Legal Aspects of International Trade and Enterprise
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This report evaluates the legislative framework of Siemens AG, a German conglomerate corporation operating in healthcare, automation, energy, and infrastructure industry. It analyzes the impact of treaties, conventions, and agreements on the products and services of Siemens AG.
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0 Legal Aspects of International Trade and Enterprise
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1 Executive Summary The purpose of this report is to evaluate the legislative framework of a multinational company.SiemensAGisselectedinthisreportwhichisaGermanconglomerate corporation that operates in healthcare, automation, energy and infrastructure industry. The number of employees of Siemens AG globally and in Australia are analysed in this report along with an evaluation of the legislativeregulatory framework that is imposed on the organisation. The impact of treaties, conventions and agreements on the products and services of Siemens AG is also analysed in this report.
2 Table of Contents Introduction of the Multinational Company............................................................................3 Legislative Regulatory Framework........................................................................................3 Treaties, Conventions and Agreements................................................................................5 References.............................................................................................................................8
3 Introduction of the Multinational Company SiemensAGisaGermany-basedmultinationalconglomeratecorporationthatwas founded in 1847 (Siemens, 2019). The company mainly offers its services in different industries such as healthcare, energy, infrastructure and cities. Currently, Siemens AG is the prominent maker of medical diagnostics equipment which is used by health divisions on a global stage (Reuters, 2019). The company is huge in the automation industry as well, and its automation division is the most profitable segment of the organisation. The headquarters of Siemens AG is situated in Berlin and Munich, Germany. On a global stage, there are over 377,000 employees that work for the company (Siemens, 2019). In Australia, the company has extensively expanded its operations in many areas. It is currently 594thranked company of the top 2000 corporations operating in Australia. In 2018, the corporation hired more than 1488 employees in order to handle its operations (IBIS World, 2018). Legislative Regulatory Framework In Australia, there are various policies that are implemented by the government in order to make sure that they are able to govern their operations. The objective of these laws is to make sure that companies did not misuse their positions in Australia to harm the interest of customers,employees,governmentor otherstakeholders(Lowetal.,2015).These regulatory compliances are applied to all multinational corporations, and they differ based on their industries. Since Siemens AG is a conglomerate, there are different areas of laws which apply to the operations of the company when it offers its services in Australia. Through these policies, guidelines are provided for companies to make sure that they effectively comply with laws. Following are different elements of the legislative regulatory framework of Australia which are applied to the organisation. Corporations Act 2001 (Cth) In order to manage its day-to-day operations, the company has to comply with the provisions given under the Corporations Act. This is a relevant act that provides provisions that apply to companies operating in the country. Under this act, provisions are given for the company regarding reporting requirements which are mandatory to be followed. As per these policies, the company has to report regarding its operations to the Australian Securities and Investments Commission (ASIC) (Bae Choi, Lee and Psaros, 2013). The
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4 ASIC looks into the operations of the company to make sure that it did not violate any laws.VariousrightsarerecognisedfortheASICunderwhichitcanconductan investigation into the operations of Siemens AG to make sure that the company did not engage in any illegal or unethical practices. The Corporations Act also provides provisions regarding mandatory meetings which the directors of Siemens AG have to conduct. Competition and Consumer Act 2010 (Cth) TheAustralianGovernmenthasimposedvariousprovisionsforthepromotionof competition in the country. Laws are also put in place to make sure that the rights of customersareprotectedwhencompaniesconducttheirbusinessoperations.The provisions regarding competition law are given under the first schedule of this act. As per these laws, Siemens AG cannot prohibit its suppliers from engaging with other businesses inordertogainanunfairadvantageinthemarket.Variousprovisionsarealso implemented to make sure that the company is able to effectively engage with other competitors that operate in the industry (Nagarajan, 2013).Thus, Siemens AG cannot engage in any