The document discusses several factors in the political and legal environments that can affect international business:
In the political environment, it discusses nation-states and sovereignty, political risk, taxes, dilution of equity control, and expropriation. In the legal environment, it discusses international law, establishment of business, jurisdiction, intellectual property (patents, trademarks, copyright), antitrust laws, and the role of the World Trade Organization in international trade. Overall, the document outlines important political and legal considerations for international businesses operating across borders.
The document discusses the political environment as a critical concern for international business. It covers several topics:
1) How the sovereignty of nations and stability of government policies can affect business conditions. Changes in political parties or nationalism can radically shift policies.
2) Different forms of government, political parties, nationalism, trade disputes and other factors contribute to political risks for global companies. Confiscation, expropriation and domestication are examples.
3) Companies can assess political vulnerability, lessen risks, and encourage investment through joint ventures and expanding operations to benefit the local economy. Governments encourage foreign investment to accelerate economic growth.
International Marketing - The Political Environment: A Critical ConcernDr. John V. Padua
The political environment is a critical concern for international marketing. Governments control business activities within their borders and political instability can negatively impact foreign investment. Political risks include confiscation of assets, nationalism increasing restrictions on foreign companies, and violence/terrorism threatening operations. Marketers must consider how different government types, political parties, and policy shifts can affect their long-term ability to do business in a country.
Strategies For International Competition Global OperationsTICS
This document discusses various strategies for international competition. It begins by outlining three strategic orientations for international operations: ethnocentrism, polycentrism, and geocentrism. Next, it explores factors that facilitate international expansion such as market saturation, political reasons, cheap labor, and competitive pressures. The document then provides guidance on evaluating target countries and developing a strategic plan for foreign market entry. Finally, it discusses approaches for managing a portfolio of subsidiaries abroad and various value chain configurations for international operations.
08 Cross-National Cooperation and AgreementsBrent Weeks
To identify the major characteristics and challenges of the World Trade Organization
To discuss the pros and cons of global, bilateral, and regional integration
To describe the static and dynamic impact of trade agreements on trade and investment flows
To define different forms of regional economic integration
To compare and contrast different regional trading groups
To describe other forms of global cooperation such as the United Nations and OPEC
BUSINESS IS DEFINED AS A SET OF ACTIVITIES RELATING TO INDUSTRY AND COMMERCE.
WHEN BUSINESS ACTIVITIES ARE CARRIED ACROSS THE POLITICAL BORDERS OF A COUNTRY, IT IS TERMED AS INTERNATIONAL BUSINESS.
A BUSINESS ENVIRONMENT INCLUDES VARIOUS EXTERNAL ACTORS AND FORCES THAT SURROUNDS A FIRM AND IMPACTS THE OUTCOME OF ITS DECISIONS AND OPERATIONS.
THE OBJECTIVE OF BOTH DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS IS “MAKING PROFIT THROUGH CUSTOMERS SATISFACTION AND SOCIAL WELFARE”
TYPES OF BUSINESS ENVIRONMENT -
1. CONTROLLABLE ENVIRONMENT
a.) PRODUCTION
b.) FINANCE
c.) HUMAN RESOURCE
d.) MARKETING
2.UNCONTROLLABLE ENVIRONMENT -
a.) DOMESTIC ENVIRONMENT
b.) FOREIGN ENVIRONMENT
c.) GLOBAL ENVIRONMENT
ANOTHER MAJOR CLASSIFICATION -
1. MICRO ENVIRONMENT
2. MACRO ENVIRONMENT
RELEVANCE of international business environment
- Knowledge of international business environment is very important.
-Environment affects a firm’s strategic as well as tactical decisions so it becomes imperative for the firm to have in-depth knowledge of the various components of domestic, foreign and global environment.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
The document discusses why studying international business is important. It provides several reasons:
1. Most large organizations have international operations or are affected by the global economy, so understanding international business is important for career opportunities and interacting with other managers.
2. Studying international business prepares small companies that may get involved in international business through importing/exporting or competing globally.
3. Understanding other cultures and political systems is important to appreciate differences and find common ground.
4. No single country has a monopoly on good ideas, so studying international business techniques keeps companies aware of global innovations.
The document then discusses various modes for companies to enter international business such as licensing, franchising, exporting, turnkey
This document discusses various barriers to international trade, including tariffs, protectionism, and non-tariff barriers. It outlines arguments for and against protectionism such as protecting domestic industries and jobs. However, tariff barriers can also increase inflation, weaken international relations, and restrict supply sources and consumer choice. The document also examines dumping, the role of the WTO and IMF in facilitating trade, and examples of regional economic communities that promote free trade.
The document discusses the political environment as a critical concern for international business. It covers several topics:
1) How the sovereignty of nations and stability of government policies can affect business conditions. Changes in political parties or nationalism can radically shift policies.
2) Different forms of government, political parties, nationalism, trade disputes and other factors contribute to political risks for global companies. Confiscation, expropriation and domestication are examples.
3) Companies can assess political vulnerability, lessen risks, and encourage investment through joint ventures and expanding operations to benefit the local economy. Governments encourage foreign investment to accelerate economic growth.
International Marketing - The Political Environment: A Critical ConcernDr. John V. Padua
The political environment is a critical concern for international marketing. Governments control business activities within their borders and political instability can negatively impact foreign investment. Political risks include confiscation of assets, nationalism increasing restrictions on foreign companies, and violence/terrorism threatening operations. Marketers must consider how different government types, political parties, and policy shifts can affect their long-term ability to do business in a country.
Strategies For International Competition Global OperationsTICS
This document discusses various strategies for international competition. It begins by outlining three strategic orientations for international operations: ethnocentrism, polycentrism, and geocentrism. Next, it explores factors that facilitate international expansion such as market saturation, political reasons, cheap labor, and competitive pressures. The document then provides guidance on evaluating target countries and developing a strategic plan for foreign market entry. Finally, it discusses approaches for managing a portfolio of subsidiaries abroad and various value chain configurations for international operations.
08 Cross-National Cooperation and AgreementsBrent Weeks
To identify the major characteristics and challenges of the World Trade Organization
To discuss the pros and cons of global, bilateral, and regional integration
To describe the static and dynamic impact of trade agreements on trade and investment flows
To define different forms of regional economic integration
To compare and contrast different regional trading groups
To describe other forms of global cooperation such as the United Nations and OPEC
BUSINESS IS DEFINED AS A SET OF ACTIVITIES RELATING TO INDUSTRY AND COMMERCE.
