The impacts of the U.S.–China trade war

Business Economics - The trade war has received an enormous amount of attention. Its impacts today have been limited because the U.S. and China have been a bit restrained. Lots of firms have gotten...     

Adequacy versus equivalency: Financial data protection and the U.S.–EU divide

In 1995, the European Union passed Directive 95/46/EC, which set the legal framework for European Union citizens to own the rights to their personal data. However, American law bestows ownership to the holder of the data, not the individual, and officials feared the European Union initiative might disrupt data sharing among United States and European Union affiliates. Thus, they negotiated the 2000 Safe Harbor Agreement to allow companies to voluntarily submit to yearly certifications that fulfilled European Union demands, but kept U.S. businesses in control of their data; nevertheless, the Agreement does not include financial and banking services. Instead, the United States argued that the privacy protections within the Gramm-Leach-Bliley Act adequately fulfilled European Union guidelines. The European Union disagreed and financial data sharing has operated under a moratorium for the past decade. However, the 2008 financial crisis has governments and clients clamouring for more data transparency to determine risk in the financial system. These global efforts, the European Union's recent push to strengthen the Directive, and the Dodd-Frank Act have pushed data sharing to the policy forefront. This article asserts that transatlantic data sharing will ultimately have to accommodate the privacy cultures in both the United States and the European Union, but firms must be prepared to cope with demands on their data by establishing government relations offices, standardizing information systems, enhancing education for compliance officers, and improving business school curricula.     

Modeling the employment–oil price nexus: A non-linear cointegration analysis for the U.S. market

ABSTRACT

Theoretically, fluctuations in oil prices are expected to affect production costs and may force businesses to delay their investment decisions, triggering pressures on employment. Following these theoretical notions, this paper investigates the asymmetric impact of oil prices on employment (measured as total employment, male employment, and female employment), in a nonlinear cointegration structure for the U.S. market. In doing so, this paper adopts the nonlinear autoregressive distributed lags (NARDL) model to shed light on such asymmetric association, as the NARDL model recently emerged as a new direction in examining nonlinear cointegration and asymmetry. The empirical findings document a long-run asymmetric effect in case of total employment and male employment only. Furthermore, the short-run asymmetric effect was detected for all three employment categories. As a final point, the Granger Causality test documents a unidirectional causality running from oil price decrease to both total employment and male employment.     

The Accounting Standards Setting Process in the U.S.: Examination of the SEC–FASB Relationship

In the U.S. there is a close relationship between the Securities and Exchange Commission (SEC), a governmental agency legally responsible for setting accounting standards, and the Financial Accounting Standards Board (FASB), a private sector body to whom the SEC has delegated this responsibility. In this paper we examine the influence of the SEC on the FASB as evidenced by all major statements issued by the FASB. Minor statements, amendments, and strictly technical pronouncements were omitted because of their limited exposure to the political process. Our analysis reveals that the SEC applied substantial pressure on the FASB in the standard setting process and has not adopted a position of benign neglect.     

Rethinking guanxi and performance: Understanding the dark side of Sino–U.S. business relationships

Previous studies on guanxi (關係) have focused on how guanxi contributes positively to business relationships, without addressing the pivotal role that guanxi plays in managing the dark-side of business relationships. To address this knowledge gap, this study specifically investigates guanxi’s influence on conflict, opportunism, and switching intention in Sino–U.S. business relationships and examines how guanxi mediate the positive effect of performance as well as the negative effect of uncertainty on such dark-side constructs. Drawing on data from over 270 Chinese firms, the findings reveal that guanxi is undermined by relationship uncertainty but enhanced by performance, guanxi also reduces the dark-side of Sino-US business relationships. Chinese buyers’ guanxi with U.S. suppliers significantly lessens their switching intention, opportunistic behavior, and the perceived levels of conflict in Sino-US relationships. The findings explain how guanxi is employed as a tool to reduce the burden associated with the dark-side of business relationships and give relevant implications.     

Firm-specific assets and the internationalization–performance relationship in the U.S. movie studio industry

We study the role that firm-specific assets (FSAs) play in the processes underlying the internationalization–performance relationship. International business scholars have begun studying the interrelationship between FSAs, internationalization, and performance; however, this research is still emergent, and has produced inconclusive results. We believe that this may be due, in part, to research designs involving the same FSAs across many industries, even though individual industries may rely on different FSAs in their internationalization strategies. We address this issue in a single industry study of U.S. movie studios, which typically rely on blockbuster production capabilities as FSAs in their internationalization efforts. We show how these FSAs co-evolve with firms’ degree of internationalization, and how each factor mediates the positive effect of the other on performance. Our results highlight the importance of studying specific industries and their salient FSAs when assessing their role of such resources in the internationalization–performance relationship.     

Perceptions of Offensive Advertising Elements: A China–U.S. Comparison

ABSTRACT

As China continues to rapidly expand and further open itself to market forces, the People's Republic arouses significant interest as a new mega-market. Consequently, the influx of new business opportunities and advertising has resulted in Chinese consumers increasingly exposed to potentially offensive advertising. While some products and images may seem acceptable when advertised in the West, there are some that may offend Chinese cultural sensitivities. The purpose of this study is to better understand similarities and differences that exist between American and Chinese perceptions surrounding offensive advertising. The results highlight a number of statistical cultural differences that have business implications for international marketers.     

