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International Business Regulations in Relation to Imports and Exports - Essay Example

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The paper "International Business Regulations in Relation to Imports and Exports" highlights that the Australian government may use various non-tariff barriers to restrict imports from Australia. This aims at protecting local industries from competitors…
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Extract of sample "International Business Regulations in Relation to Imports and Exports"

Running Head: International Business Transactions International Business Transactions Name Institution Date Introduction Australia is a country that is governed by strict regulations and standards when it comes to international business management. It is a requirement for any business that crosses border to comply with the laws of the respective importing and exporting countries. Any party that is involved in the international business must have knowledge of international standards that serve to monitor trade of import and export products. This essay aims at describing international business regulations in relation to imports and exports, the legal and procedural considerations that importers must account for before making import decisions, evaluate the way in which non-tariff barriers play an important role in restricting imports, investigate how the Australian regulatory system to exporting affect the ability of companies to export, establish and analyse the role of the Appellate Body in dealing with export duties in the China Dispute DS394 under the WTO dispute settlement system and the need for exporters of defence and dual use goods in complying with the applicable regulation. 1. What legal and procedural considerations need to be taken into account when making a decision to import goods in Australia? How are trade remedies utilised and regulated? (12 Marks) Before making a decision to import goods in Australia, business people need to take into account various legal as well as procedural considerations so as to ensure that they comply with the respective importing laws in Australia. There is a defensible regulatory decision making that all business men and authorised officers must follow before importing their products to Australia1. Business men must have the knowledge as well as skills that are required when applying defensive regulatory decision making methods effectively. They must be aware that, their products must be inspected, verified and authorised as import consignments. Correct decision making ensures that the reputation of the Australian Quarantine and Inspection Service is protected. This will help in avoiding any potential legal action to be taken against the importer. Therefore, it is important for business men to have an understanding of the key legislation and procedures that relate to defensible regulatory decision making and to apply these laws and procedures when making import decisions. Defensible decision making can be described as the best decision that a business person can make which lies within the legislative parameters and have the capacity of being verified2. Defensible Regulatory Decision Making Principles Importers to Australia have the responsibility of understanding the principles of making effective decisions for the purpose of ensuring that these decisions that are made can be defended successfully in case there are claims to challenge them. A number of standards have been put in place to regulate the import decision making process by business men. The imported must be able to defend the process that was used when making the import decision to make sure that, any challenges that may arise can be defended through a judicial review. When making import decisions, importers must ensure that they act within the legislative parameters, they should apply the principles of natural justice and procedural fairness, they must follow work practices as well as procedures that are consistent, they should also make a decision that a reasonable person would reach to, they should also take into account all considerations that are relevant to the importation of goods, all facts must be considered independently and the decision should also be reconsidered in case when more information is gathered3. Legislative Parameters Import decisions should be made within the legislative parameters by identifying the source of power of the decision and the decisions should be made within the source of power limits. Business men or authorised officers must be clear of the decisions that they are making and consider if the decision source of power is based on legislation. The legislation that is relevant to import authorised officers and business men in Australia are; Quarantine Act 1908 and Imported Food Control Act 1992 among other legislations4. When making an import decision, importers or the import officer need to know the source of the decision that needs to be made. It is important to confirm source of authority of the decision to ensure that they make decisions within that power. Natural Justice or Procedural Fairness There is need to make decisions that are fair. Those making import decisions have the responsibility to act fairly or follow procedural fairness when making such decisions. Procedural fairness is based on three rules including; the hearing rule, bias rule and no evidence rule. Based on the hearing rule, the decision maker is required to give the person who may be having interests in the decision that is going to be made a chance for presenting is or her case. Import decision may be made by the authorized officer or the importer. It is important to notify the client is unfavourable decisions may be experienced to allow the client importing goods can comment of the decision. This ensures that the decision is made on the basis of facts that are relevant. On the basis of the bias rule, the decision maker should not have any interest in the decision that is going to be made. If they have interest in such a decision, it may be bias. The no evidence rule requires import decisions to be made based on evidence which is probative.These decisions must be reasonable and also on the basis of facts that are relevant and can be proved. Work Practices and Procedures Import decisions must be made in consideration of work procedures as well as organisational parameters that are relevant such as supplier service standards, standard operating procedures, Industry Advise Notice’s and Import Operational Notices. 