International Business Essays (755 words) - Economy, Transport

International Business Tarhab Motiwala Assignment 5 Critical thinking (page 311) 3. What effect is creation of a single market and a single currency within the EU likely to have on competition within the EU? Why? ANS: The EU with its 500 million consumers has swept away huge numbers of barriers to trade and not least regulatory differences between different countries to bring out common procedures, standards and rules. As a single market and single currency area the degree of competition has become extremely high. The factors that caused this high competition. i ) a single market on competition within the EU is an increase in competition between companies from the EU countries. Trade barriers are swept away which makes it easy for companies to get involved in cross-border trade and extend the number of markets they serve without spending a lot of extra money. This should help to contain inflation and will therefore be beneficial to consumers. ii) a single currency combined with a single market within the EU have on competition is the price transparency across the Europe. 4. Do you think it is correct for the European Commission to restrict mergers between American companies that do business in Europe? (For example, the European Commission vetoed the proposed merger between WorldCom and Sprint, both U.S. companies, and it carefully reviewed the merger between AOL and Time Warner, again both U.S. companies.) ANS: In my opinion, I do not think is right for the European Commission to restrict merger between American companies that do business in Europe. However, I do believe that upholding some legal laws that limit certain restriction to ensure the legality of American business done in Europe. By doing so, Europe Union, creates a positive economy unity throughout Europe. The monetary stability with the use of Euro, the ability to strengthening individual countries, and the free border makes Europe a strong country. The ability to restrict, propose, and review any America business done in Europe gives them the power to control many political and economic within the country. In reality by them limiting the international business sets boundaries on what American business can do in European grounds. Questions (page 313) 1. What are the potential economic benefits of the trucking provisions in the NAFTA treaty? Who benefits? ANS: The potential economic benefits of the NAFTA treaty are transportation costs being cheaper and travel time would be cut down. Both the United States government and Mexican government as well as Mexican truck drivers benefit from this treaty. Both governments would end up saving money from the cut in operation costs and Mexican truck drivers benefit because they are working more, driving to final destinations rather than just the border. 2. What do you think motivated the Teamsters to object to the trucking provisions in NAFTA? Are these objections fair? Why did Congress align itself with the Teamsters? ANS: The teamsters claimed that Mexican truck drivers had poor safety records, that Mexican trucks did not adhere to the strict safety and environmental standards of the US and that the limits on the hours a driver can spend behind the wheel are ignored in Mexico thereby giving the Mexican truck drivers an unfair cost advantage. My opinion that the biggest motivation for the Teamsters objecting to the trucking provisions is the increase in competition from Mexican trucking companies in their market which would undoubtedly result in reduced profits. In 2007, Mexican drivers were followed for 18 months and this proved that the Mexican drivers had a better safety record than the U.S. carriers. That is why I believe the objections are not fair. The pilot program proved they can follow the additional 22 safety standards they were required to pass and have still have a better record than the U.S. I think Congress initially align itself with the Teamsters because of the union and the power of unions. In addition, they were convinced with the statement made by th e Teamsters. 3. Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States? ANS: Mexico s punitive tariffs are justified and