PART 1 One initiative that reduced trade restrictions was the North America Free Trade Agreement (NAFTA), signed by heads of state in 1992. The goal of NAFTA was to lower trade barriers among the three major North American countries; the US, Canada and Mexico. It was, and continues to be, enormously controversial in all three countries. In fact, on- time presidential candidate Ross Perot predicted that the loss of jobs to Mexico would produce “A giant sucking sound.” Googling “Pros and cons of NAFTA” reveals a large number of sites, some reasoned and professional, some shrill and amateurish. One good list of pros and cons, reasonably well balanced despite the progressive agenda of its hosts, can be found at OccupyTheory (2014). There are many others. What’s your opinion? Have you, or anyone you know, been affected by this pact? On balance, do you think it’s a good thing, or a bad thing? Explain. (NO MORE THE TWO PARAGRAPHS)
PART 2 Trade restrictions affect logistics firms directly. In many cases, the firms are not only complying with government policy, but working as de facto government agents; distributing forms, collecting fees in advance, and so forth. A logistician cannot avoid making difficult decisions about these issues.
The bare-bones options are as follows: •Comply, by ◦Helping block restricted trade. ◦Trying to make controlled trade as cheap and painless as possible for everyone ◦Circumvent restrictions by ◾Using legal channels, such as transshipment through a third country ◾Using questionable procedures, such as shell companies ◾Ignoring restrictions, and hoping for the best.
These decisions aren’t straightforward. Consider two extreme cases. 1.A shadowy company tells you, quite candidly, that it wants you to help them send Stinger anti-aircraft missiles to the so-called Islamic State, and will pay you a fortune in exchange for running the risk of hard time in a Federal prison. Are you even tempted? 2.Pfizer Pharmaceuticals and the Gates Foundation want your help in getting critically needed drugs to victims of an epidemic. The epidemic is located in a war-torn corner of Africa. The local militia chieftains, who are the closest thing to a national government, are demanding massive bribes, plus carte blanche to give the drugs only to the people who support them. The UN is helpless. Assuming you have contacts and assets in Africa, do you assist?
Please discuss the issues involved in how an international logistics company deals with trade restrictions. Make full use of sources.
Required Reading
AFGI (2011). 5 Reasons Americans should oppose free trade. Retrieved on 18 March 2015 from http://afgj.org/5-reasons-americans-should-oppose-free-trade
Driskill, R. (2007). Deconstructing the argument for free trade (Vanderbilt Univ. working paper). Retrieved on 19 March 2015 from http://www.vanderbilt.edu/econ/faculty/Driskill/DeconstructingfreetradeAug27a2007.pdf
FedEx (2015). Understanding duties and taxes. Retrieved on 19 March 2015 from http://www.canadacustomer.fedex.com/ca_english/customsguide/understanddutytax.html
Grainger, A. (2007). Customs and trade facilitation: From concepts to implementation. World Customs Journal, 2(1): 17-30. Retrieved on 19 March 2015 from http://www.worldcustomsjournal.org/media/wcj/-2008/1/customs_and_trade_facilitation_from_concepts_to_implementation.pdf
Hanson, D; Batten, D; & Harrison, E. (2013). It’s time to end the senseless embargo of Cuba (Forbes Opinion; 16 Jan). Retrieved on 19 Mar 2015 from http://www.forbes.com/sites/realspin/2013/01/16/its-time-for-the-u-s-to-end-its-senseless-embargo-of-cuba/
MacLean, W. & Blanchard, B. (2013). Exclusive: Chinese trader accused of busting Iran missile embargo. (Reuters, 1 Mar). Retrieved on 19 March 2015 from http://www.reuters.com/article/2013/03/01/us-china-iran-trader-idUSBRE9200BI20130301
Palmer, B. (2013). Is there anything left to sanction in North Korea? (Slate: 23 Jan). Retrieved on 18 March 2015 from http://www.slate.com/articles/news_and_politics/explainer/2013/01/north_korean_trade_restrictions_is_there_anything_left_for_the_u_s_or_u.html
Pearson (2015). Infoplease: The argument for free trade. Retrieved on 18 March 2015 from http://www.infoplease.com/cig/economics/argument-free-trade.html
Additional
EcEdWeb (n.d.). EcEdWeb Economics Lesson: Limiting trade (Council for Economic Education). Retrieved on 18 March 2015 from http://ecedweb.unomaha.edu/lessons/feoga.htm
OccupyTheory (2014). List of pros and cons of NAFTA (28 Dec). Retrieved on 18 March 2015 from http://occupytheory.org/list-of-pros-and-cons-of-nafta/
