What Does Economic Interdependence Mean for A Firm?
Identify organizations that enable economies to cooperate: e.g. WTO
Identify Multinational Markets that enable countries to cooperate: e.g. EU, policies
Identify and understand how to gain information on barriers to trade - ITC web site
Learn how to identify opportunities for strategic market entry - what does a country need?
 

Global Cooperation - GATT
GATT = General Agreement on Tariffs and Trade
is a system of bilateral agreements
formed after World War II
works toward tariff reduction and nondiscriminatory practices
Last round of talks -Uruguay Round - 1986 to 1994
Set up the WTO

Role of GATT and WTO
GATT
Most favored nation concept (MFN) - UPDATE
Uruguay round
WTO - http://www.wto.org
Exhibit 2-5 “Summary of the Final Act of the Uruguay Round of GATT”
WTO -friend or foe???
144 Countries in WTO as of 1 January 2002

Cooperation - WTO
World Trade Organization
formed by GATT at the Uraguay Round in 1994
takes in GATT and other issues
sets rules, relies on a panel of experts to settle disputes
full participation of all members

Suppose you were put in charge of protecting your company’s logo
   on the Internet - where would you start?

Cooperation - IMF
International Monetary Fund
works for stabilization of foreign exchange rates
facilitates trade when currencies are weak
establishes freely convertible currencies
SDR = Special Drawing Rights - trading in a medium based on avg base

Regional Economic Arrangements Multination Trading Blocs
European Union (EU)
 North American Free Trade Agreement (NAFTA)
 European Free Trade Area (EFTA)
EU plus Finland, Sweden, Norway, Iceland, Austria, Liechtenstein, Switzerland.
MERCOSUR Southern Cone Free Trade Area (Brazil, Argentina, Uruguay, Paraquay plus Chile)
Andean Group in South America

Regional Economic Arrangements (cont)
Gulf Cooperation Council (GCC) in West Africa
South Asian Agreement for Regional Cooperation  (SAARC) India, Pakistan, Sri Lanka, Bangladesh, Nepal, Maldives, Bhutan
ASEAN:  www.aseansec.org

 Regional Economic Arrangements: Changing levels of common agreement
Free trade areas - free trade within/own external policies - e.g. NAFTA
Customs Unions - free trade areas plus common external tariffs
Common Markets - free trade within, common external, plus free flow of labor and capital
Monetary Union - common currency and common central bank
Political Union

Global Economic Environment Ten Big Emerging Markets (BEM’s)
Chinese Economic Area CEA (China, HongKong, Taiwan)
India
South Korea
Mexico
Brazil
Argentina
South Africa
Poland
Turkey
Assn of Southeast Asian Nations - ASEAN (Indonesia,Brunei,Malaysia,Singapore, Thailand, Philippines, Vietnam)

Identify Economic Environment Within a Country
Market economy vs command economy
Market economy - supply and demand determine price
Command- govt determines supply and price, which affects demand
Move to privatization

Do Country-Specific Organizations Exist?
A form of business organization that links companies in industrial groups
Japan is a good example - keiretsu
Korea - chaebols
mutual shareholding
meetings of executives
preferential treatment between member buyers and sellers

The Importance of Infrastructure
Exhibit 2-3 “Telecommunications Hotspots”
Highly positive relationship between the number of telephone lines
    per hundred people and the GDP of a nation
Leapfrogging to cellular phones

Foreign Corrupt Practices Act
US law, makes it illegal for companies to pay bribes
Amended by Omnibus Trade and Competitiveness Act of 1988:
    reduced liability of corporate offices from having reason to know
    about bribes, and also permits lubrication payment if customary in the culture
National Security:  controlled products

A Critical Strategic Issue:  Intellectual Property Rights
Trade Related Intellectual Property (TRIP’s)
Information related products
Impact of the Internet - it is a global market, but laws and protection are country-specific
http://www.uspto.gov
http://www.uspto.gov/web/forms/index.html#PCT

Protection of Intellectual Property Rights
Fake products, copies, and ripoffs cost companies millions of dollars each year
Patent laws operate differently in different countries
Registration (code law) vs. prior usage (common law)
May be lost if not used within a certain time frame
International Conventions
Paris Convention for Protection of Industrial Property: 100 members, registration in 1 protects in all
Inter-American Convention: US and Latin American, same as Paris
Madrid Arrangement: 26 countries in Europe, automatic trademark protection for members


 
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