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Asian Countries Forge Trade Pact nomic output
Asian Countries Forge Trade Pact nomic output. BY JON EMONT The accord poses an early AND ALASTAIR GALE test for the incoming Biden ad- ministration as it begins craft- SINGAPORE-Fifteen coun ing its own policies on trade tries including China signed a and China. Mr. Biden, a Demo- major trade deal after years of crat, has said he would wait be- tricky negotiations, posing an fore signing new trade deals early challenge to President and will seek to rally allies be- elect Joe Biden as he formu- hind a more forceful policy to lates his administration's trade confront China. However, the policies new Asian agreement signals Sunday's agreement, called that other countries including the Regional Comprehensive Please turn to page AZ Economic Partnership, or RCEP, creates a regional bloc that cov • Western demand bolsters ers around a third of global eco Asian economies. A10
New Pact Links Trade Across Asia Continued from Page One U.S. allies such as Japan and South Korea are forging ahead in the meantime The new bloe stretches across many of the largest and most vibrant economies in the Asia-Pacific region, which set aside geopolitical didences to boost trade and growth during Vietnamese Prime Minister Nguyen Xuan Phuc, left, and Minister of the coronavirus pendemic. Industry and Trade Tran Tuan Anh cheer the RCEP's signing from Hanol Apart from China, it Includes Japan, South Korea, Australia, cant because it will result in a tariff items sent to South Korea New Zealand and 10 Southeast more unified trading sys- to 92% from 19%, and to China Asian mations from Indonesia tem. That should make it easier to 86% from 8%. and Vietnam to Thailand and for the region's manufacturers Japan's automobile industry Singapore to import raw materials from a key driver of the economy, Encouraging free tupde is around the bloc without facing stands to gain. The deal will even more important role that high tariffs, and export finished eliminate tariffs on nearly $50 the global economy is in a products throughout the region billion of auto parts sent to slump and there are ss of with lower tariffs, trade experts China each year accounting countries turning 'Inward, familiar with the deal said. for 87% of all such items ex- Prime Minister Yoshihide Suga At a ceremony on Sunday, ported to its western neighbor, of Japan sald during the RCEP which was condacted via video the Japanese government said meeting, a Japanese goper conference because of the pan officials across the region ment of sald demic, ministers from the 15 said they expect the agreement The world's largest con countries signed the agreement will help countries better fight omy, the US, isn't a part of and held up their signatures to the economic hit from the pan- the deal. It was involved in the the cameras. The dent's compile demie. Mohammed Azmin Ali conception of a different bloc. Malaysia's international trade called the Trans-Pacific Part- minister, called the deal on nership, or TPP, that didn't in. The 15-nation deal "economic-recovery tool that will help to open markets and part at countering China's increases pressure strengthen supply chains. growing clout. But Washing National governments need ton, which shunned big multi- on President-elect to ratify the past before it takes lateral trade pacts under the Joe Biden. effect. Trump administration, pulled over eight years of negotia • out of that pact, a modified tion, the deal faced deep chal- version of which was tigned by lenges in balancing the inter- the other 11 countries in the tion comes after several years ests of countries at varying grouping. of growing trade tensions, par stages of development. India, The deal signed on Sunday ticularly between the US and which was a part of the pro which is mute media soupe Chile, that rased questions posed grouping withdrew last than the TPP-increases pres about the future of globaliza year, concerned that the deal sure on Mr. Biden to deepen tion. would lead to a flood of im- U.S. trade engagement in the Premier Li Keqiang of China ports. Mr. Saga of Japan said Asia-Pacific region. He warned said that the signing showed he regretted India's decision last year that this doesart that multilateralism and free and would encourage it to join write the rules the road, trade still represent the right Even without India, the pop- China will, and said he would direction of the world economy ulation of the countries now try to renegotiate the TPP, but and mankind." He said the part of the deal equals about a hasn't taken a firmosition. deal is a landmark achieve third of humanity. "The fact Mr. Bidens transion team ment of East Asian regional co that you could reach an agree declined to comment on the operation that would provide ment with all those parties in- ECEP on Sunday. a boost to the global economy.cluding China is a significant Although most ountries According to Japan's get accomplishment," said William that are part of Sunay's dealment, the RCEP will clim- Reinsch, a trade expert at the already have tight tree ties- nate tarifts or 91% of goods Center for Strategic and Inter- they rely on one ancher for among members. It will stice national Studies. goods from the imports to trade barriers with many of -Xico Xiao in Pering and semiconductor sales-threw Japan's largest trading part Chester Tay in Kuala Lumpur agreement is considere signif- ners, raising the level of noti contributed to this article.
Expert Solution
To be successful in a foreign market, companies must fully understand the foreign environment in which they plan to operate.
Political Considerations
We have already discussed how tariffs, exchange controls, and other governmental actions threaten foreign producers. The political structure of a country may also jeopardize a foreign producer’s success in international trade. Nationalism is the sense of national consciousness that boosts the culture and interests of one country over those of all other countries. Strongly nationalistic countries, such as Iran and New Guinea, often discourage investment by foreign companies.
In other, less radical forms of nationalism, the government may take actions to hinder foreign operations. Ellen Proper, «Dutch See Red Over Foreign Bid For Paint Giant,» Bloomberg News, https://www.bloomberg.com, March 10, 2017. In a hostile climate, a government may expropriate a foreign company’s assets, taking ownership and compensating the former owners.
Cultural Differences
Each country has its own customs and traditions that determine business practices and influence negotiations with foreign customers. For example, attempting to do business in Western Europe during the first two weeks in August is virtually impossible. Businesses close, and everyone goes on vacation at the same time. In many countries, personal relationships are more important than financial considerations.
For instance, skipping social engagements in Mexico may lead to lost sales. presents some cultural dos and don’ts.
Cultural Dos and Don’ts Guidelines and Examples
Always present your business card with both hands in Asian countries. If you receive a business card, accept it with gratitude and examine it carefully. During this time everything slows down, particularly business. When American Airlines wanted to promote its new first-class seats in the Mexican market, it translated the «Fly in Leather» campaign literally, which meant «Fly Naked» in Spanish.
Glad-hand, back-slap, and use first names on your first business meeting in Asia. Fill a wine glass to the top if dining with a French businessperson.
Economic Environment
The level of economic development varies considerably, ranging from countries where everyday survival is a struggle, such as Sudan and Eritrea, to countries that are highly developed, such as Switzerland and Japan. In general, complex, sophisticated industries are found in developed countries, and more basic industries are found in less developed nations. Average family incomes are higher in the more developed countries than in the least-developed markets. Gross National Income is the value of the final goods and services produced by a country together with its income received from other countries less similar payments made to other countries.
Final goods are the goods ultimately consumed rather than used in the production of another good. They are intermediate goods used to make the final good. The same tires, if sold to a consumer, would be a final good. Domestic firms entering the international arena need to consider the politics, economies, and culture of the countries where they plan to do business.
For example, government trade policies can be loose or restrictive, countries can be nationalistic, and governments can change. In the area of culture, many products fail because companies don’t understand the culture of the country where they are trying to sell their products. Some developing countries also lack an economic infrastructure, which often makes it very difficult to conduct business.
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