US - European Union Trade Relations: Issues and Policy Challenges - Example

Running Head: International Business International Business Name Course Lecturer Date Executive Summary With the increased of competition in the trade industry in recent times, various companies and firms have continued to use their respective government to advance in the World Trade Organization. This is seen to be contributed by the fact that most developed countries have used their economic power an strength to push for better decision that will assist companies. The report introduces various way that the government uses to advance their companies interest in the WTO. Indeed, despite the fact that most countries have defended companies in their country against some rising issues, the report shows that the WTO always have a final decision towards a particular issue. Some ways through which the advancement is made include settlement of disputes, negotiations and intellectual property. Table of Contents Table of Contents 3 1.0Introduction 4 2.0 Ways to Advance in WTO 5 2.1 Settling disputes 5 2.2 Negotiations 6 2.3 Intellectual Property 7 2.4 Imposing Duties 8 3.0 Conclusion 9 References 10 1.0 Introduction World Trade Organization has continued to be one of the significant instruments of globalization in the world at present. Of most important is the fact that most developed countries have supported the organization. These countries have already utilized most of the multilateral financial institutions such as International Monetary Fund and the World Bank (Zoellick, 2005). As such, they have been able to influence most of the economic policies of the some developing countries especially in Africa and Asian countries. Notably, most developed countries such as the United States have perceived that they can easily achieve their goals in the World Trade Organization. In addition, they will be able to do so by using the influence and strength. As such most of companies or firms found in these countries stand to benefit too;. This is attributed to the fact that the economic and political power of their government together with their economic and technological muscles of their companies in combine effort can push their interest forward in the organization. It is interesting to note that the developed countries may have some differences in relation to their different economic and benefit interest; however, in case, there is a dispute from the developing countries concerning their exports, the developed come together to support and promote their interest. One may argue that companies in developed countries are able o get what they desire in the WTO is because they have clearly stated their goals and use their governments full strength to advance their interests. An excellent example where developed countries are able to come together to fight issue raised by developing countries, is the Uruguay Round of negotiations where powerful developed countries came together and were able to gain greatly against the developing countries. As a result of the increased pressure on the developing countries by the develop countries, high imbalances were experienced. Therefore, most companies have concluded that for them to benefit in the global market, they need to engage their governments to fight their battles not only against foreign organizations and firms but also in the WTO. As a result, various methods have been invented in order to ensure that the companies remain competitive in the trading industry. It is important to note that the governments have taken this role so as to promote the growth of their home companies and also to promote the economic growth of their respective countries (World Trade Organization, 2010). 2.0 Ways to Advance in WTO 2.1 Settling disputes One of the ways that companies use their government to advance in the World Trade Organization is to settle dispute that may arise with a foreign competitor. As such, the government presents the case to the WTO so that the committee involved in dispute settlement may make the right decision concerning the issue. One of the most recent occurrences of a government interfering in the WTO on behalf of its company is when the United States filed a complaint on behalf of the Boeing Company in 2004 at the World Trade Organization. The issue was brought when the Boeing Company claimed that the European Union countries had illicit subsided to Airbus which was against the international agreement. In addition, this move had clearly distorted the already set commercial aviation’s landscapes (Boeing, 2010). Notably, this accusation led to more than a fight between the two companies. Of major concern is the fact that the two companies are found in two powerful developed countries that are said to have a major stake in the World Trade Organization. It is said that the dispute between the two companies goes beyond the illegal subsides. As such, both companies involved their respective countries into the disputes. On e cannot but agree to the fact that this sought of dispute could have resulted to sour relations between the United States and the European Union and also damage the organization also. The governments had a hard time to clear the already created mess given the fact that the word subsides is more contentious in the airline industry. In addition, most critiques have observed that the Airbus/Boeing issue is a competition of political ideologies. This is attributed to the fact the US and EU are the largest economic blocs in the current business world and they have different philosophies in term of the market which is illustrated by what they view subsidization (Boeing, 2010). The US government on behalf of the Boeing company claimed that European Union maintained that A380 that was centrally to the WTO agreements. In its ruling, the World Trade organization in a way gave a neutral point and it appeared as if there was no winner in the disputes. However, the Boeing Company is said to have interrupted in the report on their favor claiming that the Airbus had been stopped from exporting subsides for the brand they had launched. The organization ruled out that any low amount that was offered by the European Union was hurting the rival’s sales and was illegal (Ahearn, 2005). 