5The Public Service Act 1999 requires that, services are obtained in a fair manner. To ensure that the making of import decisions that are fair, decision makers must avoid self-interest, dishonesty, favouritism and bias. Values such as fairness, impartial, courteous and effectiveness should be maintained when importing goods from Australia. In their charter, importers or any officers that are making import decisions; they must consult widely before any import decisions are made. Reasonable Person Rule Import decisions should be made considering this rule, since a reasonable person uses knowledge, judgement as well as intelligence to make decisions that fit for all other people in the society. A decision which is made out of this rule, it is unreasonable and may end up being overruled. Relevant Considerations When making a defensible import decision, all considerations that are relevant to the importation must be accounted for including; legislation, facts and evidence. Regulation and Utilisation of Trade Remedies Trade remedies are regulated by the Australia’s anti-dumping system that aims at allowing Australia to increase the benefits of free trade while opposing trading activities that are unfair from other countries and may have impacts that are negative on the Australian Industries. This is achieved by imposing more custom duties on imports that are dumped or subsidised and are found to threaten the injury of products within the Australian industry that produces similar products. This ensures that the anti-dumping system invalidates the negative impacts of the imports while deterring further dumping as well as sublimation acts. Trade remedies help in overcoming the alterations that are caused by subsidisation and dumping for the purpose of allocating resources efficiently to liberalise international trade6. 2. Evaluate the way in which non-tariff barriers play an important role in restricting imports. What are the fundamental rationales for these barriers and how are they ‘disciplined’ under GATT, SPS and TBT agreements? (10 Marks) 7Non-tariff barriers play a very important role in restricting imports. These barriers are imposed by a government for the purpose of stimulating the development of domestic industries. Imposing domestic content requirements is a good way that a government can use to specifically identify the percentage of the total value of a product that must be domestically produces for it to be sold within the domestic market. Domestic content requirements are used together with an import substitution policy whereby domestic production is made to replace imports. This reduces imports business within a country. Non-tariff barriers help in avoiding the manipulation of trade agreements by non-members who want to circumvent tariffs. The use of domestic content rule by member countries of a trade agreement enhances domestic demand for the country’s products. Non-tariff barriers that are in the form of import licenses restrict imports by requiring importers to acquire a license for every consignment that they get into the country. This is a good way of demotivating importers to carry out their business within a country. Non-tariff barriers play an important role in restricting imports by ensuring that, there is only one buyer for import products within the country or a set of products within the world’s markets. This role is played by import state trading enterprises who are instituted by a government to enjoy partial or full monopoly domestically by selling the commodities of that country8. Such kind of non-tariff barriers can be in the form of implicit import tariffs that are imposed by import state trading enterprises. These institutions usually purchase all imports at world prices and offer hem for sale at prices that are higher than the domestic prices. There is a hidden tariff in the difference between the price of purchase and the price of domestic sales. The implementation of import quotas by state trading enterprises that are implicitly general, targeted or complex usually make importation of products within the market unprofitable. This is a sure way of restricting by a government whereby importers will be discouraged to carry out their trade transactions within a country because it is expensive and unprofitable to carry out their business there. Non-tariff barriers work by imposing technical barriers to trade that work to restrict imports. These barriers are based on technical rules on how products are packaged, define and labeled9. These are rules that are impracticable by many importers and they find doing business in country with such rules to be difficult. They are not able to accommodate the technical specifications of products that are produced and sold in a particular country. For import business to thrive in a country, imports as well as domestic products should be treated equally by not taking advantage of products from one source over the other. Countries have been found to restrict imports by imposing policies of exchange rate management. These non-tariff barriers restrict imports through the management of exchange rates10. This discourages imports from the country while encouraging exports of all types of commodities to the country. Policies that are set by a country to decrease exchange rates of a country’s currency rate are seen to restrict imports because the imports are seen to become very expensive for people to acquire the products. Non-tariff barriers that work by