Case Study #3 International Trading Policies
BUSINESS CASE 1
Copyright © 2020
CASE #3 INTERNATIONAL TRADING POLICIES
TRAINING DEPARTMENT
[Assigned on 5/12/20. Execute before 5/13/20 12 PM ET NOON]
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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BUSINESS CASE 2
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CASE #3 INTERNATIONAL TRADING POLICIES
LEARNING OBJECTIVES
1. To learn about an international trading organization by learning international trading
regulations and policies.
2. To have an overview of the main international trading policies and terms.
International trading policies are a set of laws and parameters designed to manage imports
and exports in international trade.
International Trading Regulations, Policies & Terms
An exchange of services and goods among nations across the world is known as
international trade. The international trade regulations include the suitable customs and rules for
managing trade activities among nations. Nonetheless, these are also used in legal writings as an
exchange among private sectors, which is appropriate. The exchange activities among the private
sectors of different nations are a significant part of the World Trade Organization (WTO)
activities. International trade regulation helps in monitoring deceptive or unfair business
practices or acts and it also highlights unfair methods used by the corporations to compete in the
international markets. Antitrust Law is considered a subset of trade regulation law, which
highlights the inefficiencies observed in trading partner nations and also facilitates keeping
checks over domestic trade activities that are critical to GDP.
The international trading policy, also known as commercial policy, is a set of regulations
and rules that are designed to change flows of international trade, predominantly to limit imports.
International trade law is a combination of legal rules derived from new lex mercatoria and
international legislation, which regulates relations in international trade. International legislation
is based on the international acts and treaties of international intergovernmental organizations
that regulate associations formed in international trade. On the other hand, lex mercatoria is the
law for merchants on land. The WTO is an international organization established in 1995to
monitor international trade and it played a major role in the development of international trading
law. The WTO does not dictate the actual rules, which are governed by the nations during
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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BUSINESS CASE 3
Copyright © 2020
international trade in various areas, but it regulates trade and alerts the nations about any
wrongdoing.
International trade has become a major source of progress and relationship development
among the nations worldwide, because it encourages social, economic and political success.
With global trade, the nations and consumers are able to get exposure to the latest global markets
and products. Almost, all types of products are offered by the global market, such as spare parts,
jewelry, food, equipment, water, currencies, oil & gas, clothes etc. Nations are also trading
services with other nations in the global market in transportation, banking, tourism and
consulting areas.
With an evolution of advanced technology and industrialization a boost in international
trade has been observed in the global markets that have made the international trade system
stronger than ever before. Expansion in international trade has played a greater role in
globalization, as prior to that nations were restrained to the goods and services they produced
within their own boundaries. Every nation has some kind of unique trade policies and
regulations, which are formulated by its public officials to encourage growth and prosperity.
The international trading regulations and policies are developed by countries to avoid
risks such as credit risk, exchange rate fluctuations, political risks and much more. These policies
and regulations also play a critical role in keeping a country’s imports restricted, as it can harm
their balance of payment account’s stability.
There are numerous regions, where groups of countries are working together to develop
trade policies, which are equally beneficial for all of them. The international trade policies may
include various complex types of actions, such as the removal of quantitative constraints and the
reduction of tariffs. There is regional, multilateral, unilateral and bilateral liberalization
according to geographic dimension and there can be a free trade area, customs union or a free
economic area in between regional or bilateral reforms.
Subsidies, Quotas, Taxes, Tariffs, Voluntary Export Restraints and Embargos are some of
the most critical kinds of trade barriers found in international trading. These barriers are
normally introduced by the international policy makers through trade policies and regulations to
manage balance of payments accounts and to regulate trade agreements. The trade agreements
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BUSINESS CASE 4
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are established by countries to continue regular trade as these agreements help in making trading
activities smooth and support building strong relationships. Every nation has different policies
and regulations regarding product safety, but international trading policies and regulations are
kept standardized for all nations to encourage equity. Products or services that are bought from
other nations are known as imports and products or services sold to other nations are known as
exports. Imports and exports are the most significant terms used within international trade
policies and regulations; in fact an international trade revolves around these two activities.
