Category: Trade

Essay Summary of Long distance trade across Afro-Eurasia.
Long distance trade really increased in Afro-Eurasia from 500c. e. to 1500c. e. Some of the reasons for the increase included the introduction of camels, transportation with boats, and transportation on the silk roads. Some of these trade routes were easier to transport stuff more efficiently, but they all were used. Firstly, camels were introduced in about 300c. e.. This was a big upgrade from the donkeys because camels could go up to ten days without drinking water. This made trade easier since camels could make the trek across the Sahara and didn’t need much in return as far as water goes.
At one point there were up to 5,000 camels used in the transportation of goods across the Sahara. The camels made it so the Sahara was no longer a barrier for trade from north and south of the Sahara. Transportation over water took a major role in transporting goods. People were no longer just trading valuable goods because it was worth the trip, with boats they could haul a lot of cargo so they could haul items for the middle and lower class. With boats they could haul enough cargo for mass markets and a bunch of different items such as wood and heavier things that camels or donkeys couldn’t carry.
Most of the wood could be taken places by the Sahara where they couldn’t get trees to grow to build houses. Lastly, the silk road was a major part of trading because it wasn’t all about just the goods, they got a lot more other things from the different people trading with them. With the silk roads increasing, it allowed little villages to turn into bigger city/states that were mainly based on trade. They could make a lot of money from taxes by charging people that came on the roads through there city for passing.

The silk roads were first mainly based off of silk coming out of China, plus gold and spices getting traded for the silk. Most of the goods being traded were of high value, since it was difficult going so far on foot so it had to be worth it in the end. These topics are why the trade really increased from 500c. e. to 1500c. e. Some of these reasons were due to transportation with camels, transportation with boats, and transportation on the silk road and how all of these helped spring the trading routes in action. These allowed traders to trade more freely and carry more goods efficiently

Essay Summary of Long distance trade across Afro-Eurasia

Accounting Rules Could Reveal Trade Secrets.
This paper seeks to provide comments on disclosure or other aspects on the article entitled “Global accounting rules could reveal trade secrets” by Cole (2008). The article discusses about the possible revelation of trade secrets which is due to the fear for vague standards under the international financial reporting standards (IFRS) that may require too much disclosure as a result. The IFRS will replace the US generally accepted accounting principles (GAAP).
The author argues that since IFRS is based on more general principles than the US GAAP, the lack of specific guidance on how to comply with rules, the auditors will demand more public disclosure from client-corporations before they will give their clean opinion on financial statements. It is argued that because of more disclosure, then necessarily there could revelation of trade secrets (Cole, 2008). The author’s argument sounds as if trade secrets will be necessarily revealed because of the requirement of the standards for more disclosure and that auditors would in effect be disregarding the laws protective of trade secrets.
The author’s argument is simply baseless since auditors cannot just reveal trade secrets acquired by their audit engagement without suffering the penalty for prescribed for under accountants’ code of ethics and without being liable for damages when sued by clients under laws on trade secrets (IPWatchdog, 2008). This researcher believes that the argument of forced or more likely revelation of trade secrets is an oversimplification of the purpose of adequate disclosure under the IFRS. The real purpose of the disclosure is just to make the information more transparent and objective to the investors but never to reveal trade secrets.

The companies under IFRS are under no obligation to reveal these secrets in the first place to their auditors since the IFRS are never intended to repeal the rights of corporations under existing laws on trade secrets. But if in the process there would revelation by accident, the client corporations can still invoke its rights under existing laws for the protection of these trade secrets or they would make it a condition of engagement with auditors that no revelation of secrets would be made.
Otherwise, these auditors would be liable for damages in addition to being possible liable for criminal and administrative penalties provided for by law. Cole (2008) has cited about the mind-set on rule-based accounting under the US GAAP where people were used to work under the old rule and the seeming difficulty or reluctance to apply IFRS. The attitude could be read as a resistance to change. Cole (2008) also cited about the additional required guidance from the accountants under the IFRS where there is more professional judgement than merely complying with rules as done under GAAP.
The practice of the accounting profession would be more evident if auditors have to exercise professional judgment rather than blindly follow the rules as was applied under the US GAAP. Cole (2008) cited however a favourable argument for under the IFRS on premise that the new system would force auditors to understand the economics of transaction rather than just how it needs to be accounted for. Moreover, the fact that there would be more professional judgement under the IFRS as compared with US GAAP does not necessarily imply that accountants will be less professional in revealing the secrets of their clients.
Accountants also have their code of ethics dealing on confidentiality of information which prohibits them from disclosing what they have learned as trade secrets in the course of practice of their professions. Although the transition will require more time not only from accountants but also from people from operations, the cost of this exercise would be justified by the benefit afforded to investors under the IFRS which is to improve the qualitative characteristics of information for the use of the decision makers.
It can be concluded that the feared revelation of trade secrets as a result of the adoption of the IFRS is not necessarily true. The laws on trade secrets still afford protection in case on violation. It could not be argued that the IFRS is meant to violate the law on trade secrets. Since the purpose of the disclosure is just to make the information more, accurate, reliable and complete on the basis of the standard, the revelation of trade secrets does not necessarily come as a result.
These companies could always go to court to protect their rights under trade secret in case of possible violation as done by of Coca Cola which has kept its trace secret over the years (Pendergrast, 2000).
References:
Cole (2008), Global accounting rules could reveal trade secrets, {www document} URL http://www. financialweek. com/apps/pbcs. dll/article? AID=/20081026/REG/810242220, Accessed November 3,2008 IPWatchdog (2008), Trade Secrets Act. , {www document} URL, http://www. ipwatchdog. com/tradesecret/ , Accessed Nov 3,2008 Pendergrast (2000), For God, Country and Coca-Cola, Basic Books

