Chapter 4 Politics and Law Learning Objectives

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ch04

Chapter 4

To understand the importance of the political and legal environments in both the home and host countries to the international business executive.
To learn how governments affect business through legislation and regulations.
To see how the political actions of countries expose firms to international risks.
To examine the differing laws regulating international trade found in different countries.
To understand how international political relations, agreements, and treaties can affect international business.

Major areas of governmental activity that are of concern to the international business manager:

Governmental actions that distort free flows of trade in goods, services, or ideas for adversarial and political, rather than economic, purposes.
Sanctions tend to consist of specific coercive trade measures.
Embargoes are typically broader in that they prohibit trade entirely.

Are designed to deny or delay the acquisition of strategically important goods by adversaries.
The legal basis for export controls varies in nations.
Most international business can be carried out under NLR conditions.
Export licenses are issued by the Dept. of Commerce for commodities whose export is considered sensitive.

Specialists in the Department of Commerce match the exported commodity with the Critical Commodities list, the country of destination, and the recipient company.
If no concerns exist in any one of the three areas, a license is issued.
This process is only carried out if the product or the recipient country is considered sensitive.

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