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Ibus 430 Paper

Ibus 430 Paper

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Published by Mack Ortis
Term Paper on International Business with regards to how the US interacts with the international community
Term Paper on International Business with regards to how the US interacts with the international community

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Published by: Mack Ortis on Apr 08, 2013
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IBUS 430

Group Number 2 Mack, Dione, Justin, Kawah, Huy

[INTERNATIONAL ISSUES WITH NORTH AMERICA]
A not all inclusive research paper covering North American Trade Disputes, Trade Policies, Trade Regulations, Trade Trends, and Import/Export management, marketing, and finance issues.

Latest Agreement: In April 2006. reached an agreement with U. Second. auction system. Accordingly. This article analyzes the long ongoing dispute between the countries of USA and Canada involving the softwood lumber industry. trade barriers. The U.S. this dispute had arisen in the U. the fees do not provide competitive advantage to Canadian producers.5 board feet of lumber valued at U. The following reflects on the main arguments from both the U. Beginning in the 1840s. currency of $7. the United States would drop tariffs.” In part.S. Third. is that lumber produced in the United States public timberland. softwood lumber is one of Canada’s largest exports to the United States.S. it is not a “price. Canadian share of the U.S. refers to land ownership in Canada. to suspend dispute for seven years.S. economic impacts. Even the smallest cost per unit cost differential advantage by Canadian producers results in a substantial cost advantage over U.” It resembles a “tax” imposed by the government on the “tenure holder” in return for the right to harvest government-owned natural resources of timberland. locks up prices for many years with no room for changes to accommodate market fluctuations. Fourth. the United States and Canada are one another’s largest trading partner. Stephen Harper. Lastly. As a reference to statistics. using price-mechanism analysis is not deemed applicable. United States: The U. Canada’s provinces shipped a monumental 21.S. thereafter the adverse effects to which each country endures. Lastly.S.S. Throughout the many years this dispute had been reoccurring where both sides seem to disagree on pricing strategies. in 2005 alone. and return $4 billion of the $5 billion already collected in . both CVD’s and ADD’s. market for softwood has been rising and currently accounts for a considerable 34 percent. Both sides agreed to return to the previous regime of “managed trade. As such. and the impact of unintended consequences. which are 95 percent owned by the provincial government. In reference to stumpage fees. countervailing duty (CVD) and anti-dumping (ADD) tariffs resulted to a monthly $100 million a month imposition. regulation. President George Bush Jr. over imported Canadian wood. Canada argues the difference both countries forest softwood production and marketing systems differ which invalidates the “benchmark” use for a free-market system. lumber producers base their arguments against Canada on five main issues which begin with the determination of the stumpage fees. Canada: The following points can summarize arguments presented by the Canadian side.4 billion dollars. This price mechanism used by Canada goes against market conditions therefore the stumpage fees decided by provincial governments give a favorable advantage to pricing in Canadian lumber. Canada places restrictive regulations on lumber companies with regard to the use of timberland and the sharing of infrastructure costs. Canada will not allow a non-Canadian company to acquire Canadian logs harvest in Canadian public timberlands thus does not allow non-Canadian companies to export Canadian logs. and Canada. and meets the test of “adequate remuneration” set out in U. stumpage fees in Canada are adjusted regularly to reflect any change in market conditions. producers. countervailing laws. on the contrary. In comparison.S. Canada limits timber auctions. uses an auction in a market-based system of bidding.Trade Disputes: Trade dispute between USA and Canada Summary: As it stands. Currently. Canadian Prime Minister. With the WTO’s issue on Canadian stumpage fees. which are charges Canadian lumber producers have to pay to provincial governments for the right to lumber production. Although resolutions of limited durations had been sought out. relatively 5 percent of total timberland.S. primarily in the form of U.

