Strategic Options between the UK and Cuba, Trade Relations between the UK and the US - Research Paper Example

Trade Relations Section The United Kingdom faces many challenges when trading with countries outside the European Union including the United States because of various factors including differences in the business culture, long distances, as well as language differences that does not include the United States. However, the trade relationships provide a wide range of opportunities for investors. The United Kingdom has hitherto network with the United States. The trade relations are bilateral as well as those that conform to rules and regulations of World Trade Organization (WTO) (Jun, 1996, p. 112). However, irrespective of spirited efforts by the government of the United Kingdom, challenges still exist in term of barriers to effective trade between the United States and the United Kingdom. The United States of America remains he main foreign investment market as well as the single country providing the market for exports from the United Kingdom. The market is vast and encompasses the free trade zone that includes Canada and Mexico. However, the difference in the business culture and other practical features of working and living in the United States hamper the smooth trade relations. First, the person wishing to exports goods and other commodities to the United States does not get air fare discounts unless he or she is a member of the British American Business (Ostry, 1997, p. 33). This means that travelling from the United Kingdom to the United States is an expensive affair. There are low tariffs in general between the United Kingdom and United States. This means that the greatest obstacle to a person wishing to export goods to the United States remains non-tariff barriers. The tariffs between the two nations remain relatively below three percent. On the other hand, non-tariff barriers arise from different regulatory mechanisms and others closely associated with security measures and systems. Although to a small margin, tariffs imposed by the government of the United States on commodities from the United Kingdom increases the price of imported goods giving unfair advantage to those produced locally. In many ways, entrepreneurs from the United Kingdom do not receive a fair market atmosphere in the United States because the government in the US subsidises some of the companies competing with those from the UK. This in itself eliminates a fair playground for all the players in the market. In both cases, subsidies and tariffs increase the price of foreign goods thus, making domestic goods relatively cheap. The US government further imposes quotas on all imported commodities (United States, Department of Commerce, 2008, p. 15). The government does this through issuance of licences to importers from the United Kingdom in the same way it does to importers from other nations. In the milk industry for instance, the government of the United States imposes a general quota on all dried milk imported into that country. Furthermore, the US government puts a limit on the quantity of sugar any business company will import into the same country. The government also issues the rights to sell sugar import to countries where the sugar comes from without considering the investor. This means that a businessman from the United Kingdom must seek clearance and certification from the government of the United Kingdom (Tett, 2003, p, 21). This result in discretionary licensing where investors cannot trade freely and expand their business at will. Traders from the United Kingdom will also encounter hurdles in trade administration issues. The government of United States continues to impose tax on all imports passing through its ports whether headed to the United States or elsewhere. Only US citizens can receive licences to trade in the construction, maintenance of interstate power, as well as operations of power facilities. The biggest hurdle faced entrepreneurs from the United States planning to invest in the United Kingdom comes from the fact the country is a member of the European Union alongside twenty-six other countries. There is a general acceptance among the member countries that governments have the first responsibility of protecting their citizens from external and undue competition while the same time encouraging internal competition. Secondly, the agreements put the governments through their experts at the centre of determining most policies as well as the planning processes. A sharp historical difference exists between the roles of the two governments. While governance culture in the United Kingdom puts the government in the central roles of safeguarding its populations from the array of outrageous fortunes and slings, the US government offers small-step solutions in some cases, miniature. The protectionist policy spearheaded by the European Union, for which the government of the United Kingdom obliges, continues to interfere with trade relations between the United States and the United Kingdom (Goto, & Suzumura, 1997, p. 371). Non-tariff barriers exerted by the United Kingdom produce several consequences affecting American investors in the UK. American investors wishing to trade in the UK will face trade administration hurdles. Tariffs on electronics as well as electrical appliances and accessories are generally