Accounting Rules Could Reveal Trade Secrets

The Arms Trade Treaty.
The Arms Trade Treaty Derek Matthews International Relations Abstract The Arms Trade Treaty is the result of an international consensus that there is a need for global arms regulation. This belief began to develop after the Cold War in response to consequences facing the international community from countries whom purchased arms unimpeded and used them towards aggressive and oppressive ends.
The Arms Trade treaty has been applauded as an initial framework to begin practical implementation of effective arms regulations through the context of international consensus in a way that will reduce egregious human rights violations and increase weapons accountability as well as regional stability. There are criticisms as to the future effectiveness of the treaty because the scope of the treaty covers arms sales, not other forms of arms transfer and because major arms exporters have abstained from participating in the treaty.
These realities are staunch hurdles towards the future effectiveness of governing policies that may evolve from the treaty. Because the treaty has not reached the stage of ratification, an actual analysis of the impacts of this treaty have yet to be seen. Background The origins of the international arms regulation and thus, the Arms Trade Treaty (ATT) can be traced back to the start of the Cold War. NATO had an interest in slowing the transfer of advanced military technologies to the Soviet Union.

They created the Coordinating Committee for Multilateral Export Controls (COCOM) to block arms, industrial technologies, and “atomic” technologies from being exported to the Soviet Union from countries in the Warsaw Pact. This was not a nonproliferation regime and its limited scope proved ill-equipped to handle the emerging problems of the Post-Cold War era. This was evident during the 1991 Persian Gulf War where the Iraqi military was able to build the world’s fourth-largest military with $40 billion in foreign weapons purchases. Lewis, 2005) After the war, western countries began working on international agreements aimed to stop destabilizing accumulations like the arms transfer component in the Middle East. (Collina, 2012) The idea for these international agreements was proposed by the United Kingdom which wanted a global regime aimed at “avoiding arms transfers that could destabilize a region, put human rights at risk, or provide inappropriately advanced technology. (Lewis, 2005) The language set forth in this goal would lead to a chain of international agreements and guidelines aimed at reducing illicit arms trade and defining the parameters of what illicit arms trade entailed; the United Nations (UN) Registry for Conventional Arms in 1991, the US begins work on the US Code of Conduct Bill in 1993, the Warsenaar Agreement in 1996, UN Guidelines for International Arms Transfers in 1996,Oscar Arias and a group of Nobel Laureates produce first draft of the International Code of Conduct on Arms Transfers in 1997, European Code of Conduct in 1998, US passes International Code of Conduct in 1999, UN Programme of Action to Prevent, Combat and Eradicate the Illicit Trade in Small Arms and Light Weapons in All Its Aspects in 2001, Organization of American States (OAS) Model Regulations for the Control of the International Movement of Firearms, their Parts and Components and Ammunition in 2003, Great Lakes and Horn of Africa region adopt the Nairobi Protocol for the Prevention, Control and Reduction of Small Arms and Light Weapons in 2004, UN begins work on a global arms trade treaty in 2006, the General Assembly of the UN votes overwhelmingly for approval of the global Arms Trade Treaty on April 2, 2013. Shah, 2008)(Charbanneau, 2013) For the two decades following the end of the Cold War, the world has been moving in the direction towards a global consensus on how we should provide accountability and responsibility to the selling of weapons culminating with an almost unanimous agreement laid out in the Arms Trade Treaty of 2013 which was passed through the General Assembly of the United Nations with a vote of 155 for, 3 against, and 22 abstained. (Charbanneau, 2013) Reason for the ATT The trade of goods internationally has long been subject to regulation. The import and export of cars and clothes has more restrictions on trade than Ak-47s and rocket launchers. So when the discussion surrounding arms trade regulation began, it was initially just a way for western nations to stem the unfettered growth of aggressive militaries which caused regional instability such as Iraq in the Persian Gulf War.
However, once these discussions entered the international arena, it was easy to see the practicality in implementing arms regulation and to contextualize the benefit that regulation would have on preventing numerous other instances of international instability. (UN Conference, 2013) From the Contras in Nicaragua, to the Khmer Rouge in Cambodia, to the Lord’s Resistance Army in Uganda, it is easy to see the potential social and human impact of effective restrictions on the sale of weapons. The reason behind arms trade regulations is to stop weapons from falling into the hands of criminals, gangs, warlords, and terrorists who would use them to oppress human rights and destabilize the region.
There are economic impacts as well. The unrestricted sale of weapons results in damages through crime, gang violence, and piracy that vastly exceed the initial profits from selling them. UN peacekeeping missions alone cost the world over $7 billion a year and the global burden of armed violence stands at $400 billion. (UN Conference, 2013) ATT Policy Goals To address the lack of international oversight on arms trade, the UN formulated language designed to codify the growing international consensus of what responsible arms trade should look like. Through various concessions to accommodate differing opinions, they formulated a treaty with two rationales in mind.
The first was to stop sales to state end-users that would use them to undermine global peace and security, violate international human rights laws, impair socio-economic development, or are at risk to re-export those weapons which then might come into the hands of organized criminals or terrorists. The second rationale is to close loopholes in trade regulations and strengthen the effectiveness of legal frameworks to hinder the illicit arms market which provides weapons to end-users whom would normally be barred from acquiring them through legal means. (Kimball, 2011) The idea behind this rationale is to end the prevalence of weapons smugglers like Viktor Bout, whose actions inspired the film “Lord of War”.
These smugglers effectively exploit loopholes in national and international laws to provide illegal arms around the world. (Austin, 2012) The Arms Trade Treaty would also seek to strengthen transparency and reporting on arms trade transfers and the production of munitions which will provide more accountability for State’s actions. (Kimball, 2013) The treaty was created with the original UN Charter Chapter 7 Article 51 in mind which reads, “Nothing shall impair the inherent right of individual or collective self-defense if an armed attack occurs”. The treaty was shaped to allow arms purchases justified through the realm of self-defense and to fight back against regimes that violate human rights.
