Legal Aspects of International Trade and Enterprise

This study material from Desklib covers the legislative regulatory framework in Australia and the impact of treaties, conventions and agreements on products and services of Visa Inc. The article discusses the policies implemented by the Australian government to ensure ethical operations of corporations in the country, including taxation policies, the Fair Work Act 2009, the Competition and Consumer Act 2010, the Corporations Act 2001 (Cth), and the Fair Trading Act 1992. The article also explains how treaties, conventions, and agreements formed between nations create new business opportunities for multinational companies like Visa Inc. to expand their operations in overseas markets.

Legal Aspects of International Trade and
Enterprise
Total Word Count: 1944 words

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Question 1
Visa Inc.
Visa Inc. was founded in 1958 as BankAmericard, and it is an American organisation which
operates in the financial services industry (Visa, 2018). Since its incorporation, the
enterprise has expanded its operations in different locations of the world, and it offers the
facility of electronic fund transfer through its credit cards, debit cards, and gift cards,
however, the company did not operate in China. The services of the company are available
across the globe. Currently, the organisation is the world’s second-largest card payment
company in terms of card payment transactions and number of issued cards (Forbes,
2018a). The corporation has gained a positive brand image worldwide because it is known
for its e and reliable financial services which are available globally. The headquarters of the
enterprise is situated in Foster City, California, United States. The company has hired more
than 15,000 employees globally (Forbes, 2018b). The company has not disclosed the
information about an exact number of employees in Australia.
Total word count: 164 words

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Question 2
The legislative regulatory framework in Australia
The government of Australia is responsible for taking appropriate legal measures in the
country in order to establish a legal framework which is suitable for the economic growth of
the country. The objective of the policies implemented by the government is to ensure that
corporations are ethically operating in the country. The government focuses on ensuring
that the multinational corporations which establish their operation in Australia to offer their
products and services to Australian citizens comply with these policies. The purpose of the
regulatory framework is to ensure the safety of customers is maintained, and corporations
which offer their products maintain a high level of standard regarding protecting the
interest of customers (RBA, 2018). The Australian government is strict when it comes to the
imposition of these regulations, and the government imposes heavy penalties on
corporations which breach these policies. On the other hand, multinational corporations
contribute to the economy of Australia; therefore, the government also promotes their
operations by making changes in their regulatory policies. Visa Inc. has to comply with the
taxation policies in Australia while offering its services in the country. The implementation
of taxation policies is important in Australia since the tax collected from multinational
enterprises contributes to the overall GDP of the country which is invested by the
government in projects to develop the country and improve the lifestyle of its citizens (Bell
and Hindmoor, 2014).
The revenue generated by Visa Inc. is liable for tax at a rate of 30 percent, however, this rate
is not fixed, and the government has the power to change this rate in order to collect more
or less tax from companies (AOH, 2018). Visa Inc. operates in the financial services industry,
and it offers finance related services to its customers situated in Australia. As per the
taxation policy of Australia, the company is subject to the Goods and Services Tax as well.
The government imposes GST on all territories in Australia based on which Visa Inc. has to
pay GST on its services at 10 percent. Just as the corporate tax rate, the government has the
power to change the GST rate as well in order to collect more or less tax from the
enterprises. Furthermore, the Australian government is serious about the rights of

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employees who work in multinational corporations because they have an image to exploit
workers for their own benefits. Thus, in order to stop unfair treatment with employees, the
Australian government has imposed the Fair Work Act 2009 (Read and Dealing, 2013). This
act is established by the government to stop enterprises from treating their employees like
machines and provides them right to claim compensation from their employer.
The act provides various rights to employees which Visa Inc. has to ensure while hiring
employees in Australia. The act provides provisions regarding various factors such as
overtime pay, minimum wage, working hours, safety policies at the workplace and others
which Visa Inc. has to comply with (McCrystal, 2012). The corporations which did comply
with these policies have to pay compensation to their employees, and the court can also
impose penalties on them. Another key regulation which has given importance in Australia
is the Competition and Consumer Act 2010. The act provides rules regarding the promotion
of competition in Australian markets while at the same time safeguarding the interest of
customers. Multinational enterprises are large in size, and they have the resources to deal
unfairly in the market in order to eliminate their competition to gain a monopoly in the
industry (See, 2015). They focus on entering into an agreement with other corporations so
that they can eliminate competition from the Australian market which is not good for the
economy of the country. Thus, in order to tackle this issue, the government has imposed
this act based on which multinational corporations cannot misuse their position. For
example, in 2015, Visa Inc. was charged by the Australian Competition and Consumer
Commission for breaching the policies of this act and engaging in anti-competitive conduct.
Visa Inc. formed an agreement with Dynamic Currency Conversion (DCC) to collect
substantial revenue from the provision of their service of currency conversion. Based on this
agreement, the company unfairly blocked its customers and forced them to use its services
in a certain way which resulted in increasing the revenue for the enterprise. Visa Inc. was
found guilty of breaching the regulations of this act by engaging in anti-competitive conduct;
therefore, the court imposed a penalty of $18 million on the company (ACCC, 2015).
Furthermore, Visa Inc. has to comply with the provisions given under the Corporations Act
2001 (Cth) which applies to all territories in Australia. The act includes various guidelines
regarding the preparation of necessary documents and continuous disclosure requirements
which Visa Inc. has to comply with while operating in Australia. The company also has to

