxic chemicals, neither the 
          Federal Insecticide, Fungicide, and Rodenticide Act nor the 
          Toxic Substances Control Act requires exporters of banned 
          or severely restricted chemicals to obtain written consent 
          before shipping. However, exporters of unregistered 
          pesticides or other chemicals subject to regulatory control 
          actions must comply with certain notification requirements.
          
          An exporter of hazardous waste, unregistered pesticides, or 
          toxic chemicals should contact the Office of International 
          Activities, U.S.  Environmental Protection Agency, 401 M 
          Street, S.W., Washington, DC 20460; telephone 202-382-4880.
          
          IMPORT REGULATIONS OF FOREIGN GOVERNMENTS
          
          Import documentation requirements and other regulations 
          imposed by foreign governments vary from country to 
          country. It is vital that exporters be aware of the 
          regulations that apply to their own operations and 
          transactions. Many governments, for instance, require 
          consular invoices, certificates of inspection, health 
          certification, and various other documents. 
          
          CUSTOMS BENEFITS FOR EXPORTERS
          
          Drawback of customs duties
          
          Drawback is a form of tax relief in which a lawfully 
          collected customs duty is refunded or remitted wholly or in 
          part because of the particular use made of the commodity on 
          which the duty was collected. U.S. firms that import 
          materials or components that they process or assemble for 
          reexport may obtain drawback refunds of all duties paid on 
          the imported merchandise, less 1 percent to cover customs 
          costs. This practice encourages U.S. exporters by 
          permitting them to compete in foreign markets without the 
          handicap of including in their sales prices the duties paid 
          on imported components.
          
          The Trade and Tariff Act of 1984 revised and expanded 
          drawbacks.  Regulations implementing the act have been 
          promulgated in 19 CFR Part 191. Under existing regulations 
          several types of drawback have been authorized, but only 
          three are of interest to most manufacturers:
          
          1.   If articles manufactured in the United States with the 
               use of imported merchandise are exported, then the 
               duties paid on the imported merchandise that was used 
               may be refunded as drawback (less 1 percent).
          
          2.   If both imported merchandise and domestic merchandise 
               of the same kind and quality are used to manufacture 
               articles, some of which are exported, then duties that 
               were paid on the imported merchandise are refundable 
               as drawback, regardless of whether that merchandise 
               was used in the exported articles.
          
          3.   If articles of foreign origin imported for consumption 
               after December 28, 1980, are exported from the United 
               States or are destroyed under the supervision of U.S. 
               Customs within three years of the date of importation, 
               in the same condition as when imported and without 
               being "used" in the United States, then duties that 
               were paid on the imported merchandise (less 1 percent) 
               are refundable as drawback. Incidental operations on 
               the merchandise (such as testing, cleaning, repacking, 
               or inspection) are not considered to be "uses" of the 
               article.
          
          To obtain drawback, the U.S. firm must file a proposal with 
          a regional commissioner of customs (for the first type of 
          drawback) or with the Entry Rulings Branch, U.S. Customs 
          Headquarters, at the address in the following paragraph 
          (for other types of drawback). These offices may also 
          provide a model drawback proposal for the U.S. company.
          
          Drawback claimants must establish that the articles on 
          which drawback is being claimed were exported within five 
          years after the merchandise in question was imported. Once 
          the request for drawback is approved, the proposal and 
          approval together constitute the manufacturer's drawback 
          rate. For more information contact Entry Rulings Branch, 
          Room 2107, U.S.  Customs Headquarters, 1301 Constitution 
          Avenue, N.W., Washington, DC 20229; telephone 202-566-5856.
          
