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Laws that Affect Market Choice

Laws that Affect Market Choice. US laws Domestic policy Foreign policy Foreign laws Legal systems Risks Regional laws and structures (Economic Integration) International laws and structures. Home Country Laws.

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Laws that Affect Market Choice

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  1. Laws that Affect Market Choice • US laws • Domestic policy • Foreign policy • Foreign laws • Legal systems • Risks • Regional laws and structures (Economic Integration) • International laws and structures

  2. Home Country Laws • General Domestic Laws that Indirectly Affect International Matters (Domestic Policy) • Domestic Laws that Directly Affect International Matters (Foreign Policy)

  3. Domestic Laws for International Matters • Embargos & Sanctions

  4. Definitions • Embargo: Broad prohibition of trade as part of domestic law • Sanction: Similar, but usually focused on specific type of good or activity • Political reasons • Human rights • Nuclear controls • Antiterrorism • Unilateral/Multilateral

  5. Negatives? • Economic cost ($20 billion?) • Effective? • Dangerous?

  6. Domestic Laws for International Matters • Embargos & Sanctions • Export Controls

  7. Export Control Goals • Prevent military use by enemies • Antiterrorism • Crime control • Protect short-supply products (EAR) • Part of embargo or sanctions

  8. US Export Licensing Regulations • US Department of Commerce, Bureau of Industry & Security • “Soviet Union Time”

  9. Export Licensing Steps Website • What is the product? (EAR) • Where is it going? (EAR) • Who will receive it? • What is its use?

  10. Domestic Laws for International Matters • Embargos & Sanctions • Export Controls • Boycotts

  11. Domestic Laws for International Matters • Embargos & Sanctions • Export Controls • Boycotts • Antibribery Laws

  12. Foreign Corrupt Practices Act • Prohibits payment of bribes to foreign government officials • “Grease” payments are OK • Requires bookkeeping measures • OECD: Treaty system to criminalize bribery • World Bank: Helping to enforce

  13. Cultural & Ethical Differences • China prison labor • Malaysian sweatshops • Japan and Norway and whaling • Brazilian rain forest

  14. Import Restrictions • Tariffs: Taxes on imports • Quotas: Numerical restriction on imports • Nontariff barriers: Noneconomic barriers • Voluntary restraint agreements

  15. Pros & Cons pros cons Consumers bear the brunt – prices Downstream effects False sense of security Escalating barriers Ineffective – can be circumvented • Protect domestic business • Save jobs

  16. Other Government Trade Policies • Export Promotions • US Export Assistance Center • Business Oregon • SBITO • Import Promotions 手を結んで輸入しよう

  17. Foreign Direct Investment • Definition: Investment by one country in another • More and more in US (instead of OUT of US)

  18. Pros & Cons pros cons Increased competition? Negative cultural impact? Overcrowding and lower quality of life? • Job creation • Technology transfer • Increased competition?

  19. How to Promote FDI? • Mainly, government function • Prospect “mining” • Hand-holding • Financial incentives (tax breaks)

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