Legal Aspects of International Trade and Enterprise - Toyota Motor Corporation

This report examines the legal aspects of Toyota Motor Corporation's operations in Australia, focusing on the legislative and regulatory framework that governs the company's activities. It explores key statutes, treaties, conventions, and agreements that impact Toyota's products and services. The report also discusses the compliance requirements and legal obligations for multinational corporations in Australia.

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Legal Aspects of International Trade and Enterprise
Toyota Motor Corporation

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Executive Summary
Many multinational corporations expand their operations in Australia due to strong
economic growth, favourable market conditions and strong customer base and Toyota
Motor Corp is no exception which is selected as an example in this report in order to
evaluate the operations of the company in Australia and understand the key legislative
framework provisions that apply to the operations of the company. Different statutes and
regulations are identified in this report that applies to the operations of Toyota. The impact
of different treaties, conventions and agreements between Australia and other nations on
the products and services of Toyota are identified in this report as well.

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Table of Contents
Introduction...............................................................................................................................3
Australian Staff members.......................................................................................................3
Global Staff members.............................................................................................................3
Headquarters.........................................................................................................................3
Legislative Regulatory Framework.............................................................................................4
Treaties, Conventions and Agreements.....................................................................................6
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Toyota Motor Corp is a leading automobile multinational corporation from Japan that
manage its operations in Australia through its subsidiary Toyota Australia. The company was
founded in 1937 since then it has expanded its operations in the automobile industry on a
global stage (Fortune, 2018). The company become the world’s first ever automobile
manufacturer that produced more than 10 million vehicles in 2012 (Japan Times, 2013). The
company is also considered as the world leading in the hybrid car industry since it offers its
products in over 170 countries.
Australian Staff members
Currently, the company has hired more than 1,300 employees in Australia in order to
manage its operations (ABC, 2017).
Global Staff members
Globally, the company has hired over 369,124 employees for handling its operations
(Statista, 2018).
Headquarters
Its headquarters is situated in Aichi, Japan (Fortune, 2018).

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Legislative Regulatory Framework
There is a wide range of legal provisions which are implemented by the Australian
government with an objective to govern the operations of local as well as multinational
corporations. Through these provisions, the government is able to make sure that
companies are fulfilling their legal duties by ethically conducting their operations (Zhang et
al., 2015). As per these provisions, various penalties are imposed on corporations if they
engage in illegal or immoral practices that result in violating the legislative, regulatory
framework in the country. This legislative regulatory framework is also flexible, and it also
provides various benefits to foreign as well as local corporations since the growth of
companies ultimately resulted in contributing to the growth of the economy of the country.
Foreign corporations that establish their operations in the country are likely to bring foreign
currencies and employment opportunities to the country; therefore, the government also
supports these companies through the legislative, regulatory framework (Moore, 2013).
However, the priority of this framework is to prohibit foreign as well as local corporations
from violating any laws or interest of people by engaging in illegal practices.
In the case of Toyota, one of the key legislation that governs the operations of the company
includes the Competition and Consumer Act 2010 (Cth). This act applies throughout Australia
with an objective to ensure that companies such as Toyota did not use their position in the
market to eliminate competition or establish their monopoly in the industry. The first
schedule of this Act deals with the provisions regarding competition in the country to make
sure that small businesses are not dominated by large enterprises such as Toyota (Richards
et al., 2012). These companies can purchase small companies or enforce them to go out of
business by using their resources to create a monopoly in the market which will negatively
affect the economic growth of the country along with the interest of its customers. Schedule
2 of this Act recognises various rights of customers in Australia to make sure that they are
protected from unfair or illegal practices of companies (Zhang et al., 2015). For example,
section 29 of schedule 2 of this Act prohibits companies from making any representations or
advertisements which are considered as false or misleading regarding their goods or
services. For example, Toyota Australia was held liable by the Australian Competition and

