Legal Aspects of International Trade and Enterprises

This study material from Desklib discusses the legislative framework and treaties affecting Procter & Gamble, a multinational company in Australia. It covers topics such as exchange rate controls, corporate tax rates, compliance programs, and treaties such as non-compete agreements and offer and consideration agreements. The article also explains the effects of these treaties on the provision of goods and services in the company. Subject: International Trade and Enterprises

Legal aspects of international trade and enterprises.
Legal aspects of international trade and enterprises.
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Legal aspects of international trade and enterprises.
1. Description of Procter and Gamble Multi-National Company.
Procter and Gamble is a multi-national company that deals with consumer goods. The
company offers Skin as well as personal care products under different brands such as Olay,
Safeguard, and Old spice among others. Formed back in 1837 by a British American business
man called William Procter and an Irish American business man called James Gamble
(Azman, Baharumshah, Law, 2010 p.67).They believed in the dream they had of wanting to
find small yet meaningful ways of changing and improving people’s lives. , and formed this
company, it started as a very Procter and Gamble company has invested so much in human
resources, they believe that one of the reasons that they have made it so far is because of their
well trained staff and personnel. By 2017, a report showed that Procter and Gamble had a
total of 95 thousand employees worldwide and in Australia they had 157 employees
(Beamish, 2013 p.75).The global headquarters of Procter and Gamble are located in
downtown Cincinnati, Ohio in America.
2. Legislative framework of the company.
There are certain legislative and regulatory frameworks that affect all multi-national
companies operating in Australia. The Australian government recognizes the need for a
regulatory framework that will keep pace and act as a watch dog to all Multi-national
companies operating in Australia. Procter & Gamble being a multi-national company based
in Australia is affected by some of these regulatory frameworks (Boddewyn, 2015 p.65)
Below is a discussion on some of the legislative frameworks that affect Procter & Gamble
Company.

Legal aspects of international trade and enterprises.
Exchange rate controls in Australia have been abolished. The major bank in Australia; the
reserve bank of Australia took the initiative of suspending almost all of the foreign exchange
programs in Australia (Briscoe,Tarique,Schuler,2012 p.42).This has really affected Procter &
Gamble Company and its operations. Exchange rate needs to be controlled, when they are
controlled then they can result to some serious financial and economic consequences. Despite
the many sales that Procter & Gamble company are making from the sale of its consumer
goods, the profit that they are making would not match the one they would make if the
government of Australia had decided to control the exchange rates.
The other regulation framework that affects Procter & Gamble Company is the Australia’s
corporate tax rate of 30%. When compared to other economies, this tax rate is very
competitive and even way much higher (Brownlie & Crawford,2012 p.213).A lot of money is
deducted as tax out of the total money that the company makes from the sales of its various
types of consumer goods. This has made Procter & Gamble Company not to make any
considerable amount of profit. This corporate tax rate is very high. Australia is does not have
a well-developed economy, the 30% corporate tax rate is therefore overrated, countries with
developed economies such as Japan, Chin, United States, France, Germany among others are
some of the countries that can impose the 30% corporate tax rate.
Australia is among one of the countries in the world that has a very strong but enduring
traditional democracy. Australia is a country that the rule of law and the entire necessary
regulatory framework prevails (Dabbah, 2010 p.342).For instance Procter & Gamble
Company has to fully abide by the Foreign Corrupt Practices Act compliance program. The
company signs and commits not to engage in any corrupt and unwanted dealings in Australia.
Failure to the compliance with this program then the appropriate action will be taken against
the company. In the case where the authorities in charge get to know or get some piece of