The vague nature of the language still leaves significant room for state differences on what acts will be deemed self-defense or political struggle. The language is also weak on providing a legal framework to deal with non-state actors and terrorism. The policies laid out by the Arms Trade Treaty are primarily aimed towards better control over the export sale of arms; however there is little language to account for the import of arms or for arms transfers which are labeled gifts, or trades. Impacts and Opinions There are 193 Member States of the UN General Assembly. The vast majority of them agree with the ATT, although most have varying reservations to the limitations of the treaty.
The treaty is considered a floor of regulation from which to work with and not a ceiling. 155 States voted in favor of the treaty, the most impactful vote came from the US. The development of this treaty was coming to a close in 2008 after the US Senate voted their intention to deny ratification of a ATT treaty. The withdrawal of support from the top arms exporter in the world would have vastly diminished the prospects for any meaningful implementation without the support of the US. The US has come out in support of this treaty since 2009, and the renewed support by the US fundamentally changes the effectiveness that implementation of the treaty will have.
The US did influenced language in the treaty to ensure that the regulations will not impede on State’s domestic gun rights and will not lower the bar of States that already practice a high level of arms control. Despite this accommodation made specifically for the US, the National Rifle Association (NRA), a powerful interest group within America, is against the ATT and threatens to stop ratification in the Senate on the grounds increased regulation will affect domestic gun ownership. (MacFarquhar, 2013) The UN Association (UNA) which lobbies on behalf of the UN in America, stands in strong support of the ATT and is working to combat poorly informed opinions on the nature and language contained within the ATT. (UNAUSA, 2013) Proponents on both sides of the Syrian conflict voted against or abstained from the ATT.
Syria and Iran voted against the proposal while China and Russia abstained because of “the lack of an explicit prohibition on the supply of weapons to non-state actors that would, for example, restrain the ability of Syria’s armed opposition from building up its stockpile. ” (Lynch, 2013) Many of the Persian gulf powers which support the Syrian opposition, such as Saudi Arabia, Qatar, and Yemen abstained from the vote as well. The vague language in the ATT allows for political pressuring to frame either the Syrian opposition as terrorist groups or the Syrian regime as human rights oppressors and potentially justify a moratorium on arms exports to those organizations. This is one of the main criticisms of the ATT.
India also abstained from voting for the treaty, stating that the language was “the draft treaty was “tilted” in favor of the world’s leading arms exporters. ” Other abstentions came from the Latin American sect of countries that generally vote against all US led initiatives in the UN. These countries include Bolivia, Ecuador and Nicaragua. However, the treaty was met with tremendous support in the rest of Latin America and Africa, countries that have seen a tremendous amount of instability at the hands of organizations who receive their arms through illicit arms trafficking such as the drug cartels and the Muslim resistance movements. These countries mainly asserted that in the long run, the treaty would curb the arms sales that have fueled many conflicts. MacFarquhar, 2013) The cumulative sum of opposition and abstention for various reasons creates a reality where some of the top arms exporters have chosen not to adhere to the new treaty. This creates concerns on the ultimate effectiveness of the treaty, because a large part of the export nations the treaty was designed to add transparency and regulation to are not participants. America and the Western nations make up a tremendous percentage of global arms sales the percentage fluctuates annually, but America generally represents around half of all arms sales and the UK, France, and other European countries account for between 10 and 15 percent of global sales. Shanker, 2012) So the impact of this treaty will be felt through close to three quarters of global sales, and the hope is that as international norms strengthen, the outlier nations will feel the pressure to conform to these new international standards as well. Success of the treaty Impact analysis over the next decade will truly define the success of this treaty. In fact, ratification will not even begin until June 3, 2013. Every state will define the standards to which they want the treaty to measure up to and view success through that lens. Pertinent questions might arise over the next decade, about how the ATT shifted geopolitical power, how it will enforce arms transfers for conflicts where the consensus is split such as Syria, and whether it will have the teeth to prevent the widening of the black market which generally occurs when more stringent legal precedents are set.
At the bare minimum, this treaty must succeed at stopping the supply of weapons to regions of conflict where there is an overwhelming international consensus about the extent of human rights violations being carried out under a particular regime. There will always be political conflict, but through the ATT the ultimate success will be when it succeeds in ensuring that conflict does not manifest into disproportionate violence and perhaps alter the path of least resistance to a point where it is more expedient to resolve conflict through nonviolent means. References Austin, K. L. (2012, August 20). What Mauritius Can Teach Us About the Global Arms Trade – NYTimes. com. Retrieved April 11, 2013, from http://atwar. blogs. nytimes. com/2012/08/20/what-mauritius-can-teach-us-about-the-global-arms-trade/? ref=viktorbout Charbonneau, L. (2013, April 2). U. N. verwhelmingly approves global arms trade treaty| Reuters. Retrieved April 11, 2013, from http://www. reuters. com/article/2013/04/02/us-arms-treaty-un-idUSBRE9310MN20130402 Collina, T. (2012, October). The Wassenaar Arrangement at a Glance | Arms Control Association. Retrieved April 11, 2013, from http://www. armscontrol. org/factsheets/wassenaar Kimball, D. G. (2013, March 27). ‘Final’ Arms Trade Treaty A Good Step Forward | Arms Control Association. Retrieved April 11, 2013, from http://www. armscontrol. org/pressroom/Final-Arms-Trade-Treaty-A-Good-Step-Forward Kimball, D. G. (2011, October). The Arms Trade Treaty At a Glance | Arms Control Association. Retrieved April 11, 2013, from