          U.S. foreign-trade zones
          
          Exporters should also consider the customs privileges of 
          U.S.  foreign-trade zones. These zones are domestic U.S. 
          sites that are considered outside U.S. customs territory 
          and are available for activities that might otherwise be 
          carried on overseas for customs reasons. For export 
          operations, the zones provide accelerated export status for 
          purposes of excise tax rebates and customs drawback. For 
          import and reexport activities, no customs duties, federal 
          excise taxes, or state or local ad valorem taxes are 
          charged on foreign goods moved into zones unless and until 
          the goods, or products made from them, are moved into 
          customs territory. This means that the use of zones can be 
          profitable for operations involving foreign dutiable 
          materials and components being assembled or produced here 
          for reexport. Also, no quota restrictions ordinarily apply.
          
          There are now 180 approved foreign-trade zones in port 
          communities throughout the United States. Associated with 
          these projects are some 200 subzones. These facilities are 
          available for operations involving storage, repacking, 
          inspection, exhibition, assembly, manufacturing, and other 
          processing.
          
          More than 2,100 business firms used foreign-trade zones in 
          fiscal year 1990. The value of merchandise moved to and 
          from the zones during that year exceeded $80 billion. 
          Export shipments from zones and subzones amounted to some 
          $12 billion.
          
          Information about the zones is available from the zone 
          manager, from local Commerce district offices, or from the 
          Executive Secretary, Foreign-Trade Zones Board, 
          International Trade Administration, U.S.  Department of 
          Commerce, Washington, DC 20230.
          
          Foreign free port and free trade zones
          
          To encourage and facilitate international trade, more than 
          300 free ports, free trade zones, and similar 
          customs-privileged facilities are now in operation in some 
          75 foreign countries, usually in or near seaports or 
          airports. Many U.S. manufacturers and their distributors 
          use free ports or free trade zones for receiving shipments 
          of goods that are reshipped in smaller lots to customers 
          throughout the surrounding areas.  Information about free 
          trade zones, free ports, and similar facilities abroad may 
          be found in Tax-Free Trade Zones of the World, published by 
          Matthew Bender & Co., International Division, 1275 
          Broadway, Albany, NY 12204; telephone 800-424-4200.
          
          Bonded warehouses
          
          Bonded warehouses can also be found in many locations. 
          Here, goods can be warehoused without duties being 
          assessed. Once goods are released, they are subject to 
          duties.
          
          FOREIGN SALES CORPORATIONS
          
          One of the most important steps a U.S. exporter can take to 
          reduce federal income tax on export-related income is to 
          set up a foreign sales corporation (FSC). This tax 
          incentive for U.S. exporters replaced the domestic 
          international sales corporation (DISC), except the interest 
          charge DISC. While the interest charge DISC allows 
          exporters to defer paying taxes on export sales, the tax 
          incentive provided by the FSC legislation is in the form of 
          a permanent exemption from federal income tax for a portion 
          of the export income attributable to the offshore 
          activities of FSCs (26 U.S.C., sections 921-927). The tax 
          exemption can be as great as 15 percent on gross income 
          from exporting, and the expenses can be kept low through 
          the use of intermediaries who are familiar with and able to 
          carry out the formal requirements. A firm that is exporting 
          or thinking of exporting can optimize available tax 
          benefits with proper planning, evaluation, and assistance 
          from an accountant or lawyer.
          
          An FSC is a corporation set up in certain foreign countries 
          or in U.S.  possessions (other than Puerto Rico) to obtain 
          a corporate tax exemption on a portion of its earnings 
          generated by the sale or lease of export property and the 
          performance of some services. A corporation initially 
          qualifies as an FSC by meeting certain basic formation 
          tests. An FSC (unless it is a small FSC) must also meet 
          several foreign management tests throughout the year. If it 
          complies with those requirements, the FSC is entitled to an 
          exemption on qualified export transactions in which it 
          performs the required foreign economic processes.
          
          FSCs can be formed by manufacturers, nonmanufacturers, or 
          groups of exporters, such as export trading companies. An 
          FSC can function as a principal, buying and selling for its 
          own account, or as a commission agent. It can be related to 
          a manufacturing parent or it can be an independent merchant 
          or broker.
          