WHEN BUSINESS ACTIVITIES ARE CARRIED ACROSS THE POLITICAL BORDERS OF A COUNTRY, IT IS TERMED AS INTERNATIONAL BUSINESS.
A BUSINESS ENVIRONMENT INCLUDES VARIOUS EXTERNAL ACTORS AND FORCES THAT SURROUNDS A FIRM AND IMPACTS THE OUTCOME OF ITS DECISIONS AND OPERATIONS.
THE OBJECTIVE OF BOTH DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS IS “MAKING PROFIT THROUGH CUSTOMERS SATISFACTION AND SOCIAL WELFARE”
TYPES OF BUSINESS ENVIRONMENT -
1. CONTROLLABLE ENVIRONMENT
a.) PRODUCTION
b.) FINANCE
c.) HUMAN RESOURCE
d.) MARKETING
2.UNCONTROLLABLE ENVIRONMENT -
a.) DOMESTIC ENVIRONMENT
b.) FOREIGN ENVIRONMENT
c.) GLOBAL ENVIRONMENT
ANOTHER MAJOR CLASSIFICATION -
1. MICRO ENVIRONMENT
2. MACRO ENVIRONMENT
RELEVANCE of international business environment
- Knowledge of international business environment is very important.
-Environment affects a firm’s strategic as well as tactical decisions so it becomes imperative for the firm to have in-depth knowledge of the various components of domestic, foreign and global environment.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
The document discusses why studying international business is important. It provides several reasons:
1. Most large organizations have international operations or are affected by the global economy, so understanding international business is important for career opportunities and interacting with other managers.
2. Studying international business prepares small companies that may get involved in international business through importing/exporting or competing globally.
3. Understanding other cultures and political systems is important to appreciate differences and find common ground.
4. No single country has a monopoly on good ideas, so studying international business techniques keeps companies aware of global innovations.
The document then discusses various modes for companies to enter international business such as licensing, franchising, exporting, turnkey
This document discusses various barriers to international trade, including tariffs, protectionism, and non-tariff barriers. It outlines arguments for and against protectionism such as protecting domestic industries and jobs. However, tariff barriers can also increase inflation, weaken international relations, and restrict supply sources and consumer choice. The document also examines dumping, the role of the WTO and IMF in facilitating trade, and examples of regional economic communities that promote free trade.
This document discusses the political environment and how it can impact international business. It covers topics like the sovereignty of nations, different governmental types, political parties, nationalism, trade disputes, political risks, and the impact of political activists, violence and terrorism. It provides examples to illustrate these concepts, such as the EU banana trade dispute between the US and Europe, political instability in Africa, and the consequences of the US embargo on Cuba. The document emphasizes the importance of understanding a country's political landscape and how changes can affect market potential and business stability.
This document discusses ethical issues that can arise in international business. It covers several key topics: employment practices, human rights, environmental regulations, corruption, and the moral obligations of multinational corporations. For each topic, it provides examples of ethical dilemmas companies have faced. It also examines approaches to business ethics like cultural relativism and discusses determinants of ethical behavior such as personal ethics and organizational culture. Finally, it outlines strategies for making ethical decisions, such as hiring people with strong ethics and creating an ethical organizational culture.
Factors associated with Entry Mode
Timing of an Entry
FIRST MOVER ADVANTAGE
Scale of Entry & Strategic Commitments
ENTRY MODES
Explain exporting, turnkey projects and licensing entry modes with their advantages and disadvantages.
Explain franchising, joint venture and wholly owned subsidiaries with its advantages and disadvantages.
SELECTING ENTRY MODE
PROS & CONS OF ACQUISITION
PROS &CONS OF GREENFIELD VENTURES
What is strategic alliance?
What are the advantage and disadvantages of strategic alliance?
What are the factors contributing to the success of an alliance?
This document contains the authors and contact information for S. Aravindan and V. Kannan from Sri Ramakrishna Mission Vidyalaya College of Arts and Science in Coimbatore, India. It also summarizes several trends that may impact global business in the future, including the rising power of emerging markets, the growth of clean technology, demographic shifts transforming the global workforce, disruptive innovation, and the increasing role of data analytics and smart technology.
Effects of politics on international businesstaniajavaid
The political environment of the countries in which international businesses operate can significantly impact their operations. Governments have sovereignty over allowing or restricting foreign firms and impose various political factors such as differing laws, trade restrictions, and policies regulating business. These political factors vary across countries and can change unpredictably, presenting risks. Therefore, international businesses must consider how a nation's political system, policies, and stability or instability may affect their activities.
The document discusses economic integration and cooperation in Europe, Africa, and the Middle East. It covers the evolution of the European Union and patterns of international cooperation such as free trade areas, customs unions, and common markets. Specifically, it outlines the key institutions of the EU and the introduction of the euro currency. It also examines Eastern Europe's transition to free market systems and the formation of the Commonwealth of Independent States following the dissolution of the Soviet Union.
This document provides an overview of international business. It defines international business as commercial transactions that occur across country borders, including sales, investments, and transportation between two or more countries. Some key aspects covered include:
- The different types of international business transactions like export-import trade, foreign direct investment, licensing, franchising, and management contracts.
- The various components of the international business environment such as the economic, legal, political, social, and cultural environments countries operate within.
- Recent changes in international business like the acceleration of globalization and regionalization through trading blocs.
- The benefits of globalization for increasing employment, income, production, and consumption on a global scale.
This document provides an overview of international business. It defines international business as transactions involving the selling of items produced in other countries. The benefits for businesses engaging in international trade include access to larger markets, cheaper labor costs, and access to more resources. The document also discusses some of the costs of international trade like outsourcing and potential human rights and environmental issues. It outlines various barriers to international trade such as tariffs and currency fluctuations. Finally, it looks at Canada's major trading partners and various trade agreements that can help reduce barriers between countries.
Comparison beween Multinational Financial Management and Domestic Financial Management?
Discuss evolution and International Financial Management System?
Write Special features of foreign exchange?
Describe the country risk Analysis in International Business?
