Copyright Atomic Dog Publishing, 2002 International Expansion Trade Barriers Trade Facilitators.
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Transcript of Copyright Atomic Dog Publishing, 2002 International Expansion Trade Barriers Trade Facilitators.
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Copyright Atomic Dog Publishing, 2002Copyright Atomic Dog Publishing, 2002
International Expansion
• Trade Barriers
• Trade Facilitators
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International Trade Most int’l trade consists of the purchase & sale of
industrial equipment, consumer goods, oil & agricultural products
Federal Reserve Bank of New York
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Copyright Atomic Dog Publishing, 2002Copyright Atomic Dog Publishing, 2002
What factors encourage companies to take their business abroad?
• Competition• Trade agreements• Economic Growth• Move to Market
Economy
• Keep up w/competition• Market opportunities• Profitability• Extend mature phase of
PLC
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International Trade & Trade Policy
Opinions on trade
Protectionism - regulate trade to protect home markets
- Trade barriers
Free Trade – an open global market- Trade facilitators
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Copyright Atomic Dog Publishing, 2002Copyright Atomic Dog Publishing, 2002
Barriers/Facilitators to Trade
• Barriers: Import restrictions, standards, boycotts/embargos, other
• Facilitators: International Organizations U.S. Government Organizations Other (incl. Foreign Trade Zones)
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Trade Barriers• Import Policies:
Tariffs - taxes/duties levied against imported goods.- A tax of 15% makes jewelry from Mexico more expensive than
jewelry made in the United States. Quotas - limits quantity or dollar amount of goods allowed in
the host country- Korea may export only 15,000 automobiles a year to the United
States. Import Licenses - like quota, but on a case-by-case basis
• Standards: health, quality, safety, labeling, certification
- The rungs on the ladder of any bulldozer sold in Germany must be 12 inches apart; US manufacturers generally make rungs 15 inches apart.
National Council on Economic EducationCopyright © 2000-2004 EconEdLink. All rights reserved.
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Trade Barriers
• Other Voluntary Agreements - reciprocal limits between 2 countries to
avoid penalties by one
Monetary Barriers – e.g., Exchange Permit - government permit required to convert local currency into foreign (U.S.) money for transfer abroad.
Anti-dumping penalties – penalties for underpricing goods in a foreign market in order to shut out the competition abroad.
Other Restrictions - e.g., language laws, product labels, religious conventions, etc.
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Example: Honduras
• 15% tariff on finished goods
• Exchange permit required
• Strict sanitary standards; Sanitary permit required
• Label law; labels must include sanitary registration number
Country Commercial Guide
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Barriers to International Trade: Boycotts & Embargos
• Boycotts – “can’t buy from” ban on the purchase of all goods associated with a particular
company and/or country
• Embargos –”can’t sell to” Prohibits all business deals with the target country
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Facilitators of International Trade
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International Trade/Development Organizations
• History
• Organizations: World Trade Organization International Monetary Fund (IMF) Development Banks – e.g., World Bank
• United Nations Organizations
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Copyright Atomic Dog Publishing, 2002Copyright Atomic Dog Publishing, 2002
International Monetary Fund
• Founded 1944 to prevent another world-wide depression
• Oversees world economic situation
• Monitors countries’: Balance of payments Financial sector Economies
• Provides assistance
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The World Trade Organization (WTO)
• 150 member countries
• A forum of governments to negotiate trade agreements via: A negotiating forum A set of overriding rules
• Purpose: “to help trade flow smoothly, freely, fairly and predictably” remove barriers to international trade Settle trade disputes
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Government Organizations Facilitating International Trade
• United States Agencies US Agency for International Development (USAID) US Department of Commerce Export-Import Bank of the United States State and Local Government Agencies Department of State Small Business Administration Department of Agriculture
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Non-government Organizations that Facilitate International Trade
Commercial banks Export intermediaries Chamber of commerce and trade associations American chambers of commerce abroad International trade consultants and other advisors
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Copyright Atomic Dog Publishing, 2002Copyright Atomic Dog Publishing, 2002
Free Trade Zones
• Tax-free area not considered part of the country in terms of import regulations