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Consumer Commission (ACCC) for making claims regarding the use of leather in the interiors
of its cars whereas the company only used partial leather (ACCC, 2013).
Along with this act, Toyota also has to comply with the provisions given under the Fair
Trading Act 1992 in which various provisions are included by the government to make sure
that companies manage their operations in a fair manner. These provisions are
implemented in order to prevent companies from engaging in any contracts that could lead
to destroying the competition in the industry (Thompson, 2013). For example, Toyota
cannot form a contractual relationship with another leading automobile brand in Australia
to create a duopoly in the industry with an objective to drive other competitors out of the
industry. Since Toyota has hired employees in Australia, it has to comply with the guidelines
given under the Fair Work Act 2009. This is another relevant legislation that applies to the
operations of the company to make sure that it did not violate the rights and benefits of its
employees. Toyota has to make sure that it did not offer less than minimum wage to its
employees and it also has to focus on implement policies to ensure that employees have
access to adequate health and safety policies. The company cannot force its employees to
work overtime or hire them to work over 38 hours in a week without a valid contract (Fair
Work, 2019).
The taxation policies in Australia also apply to the operations of Toyota under which the
company has to make sure that it fulfils its taxation policies. The company has to pay tax on
the profit which it generates from its operations in the country. Currently, foreign
companies operating in Australia are taxed at a rate of 30 per cent on their profit (ATO,
2019). However, the government can introduce changes in this rate by increasing or
decreasing the amount which resulted in affecting the profit generated by Toyota in
Australia. Due to a high rate of tax, many foreign companies did not prefer to expand their
operations in international markets; therefore, Australia is less likely to increase tax rates in
the future. Since Toyota offers its products and services in the industry, the company has to
pay the Goods and Services Tax (GST) as well. Currently, the rate of GST is fixed by the
government at 10 per cent; however, this rate can also be increased or decrease by the
government in the future which will create challenges for Toyota (ATO, 2018). Compliance
with these taxation policies and ensuring that the tax is filed on time is important for Toyota
to make sure that the company did not face any legal penalties for its failure to discharge its

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tax liabilities. The Corporations Act 2001 (Cth) is another key legislation that applies to the
operations of Toyota Motor in Australia. As per this act, Toyota has to issue various annual
reports and compliances or else the company can face legal consequences.
Treaties, Conventions and Agreements
Countries enter into agreements with each other with the objective to promote trade
practices and support economic growth by making it easier for companies to expand their
operations in foreign markets. The countries enter into treaties, conventions and
agreements in which they include trading provisions that make it easier for companies to
export and import into the country or establish their operations in foreign markets
(Gardiner, 2015). The Australian government has also entered into Free Trade Agreements
(FTAs) with different countries with an objective to create new trading ties between the
countries that support the economic growth of nations. Currently, the Australian
governments have established FTAs with China, Japan, the United States, the United
Kingdom and India. These treaties also create various benefits to Toyota which is a Japanese
company. The FTA formed between Australian and Japanese government resulted in making
it easier for Toyota to conduct its operations in Australia (DFAT, 2018).
The JAFTA or Japan-Australia Free Trade Agreement is a key treat that is formed between
both countries. Through these provisions, the government has removed various legal
compliances that generally govern the actions of Toyota. Under this agreement, the
government have made provisions regarding the removal of charges, excise duty and tariff
which Japanese companies have to pay otherwise when they expand their operations in
Australia (DFAT, 2018). The objective of these provisions is to make sure the trading
relationship between these two nations are built, and they are able to bring foreign
currency in both countries that support their economic growth. Through these provisions,
Toyota is able to offer its latest products and services to Australian customers without facing
substantial legal complications. Due to the removal of tariff and duties, the Australian
automobile sector has become a preferred market for Toyota to expand its operations
(Gardiner, 2015).
Another relevant agreement that is formed between the Australian and the Japanese
government is the agreement to remove double taxation on the proceedings of companies

