How can a local content law in Japan act as a barrier to a U.S.-based automobile manufacturing company that is interested in setting up a branch office in Tokyo?
What will be an ideal response?
Answer: Success in international trade will depend largely upon social, economic, legal, and political barriers. Any firm planning to conduct business abroad must understand social and cultural differences between the host country and home country. Economic differences include the extent of government involvement in a given industry and the level of competition. There are many legal and political barriers to international trade, including quotas, tariffs, subsidies, local content laws, and business practice laws. Many countries, including the United States, have local content laws—requirements that products sold in a country be at least partly made there. Firms seeking to do business in a country must either invest there directly or take on a domestic partner.
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Fill in the blank(s) with the appropriate word(s).