high in the UK. The UK charges a tariff of six percent on various categories led by those labelled as general electronics. This increases prices of electronics supplied by businesspersons who import the same goods. The general system of preference gives an exemption to poor countries thus, eliminating the US from the exemption. Section 2 Strategic Options between the UK and Cuba (A socialist state) The United Kingdom continues to strengthen its relationship with socialist states such as Cuba with aim of expanding trade relations for the benefit of citizens in both countries. This comes through various trade agreements signed between the two governments. The treaties aim at fast-tracking closer economic and dialogue on technical, scientific, cultural, educational, as well as sporting relationships. Among the important areas highlighted seek to provide appropriate strategic options for entrepreneurs from Britain to access the Cuban market. Such moves enable traders from UK to expand their network following increased trade opportunities (Huntington, 1996, p, 51). Identification of available opportunities make such agreements tangible bearing in mind the fact that Britain is the sixth largest economy in the world and the third in the European Union while the economy of Cuba is recovering slowly following several decades of being politically closed. The UK economy is the seventh largest importer and the eleventh largest exporter. This means that citizens from both countries are set to benefit a lot from trade agreements. British investors are set enjoy various issues. First, transportation to Cuba continues to open following increase in the number of airlines serving the country. Air Canada, Sunwing, Westjet, as well as Air Transat continue to serve various airports in Cuba. The airports include among others Cayo Coco, Havana, Holguin, Varadero, and Cayo Largo. Cubana, the national airline company for Cuba subscribes to the international airline standards. Investors from the United Kingdom need to understand that transport infrastructure in Cuba are exemplary and connect all major cities (Carter, 2001, p. 626). The roads are all-weather and investors can reach their destinations with their commodities on time. Viazul is one of the intercity bus companies that serve people from different airports to different cities and from one major city to another as well. The charges are moderate and taxis connect various parts of major cities with ease. Information is available for interested businesspersons from different websites. However, it becomes necessary to avoid renting a car since the law criminalises traffic accident and imprisonment is a possibility (Griffins, 2006, p. 31). This means that the transport infrastructure is not an issue to traders from the United Kingdom. Cubans are friendly and appreciate visitors who respect their culture and are polite. This explains why doing business in Cuba is not about foreign income but respect to their way of life. Although the official language is Spanish, few Cubans speak English especially those in the business and tourism sector. The Cuban Chamber of Commerce organizes for translators at a fee for those going into the interior side. Furthermore, interested entrepreneurs ought to understand the pride, sensitivity, culture, and history of Cubans to stay and trade comfortably (Fischer, 2000, p. 71). A personal relationship is at the centre of successful business relation in Cuba. Communication, an important element for business is available (Anderson, 2001, p. 449). Fax as well as telephone lines are present in all hotel and public booths. The cellular GSM works efficiently provided a person activates to a Cuban line. Negotiations on business matters begin with small talks such as coffee meeting and progresses efficiently to serious engagements. The traditional business culture makes allows people to often exchange business card during meetings. Bearing in mind all these factors, Cuba offers one of the best investment opportunities for British investors. Bibliography Anderson, C. (2001). The impact of war on trade: an interrupted time series study, Journal of Peace Research, 38(4), pp. 445–457. Carter, J. (2001). On disruption of trade by war: a reply to Barbieri and Levy, Journal of Peace Research, 38(5), pp. 625–628. Fischer, T. (2000). The United States, the European Union and the Globalization of World Trade: Allies or Adversaries? Westport, Conn., Quorum Books. Goto, A. & Suzumura, K. (1997). Keiretsu: inter-firm relations in the UK. London, Routledge, pp. 361–380. Griffins, W. (2006). The Mikado’s Empire: A History of US Japan from the Age of the Gods. Berkeley, Stone Bridge Press. Huntington, S. (1996). The Clash of Civilizations and the Remaking of the World Order. New York, Simon and Schuster. Jun, J. (1996). Globalization and Decentralization: International contexts, Policy Issues and Intergovernmental Relations in Japan and the United States. Washington, DC: Georgetown University Press. Ostry, S. (1997). Globalization, domestic policies and the need for harmonization. London, Routledge, pp. 29–39. Tett, G. (2003). Saving the Sun: How Wall Street Mavericks Shook Up Japan’s Financial World and Made Billions. New York, Harper Business. United States, Department of Commerce. (2008), Statistical Abstract of the United States, at www.census.gov/compendia/statab Read More