Legal aspects of international trade and enterprises.
tangible evidence that the company is engaging is corrupt dealings, then all its operations
would be shut down and the appropriate action taken which will first be determined by
carrying out an investigation to determine the credibility of the provided information.
The legal system that exists in Australia is very different from the one that is America. In
Australia the legal system is totally not under any circumstance immune to political pressure
when situations have arisen and one is trying as much as possible to resolve business disputes
and misunderstandings that might have occurred as a result of different reasons. This is
among one of the factors that greatly affects Procter & Gamble Company (Buckley &
Casson, 2016 p.90).
Government’s subsidies, anti-dumping rules in Australia greatly affect the overall operations
of Procter & Gamble Company. In Australia there are certain rules regarding damping and
disposal of wastes. Procter & Gamble Company therefore have to adhere to these rules. A
violation of any of these rules or a section of these rules will result to serious consequences.
The issue of countervailing and some serious trade remedies. These rules must follow to the
later by the company.
Apart from the Australian government, there is the World Trade Organization that is specially
formed and designed to enhance various trade opportunities to multi-national companies such
as Procter & Gamble (Buckley & Casson, 2016 p.150).This organization has some effect on
the operations of multi-national company. It is tasked with the activity of monitoring
international trade. It has the ability of influencing some very crucial terms of trade that can
be implemented in a certain country. It does not have total control, it just have an ability to
influence the direction that the laws and regulations will take. Being under the surveillance
and also guidance of the World Trade organization, Procter & Gamble companies operations

Legal aspects of international trade and enterprises.
are tied. They have to abide the some of the rules and regulations that the body sets. Failure
to abiding by these rules and regulations then there would be some serious consequences such
as the denial of trading rights in certain countries.
Respect for human life. Being a multi-national company, Procter & Gamble has the task to
ensure that it understands the rights of citizens in all the various companies it has branches in.
In Australia, there are totally different laws regarding human right compared to United States.
(Dolzer & Schreuer, 2012 p.213).This issue has really affected Procter & Gamble Company.
Instead of spending their time doing some valuable staff that can be beneficial to the
company, it has to spare some of this time and try to understand the rights of this company so
that they can avoid violating any of its employee’s rights.
Finally, public policy abroad is very different, not just being different, there are certain
countries abroad that are very keen and observant in ensuring that their public policies are not
looked down upon.
3. Treaties, conventions or agreements in the company.
Generally the business environment is surrounded by the agreements (Dunning, 2013
p.50). In Procter and Gamble Company most of its operation in different countries is
controlled by the agreements. These agreements are formulated in order to ensure the
company obeys to the rules and regulations which assists in achieving the company’s goals
and objectives. Treaties are mostly written documents which describes what the company
will be doing in the market and how the workings of the company should abide to the rules
and regulations of the country. The Procter and Gamble Limited Company is involved with
various treaties. Most of these treaties regulates the function of the company in the market.
Also treaties safeguards the properties of an organization in market (Dunning, 2013 p.100).

Legal aspects of international trade and enterprises.
Treaties vary depending on legal agreement of the business and also the laws of a certain
country. Procter and Gamble limited company has been involved in agreements such as;
Non –compete agreements.
This is an agreement that the company has signed to regulate competition in the
market. The treaty is signed by the companies in the market to prohibit the individuals or
other companies from manufacturing goods of similar type (Johnson & Turner,2010 p.200).It
is the agreement that ensures no monopoly in business. Procter and Gambler Company
indulges in this agreement so as to prevent new companies from coming with an idea of
designing similar products. Therefore each company is required to offer unique products to
the marketplace.
Formation treaties.
It is the agreement based on the aspect of performance and formation. When the
company is investing in new areas then it required to sign the formation document (Ruigrok
& Van, 2013 p.50).The Procter and Gambler Company adheres and pledges to abide in this
agreement. Also this agreement requires the company to meet its obligation. This is to mean
that if the agrees to provide a product to the customer then it must supply the goods without
delay and following the terms agreed.
Competency and mutuality agreements.
In business all parties should enter in an agreement which includes legal capacity to
run a business. The company agrees not to take advantages over the minorities in the country.
On part of mutuality agreement the company agrees to perform its duties following the apt