contracts that create a monopoly of the company in the market since it adversely affects the economic growth of the country. The second schedule provides a range of policies regarding the protection of consumer rights. These are also referred as the Australian Consumer Law (ACL). As per these laws, Siemens AG has to make sure that it takes corrective measures that are focused on protecting the rights of customers. For instance, the provisions for the protection of customers from false and misleading claims regarding products and services of the company are given under section 18 of the act. Employment Laws SinceSiemens AG has hiredemployees in Australiatomanageits operations, the company has to make sure that it protects their rights. Various employment law provisions are implemented by the Australian government to make sure that companies did not violate the interest and rights of their employees. The provisions regarding employment laws are given under the Fair Work Act 2009 (Cth). Various general guidelines are given under this act to make sure that the company did not adversely affect the interest of the company. A good example is the guidelines given for the company regarding maximum working hours for employees (Bray and Stewart, 2013). In Australia, companies cannot enforce workers to work for more than 38 hours in a week. Since many of the operations of Siemens AG requires its employees to work for long working hours, the company has to
5 form a contractual relationship with its employees to make sure that they work for long hours. Furthermore, the corporation cannot hire employees below the minimum pay wage which is decided by the government. The government also increases this minimum wage, and Siemens AG also has to give increased minimum wage to its employees. Employees receive additional pay for the hours for which they work in the company above 38 hours in aweek(BrayandStewart,2013).SiemensAGcannotpaythesamewagetoits employees for the additional hours since they have the right to receive additional payment for their work. Fair Trading Act 1992 (Cth) The Australian government has also implement provisions for companies such as Siemens AG to make sure that they did not engage in any practices that could harm the economic growth or the interest of local communities. In this regards, provisions are given under the Fair Trading Act. As per these laws, prohibitions are imposed on Siemens AG to make sure that the company did not unfair trade in the Australian market by engaging in illegal or unethical contacts with its suppliers or business partners (Graw, 2012). The company also has to make sure that it fairly deals with its employees by providing them adequate health and safety facilities to protect their interest. Treaties, Conventions and Agreements Since there are many countries in which Siemens AG operates, the treaties, conventions and agreements that are formed between these nations affect its products and services. There are a number of treaties, conventions and agreements in which the Australian government has entered, and they made it easier for Siemens AG to expand its operations in the overseas markets (Gardiner, 2015). The profitability of the organisation is affected by these factors since it becomes easier and beneficial for the organisation to reach a new customer base which is situated in foreign countries. Various guidelines and provisions are also implemented on the organisations when they conduct their operations in the overseas markets. Therefore, effective compliance with them is crucial for the organisation to make sure that it is able to reach out to its customers. Double Taxation Treaty between Australia and Germany In 2016, both nations formed a treaty with each other in order to address the issue of double taxation. In this treaty, the government of Australia and the Federal Republic of Germany has eliminated the imposition of double tax on the companies which operates in
6 both nations. As per this treaty, the tax which was imposed on the income and capital of companieshasbeenremoved(EY,2016).Furthermore,stricterprovisionsare implemented that made it difficult for companies to avoid paying tax to the government. Since Siemens AG is a Germany based organisation, the company has benefited from this treaty. This treaty has opened new business growth opportunities for the organisation by making it easier for the company to easily expand its operations in both markets. This treaty affects the products and services of the company as well. Siemens AG is able to offer its services to its customers situated in Australia without hiking its prices due to the avoidance of double taxation (EY, 2016). The removal of this tax means that the income which the company sent back to its headquarters in Berlin is not taxed by the Federal Republic of Germany. This makes it easier for the organisation to easily offer its services to the customers without facing difficulties that lead to expand of its operations and growth in its profitability which is important for the company to sustain its future growth. Australia – United States Free Trade Agreement (AUSFTA) A major market for Siemens AG is the United States and treaties