          An FSC must be incorporated and have its main office (a 
          shared office is acceptable) in the U.S. Virgin Islands, 
          American Samoa, Guam, the Northern Mariana Islands, or a 
          qualified foreign country. In general, a firm must file for 
          incorporation by following the normal procedures of the 
          host nation or U.S. possession. Taxes paid by an FSC to a 
          foreign country do not qualify for the foreign U.S. tax 
          credit. Some nations, however, offer tax incentives to 
          attract FSCs; to qualify, a company must identify itself as 
          an FSC to the host government. Consult the government tax 
          authorities in the country or U.S. possession of interest 
          for specific information.
          
          A country qualifies as an FSC host if it has an exchange of 
          information agreement with the United States approved by 
          the U.S. Department of the Treasury. As of February 20, 
          1991, the qualified countries were Australia, Austria, 
          Barbados, Belgium, Bermuda, Canada, Costa Rica, Cyprus, 
          Denmark, Dominican Republic, Egypt, Finland, France, 
          Germany, Grenada, Iceland, Ireland, Jamaica, Korea, Malta, 
          Mexico, Morocco, Netherlands, New Zealand, Norway, 
          Pakistan, Philippines, Sweden, and Trinidad and Tobago. 
          Since the Internal Revenue Service (IRS) does not allow 
          foreign tax credits for foreign taxes imposed on the FSC's 
          qualified income, it is generally advantageous to locate an 
          FSC only in a country where local income taxes and 
          withholding taxes are minimized.  Most FSCs are 
          incorporated in the U.S. Virgin Islands or Guam.
          
          The FSC must have at least one director who is not a U.S. 
          resident, must keep one set of its books of account 
          (including copies or summaries of invoices) at its main 
          offshore office, cannot have more than 25 shareholders, 
          cannot have any preferred stock, and must file an election 
          to become an FSC with the IRS. Also, a group may not own 
          both an FSC and an interest charge DISC.
          
          The portion of the FSC gross income from exporting that is 
          exempt from U.S. corporate taxation is 32 percent for a 
          corporate-held FSC if it buys from independent suppliers or 
          contracts with related suppliers at an "arm's-length" price 
          _ a price equivalent to that which would have been paid by 
          an unrelated purchaser to an unrelated seller. An FSC 
          supplied by a related entity can also use the special 
          administrative pricing rules to compute its tax exemption. 
          Although an FSC does not have to use the two special 
          administrative pricing rules, these rules may provide 
          additional tax savings for certain FSCs.
          
          Small FSCs and interest charge DISCs are designed to give 
          export incentives to smaller businesses. The tax benefits 
          of a small FSC or an interest charge DISC are limited by 
          ceilings on the amount of gross income that is eligible for 
          the benefits.
          
          The small FSC is generally the same as an FSC, except that 
          a small FSC must file an election with the IRS designating 
          itself as a small FSC -- which means it does not have to 
          meet foreign management or foreign economic process 
          requirements. A small FSC tax exemption is limited to the 
          income generated by $5 million or less in gross export 
          revenues.
          
          An exporter can still set up a DISC in the form of an 
          interest charge DISC to defer the imposition of taxes for 
          up to $10 million in export sales. A corporate shareholder 
          of an interest charge DISC may defer the imposition of 
          taxes on approximately 94 percent of its income up to the 
          $10 million ceiling if the income is reinvested by the DISC 
          in qualified export assets. An individual who is the sole 
          shareholder of an interest charge DISC can defer 100 
          percent of the DISC income up to the $10 million ceiling. 
          An interest charge DISC must meet the following 
          requirements: the taxpayer must make a new election; the 
          tax year of the new DISC must match the tax year of its 
          majority stockholder; and the DISC shareholders must pay 
          interest annually at U.S. Treasury bill rates on their 
          proportionate share of the accumulated taxes deferred.
          
          A shared FSC is an FSC that is shared by 25 or fewer 
          unrelated exporter-shareholders to reduce the costs while 
          obtaining the full tax benefit of an FSC. Each 
          exporter-shareholder owns a separate class of stock and 
          each runs its own business as usual. Typically, exporters 
          pay a commission on export sales to the FSC, which 
          distributes the commission back to the exporter.
          
