Tariff and Non Tariff Barriers

Tariff and Non Tariff Barriers

• 1.
  Forms of InternationalBusiness • Trade • International licensing of technology and intellectual property (trademarks, patents and copyrights) • Foreign direct investment 1
• 2.
  Trade • Exporting • Importing •Government controls over trade: tariffs and non-tariff barriers • Role of trade in services 2
• 3.
  Trade • Exporting: shipmentof goods or the rendering of services to a foreign buyer • Importing: process of buying goods from a foreign supplier and entering them into the customs territory of a different country 3
• 4.
  Trade: Government controls over trade Tariffs: import duties or taxes imposed on goods entering the customs territory of a nation Why impose? revenue collection, protection of domestic industry, political control 4
• 5.
  Trade: Government controls •Non-tariff Barriers: all barriers to importing or exporting other than tariffs ex. product standards • Quota: restriction imposed by law on the numbers or quantities of goods or of a particular type of good • Embargo: a total or near total ban on trade with a particular country e.g. used against Iraq in 1990 5
• 6.
  Trade: trade inservices • Travel, banking, insurance and securities, professional services (law & architecture) Trade: exporting • Direct: often use foreign sales agents • Indirect: use export trading companies 6
• 7.
  Intellectual Property and Licensing • Definitions – Copyrights: legal rights to an artistic or written work – Trademarks: the legal right to use a name or symbol; that identifies a firm or its product – Patents: governmental grants to inventors assuring them of the legal right to produce, use and sell their invention for a period of years 7
• 8.
  International Licensing Agreements • International licensing agreements: contracts by which the holder of intellectual property will grant certain rights in that property to a foreign firm to use for a period of time under certain conditions in return for a licensing fee • How does this work as a business model? • Technology transfer: exchange of technology and know how between firms in different countries through licensing 8
• 9.
  Protecting Intellectual Property isa key issue for your business • Inventory and secure your intellectual property as you would a building • Difficult, Why? • What is piracy? 9
• 10.
  Legal and PoliticalIssues in Technology Transfer Agreements • Regulated by some governments – generally in Asia, Latin America, and the Middle East – terms restricted to benefit the developing country 10
• 11.
  Foreign Direct Investment •Ownership and active control of ongoing business concerns including investment in manufacturing, mining, farming and other production facilities • Multinational corporation • Wholly owned foreign subsidiary • Joint venture • Mergers and acquisitions 11
• 12.
  International Framework for Trade • Trade liberalization: efforts of governments to reduce tariffs and non- tariff barriers • General Agreement on Tariffs and Trade, 1947 – Sets rules on how member nations will regulate international trade • WTO: 1995 came into existence 12
• 13.
  How do youmanage the risks of international business? • Consider “ The management of international business is the management of risk.” 13
• 14.
  Managing Risk: Risk Assessment • Market entry strategy • Shifting the risk • Using the contract to fix responsibility, allocate risk and price accordingly • Payment and credit risk, property risk, delivery risk • Managing distance and communications 14
• 15.
  Managing Risk • Managinglanguage and cultural differences • Managing currency and exchange rate risk 15
• 16.
  Ethical Issues • Bribes? • Child labor? • Different working conditions and wages? • Corporate response? 16
• 17.
  Contracts Clauses ofthe Intellectual Property’s Protection • Geographic limit • Field of use limitations • Output/ customer restrictions • Confidentiality • Ownership/use • Disclose improvements • Grant back • Termination • Non competition 17
• 18.
  Franchising: International Licensing Pitfalls • Duration •Counter trade • Royalty •Tax laws • Trademark protection •Language • Competition laws problems • Tied purchase •Disclosure • Geographic exclusivity • Repatriation 18