1. Section 5.1 Governmental Influences on Trade

2. Government and International business
Government policies play a major role in international trade. They affect all aspects of importing and exporting.

3. Types of government
Democracy = a government system in which the nations citizens hold political power.
A republic is a kind of democracy; it’s leaders are elected representatives.
Democratic political characteristics:
Freedom of opinion, expression, press
Elections in which voters choose officers of the government
Limited terms of elected officials
Independent and fair court system
Nonpolitical bureaucracy and defense infrastructure
Access to the decision making process available to citizens

4. Totalitarian government
Citizens have no influence on the government's policies and laws.
Governments control all aspects of life, including attitudes, values and beliefs.
Deny religious freedoms.

5. tHEOCRACY
Type of totalitarian government whose leaders claim to be inspired by divine guidance.
Leaders rule according to the religious principles of the dominant faith.
Citizens of other faith are looked down upon as second class citizens.

6. Political ENVIRONMENTS
A nations values, attitudes, and actions shape the nations political environment.
2 factors that guide government actions:
Isolationism= a foreign policy that combines an avoidance of political and military alliances with a policy of economic nationalism and protectionism.
Conservative and Liberal Values = attitudes and opinions that shape and guide a nations trade policies.

7. Conservative vs Liberal
Limit government activities
Promote private ownership of business
Allow market to operate freely
Fewer government controls and regulations
LIBERAL
More government involvement in business
Stronger quality and safety regulations
Consumer protection

8. INTERNATIONAL TAXES INCOME TAX SALES TAX EXCISE TAX PAYROLL TAX
VALUE ADDED TAX
Do American flight attendants pay US federal and state tax on all of their earned income?

9. ENTERPRISE ZONES BUSINESS TAX RATES ARE LOWER FAVORABLE TAX CREDITS
FINANCING
INCENTIVES TO PROMOTE ECONOMIC DEVELOPMENT

10. FREE TRADE
Free Trade Zone= a place where people can buy goods from other countries without paying extra taxes.
Free Trade Agreement = is a treaty between countries in which the countries agree to not charge taxes, duties or tariffs on goods that they trade.

11. Political Risk Trade Sanctions Expropriation Economic Nationalism
Political Turbulence
War

12. Government Regulation Video

13. Legal influences on trade 5.2 page 115

14. Legal systems and international business
COMMON LAW = a set of laws based on local customs, traditions, and precedent. Gives a judge flexibility to reach a fair and just decision.
PRECEDENT = something that precedes or has come before. A judge who follows precedent looks at decisions made by other judges in the past when judging a current case.

15. Civil law
A set of codes based on broad legal principles. It is the basis of law in many countries, including Germany, France, Japan, and Russia.
Decisions are made based on codes that have been written over time.
Judges in common law systems interpret the laws, whereas in civil systems they apply the civil codes.
Judges in civil law countries have less flexibility.

16. Theocratic law
A set of laws based on religious teachings. The law regulates moral behavior, and to a lesser extent, business.
The most common form of theocratic law is found in Islamic Law.
Islamic Law bans paying or accepting interest on a debt. Therefore doing business with a country such as Saudi Arabia, that is guided by Islamic Law can provide challenges.

17. Product safety and consumer protection
Individual countries have widely different laws regarding consumer protection.
Manufacturers must consider the safety of the products that they create. Those injured by unsafe or poorly made goods can sue violators for damages.
LIABILITY = is legal responsibility for the financial cost of another persons loses or injuries.

18. Product liability lawsuit
A settlement has been reached in lawsuits filed by three people who had parts of fingers snipped off by Martha Stewart lounge chairs sold at Kmart stores.

19. Labor laws Minimum wage rates Length of the work week and overtime
Hiring, firing, and layoff policies
The age at which a person can work
The right to form a labor union
The right to strike

20. Labor laws Each government forms its position on labor laws
In countries with few or no protective labor laws, businesses may exploit workers

21. Intellectual property laws
INTELLECTUAL PROPERTY = is an original work fixed in a tangible medium of expression that can be copyrighted, patented or trademarked.
COPYRIGHT
a legal protection of a creators intellectual property or product. (Author, Composer, Publisher, Artist)
TRADEMARK
a device that legally identifies ownership of a registered brand or trade name. (McDonalds, POLO)
PATENT
gives an inventor exclusive rights to manufacture, sell or use an invention which can be a new physical product or something that improves an existing product.

22. Licensing Requirements
Multinational companies must comply with licensing requirements of other countries and international organizations when importing and exporting products.
A business may need to obtain different types of licenses for different goods and services.
3 issues that must be addressed:
Knowing the requirements
Meeting the requirements in a cost effective way
Successfully completing the paperwork

23. Resolving Legal disputes
Litigation = a legal process used to resolve a dispute through the court system
Mediation = a process of intervention between conflicting parties that promotes resolution of their conflict outside the court system.
Arbitration = a process to resolve disputes in which each side presents its case to an independent individual, the arbitrator, who makes decisions that are binding.

24. Globalization / law / labor laws
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