The Arms Trade Treaty

The trade off model.
“If the Trade-Off Theory were true, then firms ought to have much higher debt levels than we observe in reality.” — Miller (in “Debt and Taxes” published in Journal of Finance, 1977) The simulation model does a good job of capturing some dynamic aspects of Diageo’s capital structure problem. By using random variables to model for uncertainties, and generating 10,000 trials of 15 years each, a far range of outcomes can be quantified. The simulation includes many reactive variables, such as recalculation of the interest coverage ratio in each year and changes in the debt level to maintain a constant zero-cash balance. However, the model also uses many constant parameters for simplicity, and fails to capture some features of reality.
The greatest weakness of the model might be a lack of measures for preventing or responding to financial distress. The model is meant to evaluate the effectiveness of different interest coverage benchmarks, but it does not seem to allow for Diageo to take action to stick to each target benchmark. Only when the coverage is deemed too high, the company can issue a special dividend. But as the case describes, “there was no provision to pay down debt when coverage fell” to avoid potential distress. In fact, the coverage ratio and debt levels seemed to depend more on financing measures modeled to maintain constant year-end cash balances than on the target coverage ratio.
The model also lacks provisions for company reorganization in the face of financial distress. A 20% reduction in firm value occurs whenever the coverage falls below 1, but if the firm anticipated a fall in interest coverage due to low expected profitability, even if it cannot pay down debt at that point it can cut back on some major expense accounts such as its advertising budget, to leave some space for financing interest payments. Measures for preventing distress will decrease the likelihood of bankruptcy and may also decrease its cost.

