Table of Contents
Credit Suisse is a company that offers financial services globally; the operations of the company can be classified into three segments. These segments include asset management, investment banking, and private banking. In asset management, the company offers products such as fixed income and equities. Investment banking encompasses services such as financial products, which can be termed as capital-efficient. Private baking encompasses the provision of services and products to clients such as institutions in the corporate sector (New York Times, 2013). This paper will discuss the various factors, which can have an impact on the company’s global operations.
Overview of the paper
The paper will focus on the factors that can affect the global operations of Credit Suisse in the global market. In this regard, the paper will look into the impact of countervailing duties, antidumping duties, as well as escape sources relief clause, on the operations of this company. The paper also seeks to explore the effects of Section 301 retaliation on the global operations of Credit Suisse. In addition, the paper will examine why the use of trade barriers to enforce labor or environmental standards may not be an efficient method. Moreover, the paper will examine the pros and cons of a large trade deficit.
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Countervailing duties refer to duties imposed on imports by the government that will import them. The purpose of these duties is to harmonize trade between foreign producers and domestic producers. The impact of these duties on the multinational company is that they make the company sell goods at a low price. This could not happen if there were no subsidies offered. These duties will also allow the company to sell goods at a lower price than the competitors. As a result, the company becomes competitive in the global markets, and this affects the operations of local producers (Yager, 2011).
Antidumping duties refer to tariffs imposed by the domestic government on imports from foreign countries. This mostly happens when the domestic government suspects that the price of the imports is below the market price. Antidumping duties can have an impact on the operations of Credit Suisse in a number of ways. When such duties are imposed, the company will face stiff competition from the local companies. As such, the company will be forced to increase the prices of their goods so that the goods can match the fair value in the market. This can affect the company negatively since it may not collect huge revenues from the sale of its goods. Credit Suisse will also face the challenge of operating in a distorted market. Anti-dumping duties have the effect of distorting the market. This is because the government does not have the capacity to determine the prices in the market (Yager, 2011). Therefore, the pricing of the goods and services by the government is not appropriate in international trade. The company will be faced with difficulties in conforming to the prices set by the government. This emanates from the fact that market prices should be shaped by the forces of demand and supply, and not the prices set by the government.
The anti-dumping duties may also affect the activities of the multinational company in the foreign market. Customers may avoid buying services from Credit Suisse because of the belief that the products of the company are counterfeit since they are offered at low prices. This may make the company lose some of its potential customers who may be willing to purchase its products.
Escape sources clause relief
The escape clause is provided for under section 201 in the 1794 Trade Act of the United States. Under Section 201, it is stated that when an escape clause is received, the International Trade Commission should investigate with the aim of checking if there is import of an article in the United States. The purpose of checking such imports is to prevent injuries, which may emanate from high quantities of the articles. Escape sources clause relief has an impact on the activities of the multinational company. One of the impacts that this clause can have on Credit Suisse is that it can restrict the activities of this company. As a result, the company will be under strict scrutiny when providing services to its clients (Cunningham, 2005).
Section 301 retaliation
Section 301 retaliation is contained in the United States Trade Act of 1974. Under this act, the chief negotiator of the president dealing with trade should take the necessary action to curb the activities of nations that may engage in trade practices that can be considered unfair. This act will have an impact on the activities of Credit Suisse in the global market. One of the impacts of the act is that it will help in negotiating better terms for the company. The company’s operations in foreign countries will not be restricted; this is because the act will ensure that the company carried out its activities without any interference from the foreign countries. The other program that the company can rely on is Special 301, which is under Section 301. This will help the company in protecting the intellectual property rights, thus ensuring that the products of the company cannot be stolen by other firms (Shadikhodjaev, 2009).
Reasons why using trade barriers to enforce labor or environmental standards may be less efficient than other measures
The use of trade barriers to enforce labor or environmental standards can be regarded as less efficient than other measures. With regard to the issue of labor, trade restrictions may have the impact of undermining the trade partners that have a low wage rate. As a result, the ability of countries to raise labor standards may be affected by the trade barriers that relate to trade. Trade barriers to enforce labor may also have the impact of preventing countries from meeting the levels of development, which they aim at achieving (Babkina, 2000).
Pros and cons of a large trade deficit
A large trade deficit has some implications on a country; there are advantages and disadvantages derived from a large trade deficit. One of the pros of a large trade deficit is that it reduces inflation. A large trade deficit also raises the living standards of the residents in the country. The standards of living are raised because there is immense flow of goods and services through trade. A large trade deficit also contributes to the flow of money in the country; this increases the purchasing power of the residents, thus making them wealthy. Apart from the advantages derived from a large trade deficit, there are some disadvantages that emanate from a large trade deficit. One of the cons of a large trade deficit is that it can contribute to outsourcing. This means that the local talents may be replaced by expertise from foreign countries. The other disadvantage of a large trade deficit is that it may contribute to the devaluation of the currency (Canino, 2011).
Lessons learned and Recommendations
I have learnt that there are certain trade restrictions and duties that may affect the operations of a multinational company. These restrictions either serve to benefit the company or restrict activities. I recommend that there be harmonization of the standards required to conduct trade between countries. This will ensure that companies operate in the global arena freely without any unnecessary interference.
In conclusion, Credit Suisse offers financial services globally. Countervailing duties will ensure that the company sells its product at a low price. Antidumping duties may affect the company negatively since it may make it hard for the company to penetrate in the market. Section 301retaliation may enhance the operations of the company since it may protect the business of Credit Suisse. The various restrictions put forth by the domestic countries may affect the activities of the companies. There should be harmonization of standards in order to enhance the operations of companies in the international arena.
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