tariffs. Also. I believe Canada will be forced to work with the U.S.. and have made 300. I think it would be fair for the United States to implement subsidies for domestic producers in the lumber industry. Disputes over the new agreement would then be submitted to a panel of non-North American commercial arbitrators. government eliminate the tariffs completely.000 to the cost of building an average sized home. and a pattern of managed trade interim solutions. Impact of the Dispute: The U. U. Disruption of the U. New Zealand. lumber industry will continue to suffer financially from the outsourcing. when negotiations resume it is imperative for both parties to continue to resolve the lumber issue and minimize any collateral damage. Since most U. with an ongoing threat of new suppliers of lumber producing countries such as Scandinavia. market can be catastrophic for Canada’s softwood industry. goods such lumber.000 moderateincome Americans ineligible for home ownership mortgages. which ships 70 percent of its lumber production.S. in order to maintain its highest purchaser. The remaining one billion would be kept by the U.S. oil. Analysis: After reading the article. the largest bilateral trade relationship in the world estimates at a astronomical $1 billion a day between the two. would dismiss any petition for CVD’s and ADD’s on Canadian softwood exports.000-$7. have gained a small share of the growing market. The three main obstacles include a disregard for agreement. Lastly. New Zealand. the trade relationship both sustain to gain from one another has felt the negative impacts from this dispute. I feel that the U.S. Most importantly. In order. Additionally. The announcement came one day before Brazil was to begin imposing up to $830 million in sanctions with authorization . Although softwood makes up for less than 5 percent of total trade between the United States and Canada. the implementation of tariffs must be used. the price of building materials has been rising at double-digit rates. I agree with the critics from this article who doubt a lasting resolution on the basis of three factors. Considering that the United States continues to contract with Canada for such an overwhelming portion of their lumber market share.S.S. both countries will continue to dispute. quadruple the rate of inflation. the U. and Brazil Reach Agreement on Cotton Dispute Summary: The United States and Brazil have reached an agreement aimed at settling a long-standing trade dispute over American subsidies to cotton growers.S. Also a possible solution to help domestic producers would give tax credits and encourage domestic companies to purchase U. and natural gas to the USA. building industry and home owners would be negatively affected. These increases could add $5. If history repeats itself and negotiations are based on interestbased principles rather than collaborative solutions.S. Canada agreed to impose an export tax and limit its shipments of lumber if prices in the United States were to fall below their current levels. Inflation of material costs have resulted in tariffs and limited supplies.S. government decided to defy NAFTA’s panel ruling on August 2005. and Chile. After the U. Canada retaliated with considering placing duties on shipments such as energy products like electricity. Reports show that since the tariffs were imposed in 2002. and Chile. The National Association of Home Builders (NAHB) went on record demanding that the U. In 2013.S. Threats from suppliers in other countries including Scandinavia. I believe that the countries are leading towards managing their disagreement. Canada agreed to cap its share of US market at 34 percent. half of which would be disbursed to members of the Coalition of Fair Lumber Imports who initiated litigations against Canada. land-ownership structure versus strategy of acquisition. to control the balance in both domestic goods and exported goods. Lastly.S. companies already prefer Canadian lumber for its higher quality.

. windmills and bio mass technology. APEC also targeted technologies created for environmental monitoring for reduced duty (REUTERS. the reduced duty goes into effect in 2015. including the North American countries of Canada. 2012). Trade Trends: Decrease in Trade Barriers and Heightened Green Trade Initiatives The 21 member Asia-Pacific Economic Cooperation Forum (APEC) has consistently sought to promote free trade and economic cooperation throughout the Asia-Pacific region. The plan moves to recognize Santa Catarina. The Brazilian sanctions added up to $591 million in higher tariffs on a wide array of goods. Specifically the group identified 54 green technologies that will carry a duty of less than 5% when traded among APEC members. This year the members of the forum agreed to cut duties on technologies that promote economic growth while maintaining the integrity of the environment.S. the APEC forum seeks to promote the trade of Green Technology among its member nations. 2012). The goals of the TPP are to further increase trade volume among TPP member nations by decreasing trade barriers. which began in 2004. This represents the value of the retaliation the WTO had authorized for American payments to cotton producers under a marketing loan program and countercyclical loan program. If the alliance is confirmed. The WTO had ruled that American subsidies to cotton growers had violated global trade rules. Within the past few years negotiations have been largely focused on establishing a free-trade zone among key members called the Trans-Pacific Partnership (TPP). The U. which put domestic production at a disadvantage. a state in Southern Brazil. Analysis: Avoiding the immediate harmful economic effects from any trade retaliation is best for both countries.S. The TPP negotiations. the United States agreed to evaluate whether the Brazil commodity of fresh beef could be imported from Brazil while preventing the introduction of foot-and-mouth disease. Broader issues in contention would be deferred until Congress takes up the next farm bill. The U. textiles and wheat. The 54 identified technologies included power generating equipment from renewable energy sources such as solar technology. Impact of Dispute: Under a preliminary deal. I agree with the resolution because of the violation of trade agreements the United States broke. Mexico and the United States. Lastly.3 million a year. are expected to be majority completed by 2013. The U.S. including the United States. medical equipment. Besides working to establish the TPP. Also included are technologies aimed at treating water waste and repurposing recyclables. TPP will be the largest free-trade pact since NAFTA was finalized in 1994 (REUTERS. electronics. Currently 13 APEC members are included in the TPP negotiations. The WTO’s ruling was fair in its proceedings and further serves as a standard for appropriate trade guidelines worldwide. With the increase awareness of the importance of environmental research. Canada and Mexico. pharmaceuticals. cotton imports had a competitive advantage in the country. cotton industry may be impacted with the loss of subsidies whereas the Brazilian will continue to improve with funds from the resolution. would also need to set up a technical assistance fund of $147.from the World Trade Organization. as free of the disease. including autos. Brazil would hold off on retaliation in exchange for American concessions includes the modification of an export loan program as well as a temporary assistance fund for the Brazilian cotton industry.

