The GATT and the WTO

The General Agreement on Tariffs and Trade (GATT) was established in 1945 as a provisional agreement pending the creation of an International Trade Organization (ITO). The ITO draft charter, which was the result of trade negotiations at the Havana Conference of 1948, never came into being due to the failure of the U.S. Congress

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Regional Integration Agreements (RIAs)

WTO members are permitted to enter into RIAs under specific conditions. RIAs must be consistent with the WTO rules, which require that the parties to the agreement (1) establish free trade on most goods in the regional area within 10 years, and (2) refrain from raising their tariffs against countries outside the agreement. The

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The North American Free Trade Agreement (NAFTA)

The North American Free Trade Agreement (NAFTA) established a free-trade area for Canada, the United States, and Mexico. The agreement came into effect on January 1, 1994, after a difficult ratification by the U.S. Congress and approval by the Canadian and Mexican legis­latures. The North American Free Trade Agreement gave rise to the second

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The European Union and Trade Agreements

The European Union (EU) is the oldest and most significant economic integration scheme, involving twenty-eight Western and Eastern European countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. One

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The Euro Crisis and Implications

Serious intraregional divergences in competitiveness and the related buildup of regional imbalances have been the root cause of the crisis in the euro zone. The Maastricht treaty of 1992, which created the European Union and led to the cre­ation of a single European currency (the euro), established criteria for EU member states that included

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Ownership Structure of Export-Import Business

In this section, we examine different forms of business organizations: sole proprietorships, partnerships, corporations, and limited-liability companies. 1. Sole Proprietorships A sole proprietorship is a firm owned and operated by one individual. No separate legal en­tity exists. There is one principal in the business who has total control over all export-import operations and who

Export-Import Business or Trade Name

A sole proprietorship or partnership that is engaged in an export-import business can oper­ate under the name of the sole proprietor or one or more of the partners. There are no reg­istration requirements with any government agency. However, if the sole proprietorship or partnership operates under a fictitious name, it must file a fictitious

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Bank Accounts, Permits, and Licenses of Export-Import Business

An export-import firm must open a bank account with an international bank that can accom­modate specialized transactions such as letters of credit, foreign exchange payments, forfeit­ing, and so on. Some international banks have subsidiaries in importing countries that can verify the creditworthiness of foreign buyers. Sole proprietors and partnerships can open a bank account

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Location and Use of Professional Services for Export-Import Business

When the export-import business is small, it is economical to use one’s home as an office during the early phase of the operations. Besides saving money and travel time, using a por­tion of a home provides opportunities for deduction of expenses related to the business. All of the direct expenses for the business part

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Organization for Export: Industry Approach

The Small Business Administration (SBA) states that, besides multinational firms such as General Motors or IBM, there are many small-scale industries that export their output. For many of these companies, there are a number of organizational issues that need to be ad­dressed to achieve an optimal allocation of resources. Some of the issues include

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General Principles of Taxation for Export-Import Business

The United States levies taxes on the worldwide income of its citizens, residents, and business entities. The United States, the Netherlands, and Germany are some of the few countries that impose taxes on the basis of worldwide income; most other countries tax income only if it is earned within their territorial borders. For U.S.

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Taxation of Export-Import Transactions

1. Taxation of U.S. Resident Aliens or Citizens U.S. citizens and resident aliens are taxed on their worldwide income. In general, the same rules apply irrespective of whether the income is earned in the United States or abroad. For­eign tax credits are allowed against U.S. tax liability to mitigate the effects of taxes by

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Assessing and Selecting the Product for Export

Although the basic functions of exporting and domestic selling are the same, international markets differ widely because of great variations in certain uncontrollable environmental forces. These include currency exchange controls/risks, taxation, tariffs, and inflation, which happen to originate outside the business enterprise. Such variations require managers who are aware of global threats and opportunities.

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International Market Research

International market research deals with how business organizations engaged in interna­tional trade make decisions that lead to the allocation of resources in markets with the greatest potential for sales (Ball et al., 2013). This process of market screening helps to maxi­mize sales and profits by identifying and selecting the most desirable markets. Why Conduct

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International Market Assessment

International market assessment is a form of environmental scanning that permits a firm to select a small number of desirable markets on the basis of broad variables. Companies must determine where to sell their products or services because they seldom have enough resources to take advantage of all opportunities. Not using scanning techniques may

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Developing an International Business Plan for Export

A business plan involves a process in which an entity puts together a given set of resources (people, capital, materials) to achieve defined goals and objectives over a specific period of time. In addition to providing the direction necessary for success, a sound business plan should be flexible to take advantage of new opportunities

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Export Counseling and Assistance

A number of assistance sources are available to U.S. exporters. 1. The U.S. Department of Commerce Through the local district office, the exporter has access to all assistance available through the International Trade Administration (ITA) and to trade information gathered overseas by the U.S. and foreign commercial services. The U.S. Trade Information Center serves

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Overseas Travel and Trade Promotion

Once market research is conducted and the target countries are selected, the next step is to visit the countries in order to locate and cultivate new customers or to develop and maintain relationships with foreign distributors. As we enter the twenty-first century, the world has become one market, and this has naturally given rise

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Developing Export Markets

A recent survey by Babson College and the London Business School on entre­preneurship noted that middle-income countries have a larger share of individu­als engaged in business ventures with high growth potential than high-income countries. The study also noted that the countries have higher percentages of people starting businesses. This is partly attributed to the

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Strategies for Entering New Markets

A. Picking the right country Select a country that understands the value of your product. Target a country with growth potential. Start with homogeneous markets or markets of strong trading partners. Target a country where you can sell at a competitive price. B. Understanding the overseas market Be flexible and open minded in establishing