A SUMMER IN CANTERBURY

Canterbury-Cathedral-460x306Scholars typically spend their summers at interesting and learn-worthy organizations. For my summer this year such destination will be the University of Kent in Canterbury, UK. There I will participate in several events. I will be help coordinate a university-wide international business seminar: Global Business in a Dynamic Environment. In addition, I will be chairing the scientific council of the 1st International Doctoral Conference “Socializing Business Research: Connecting and Advancing Knowledge” at Kent Business School.

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OECD proposals to have impact on transfer pricing in India

NEW DELHI: Once implemented, the measures proposed by OECD to curb tax avoidance activities would have “far reaching implications” in India’s transfer pricing landscape as well as a significant impact on US multinationals with overseas operations, according to experts.

Paris-based Organisation for Economic Cooperation and Development (OECD), which sets the global tax standards, published a seven-point BEPS ( Base Erosion and Profit Sharing) recommendations on Tuesday.

Companies having international operations would have to work towards not only adhering to compliance obligations but also review the operating structures in various jurisdictions, he said in a statement.
The proposals, which have been prepared after extensive consultations with various stakeholders including G20 nations.

Read Full Article in The Economic Times

International Trade On the Rise As Demand For U.S. Made Goods Increases

By  |  Market Overview
Advanced economies are projected to climb 1.8% in 2014 and 2.4% in 2015. These growth projections are considered crucial for global expansion as well as for the progress of emerging and developing nations. Emerging economies are predicted to grow by 4.6% in 2014 and 5.2% in 2015.

A chart displaying Gross Domestic Product (GDP) of the global economy as well as that of selected developed nations, including the U.S, Japan and the Eurozone, and emerging countries like China, India, Brazil and South Africa is provided below:

GDP Rates

GDP Rates

A spur in economic growth inducing more industrial activities is considered favorable for the expansion of the machinery industry. This direct correlation, right on the heels of the expected economic growth worldwide, makes us confident about the machinery industry. Across nations, the level of industrial activities is measured in terms of industrial production — output of the manufacturing, mining and utilities sectors.

A brief discussion on the prospects of the machinery industry in different nations has been provided below.

Prospects in the United States

International trade is on the rise. Export demand for U.S-made goods, especially automotive vehicles and parts, consumer articles, industrial supplies and materials, and food and beverages, increased by roughly $2 billion to $198 billion in July.

The world’s largest economy held nearly 16.5% of the global GDP on purchasing power parity (PPP) basis, in 2013. Over the last five years, the country’s GDP growth movement were in sync with its industrial production. With the IMF anticipating the economy to grow by 1.7% in 2014 and 3% in 2015, one can gather a fair idea about the growth prospects of the machinery industry.

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WTO Has Rejected India’s Challenges Against Steel Import Laws: US

LALIT K JHA for Outlook

According to US Trade Representative Michael Froman, the World Trade Organisation panel rejected India’s challenges to key aspects of US countervailing duty laws and regulations, and most of the hundreds of challenges brought by India against case-specific Department of Commerce determinations in a countervailing duty proceeding covering hot-rolled carbon steel flat products from the country.

“This dispute is another example of the Administration’s commitment to fight for American workers and industry by taking strong trade remedy measures against unfair subsidies and defending those actions when challenged by our trading partners,” US Trade Representative Froman said.

“The WTO panel’s findings rejecting most of India’s numerous challenges to our laws and determinations is a significant victory for the United States and for the workers and businesses making these steel products,” Froman said.

In its order, the WTO panel upheld key US countervailing duty laws and regulations regarding the application of “facts available” and the calculation of benefit.

The panel also rejected most of the challenges brought by India against the Department of Commerce’s case-specific determinations, including challenges to over 300 instances of the use of “facts available”, challenges to Commerce’s benchmark calculations and specificity determinations, findings that two Indian entities constituted “public bodies” and were thus subject to WTO subsidy disciplines and Commerce’s inclusion of new subsidy programmes in countervailing duty review proceedings, Froman said.

With respect to the findings by the panel that US measures breach WTO rules in certain respects, the United States is studying those findings and will evaluate all options to ensure that US remedies against unfair subsidies remain strong and effective, he said.

In this dispute, India alleged that several US laws and regulations governing countervailing duty investigations, as well as specific countervailing duty measures imposed on imports of certain hot-rolled carbon steel flat products from India, were inconsistent with provisions of the Agreement on Subsidies and Countervailing Measure (SCM) and the General Agreement on Tariffs and Trade 1994.