The WTO encourages an open and free multilateral trading system and promotes its
members to follow five main principles. Those principles are: reduction in trade barriers;
nondiscrimination; increased competition through open and fair trade; increased confidence; and
special terms under agreements of the WTO for developing nations. The WTO encourages
transparency in all trade activities to build strong and effective relations among trading partners
or countries. In order to accomplish trade goals, the countries involved in international trade
should create and sustain sound legislative, regulatory, institutional and enforcement frameworks
that promote transparency, economic growth, foreign investment, minimal administrative costs,
job creation and competitiveness. The international trading regulations have helped many
countries in raising their living standards and in creating competitive market economies.
The non-discriminatory principle is beneficial for nations to have open competition and
free trade in the global markets. Therefore, countries need to develop such trade regulations and
policies that promote industrialization and globalization, rather than just keeping the horizon of
trade limited to domestic markets. Government bodies and policy makers have the power to
improve trade regulations, including laws or contracts leading to increased investments, so they
all should devise a framework that promotes quality trade relations.
Such policies and regulations should be developed by the policy makers to encourage
economic growth through international trading activities. Several countries have attained
economic prosperity through adoption of free trade and their initiation of economic reforms. It is
international trade that has helped spread knowledge globally. International trade can further
enhance the absorptive capability of countries involved in trade by encouraging technological
advancement activities, as long as effective international trading policies and regulations are
followed. Countries like China have improved and modified their trade administrative
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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BUSINESS CASE 5
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regulations and laws to encourage economic growth and have eliminated several trade barriers to
encourage free trade worldwide. The exports of China are flourishing in the international market
mainly due to an effective implementation and management of international trading policies and
regulations. Now, foreign investors and customers are able to interact in global markets more
effectively as their trading rights are protected by international trade regulatory bodies such as
the WTO.
A country’s trade policies and regulations should be devised to enhance national welfare
because there are market imperfections such as duopolies, oligopolies and monopolies found in
the trade markets that can have a negative impact on the national interests of a country. Trade
policies can also be used to rectify unemployment imperfections found in industries around the
world. The international trade regulations have led several nations to develop highly competitive
and internationalized business industries such as Information Technology, electrical machinery,
oil & gas, etc.
The key objectives of international trading policy are to: encourage trade among
countries; provide security and protection to domestic markets; maximize export of specific
products such as oil, gas, crops, electronic items etc.; expand regional markets; limit imports of
specific goods to provide protection to regional developing or infant industries; secure foreign
exchange; restrain imports of merchandise that could be harmful to balance of payment accounts;
prevent or assist the import or export of merchandise or services for attaining a preferred
exchange rate; and penetrate into such trade agreements with foreign countries that promote
stability in foreign trading activities.
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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BUSINESS CASE 6
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KEY TAKEAWAYS
• The international trading policies and regulations are designed to regulate fair trading
practices in the global markets.
• It is international trade that has helped nations in developing strong relationships that
encourage industrialization and globalization.
• International trading policy, also known as commercial policy, is based on a set of
regulations and rules to administer international trade.
• The WTO is an international trade regulatory organization that monitors the trading
activities and also plays the role of negotiator among trading partners.
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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BUSINESS CASE 7
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EXERCISES
1. The _________ principle is beneficial for nations to have open competition and free trade
in the global markets.
2. _______ Law highlights the inefficiencies observed in trading partner nations and also
facilitates keeping checks over domestic trade activities.
3. The WTO encourages _______ in all trade activities to build strong and effective
relations among trading partners or countries.
4. What are the main objectives of international trading policy?
5. Define import and export.
6. How can international trade be promoted, if we devise trade regulations and policies?
7. List the main principles of the WTO to promote a free multilateral trading system.
8. Describe the role of the WTO in the promotion of international trade.
9. International trading regulations and policies can prevent nations from what risks?
10. What are ways international trade promotion can ultimately help countries in
accomplishing their established trade goals?
https://www.coursehero.com/file/62608010/CS3-International-Trading-Policiespdf/
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