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Govt. Can Impose Nontariff Barrier

Explore government actions affecting MNCs, formulate political strategies, and navigate challenges and opportunities in emerging markets. Learn how MNCs can influence government policies and harness the benefits of integration and national responsiveness.

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Govt. Can Impose Nontariff Barrier

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  1. Welcome to class ofEmerging Markets-Government RelationsDr. Satyendra SinghProfessor, Marketing and International BusinessUniversity of WinnipegCanadas.singh@uwinnipeg.cahttps://abem.uwinnipeg.cahttps://www.abem.ca/conference

  2. Govt. Can Impose Nontariff Barrier • WTO identifies 600 such barriers • Quota • Antidumping accusations • Countervailing duty by law • Labeling restrictions • Licensing mandatory • Product standards  health and safety • Custom inspection procedure  host’ll do it • Government procurement regulations • TRIM  Trade Related Investment Measure • WTO: DSB Dispute Settlement Board

  3. So Form Govt. Relations • Governments take actions • Regulate • Taxation • Expenditure • Privatize • Consultation • It impacts MNCs • Govt. actions  threats and opportunities for MNCs

  4. Government Actions:Threats and Opportunities • Given threats, MNCs need to formulate political strategy in both host and home countries  relations

  5. Political Strategy – Elements • Formulation • Objectives (form IJV, buy govt. assets, get permit, influence MPs to have favorable legislations) • Issues (current or emerging) • Stakeholders (allies, opponents, targets) • Position/Case (“public interest”) • Implementation • Timing • Techniques • Direct (negotiate, litigate) • Indirect (advocacy advertising, political contributions) • Vehicles (association coalition, Government Relations department, consultants) • Style (confrontation or conciliation depends on objective)

  6. Objectives: MNCs, SoE, Govt

  7. MNCs Strategic approach to Govt. Policy MNC Can NOT influence Govt MNC Can influence Govt To achieve Benefits of integration MNC’s objectives in Business – Govt. Interactions To achieve Benefits of National Responsiveness Strategy: Choose one (say 4); determine who has the bargaining power: Govt or MNC

  8. Bargaining Power • Governments may discriminate • Due to differing characteristics of subsidiaries • Force MNCs to have IJV, impose taxes, fix prices • Or they can give MNCs 100% foreign ownership and financial support! • Sources of Bargaining power for host country • Growing capability to replace the MNC’s products • Control access to raw materials, labor and capital • Sources of Bargaining power for MNC • Global structure, Vertical integration • MNCs avoid dealing with govtsunstable • Globalization has made govt. FDI friendly

  9. Govts Create Business Linkages

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