undervaluing the currency rate of a country in the international financial markets will definitely restrict imports. These policies may be set to be multiple exchange rate policies whereby importers are required to pay exchange rates that are different for a foreign currency depending on the products that are being imported. Such policies will restrict imports more. Considering the non-tariff barriers of precautionary principle and sanitary as well as phytosanitary barriers to trade, restricts imports by requiring that chemicals and technologies that are new in the market should be regarded as dangerous not unless they are proven otherwise. This is a way of restricting imports whereby importers cannot make use, buy and import those chemicals or the technologies until they proven to be non-dangerous11. The people who have the responsibility to establish the harmlessness of a new chemical or technology are the only hope for importers to continue doing business in a particular country with government restrictions based on precautionary principle. The need for importers to rigidly adhere to the precautionary principle leads to trade embargoes on various products like seeds that are genetically modified that have do not rely on science for analysis that may render market closure for these products. Countries are seen to restrict imports by using such kind of non-tariff barriers as an excuse to keep out competitive products in the market. The fundamental rationale for non-tariff barriers is to restrict imports without imposing tariffs. These tariffs mostly are used by governments for the purpose of protecting the health of its citizens, improve safety, sanitation as well as natural resources that are depletable. 12GATT disciplines non-tariff barriers by imposing anti-dumping duties to imports that are causing or even threatening the causation of injury to a local industry. 13SPS disciplines non-tariff barriers by providing measures for agricultural products. The SPS recognizes the application of the Sanitary and phytosanitary measures that apply to foods that are produced domestically, animal as well as plant diseases and products that come from other countries. SPS is used by countries to set the minimum safety standards, quality and health of products that are produced and sold within the country. Measures are also provided by SPS to hinder the importation of products using unjustified means. TBT disciplines non-tariff barriers by imposing measures that require the protection of human health as well as food safety when carrying out import business like packaging and minimum size of fruit. 3. To what extent do you think the Australian regulatory approach to exporting may (or may not) affect companies’ ability to export? (8 Marks) 14Free trade is highly promoted by regulating bodies in Australia. This increases the capability of companies to operate freely in the international market. Therefore, companies usually exploit this opportunity to export more of their products to other countries. The government also issues export permits that are non-automatic through its agencies. This acts as a restriction for free trade in Australia whereby companies may be limited in operating in the international market. Companies are also required to conform to the assessment test of testing, inspection as well as certification in the exporting country. This ensures that companies who want to enter and sell their products in the global market are careful to produce products that are of high quality. This will ensure that their products are acceptable in the countries they are exporting to. It is evident that, arrangements that are aimed at substantially reducing competition in Australia are highly prohibited by the Government as stipulated under the 1974 Trade Practices Act15. Export contracts are however exempted from this principle and companies are allowed to export their products with minimum restrictions. This increases the performance as well as operation of companies who can now operate globally to expand their businesses. The national competition policy in Australia extends the presence of competition in all business activities. The reforms for reducing regulatory burden by the NPC will increase the accessibility of infrastructure which is export oriented to Australian companies. This has led to better operations of these companies in the export market. 16Exchange rates affect the supply as well as demands for export volumes. When more goods are produces for the purpose of exporting, more returns will be accrued from the exports. A change in currency exchange rate within a country does not affect the demand for the country’s exports. This has seen many companies in Australia remain in the export market since their products are not affected by change in currency exchange rates. 17The new arrangements of exporting wheat in Australia were introduced by the Australian Government under the Wheat Export Marketing Act 2008 (the Act). This Act was aimed at removing the old arrangement of export that was single desk and introduced the presence of competition within the Australian export market of bulk wheat18. Monopoly in the export of wheat was removed and a new regulator known as the Wheat exports Australia. The administration of the regulator has improved the production of when among companies that has increased the quality of wheat sold in the export market. This has enabled companies to be able to get more returns from their wheat produce. The credibility of wheat companies is determined by the regulator and these companies can operate in the international market and export their wheat once they meet the required standards of production. Wilson & Otsuki (2004) note that, technical regulations as well as standards that are mandatory and set by countries who import, with other assessments of conformity that are compulsory by importing countries, like testing and certification usually have a negative effect on the ability of firms to export their products to such countries. Companies have to make decisions for reallocating resources in order to comply with these requirements. This is expensive for them and their business of exporting their produce to those countries is hindered. 