The cash assumptions and the definition of financial distress made by the model are also questionable. Interest payments are paid out of the cash account, not EBIT, so an interest coverage ratio below 1 does not mean that the company is insolvent and in distress. If it happens to be a bad season, then it is short term and if Diageo has a sufficient cash buffer then there is no real distress problem. Only when the coverage ratio continues to be below 1 does distress arise. This then leads to another modeling assumption that the year end cash balance is always zero and therefore no cash buffer exists to pay for interest in bad years.
This is a poor assumption since companies always maintain some minimum cash and liquid assets, and this minimum should grow as the size of the company grows. Assuming a zero year-end cash balance also forces Diageo to take out or repay additional debt when it may be better off not doing so. In some cases, Diageo may be too highly leveraged and will not even be able to take out additional debt but the model does not account for this possibility and does not allow the company to issue new equity in place of debt in any circumstance.
Further static assumptions of the model include a constant maturity mix of debt and presumably infinite refinancing at the range of rates given by a set of interest coverage ratios. Constant currency mix of debt is also assumed regardless of exchange rate dynamics and regional strategies. So management in effect has no control over the type of debt taken out and cannot choose less costly debt or debt that holds less exchange rate risk. If the model can capture this, the cost of holding debt should go down.
Finally, as the Treasurer Ian Cray describes, in the interest of Diageo, financial distress is not simply an inability to pay debt, it also should include an inability to meet the expectations of equity holders. Therefore even when interest coverage is above 1, the company could already be in a “distressed” situation and already have lost some of its firm value. At that point, the company can of course take action to reorganize, at some cost. Otherwise, there may be some chance of it suffering the full cost of financial distress. Since this is an important consideration to Diageo, the model can be enhanced to accommodate it. It will skew results to indicate a higher optimal coverage and less financial leverage.
More thoughts on Diageo’s capital structure decision. There are other factors that we should take into account in choosing the optimal capital structure. Agency costs can be one factor. Agency costs involve conflict between the interest of the firm’s management, its shareholders, and its debt holders. With respect to leverage policy, debt may have a disciplining effect on companies and causes underinvestment. If the leveraged firm undertakes a low-risk project with safe and consistent cash flows, most of the returns will be claimed by the debt-holders.
In response the equity holders will want the company to avoid those low-risk projects and only invest in those projects which are risky and can produce very high returns at the expense of the debt holders. Management acting in the interest of shareholders with therefore limit investment to high return projects and disregard other positive NPV projects which can increase firm value. The greater the firm’s leverage, the more severe is the underinvestment problems. This is a cost of debt which the model has not accounted for.
From shareholders’ perspective, they may or may not be satisfied with the debt to equity ratio suggested by the static trade-off theory. Shareholders have their own decisions on how much risk they can afford and how much return they are expecting. If the debt to equity ratio is way too high, the shareholders will be left in a highly risky position because in case the company encounters a financial distress the debt holders have priority in receiving protection. Since the management team is responsible to act in shareholders’ interests, the CEO, CFO and other decision makers should pay attention to shareholders’ tolerance of risk level while they adjust the company’s capital structure.
In Diageo’s case, the debt to equity ratio is about 1 to 3, while interest coverage ratio is 5 to 8 times. If the management decides to follow the trade-off model and target an interest coverage ratio of 3.9 to 4.5 times, the debt to equity ratio would increase (lower interest coverage ratio implies a higher debt level, assuming EBITDA remains the same). Then the management team should question themselves whether the shareholders would be satisfied with the higher debt level, or not.
Another way to think about the capital structure is to analyze the industry comparables. The major competitors, including Allied Domecq and Coca Cola, have higher interest coverage ratios than Diageo. Some competitors’ interest coverage ratios have doubled or even tripled Diageo’s. This implies that Diageo’s debt level is a bit too high. If the management follows the competitors’ choice on debt and equity ratio, they should rearrange the capital structure by reducing the debt level and increase equity level.
However, the industry comparable analysis may not suggest the right capital structure for Diageo because the competitors’ financial condition and ability to generate earnings may differ from Diageo’s. In fact, the decision on capital structure largely depends on Diageo’s own positions in operation and financing as well as Diageo’s management and shareholders’ risk tolerance.
Last but not least, Diageo is currently allowed to take on a higher level of debt than other companies due to its relatively stable cash flows. It is questionable whether Diageo can maintain the cash flow stability. The cash flow stability can be affected by internal factors such as changes in investing activities and by external factors such as industry competition. In this sense, it is not guaranteed that Diageo can still enjoy a higher level of debt than other companies while maintaining A+ credit rating. Thus, the constraints on Diageo’s debt level may vary over time.
Conclusion
The management’s decision on Diageo’s capital structure can be influenced by a variety of factors, which include the optimization of static trade off model, the maintenance of credit ratings, risk tolerance of shareholders and capital structures of comparable competitors, etc. It is important to acknowledge that these factors have set up constraints on the capital structure decision in very different directions. For instance, the optimal solution from the trade off model does not satisfy the requirements of credit ratings.
Surprisingly, the “real” trade off in Diageo’s case is between all these factors. Thus, the amount of weights the management allocates to these factors becomes the key in making the capital structure decision. If the management put more weights on the maintenance of credit rating, the interest coverage ratio should be in the range of 5 to 8 and the debt level should be below 6.78 billion. If more weights are given to the trade off model, the interest coverage ratio should be around 4.2. The management may increase the debt level to 8.1 billion and risk a credit rating downgrade to BBB.

The trade off model

To What Extent Has the World Trade Organisation Helped?.
The World Trade Organization (WTO) was established in 1995 after the Uruguayan Round. It embodies the international organization which deals with a wider range of aspects related to the international trade. The WTO controls the international trading system. It represents an evolved instrument of negotiation in comparison with the preceding General Agreements on Trade on Tariff and Trade (GATT). Hoekman, B. M. & Kostecki, M. M. (2009) WTO includes many important improvements on economic issues, disciplines and commitments of the international negotiation in addition it shape the current Multilateral Trading System (MTS).
United Nations Conference on Trade and Development (2008) Reports have shown that WTO was creating a favorable condition for business in Peru during the last 10 years. WTO (2007) since the beginning as member of WTO Peruvian governments have express their interest to continue doing necessary improvement in its legislation in order to achieve a completely integration to the global market as well as liberation of trade, WTO (2007) actively participation in negotiations and integration agreements is evidence of that.
For instance Peru has bilateral agreements in force with: Unites States of America, Chile, Mexico, Canada, Singapore, China, South Korea, Thailand, Japan, Panama, Andean community (CAN), Asia pacific Cooperation Forum (APEC) Latin America Integration association (LAIA), MERCOSUR, agreements signed with : Venezuela, Costa Rica, Guatemala, European Union, and Agreements in negotiation: El Salvador, Honduras, Doha program, Pacific alliance.

