Good Essay On Pol 202: International Relations
International trade has been the main motivation and reason for many wars in history including the two World Wars. Therefore, in the Post World War II global order, there has been a lot of effort meant to reduce the tensions and friction between nations in relation to pursuing international trade. The purpose of this paper is to critically evaluate the position of international trade rules in the context of international relations theory and how they affect branches of businesses.
In the process of completing this research, there will be an evaluation of the concept of international trade regulation. This will present a definition of what international is. This will culminate in the critical examination and review of international relation within the context of the classical theories of International Relations theory – liberalism and realism. This will be applied to Newmont, an American mining company as well as trading entity. From there, the impact of international trade rules on the branches of a multinational organization will be assessed and evaluated. This will lead to a conclusion that will involve a theory that explains the thesis statement underlined above.
International Trade Rules
The definition of International Trade Law is complicated. It is viewed in the narrow and wider sense and this gives various levels of definitions and possible interpretations of international trade law. In the wider sense, international trade law encompasses all regulations that exist in the global and regional transnational organizations including the United Nations and regional blocs that allows entities within one country and another to trade with other entities in other countries.
This means that any legal instrument in the international legal structure that promotes trade between entities across nations can be considered as an international trade rule. However, this includes a very complex set of rules that have developed steadily over the years to promote consistency and allowances in local countries and also protect local industries within these countries.
The narrow definition of international trade law includes the laws specifically made to promote free trade between nations and this typically refers to the laws of the World Trade Organization, which is a part of the United Nations system which specifically provides the framework for international trade and activities. The World Trade Organization as it exists today goes back to 1946 when the General Agreement on Tariffs and Trade (GATT) was signed under the supervision of the United Nations Economic and Social Council, which is the branch of the UN.
The GATT provided the framework complement “the substantive rules that placed restrictions on parties’ freedom to restrict or distort trade”. Therefore, the GATT provided specific rules that span from customary international trade law to treaties that are used to deal with trade across nations around the world. These treaties were signed on a multinational basis and the treaties continued with over 8 rounds of agreements that continued amongst nations that were allied to the West in the Cold War until the Uruguay Round of talks in 1994, which culminated in the formation of the World Trade Organization to replace the GATT.
Some scholars identify that the GATT was boycotted by the Communist Countries and nations in the Eastern bloc because they considered it to be a tool used by Capitalist countries to extend their influence. Therefore, it was only after the fall of the Soviet Union that the principles of the GATT could be generalized and the number of signatories could increase to over 100 countries around the world.
International Trade Rules in International Relations Theory
The two most popular theories of International Relations are liberalism and realism. Other writers present the concept of constructivism. However, the first two are very popular and they are found in more textbooks and academic discussions and form the classical theories of International Relations.
Liberalism is a school of thought in International Relations that asserts that the goals of every state and the goal of the countries around the world should be one and the same, hence institutions in the global order must work towards the same goals of states. Therefore, it is a situation whereby all nations are required to democratically set their agenda and support institutions like the United Nations and other transnational entities in ways that will help to promote development in the world. This goes back to the ideas of US President, Wilson Woodrow who supported the formation of the League of Nations as a means of promoting world peace and enhancing development around the world. This is to promote the ideas of civil liberties and human rights that existed in the pre-Independence American philosophies amongst people in different nations around the world. This culminates in the presentation of idealized principles and views that will help to protect human rights and also build institutional structures and democracy in nations around the world.
Realism on the other hand identifies that every state has an interest in participating in international affairs and as such, states only seek their own interest and survival through international organizations like the United Nations. Realism indicates that all institutions in the international order are used as tools for the survival of states around the world. Therefore, nations are to work within these rules to seek their goals and individual needs. This is presented as a counter-argument to liberalism which asserts that nations should endeavor to contribute positively to the achievement of good results for all members of society.
The position of a multinational entity varies in relation to their philosophies and their alignment to the international trade system and process. Therefore, based on the different theories of International Relations, there are numerous processes and systems through which countries can position themselves and carry out their activities. The school of International Relations thought of each entity provides the basis and process through which a given business’ processes can be interpreted and defined.
Realism and International Trade Rules in Multinational Businesses
Realism asserts that businesses work under the auspices and within the framework of their country’s rules and foreign policy. Therefore, under this theory, a business expanding to another country is doing so as a means of maximizing profits which will also increase the taxable income for the country in question. Therefore, realists assert that international trade negotiations are carried out by states who pursue their foreign interests through expanding trade and increasing the scope of profits they stand to get. Therefore, the negotiation of these trade rules and trade regulations are done for the protection of the core interest of nations.
Therefore, a business that is entering a foreign country will have to identify its opportunities and options in relation to the country’s foreign policy and business promotion system and process. This will give the nation the impetus for carrying trade and achieving optimal results.
“In the 1947-1995 period, contemporary international law emerged as a product of US (and later US-European power) exercised through the creation and operation of the General Agreement on Tariffs and Trade (GATT) and its successor, World Trade Organization (WTO) and reflected in the GATT/WTO substantive rules”. This indicates that essentially, international trade rules and international trade laws in itself was created opportunistically to meet the needs and desires of American businesses or businesses from pro-American countries. Thus, the rules are negotiated to protect such persons. As such, a business from these countries will be able to access a series of benefits that will give them the best results in dealing with foreign stakeholders.