Evasion behaviors of exporters and importers: Evidence from the U.S.–China trade data discrepancy

Since the late 1990s, reported U.S. imports from China and Hong Kong have regularly and increasingly exceeded reported exports of China and Hong Kong to the United States. This discrepancy, which is not caused by re-exporting through Hong Kong, varies by product categories, and in some cases takes the opposite sign. In this paper, we focus on China's direct exports to the United States. Using a model that allows for simultaneous misreporting to two authorities, we find strong statistical evidence of under-reporting exports at the Chinese border to avoid paying value-added tax (VAT). The value of VAT avoided is estimated at $6.5 billion during 2002–2008, and the associated understatements account for approximately two-thirds of the discrepancy. We also provide evidence of tariff evasion at the U.S. border, in particular for related-party transactions, and indirect evidence of transfer pricing and evasion of Chinese capital controls. An estimated $2 billion of U.S. tariff revenue is lost due to such evasion during 2002–2008, which reduces the apparent size of the statistical discrepancy.     

EXPLAINING ASYMMETRY IN THE U.S. MERCHANDISE AND SERVICE ACCOUNT BALANCE: Does the Service Sector Hold the Key to the U.S. Current Account Woes?

The U.S. economy has experienced two noteworthy structural changes in recent years. Externally, there has been a growing deficit in the merchandise account along with a simultaneously rising service account surplus. And domestically, the GDP share of the service sectors has been growing at a faster rate relative to the goods sectors. The objective of this article is to test the proposition that much of the asymmetry in the relative performance of the merchandise and the service accounts can be explained (1) in terms of income and price elasticity differentials and (2) in terms of relative growth of the service sectors. Results from estimated import and export demand functions for merchandise and service trades and from sectoral analysis of the U.S. economy seem to support the above proposition. The main policy implications are that: (1) domestically, the United States should facilitate current sectoral transformation by eliminating market distortions and rigidities and (2) externally, it should expand on the initiatives taken during the Uruguay Round and drive the WTO toward a full liberalization of trade in services.     

ICBC to Open Subsidiary Bank in the U.S.

The Industrial and Commercial Bank of China (ICBC) has planned to open a subsidiary in the United States, as part of its going-global strategy which also involves Russia,Australia and the Middle East,Board Chairman Jiang Jianqing said on October 17.     

Advertising the U.S. National Organic Standard: A Well-Intentioned Cue Lost in the Shuffle?

The 2002 implementation of the National Organic standard and development of the USDA organic seal gave food advertisers a new tool with which to communicate food characteristics to consumers. Based principally on farm and manufacturing practices, the standard offers consumers an expansion of their food choices. Parents of young children have been shown to have particular interest in organic food. Using parent-targeted magazine-based food ads, this paper explores how organic has been promoted, how its advertising strategy compares to that for conventional foods, and whether organic food has been appropriately differentiated from conventional foods such that the USDA organic seal carries a significant and unique meaning to both consumers and the food industry. The content analysis shows that the period following the implementation of the National Organic Program exhibits a general upward trend in usage of health-related cues but minimal increase in use of terms associated with the “organic” ideal. A direct comparison of organic and non-organic food ads shows that there has been little leakage of terminology related to “organic” into mainstream food advertising strategy. Most importantly, we find that “organic” is intermixed with health cues, contributing to the often-found consumer perception that “organic” means “healthier,” and suggesting that the goals of the NOP to offer consumers a clear definition and a way to reduce confusion have not been met in advertising strategy.     

Colombian consumers’ outshopping of apparel in the U.S.

Outshopping is defined as purchasing goods outside of consumers’ trading areas. Despite threatening local economies, outshopping generates opportunities for the new trading areas in which it occurs. Studies on outshopping have reported contradictory results and academics suggest further research, especially in relation to consumers’ micro-level characteristics. Moreover, few studies have focused on the U.S. as the trading area and apparel as the traded product. Based on the theory of reasoned action, this quantitative study explores how attitudes toward international outshopping and subjective norm influence purchase intention of apparel goods among international outshoppers in the U.S. by focusing on four characteristics of international outshoppers – self-control in terms of spending, the desire for unique products, age, and gender – as antecedents of attitudes toward outshopping. Colombian consumers (South America) were chosen as respondents because market reports indicate that the U.S. is their top favorite international tourist destination. Findings suggest that more positive attitudes toward outshopping apparel in the U.S. were found among female consumers with higher self-control over their expenditures. Respondents were also influenced by the opinion of others; while age and desire for unique products were found non-significant. By understanding international outshoppers, marketers can develop unique market strategies for attracting global consumers.     

The U.S. immigration debate: what’s all the shouting for?

Potential GDP growth has slowed by 1.3% a year. The main culprit is labor force decline. It follows logically that a more welcoming immigration policy would be responsive to our demographic challenges and thereby complementary to macroeconomic growth. Ironically, anger at immigration has grown in inverse proportion to actual immigration flows. There is little evidence that immigrants have negative impacts on the wages of native-born workers, and increased immigration would likely have a net positive fiscal impact. Based on these economic considerations, the U.S. immigration debate seems driven by much more heat than light.     

The impact of a U.S.–U.K. free trade agreement on workers: a CGE model with worker displacement

Business Economics - On May 5, 2020, the U.S. Trade Representative announced plans to negotiate a free trade agreement with the United Kingdom (USUKFTA). We use GTAP to model the economic...     

Correction to: The impact of a U.S.–U.K. free trade agreement on workers: a CGE model with worker displacement

Business Economics -     

U.S.to Continue Tightening Trade Policy on China——A review of the establishment of the U.S.Interagency Trade Enforcement Center

U.S.President Barack Obama signed an executive order on February 28,2012 to set up Interagency Trade Enforcement Center (ITEC) in a bid to coordinate with U.S.trade rights,and domestic trade laws enforcement matters.This can be seen as a more tightening protectionism sign for U.S.bilateral trade relation especially with China.As stated in the executive order,the purpose of the Center is to advance U.S.foreign policy and protect the national and economic security of the United States through strengthened and coordinated enforcement of U.S.trade right under international trade agreement and enforcement of domestic trade laws.