Short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
International Marketing The International Legal EnvironmentDr. John V. Padua
This document provides an overview of key concepts in international marketing and international business law. It discusses the major legal systems that form the basis for laws around the world, including common law, civil law, Islamic law, and Marxist law. It also summarizes important topics like intellectual property rights, jurisdiction over legal disputes, methods of resolving disputes, and how U.S. laws may apply to companies operating abroad. The document aims to outline major learning objectives on globalization and the legal environment of international business.
This document discusses globalization and international business. It defines globalization as the interdependence of countries through reduced trade barriers and increased flow of trade, capital, technology and people between nations. The key drivers of globalization are described as economic, technological, personal contact and political factors. International business is defined as the exchange of goods and services between individuals and businesses across multiple countries. The document outlines factors that have increased globalization and discusses how companies operate internationally through methods like exports, imports and foreign direct investments. It also examines some challenges of globalization and factors that influence international business operations.
International business: THEORIES OF INTERNATIONAL TRADERoni Kumar
This document provides an overview of several theories of international trade, including mercantilism, absolute advantage theory, comparative advantage theory, the Heckscher-Ohlin model, and the Porter Diamond model. It discusses the key principles and features of each theory, provides examples to illustrate the concepts, and notes some criticisms of the earlier theories like mercantilism. The document is an assignment on international business theories of trade that is organized by topic with headings and includes references.
This presentation is made by Palm & Latex Technology & Value Addition degree programme students in Uva Wellassa University of Sri Lanka as to fulfill a requirment for their course of Trade & Finance. In this presentation is generally related to Sri Lanka.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
Culture, Management Style, and Business SystemsSavaş Şakar
The document discusses how culture profoundly impacts management styles and business systems. It contrasts relationship-oriented cultures like Japan that are consensus-based versus information-oriented cultures like the US that are more individualistic. Successful international business requires understanding different management styles and adapting to cultural differences.
1 2 introduction of international business environmentUrvashi Dwivedi
The document discusses key concepts related to international business environments including domestic versus international business, liberalization, privatization, and globalization. It provides definitions and explanations of international business, international trade, international marketing, international investments, and global business. It also compares differences between domestic and international business environments and discusses reasons for international business expansion.
Global marketing - products & services for consumersRECONNECT
This is the lecture of course "Global Marketing"
This slideshare network of RECONNECT will provide all the presentation related to case studies, project presentations, educational, motivational slides & much more.
Follow Reconnect on slide share.
Official fb page: facebook.com/reconnectt
Official fb group: facebook.com/groups/reconnecting.tech/
Rights are reserved for this presentation. Please inbox 1st to get permission to use this
This document discusses theories of international trade and investment. It covers concepts like comparative advantage and competitive advantage. It then discusses classical trade theories like mercantilism and theories based on factors of production. It also covers how governments can enhance national competitive advantage through policies that stimulate innovation, target industries, and invest in infrastructure. The document discusses industrial clusters and national industrial policy. It covers theories on why firms invest overseas based on monopolistic advantages, internalization, and Dunning's eclectic paradigm. Finally, it discusses non-FDI based explanations for internationalization through collaborative ventures.
Embargoes are prohibitions on commerce and trade with specific countries imposed for safety, protectionist, or political reasons. There are three main types of embargoes: 1) Financial sanctions like freezing assets and funds; 2) Trade sanctions on products like arms, imports/exports, and other goods; 3) Trade sanctions on services including technical aid, investments, transport, travel, and insurance. Common goals of embargoes include preventing weapons from reaching sanctioned countries and hindering their economies. Examples provided include EU sanctions on Russia and US embargoes on Cuba and Syria.
This document discusses the political and legal environments that multinational enterprises must consider when operating in different countries. It outlines various political systems such as democracy, totalitarianism, and mixed systems. It also describes the layers of political influence from the home country, host country, and global levels. The legal environment section notes that countries develop their own legal systems and the main types are common law and code law systems. It concludes by explaining the layers of the legal environment and methods for settling international disputes such as negotiation, arbitration, and litigation.
This document discusses the political environment and how it can impact international business. It covers topics like the sovereignty of nations, different governmental types, political parties, nationalism, trade disputes, political risks, and the impact of political activists, violence and terrorism. It provides examples to illustrate these concepts, such as the EU banana trade dispute between the US and Europe, political instability in Africa, and the consequences of the US embargo on Cuba. The document emphasizes the importance of understanding a country's political landscape and how changes can affect market potential and business stability.
This document discusses ethical issues that can arise in international business. It covers several key topics: employment practices, human rights, environmental regulations, corruption, and the moral obligations of multinational corporations. For each topic, it provides examples of ethical dilemmas companies have faced. It also examines approaches to business ethics like cultural relativism and discusses determinants of ethical behavior such as personal ethics and organizational culture. Finally, it outlines strategies for making ethical decisions, such as hiring people with strong ethics and creating an ethical organizational culture.
Factors associated with Entry Mode
Timing of an Entry
FIRST MOVER ADVANTAGE
Scale of Entry & Strategic Commitments
ENTRY MODES
Explain exporting, turnkey projects and licensing entry modes with their advantages and disadvantages.
Explain franchising, joint venture and wholly owned subsidiaries with its advantages and disadvantages.
SELECTING ENTRY MODE
PROS & CONS OF ACQUISITION
PROS &CONS OF GREENFIELD VENTURES
What is strategic alliance?
What are the advantage and disadvantages of strategic alliance?
What are the factors contributing to the success of an alliance?
This document contains the authors and contact information for S. Aravindan and V. Kannan from Sri Ramakrishna Mission Vidyalaya College of Arts and Science in Coimbatore, India. It also summarizes several trends that may impact global business in the future, including the rising power of emerging markets, the growth of clean technology, demographic shifts transforming the global workforce, disruptive innovation, and the increasing role of data analytics and smart technology.
Effects of politics on international businesstaniajavaid
The political environment of the countries in which international businesses operate can significantly impact their operations. Governments have sovereignty over allowing or restricting foreign firms and impose various political factors such as differing laws, trade restrictions, and policies regulating business. These political factors vary across countries and can change unpredictably, presenting risks. Therefore, international businesses must consider how a nation's political system, policies, and stability or instability may affect their activities.