2.2 Negotiations Another way in which the companies may utilize the government in pushing their advance in the competitive market is through negotiation. Indeed, it has been observed that there are various counties that are using negotiations in order to promote their interest. Countries such as Australia have indeed streamlined the trade policies with that of the WTO in order to ensure that the home countries are able to maintain the competition in the business world. As such, the companies are set to benefit from these policies given that they have to maintain the ever-increasing competition in various industries. The Australian governments have engaged actively in the negotiations in order to ensure that the commercial interest of Australian companies and businesses are advanced and protected. Of importance to note is fact that the negotiations cover measures such as import quotas and bans, tariffs and various restrictions on trade (Zoellick, 2005). It also include arrangements which are mainly negotiated on measures that include customs procedure, subsides, testing and standards, protection of intellectual property and publication of various essential trade rules. It is important to note, however, that all the members of WTO have access to the negotiation arrangements. The Australian government has negotiated on behalf of various companies such s those involved in insurance, banking, engineering, construction, distribution, transport, environment, accountancy and telecommunication, just to name a few. In addition, the government has continued to pursue and secured different reforms that are related to non-tariff measures that result to trade problems and it has been successful. There are various benefits that the firms in Australia have benefitted form the negotiations. For instance, some agriculture companies have benefitted from exporting live cattle through duty free access and sheep meat while the mining industry has been able to export zinc, lead, copper, iron and copper ores in some countries such as Russia for a given period of time (United States Special Trade Representative, 2008). 2.3 Intellectual Property Another method that most companies are using their government to advance in the World Trade Organization is through the use of intellectual property. Indeed, it has been observed that in the past decades, there is an increase in knowledge throughout the world. There is a continuous introduction of new technologies, medicines and other interventions that are related to different fields within the business world. Therefore, it is important that creators are given a right to protect their work from being misused or from other people directly gaining from them. As such, intellectual property has gained importance in the trading world. As such, various companies are pushing their government to help in attaining the intellectual property in order to gain from a particular invention (World Trade Organization, 2010). 2.4 Imposing Duties Imposing duties in another means that companies are pushing their government to do in order to help them advance in the World Trade Organization. As such, foreign companies that export goods to a particular country, there are expected to play duties. This results to an increase of the product in that particular country. On the other hand, similar goods that are produced in the same country go for lesser cost compared to the imported goods as they do not incur extra cost in the payment of the duty. In recent times China had imposed tariffs on steel that was imported from the United States in order to protect the steel industry and companies involved with steel in China. In a way the government was advancing the steel companies in China in the WTO (Roach, 2009). However, most economists analyzed the situation and observed that this is one of the trade conflict facing both countries; United States and China. It is obvious that disagreement between the two countries have continued in the past year and the differences range for the China’s currency and subsides that are accorded to China’s firms. However, despite the fact that China tried to protect its steel companies and firms against those of the United States through the World Trade Organization, the WTO held on to the fact that China had imposed the tariffs illegal and that was against the agreements that the country had signed when it accepted to be a member of the organization in 2001. Similarly, the United States had accused China for restricting US export s of some metal that are used to make different type of high tech devices and illegally subsidizing export on car. Essentially, despite the fact the countries have the companies’ growth at heart, their rivalry in the market will continue to grow if careful measure are not taken to avoid occurrence of such situations in the future which most critiques view as untreatable (Roach, 2009). 3.0 Conclusion At present the WTO is a growing organizational with about 146 members worldwide. However, more countries that are not members have continued to show some interest in joining the organization. The main reason for its establishment is to ensure that all members are able to reach an agreement which will result to increase in trade among the countries. However, despite the intended reasons, most of the developing countries are said not to have attained the goals. This is attributed to the fact that most developed countries that use their economic power have taken over some policy that are intended to balance the trade between developed and developing countries. As such, many companies and firms in developed countries have continued to take advantage of this situation and use the government to advance in the WTO. The report has discussed various ways that have been used by the companies including negotiation, imposing tariffs. However, it has been noted that the WTO has either agreed or refused some presented concern. References Ahearn, R. (2005). U.S.-European Union trade relations: Issues and policy challenges. Congressional Research Service Boeing. (2010, September). Boeing Facts . Retrieved October 22nd, 2010, from Boeing Home: www.boeing.com Roach, S. (2009), The Next Asia: Opportunities and Challenges for a New Globalisation, London:Wiley United States Special Trade Representative (2008), National Trade Estimate Report on Foreign Trade Barriers: China, www.ustr.gov World Trade Organisation (2010), Trade Policy Review: China, www.wto.org Zoellick, R. (2005), Whither China: from membership to responsibility? Speech on US-China relations and remarks to the National Committee on US-China relations, New York, September 21, www.state.gov/s/d/former/zoellick/rem/53682.html Read More