INTERNATIONAL MARKETING CH2

WORLD TRADE ORGANIZATION

Established 1995. Replaced GATT as the major institutional framework for global trade rules.

Trade rules
Negotiations
Dispute settlement
Trade cooperation

TARIFFS

A tax or fee imposed on imports.

Specific Tariff

Fixed amount per unit

Ad Valorem Tariff

Fixed Percentage of value

NON-TARIFFS BARRIERS

Quotas
Import license
Export restrictions
Subsidies
Government procurement rules
Domestic content requirements
Product standards
Regulations

Trade Liberalization

Reduce trade barriers
→ More international trade

Protectionism

Increase barriers
→ Protect domestic industries

REGIONAL ECONOMIC INTEGRATION

Countries cooperate to reduce barriers, increase trade, and coordinate economic policies.

Free Trade Area

Remove internal trade barriers.

Customs Union

FTA + common external trade policy.

Common Market

Customs union + movement of labor and capital.

Economic Union

Common market + coordinated economic policies.

TRADE DIVERSION

Trade shifts because the member receives preferential treatment.

United Nations

Primary purpose relevant to this chapter: Promoting peace and international stability.

DUMPING

Selling a product in a foreign market at an unusually low price.

FDI

Investment by a company or investor in business operations located in another country, with an intention of establishing a lasting interest or influence.

International Trade

Exchange of goods/services between people or entities in different countries.

Balance of Payments

A record of a country's economic transactions with the rest of the world.

Trade Surplus

Value of exports exceeds value of imports.

Trade Deficit

Value of imports exceeds value of exports.

Foreign Exchange

Means for settling accounts/payments across borders (currency exchange).

Hedging

A strategy firms use to manage/reduce exchange rate risk exposure.

GATT

General Agreement on Tariffs and Trade (1947) — series of rules to reduce tariffs and promote free trade; predecessor to the WTO.

WTO

World Trade Organization — institution (est. 1995) overseeing global trade rules and settling trade disputes.

Most-Favored-Nation (MFN)

Principle requiring that a trade benefit given to one country be extended to all other member countries.

Tariff

A tax imposed on imports (or exports).

Specific Tariff

Fixed charge per unit of imports.

Ad Valorem Tariff

Tariff as a fixed percentage of the value of the good.

Non-Tariff Barrier

Trade restrictions other than tariffs (quotas, licensing, subsidies, standards, etc.).

Regional Economic Integration

Cooperation among neighboring countries to reduce trade barriers (e.g., free trade areas, customs unions).

Trade Creation

New trade opportunities created by removing barriers within a trade bloc.

Trade Diversion

Shift of trade toward a less efficient producer simply because it's within the trade bloc.

Trade Liberalization

Reducing tariffs/barriers to make trade freer.

Protectionism

Increasing tariffs/barriers to protect domestic industries.

FDI (Foreign Direct Investment)

Investment in/acquisition of foreign assets with intent to control and manage them.

Dumping

Exporting a product at a price lower than domestic price or below production cost.

Marketing

Creating, communicating, and delivering value while managing customer relationships.

International Marketing

Marketing activities conducted across national borders.

Export Marketing

Selling goods or services across national or political borders.

Multinational Marketing

Multiple countries; markets may be managed relatively independently; local adaptation is important. (Polycentric perspective)

Global Marketing

Worldwide perspective; markets and resources are coordinated to create global competitive advantage. (Geocentric perspective)

Globalization

Increasing economic, cultural, political, and technological interconnectedness across countries and markets.

Standardization

Using a similar or consistent marketing approach across markets.

Customization

Adapting the marketing approach to local market conditions.

CAGE Framework

A framework explaining four dimensions of distance between countries