          States, regional authorities, trade associations, or 
          private businesses can sponsor a shared FSC for their 
          state's companies, their association's members, or their 
          business clients or customers, or for U.S. companies in 
          general. A shared FSC is a means of sharing the cost of the 
          FSC. However, the benefits and proprietary information are 
          not shared. The sponsor and the other exporter-shareholders 
          do not participate in the exporter's profits, do not 
          participate in the exporter's tax benefits, and are not a 
          risk for another exporter's debts.
          
          For more information about FSCs, U.S. companies may contact 
          the assistant secretary for trade development (telephone 
          202-377-1461); the Office of the Chief Counsel for 
          International Commerce, U.S. Department of Commerce 
          (202-377-0937); or a local office of the IRS.
          
          COMMERCE ASSISTANCE RELATED TO MULTILATERAL TRADE 
          NEGOTIATIONS
          
          The Tokyo Round Trade Agreements, completed in 1979 under 
          General Agreement on Tariff and Trade (GATT) auspices, 
          produced significant tariff reductions and established 
          several nontariff trade barrier (NTB) agreements or codes. 
          The codes currently in effect address the following NTBs:
          
          *    Countervailing measures to offset trade-distortive 
               subsidies.
          
          *    Antidumping duties used to counter injurious price 
               discrimination.
          
          *    Discriminatory government procurement.
          
          *    Technical barriers to trade (e.g., product standards).
          
          *    Uniform and equitable customs valuation for duty 
               purposes.
          
          *    Import licensing procedures.
          
          *    Trade in civil aircraft (both tariff and nontariff 
               issues).
          
          An important benefit for U.S. exporters stemming from the 
          Tokyo Round is the GATT Government Procurement Agreement 
          opening many foreign government procurement orders to U.S. 
          suppliers. Commerce's TOP has been designated the primary 
          clearing point for tenders generated under this agreement. 
          Information on the TOP can be obtained by contacting the 
          local Commerce district office or Trade Opportunity 
          Program, U.S.  Department of Commerce, Export Promotion 
          Services, Washington, DC 20230; telephone 202-377-4203.
          
          Users can also access TOP leads by tapping in directly to 
          the EBB, a data base service of the Department of Commerce. 
          Subscriptions to this service can be obtained by mail from 
          U.S. Department of Commerce, National Technical Information 
          Service, 5285 Port Royal Road, Springfield, VA 22161.
          
          Other data base information on foreign tenders can be 
          obtained from the Commerce Business Daily, available from 
          the U.S. Government Printing Office, Washington, DC 20402; 
          telephone 202-783-3238. Brief summaries of leads also 
          appear in the Journal of Commerce.
          
          In 1991, negotiators were engaged in achieving a successful 
          conclusion of the Uruguay Round of multilateral trade 
          negotiations. U.S. objectives included (1) a substantial 
          market access agreement covering tariffs and nontariff 
          measures and (2) improvement in GATT to cover trade in such 
          new areas as services, intellectual property rights, and 
          trade-related investment measures. General information on 
          the Uruguay Round can be obtained from the Office of 
          Multilateral Affairs, H3513, U.S. Department of 
          Commerce/ITA, Washington, DC 20230.
          
          BILATERAL TRADE AGREEMENTS
          
          The United States has concluded bilateral trade agreements 
          with several Eastern European countries, the Soviet Union, 
          and Mongolia. These congressionally approved agreements are 
          required by the Trade Act of 1974 for these countries to 
          receive most-favored nation (MFN) treatment.  In addition 
          to an article providing for reciprocal MFN status, the 
          agreements contain guarantees on intellectual property 
          rights and business facilitation. Such guarantees as the 
          right to establish commercial representation offices in a 
          country by no more than a simple registration process, the 
          right to serve as and hire agents, the right to deal 
          directly with customers and end users of products and 
          services, and the right to hire employees of a company's 
          choice are all included in the agreements. The intellectual 
          property rights provisions include protection for computer 
          software and trade secrets. Trade agreements are in effect 
          with Hungary, Czechoslovakia, and Romania (the MFN 
          provisions of this agreement have been suspended). As of 
          August 14, 1991, the trade agreements with the Soviet 
          Union, Mongolia, and Bulgaria have been signed and 
          submitted to the Congress for approval.
          
