1. Strengthening International Government Relations

2. Sources of Trade Regulation
GATT and WTO
Set up to deal with tariffs and non tariff barriers to trade
Tokyo Round in mid 1970s
Tariff barriers reduced significantly
Partial success with non-tariff barrier reduction mainly due to complexity and sensitivity

3. Sources of Trade Regulation
GATT and WTO
Uruguay Round –
Challenging problems addressed – technical barriers, trade in services, intellectual property rights, trade in technology etc.
More member countries – 117
Problems of developing countries addressed
WTO formed – meets every 2 years

4. Trade Agreements and Associations
U.S. – Canada Free Trade Agreement
Formed January 1988 – world’s largest free trade area
Dispute resolution mechanisms established
NAFTA formed with Mexican representatives

5. Trade Agreements and Associations
Association of Southeast Asian Nations
ASEAN formed August 1967 with 5 member states, presently has 10 members
Regarded as a loose economic cooperation channel but expected to change, FTA with China expected
Move towards ASEAN FTA

6. Trade Agreements and Associations (cont.)
Asia-Pacific Economic Corporation
APEC established 1989, presently has 21 members
Primary vehicle for open trade and economic cooperation
Agreement to develop free trade yet to be reached
ANDEAN and MERCOSUR
Composed of South American nations with an objective of setting a common external tariff
European Union
Slow process of European integration
Founded on the principle of supra-nationality

7. Opportunities and Threats
Opportunities and Threats from Government Actions
Threats
Government Actions
Opportunities
Increase costs
Reduce ROI
Competitive disadvantage
Increased competition
Co-opt
Regulation
Taxation
Expenditure
Privatization
Consultation
Control competition
Competitive advantage
Subsidies, grants,
customers
Level playing field
Influence policy

8. Political Strategy
Essential for a firm to form and implement political strategy
Formulation
Objectives
Issues
Stakeholders (allies, opponents, targets)
Position/Case (“public interest”)

9. Political Strategy Implementation Timing Techniques
Direct (negotiate, litigate)
Indirect (advocacy advertising, political contributions)
Vehicles (e.g. coalition, Government Relations department, consultants)
Style (e.g., confrontation or conciliation)

10. Impact of International Business-Government Interaction Objectives and Motivations of MNC-SOE Alliances and Acquisitions
Objectives of MNCs
Increase profits, reduce potential risks and achieve economies of scale
Control/preempt competition, expand market share, achieve first mover advantage
Obtain lower-cost production or distribution facilities
Develop or adapt technology jointly, obtain new labor or technology resources
Expand domestic sales through overseas operations
Obtain new labor or technology resources

11. Objectives of SOEs or Privatized Enterprises
Impact of International Business-Government Interaction Objectives and Motivations of MNC-SOE Alliances and Acquisitions
Objectives of SOEs or Privatized Enterprises
Ensure survival and financial viability
Gain competitiveness and become profitable
Acquire new technology and improve managerial competence

12. Objectives of Governments
Impact of International Business-Government Interaction Objectives and Motivations of MNC-SOE Alliances and Acquisitions
Objectives of Governments
Generate public revenues from SOE sales
Reduce subsidies to loss making SOEs, foreign debts and public budget deficits
Strengthen private sector, increase national productivity and stimulate growth
Expand shareholding among citizens and reduce government role in economy

13. ENSURING THE SUCCESSFUL PRIVATIZATION OF ONTARIO HYDRO
Rolling blackouts in California have drawn attention to Ontario’s plans to privatize the production and distribution of electricity. The failure of privatization in California makes it all the more important for Ontario to understand what went wrong there, and why others (such as British Airways and British Telecom, for example) succeeded. This article describes the best practices in privatization, and provides lessons for both the Ontario government and the parties who would manage the privately owned corporations. For government, we recommend a controlled deregulation over time that would enable Ontario Hydro to adjust to market dynamics and avoid the California situation. For potential investors, we offer
new ideas and business models to capitalize on the opportunities the opening of this market will provide.
BY DAVID W. CONKLIN AND TREVOR HUNTER
IVEY BUSINESS JOURNAL
JULY/AUGUST 2001

14. Proactive Management of Relations
MNE’s Perception of Government Policy
MNE’s approach to
Government Policy
Viewed as outside the Influence
Of MNE Managers
Viewed as Potentially Influenced
by MNE Managers 1
“Government Policy as lever for global competitiveness” approach
Example: Porter’s home base/cluster concept 3
Non-location bound firm specific characteristics in MNE government interaction
Example: Use of strategic trade policy arguments to obtain government favors. 2
“Good corporate citizen” approach
Government policy not viewed as a major determinant of international competitiveness 4
Location bound firm specific characteristics in MNE government interaction
Government policy viewed as something which can be influenced through lobbying,
i.e., a proactive strategy
To achieve
Benefits of
integration
MNE’s objectives in Business – Government
Interactions
To achieve
Benefits of
National
Responsiveness

15. Bargaining Power
Discriminatory enforcement occurs due to differing characteristics of subsidiaries – Bargaining Power
Sources of Bargaining power for host country
Growing capability to replace the MNE’s products
Control over access to raw materials, labor and capital
Sources of Bargaining power for MNE
Vertical integration