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that operations in both countries. The profits which are generated by Toyota from its
operations in Australia are only taxed once due to which treaty otherwise the company had
to pay double tax which would have reduced its profits considerably (Nottage, 2014). If
companies had to pay double tax on the profit which they generate in foreign markets, then
they are less likely to expand their operations in overseas markets. Thus, these policies
promote trading practices between the two nations.
Toyota also offers its services in New Zealand through its locally owned dealerships and
while managing its operations in the country, the company saves its tariff and costs due to
the FTA between Australia and New Zealand. Both these countries have formed ASEAN
Australia-New Zealand FTA that is implemented in order to promote trading relationships
between the two countries (Ishido, 2012). Through this agreement, a wide range of legal
compliances are removed by the government making it easier for companies operating in
Australia to expand their operations in New Zealand. Along with the removal of legal
provisions, the government has also removed tariff which companies have to pay otherwise
while conducting their business in New Zealand. Due to these facilities, Toyota is able to
export its products from Australia to New Zealand without facing any legal issues (Ishido,
2012). The company is able to reduce its costs which are incurred in payment of tariff or
other fees that resulted in increasing its profits.
Since Toyota is a leading multinational brand, the treaties formed between Australia and
other counties make it easier for the company to make sure that it offers better products
and services to its customers. A good example is AUSFTA or Australia-United States FTA
which is an agreement formed between the two nations that benefit companies operations
in these countries. Through this treaty, companies such as Toyota are able to export their
products directly from the US to Australia without facing substantial legal compliances or
duties (Armstrong, 2015). Since the US is a major market for Toyota, the company launches
its latest products and services in the country. However, due to this FTA, the company is
able to quickly export those products to the Australian market in order to offer better
services to its customers that are not possible otherwise due to high tariff and duties. Due to
these agreements, the profitability of Toyota has increased, and the company is able to
create a loyal customer base in Australia and many other countries (Armstrong, 2015).

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Therefore, the evaluation of these provisions is required to make sure that Toyota
appropriately manages its operations and expand its profitability in different countries.

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Conclusion
In conclusion, foreign corporations have to comply with a wide range of regulatory
compliances while managing their operations in Australia to make sure that they avoid legal
consequences. Toyota also complies with provisions given under various acts such as
Corporations Act, Competition and Consumer Act, Fair Work Act and Fair Trading Act. The
company also complies with the taxation policies of Australia. Various treaties between
Australian, Japan and New Zealand benefits Toyota since it reduces its costs and legal
compliances which makes it easier for the company to expand its customer base in these
markets. Through these provisions, Toyota is able to create a strong position in Australia
market which cannot otherwise be possible for the company.

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References
ABC. (2017) Toyota workers out of jobs as car manufacturer closes Altona plant. [Online]
Available from: http://www.abc.net.au/news/2017-10-03/toyota-car-production-ends-
altona-after-50-years-manufacturing/9007624 [Accessed on 19th April 2019].
ACCC. (2013) Toyota Australia gives an undertaking to ACCC on ‘leather’ claims. [Online]
Available from: https://www.accc.gov.au/media-release/toyota-australia-gives-an-
undertaking-to-accc-on-%E2%80%98leather%E2%80%99-claims [Accessed on 19th April
2019].
Armstrong, S. (2015) The economic impact of the Australia–US free trade
agreement. Australian Journal of International Affairs, 69(5), pp.513-537.
ATO. (2018) GST. [Online] Available from: https://www.ato.gov.au/Business/GST/ [Accessed
on 19th April 2019].
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https://www.ato.gov.au/Rates/Company-tax/ [Accessed on 19th April 2019].
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partnership-agreement.aspx [Accessed on 19th April 2019].
Fair Work. (2019) Maximum weekly hours. [Online] Available from:
https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/
minimum-workplace-entitlements/maximum-weekly-hours [Accessed on 19th April 2019].
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Ishido, H. (2012) Liberalization of Trade in Services Under ASEAN n FTAs: A Mapping
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Japan Times. (2013) Toyota nears 10 million car annual output. [Online] Available from:
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