On the microcosmic level, a business will therefore have the obligation to go through all the trade rules and trade regulations and how it defines business activities and processes in foreign countries. Thus Realism will include the obligation for the management of a multinational company to learn about the relevant international trade laws and national regulations in the host country and try to find the best way of gaining optimum results from operation. Therefore, a business has no direct obligation to go beyond these rules that are made in the international trade rules and the local rules and regulations of the country.
Realism also asserts that there is a major totality and completeness in the existing legal systems and rules that guide international trade. This is because realism asserts that states seek and pursue their interests in foreign countries. As such, anything done within the body of dominant rules and traditions of international law and the local laws of the host country can be passed as legal.
The position of realism is such that Newmont’s branches in India and Africa will have to negotiate for their entry and operation in these developing countries on the basis of regulations in the World Trade Organization as well as local national rules. This will mean that Newmont will only be liable to rules of commercial transactions as well as regulations relating to environmentalism that is recognized by American law. This is because as a country, they have the obligation to work within a scope of general regulations in the international community and the international trade.
Realism implies that Newmont will have to view one word – relevance. Newmont will have to identify relevant laws and go on to obey them and apply them in dealing with issues and matters. This will be based on international treaties of America and the relevant laws of India and the African countries within which they operate. This is an environment within which Newmont can pursue the maximum profits by staying in the scope of all relevant regulations and trade rules. In cases of disputes, Newmont will have to work within normal and standardized rules of dispute resolution as per the World Trade Organization and pursue its best interest.
Liberalism and International Trade Rules in Multinational Business
Liberalism on the other hand comes with a different interpretation of international trade law in relation to businesses. Liberalism philosophically asserts that nations must be treated equally and fairly and this must be done through the creation of strong institutions that protects the rights of all people around the world. Hence, a business operating in the international community will have to view international trade rules as an extension of their national laws that are meant to promote and enhance all the needs of all people around the world.
In this sense, the World Trade Organization rules are meant to be interpreted in a way and manner that aligns it to the basic approach of doing business in western societies and communities. Liberalism asserts that trading international trade law and free trade rules are to promote globalization and the achievement of international development across the world, therefore, businesses are encouraged to pursue the highest levels of morality in their activities and processes. This means liberalism is about the presentation of Kantian oriented definitions of what is right, which includes a set of rules that must be obeyed absolutely in a univeralist manner.
However, in this process, nations are encouraged to have their own local rules and regulations although they are not required to follow the American model of democracy, they are also encouraged to pursue their own human rights regulations. This means nations are required to nurture their people and the rights and livelihood of their people.
In this situation, Newmont will have to ensure that they learn about the regulations and obligations of international law and try hard to respect and honor the rights of people. This implies that there is the need to understand the rules and regulations and try to protect the honor and dignity of the rights of people in Africa and India when they trade there. As a good citizen, the liberalism school of thought requires Newmont to go the extra mile as a duty and not only pursue minimum standards of WTO rules and national laws of home countries. They will have to act in good faith and also spend time and resources understanding money laundering rules and rules that require them to operate up to American standards even in foreign countries that are many years away from instituting those American laws.
Additionally, Newmont’s management will have to ensure that they carry out various corporate social responsibilities and treat their workers fairly. They will have to ensure they adhere to relevant ethical standards both in the US and in the host countries they will operate in. This includes social and sustainability targets to make the entire world a better place and not just focus on making money to return to the United States. Therefore, it requires a lot of sensitivity to issues and responsible behavior as an absolute rule in operating in foreign lands.
International trade rules include numerous legal instruments and treaties that were put together by nations after the Second World War. In the technical sense though, international trade rules include the World Trade Organization rules which is a body of regulations meant to address international trade and regulations. The acceptance and application of these rules for international businesses vary according to the philosophies of the directors of these entities.
Under the realism school of International Relations thought, a business entering a foreign country will only have to adhere to the relevant rules that are necessary and use the tools of international trade laws to its advantage and benefits. In realism, a firm has no obligation or requirement to contribute anything aside its legal obligation as they think that the international trade laws and laws of the host country is sufficient.
On the other hand, the liberalism school of thought requires that a country like the United States promotes human rights and civil liberties and development everywhere an American business operates. Therefore, the view of liberalism in International Relations requires a business to adhere to universal standards of human rights, development and compliance. Supporters of this view indicate that it is necessary to be sensitive to money laundering laws and the universal application of environmentalism and social responsibility at the corporate level. Therefore, there is the need to go beyond just adhering to the laws of the host country and minimum requirements of international trade rules like WTO regulations. This will culminate in a series of actions and processes meant to promote responsibility in firms when they operate overseas.
An American company like Newmont will have a minimum obligation of adhering to local laws of their host nations and the World Trade Organization rules as well as relevant treaties. However, they are encouraged and sometimes required to be more ethical by adhering to American standards of doing things and carrying out business activities. This includes being sensitive to American money laundering requirements, corporate social responsibility and environmentalism in order to meet all needs of the local communities they operate within.
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