6.4: Political and Legal Issues in International Negotiations
This article describes Raytheon's effort to negotiate a NATO weapons system with a consortium of European companies. We return to a recurring theme that businesses need to understand the various economic, political, and social cultures of a particular country or region they wish to negotiate with. In this case, Raytheon learned that the governments of the countries they wished to negotiate with in Europe would make the purchasing decision, not them.
This lecture analyzes the Transatlantic Trade and Investment Partnership (TTIP), which sought to strengthen economic and trade ties between the U.S. and Europe. It gives a background on TTIP, its advantages and issues, and prospects for the future. The now-failed Trans-Pacific Partnership (TPP) was the idea of a regional free-trade agreement in the Asia-Pacific region, including Australia, Canada, Japan, Mexico, the US, Singapore, and Vietnam. One significant issue of TPP was its exclusion of China.
Read this chapter. While we are all a part of the economy, we can't see all parts of an economy at any one time. This chapter describes policy issues, controversies, and the history of international trade. You will learn about international economics, FTAs, GATT, WTO, anti-subsidy laws, and bound vs. applied tariffs. You will read about real-world issues such as policies restricting trade and forging agreements to reduce trade barriers. Test your knowledge by answering the exercises in each section.
Read this study on how international trade regulation addresses exchange rate measures. The authors look for provisions of the World Trade Organization (WTO) agreements that could address the exchange rate issue and rebalance the impacts of misaligned currencies on trade. These misalignments significantly affect international trade instruments and create incentives to export while disincentivizing imports.
Read this chapter to learn about currencies, foreign exchange rates, and global capital markets. It gives us a real-world example of a company that has to deal with different currencies. Small changes in the daily foreign currency market can significantly affect a company's costs and profitability. At the end of the chapter, read the ethical dilemmas. What would your responses be? Would you recommend that Walmart set up an offshore company? Why or why not?
This chapter argues for economic free trade through the lens of trade theory. While free trade may not be optimal, many consider it to be the most pragmatic policy option for a country. During the 19th and 20th centuries, policymakers asked whether free trade was in everyone's best interest. The modern case for free trade argues that government intervention in trade is impractical. Free trade is not always the best policy choice when the objective is to maximize national welfare. Free trade is pragmatically, rather than technically, optimal because it is attainable and most likely to produce the highest level of economic efficiency.
Commercial diplomacy is designed to influence foreign government and regulatory decisions that affect global trade and investment. This article differentiates commercial and economic diplomacy, which are often used interchangeably. It describes public and private sector practitioners and lists traditional commercial diplomacy activities under the umbrella of networks, intelligence, image campaigns, and support.
Read this article on the World Trade Organization (WTO) to learn why it was formed, its members and observers, the Doha Development Round, major obstacles, and agreements.
Listen to this podcast for an argument that the WTO needs to adapt its approach to trade negotiations and strike a balance between its strong dispute settlement mechanisms and a comparatively weak negotiating framework.