P&g corporate analysis

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BHS 0009 – European Business and its Environment
Assignment 2010/2011 :
« European business increasingly has to accept policy at national, European and international levels ». Consider the rational for the existence of policy at these three levels and how such policy affects the decisions made by European business. Use examples to illustrate your answer.

By Benjamin GASTINEAU U1071987 To KJROWLES Words: 1962

The 2009 summit in Copenhagen, on environmental issue had shown the difficulties to find a multilateral agreement, between the most influent and powerful nations on the earth, on one of the major issue of our time : the climate change. Indeed, many divergent nationals' ambitions are facing each others. On one hand, developing countries aspiring to progress and prosperity,are not likely keen to sacrify their fast economic growth rate. On the other hand, the real need of considering the future generations by implementing environmental measures in order to diminish the impact of the human activity on the earth. This debate is not new, over the last few decades it has contributed to raise a kind of an “Eco-conscience” in the consumer's mind, pushing him into the conceptof “green consumerism”. The emergence of Fair Trade organisations, Eco-label and recycling process are probably the most relevant examples. That is to say, environmental issues are now fully part of our present and condition many aspect of our everyday life. Consequently, “ European business increasingly has to accept environmental policy at national, European and international levels”. Toillustrate this sentence, the paper shows the existence of such policy at these three levels and underlines the implications on trade and business of such policy. Firstly, the work approaches implications of environmental policy on the international scope by underlining the economic growth race issue and the restriction of trade for environmental considerations. Then the study narrow it down with theEuropean model, where the issue of competitiveness is detailed. Finally, the essay looks into the national level by bringing to light business applications induced from environmental policies.

Activities related to international trade are strongly affected by numerous supranational, national and domestic regulations. The NAFTA (North American Free Trade Agreement) negotiations studied thatenvironmental regulations have a non-negligible impact on investment and trade. Indeed, it is not difficult to understand that there is a potential conflict between environmental regulations and trade policy. There are three types of problems that carry an international economic dimension. Firstly, trade policy might enforce domestic environmental regulations; when a domestic industry is producingmassive amount of pollution it can subsidize imports of the pollution in order to reduce domestic emissions' outputs. Secondly, different environmental standards between countries or regional space may influence level of trade; some imports barriers can be imposed for protecting domestic environmental requirements from more limited foreign standards. These regulations are perfectly allowed by the WTOrules if these barriers are founded on a potential health problem. Most of EU policies are concerned with this potential health effects (closely linked to the “Precautionary Principle” forcing EU authorities to prevent any sort of potential damage) , for instance the attitudes of European towards genetically modified food from the United States. The last problems, and not the meaningless, is thatthe degree of environmental regulations and the standards complexity might influence the decision of MNEs on where to produce; countries adopting low cost and limited environmental measures are more likely to attract Foreign Direct Investment. In one sense, they are trading environmental degradation for economic growth. So it appears that limited environmental regulations could be seen as “social...
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