4. Provide a critical analysis of the role of the Appellate Body in dealing with export duties in the China Dispute DS394 under the WTO dispute settlement system. Does this decision provide adequate incentives for Member States to invoke the system? Support your argument by relying on scholarly sources. (20 Marks) The Appellate Body plays the role of dealing with export duties in the China Dispute DS394 under the WTO dispute settlement system. The Appellate body has the role of determining whether export duties that are imposed by China on the different forms of coke, silicon metal, zinc, manganese, bauxite, fluorspar, yellow phosphorous and magnesium are consistent with the China’s Accession Protocol Paragraph 11.319. This paragraph requires that, exclusion of all taxes as well as charges that are applied to exports, irrespective of the provision which is specifically stated in Annex 6 of the Protocol or if applied in conformance with the Article VIII of the GATT 1994. However, it is clear that, only yellow phosphorous is available in the raw materials listed in Annex six. The other materials are not in that list and cannot be exempted from export duties. In addition, the fifty per cent of export duty imposed on yellow phosphorous was already removed before the panel was established. This role is well demonstrated in the case presented by United States, Canada, Mexico as well as Turkey on 23rd June 2009, in relation to consultations with China and its restraints on exports of the different forms of raw materials. The findings of the case was that, China was the leading producer of all the raw materials listed that are used in producing items every day and other technology products. From the basis of the complains, it is clear that, using export duties to restrict exports by china results to the creation of scarcity of raw materials that will lead to increased prices of the same within the global markets. When the case was presented to the WTO, the Chinese government went ahead and eliminated all duties for exports except for products that were listed in Annex 6 of the Protocol of Accession. The findings of this case show that, there are inconsistencies of China’s export duties with the obligations that were agreed to by China in Its Protocol of Accession20. In its role, the panel also found out that, the wording that are used in the Protocol of Accession of China does not allow the use of the general exceptions by China in the Article XX, of the GAAT 1994 for the purpose of justifying its WTO export duties that inconsistent. In its duty, the Panel established that, even when China has the capability of relying on specific exceptions that are available in the rules of WTO for the purpose of justifying its export duties, China did not comply with the requirements stipulated in the exceptions. In its findings the Panel decided that, China must adopt the WTO framework for it to be consistent21. Regarding the purpose of imposing export duties, the Panel found out that, even if China imposes these duties for the purpose of protecting its citizen’s health, China was not able to prove how the export duties would reduce pollution for the purpose of improving people’s health. In investigating the China’s responsibility in eliminating all restrictions in relation to the right to trade under the WTO, the Panel established that China has successfully met this responsibility. The report of the Appellate body was circulated to its members on the 30th January 2012 in relation to the decision of China’s export duties on raw materials. In its findings, the Appellate body suggested that, since the complainants did not provide linkages that are clear between the duties provided in the agreements that were alleged to be violated. The problem was not clearly stated. The Appellate body did uphold the decision for the panel for China to bring its export duty in conformity with WTO obligations to ensure that the two are consistent22. Concerning the conditional other appeals presented by Mexico, European Union and United States, the Appellate Body was reluctant to address their appeal since it deemed that there is no need. Concerning the basis for China’s Accession Protocol, the Appellate body did support the Panel’s decision that paragraph 11.3 of the Protocol Accession of China does not allow an exceptions for China under the Article XX of the GATT 1994 that would be a justification for export duties that are inconsistent with the duty of China under Paragraph 11.3. The reason is that, the Appeal made by China did not request the Appellate Body to reverse the findings of the Panel that, China was not able to demonstrate their action of imposing export duties is consistent with the Article XX of the GATT 199423. However, is true that the Appellate body considered China’s argument that the Panel erred by considering that, there is no basis which is textual to invoke the China’s Protocol of Accession in the Article XX in the claim that was presented under Paragraph 11.3. As it was found by the Panel, China had argued that, it was wrong for the panel to have assumed that, there was absence of language in Paragraph 11.3 that excluded resource to the Article XX of the GATT 1994 that had an expression of granting the right of regulating trade in a way that is consistent with the Article XX, can be interpreted to mean that, China as well as other members had an intention of depriving that right to China24. According to the Appellate Body, they agreed that, the defence of China that the members of WTO usually a right which is inherent for them to regulate trade activities, and this includes the use of export duties for the purpose of promoting non trade interests. This decision was different from the Panel decision and the Appellate Body did not support the Panel concerning this matter. The decision made by the Appellate Body is provided incentives that were adequate for the member states to invoke the system. The reason is that, their complaints about China were not resolved by the Appellate Body. In fact, the decision made in the Panel’s finding would hold a better place and work in their favour when it comes to the complaints being addressed. 