International Trade

Evaluate two of the scenarios listed below and explain the best solution for each. Include comments related to any ethical issues that arise. Support your responses with appropriate cases, laws and other relevant examples by using at least one scholarly source from the SUO Library in addition to your textbook for each scenario.

Scenario 1—International Trade
The Director of Purchasing for parts distribution company wants to purchase steel coach screws from Germany; however, he is not sure what the best option is. The director comes to you and asks your opinion. You know that Germany, Canada, and Korea are the best sources for obtaining this product. While your research shows coach screws from Germany are of the highest quality, the United States imposes a tariff of 12.5%, which makes this option noncompetitive.

Which US trade laws should you consider when selecting a country?
Is there any way by which you can seek a reduction on the tariff? If so, how? If not, why?
Select an alternative country (Canada or Korea) for purchasing the coach screws and explain your reasons for selecting the country.
Scenario 2 – Bribery
Slyce Pizza Company purchased four commercial refrigerators for the restaurants and eight pizza ovens from a supplier in Italy. Between the shipping costs, delays, and unanticipated duties, the purchasing manager was worried that his boss would be upset about the total costs. In an effort to reduce costs, the manager offered a US Customs officer $500 in cash to re-classify the imported goods to reduce the amount of duties owed.

Analyze the legal and ethical ramifications of the purchasing manager's offer to the customs official?
Would it make a difference if the purchasing manager offered to donate $500 to St. Jude Children's Research Hospital if the officer expedited the paperwork necessary to release the goods from custom's custody?
Scenario 3—Environment
Recycling Genie is a new company that contracts with Best Buy and other electronics retailers for the collection old computers, monitors, televisions, and cell phones dropped off at their facilities. The electronics contain lead, mercury, and polyvinyl chlorides that are known to have toxicological effects such as cancer, kidney disease, and brain damage. Recycling Genie has been in negotiations to ship the e-waste to companies in China, Vietnam, and Mongolia.

What are the legal and ethical concerns with shipping e-waste to these countries?
Scenario 4—Property
Ginger and Allen lived together in New Mexico since 2011, but they were not married until July 2013. Allen purchased the home in 2008, prior to meeting Ginger. He did not add Ginger to the title after they were married; however, she contributed to the mortgage payments from 2011 until she started her business in 2013. In September 2013, Ginger inherited $55,000 from her father that she used to start a corporation, Fantastic Faces, a beauty consulting business

Ginger worked full time for Fantastic Faces, while Allen continued with his job teaching at the university. Allen made no contributions to Fantastic Faces. Due to limited financial resources, Ginger did not earn any salary until 2015.

In May 2013, Allen inherited 20 acres of farmland in Alabama from his grandfather. The land was leased to a local farmer. Allen visited the farm after the funeral in 2013 but did not return to Alabama. The rental income of $5,000 per year was deposited into the couple's joint account. Allen filed for divorce in New Mexico on November 10, 2015.

Explain the how the court will determine the ownership of the house, farmland, and business based on New Mexico law.
Determine how the court would decide if the couple resided in your state instead of New Mexico.
responding to your classmate response

Full Answer Section

     

Tariff Reduction Options:

  • Petition for Tariff Relief: The company can petition the US Trade Representative for relief from the tariff on German coach screws.
  • Free Trade Agreement Negotiation: Advocate for the US to pursue a free trade agreement with Germany to reduce tariffs on manufactured goods.
  • Duty Drawback Program: The company can participate in the Duty Drawback Program, which allows for refunds of duties paid on imported materials used in exported products.

Country Selection:

Given the 12.5% tariff, Korea presents the most competitive option due to its potential tariff reduction through the GSP program. Exploring potential GSP eligibility and conducting cost comparisons with Canada would be crucial before finalizing the decision.

Ethical Considerations:

  • Fairness: Choosing the cheapest option solely based on price could raise concerns about fair competition and labor practices in the chosen country.
  • Transparency: Discussing the rationale behind the choice with stakeholders and ensuring compliance with all trade laws and regulations is essential.

Scenario 2: Bribery

Legal and Ethical Ramifications:

  • Bribery is a felony in the US, punishable by imprisonment and fines.
  • Offering a bribe to a customs officer is also a violation of international anti-corruption laws.
  • Ethical implications: Bribery undermines the integrity of public institutions and creates an unfair advantage for the company.

Alternative to Bribery:

  • Seek clarification and guidance from the customs officer regarding the classification and duties owed.
  • Comply with all legal requirements and document any communication with customs officials.
  • If facing undue delays or unreasonable costs, consult legal counsel and consider filing a formal complaint through appropriate channels.

Donation vs. Bribery:

Offering a donation to St. Jude's instead of a direct bribe does not change the underlying intent of influencing the customs officer's decision and would still be considered illegal and unethical.

Source: US Department of Justice, Foreign Corrupt Practices Act (FCPA): https://www.justice.gov/criminal/criminal-fraud/foreign-corrupt-practices-act

Scenario 3: E-waste and Environmental Concerns

Legal and Ethical Concerns:

  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal: This international treaty restricts the export of hazardous waste from developed to developing countries.
  • Resource Conservation and Recovery Act (RCRA): This US law regulates the export of hazardous waste and requires exporters to ensure environmentally sound management in the receiving country.
  • Ethical considerations: Exporting e-waste to developing countries raises concerns about environmental injustice and potential harm to vulnerable communities.

Sample Answer

   

Scenario 1: International Trade

US Trade Laws to Consider:

  • Tariff Act of 1930: This establishes the framework for imposing tariffs on imported goods.
  • Trade Agreements Act of 1974: This governs US participation in trade agreements that may reduce tariffs for specific countries.
  • Generalized System of Preferences (GSP): This program offers temporary tariff reductions for certain developing countries, including Korea.