Tuesday, October 9
Solutions to Foreign Exchange Exercises/Calculate
the answer/#1
1.5495/0.5046 = 3.07 * 10,000 = DEM 30,700 for the
car
Differences in Accounting Standards
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accounting for research and development expenses
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accounting for fixed assets
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inventory accounting treatment
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capitalizing or expensing leases
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pension plan accounting
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accounting for income taxes
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foreign currency translation
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accounting for mergers and acquisitions
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consolidation of equity securities holdings
Consequences of such differences
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poor or improper business decision-making
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inability to raise capital
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limited monitoring of competitive market factors
Is Accounting Standardization the solution?
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standardization through the IASC (International Accounting
Standards Committee, 1973)
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standardization through regional agreements (international
institutions and economic integration)
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tax treaties
International Taxation
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residential approach: residents' income is taxed regardless
of its origin
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territorial approach: all parties within the jurisdiction,
regardless of their country of residency
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presence of direct (income) and indirect taxes (sales,
tariffs, VAT, etc.)
Economic Integration
is the result of agreements between nations to establish links through
movements of goods, services, capital, and labor across borders.
The Spectrum of Economic Integration
Free Trade Area (no tariff
or non-tariff barriers)
Customs Union (common trade policies with
nonmembers)
Common Market (free movement of factors
of productions, i.e. people , technology and capital)
Economic Union (unified economic policies
and institutions)
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Agreements are generally passed between countries
with common
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geography ("regional blocks")
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development level (developed vs. developing)
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resources (Ex: oil producing countries)
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culture (language, religion)
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history (former colonies)
Arguments FOR Economic Integration
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trade creation
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reduced import prices (between member countries)
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increased competition, greater efficiency and lower
prices
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economies of scale
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factor productivity and increase of wealth
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cross-cultural understanding
Arguments AGAINST Economic Integration
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trade diversion
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decreased autonomy of the country
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factor mobility and regional preferences
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cultural differences and ethnocentrism
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free trade
Major Groupings
| Free Trade Area |
Customs Union |
Common Market |
Economic Union |
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ASEAN (Association of South East Asian Nations)
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APEC (Asia Pacific Economic Cooperation)
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SAARC (South Asian Association for Regional Cooperation)
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EFTA (European Free Trade Association)
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FTAA (Free Trade Area of the Americas)
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GCC (Gulf Cooperation Council)
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LAIA Latin American Integration Association)
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NAFTA (North American Free Trade Agreement)
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AFTA (ASEAN Free Trade Area)
ECOWAS (Economic Community of West African States)
SACU (Southern African Customs Union)
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ANCOM (Andean Common Market)
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CACM (Central American Common Market)
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CARICOM (Caribbean Community and Common Market)
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MERCOSUR (Mercado Comun Del Sur)
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COMESA (Common Market for East and Southern Africa)
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EU (European Union)
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A closer look at the situation in the Americas
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NAFTA Members
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Canada
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Mexico
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United States
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Antigua and Barbuda
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Argentina
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Bahamas
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Barbados
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Belize
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Bolivia
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Brazil
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Canada
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Colombia
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Chile
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Costa Rica
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Dominica
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Dominican Republic
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Ecuador
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El Salvador
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Grenada
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Guatemala
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Guyana
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Haiti
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Honduras
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Jamaica
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Mexico
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Nicaragua
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Panama
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Paraguay
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Peru
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St. Kitts and Nevis
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St. Lucia
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St. Vincent and the Grenadines
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Suriname
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Trinidad and Tobago
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United States
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Uruguay
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Venezuela
Issues to be negotiated
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Market Access
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Investment
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Services
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Government Procurement
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Agriculture
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Dispute Settlement
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Intellectual Property Rights
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Subsidies, Antidumping and Countervailing
Duties
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Competition Policy
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Civil Society
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Smaller Economies
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E-Commerce
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Institutional Issues
Handout: "Joint Statement of the NAFTA
Free Trade Commission Building on a North American Partnership" (http://www.mac.doc.gov/nafta/ar-july31.html)
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