Global marketers must continually stay abreast of laws and trade regulations in each country in which they compete. Some laws, such as Les Soldes (The Sales) in France, are uncommon to U.S. marketers. Bylaw, retail sales can be held only twice a year—in January or February and again during autumn. At least 30 percent of French clothing sales occur during these two sales seasons.
Political conditions often influence international marketing, as well. Consider the effects of recent political turmoil in Kosovo, Indonesia, and Kenya. Such political unrest sometimes results in acts of violence, such as destruction of a firm’s property. Middle Eastern terrorists have targeted U.S. companies’ offices abroad. IBM and American Express have been subject to terrorist threats and attacks. As a result, many western firms have set up internal political risk assessment (PRA) units or turned to outside consulting services to evaluate the political risks of the marketplaces in which they operate.
The fall of communism and the transformation of state-dominated industries into privately-owned and managed profit-seeking enterprises has been accompanied by a trend toward freer trade among nations. The movement toward capitalism is emphasized by the recent launch of Forbes Global, a new international business periodical, published by the well-known business magazine Forbes. The legal environment for U.S. firms operating abroad results from three forces: (1) international law, (2) U.S. law, and (3) legal requirements of host nations. International law emerges from the treaties, conventions, and agreements that exist among nations. The United States has many friendship, commerce, and navigation (FCN) treaties with other governments. These agreements set terms for various aspects of commercial relations with other countries, such as the right to conduct business in the treaty partner’s domestic market. Other international business agreements concern worldwide standards for various products, patents, trademarks, reciprocal tax treaties, export control, international air travel, and international communication.
Since the 1990s, Europe has pushed for mandatory ISO (International Standards Organization) 9000 ceniflcation—an internationally recognized standard that ensures a company’s goods and services meet established quality levels. A decade later, the standards have crossed the Atlantic Ocean to include a growing number of U.S. businesses. Large multinational corporations were the first to undertake the costly and time-consuming ISO certification process. However, marketers in small businesses have come to realize the advantages of being ISO certified, such as access to more international markets, promotional prestige, and customer confidence of quality—all of which can lead to increased sales. The International Monetary Fund, another major player in the international legal environment, lends foreign exchange to nations that require it in order to conduct international trade. These agreements facilitate the whole process of world marketing. However, there are no international laws for corporations, only for governments. Therefore, marketers include special provisions in contracts, such as which country’s courts have jurisdiction.
The second dimension of the international legal environment, U.S. law, includes various trade regulations, tax laws, and import’export requirements that affect international marketing. One important law, the Export Trading Company Act of 1982, exempts companies from antitrust regulations so they can form export groups that offer a variety of products to foreign buyers. The law seeks to make it easier for foreign buyers to connect with U.S. exporters. It also allows banks to participate directly in such ventures by financing trading activities. Although export trading companies offer many benefits to U.S. companies, relatively few firms have joined forces in these cooperative ventures.