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ensure that it fulfills the regulations imposed by the Fair Trading Act 1992. This act is
focused on eliminating any unfair trading activities in which corporations indulge in to gain
an unfair advantage (Austlii, 2018). Based on the policies of this treaty, Visa Inc. has to
ensure that it fairly deals with its suppliers and other services provides while keeping the
safety and the best interest of customers in mind. Thus, Visa Inc. has to ensure that it
complies with these guidelines imposed by the Australian government in order to avoid
facing penalties which resulted in reducing its profitability and brand image.
Total word count: 914 words

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Question 3
Impact of treaties, conventions and agreements products and services of
the company
The Australian government enters into a number of treading conventions and treaties with
other nations in order to build strong trade relationships with them. The main objective of
nations while forming these agreements is to ensure that they both get advantage from
such treaties. These treaties make the process of establishing and expanding operations in
other nations easier for enterprises. It resulted in increasing the export rates of an
enterprise. On the other hand, another country benefits from the trading practices as well
because a substantial amount of foreign currency is coming to the country which supports it
economic growth. Based on these agreements, the governments decide to reduce the
number of legal regulations and frameworks which corporations have to follow while
expanding their operations in overseas markets. Furthermore, they also give them financial
support by removing tariff, excise duty, registration fees, and other charges which
companies have to pay otherwise (DFAT, 2018). It encourages corporations to expand their
operations in new markets to exploit their opportunities. It also increases the customer base
of companies which positive influence its profitability. Similarly, the treaties which are
formed by the Australian government with other nations resulted in benefiting or creating
challenges for Visa Inc. while operating in Australia.
Firstly, the revenue which is generated by Visa Inc. is sent back to the headquarters of the
company. The company invests such money in global expansion and achieving its corporate
objectives. Thus, the treaty signed between the United States and Australian government
regarding avoidance of double taxation is beneficial for Visa Inc. The treaty removes the
provision of imposing a double tax on the income of multinational corporations while they
are sending back their revenue to their domestic country (US Taxes, 2018). Therefore, Visa
Inc. is able to save money on taxes while transferring the profits of the company back to its
home country which assists it in improving the services which it offers by expanding them
across the globe. Another key treaty which creates new business opportunities for Visa Inc.
is the free trade agreement which is formed between the United States and Australia. The

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agreement is titled AUSFTA or Australia United States Free Trade Agreement. This is a trade-
related treaty which is signed by both nations to promote trade relationships between them
(Lopert and Gleeson, 2013). As per the terms of this treaty, both nations remove the strict
and rigid legal frameworks which corporations have to comply with while they are
expanding their operation in either market.
The country reduces the number of regulations and standards which companies have to
meet in order to expand their operations in such countries. It encourages multinational
enterprises such as Visa Inc. to reach a wider audience by expanding their operations in
overseas markets. Moreover, the treaty reduces excise duty, tariff and other charges which
corporations have to pay which resulted in reducing their profitability (Armstrong, 2015).
The objective of these terms is to increase trading practices between the two nations to
support the economy of both nations. As per this treaty, Visa Inc. is able to easily expand its
operations in Australia and offers various finance related services to its customers. The
treaty increased the customer base of the enterprise which resulted in increasing its
revenue generation ability. Visa Inc. also offers its services in New Zealand, and the strong
trading ties between Australia and New Zealand benefits the company by expanding its
operations in both nations. Closer Economic Relations (CER) is a treaty which is signed by
the governments of both nations. The agreement is a free trade agreement, and its
objective is to promote trade practices between the two countries in order to support their
economic development (Kehoe and Ruhl, 2013). The objective of this treaty is to remove
trade restrictions between both countries to increase the flow of foreign currency in order
to support the economy of both nations. Due to this treaty, Visa Inc. is able to seamlessly
offer its services in both nations which build its customer base.
The company has generated a competitive advantage due to the ease of availability of its
services. Thus, based on this treaty, the company is able to deliver high-quality services to
its customers who reside in both Australia and New Zealand. AANZFTA or ASEAN Australia
New Zealand Free Trade Agreement is another treaty which is formed between the two
nations. This treaty is also relating to increasing the trade relationship between the two
nations with an objective to build strong ties which support the economy of both countries
(Tseuoa, Syaukat, and Hakim, 2012). Due to this treaty, Visa Inc. is able to ensure that it
offers effective financial services to its customers without delaying their online payments.

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The treaty increases the efficiency in the operations of Visa Inc. due to which the company is
able to generate a competitive advantage in the market which is crucial for its success.
Therefore, the treaties, conventions, and agreements which are formed between two
nations create new business opportunities for multinational companies based on which they
are able to avoid legal restrictions and expand their operations in overseas markets.
Total word count: 866 words

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References
ACCC. (2015) Visa ordered to pay $18 million penalty for anti-competitive conduct following
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31/08/2018].
APH. (2018) Small business company tax rate changes. [Online] Available at:
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/
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31/08/2018].
Armstrong, S. (2015) The economic impact of the Australia–US free trade
agreement. Australian Journal of International Affairs, 69(5), pp.513-537.
Austlii. (2018) Fair Trading (Australian Consumer Law) Act 1992. [Online] Available at:
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Bell, S. and Hindmoor, A. (2014) The structural power of business and the power of ideas:
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Forbes. (2018a) AmEx Is Likely To Become The Second Largest U.S. Card Processing Company
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trade?. Journal of Political Economy, 121(2), pp.358-392.

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Lopert, R. and Gleeson, D. (2013) The high price of “free” trade: US trade agreements and
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