          INTELLECTUAL PROPERTY RIGHTS CONSIDERATIONS
          
          The United States provides a wide range of protection for 
          intellectual property (i.e., patents, trademarks, service 
          marks, copyrights, trade secrets, and semiconductor mask 
          works). Many businesses -- particularly high-technology 
          firms, the publishing industry, chemical and pharmaceutical 
          firms, the recording industry, and computer software 
          companies -- depend heavily on the protection afforded 
          their creative products and processes.
          
          In the United States, there are five major forms of 
          intellectual property protection. A U.S. patent confers on 
          its owner the exclusive right for 17 years from the date 
          the patent is granted to manufacture, use, and sell the 
          patented product or process within the United States.  The 
          United States and the Philippines are the only two 
          countries that award patents on a first-to-invent basis; 
          all other countries award patents to the first to file a 
          patent application. As of November 16, 1989, a trademark or 
          service mark registered with the U.S. Patent and Trademark 
          Office remains in force for 10 years from the date of 
          registration and may be renewed for successive periods of 
          10 years, provided the mark continues to be used in 
          interstate commerce and has not been previously canceled or 
          surrendered.
          
          A work created (fixed in tangible form for the first time) 
          in the United States on or after January 1, 1978, is 
          automatically protected by a U.S.  copyright from the 
          moment of its creation. Such a copyright, as a general 
          rule, has a term that endures for the author's life plus an 
          additional 50 years after the author's death. In the case 
          of works made for hire and for anonymous and pseudonymous 
          works (unless the author's identity is revealed in records 
          of the U.S. Copyright Office of the Library of Congress), 
          the duration of the copyright is 75 years from publication 
          or 100 years from creation, whichever is shorter. Other, 
          more detailed provisions of the Copyright Act of 1976 
          govern the term of works created before January 1, 1978.
          
          Trade secrets are protected by state unfair competition and 
          contract law. Unlike a U.S. patent, a trade secret does not 
          entitle its owner to a government-sanctioned monopoly of 
          the discovered technology for a particular length of time. 
          Nevertheless, trade secrets can be a valuable and 
          marketable form of technology. Trade secrets are typically 
          protected by confidentiality agreements between a firm and 
          its employees and by trade secret licensing agreement 
          provisions that prohibit disclosures of the trade secret by 
          the licensee or its employees.
          
          Semiconductor mask work registrations protect the mask 
          works embodied in semiconductor chip products. In many 
          other countries, mask works are referred to as integrated 
          circuit layout designs. The Semiconductor Chip Protection 
          Act of 1984 provides the owner of a mask work with the 
          exclusive right to reproduce, import, and distribute such 
          mask works for a period of 10 years from the earlier of two 
          dates: the date on which the mask work is registered with 
          the U.S. Copyright Office or the date on which the mask 
          work is first commercially exploited anywhere in the world.
          
          The rights granted under U.S. patent, trademark, or 
          copyright law can be enforced only in the United States, 
          its territories, and its possessions; they confer no 
          protection in a foreign country. The protection available 
          in each country depends on that country's national laws, 
          administrative practices, and treaty obligations. The 
          relevant international treaties set certain minimum 
          standards for protection, but individual country laws and 
          practices can and do differ significantly.
          
          To secure patent and trademark right outside the United 
          States a company must apply for a patent or register a 
          trademark on a country-by-country basis. However, U.S. 
          individuals and corporations are entitled to a "right of 
          priority" and to "national treatment" in the 100 countries 
          that, along with the United States, are parties to the 
          Paris Convention for the Protection of Industrial Property.
          