WTO. org (2012 Foreign capitals entering to the local market in Peru are steadily increasing as result of trade negotiations also it has made possible to some local industries access to the international market. However Peru still depends on commodities exportation, for example traditional products that are mainly agricultural and minerals such as Cooper, gold, oil and fish meal represent the 75. 7% and nontraditional products such as textiles and agro industrials products represents 23. 92 %. INEI (2012) in my view this may bring negative consequences to the local economy if Peru remain exporting non value added goods. Since 1995 Peru is a member of the WTO, WTO. org (2012). Agreements were incorporated to the Peruvian legislation 1996 however due to internal political troubles It was not possible to see the real impact of these agreements until 2002.
At that time deep concern in the government in turn made to undertake political reforms in order to promote a major participation of the country into the WTO. During the period from 2000 to 2002 Peru experienced grow of the domestic products (GDP) of 4. 6 %, a slightly increment from 2002 and 2006 of 5. 8 % however after coming into effect important bilateral and regional agreements the GDP grew 7. 8 % in 2010.
MICETUR (2012) WTO plays the role of international intermediary between developing and developed economies bringing apparently favorable condition to less developing world when facing negotiation for instance in the DOHA round of November of 2012 emerged the initiative to help developing countries by launching the Doha program which aim to find solutions to important issues affecting developing countries such as obstacle to access to international market of agricultural products, development of the agriculture industry by technical assistance, enhance the capacity, dispute settlement and industrial tariffs as well as services.
United Nations Conference on Trade and Development (2008) To conclude WTO propose the legal framework to create better conditions especially during commercial negotiations to achieve the development however Countries requires improve its capacities in order to be competitive and capable to avail this benefits.

To What Extent Has the World Trade Organisation Helped?

Suggest reasons why the memberships of trade blocs, such as the EU, has changed over time.
Memberships of trade blocs changed over time because countries realized that there are a huge amount of benefits to joining a trade bloc union. Benefits such as Free trade within the bloc which means that they have free access to each other’s markets, members of the trade bloc are encouraged to specialize. This means that at the regional level there is a wider application on ability to carry out a particular economic activity e. g. making a specific product more efficiently than another activity.
In addition countries have Market access and trade creation which is when countries have easier access to each other’s markets meaning that trade between members is likely to increase. Trade creation exists when free trade enables high cost domestic producers to be replaced by low cost and also allow more efficient imports. Because low cost imports lead to lower priced imports, there is a ‘consumption effect’, with increased demand resulting from lower prices.
Also Producers from the member country can benefit from the application of scale economies, which will lead to lower costs and lower prices for consumers. Jobs may be created as a consequence of increased trade between member economies. There is increased protection. Firms inside the bloc are protected from cheaper imports from outside, such as the protection of the EU shoe industry from cheap imports from China and Vietnam. There are other long-term political and social benefits to trade blocs.

The countries’ economies become more intertwined also the political reasons for close cooperation within the bloc increases. Countries understand that they have a stake in each other and make greater efforts to get along. In that same way, increased business contacts usually mean that people must learn the culture of their trading partners. Many must learn new languages and different business practices. In short, more people will come into contact with each other and will need to learn more about each other. This breeds increased understanding amongst people.
Another reason for the change is as for consumers are that there is often a greater variety of goods and services available in free trade blocs. Products like beer, detergent, clothing, and machine tools are often produced in all the countries after the free trade agreement they are often stocked in many stores. Products like satellite hook ups for televisions, computers and telephones are usually made more available to developing countries. Internet service providers are now able to sell to larger markets and more consumers have opportunities to purchase or use these services.

Suggest reasons why the memberships of trade blocs, such as the EU, has changed over time

Builders Trade Center.
Venture capitals, business angels and grants are possible external sources of finance that BTC may wish to consider. Venture capital involves specialist companies investing a minimum of i?? 500,000 in small companies, the advantage to the small company is that such a large amount of funding has been received, however the larger firm would expect to gain some control over the business, and this could mean that the owners of BTC lose control over the business. Another similar sort of financing where business people give advice and invest in small businesses could fund the company for growth is called business angles.
There is a network of business angels who want to invest in small firms. They have the same advantages and disadvantages as venture capital. Grants schemes can provide small firms, like BTC, with some finance. The advantage is that because it is a grant it does not have to be paid back however not every firm can apply for grants and the amount you get is generally low. To receive a grant the company has to go through strict criteria so therefore BTC should not totally rely on grants. BTC could also raise finance by making deals with their suppliers.
They could ask suppliers for a reduction in price of the stock they buy for a short term, as it could lead to an increase in the amount of sales and therefore increasing the demand of the supplier’s products. However, the chance of a supplier reducing its price is very unlikely as it could cause conflict among other businesses that use the same supplier. Another way of generating funds is to delay payments to suppliers and creditors. The business will have to agree trade credit terms before hand to achieve this.

The advantage a business will have is that it does not have to pay its creditors until a later date, and consequently it will have more funds available which it could use for growth; however the credit has to be paid even at a later date which could be a problem if the company has already spent the money. In conclusion, I think, for BTC to be more successful it will have to continue to grow. They have achieved a good rate of growth over the past couple of years and their plans to open up another store does show their ambition to keep growing.
This is a positive step for BTC because a firm needs to keep competing to increase its market share. I think BTC should be aware of the problems they face if they start overtrading. I think BTC should go ahead with the purchase of a new store, because I believe they will be in a better position to talk to suppliers about reducing prices and even discuss longer trade credit. This would mean that they could pass these benefits on to their customers, which would mean that BTC’s prices are more competitive and customers could have some credit. This would be a great opportunity for BTC to gain a competitive edge of rivals.
For future growth, BTC should start trading over the internet. By setting up a website, BTC could target potentially the whole of the UK. This would be cheaper and more realistic than setting up stores nationwide. The cost of setting a website and maintaining in very small compared to setting up stores nationwide. To maintain and compete in a highly competitive market where you have large enterprises like B&Q and Wickes, BTC will have to keep diversifying through internal expansion and maintain a competitive edge over its rivals. BTC has done this during its first two years of operating.