The WTO panel rejected most of India’s claims against US laws and regulations under the SCM Agreement, Froman said.

The WTO also rejected all of India’s challenges to US Commerce’s benchmark regulations, which the Department of Commerce uses to determine whether a subsidy has conferred a benefit, Froman said.

WTO also rejected India’s claims that the US statute and regulations allowing for the use of “facts available” in instances where responding companies fail to cooperate with an investigation violates SCM Agreement.

The panel found that the US measure allowing for “cross-cumulation” of dumped and subsidised imports when assessing injury in certain ITC determinations breaches WTO rules.

However, the panel rejected other challenges brought by India against ITC’s injury determination in the underlying investigation, Froman said.

The WTO also rejected most of India’s challenges to the determinations under the SCM Agreement including the US findings that certain entities providing subsidies were “public bodies” acting on behalf of India,” he said.

In Need of Honorable Merchants

Michael Czinkota researches international marketing issues at Georgetown University. He served in trade policy positions in the George H.W. Bush and Ronald Reagan administrations. His International Marketing text (with I. Ronkainen) is now in its 10th edition. Kimberly Boeckmann participated in drafting this work.

A powerful concept in today’s international marketing field focuses on re-establishing honorable practices in the workplace and, more importantly, across borders.

The emphasis on the Honorable Merchant is a renewed issue in Europe, bringing fresh life to old thoughts. What exactly is an Honorable Merchant? It dates back at least to medieval history and ancient mercantile practices, where trust was paramount for achieving success.  “Honorable practices” are rules established to guide merchants in conducting international business. For example, Berhold v. Regensburg admonished in 1210 that merchants should always use accurate measures and weights, highlighting Honorable practices as a priority in society. These rules go all the way back to Proverbs (11:1), which specifically address merchants: “A false balance is an abomination to the Lord, but a just weight is his delight.” The New Testament, Matthew 19:23-24, cites Jesus as saying ‘it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God’. Later on, the Quran resolves that charging interest is inappropriate and even sinful (Quran 3:130-131).  In Chinese society, the role of a merchant was seen as a necessary evil, far below more exalted societal roles, such as imperial officials.

Honor also implied accountability beyond the merchants themselves, extending to their leaders. In the early 15th century, creditors from abroad requested that citizens convince their nobility to pay their trade debts. If not, they threatened attack not only on the noblemen and cities themselves, but every merchant from those cities.

A summary then indicates:

  1. The profession of merchants often has a dubious reputation, even more so internationally.
  2. Mixed emotions are prevalent, since merchants can either help or hinder through their work
  3. Internationally, merchants may be at a disadvantage due to their foreignness. Their background and differences could detract from success in business
  4. International merchants are attractive since they bring choice to market, however they still may displace domestic relationships
  5. To overcome this psychic distance, merchants must compensate for their shortcomings

Merchants have long faced a variety of objections, making it difficult to climb the path to trust. Trust can facilitate investments in relationship assets, encourage information sharing, and lower transaction costs. However, Honorable practices have developed over time, by building long-term customer relationships. We believe that the outcome of Honorable behavior will be the construction of Trust Bridges.

An Honorable Merchant’s reputation can be developed by highlighting commonalities and shared experiences, which establish a set of standards for international business. Exposing two parties to common conditions and values helps establish connectivity, warmth and trust more rapidly than if they had no similar experiences. Through a combination of collaboration, symposia, conferences, and courses, partners can accredit and certify people or companies through a database of Trust Bridges.

In its annual Global Marketing conference, held recently in Cancun, the American Marketing Association sought to help in developing the honorable merchant concept. Today’s critical characteristics of an Honorable Merchant must be to 1) build trust, 2) demonstrate corporate social responsibility (CSR), and 3) offer integrity and reliability, i.e. just because something can be done, the Honorable Merchant will not necessarily do it. All this needs to occur simultaneously in the realms of academia, business, and policy.

An essential application of a Trust Bridge exists for alumni of a university. A university’s ability to establish an extraordinary environment enables the building of common bridges, anchored in similar life experiences.  The most effective way to develop strong relationships is to highlight what each party brings to the table. Team work, networking and reputation will increasingly become the main factor in choosing to attend a brick and mortar university, even after the web and internet provide alternatives to traditional education. However, for such efforts to be victorious, they must go beyond the mere transfer of information and help interested parties collaborate and connect.

Familiarity brings a fast track to relationships. A data base of shared experiences can be instrumental in fostering such familiarity. A greater capacity for trust is developed through understanding, which shapes honorable relationships. Honorable practices should again become the expectation and norm.