The importance of ethics in international trade is a widely explored topic for businesses and individuals who have conducted these trades. Evidence suggests that a decrease in productivity is a direct result of unethical practices, which sometimes lead to lawsuits and reduced profits (Buchanan and Yoon). Scandals involving these practices are not only widespread, but very much recognized and can result in negative publicity for those concerned. Conservation issues as well as human rights are two of the most publicized issues when it comes to ethics.
Unethical practices involving these two areas have been known to tarnish and sometimes destroy the reputations of companies and the perceptions that individuals have of them. Because of the seriousness of a scandal that is caused by a lack of ethics, companies have been known to establish frameworks of business ethics and ensure that they have programs in place to detect, prevent, or settle any violations that occur. These companies place much emphasis on the expected behaviors of their staff and the consequence that can arise from non-compliance.
Environmental issues, such as climate change, are vital to everyone. Businesses that engage in trade and cause damage to the environment are currently addressed by the government, the media and NGOs. Companies, no matter what their trade, are expected to do whatever it takes to protect the environment, instead of dumping harmful chemicals in places where it will affect someone. Stopping companies from emitting harmful substances and emitting noises into the environment is also a great challenge for the authorities.
Coastal waters are polluted constantly, because of lack of ethics on the part of the companies who are guilty of such pollution. In china recently, the Environmental Ministry announced that air pollution had worsened even after trying to improve their economic growth. They also detected pollution in their coastal waters. China currently has the fastest growth rate for their economy and was told that there would be a continued increase in the emission of carbon dioxide (Buchanan and Yoon). This situation is in itself unethical, as it can pose serious health issues for the citizens.
Codes of ethics in businesses are deep-seated in cultural and national values, which can be translated into conflicting issues at the national level. For every business, their culture, customs, values, ethics and principles are unique to their country. It is therefore physically impossible to have a code of ethics that will be adhered to, by every nation. Issues pertaining to child labor in the poorer countries are also being tackled, as it is currently accepted and therefore encouraged by corporations throughout the world. Multinational corporations are known to source and subsequently, distribute items that are the product of child labor.
This is difficult to address, because on an international level, it is difficult to uncover proof of such lack of ethics. In another case, Nike was the subject of a scandal, which involved discrimination, unfair working conditions, overstated wages, child labor and unfair contracts. They were accused of failing to monitor their sub-contractors and of lack of provision of training on their code of conduct. The international market learned from the case involving Nike, how to minimize the occurrence of ethical issues. When Nike resurfaced in the news, after failing to pay severance totaling 2.2 million to garment workers in Honduras, it again raised questions pertaining to ethics and moral obligations (Buchanan and Yoon).
There are many multi-national corporations that refuse to respect human rights and take responsibility for their actions. They do not encourage, nor respect freedom of speech, freely associating, or assembling and encourage repression from political views. The global market is easily affected by corruption and stagnate the development of a country. Lack of ethics can reduce growth and decrease that country’s foreign investment. Bad publicity, as a result of lack of ethics can negatively impact that country’s loan prospects, its foreign aid and trade. Unethical dealings can result in high returns for the corrupted, but negatively impact a country’s people.
Gifts from businesses is not encouraged by the US, but there are other countries who condone and accept them, as they are thought to improve business relationships. Safety practices and marketing efforts should always be ethical and be done above board. Unethical marketing efforts can have a negative impact on the company. One example is Nestle, who ended up causing the death of several babies in poorer countries, because of misrepresentation in their marketing strategy.
The global marketplace is managed, overseen and regulated by the General Agreement on tariffs and Trade or GATT, International Monetary Fund or IMF, The World Trade Organization or WHO, and the World Bank. They also organize treaties that govern the multinational trade. Trying to develop global and organizational ethics in our culture is not an easy task. The advantages of ethics in international trade include the ability to eliminate activities and actions that are bad for the economy, the environment and human rights (McGee). It fosters an increase in profits for multi-national organizations and encourage transparent dealings between countries and corporations. While it is important to retain values, it is also important to maintain moral principles in order to have an ethical framework for international trade. In doing so, renewed awareness is possible, as well as the correct way of conducting trade.
Buchanan, James M, and Yong J Yoon. The Return To Increasing Returns. Ann Arbor: University of Michigan Press, 1994. Print.
McGee, Robert W. 'Legal Ethics, Business Ethics And International Trade: Some Neglected Issues'. SSRN Journal n. pag. Web.