The document discusses economic integration and cooperation in Europe, Africa, and the Middle East. It covers the evolution of the European Union and patterns of international cooperation such as free trade areas, customs unions, and common markets. Specifically, it outlines the key institutions of the EU and the introduction of the euro currency. It also examines Eastern Europe's transition to free market systems and the formation of the Commonwealth of Independent States following the dissolution of the Soviet Union.
This document provides an overview of international business. It defines international business as commercial transactions that occur across country borders, including sales, investments, and transportation between two or more countries. Some key aspects covered include:
- The different types of international business transactions like export-import trade, foreign direct investment, licensing, franchising, and management contracts.
- The various components of the international business environment such as the economic, legal, political, social, and cultural environments countries operate within.
- Recent changes in international business like the acceleration of globalization and regionalization through trading blocs.
- The benefits of globalization for increasing employment, income, production, and consumption on a global scale.
This document provides an overview of international business. It defines international business as transactions involving the selling of items produced in other countries. The benefits for businesses engaging in international trade include access to larger markets, cheaper labor costs, and access to more resources. The document also discusses some of the costs of international trade like outsourcing and potential human rights and environmental issues. It outlines various barriers to international trade such as tariffs and currency fluctuations. Finally, it looks at Canada's major trading partners and various trade agreements that can help reduce barriers between countries.
Comparison beween Multinational Financial Management and Domestic Financial Management?
Discuss evolution and International Financial Management System?
Write Special features of foreign exchange?
Describe the country risk Analysis in International Business?
Short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
International Marketing The International Legal EnvironmentDr. John V. Padua
This document provides an overview of key concepts in international marketing and international business law. It discusses the major legal systems that form the basis for laws around the world, including common law, civil law, Islamic law, and Marxist law. It also summarizes important topics like intellectual property rights, jurisdiction over legal disputes, methods of resolving disputes, and how U.S. laws may apply to companies operating abroad. The document aims to outline major learning objectives on globalization and the legal environment of international business.
This document discusses globalization and international business. It defines globalization as the interdependence of countries through reduced trade barriers and increased flow of trade, capital, technology and people between nations. The key drivers of globalization are described as economic, technological, personal contact and political factors. International business is defined as the exchange of goods and services between individuals and businesses across multiple countries. The document outlines factors that have increased globalization and discusses how companies operate internationally through methods like exports, imports and foreign direct investments. It also examines some challenges of globalization and factors that influence international business operations.
International business: THEORIES OF INTERNATIONAL TRADERoni Kumar
This document provides an overview of several theories of international trade, including mercantilism, absolute advantage theory, comparative advantage theory, the Heckscher-Ohlin model, and the Porter Diamond model. It discusses the key principles and features of each theory, provides examples to illustrate the concepts, and notes some criticisms of the earlier theories like mercantilism. The document is an assignment on international business theories of trade that is organized by topic with headings and includes references.
This presentation is made by Palm & Latex Technology & Value Addition degree programme students in Uva Wellassa University of Sri Lanka as to fulfill a requirment for their course of Trade & Finance. In this presentation is generally related to Sri Lanka.
Foreign Direct Investment (Theories of FDI)Mamta Bhola
This document discusses different theories of foreign direct investment (FDI). It begins by covering Stephen Hymer's theory of imperfect markets, which views multinational corporations as oligopolistic firms that seek to establish control and maximize profits by taking advantage of market imperfections in host countries. It then briefly mentions the product life cycle theory. The majority of the document is spent explaining the internalization approach theory and eclectic theory of FDI, which incorporate factors of ownership advantages, locational advantages, and internalization to explain why firms undertake FDI. It concludes by listing some common objectives of companies engaging in FDI, such as reducing costs, gaining economies of scale, and knowledge sharing.
Culture, Management Style, and Business SystemsSavaş Şakar
The document discusses how culture profoundly impacts management styles and business systems. It contrasts relationship-oriented cultures like Japan that are consensus-based versus information-oriented cultures like the US that are more individualistic. Successful international business requires understanding different management styles and adapting to cultural differences.
1 2 introduction of international business environmentUrvashi Dwivedi
The document discusses key concepts related to international business environments including domestic versus international business, liberalization, privatization, and globalization. It provides definitions and explanations of international business, international trade, international marketing, international investments, and global business. It also compares differences between domestic and international business environments and discusses reasons for international business expansion.
Global marketing - products & services for consumersRECONNECT
This is the lecture of course "Global Marketing"
This slideshare network of RECONNECT will provide all the presentation related to case studies, project presentations, educational, motivational slides & much more.
Follow Reconnect on slide share.
Official fb page: facebook.com/reconnectt
Official fb group: facebook.com/groups/reconnecting.tech/
Rights are reserved for this presentation. Please inbox 1st to get permission to use this
This document discusses theories of international trade and investment. It covers concepts like comparative advantage and competitive advantage. It then discusses classical trade theories like mercantilism and theories based on factors of production. It also covers how governments can enhance national competitive advantage through policies that stimulate innovation, target industries, and invest in infrastructure. The document discusses industrial clusters and national industrial policy. It covers theories on why firms invest overseas based on monopolistic advantages, internalization, and Dunning's eclectic paradigm. Finally, it discusses non-FDI based explanations for internationalization through collaborative ventures.
Embargoes are prohibitions on commerce and trade with specific countries imposed for safety, protectionist, or political reasons. There are three main types of embargoes: 1) Financial sanctions like freezing assets and funds; 2) Trade sanctions on products like arms, imports/exports, and other goods; 3) Trade sanctions on services including technical aid, investments, transport, travel, and insurance. Common goals of embargoes include preventing weapons from reaching sanctioned countries and hindering their economies. Examples provided include EU sanctions on Russia and US embargoes on Cuba and Syria.
This document discusses the political and legal environments that multinational enterprises must consider when operating in different countries. It outlines various political systems such as democracy, totalitarianism, and mixed systems. It also describes the layers of political influence from the home country, host country, and global levels. The legal environment section notes that countries develop their own legal systems and the main types are common law and code law systems. It concludes by explaining the layers of the legal environment and methods for settling international disputes such as negotiation, arbitration, and litigation.
This document discusses the political and legal environments that multinational enterprises must consider when operating in different countries. It covers various political systems and ideologies around the world, such as democracy, totalitarianism, and different forms of government intervention in the economy. The document also discusses political risks, establishing political strategies, different legal systems, and the role of lobbying in influencing government decisions.