          The right of priority gives an inventor 12 months from the 
          date of the first application filed in a Paris Convention 
          country (6 months for a trademark) in which to file in 
          other Paris Convention countries _ to relieve companies of 
          the burden of filing applications in many countries 
          simultaneously. A later treaty to which the United States 
          adheres, the Patent Cooperation Treaty, allows companies to 
          file an international application for protection in other 
          member states. Individual national applications, however, 
          must follow within 18 months.
          
          National treatment means that a member country will not 
          discriminate against foreigners in granting patent or 
          trademark protection. Rights conferred may be greater or 
          less than provided under U.S. law, but they must be the 
          same as the country provides its own nationals.
          
          The level and scope of copyright protection available 
          within a country also depends on that country's domestic 
          laws and treaty obligations. In most countries, the place 
          of first publication is an important criterion for 
          determining whether foreign works are eligible for 
          copyright protection. Works first published in the United 
          States on or after March 1, 1989 _ the date on which U.S. 
          adherence to the Berne Convention for the Protection of 
          Literary and Artistic Works became effective _ are, with 
          few exceptions, automatically protected in the more than 80 
          countries that comprise the Berne Union. Exporters of goods 
          embodying works protected by copyright in the United States 
          should find out how individual Berne Union countries deal 
          with older U.S. works, including those first published (but 
          not first or simultaneously published in a Berne Union 
          country) before March 1, 1989.
          
          The United States maintains copyright relations with a 
          number of countries under a second international agreement 
          called the Universal Copyright Convention (UCC). UCC 
          countries that do not also adhere to Berne often require 
          compliance with certain formalities to maintain copyright 
          protection. Those formalities can be either or both of the 
          following: (1) registration and (2) the requirement that 
          published copies of a work bear copyright notice, the name 
          of the author, and the date of first publication. The 
          United States has bilateral copyright agreements with a 
          number of countries, and the laws of these countries may or 
          may not be consistent with either of the copyright 
          conventions.  Before first publication of a work anywhere, 
          it is advisable to investigate the scope of and 
          requirements for maintaining copyright protection for those 
          countries in which copyright protection is desired.
          
          Intellectual property rights owners should be aware that 
          after valuable intellectual property rights have been 
          secured in foreign markets, enforcement must be 
          accomplished through local law. As a general matter, 
          intellectual property rights are private rights to be 
          enforced by the rights owner. Ease of enforcement varies 
          from country to country and depends on such factors as the 
          attitude of local officials, substantive requirements of 
          the law, and court procedures. U.S. law affords a civil 
          remedy for infringement (with money damages to a successful 
          plaintiff) and criminal penalties (including fines and jail 
          terms) for more serious offenses. The availability of 
          criminal penalties for infringement, either as the 
          exclusive remedy or in addition to private suits, also 
          varies among countries.
          
          A number of countries are parties to only some, or even 
          none, of the treaties that have been discussed here. 
          Therefore, would-be U.S.  exporters should carefully 
          evaluate the intellectual property laws of their potential 
          foreign markets, as well as applicable multilateral and 
          bilateral treaties and agreements (including bilateral 
          trade agreements), before making a decision to do business 
          there. The intellectual property considerations that arise 
          can be quite complex and, if possible, should be explored 
          in detail with an attorney.
          
          In summary, U.S. exporters with intellectual property 
          concerns should consider taking the following steps:
          
          1.   Obtaining protection under all applicable U.S. laws 
               for their inventions, trademarks, service marks, 
               copyrights, and semiconductor mask works.
          
          2.   Researching the intellectual property laws of 
               countries where they may conduct business. The US&FCS 
               has information about intellectual property laws and 
               practices of particular countries, although it does 
               not provide legal advice.
          
          3.   Securing the services of competent local counsel to 
               file appropriate patent, trademark, or copyright 
               applications within priority periods.
          
          4.   Adequately protecting their trade secrets through 
               appropriate confidentiality provisions in employment, 
               licensing, marketing, distribution, and joint venture 
               agreements.
          