Builders Trade Center

U.S Cuban Trade and Wal-Mart Goes South.
The 20th century is largely shaped by the Cuban revolution that happened in the past decades ago. During those years, it was identified by its enemies as a satellite, a means by which to implement the Soviet policy in Latin America and Africa. Afterwards, the Soviet Union declined and the community of nations was created wherein it is composed of Central and Eastern European countries that were liberated from the Nazi Regime. However, Cuba was regarded as the exemption in all the expectations that other countries have regarding its liberation from the Soviet forces.
After their liberation and even up to this present time, Cuba still adheres to the Communist principle that they acquired when they entered the Soviet sphere of influence. As a result, this ideology that they have was met with great dissatisfaction coming from the United States (Luis, 2008). The relationship of the Cuba and the United States has been characterized by tension since the Fidel Castro took the seat of power in 1959. The different administrations that ruled the White House during the time of Castro’s leadership have implemented tough measures against Cuba, which includes prolonged economic sanctions and diplomatic isolation.
This is United States policy towards Cuba is quite observable during the Bush Administration wherein he strongly enforced the economic embargo and strengthened travel restrictions (Hanson, 2009). Issue Recently, Fidel Castro has step down from office as the leader of Cuba. Due to this event, the issue of whether the United States policy that tends to isolated this Communist country is being debated once again. Some officials in the United States Congress argue that change in leadership only represent little difference in the overall policy and practices of Cuba.

As such, the United States strict limits on trade and travel should continue. However, some members of the Congress assert that the change in the leadership of the country should represent an opportunity for development on the human rights in Cuba. Moreover, changing the United States policy towards the country could also be a good means to help Cuba in its mode of transition from being a Communist state towards a type of government receptive to the international community (Wolf, 2008).
Being the case, the question that is posed upon the leaders of the United States especially in the new administration of Barack Obama is whether they should lift tighten the economic grip on Cuba or not. Analysis Based upon the background of the issue as well as the current state of situation with regards to the United States and Cuba’s relation, it would be on the best interest of both countries if the United States will loosen its economic grip on Cuba.
Due to the fact that the root causes of the conflict between the two countries way back in history, it would be a sound decision to forego of the past and move on with the present. The United States will benefit if they will resume relation with Cuba as this will give way as another market for the United States businesses to access (Hanson, 2009). In the same manner, Cuba will also have the chance to import products from the United States and they can also export goods that they have comparative advantage in.
Moreover, establishing diplomatic relations with Cuba will also lessen or even eliminate the strict limits on travel and remittances that Cuban and Americans are currently experiencing. Conclusion Tightening the economic grip on Cuba is not an advantageous move for the United States especially since Cuba is regarded as one of its closest neighbor. It is better for the United States to resume diplomatic ties and lift the economic embargo that is has implemented in the country. Greater partnership among these two states especially in terms of economic purposes is needed more than ever especially during this time of economic crisis.

U.S Cuban Trade and Wal-Mart Goes South

CIF Trade terms.
The contract between parties is a CIF (cost, insurance and freight) contract and as such, the Seller is required to arrange the carriage of the goods, their insurance in transit and all costs of such arrangements are usually included in the contract price (Bridge, 2007). Furthermore, an essential element of a CIF seller’s duty is to obtain a bill of lading, an insurance policy, any other document required by the contract (Bridge, 2007) and to forward these to the buyer. The buyer then pays on the invoice only when they have received the correct shipping documents (Bridge, 2007).
The fundamental feature of a CIF contract is that once a seller has shipped the goods, they have “performed” the contract by tendering conforming documents to the buyer (Treitel, 2007). Indeed, it was described in the case of Hindley v E India Produce Co. Limited (1972] 2 Lloyd’s Rep 515) as “a contract for sale of the goods performed by delivery of documents” (Sealey & Hooley, 2003). As such, the CIF contract imposes duality of obligations on the seller to deliver the goods and deliver the documents.
The documentary obligations require the seller to procure and submit to the buyer the exact documents stipulated in the contract (Sealey & Hooley, 2003). Furthermore, in the case of The Julia ([1949] AC 293), Lord Porter asserted that in the absence of a provision in the contract to the contrary, the documents provided should include a bill of lading, an insurance policy and an invoice. Under English law, a CIF contract entitles buyers to reject a tender of shipping documents on grounds of the document being “defective” or alternatively, where they are tendered late (Kwei Tek Chao v British Traders and Shippers Limited [1954] 2 QB 459).

