Global Business

  1. Free Trade - Tariffs (a tax imposed on imported goods) between member countries are significantly reduced, and some are abolished altogether. Each member country keeps its tariffs regarding third countries, including its economic policy. The general goal of free trade agreements is to develop economies of scale and comparative advantages, promoting economic efficiency. A challenge concerns resolving disputes as free trade agreements tend to offer limited arrangements and dispute resolution mechanisms. Therefore, they are prone to the respective influence and leverage of the involved nations, which can lead to different outcomes depending on their economic size. A large and complex economy having a free trade agreement with smaller economies is better positioned to negotiate advantageous clauses and dispute resolution

  2. Custom union. Sets common external tariffs among member countries, implying that the same tariffs are applied to those countries; a common trade regime is achieved. Custom unions are particularly useful to level the competitive playing field and address the problem of re-exports where importers can be using preferential tariffs in one country to enter (re-export) another country with which it has preferential tariffs. Movements of capital and labor remain restricted.

  3. Common market. Services and capital are free to move within member countries, expanding scale economies and comparative advantages. However, each national market has its own regulations, such as product standards, wages, and benefits.

  4. Economic union (single market). All tariffs are removed for trade between member countries, creating a uniform market. There are also free movements of labor, enabling workers in a member country to move and work in another member country. Monetary and fiscal policies between member countries are harmonized, which implies a level of political integration. A further step concerns a monetary union where a common currency is used, such as the European Union (Euro).

  5. Political union. Represents the potentially most advanced form of integration with a common government and where the sovereignty of a member country is significantly reduced. Only found within nation-states, such as federations where a central government and regions (provinces, states, etc.) have a level of autonomy over well-defined matters such as education.

  6. Reasoning – The process of forming conclusions, judgments, or inferences from facts or premises.

  7.  Effect – a result, consequence.

  8.  Control – To exercise restraint or direction over; dominate; command.

  9.  Regulation – A law, rule, or other order prescribed by authority, especially to regulate conduct.

  10.  Business Behavior – The manner of behaving or acting as a person, partnership, or corporation engaged in commerce, manufacturing, or a service; profit-seeking enterprise or concern.

  11.  Analyze – To examine carefully and in detail to identify causes, key factors, possible results, etc.

  12.  Foreign Corrupt Practices Act – Legislation signed into law in 1977 that prohibits US firms from engaging in bribery and other unlawful and fraudulent practices when conducting business in foreign countries. The legislation assigned responsibility for FCPA enforcement to the US Department of Justice with supporting roles played by the Securities & Exchange Commission (SEC) and the Office of General Counsel of the Department of Commerce.

  13.  International Law – Body of legal rules governing interaction between sovereign states (Public International Law) and the rights and duties of the citizens of sovereign states towards the citizens of other sovereign states (Private International Law).

  14.  Conduct – Personal behavior; way of acting; bearing or deportment.

  15. FCPA - anti bribery provisions - unlawful to make payments to foreign gov't officials to assist in obtaining or retaining business

  16. FCPA requirements  - corrupt intent; - payment must be intended to induce recipient to misuse his/her official position to direct business wrongfully to the payer or any other person; doesn't need to succeed

  17. What constitutes a payment - any individual, firm, officer, director, employee, or agent, and any stockholder acting on behalf of a firm

  18. What is a foreign official - any officer or employee of a foreign gov't, a public international organization, or any department or agency thereof, or any person acting in an official capacity

  19. Payment exceptions - - issuing documents and permits; processing papers; providing police protection; mail pickup & delivery; loading and unloading cargo

  20. Defenses - lawful under written laws and regulations of the foreign official’s country; a reasonable and bona fide expenditure aka has to be real, travel expenses