Business & Commerce Rules and Factor Endowments
By: Amit Bhushan Date: 19th Feb. 2015
The war to define Global Business & Commerce Rules seems to be hotting up again amongst Global Players. It is all about defining the criteria that help maintain or maximize the opportunity set, profitability parameters and vulnerability controls for their ‘corporate' organizations & business entities, so that they enjoy unfettered ‘access' to markets/consumers across geographies. This involves define Quality parameters assessment standards, sanitary and phytosanitary standards, labour related conditions and environmental & sustainability related conditions to be defined. The march for taxation including entry tariffs, business entity valuation & transfer pricing and other accounting measures will be set separately by financial standards organizations, which operate separately from Trade & commerce. The countries rich in certain endowments want to ensure that their endowments are properly valued by the new rules so that their people enjoy the prosperity due to their ‘competitiveness' in those factors. So the handle on both these measures will be maintained in order to preserve the hegemony. Treatment of IPR, Copyrights rules and other sundries is often part of such enforcement plans.
Ironically it's not as per democracy amongst ordinary people but a muscle flexing amongst nation states that set the game. The ‘capital rich' nations on the back of their highly valuable currency paper and often technological prowess as well want to keep calling the shots in this ‘game'. The ‘labour rich' nations which need to sell their output and often lacking technological prowess find themselves at the lower end of the bargaining power. Such nations have not yet learnt to trade amongst themselves basis their own cultural preferences often due to geo-politics, territorial disputes and the baggage of history, legacy of which has been passed assiduously to upcoming generations. This is reflected in their relationships where their commerce is mostly to and from capital & technology rich nations with limited ability to trade with a ‘poorer' cousin with complimentary strengths. The consumer tastes & preferences continue to be manipulated by savvy marketing from the ‘seller' nations whereby not only the competitors from other ‘developing' countries remain on weaker footing, but even the smaller domestic firm are seen struggling to ‘reach out to domestic customers'. The attempts to level field are condemned as anti-competitive protective measures while raising cultural/language related factors often condemned as ‘uncouth' and reprehensible in a ‘globalized marketplace'.
The negotiations are increasingly becoming contentious due to rise of middle income countries like China where they do not immediately find all their labour quickly absorbed in the resulting job market, but a rise in overall size to beat several smaller but capital surplus nations. So due to the size of their rich class of people they start acting as a big market for high class products in their own right and often some other countries find it more attractive to deal with their rich class than with some of the smaller rich nations. That they are also attempting to create financial institutions to define ‘new rules for supplying capital' tends to create competition and adds to complications since such financial backing in currency acceptable to the smaller nations brings in much more credibility to their transaction management ability.
However it will be much more vantageous for the labour surplus nation to have an orderly market access which puts value to their produce fairly, in the long run rather than immediate capital supply issues. Similarly, those rich in primary commodities will need to watch out for long term pricing of their wares besides technology access to harness the resources. The nations in play attempting to define rules have not really ever shared any long terms plans for the same for a larger debate while canvassing for support amongst concerned nation states. Also dealing issues in segregated manner often blur the wholesome picture, making an assessment of which is an art rather than a science at the juncture.
By: Amit Bhushan Date: 19th Feb. 2015
The war to define Global Business & Commerce Rules seems to be hotting up again amongst Global Players. It is all about defining the criteria that help maintain or maximize the opportunity set, profitability parameters and vulnerability controls for their ‘corporate' organizations & business entities, so that they enjoy unfettered ‘access' to markets/consumers across geographies. This involves define Quality parameters assessment standards, sanitary and phytosanitary standards, labour related conditions and environmental & sustainability related conditions to be defined. The march for taxation including entry tariffs, business entity valuation & transfer pricing and other accounting measures will be set separately by financial standards organizations, which operate separately from Trade & commerce. The countries rich in certain endowments want to ensure that their endowments are properly valued by the new rules so that their people enjoy the prosperity due to their ‘competitiveness' in those factors. So the handle on both these measures will be maintained in order to preserve the hegemony. Treatment of IPR, Copyrights rules and other sundries is often part of such enforcement plans.
Ironically it's not as per democracy amongst ordinary people but a muscle flexing amongst nation states that set the game. The ‘capital rich' nations on the back of their highly valuable currency paper and often technological prowess as well want to keep calling the shots in this ‘game'. The ‘labour rich' nations which need to sell their output and often lacking technological prowess find themselves at the lower end of the bargaining power. Such nations have not yet learnt to trade amongst themselves basis their own cultural preferences often due to geo-politics, territorial disputes and the baggage of history, legacy of which has been passed assiduously to upcoming generations. This is reflected in their relationships where their commerce is mostly to and from capital & technology rich nations with limited ability to trade with a ‘poorer' cousin with complimentary strengths. The consumer tastes & preferences continue to be manipulated by savvy marketing from the ‘seller' nations whereby not only the competitors from other ‘developing' countries remain on weaker footing, but even the smaller domestic firm are seen struggling to ‘reach out to domestic customers'. The attempts to level field are condemned as anti-competitive protective measures while raising cultural/language related factors often condemned as ‘uncouth' and reprehensible in a ‘globalized marketplace'.
The negotiations are increasingly becoming contentious due to rise of middle income countries like China where they do not immediately find all their labour quickly absorbed in the resulting job market, but a rise in overall size to beat several smaller but capital surplus nations. So due to the size of their rich class of people they start acting as a big market for high class products in their own right and often some other countries find it more attractive to deal with their rich class than with some of the smaller rich nations. That they are also attempting to create financial institutions to define ‘new rules for supplying capital' tends to create competition and adds to complications since such financial backing in currency acceptable to the smaller nations brings in much more credibility to their transaction management ability.
However it will be much more vantageous for the labour surplus nation to have an orderly market access which puts value to their produce fairly, in the long run rather than immediate capital supply issues. Similarly, those rich in primary commodities will need to watch out for long term pricing of their wares besides technology access to harness the resources. The nations in play attempting to define rules have not really ever shared any long terms plans for the same for a larger debate while canvassing for support amongst concerned nation states. Also dealing issues in segregated manner often blur the wholesome picture, making an assessment of which is an art rather than a science at the juncture.