Module 9 - Jurisdictions.docx

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14 Apr 2012
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Module 9 - Jurisdictions
The Diversity of Jurisdictions
International Business and Ethics
o Do these things go together at all?
o What is controversial about international business?
The plurality of jurisdictions
The plurality or diversity of moral beliefs
The Business Context
o Focus on the things that are unique
Diversity of jurisdictions
How to deal with international regulations
How to deal with diversity of moral beliefs?
Who should prevail in business negotiations?
What are the ethical issues?
Should accompany engage in illegal activities which are legal in other
countries?
The law
o There is no uniform international law regulation business
Not yet a position in the history of humanity where that kind of unification
and cooperation is possible
Some companies and industries make their profit based on diversity of
jurisdictions and what happens
There are attempts on both regional and global basis to work out some
rules and laws regulating international business
E.g Accountants making profit by advising companies on how to
move their assets around
Take advantage of the difference in tax laws
o Grand Cayman
o Isle of Mann
o Monaco
o Costa Rica
o Bermuda
Seeking out their place in international trade
Differences Between Regional and Global Business Institutions- Their Nature and Rules
Regional Business Institutes
Global Arrangements regarding Business
Regional Multilateral Institutions
o Countries in a region have signed an agreement between themselves
o Canada
Free Trade Agreement with Us (1989)
Extended to NAFTA which added Mexico (1994)
o Variety of arrangements
Some South American counties
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Southeast Asian countries
European Union
o Most developed agreement with a consistent set of rule and regulations on a
regional basis
o Policies
Tariffs
Labour standards
Environmental standards
Common currency
European Central bank sets common interest rates throughout territory
Robust common political institutions
Common tax rate
European parliament
o Europe grows out of historical set of circumstances that are not paralleled in other
parts of the world
European Union formed to prevent another war between France and
Germany
Began as tariff agreement in steel and coal industry (1953)
Economic and political integration
Many countries signed on as a way to boost their economies after
WWII
Seeking to reduce tariffs to increase the volume of trade
Rational for political integration of Europe is to create stronger economic
integration
o The Issue with NAFTA is that there is a party with disproportionate power
One of the reasons for Europe’s success is that there is relative equality of
power and size of economies
Cooperative arrangements do not work as well when you have one party
who has incredible advantage in terms of finance and population
Canada
As America’s neighbour and because our economy is closely tied,
we don’t like it when America acts in unilateral and unpredictable
ways
o Reason to advocate America’s entry into multilateral,
global institutions
o Better able to predict what they are going to do and to
cushion ourselves accordingly
Don’t want to be included in common institutions with Americans
in which they will clearly have the majority of the power
o e.g. United nations other big powers which will check
American interests
If there were common NAFTA institutions, Canada’s interests would not
have importance in terms of economic and political clout
Global Business Institutes
Global Economic Institutions
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o World Trade Organization (WTO, GATT)
Formed in attempt to prevent a recurrence of WWII
One cause of war was pursuit of excessively protectionist polices in
Europe (!920s and 1930s)
Connected to that, was imperial experiment the drive to get colonies
Incentive to militarily grow an empire
GATT reduced tariffs on international trade to prevent this from occurring
Function:
To engage in regular negotiations about the reduction of tariff’s on
international trade
Provides dispute resolution mechanism arbitration panel
o What are you going to do if they don’t want to adhere to
the ruling of the arbitration?
o E.g. Canada wins ruling
Commitment to an international system that regulates business
Because of diversity of jurisdictions, enforcement mechanisms are
weaker
o World bank
Function:
To help development of Less Developed Countries (LCD)
To help countries with sever short-term economic crises
o E.g Mexico
Economic Crisis?
Less Developed Countries
o Many owe money to banks in developed countries
o Paying interest on money owed can often be problematic
Controversies Surrounding Global Business Institutions
The Criticism
Policies hard to disagree with, but there is also controversy
o Agendas of these institutions
o Effects that these institutions have
o Histories
Who benefits the most from these institutions?
o Clear benefit to very rich people from most developed countries in the world
o Is the purpose of the World Bank to help out development?
o Is the purpose of the World Bank to ensure that developing countries are going to
pay back their debts to the developed countries?
e.g. World Bank and Mexico
o Mexico benefits in the short-term
o Whoever holds Mexico’s loans will also benefit
World Bank
o In exchange for loans, the world bank either charges interest or stipulates other
concessions
No exchange unless policy changes are made that affect the state of
economy
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