Discussion activity-Due:1/29/2017
Topic 3. Reflections & Lessons Learned
My team chose the Software industry and the countries we chose were Turkey and Israel. The first major lesson that I learned from the case study was to investigate the current local market of the target countries. Do Turkey and Israel have a large software development industry, or is it relatively small and protected?
In the case of the Catfish industry, the market was relatively small and regional (Brown, 2001). Two thirds of all the catfish farms could be found in one region of the United States: Mississippi, Arkansas, and Louisiana (Brown, 2001). Therefore, when Vietnam came in with a vastly cheaper product, they were able to have significant effects on this small market. At one point, they captured over 20% of the market (Brown, 2001). Having a large effect on a regional market, led the U.S. to protectionist actions like labeling changes and tariffs (Brambilla, Porto, & Tarozzi, 2012). These actions were designed to protect local jobs (Carter, 2001). Local businesses wielded great power via lobbying regional politicians to their cause (Carter, 2001).
If the software industry is relatively small and regional in Turkey and Israel, regional politicians might have a higher likelihood of stepping up and performing trade diversion tactics. This would be particularly true, if our company has a chance of capturing a large market share. However, if the industry is already large and spread out nationally, these trade diversion tactics are less likely to happen. It is also important to look at the national relationship between business actions and government lawmaking. Is there a strong lobbying environment in Turkey and Israel? If so our company might want to begin lobbying for our interests before expanding into these countries.
The second major item that our team should look into while conducting our research is “What trade agreements and organizations are these countries are part of?”. Turkey and Israel are both part of the WTO (WTO, 2016a & WTO, 2016b). Being part of the WTO provides a method for helping resolve international industry disputes, but the WTO also has many faults that can lead to this be an ineffective method for resolving this disputes (Tehrani, 2008). Are their other trade agreements, economic unions, or customs unions, or common markets in place that would further facilitate trade creation? If so, this would represent a greater chance for potential gains for both our company and the local country. Viner’s theory supports this stating that “Trade creation generally produces a net economic gain.” (Flynn, 2015).
References
Brambilla, I., Porto, G., & Tarozzi, A. (2012). Adjusting to trade policy: evidence from U.S. antidumping duties on Vietnamese catfish. Review Of Economics & Statistics, 94(1), 304-319.
Brown, T. (2001). South and Southeast, Vietnam embroiled in catfish controversy. Marketing News, 35(22), 50.
Carter, D. (2001, December 28). Congressional ruling shuts Vietnamese catfish out of U.S. market. The Washington Times. Retrieved from www.washingtontimes.com
Flynn, S. I. (2015). Trade creation and diversion. Research Starters: Business (Online edition). Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ers&AN=89164019&site=eds-live&scope=site
Tehrani, M. (2008). European Union and the US trade disputes: The role of the WTO. Organization Management Journal (Palgrave Macmillan Ltd.), 5(3), 135-148. doi:10.1057/omj.2008.15, Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=49128980&site=eds-live&scope=site
WTO. (2016a). Israel and the WTO. Retrieved from https://www.wto.org/english/thewto_e/countries_e/israel_e.htm
WTO. (2016b, October 3).Morocco - anti-dumping measures on certain hot-rolled steel from Turkey - Request for consultations by Turkey. Retrieved from https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=231677&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True