The document summarizes India's political and economic environment in the early 1990s and the impact of the 1991 New Economic Policy reforms. Key points include: India faced a balance of payments crisis in 1991 which led to economic reforms including liberalization, privatization, and globalization. The reforms reshaped India's business environment and increased economic growth rates, improving India's global economic position. Long-term socialist policies shifted to a more open market economy after the 1991 reforms.
The document discusses the political environment factors that businesses must consider when expanding overseas. It provides details on Hong Kong's political system and environment. Hong Kong has a relatively stable political system due to its "one country, two systems" agreement with China that guarantees its capitalist system and limited democracy until 2047. The political factors discussed that influence business include the type of political system, stability, policies on taxation, intellectual property, and product safety laws.
An economic system is the mechanism by which a society produces, distributes, and consumes goods and services. The main types of economic systems are capitalism, socialism, and mixed economies. Capitalism is based on private ownership and market forces, while socialism involves public or collective ownership and economic planning. Most modern economies are mixed, combining elements of both capitalism and socialism.
This document discusses a working paper on country risk analysis. It defines country risk as the probability that unexpected events in a country will influence its ability to repay loans or repatriate dividends. It then discusses measures of country risk, including financial and economic risk factors like debt ratios and inflation, as well as political risk factors like expropriation, contract repudiation, and corruption. Finally, it describes several country risk rating organizations and the attributes and indicators they examine when assigning country risk ratings.
Venezuela has faced significant economic challenges in recent years due to its heavy reliance on the petroleum industry. Foreign direct investment (FDI) in Venezuela has declined dramatically from $2.2 billion in 2016 to just $13 million in 2020 as hyperinflation, US sanctions, and political instability have deterred investors. While Venezuela offers incentives like tax breaks to attract FDI, it continues to face obstacles like an interventionist economic system, weak institutions, and overdependence on oil. Improving infrastructure, education, access to finance, and trade could help Venezuela diversify its economy and attract more sustainable foreign investment.
This document analyzes Pepsico's business position in Mexico in the late 1990s. It describes how Pepsico and Coca-Cola competed fiercely for market share in Latin America between 1993-1996. While Pepsico initially had success through its bottling partner, by 1996 Coca-Cola had won the "cola war" in Latin America. The document then details Pepsico's strategies in Mexico from 1993 onward to expand its market share through its bottling partner Gemex, but explains how a series of missteps caused it to lose substantial share to Coca-Cola.
The document discusses corruption and the gap between the rich and poor. It begins by listing the names of group members who were discussing these topics. It then provides examples of issues caused by corruption like poverty, starvation, and exploitation. The document goes on to discuss types of corruption, examples of political corruption, factors that cause people to become corrupt, and statistics on corruption. It also addresses how corruption causes poverty and its effect on inequality. Finally, it outlines some things governments are doing now to address corruption through anti-corruption laws and strengthening enforcement. The group plans to promote awareness of these issues on social media and through editorials to the newspaper club.
Research Topics with Explanation SHOULD THE GOVERNMENT PROV.docxronak56
Research Topics with Explanation
SHOULD THE GOVERNMENT PROVIDE FINANCIAL ASSISTANCE TO PEOPLE WHOSE RETIREMENT FUNDS WERE INVESTED IN STOCK OF COMPANIES THAT MAY HAVE USED UNETHICAL ACCOUNTING PRACTICES?
Name: Richard Hepburn
Assignment 4 Persuasive Paper Part 2,
Solution
and Advantages
Strayer University
Research & Writing EGN215041VA016
Professor Michael White
Date: 02/20/17
December 02, 2001 is a day that will go down in history for many people, it was the day that Enron a U.S energy trading and Utilities Company filed for bankruptcy. This bankruptcy filing changed the lives of many innocent Americans who lost their entire life savings. In late December 2008, a major case of stock and securities fraud was discovered and Bernard Madoff the founder of Bernard L. Madoff Investment Securities was convicted and eventually sentenced to 150 years in prison for running the largest fraudulent scheme in U.S history. New York Times | DIANA B. HENRIQUES and ZACHERY KOUWE | Posted 05.25.2011 | Business. Both of these schemes negatively affected the financial, social, health, and economic lives of thousands of people who depended on the expertise of these companies to invest their retirement savings adequately. These unfair practices lead me to believe that there is no accountability for these crimes and the government, therefore, has a responsibility to the public as a whole, and to the numerous people who have lost their life savings to the unscrupulous accounting practices of many professional investors and financial institutions.
My first concern leads me to believe that nobody is keeping a watchful eye on any of these big corporations who continues to mishandle the retirement savings of the American citizens who work so hard to put away their life savings for a better future. What was the Enron culture? The Wall Street Journal of 26 August 2002 captured the essence of Enron’s culture, as the expression of the personalities of its senior management (Raghavan et al., 2002). A Lucite cube on the desk of Chief Financial Officer Andrew Fastow read: ‘rip your face off.' Add Jeff Skilling’s penchant for extreme sports, and a picture of an aggressive culture begins to form. The Wall Street Journal reporters observed ‘It [Fastow’s cube] was a characteristic gesture inside Enron, where the prevailing corporate culture was to push everything to the limits: business practices, laws and personal behavior’ (Raghavan et al., 2002). Enron Corp is a company that reached dramatic heights, only to face a dizzying collapse. The story ends with the bankruptcy of one of America's largest corporations. Enron's collapse affected the lives of thousands of employees and shook Wall Street to its core. At Enron's peak, its shares were worth $90.75, but after the company had declared bankruptcy on December 2, 2001, they plummeted to $0.67 by January 2002. To this day, many wonder how such a powerful business disintegrated almost overnight and how it managed to fo ...
Pricing and Non-Pricing Strategies discusses Bury implementing strategies for his digitized books business. As he has a patent eliminating competition, he can set market prices and quality standards. Current projections show continued market growth, allowing for financial success if strategies attract customers. Bury can use pricing tactics like periodically lowering prices to boost sales. His non-pricing strategies should focus on developing unique products to retain loyal customers through lifetime value.
The chapter discusses the development of the international monetary system from the Bretton Woods Conference in 1944. Key points:
- Countries realized after WWII that political freedom alone was insufficient and economic cooperation was needed for development.