With regard to the definition of “defective”, various scenarios have addressed this, including a non-genuine bill of lading and a bill of lading failing to provide the buyer with “continuous documentary cover”. Moreover, in the case of Gill & Duffus SA v Berger & Co Inc ([1984] AC 382) it was asserted that if the documents conform to the contract stipulations, then the buyer is obliged to accept them otherwise they will be in breach of contract even if the goods themselves do not comply with the contract on arrival (which is subject to the separate right of rejection).
Furthermore, in the Hansa Nord case, Roskill L. J asserted that “the seller’s obligation regarding documentation has long been made sacrosanct by the highest authority and….. The express or implied provisions in a c. i. f. contract in those respects [are] of the class ….. Any breach of which justified rejection” (at p. 70). It was further held that a c. i. f. buyer could reject documents disclosing a defect even where the defects in the goods would not itself justify rejection of the goods.
The common law demonstrates that there is an exception to the requirement that the documents must be perfect in all respects, however the parameters of this exception are uncertain and ultimately appear to be a question of fact. For example, in the case of Tradax Internacional S. A. v Goldschmidt S. A. ([1977] 2 Lloyd’s Rep 604) , the contract provided that the goods should contain no more than 4% foreign matters and a certificate of quality was required to be submitted with the other standard shipping documents.
The buyers subsequently rejected the documents on the grounds that the certificate of quality showed 4. 1% of foreign matters. However Slynn L. J. presiding stated that the buyer could not validly reject the documents on this ground and that the certificate was what it was stated to be, in other words a “certificate of quality”. Slynn L. J further asserted that “here the certificate is a good certificate in that it does state what is the quality, what is the percentage of impurities. It shows that there was not a full compliance with the contractual term as to quality and it does what it was intended to. It is a valid document…. Capable of being transferred as part of a subsequent sale”.

CIF Trade terms

China trade performances and policies.
Consumption Behavior China is the world’s largest car market. By the end of 2012 the number of motor icicles reached 109. 4 million in China. China produced 19. 3 million cars in 2012. China is the world’s largest mobile phone market, with over 1. 1 billion subscribers at the end of 2012. China is the second largest luxury goods market in the world, after Japan, and China is the second largest market for cinema, after the US. Between 1949 and 1979, a total of 280,000 Chinese traveled abroad. In 2012, 83 million Chinese citizens made Journeys abroad. Household consumption as a percentage of GAP is among the lowest of any major economy, at around 34% in 2011, which remained nearly unchanged since 2006.
Introduction on China Trade Policies China foreign trade in the past year The trade history of China is Important for how it has affected global production and earnings in poor and rich countries. Many analysts view China ‘s recent dominance primarily as the result of the post-1978 reforms. The overall economic system after 1949 was modeled after the Soviet Union, and raised savings from the rural sector in order to benefit industrial production. Foreign trade was generally conducted by state enterprises that had limited incentives to operate efficiently because their position was not contested by competition. The verbal regime adopted by China was geared towards self-sufficiency and import substitution, which as such was not atypical for a relatively poor country during this period.
Never the less, China ‘s own trade regime together with the trade liberalizing of the GATE member countries meant that China’s role in the world trade shrank after 1949. While before World War II China Accounted for around 2% of the world’s imports plus exports, estimates suggest that China’s share had fallen by the asses to around 1 . 7% and by the asses to around 0. 7%. The quantitative information on China’s foreign during the period 1949-1979 is very emitted and it corresponds to the small net gains that China was expecting to reap from participation in world trade. Foreign trade data of China was collected, as in most other countries, in the process of administrating trade taxes through customs.

China’s share in world trade did not change much between 1970 and 1978, while after 1978 China ‘s share increased substantially, consistent with a trade liberalizing impact of the 1978 reforms. Other breakpoints occurred around 1990 and around 2000, and in each case the rate at which China gains in terms of the world trades eave increased, with China ‘s rate of rate of trade growth increasing overall during this period. Between 1978 and 1990, trade growth is 7. 5%, between 1990 and 2000 it comes to 13. 5%, and between 2000 and 2007 it is 16. 2%. An important event that strengthened China ‘s foreign trade ties further is it accession to the World Trade Organization.
China foreign trade today On December from 2001, China became the 43rd member country of the World Trade Organization after 16 years of negotiations. To honor its commitments upon entry into the WTFO, China expanded its opening-up in the fields of industry, agriculture and the services trade, and accelerated trade and investment facilitation and liberalizing. Meanwhile, the state deepened the reform of its foreign trade administrative intervention, rationalized government responsibilities in foreign trade administration, made government behavior more open, more impartial and more transparent, and promoted the development of an open economy to a new stage. Expediting improvements to the legal system for foreign economic relations and trade.
After its entry into the WTFO, China reviewed over 2,300 laws and regulations, and departmental rules. Those that did not accord with WTFO rules and China’s commitments upon entry into the WTFO were abolished or revised. Administrative licensing procedures are reduced and regulated in the revised laws and regulations, and a legal system of trade promotion and remedy has been established and improved. In accordance with the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) administered by the WTFO, China revised its laws and regulations and Judicial interpretations related to intellectual property rights, and thereby constructed a complete legal system that conforms to China’s actual notations and international practices.
Taking further measures to lower tariffs and reduce non-tariff measures. During the transitional period following China’s entry into the WTFO, the general level of China’s import tariffs was lowered from 15. 3% in 2001 to 9. 9% in 2005. By January 2005, the majority of China’s tariff reduction commitments had been fulfilled; China had removed non-tariff barriers, including quota, licensing and designated bidding, measures concerning 424 tariff lines, and only retained licensing administration over imports that are controlled for the sake of public safety and the environment in line tit international conventions and WTFO rules. By 2010 China’s overall tariff level had dropped to 9. 8% – 15. % in the case of agricultural products and 8. 9% in the case of industrial products. Since 2005, China has completely maintained its bound tariff rate.

China trade performances and policies