The three models can however not be applied independently. There is an overlap in their application with the business organizations currently leaning towards the polycentric model. International Business Part One Legal Issues Relating To Global Commerce International business involves trading within and without national boundaries. The fact that business spreads across different jurisdictions gives rise to legal issues especially because many times the laws across countries are not the same. There is therefore, the need to harmonize the laws. Some of the legal considerations in international trade include the following: Tariffs (Customs) and Quotas A tariff is a tax imposed on imports and exports within a jurisdiction. The amounts of tariffs charged by the government in-charge determine whether the investors would be able to invest in a particular jurisdiction or not. Many jurisdictions use the tariff rates as the bait to either attract or chase away investors. Charging high rates would effectively discourage investment (Schaffer, Agusti, & Earle, 2010). Quotas refer to the restriction of quantities to be imported or exported in a particular jurisdiction. Governments impose maximum limits of imports to protect their domestic industry mainly from inflation caused by unfavorable balance of trade. The governments may impose exports to caution the country from scarcity of commodities which would shoot demand high and consequently occasion inflation within the economies. The use of tariffs and quotas affect businesses as they have to toil within the agenda of a particular jurisdiction (Schaffer, Agusti, & Earle, 2010). Antidumping and Transfer Pricing Laws Antidumping refers to rules against dumping. Dumping essentially refers to a situation where multinationals import goods of lesser quality and value into foreign jurisdictions. Governments have come out strongly against dumping as it defeats the ideals of trade and erodes the standards by perpetuating mediocrity (Schaffer, Agusti, & Earle, 2010). Transfer pricing is a concept of taxation that concerns multinationals. Owing to the different taxation rates by different jurisdictions, multinationals exploit transfer pricing so as to tax their products within the lower taxation rates jurisdictions. Governments have come up with laws to prevent cases of tax avoidance and evasion under the guise of transfer pricing. Intellectual Property Rights International business recognizes intellectual property rights although the rights are granted within individual jurisdictions. These include copyrights, patents and trade secrets. Governments have been considerate enough to provide laws to enable innovators enjoy the fruits of their work through the intellectual property rights (Schaffer, Agusti, & Earle, 2010). Sources and Forms of Political Risks Political risks refer to the effects the politics of the day in a particular jurisdiction has on the businesses within that jurisdiction. Political risks could be caused by the government, the people or the activities of competitors and non-governmental organizations. Governments mainly expropriate or nationalize companies in effect taking over the share ownership of the companies. The people may be at war creating un-conducive environments detrimental for business. Activists in the guise of protection of the environment or societal interests may render the business working environment
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