- The Bretton Woods Conference established the IMF to oversee the new monetary system based on fixed exchange rates and use of the US dollar and gold standard.
- The system helped sustain trade growth but faced challenges of debt crises and fluctuations caused by moving to floating exchange rates in the 1970s. The balance of payments tracks a country's total economic relations internationally through trade, investment, aid and other flows.
Public finance involves the collection and spending of government funds through taxes, expenditures, budget preparation, and borrowing. Money is essential for governments to fund activities like education, defense, health, and economic development. The annual budget process involves preparation, legislative approval, and auditing of expenses. Budgets estimate annual income and expenses and aim to encourage wise use of funds. Government revenue comes from taxes on income, property, imports, licenses, fines, fees, foreign loans, and bonds. Strict rules limit taxation to public purposes and require uniform and fair taxes.
REPOSITIONING THE NIGERIAN ECONOMY WITHOUT THE IMFMustapha Ameh
The document discusses Nigeria's relationship with the IMF and strategies for achieving economic growth without IMF involvement. It argues that Nigeria has not benefited meaningfully from interacting with the IMF, as the country remains deeply in debt and most economic indicators have not improved. Some of Nigeria's main economic challenges include overdependence on oil, corruption, lack of economic diversification, and insecurity. The document proposes that Nigeria can pursue growth through fighting corruption, encouraging the private sector and entrepreneurship, diversifying the economy away from oil, rationalizing government activities, and improving security. With the right policies and determination, the document suggests Nigeria can develop its economy without relying on the IMF.
The document discusses energy sanctions against Russia, Iran, and North Korea. It explains that sanctions are used by the US to enforce laws and policies, and are intended to maximize economic impact on the target country while minimizing damage to US economic interests. Sanctions can be imposed by the US alone or internationally. Russia has faced sanctions due to human rights violations, while Iran is questioned for supporting terrorism. It is difficult to determine the true economic impact of sanctions, as other factors like falling oil prices also influence economies.
This document provides an overview of a case study on managing companies under economic sanctions in Iran. It discusses how Iran has been able to circumvent some sanctions through effective business management practices that allow trade and commerce to continue prospering. The study aims to show how sanctions have often been unsuccessful or produced limited results through case studies of Iran and other nations' trade and business acumen. It also discusses various economic sanctions imposed on Iran by the US and others and their varying impacts on Iran's economy, such as reductions in oil exports and currency devaluation. The significance of the study is that it focuses on possible instruments of leverage for trade sanctions through an analysis of Iran's scenario.
The document discusses the tensions between hyperglobalization, nation states, and democratic politics. It describes Thomas Friedman's concept of the "Golden Straitjacket" where countries pursue policies to attract foreign capital like free markets and small government. This prioritizes the "electronic herd" of global investors over domestic needs. The Washington Consensus promoted these policies but they failed in Argentina in the late 1990s during its financial crisis. The Bretton Woods system after WWII balanced globalization and sovereignty better by allowing capital controls and currency adjustments. However, it weakened over time due to speculative pressure on the dollar and internal economic priorities conflicting with maintaining exchange rates.
Brazil is considered an emerging market economy due to its fast economic growth in recent decades, increasing foreign investment, and rising international influence. However, Brazil had long struggled with problems like debt, high inflation, and protectionist policies under a military regime from 1965-1985. In the 1980s and 1990s, Brazil adopted market-oriented reforms like trade liberalization, privatization of state firms, and more stable macroeconomic policies to emerge from its previous stagnation and develop into a leading economy in Latin America and a prominent member of the BRIC countries. However, Brazil still faces challenges like inequality that prevent it from being considered an advanced economy.
The document discusses factors affecting the global economy, including the Ebola outbreak, changes in China's economic growth, and the Panama Papers leak. Regarding Ebola, many countries contributed funds to curb the virus. China's economy is slowing slightly as policies aim for more sustainable growth. The Panama Papers leak revealed how offshore shell companies enable dirty money to flow globally and highlighted tax evasion by the wealthy. The effects of globalization allow capital to move freely for the rich while ordinary citizens cannot share in the same mobility.
When an Africal nation, Nigeria, could bring back the off-shore Black Money and distribute it to the citizenry, there is no reason for the Indian government not to do so. But the vested interests do not only block the efforts but have encouraged more black money operations through Electoral Bonds and Foreign Funding in elections.
More important fact is that the BJP is unwilling to do what it had suggested on 30.01.2011 when it was in Opposition. That was a practical and workable suggestion proposed by the Task Force of the BJP. The members of the Among the members of the Task Force were S. Gurumoorty, presently a Director of the RBI and Ajit Doval, presently National Security Advisor.
It is a matter of concern that the BJP is working for the rich and corrupt who generate Black Money.
The document discusses key economic factors to consider when evaluating the economic environment of a country for international expansion. It covers different economic systems (market, command, mixed), macroeconomic indicators like GDP, inflation, balance of payments, exchange rates. International monetary systems throughout history are examined, from the gold standard to Bretton Woods to the current nonsystem of managed floating rates. Understanding a country's economic framework, growth trends, and government policies is important for assessing market potential and risks.
In This Essay, I Will Address The Issues Caused By TheAlison Hall
The document discusses the extent, drivers, and challenges of information and communication technology (ICT) adoption in Kenya's floriculture industry. It proposes a research study on this topic, outlining the importance of ICT adoption for business competitiveness. While ICT can lead to cost savings and efficiency, some studies have shown the adoption rate in Kenya's floriculture sector has been low due to challenges such as lack of infrastructure and skills. The proposed study would examine the current level of ICT use, factors influencing adoption decisions, and barriers preventing full utilization.
The document discusses several pieces of US legislation aimed at combating money laundering and other financial crimes. It outlines laws such as the Bank Secrecy Act of 1970, Money Laundering Control Act of 1986, Anti-Drug Abuse Act of 1988, and the USA PATRIOT Act of 2001. These laws established reporting requirements for financial institutions, made money laundering a federal crime, increased penalties for noncompliance, and enhanced anti-money laundering efforts. The document also discusses the role of the Office of Foreign Assets Control (OFAC) in administering sanctions and publishing restricted lists.