          ARBITRATION OF DISPUTES IN INTERNATIONAL TRANSACTIONS
          
          The parties to a commercial transaction may provide in 
          their contract that any disputes over interpretation or 
          performance of the agreement will be resolved through 
          arbitration. In the domestic context, arbitration may be 
          appealing for a variety of reasons. Frequently cited 
          advantages over conventional courtroom litigation include 
          potential savings in time and expense, confidentiality of 
          the proceedings, and expertise of the arbitrators.
          
          For export transactions, in which the parties to the 
          agreement are from different countries, additional 
          important advantages are neutrality (international 
          arbitration allows each party to avoid the domestic courts 
          of the other should a dispute arise) and ease of 
          enforcement (foreign arbitral awards can be easier to 
          enforce than foreign court decisions).
          
          In an agreement to arbitrate (usually just inserted as a 
          term in the contract governing the transaction as a whole), 
          the parties also have broad power to agree on many 
          significant aspects of the arbitration. The arbitration 
          clause may do the following:
          
          *    Specify the location (a "neutral site") where the 
               arbitration will be conducted, although care must be 
               taken to select a country that has adopted the UN 
               Convention on the Recognition and Enforcement of 
               Foreign Awards (or another convention providing for 
               the enforcement of arbitral awards).
          
          *    Establish the rules that will govern the arbitration, 
               usually by incorporating a set of existing arbitration 
               rules such as the UN Commission on International Trade 
               Law (UNCITRAL) Model Rules.
          
          *    Appoint an arbitration institute to administer the 
               arbitration. The International Chamber of Commerce 
               based in Paris, the American Arbitration Association 
               in New York, and the Arbitration Institute of the 
               Stockholm Chamber of Commerce in Sweden are three such 
               prominent institutions.
          
          *    Choose the law that will govern procedural issues or 
               the merits of the dispute, for example, the law of the 
               State of New York.
          
          *    Place certain limitations on the selection of 
               arbitrators, for example, by agreeing to exclude 
               nationals of the parties to the dispute or by 
               requiring certain qualifications or expertise.
          
          *    Designate the language in which the arbitral 
               proceedings will be conducted.
          
          For international arbitration to work effectively, the 
          national courts in the countries of both parties to the 
          dispute must recognize and support arbitration as a 
          legitimate alternative means for resolving disputes. This 
          support is particularly crucial at two stages in the 
          arbitration process. First, should one party attempt to 
          avoid arbitration after a dispute has arisen, the other 
          party must be able to rely on the judicial system in either 
          country to enforce the agreement to arbitrate by compelling 
          arbitration. Second, the party that wins in the arbitration 
          proceeding must be confident that the national courts will 
          enforce the decision of the arbitrators. This will ensure 
          that the arbitration process is not ultimately frustrated 
          at the enforcement stage if the losing party refuses to pay 
          or otherwise satisfy the arbitral award.
          
          The strong policy of U.S. federal law is to approve and 
          support resolution of disputes by arbitration. Through the 
          UN Convention on the Recognition and Enforcement of Foreign 
          Arbitral Awards (popularly known as the New York 
          Convention), which the United States ratified in 1970, more 
          than 80 countries have undertaken international legal 
          obligations to recognize and enforce arbitral awards. While 
          several other arbitration treaties have been concluded, the 
          New York Convention is by far the most important 
          international agreement on commercial arbitration and may 
          be credited for much of the explosive growth of arbitration 
          of international disputes in recent decades.
          
          Providing for arbitration of disputes makes good sense in 
          many international commercial transactions. Because of the 
          complexity of the subject, however, legal advice should be 
          obtained for specific export transactions.
          
          THE UNITED NATION SALES CONVENTION
          
          The UN Convention on Contracts for the International Sale 
          of Goods (CISG) became the law of the United States on 
          January 1, 1988. It establishes uniform legal rules to 
          govern the formation of international sales contracts and 
          the rights and obligations of the buyer and seller.  The 
          CISG is expected to facilitate and stimulate international 
          trade.
          