S. imports market. corporations will have a greater incentive to produce and market green technology.S. the impact of the U. the U. and Mexico. increased global competition as a result of decreased duties should cause more rapid technological advancements amongst participating nations.S. First. Lastly. market. capitalizing on opportunity. purchases has developed in the last decade between Canada and China.S. However.S. Vietnam. Furthermore. competition between member nations will drastically increase and low-cost producing countries. job growth in the future.S. has become more time consuming and costly. At the peak of their reliance. nations that the deal will negatively impact U. the appreciation of the Canadian dollar against the U. 2012).S.S. Canada Moving Away from Dependence on U.S. however.S. 2012). Because of these restrictions trade between Canada and the U. heavy competition for U. the decision to reduce tariffs on green technology carries with it fears from many U. Canada has recently joined in the negotiations of the projected Trans-Pacific partnership. Another factor has included tightened border restriction between the two bordering countries as a result of the 9/11 terrorist attacks. will account for only two thirds of Canada's total exports (Derek Burleton. dollar has made Canadian goods less competitive in the U. Once the negotiations are finalized. such as China. Canada stands to increase trade relations with Countries like China.S. Canada’s trend towards independence from the U. Market For years Canada has relied heavily upon its trade relationship with the United States. In 2003. China beat out Canada to become the top supplier of U. Several factors have directly contributed to the decline in Canadian exports to the U. and Canada will remain significant and stable trade partners. Also. and most significantly. exports.The unanimous decision to reduce duty fees on the trade of green technologies addresses two important goals of the APEC forum: promoting the growth of the green technology sector and liberalizing trade between member nations. Relationships outside of the NAFTA alliance.S. Within the next decade.S. Due in part to the overall impact of NAFTA. Canada has slowly been moving away from their dependence on the U. Australia and Chile. purchased 85% percent of Canada’s total exports. First.S. in 2002. is set to continue. which includes the U.S. Canada has broadened its horizons to establish trade partnerships with a greater variety of countries including Europe and China and as a result have shifted a great deal of their trade focus away from the U. The formation of the Trans-Pacific Partnership (TPP) will further open global markets and encourage trade among participating members. since the global economic crisis. This partnership is an alternative trade alliance group involving nations along the Pacific Rim. the U.S. Canada’s shifted focus will likely benefit the country greatly. Also. market (Derek Burleton. will increase the number of Canadian exports significantly and help bolster the guarded Canadian economy. The overall impact of APEC’s focus should prove to be positive for the global economy as well as the green sector. In addition to incentive. it is projected that the U. As a result of their effort. this agreement may negatively impact other non-participating countries since they will not likely be able to compete with the projected free-trade pact. However. However. . will be able to sell their products at a lower price and gain an inherent advantage to competing countries with higher production costs.S. recession has shown a decrease in the United States’ demand for foreign goods.

