INTERNATIONAL FREE TRADE

Question 1

Several international institutions introduced after the World War II comprising the General Agreement on Tariffs and Trade (GATT), renamed in 1995 as the World Trade Organization (WTO), World Bank, and International Monetary Fund (IMF) have played a significant task in fostering free trade instead of protectionism.
World Trade Organization or (WTO) represents the chief international organization that helps encourage free trade through creating rules regarding international trade. WTO’s chief function is ensuring that trade runs as efficiently, predictably and liberally as possible. The organization’s heart possesses WTO agreements, agreed and signed by numerous of the globe’s trading countries. The World Bank group has definite trade initiatives, which are aimed at fostering Free trade they comprise (Kelly, McGowen, & Williams, 2014);

  • Promoting multilateral trading structures that are helpful to economic development and growth
  • Encouraging trade competitiveness to become the centerpiece of the trading nations development strategies
  • Fostering trade and funding of related improvements through its “Aid for Trade” initiatives.

The International Monetary Fund (IMF) additionally has major roles to play towards fostering international trade, they comprise;

a. Promoting international monetary collaboration;

b. Facilitating the development and impartial expansion of international trade;

c. Promoting the exchange steadiness;

d. Aiding the founding of a multilateral payments framework;

e. Extending IMF’s general resources temporarily accessible to the members through adequate safeguards

Question 2

Trade liberalization entails removal of barriers to trade among dissimilar nations and fostering free trade. Trade Liberalization possesses numerous benefits (Kelly, McGowen, & Williams, 2014)

  • Trade liberalization permits nations to specialize in manufacturing the products and services that they own a comparative advantage enabling a net increase in economic benefit.
  •  The elimination of tariff barriers results to reduced prices for customers. E.g. eliminating food levies could help decrease the price of agricultural products. This may mainly a benefit for states who import food.
  •  Trade liberalization implies companies will face larger competition from overseas. This acts as an encouragement to increase effectiveness and reduce costs. Additionally it could act as an inducement for a nation to move resources towards new factories where competitive advantage can be maintained. For instance, trade liberalization has encouraged the UK to focus less on production activities and greatly towards the service sector.
  • Trade liberalization permits bigger specialization. Economies focus on manufacturing specific goods. This can permit huge effectiveness savings through economies of scale.

According to Woolcock (2007) the EU has move beyond reducing tariffs and non-tariff barriers, eliminating quotas, to trading amongst member countries and creating a customs union. The European Union has shifted toward even bigger economic incorporation by turning to be a common market; this arrangement abolishes impediments to the movement of production factors, for instance capital and labor, amongst participating nations. The European Union as a common market manages and harmonizes every nation’s tax, manufacturing, along with agricultural policies (Kaberia, 2007).

Question 3

Business doing business face huge challenges overseas due to differences in many aspects between their home countries and the host countries. These challenges might even lead to closure of business if they remain unaddressed. According to Kelly, McGowen, & Williams (2014) each nation has varied cultural etiquette, thus, being uninformed of them and make a socially unethical deed can harmfully affect the business dealings. Many companies have indicated that cultural differences form the biggest challenges of conducting business overseas. It is extremely significant to discover the cultural diversities in international business regarding what is acceptable in the host nation. This regards what may regard as odious in the host country.
Secondly, there are diverse quality standards in every country, regarding the industry. A fresh business setting requires a new set of business decorum that ought to be promptly learnt. The Corporation should seek to hire the locals of the state where you are undertaking the business.
Thirdly, as a result of rising terrorism incidences that are continuously occurring, there exist numerous political dramas amongst various international states. This evidently affects their trade relations, openly or indirectly. Thus, a constructive political relationship between the home nation and a probable foreign market implies a blessing for the business (Reuvid & Sherlock, 2011).

Fourthly, doing business internationally requires the business to be able to overcome foreign exchange variation barriers. Additionally, a business should ensure that it owns adequate financial backing to offer a cushion towards unpredicted financial mishaps.

Question 4

Ethics entails studying what is correct or wrong, along with doing the correct thing however “the right thing” is never almost as simple as indicated many business ethics literatures. Ethics initiatives ought to arise naturally from the business culture along with hiring ethical staffs will reduce unethical conduct in the corporation. Additionally, staffs from dissimilar backgrounds should be offered a universal understanding regarding what is deemed as ethical conduct via official training, therefore forming an ethical corporation climate. This can attain effective business ethics (Kelly, McGowen, & Williams, 2014). Furthermore, dire consequences should be directed to staffs extending unethical behavior that hurt the business along with fellow employees. Changes are required in the regulatory structure, in the corporation ethics programs in the business. Among the mainly the major reasons of unethical issues regards monetary gain, thus the business should ensure that the workers are properly remunerated. Honest administration should be entwined with managing the business coupled with appropriate rewarding/motivating processes that influence staff decision making and behaviors may result in reductions of unethical behaviors. Ethical behaviors should be initiated and maintained by managers since employees look to their supervisors, meaning, that once managers engage in unethical behavior the juniors will definitely engage in the same conducts (Finance Train, 2012).

References

Finance Train (2012). Role of International Organizations (IMF, World Bank and WTO). Retrieved from: http://financetrain.com/role-of-international-organizations-imf-world-bank-and-wto/

Kaberia, D. K. (2007). World Trade Organization (WTO) and its Role in International Trade: with Case three Case Studies (Philippines, China and United States of America. Retrieved from: http://www.uwsp.edu/forestry/StuJournals/Documents/IRM/kaberia.pdf

Kelly, M., McGowen, J., & Williams, C. (2014). BUSN 6.

Reuvid, J. and Sherlock, J., (2011). International Trade: An Essential Guide to the Principles to the Principles and Practice of Export. 1st ed. India: Kogan Page Publishers, Inc..

Woolcock, S. (2007). European Union policy towards Free Trade Agreements. Retrieved from http://www.felixpena.com.ar/contenido/negociaciones/anexos/2010-09-european-union-policy-towards-free-trade-agreements.pdf

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