Similar to International political environment - class material (19)
International political environment - class material
1. THE POLITICAL and LEGAL ENVIRONMENT
I. The political environment
There are several factors to consider when talking about the political environment that
could affect international business:
1. NATION-STATES AND SOVEREIGNTY
Every sovereign state is bound to respect the independence of every other sovereign
state, and the courts in one country will not sit in jurisdiction on the acts of government
of another done within its territory.
A sovereign state is considered free and independent. It regulates trade, manages the
flow of people into and out of its boundaries, and exercise undivided jurisdiction over all
persons and property within its territory. It has the right, authority, and ability to
conduct its domestic affairs without outside interference and to use its international
power and influence with full discretion.
Government actions taken in the name of sovereignty occur in the context of two
important criteria: a country's stage of development and the political and economic
system in place in the country.
2. 2. POLITICAL RISK
Political risk -- the risk of a change in government policy that would adversely impact a
company's ability to operate effectively and profitably--can deter a company from
investing abroad.
When the perceived level of political risk is lower, a country is more likely to attract
investment. The level of political risk is inversely proportional to a country's stage of
economic development: All other things being equal, the less developed a country, the
greater the political risk.
The political risk of emerging countries, for example, is quite limited as compared to a
country in an earlier stage of development in Africa, Latin America, or Asia.
Isolated situations like elections, demonstrations, human rights violations, etc can
increase the perceived political risk of a country or region
3. Venezuela's Hugo Chavez tightens state control of
food amid rocketing inflation and food shortages
President Hugo Chavez is tightening state control over Venezuela's food
supply, setting quotas for food staples which are to be sold at government-
imposed prices.
By Jeremy McDermott, Latin America Correspondent
6:33PM GMT 04 Mar 2009
Venezuela's public finances are unravelling, with oil prices at $40 a barrel, while the
national budget is calculated at $60 a barrel. Inflation is running at over 30 per cent,
yet with the new measures Mr Chavez is seeking to ensure that his core support, the
poor, can still fill their shopping baskets with food.
"If any industry wants to ride roughshod over the consumers, with a view to getting
better dividends, we are going to act," said Carlos Osorio, the national
superintendent of silos and storage. "For the government, access to food is a matter
of national security."
Production quotas and prices have now been set for cooking oil, white rice, sugar,
coffee, flour, margarine, pasta, cheeses and tomato sauce…..
From The Telegraph UK
4. 3. TAXES
It is not uncommon for a company to be incorporated in one place, do business in
another, and maintain its corporate headquarters in a third. This type of diverse
geographical activity requires special attention to tax laws.
Many companies make efforts to minimize their tax liability by shifting the location of
income. For example, it has been estimated that tax avoidance by foreign companies
doing business in the United States cost the U.S. government several billion dollars each
year in lost revenue.
There are no universal international laws governing the control of taxes on companies
that do business across national boundaries. To provide fair treatment, many
governments have negotiated bilateral tax treaties to provide tax credits for taxes paid
abroad.
For example: The United States has dozens of such agreements in place. In 1977, the
Organization for Economic Cooperation and Development (OECD) passed the Model
Double Taxation Convention on Income and Capital to help guide countries in bilateral
negotiations.
5. 4. DILUTION OF EQUITY CONTROL
Political pressure for national control of foreign-owned companies is a part of the
environment of global business in lower-income countries. The foremost goal of national
governance is to protect the right of national sovereignty, especially in all aspects of
domestic business activity.
Host-nation governments sometimes attempt to control ownership of foreign-owned
companies operating within their borders. In underdeveloped countries, political
pressures frequently cause companies to take in local partners.
India passed in 1973 the Foreign Exchange Regulation Act (FERA), which restricted
foreign equity participation in local projects to 40 percent. Many companies decided to
leave India before giving the control of their business to local goverments
6. 5. EXPROPRIATION
The ultimate threat a government can pose toward a company is expropriation.
Expropriation refers to governmental action to dispossess a company or investor.
Compensation is generally provided to foreign investors, although not often in the
"prompt, effective and adequate" manner provided for by international standards.
Nationalization occurs if ownership of the property of assets in question is transferred
to the host government. If no compensation is provided the action is referred to as
confiscation.
Short of outright expropriation or nationalization, the phrase creeping expropriation
has been applied to severe limitations on economic activities of foreign firms in
certain developing countries.
These have included limitations on repatriation of profits, dividends, royalties, or
technical assistance fees from local investments or technology arrangements.
Other issues are increased local content requirements, quotas for hiring local
nationals, price controls, and other restrictions affecting return on investment.
7. Venezuela's Chavez threatens to expropriate bank
By FABIOLA SANCHEZ
Associated Press
President Hugo Chavez threatened to expropriate a Spanish-owned bank on Wednesday,
arguing that its managers have refused to grant loans to cash-strapped Venezuelans
seeking to purchase homes amid a nationwide housing deficit.
During a televised speech, Chavez accused the president of Banco Provincial, Pedro
Rodriguez Serrano, of refusing to offer loans. The Venezuelan president raised the
possibility of seizing control of the bank. Banco Provincial belongs to Spanish banks Banco
Santander SA and Banco Bilbao Vizcaya Argentaria SA.
In a statement released following Chavez's speech, Banco Provincial denied the bank has
turned its back on clients seeking loans. Last year, the bank granted loans to 3,256 families
seeking to buy homes, financed the construction of 31 residential complexes and
cooperated with the state-run National Housing Bank, approving over 1,600 requests for
housing-related loans, it said….
From: BBC.GO.COM
8. Bolivia plans to expropriate
mines
Mines were sold to private interests by
earlier governments
By Alex Emery, Bloomberg News April 13, 2011
http://www.vancouversun.com/business/Bolivia+plans+expropriate
+mines/4610801/story.html#ixzz1NxDB4v4Y
Bolivia's President Evo Morales plans to expropriate zinc, silver and tin mines sold off by
previous governments, an official said. Morales will announce a decree May 1 to
"dismantle the privatization model," said Nicolas Fernandez, a spokesman for state mining
company Corp. Minera de Bolivia, known as Comibol.
"The government is recovering all the privatized companies," Fernandez said today in a
telephone interview from La Paz. "When the decision is taken, Comibol will be ready to
manage these mines.“ Comibol may rescind contracts with companies including Glencore
International AG, Pan American Silver Corp., and Coeur d'Alene Mines Corp., La Paz-based
newspaper La Razon reported today, citing Comibol President Hugo Miranda….