such as those witnessed on 9/11.As an outcome of Canada’s increase independence from the United States. long grain rice called Basmati rice is hard to grow for commercial purposes. Canada will have to become more price competitive in order to compete within a larger market. As far as the United States is concerned. Besides. Crespi (2011) This academic journal talks about a controversy over patent rights on three new strains of Basmati rice to RiceTec. The controversy of the TRIPS agreement makes it favorable for developed countries. creating restriction in its marketing on this product. without using the term “ Basmati”. Marketing. and thus disrupt the competition on the demand of this product. TRIPS as it is now based may provide little help to developing countries trying to protect their traditional goods and practices. I personally disagree with the granting of patenting rights on this kind of commodity. So the Basmati rice industry in other countries. Inc can use it in marketing its rice. therefore RiceTec decided to obtain benefit from the Trade Related Intellectual Property Rights Agreement (TRIPS) to have a patent titled of “Basmati rice lines and grains”.S market. This kind of . Financial Issues: Geographical Indications and The Trade Related Intellectual Property Rights Agreement (TRIPS): A Case Study of Basmati Rice Exports – Kranti Mulik and M.S. in which it defines the high quality of this rice-type. the diversification of the Canadian market should carry little impact since the U.S patent and trademark Office. the Canadian economy will be less tied to U. Importers who obtain its Indian’s Basmati rice have to face a serious issue of how to promote its commodity.S. RiceTec. (RiceTec) is a Texas development company that produces and exports a Basmati-type rice called “Texmati”. has already diversified its own market. economic trends and thus their markets should become more independently stabilized. in which it gives a severe disadvantage toward other importers and exporters of this industry to promote Basmati rice within the U. like Indian exporter. On the flip side. Moving into the future the U. Inc. have been affected in their exports and productions by this patenting right.S. and in 1996 this rice company was granted with a patent on basis of 20 claims made of “cross-bred” rice lines and grain developed that eventually harm different foreign exporter. such as rice. with the TRIPS will disrupt the “harmony” and “healthy” competition within any marketplace. are basic needs that regardless of the competitive market it must be beneficial for the society and competitors to satisfy the demand. must continue to focus on increasing their own GDP rather than remaining a primary source of income for other countries. product differentiation. this means a greater cushion from unforeseen foreign disasters. So the term “ Basmati” is not allowed to use in marketing its rice. Inc. because commodities. A high quality. such as India and Pakistan. to determine dominance or control on the industry within its own domestic market. since this company has claims some entitled of the term for protection of its own product. Import/Export Management. Plus. For the producers of Canada’s GDP. but only from the RiceTec. by the U. such as the US.

Officials in Beijing say the “decision was made independent of the U. a closely related industry. Rolled . Aluminum is one of the United States strongest exports and according to industry leaders is the main factor that helped “the domestic industry weather the global storms that have slowed European and Chinese markets” (staff.S. 2012) The automotive industry has not been the only sector in the news. The Basmati rice is known as high quality rice. Aluminum.T. took this action. The impact of granting the property rights of the Basmati rice to RiceTec will make importers with a disadvantage of losing its distinct image in certain segmented markets.S.S. The future of Basmati rice from other exporters rather than RiceTec. 2012).T. has been increasing in demand overall. but competitors will have to promote this product line as with other differentiations. claims that over the course of two years China has provided approximately 1 Billion Dollars in parts and fully complete automobiles. Most of that growth has been attributed directly to China’s growing industry. which violates the W. Importers have to find a way to market its rice and preserve the distinct image of Basmati rice without able to use the term “Basmati”. perhaps to generate a competitive advantage.O. Inc. the Chinese have asked the U. The meaning of the TRIPS agreement may be considered as a risk for those importers who seek different products from around the world to compete in the U. therefore the term should be used equally for other competitors. to participate in a formal W. law that allowed the Commerce Department to impose CVD (countervailing duties) on exports from non-market economies retroactively. Therefore. Although China does not export fully complete automobiles to the United States.product is well known as generic product since it has a long history of the usage if the term “Basmati” rice. Projected growth estimates put that aluminum exports will increase by a drastic 57%. those industries who have not used this intellectual property right to protect its product and market may consider using it now.’s transparency obligations. it does export autos to other developing countries. Besides. whereas domestic companies like RiceTec can make some allegations to protect its market and industry. The U. move. Hence.S. This kind of law creates an uncertain legal environment for Chinese exporters. vehicles.S market. and the timing is coincidental” (Inside US Trade. they may promote its product with high quality and long grain rice that is characterized. The threats may go to the rest of agriculture industries that cannot use any terms of other producers producing similar products from exploiting the reputation built. consultation over a U. 2012). The United States recently took action in the WTO against China policies in the automotive sector claiming that China unfairly subsidized exports of fully complete autos and automotive parts. In light of this accusation Chinese officials have “denied in general that they subsidize exports” (Keith Bradsher. A. importers must seek different methods of market its product to reach the adequate market segmentation for its product. The opportunities of this patent right may go only with RiceTec that can expand a whole product line with the Basmati rice-type.S. may rely largely on how effectively RiceTec performs. especially within the agriculture industry. an unfair subsidy would give Chinese automobiles an unfair advantage in the developing country against U.O. US Automotive Sector: Import/Export analysis The automotive sector has recently been the topic of choice between the United States and China. The same day that the U.S.

