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International Business Trading



Kirjoittanut: Oshadi Mohottiarachchi - tiimistä Kaaos.

Esseen tyyppi: Akateeminen essee / 3 esseepistettä.

KIRJALÄHTEET
KIRJA KIRJAILIJA
The International Business Environment: A Handbook for Managers and Executives
Davies & Warnock
Esseen arvioitu lukuaika on 8 minuuttia.

International Business Trading

 

Oshadi Mohottiarachchi

 

Content

 

  1. Introduction
  2. The trade– investment dichotomy
  3. The international business environment
  4. Rules of origin
  5. Safeguards
  6. Systemic and structural factors
  7. Restrictions on voluntary export restraint and orderly marketing agreements
  8. References

 

Introduction

This essay will delve into the various aspects of international trade, including its importance in the global economy, the challenges faced by companies engaged in cross-border transactions, and the strategies employed to navigate the complexities of international markets. By examining these topics, we can gain a deeper understanding of the significance of international business trading and its impact on both businesses and nations worldwide.

 

The trade– investment dichotomy

    The trade-investment dichotomy is a fundamental concept in the field of international business. When we talk about international commercial activity, we can categorize it into two main components: international trade and foreign investment. International trade refers to the exchange of goods and services between countries, involving the import and export of products. On the other hand, foreign investment involves the deployment of capital across borders, including activities such as foreign direct investment and portfolio investment. These investments contribute to the creation of businesses or the acquisition of assets in other countries. One of the key elements of the international business environment is the presence of barriers. These barriers can take various forms, such as trade restrictions, tariffs, quotas, or regulations imposed by governments. They are put in place to protect domestic industries, regulate the flow of goods and services, and ensure national security. (Davies. Warnock. 2015. Chapter 2)

A trade barrier is any action by the government of a nation-state that restricts or regulates trade. These barriers are put in place to protect domestic industries, regulate the flow of goods and services, and ensure national security. Trade barriers can include tariffs, which are taxes imposed on imported goods, as well as quotas, which limit the quantity of certain products that can be imported. Other forms of trade barriers include subsidies given to domestic industries, which provide them with a competitive advantage, and technical regulations that impose certain standards on imported products. (Davies. Warnock. 2015. Chapter 2)

A duty is a tax that is levied on the sale or movement of a product. Duties are typically imposed by governments to generate revenue or to protect domestic industries from foreign competition. They can be ad valorem, which are calculated as a percentage of the product’s value, or specific, which are based on a fixed amount per unit of the product. Duties can significantly impact international trade by affecting the cost and competitiveness of imported goods. In international trade, the term tariff or customs tariff refers to a customs duty that is fixed and listed on a customs tariff schedule. Duties can significantly impact international trade by affecting the cost and competitiveness of imported goods. Higher tariffs can make imported goods more expensive, thereby reducing their competitiveness in the domestic market. This can incentivize consumers to prefer domestically produced goods, leading to an increase in demand for local products. (Davies. Warnock. 2015. Chapter 2)

 

The international business environment

The international business environment is a complex and dynamic landscape that is shaped by various factors. It encompasses both the external and internal forces that impact businesses operating on a global scale. Factors such as political stability, economic conditions, cultural differences, and legal frameworks all play a role in shaping the international business environment. In this context, businesses must navigate through a myriad of challenges and opportunities as they seek to expand their operations beyond their domestic borders. Factors such as political stability, economic conditions, cultural differences, and legal frameworks all play a role in shaping the international business environment. In this context, businesses must navigate through a myriad of challenges and opportunities as they seek to expand their operations beyond their domestic borders. This increasingly globalized landscape necessitates a deep understanding of various markets, including their unique cultural norms, consumer behaviors, and regulatory frameworks. Moreover, companies must adapt their strategies to account for geopolitical risks, such as changes in trade policies or political instability in foreign markets. (Davies. Warnock. 2015. Chapter 2)