that are formed between Australia and the United States benefit the company as well. Both of these nations have formed a Free Trade Agreement (FTA). The purpose of this FTA is to promote trading practices between the two countries. The government achieve this objective by removal of unnecessary legal compliances that are imposed on companies (Thurbon, 2015). Under this treaty, the taxes and other provisions which are imposed on the organisation are also removed. Due to these factors, Siemens AG is able to effectively conduct its operations in both markets without facing any hiccups. This treaty affects the products and services which the company offers to its customers because it enables it to reduce their prices since it did not have to pay fees, charges or duties which are usually imposed by foreign governments. The quality of its products and services remains the same as well. These factors contribute to the overall growth of Siemens AG and enable the company to sustain its growth in the market. China-Australia Free Trade Agreement (ChAFTA) China is a major market for Siemens AG as well. The positive relationships that are constructed between the government of Australia and China lead to benefiting Siemens AG as well. Australia is one of a few countries that have a positive trading relationship with Chine and Siemens AG is able to take advantage of this fact. The company is able to effectively expand its operations in China from Australia which saves its costs, and it also
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7 removes the obligation which is otherwise imposed on the company to comply with the lengthy legislative framework implemented by the Chinese Government (Xiang, Kuang and Li, 2017). Due to the removal of these factors, the products and services of Siemens AG are offered at the same prices to its clients since both governments have also removed the imposition of duties, fees and charges on foreign companies. Siemens AG is able to take advantage of this fact, and the company is able to effectively expand its operations in the Chinese market. ASEAN-Australia-New Zealand FTA (AANZFTA) Siemens AG has also established its operations in the New Zealand market and treaties between Australia and New Zealand benefit the company. Since there are positive trading ties between Australia and New Zealand, Siemens AG is able to expand its operations in both markets. Through AANZFTA, both governments have established free trade areas, and companies operating in these areas are free from legislative framework which is otherwise imposed on them (Tseuoa, Syaukat and Hakim, 2012). Along with legislative policies, the government has also removed various duties, fees and charges which are imposed on the company. Due to the removal of these elements, the prices of Siemens AG remains the same since the company is not subject to additional fees or legislative duties which increases the profitability of the company and expands its markets.
8 References Bae Choi, B., Lee, D. and Psaros, J. (2013) An analysis of Australian company carbon emission disclosures.Pacific Accounting Review,25(1), pp.58-79. Bray, M. and Stewart, A. (2013) From the arbitration system to the Fair Work Act: the changing approach in Australia to voice and representation at work.Adel. L. Rev.,34, p.21. EY. (2016)New Australia-Germany Tax Treaty enters into force - EY – Global. [Online] Availableat:https://www.ey.com/gl/en/services/tax/international-tax/alert--new-australia- germany-tax-treaty-enters-into-force [Accessed on 01/04/2019]. Gardiner, R.K. (2015)Treaty interpretation. Oxford: Oxford University Press. Graw, S. (2012)An introduction to the law of contract. Toronto: Thomson Reuters. IBIS World. (2018)Siemens Ltd - Premium Company Report Australia. [Online] Available at:https://www.ibisworld.com.au/australian-company-research-reports/manufacturing/ siemens-ltd-company.html [Accessed on 01/04/2019]. Low, D.E., Alderson, D., Cecconello, I., Chang, A.C., Darling, G.E., D'journo, X.B., Griffin, S.M., Hölscher, A.H., Hofstetter, W.L., Jobe, B.A. and Kitagawa, Y. (2015) International consensusonstandardizationofdatacollectionforcomplicationsassociatedwith esophagectomy.Annals of surgery,262(2), pp.286-294. Nagarajan, V. (2013) The Paradox of Australian Competition Policy: Contextualizing the Coexistence of Economic Efficiency and Public Benefit.World Competition,36(1), pp.133- 163. Reuters.(2019)SiemensAG(SIEGn.DE).[Online]Availableat: https://in.reuters.com/finance/stocks/company-profile/SIEGn.DE[Accessedon 01/04/2019]. Siemens.(2019)SiemensataGlance.[Online]Availableat: https://new.siemens.com/global/en/company/investor-relations/at-a-glance.html [Accessed on 01/04/2019]. Thurbon, E. (2015) 10 years after the Australia-US free trade agreement: where to for Australia’s trade policy?.Australian Journal of International Affairs,69(5), pp.463-467.
9 Tseuoa, T., Syaukat, Y. and Hakim, D.B. (2012) The impact of Australia and New Zealand Free Trade Agreement on the beef industry in Indonesia.Journal of ISSAAS,18(2), pp.70- 82. Xiang, H., Kuang, Y. and Li, C. (2017) Impact of the China–Australia FTA on global coal production and trade.Journal of Policy Modeling,39(1), pp.65-78.