Legal aspects of international trade and enterprises.
measures. This mutuality agreement demands cancellation of contract if either one party that
is the company and the USA government disobeys terms and conditions agreed when signing.
Offer and consideration agreements.
Based on the offer Procter and Gamble company agrees to provide consumer goods to
the USA market with the exchange of money (Ruigrok & Van, 2013 p.80).The company
provides goods to the USA government then in exchange it gets money as agreed .On aspect
of acceptance it shows that both the USA government and company agrees to offer the
presented terms when performing the duties .This is based on the contract signed between the
USA and the Procter and Gamble limited Company.
Effects of the treaties to provision of goods and services in the company.
Basically agreements in business are important. Procter and Gambler limited
company participates in agreements so as to ensure there is uniformity and security when
selling consumer goods in the market (Schaffer,Agusti,Dhooge,Earle,2011 p.54).Agreements
helps Procter and Gambler Company in the following ways;
Agreements helps the company in fixing the cost of the resources. This is an agreement
which regulates on how the company agrees to sell the resources to other countries. The
company signs contacts which helps to sell goods for a specific price at a certain time in the
market.
Treaties serves as a proof for a details when selling products (Shenkar,Luo,Chi,2014
p.45).When the Procter and Gambler Company signs an agreement with another country then
it means that the company has been given the mandate to sell goods to the customers. By this

Legal aspects of international trade and enterprises.
the company will be able secure huge profits from the market. Company is required to
present the document in case of future crisis.
Agreements helps to prevent misunderstanding that may arise .This majorly needs the
company to go through the terms and conditions contained in the written document signed
during the agreement. Company will understand where to operate and which products it is
required to offer. By this the Procter and Gambler company is able to operate only on the
legal business and therefore escaping penalties that may be incurred when it negating from
the laws.
Treaties helps the company to avoid huge expenses when selling goods to the customer
(Sornarajah, 2017 p.43). Agreements serves as a reminder that’s the company is protected
from operating on other business which did not sign fro during an agreement. This helps
companies in selling products since there is only one line of production.
Agreements helps to reduce competition in market. The company by agreeing to terms of
non-compete agreements, it is able to incur huge profits from the market since no other
companies which offer same goods.
Agreements helps in ensuring there is effectiveness and efficiency in the company. The
vision of the Procter and Gamble Company is to ensure that there are no delays and every
customer in the market is served well (Subedi, 2016 p.90). Agreements starts within the
company whereby workers abides to laws and therefore ensuring there is responsibility and
accountability when producing goods. This reduces delays in the company hence leading to
customer satisfaction in market.
Conclusion.

Legal aspects of international trade and enterprises.
International trade is controlled by rules and regulation. The company adheres to
agreements so as to ensure there is no issues of illegal business in the market. Each
agreement and law is adhered by every party in the business (Wagner,2012 p.89).The core
part in international trade is on how enterprises are exercising what they have pledged for
during formation. Laws and agreements are there in business to ensure companies operates
with the stipulated procedures. This promotes fairness in the economy and therefore
eradicating illegal businesses in the economy. Also, agreement targets to reduce competition
in the market. This mostly hinders companies to produce similar goods thus ensuring
uniqueness in the marketplace.

Legal aspects of international trade and enterprises.
References.
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economic freedom and economic growth: International evidence. Economic Modelling, 27(5),
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business). Routledge.
Boddewyn, J.J., 2015. Political aspects of MNE theory. In The Eclectic Paradigm (pp. 85-
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Briscoe, D., Tarique, I. and Schuler, R., 2012. International human resource management:
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Brownlie, I. and Crawford, J., 2012. Brownlie's principles of public international law. Oxford
University Press.
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Dabbah, M.M., 2010. International and comparative competition law. Cambridge University
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Dolzer, R. and Schreuer, C., 2012. Principles of international investment law. Oxford
University Press.
Dunning, J.H., 2013. International Production and the Multinational Enterprise (RLE
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Schaffer, R., Agusti, F., Dhooge, L.J. and Earle, B., 2011. International business law and its
environment. Cengage Learning.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
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Subedi, S.P., 2016. International investment law: reconciling policy and principle.
Bloomsbury Publishing.
Wagner, J., 2012. International trade and firm performance: a survey of empirical studies
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