5. What advice would you give an exporter of ‘defence and dual-use goods’ to make sure that it complies with the applicable regulation? (5 Marks) 200words Defence and dual use goods in Australia are regulated under the Customs Act 190125, together with the Regulation of the Customs Prohibited Exports Regulations 195826. As described in the Defence and Strateic Good List, there is a list of goods that are regulated under the Regulation 13E and exports of these goods are prohibited from Australia without the acquisition of a license of a permit. Therefore, any exported who intents to export such goods must obtain a permit. Exporters must also ensure that, these good meet the commercial needs for exports and an application in weapons of mass destruction program. They must meet the export controls that are imposed on the defence and dual use goods as required by the department of defence that is responsible for administering approval for these goods in Australia. Exporters of such goods should not violate export controls. Today the introduction of the Customs Amendment (Military End-Use) Bill that was passed in the year 2012 for the purpose of amending the Customs Act 1901. This bill allows the minister for defence to make a prohibition of exports that are made for the end use by the military and that would be a compromise to the Australia’s defence, international relations and security27. Therefore, an exporter does not need to apply for a license to export the defence and dual use goods under this section of the Customs Act. The reason is that, this section has a prohibition power and exporters are only recommended to take due diligence while undertaking any foreign trade for the purpose of ensuring that there is legitimacy of any export. In the case that the goods are for military end use and might be contrary to the defence of Australia, the exporter has the responsibility for contacting the DECO for any assistance. Conclusion This essay is a complete evidence of the diverse and compulsory regulation of international business. Any business that crosses the border has the responsibility for complying with the laws of the respective importing as well as exporting countries. Therefore, it is inevitable for business people to continue educating themselves about the standards that are available in the international market that controls trade for the import and export products. Importers are advised to follow the legal as well as procedural considerations before making any decision of importing goods in Australia. They should also be able to understand how trade remedies are regulated and utilized in Australia for the purpose of encouraging free trade. The Australian government may use various non-tariff barriers to restrict imports from Australia. This aims at protecting local industries from competitors. The approach of exporting in Australia has been described as one that is affecting the ability of companies to export. Free trade is highly embraced in Australia and companies are free to do their business internationally. The Appellate Body has also been described as playing a critical role in dealing with export duties in the China Dispute DS394 under the WTO dispute settlement system. They must provide incentives that are adequate and do not make the member states to invoke the system. Exporters are also advised to comply with the applicable regulation before exporting defence and dual use goods. References Australian Government. (2010). Regulation Impact Statement: Government Response to the Productivity Commission Review of Wheat Export Marketing Arrangements. Department of Agriculture, Fisheries and Forestry. Australian Government. (2014). Australia’s Trade Remedies System: Mechanisms to address the negative impacts of unfair trading activities by overseas companies on Australian industries. Department of Industry Innovation, Science, Research and Tertiary Education. Carter, J. (2002). Review of Australia’s Quarantine Function. Supplementary Information from AFFA for JCPAA. Parliament of Australia. Commonwealth of Australia. (2014). Volume 3: Defensible Decision Making. Department of Agriculture. Customs Act 1901 Customs Prohibited Exports Regulations 1958 Customs Amendment (Military End-Use) Bill Investment, N. A. (2010). Australia-China Free Trade Agreement negotiations. Population, 1(3414). Johnson, R. (2014). Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade. Congregational Research Service. Richardson, D. (2004). Intellectual Property Rights and the Australia-US Free Trade Agreement. Department of the Parliamentary Library, Information and Research Services. Smith, M. (2010). Impact of the Exchange Rate on Export Volumes. Reserve Bank of New Zealand. Eonomics Department. Bulletin. 67(1). Summer, D., Smith, V. & Rosson, C. (2014). Tariff and Non-Tariff Barriers to Trade. National Agricultural Law Center. Trade Practices Act 1974. Vandegraaff, R. (2009). A co-regulatory approach to farm animal welfare in Australia. Animal Health and Welfare Systems. Wheat Export Marketing Act 2008 Wilson, J. & Otsuki, T. (2004). Standards and Technical Regulations and Firms in Developing Countries: New Evidence from a World Bank Technical Barriers to Trade Survey. World Bank. WTO. (2012). Detailed Presentation of the Agreement on Agriculture. WTO E-learning. WTO. (2012). China – Measures Related To The Exportation of Various Raw Materials. Reports of the Appellate Body. WTO. (2014). China — Measures Related to the Exportation of Various Raw Materials, Dispute DS394.Retrieved from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds394_e.htm Read More

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