          The CISG applies automatically to all contracts for the 
          sale of goods between traders from two different countries 
          that have both ratified the CISG. This automatic 
          application takes place unless the parties to the contract 
          expressly exclude all or part of the CISG or expressly 
          stipulate to law other than the CISG. Parties can also 
          expressly choose to apply the CISG when it would not 
          automatically apply.
          
          At present, the following nations apply the CISG: 
          Argentina, Australia, Austria, Bulgaria, Byelorussian 
          Socialist Republic, Chile, China, Czechoslovakia, Denmark, 
          Egypt, Finland, France, Germany, Hungary, Iraq, Italy, 
          Lesotho, Mexico, Norway, Spain, Sweden, Switzerland, Syria, 
          Ukrainian Soviet Socialist Republic, USSR, United States, 
          Yugoslavia, and Zambia. The CISG will enter into force in 
          the Netherlands on January 1, 1992, and in Guinea on 
          February 1, 1992.
          
          The United States made a reservation, the effect of which 
          is that the CISG will apply only when the other party to 
          the transaction also has its place of business in a country 
          that applies the CISG.
          
          Convention provisions
          
          The provisions and scope of the CISG are similar to Article 
          2 of the Uniform Commercial Code (effective in the United 
          States except Louisiana). The CISG comprises four parts:
          
          *    Part I, Sphere of Application and General Provisions 
               (Articles 1-13), provides that the CISG covers the 
               international sale of most commercial goods.
          
          *    Part II, Formation of the Contract (Articles 14-24), 
               provides rules on offer and acceptance.
          
          *    Part III, Sale of Goods (Articles 25-88), covers 
               obligations and remedies of the seller and buyer and 
               rules governing the passing of risk and damages.
          
          *    Part IV, Final Provisions (Articles 89-101), covers 
               the right of a country to disclaim certain parts of 
               the convention.
          
          Applying (or excluding) the CISG
          
          U.S. businesses can avoid the difficulties of reaching 
          agreement with foreign parties on choice-of-law issues 
          because the CISG text is available as a compromise. Using 
          the CISG may decrease the time and legal costs otherwise 
          involved in research of different unfamiliar foreign laws. 
          Further, the CISG may reduce the problems of proof and 
          foreign law in domestic and foreign courts.
          
          Application of the CISG may especially make sense for 
          smaller firms and for American firms contracting with 
          companies in countries where the legal systems are obscure, 
          unfamiliar, or not suited for international sales 
          transactions of goods. However, some larger, more 
          experienced firms may want to continue their current 
          practices, at least with regard to parties with whom they 
          have been doing business regularly.
          
          When a firm chooses to exclude the CISG, it is not 
          sufficient to simply say "the laws of New York apply," 
          because the CISG would be the law of the State of New York 
          under certain circumstances. Rather, one would say "the 
          provisions of the Uniform Commercial Code as adopted by the 
          State of New York, and not the UN Convention on Contracts 
          for the International Sale of Goods, apply."
          
          After it is determined whether or not the CISG governs a 
          particular transaction, the related documentation should be 
          reviewed to ensure consistency with the CISG or other 
          governing law. For agreements about to expire, companies 
          should make sure renewals take into account the 
          applicability (or nonapplicability) of the CISG.
          
          The CISG can be found in the Federal Register (Vol. 52, p. 
          6262, 1987) along with a notice by the U.S. Department of 
          State, and in the pocket part to 15 U.S.C.A. app. at 29. To 
          obtain an up-to-date listing of ratifying or acceding 
          countries and their reservations call the UN at 
          212-963-3918 or 212-963-7958. For further information 
          contact the Office of the Assistant Legal Adviser for 
          Private International Law, U.S. Department of State 
          (202-653-9851), or the Office of the Chief Counsel for 
          International Commerce, U.S. Department of Commerce 
          (202-377-0937).
          
          
