Benefits and drawbacks of exporting to europe or establishing a company within europe territory

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KUBOTA Corporation is a medium-sized company incorporated established in 1890 in OSAKA, Japan. It manufactures garden tractors and ride-on mowers for professionals and private individuals as mechanized farming. The company has subsidiaries and affiliates in Oceania and Asia, as well as in North America, and is considering an expansion of its operations in Europe. Indeed, the European Unionterritory contents an enormous potential in terms of trade thanks to its internal market but also to its citizens. Indeed, constituted of its 27 Member States, European businesses have access to 500 million consumers. This is “the world’s largest trading bloc” and the best place to expand our operations, but this supranational community is not unique in the world. As we have subsidiaries andaffiliates in Oceania and Asia as well as in North America, you know about the existence of some others such communities, international and transnational bodies such as the North Atlantic Free Trade Area (NAFTA) and the Association of South-East Asian Nations (ASEAN).

However, the EU, established by the Treaty of Rome in 1958, is constituted of the internal or common market based on a liberalpolitics and realised by the Treaty of Maastricht in 1992. The community is composed of five community’ institutions: The European Parliament which represents the interest of the nationals of the Member States; the Council which represents the interests of Member States; the Commission which represents the interests of the Community (by example, which negotiates within the WTO); the European Court ofJustice which protect the respect of EC law and the Court of Auditor which supervises the financial aspect of the Community.
Its principle aim is to create a single market within which one and all the internal frontiers between its 27 Member States within its territory would be erased in order to ensure the free movement of people, goods, services and capital. However, it took some time for thecommon market to be established since the Treaty of Rome for “external” and “internal” reasons. About the first one, it had to face during the 50s decade with “a relative international economic prosperity” and during the 60s decade with economic crises whereas about the second one, “the common market had been constructed in order to preserve the interest of its nation states”.
According to thecombination of art 14 and 95 of the Treaty, the Union shall have competence to “adopt measures with the aim of progressively establishing the internal market”. European Member States are bound by some of these measures: the primary legislation (Treaties) and by some instruments of the secondary legislation (Regulations and Directives) , where they are taken in the aim of the harmonization of “laws,regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market.”

Besides, it has to be mentioned that as is the case for Japan, EC are a Member of the World Trade Organisation which is the only international organisation dealing with trade rules between Countries. WTO and EC do have some similarities but also somedifferences which have to be taken into account, in the case of establishing our company in the European territory, which will be exposed in due time.
However, we have to consider what are the best ways to penetrate the European market, between exporting our products overseas and establishing our company within the territory of the European Union. To find out the best solution for us, it isessential to know more about the different aspects of European market: how it is functioning and what the regulations are.

As KUBOTA is a goods producer, we are more concerned by the European Community legislation governing the free movement of goods that the one governing the free movement of service. Furthermore, we also are concerned by the EC legislation governing the free movement of people...