In international trade, the term country of origin does not refer to the nation-state from where a product was exported but refers to the nation-state where the product was grown, produced, or manufactured. This concept is crucial as it plays a significant role in determining the applicability of trade agreements, determining product quality and safety standards, and establishing consumer preferences. Understanding the country of origin of a product is essential for both businesses and consumers as it provides valuable information about the product’s sourcing, manufacturing processes, and potential risks or benefits associated with its production. Additionally, the country of origin can also influence consumers’ purchasing decisions, as many consumers prioritize supporting local industries or have preferences for products from certain countries known for their expertise or quality. (Davies. Warnock. 2015. Chapter 2)

 

Rules of origin

Rules of origin are an integral aspect of international trade, serving to determine the country of origin of a product and establish its eligibility for preferential trade agreements. These rules aim to prevent trade deflection and ensure that only products originating from specific countries benefit from preferential tariffs. In essence, they help maintain the integrity of trade agreements by verifying the authenticity of a product’s origin. Rules of origin can be complex, as they involve determining the percentage of value added by each country in the production process. In essence, they help maintain the integrity of trade agreements by verifying the authenticity of a product’s origin. Rules of origin can be complex, as they involve determining the percentage of value added by each country in the production process. Non-preferential rules of origin are another category of rules that are applied to countries that do not have preferential trade agreements in place. These rules serve to establish the country of origin for products traded between countries that do not have a special trade relationship. (Davies. Warnock. 2015. Chapter 2)

In the field of international business, a concept that holds great significance is that of substantial transformation. When the manufacture of a product includes processes in more than one country, the determination of its country of origin becomes crucial in terms of trade regulations and benefits. Substantial transformation refers to the process through which a product undergoes significant changes or alterations that result in a new and distinct entity. This principle helps in determining the origin of a product by identifying the country where the substantial transformation occurred. (Davies. Warnock. 2015. Chapter 2)

Most countries use one of three methods for determining substantial transformation. This principle, which is crucial in international trade, helps in determining the origin of a product by identifying the country where the substantial transformation occurred. By focusing on the location where the product undergoes significant changes or alterations, this method provides clarity and consistency in establishing a product’s country of origin. These three methods include the “wholly obtained” principle, the “substantial transformation” principle, and the “tariff shift” principle. (Davies. Warnock. 2015. Chapter 3)

If we dig into the change-in-tariff-classification method, we can explore how it fits into the broader context of determining the country of origin for a product. This method involves looking at the specific classification code assigned to a product under a customs tariff schedule. If there is a change in the classification code due to the production or manufacturing process, it can indicate that substantial transformation has occurred in a particular country. In other words, this method focuses on the changes in tariff classification as an indicator of where the product was transformed in a significant way. (Davies. Warnock. 2015. Chapter 3)

The “wholly obtained” principle is a state that a product is considered to be originating from a particular country if it is wholly obtained or produced in that country. For example, if a product is made entirely from raw materials that are sourced and processed within a specific country, it can be considered as wholly obtained from that country. The special-processing rule uses a list of special-processing operations that further define substantial transformation. These operations include things like milling, pressing, assembly, or a combination of these activities. By using this rule, it is possible to determine whether a product has undergone significant changes that result in a new and distinct entity. This method helps in establishing the country of origin by focusing on the specific operations performed on the product. In some cases, countries modify one of these methods, combine elements from different methods, or use their own method. This method helps in establishing the country of origin by focusing on the specific operations performed on the product. By considering the nature and extent of these operations, it becomes possible to determine whether substantial transformation has occurred. This approach allows countries to tailor their rules of origin to their specific needs and objectives, accommodating different industries and trade relationships. (Davies. Warnock. 2015. Chapter 3)

Safeguards

Safeguards refer to functional mechanisms for limiting imports that may be used by specific categories of nation-states, or by a nation-state that needs to take an emergency action. These measures have been put in place to protect domestic industries from sudden surges in imports that could harm their competitiveness. Safeguards can take various forms, including tariffs, quotas, and import licensing requirements. By imposing these measures, countries can ensure that their domestic industries have a fair chance to compete in the global market. By imposing these measures, countries can ensure that their domestic industries have a fair chance to compete in the global market. Safeguards provide a way to protect against sudden influxes of imports that could potentially harm the competitiveness of local industries. These measures can take the form of tariffs, which impose additional costs on imported goods, making them less attractive to consumers. Quotas can also be implemented, limiting the quantity of goods that can be imported, effectively controlling the market share of foreign products. Another measure that can be used to regulate the flow of imports is licensing requirements. These requirements impose certain conditions on the importation of goods and can include criteria such as quality standards or certifications. In some cases, countries may also impose embargoes or trade restrictions on specific products or on certain nations due to political or economic reasons. These measures aim to protect domestic industries and promote local businesses by limiting competition from foreign entities. (Davies. Warnock. 2015. Chapter 3)