9. Zimbabwe PM allays fears of foreign businesses expropriation
February 18th, 2011 in Business, News
Zimbabwean Prime Minister Morgan Tsvangirai has allayed fears of expropriation of
foreign businesses under the country’s controversial indigenisation regulations, assuring
visiting German investors on Thursday that the measures have not been adopted yet by
government.
The Indigenisation Regulations published last year by the Minister of Youth Development,
Indigenisation and Empowerment, Saviour Kasukuwere, have caused consternation
among new and existing investors.
Tsvangirai told a visiting German business delegation, Afrika-Verein, that the regulations
would not be used to expropriate investors’ properties. "The indigenisation law was
passed in 2004 by ZANU PF and for four years they could not implement it because there
was no clarity on how to undertake the process….
Under the regulations, which were published in February last year, foreign investors are
required to cede at least 51 percent of their shareholdings to black Zimbabweans and
those who violate the law are liable to a two-year imprisonment.
Tsvangirai noted that the regulations were published prematurely ….
10. THE LEGAL ENVIRONMENT
I. INTERNATIONAL LAW
International law may be defined as the rules and principles that nation-states consider
binding upon themselves. There are two categories of international law: public law, or
the law of nations; and international commercial law, which is evolving. International
law pertains to trade and other areas that have traditionally been under the jurisdiction of
individual nations.
II. ESTABLISHMENT
Under what conditions can trade be established? To transact business, citizens of one
country must be assured that they will be treated fairly in another country.
Before doing business in a foreign country, organizations need to know the established
rules for international commerce and how likely a government is willing to uphold these
laws
11. International trade agreements provide organizations from any country the right
to nondiscriminatory treatment in trade, the reciprocal right to establish a
business, and, particularly, to invest.
Commercial treaties provide one with the privilege, not the right, to engage in
business activities in other than one's own country. This can create problems for
business managers who may still be under the jurisdiction of their own laws even
when they are out of their native country.
U.S. citizens, for example, are forbidden by the Foreign Corrupt Practices Act to
give bribes to an official of a foreign government or political party, even if bribes
are customary for conducting business in that country.
12. III. JURISDICTION
Company personnel working abroad should understand the extent to which they are
subject to the jurisdiction of host-country courts.
Employees of foreign companies working in the United States must understand that
courts have jurisdiction to the extent that the company can be demonstrated to be
"doing business" in the state in which the court sits.
The court may examine whether the foreign company maintains an office, solicits
business, maintains bank accounts or other property, or has agents or other employees
in the state in question.
IV. INTELLECTUAL PROPERTY: PATENTS, TRADEMARKS and COPYRIGHTS
Patents and trademarks that are protected in one country are not necessarily protected
in another, so global markets must ensure that patents and trademarks are registered in
each country where business is conducted.
A copyright is (as the word says) the right to copy an original work (literature, audio,
video, etc), trade with it and make a profit.
13. V. ANTITRUST
The word trust is a synonym of cartel
Antitrust laws are designed to combat restrictive business practices and to encourage
competition.
In the U.S. The Sherman Act of 1890 prohibits certain restrictive business practices,
including fixing prices, limiting production, allocating markets, or any other scheme
designed to limit or avoid competition.
The law applies to foreign companies conducting business in the United States and
extends to the activities of U.S. companies outside U.S. boundaries as well if the
company conduct is deemed to have an effect on U.S. commerce contrary to law.
Similar laws are taking on increasing importance outside the United States as well.
The European Commission prohibits agreements and practices that prevent, restrict, and
distort competition. The interstate trade clause of the Treaty of Rome applies to trade
with third countries, so that a company must be aware of the conduct of its affiliates.
14. Google and EU in antitrust
resolution talks: source
Google has begun preliminary talks with
European Union regulators in an effort to
resolve an antitrust investigation that began in
November, according to a source cited by
Reuters today.
(Reuters) - Google and European Union regulators are in tentative talks to resolve an
antitrust probe against the Internet's dominant search engine, a source familiar with
the case said on Monday.
A deal could avert a lengthy battle and possible fine for the U.S.-based company.
The European Commission opened an investigation into Google last November after
three complainants accused it of abusing its position by demoting rival sites in search
results and giving preference to its own services.
"There is some interest from both sides, some tentative discussions in resolving the
issue, but no really concrete proposals on the table," the source told Reuters.
A Commission spokeswoman said the EU executive was not in discussions with Google
at the moment and was still reviewing the case.
15. EU Antitrust Probe Includes Asian Carriers
Peter T. Leach | May 18, 2011 7:08PM GMT
The Journal of Commerce Online –
Shipping lines confirm office raids
European Union antitrust officials raided the European offices of a number of Asian
carriers on Tuesday in addition to European shipping lines as part of a probe into
suspected price fixing in the sector, the lines said on Wednesday.
Neptune Orient Lines, OOCL, Evergreen Marine and Hanjin Shipping all said that were part
of a European Commission investigation into the violation of antitrust rules.
EU regulators on Tuesday raided several liner shipping companies including Maersk
Line, CMA CGM, and Hapag-Lloyd.
The European Commission, the EU’s executive wing, said it “has reason to believe the
companies concerned may have violated the antitrust rules that prohibit cartels and
restrictive practices and/or abuse of a dominant market position.”
The EU outlawed price-setting liner conferences in October 2008 when it abolished
carriers’ long-standing exemption from antitrust enforcement….
16. VI. THE WORLD TRADE ORGANIZATION AND ITS ROLE IN INTERNATIONAL TRADE
In 1948 when 23 countries underlined in the General Agreement on Tariffs and Trade
(GATT) their determination to reduce import tariffs, this was considered a milestone in
international trade relations. GATT is based on three principles.
The first concerns nondiscrimination: Each member country must treat the trade of all
other member countries equally.
The second principle is open markets, which are encouraged by the GATT through a
prohibition of all forms of protection except customs tariffs.
Fair trade is the third principle, which prohibits export subsidies on manufactured
products and limits the use of export subsidies on primary products.
In reality, none of these principles is fully realized as yet, although much progress was
made during the Uruguay Round on issues such as nontariff barriers, protection of
intellectual property rights, and government subsidies.