Trade Agreements
Trade agreements are a way for Americans to create opportunities for themselves in the economy. Today the United States have free trade agreements with seventeen different countries. In the rest of the world the companies in the US that want to expand their business globally have to go through the process of figuring out different trade barriers and tariffs. A trade barrier is a restriction on international business. A tariff is a tax on exported goods. The world trade organization helps regulate all of the trade agreements.
In today’s economy, two of our largest and continually growing companies, Facebook and McDonald’s, routinely run into difficulties with tariffs and trade barriers. Facebook is a social networking site that was developed February 2004 to connect students. The site has come a long way since 2004 and is now available in seventy different languages. Currently seventy percent of more than 500 million active Facebook users are located outside of the United States.
In some countries Facebook is blocked, forcing its creators to find a way to make the social networking site acceptable to governments that protest it for social, political and religious reasons. McDonald’s is a very popular fast food restaurant in America and is swiftly growing to be an international marvel. McDonald’s is a franchising fast food restaurant with over 32,000 restaurants in 115 countries. Since McDonald’s is a franchise it doesn’t have to worry about trade barriers, tariffs, and nontariff barriers because the corporation does not export goods.
There are some other circumstances that McDonald’s has to be aware of. One of the biggest obstacles McDonald’s had to overcome when deciding to start business overseas was the different styles of food each culture favors. Facebook is widely accepted in North America and Europe and is growing in popularity in other countries. But one issue that remains the same in every country is the networks privacy policy. Every country in the world has different privacy regulations that Facebook has to adjust to in order for the site to be successful in that country.
In July 2010, German data protection officials believed that some of Facebook’s privacy policies are illegal. Canadian authorities filed a similar lawsuit the preceding year. German official’s main concern was that Facebook was collecting information on nonmembers. Facebook is ranked as the fourth most popular social networking site in Germany, one of three countries in Europe where the site is not number one or two. McDonald’s has its own trade agreements to be aware of. The company has to know the certain exports that are allowed into a country.
McDonald’s has to be very aware of the agricultural trade barriers in other countries. In Costa Rica and Thailand have strict duties on French fries. India has high barriers on pasta and Canada, along with many other countries, strongly controls all cheese imports. China does allow foreign exports but from mostly accepts cotton and soybeans from the US. China hasn’t allowed beef imports from the US for years, in 2010 the two countries reached a new agreement with some modifications. China will allow American beef imports from animals no older than the age of thirty months.
Facebook is another company that would like to be successful in many other countries; it is not an easy process. In 2009, Mark Zuckerberg went to China to learn more about the market in which he wished to get the Facebook site started. At that time the site only had 14,000 active users in the country. Zuckerberg is hoping to get the site started with the correct partnerships. He believes he cannot connect the world without the Chinese population. Chinese authorities didn’t say why the networking site is blocked but along with YouTube when user try to access the site they receive and error message.
Zuckerberg said the company is willing to censor the openness of the site in certain markets. Many countries ban the social networking site because of the religious content or other historical reasons, for example Germany has made restrictions on Nazi Content. Muslim nations block many sites because they are against the religion. McDonald’s food around the global tends to have very different products. In Japan the McDonald’s serve French fries with a seaweed flavoring. The restaurant also features a Teriyaki McBurger and a Chicken Tatsuta Burger which is a grilled chicken breast marinated in a ginger-soy-mayo sauce.
In Singapore there is a Love Burger, which is a grilled chicken tender drenched in a honey mustard sauce and topped with lettuce and tomatoes. There is also a McPepper burger on the menu that consists of two beef patties basted in a black pepper sauce and topped with onions. You could also try a McTowkay burger well an egg and beef patty perfectly marinated in their special towkay sauce with a mix of lettuce and mayonnaise on a sesame bun. In Sweden instead of a drive thru window McDonald’s came up with a McSki for a Ski-thru service so skiers don’t have to miss out on the slopes by going inside.
There is also a Kiwiburger in New Zealand that is a hamburger with fried egg and a slice of beet or in Thailand you can find a Samurai Pork burger that is marinated in teriyaki sauce, the list is endless. Trade agreements are an important part of the world economy. They protect a country’s government decisions without the agreements companies could start up everywhere and a government might not enjoy that, whether the agreements are dealing with food or an internet website governments like to have control. This is a satellite picture of the Facebook connections in the world. Most of the users are found in America and Europe. .
