Anyone forming contracts with Japanese businesses or consumers beware: The Civil Code in Japan is likely to face the largest reforms since it became effective in 1898. On April 14, 2017, sweeping reforms to the Civil Code were approved by the Japanese Parliament’s Lower House. Although they must still be approved by the Upper House, and they might change in the process, pundits expect approval without change.
Many people have heard about the lawsuit in which a consumer won a substantial verdict against McDonalds over a burn from a cup of hot coffee. Last year, General Motors faced claims due to a faulty ignition switch that shut off the engine during driving, disabled power steering and power brakes, and even prevented airbags from inflating. Toyota faced similar problems in the past with claims of sudden acceleration in certain car models. Tobacco companies like Philip Morris faced lawsuits over cigarettes and many medical device companies have faced serious claims that their products harmed the very people they had aimed to help. Products liability cases affecting consumers tend to make headlines. Defending companies often take a hit to their reputation as well as their bottom line.
Our next installment of GSB’s Resource for Doing Business in the U.S. introduces products liability law concepts and explains why negligence or fault may not even matter. Moreover, it’s not just the manufacturer who is at risk; others in the distribution chain can be sued too. With judgements frequently in the millions of dollars, foreign investors in the U.S. must think ahead about ways to mitigate the substantial risks that products liability claims can present. This installment offers a few concrete steps a potentially affected company can take to protect its business and investment.
Imagine that you’ve had great sales of your product in your home country and you attend an international trade show, where a representative of a famous company from the U.S. approaches your booth. Perhaps the rep tells you that there’s nothing like your product available in the U.S. and it’s guaranteed to be a hit. Can they represent you, the rep asks. Suddenly the potential of the U.S. market opens up and you see dollar signs everywhere. But where do you begin?
It all depends on the perceived opportunity. If a foreign enterprise wants to sell its goods in the U.S., it usually starts small and gradually increases its investment. Our next installment of the Resource for Doing Business in the U.S. describes the different approaches a business might take to sell its wares in the U.S.
- We start with the simplest of legal structures (a simple buy and sell transaction)
- We then describe the other types of structures through which such sales might occur, including distribution and sales agency relationships.
- We also highlight some of the most salient considerations to keep in mind at the outset:
- Compliance with customs;
- Anti-dumping considerations; and
- Other federal laws governing goods entering the U.S. market.
However, stay tuned for future installments of our guide, which will address other considerations and legal risks associated with entering the U.S. market to sell goods or services. This will include information on products liability laws, consumer protection laws, environmental protection laws, intellectual property laws, antitrust laws and the like. Today’s installment is merely to provide an initial introduction to the topic of selling goods in the U.S., and to provide our readers with the key points to first consider when exploring the U.S. market.
As The Associated Press recently reported, U.S. alcohol producers are increasingly interested in brewing sake, the traditional Japanese rice wine. Producers believe that there is a strong untapped market among U.S. consumers for premium sake that is accessible, in terms of both price and language.
Read more here: http://time.com/3949183/sake-latest-trend/
This trend could make progress in the state of Washington, which is reported as having the most craft distilleries of any state and continues to have a strong craft brewing industry. The laws and regulations surrounding the interstate transportation of liquor tend to favor homegrown production, and Washington lawmakers have recently altered the state’s laws to make distilling in this state easier and, potentially, more profitable. Cheers to that!
So you want to do business in the United States. One of the very first things to think about is tax planning. It can make the difference between a profitable and unprofitable overseas venture. The level of scrutiny on cross border transactions has increased over the years, as technology has allowed governments to cooperate and collect data more easily. Both your home country’s tax authorities and the U.S. authorities will be interested in how your business is operated, to make sure that they are each getting their fair share of tax from your revenues. You need to make sure you are both complying with applicable laws and structuring your business in the most tax efficient way possible. Tax attorneys can help with that planning. Working with tax advisors in your home country and your accountants, they can help you develop a strategy and implement it.
Our next installment of our resource for doing business in the U.S. therefore seeks to give you some basic information about the different ways that foreign enterprises are taxed in the U.S. This is not aimed at telling you how to structure a particular project, but we hope that an introduction to the concepts will make it easier when you start considering tax planning. It should help you:
- Know what information you’ll need when talking with your tax attorney or other advisor
- Understand the reasons why certain facts and circumstances will likely impact that advisor’s analysis and recommendations.
A link to the installment is available here.
It’s a simple fact: Companies need money to start and to grow. When exploring business in the U.S., financing is always a question. Our next installment of our resource for doing business in the U.S. is therefore about U.S. capital markets. Most clients have heard about the New York Stock Exchange and some have dreamed of “going public” -- hitting it big like the companies in worldwide headlines announcing their initial public offerings. Some imagine themselves ringing the bell above the Exchange floor. Just last month, Alibaba made a big splash announcing its first public offering in the U.S., which may well rank among the largest ever. The extent of regulatory compliance to go public and to maintain one’s status, however, must be factored into any decision to seek funding on the public markets. It takes time and money. Most companies end up electing to stay private and either borrow money or pursue alternative sources of investment. Still, there are state and federal laws that apply. This installment is a simple introduction to the concepts and sources of such law.
We hope you enjoy it!
Canadian citizens already benefit from some of the least bureaucratic processes for admission to the U.S., whether as pleasure or business visitors, or for U.S. employment. Things may get even better, as announced by the Department of Homeland Security (“DHS”) in January.
