World trade has forged a network of global linkages, in which everyone and every country is involved. Nowadays, a drought in Brazil and its effect on coffee production and prices is felt around the world. U.S subsidies for ethanol production from corn affects prices for other agricultural crops and livestock in the far reaches of the world. As the key player in globalization, any U.S reform tends to change the international market. The old saying goes, if the U.S. sneezes, other nations catch a cold.
After only 100-days in office, President Trump has already released a tax reform memo to the public. Although not complete and detailed, there is clear a signal coming from the release how the government would like to encourage U.S companies to export and invest abroad.
First, comes a cut in the top tax rate for all businesses to 15%, far below the current 35% top rate. This reduction is not imbalanced since it would also benefit the owners and shareholders of international corporations in the United States. With this tax cut, companies, especially manufacturers, can lower the price of exports and have more money for R&D and marketing. This measure will greatly enhance the competitiveness of U.S goods in the global market. Also, a tax reduction will significantly reduce the financial constraint on companies and allow American companies to seek investment opportunities on a global scale.
A recent consultation at WTO discussed sensitive and important issues : food security and agriculture development in the perspective of trade facilitation.
In particular, one proposal from the G-33 group of developing countries suggests extra special treatment to protect their poor farmers including taxing early adoption of goods for food security. However, responses on this matter varied with supporters mainly came from developing countries in the G-33 and Agriculture G-20 group. While all agreed that food security is of crucial importance, some questioned whether such proposal might imply no disciplines on stockholding and argued that the biggest boost to food security would come from reforming agriculture trade.
Most members concluded that the discussion was constructive that set forth future negotiation dialogue. More consultations from delegations would be expected, but a balance between agriculture and other subjects such as trade facilitation is demanded.
The McDonough School of Business held a discussion on:
TAXATION AND FINANCIAL MANAGEMENT FROM A GLOBAL PERSPECTIVE: OPPORTUNITIES AND CHALLENGES
with a Delegation from the Principality of Liechtenstein
Hosted by Professor Michael Czinkota
On February 9, 2012, a delegation from the Principality of Liechtenstein, led by Ambassador Fritsche, Dr. Ernst Walch, former president of parliament and minister of foreign affairs and Prof. Dr. Francesco Schurr, head of the Chair for Company, Foundation and Trust Law at the Institute for Financial Services, visited Georgetown University.
Georgetown’s McDonough School of Business Dean and William R. Berkley Chair, David Thomas, together with Prof. Allan Eberhart, Prof. David Walker, Prof. Thomas Cooke and Prof. Charles Skuba graced the event.
Governments often impose barriers that interfere with trade. The Office of the U.S. Trade Representatives (USTR, www.ustr.gov) defines trade barriers as “government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products.” One typical barrier consists of “voluntary” import restraints that are applied selectively against trading partners, an approach used primarily with the textile, steel, and automotive industries. Voluntary restrictions, ensured through severe threats against trading partners, are designed to help domestic industries reorganize, rebuild, and recapture their trade prominence. Countries that do no use voluntary measures often implement tariffs. This approach helped preserve the Harley-Davidson Company in the U.S. during the 1980s when the duty on imported Japanese heavy motor-cycles was temporarily bumped from just over 4 percent to almost 50 percent.
This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.
Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 17.