This is something the United States obviously has a concern about. 2012) A low per unit price will keep overall automotive construction costs low. may just be a stopgap measure and the real problem may be in trying to grow our raw material exports while keeping our produced goods at an export amount level and a price level that is beneficial to the U. if it is indeed subsidizing its automotive exports. . This will happen because even though aluminum is increasing in demand the price for aluminum has stayed relatively low (staff.aluminum is one of the chief of these exports and has multiple uses including use in the construction of automobiles. automotive companies’ exports in developing countries.O. a clear advantage in the automotive industry. Couple a low price of aluminum with additional funding from a Chinese government and the cost of production could reach a minimum that would push out and endanger U. This correlation is not merely a coincidence and I believe that we will indeed see a continued increase in exports to China of rolled aluminum as they increase their automotive production. economy.T.S.S. A. however the real question is are they realizing that appealing to the W. This in turn will allow China.

“Geographical Indications and The Trade Related Intellectual Property Rights Agreement (TRIPS): A Case Study of Basmati Rice Exports”. New York Times.882004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=unknown&sid=ProQ:ProQ%3Aabitrade &atitle=US+aluminum+sector+keeps+on+rolling+along&title=American+Metal+Market&issn= 00029998&date=2012-0801&volume=&issue=&spage=&au=AMM+staff&isbn=&jtitle=American+Metal+Market&btitle = Keith Bradsher. Retrieved October 15. (2012.Crespi (2011). http://sfx.com/2012/09/17/business/unitedstates-to-file-wto-case-against-china-over-cars. 2012. (2012).T. Academic Search Complete. (2012).S. gpx law. TD Economics. Suhail. 2010: 2. 30(37) Retrieved from http://search. and Brazil Reach Agreement on Cotton Dispute.html?_r=0 . 2012.proquest. Retrieved from http://search. Vol.calstate.Academic Search Complete. "A Trade Dispute Between The USA And Canada.O. A. Abboushi. Case against China over Cars. American Metal Market." New York Times 07 Apr.com/docview/1095242019?accountid=13802.9 Produced by the Berkeley Electronic Press. http://www.S.proquest. U. (2012.882004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=unknown&sid=ProQ:ProQ%3Aabitrade &atitle=CHINA+TAKES+STEPS+TOWARD+POSSIBLE+NEW+WTO+CHALLENGE+OF+ U.S." Competitiveness Review 20. 14 Oct.edu:9003/sfsu?url_ver=Z39.edu:9003/sfsu?url_ver=Z39. Web. (2012). Journal of Agricultural Industrial Organization. D.Bibliography Derek Burleton. September 16). Inside US Trade. Web. CHAN. To File W.1 (2010): 43-51. Asia-Pacific Forum to Cut Import Duties for Green Technologies. "U. China takes steps toward possible new wto challenge of U.+GPX+LAW&title=Inside+US+Trade&issn=08971676&date=2012-0921&volume=30&issue=37&spage=&au=&isbn=&jtitle=Inside+US+Trade&btitle= staff. US aluminum sector keeps on rolling along.com/docview/1080904174?accountid=13802. September 7).nytimes. New York Times. P.S. SEWELL. REUTERS. CANADA’S DECLINING RELIANCE ON THE. Kranti Mulik and John M. http://sfx. 14 Oct.calstate. 2012.

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