Normal Procedures for Non-Canadians
For citizens of most countries, admission to the U.S. is usually the second part of a two-step, or even three-step process. For pleasure or business visitors, it includes (a) an application for a visa at a U.S. consulate and (b) admission at a port-of-entry, whether air, sea or land. Those people seeking U.S. employment authorization must endure an additional step in the process before the two noted above; government approval of that employment.
Citizens of 38 countries can eliminate the visa part of the process through the Visa Waiver Program (“VWP,”) but their admission is for 90 days only. (There have been some rumblings in Congress about the lack of security associated with the VWP after the recent terrorist attacks in France. Stay tuned for possible changes.) Admission with an actual, consulate-issued visitor visa is usually for up to six months at a time.
Current Processes for Canadian Citizen Visitors
Not only are visas are not required for Canadian citizen visitors, they can be admitted for six months instead of just 90 days, just like for those people with a visa. This special consideration for Canadian citizens eliminates the time and expense of the visa application process, speeds admission at the ports of entry, and increases the period of admission.
Current Processes for Canadian Citizens Seeking U.S. Employment
Canadian citizens also benefit from Canada-specific procedures involving seeking U.S. employment authorization. Perhaps the most notable is U.S. employment approved through the North America Free Trade Agreement (“NAFTA”). Certain professional employment in the U.S. can be applied for, adjudicated and approved at most U.S. ports of entry and U.S. international airports, as well as most Canadian international airports and even some in Europe, with no complicated application form, for only $50 USD. While mail-in applications are also an option, that format requires a form and increases both the filing fee (to $325) and review time (by at least 1 month unless an additional “premium processing” fee of $1,225 is paid for review within 15 calendar days). Approval of up to three years at a time can be issued repeatedly.
Like with NAFTA filings, Canadian citizens transferred to be employed in the U.S. under the Intracompany Transferee (L) process, never have to use the visa application step, and can eliminate the mail-in application process (by filing directly at many U.S.-Canada ports of entry or most Canadian international airports). Unlike NAFTA cases, the filing fee is the same, regardless of the filing location. A distinct benefit of not filing by mail is that approvals can be for as many as three-years at a time for each filing, whereas for citizens of other countries, approvals can be for as many as three years for the first filing only. The L process includes an option, called the “blanket petition” that can reduce the corporate documentation requirement for certain international businesses.
Most other U.S. employment classifications for Canadian citizens require the same mail-in process as for citizens of other countries, but still eliminate the need for a visa, thereby eliminating the time and expense of a consulate appointment. The January 14 announcement suggests we may soon see some additional benefits for Canadian citizens seeking U.S. employment if they seek admission along the northern border ports of entry.
“Known Employer” Pilot Program-Goal to Aid U.S.-Canada Business Travel
The Department of Homeland Security announced in mid-January that it is considering a “Known Employer” pilot program to streamline adjudication of certain, unspecified types of employment-based immigration benefit requests filed by eligible U.S. employers. This suggests that it may apply to TN, L, H, or other classifications. The department expects to launch the pilot by late 2015 to test a program designed to:
- Make adjudications more efficient and less costly.
- Reduce paperwork and delays for both the department and U.S. employers who seek to employ foreign workers.
A goal of the program would be to expedite or otherwise facilitate legitimate cross-border business travel along the northern border ports of entry. This pilot program is a binational commitment under the NAFTA and the U.S.-Canada Beyond the Border initiative. In particular, one specific commitment made by the U.S. and Canadian governments under the Beyond the Border initiative is to “explore the feasibility of incorporating a trusted employer concept in the processing of business travelers between Canada and the United States.”
We won’t know the specifics of the DHS “Known Employer” Pilot Program for some time, but we can hope that prospective U.S. employers of Canadian citizens may find that the process will become even faster and less burdensome in some ways than currently available by late 2015.
Garvey Schubert Barer is pleased to provide its first installment of an introductory guide for businesses and individuals interested in conducting business in the United States, called “Legal Aspects of Doing Business in the United States of America.” Over the next several months, we’ll be posting additional installments. We will also post translated versions for our Chinese and Japanese friends, clients and colleagues to use as a resource.
Although the guide will only provide an introduction to certain key aspects of doing business in the United States, we hope it will prove helpful and that you will contact us with further questions or to seek legal advice. Early and careful planning ultimately avoids a variety of challenges and reduces expense. Our aim in providing you with these installments is to help with that process.
Due to the strong, long standing bilateral relationships the U.S. enjoys with countries like Canada, China and Japan, it is understandable that companies from abroad frequently pursue investment in the U.S. as a means of expanding on previous domestic successes. This investment has increasingly been direct, rather than through intermediaries, such as trading companies and importers, and there are a variety of means of achieving cross-border objectives. Direct investment is a great way to control one’s own destiny.
Our first installment is therefore about, “Establishing a New Business in the U.S.”
Still, have you ever felt confused by the different business entity options for starting a business in the U.S.? What are they, and how are they different? Why should you care? This installment provides the answers to these basic questions. It also highlights some of the differences between U.S. and other countries’ laws in this area. We hope you find it useful!
The International Practice Group of Garvey Schubert Barer is a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics, and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. The firm’s attorneys have been actively practicing in the international arena since the early 1970s.