 

Systemic and structural factors

 

Systemic and structural factors play a significant role in the international business landscape. In some cases, a systemic or structural element of an importing country’s domestic business environment can act as a non-tariff barrier to trade. These barriers can include complex regulations, bureaucratic procedures, and inefficient infrastructure that hinder the smooth flow of goods and services across borders. For example, excessive paperwork requirements or lengthy customs clearance processes can delay the arrival of imported goods, adding costs and uncertainty to international trade. Some of these systemic or structural elements are governmental regulations and bureaucratic procedures that can create barriers to international trade. For instance, excessive paperwork requirements or lengthy customs clearance processes can delay the arrival of imported goods, adding costs and uncertainty to international trade. These inefficiencies can hinder the smooth flow of goods and services across borders, impacting the competitiveness of businesses and potentially limiting their ability to engage in global trade. Furthermore, inadequate or inefficient infrastructure, such as outdated ports or unreliable transportation networks, can further exacerbate the challenges faced by businesses involved in international trade. (Davies. Warnock. 2015. Chapter 2)

 

Restrictions on voluntary export restraint and orderly marketing agreements.

 

Restrictions contained in voluntary export restraint and orderly marketing agreements play a crucial role in the international business landscape. These agreements are established between governments with the purpose of preventing a surge in exports that could potentially harm industries in importing countries. Voluntary export restraints involve an agreement between the exporting country and the importing country, where the exporting country voluntarily limits the quantity of its exports to the importing country. This restriction ensures that the importing country’s domestic industries are not overwhelmed by a sudden influx of imports, allowing them to maintain their competitiveness. (Davies. Warnock. 2015. Chapter 2)

These voluntary export restraint agreements can be seen as a form of collaborative trade management, where both exporting and importing nations come to an agreement that benefits both parties. For example, the agreements between the United States and Japan, which restricted the number of Japanese cars that could be imported annually into the United States, were voluntary export restraint agreements. This helped protect the American automotive industry from excessive competition while allowing the Japanese automotive industry to continue exporting and maintaining a significant presence in the US market. Furthermore, restrictions on trade can also be imposed through the use of export duties, as seen in the case of China and the EU Textiles. In this particular scenario, the Chinese government implemented export duties on Chinese-made textiles being exported to the EU. By doing so, they aimed to protect their domestic textile industry from excessive competition in the European market. These export duties created an additional cost for Chinese textile exporters and made their products less competitive in comparison to those from other countries. (Davies. Warnock. 2015. Chapter 2)

There are other barriers to trade that can significantly impact international business. One such barrier is the imposition of anti-dumping duties, which are put in place to counteract the selling of goods below their fair market value. These duties aim to protect domestic industries from unfair competition and to prevent market distortions. Additionally, subsidies provided by governments to domestic industries can create uneven playing fields and hinder international trade. (Davies. Warnock. 2015. Chapter 2)

To conclude this essay on international business trading, it is evident that various barriers and restrictions can hinder the smooth flow of goods and services across borders. Inefficient infrastructure and inadequate transportation networks exacerbate the challenges faced by businesses involved in global trade. Furthermore, voluntary export restraint and orderly marketing agreements play a crucial role in preventing a surge in exports that could harm industries in importing countries. These agreements ensure that domestic industries are not overwhelmed, thus maintaining their competitiveness. (Davies. Warnock. 2015. Chapter 2)

 

References

 

(Davies. Warnock. 2015. The International Business Environment: A Handbook for Managers and Executives. https://andor.tuni.fi/discovery/fulldisplay?docid=cdi_askewsholts_vlebooks_9781498731164&context=PC&vid=358FIN_TAMPO:VU1&lang=en&search_scope=My_inst_and_CI_extended_search&adaptor=Primo%20Central&tab=Everything&query=any,contains,The%20International%20Business%20Environment%20&mode=basic)

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