ROUTLEDGE LIBRARY EDITIONS: INTERNATIONAL TRADE POLICY Volume 12 GLOBAL CORPORATE STRATEGY AND TRADE POLICY GLOBAL CORPORATE STRATEGY AND TRADE POLICY ALAN RUGMAN AND ALAIN VERBEKE I~ ~~o~:~!n~~~up LONDON AND NEW YORK Firstpublishedin1990byRoutledge Thiseditionfirstpublishedin2018 byRoutledge 2ParkSquare,MiltonPark,Abingdon,OxonOX144RN andbyRoutledge 711ThirdAvenue,NewYork,NY10017 RoutledgeisanimprintoftheTaylor&FrancisGroup,aninformabusiness ©1990AlanRugmanandAlainVerbeke Allrightsreserved.Nopartofthisbookmaybereprintedorreproducedorutilised inanyformorbyanyelectronic,mechanical,orothermeans,nowknownor hereafterinvented,includingphotocopyingandrecording,orinanyinformation storageorretrievalsystem,withoutpermissioninwritingfromthepublishers. Trademarknotice:Productorcorporatenamesmaybetrademarksorregistered trademarks,andareusedonlyforidentificationandexplanationwithoutintentto infringe. BritishLibraryCataloguinginPublicationData AcataloguerecordforthisbookisavailablefromtheBritishLibrary ISBN:978-1-138-06323-5(Set) ISBN:978-1-315-14339-2(Set)(ebk) ISBN:978-1-138-30070-5(Volume12)(hbk) ISBN:978-0-203-73234-2(Volume12)(ebk) Publisher’sNote Thepublisherhasgonetogreatlengthstoensurethequalityofthisreprintbut pointsoutthatsomeimperfectionsintheoriginalcopiesmaybeapparent. Disclaimer Thepublisherhasmadeeveryefforttotracecopyrightholdersandwouldwelcome correspondencefromthosetheyhavebeenunabletotrace. Global Corporate Strategy and Trade Policy Alan Rugman and Alain Verbeke London and New York First published by Routledge 1990 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge a division of Routledge, Chapman and Hall, Inc. 29 West 35th Street, New York, NY 10001 © 1990 Alan Rugman and Alain Verbeke Printed in Great Britain All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data Rugman, Alan M. Global corporate strategy and trade policy 1. Multinational companies. Corporate planning. Effect of government policies on foreign trade. Foreign trade. Policies of governments. Effects on corporate planning of multinational companies I. Title II. Verbeke, Alain 658.4012 ISBN 0-415--05195-9 Library of Congress Cataloging-in-Publication Data Rugman, Alan M. Global corporate strategy and trade policy / Alan Rugman and Alain Verbeke. p. cm. - (International business series) Includes bibliographical references and index. ISBN 0-415--05195-9 1. International business enterprises-Management. 2. Strategic planning. 3. Commercial policy. I. Verbeke, Alain. II. Title III. Series: International business series (London, England) HD62.4.R84 1990 658.4'012-dc20 90-43471 CIP Printed and bound in Great Britain by Biddies Ltd, Guildford and King's Lynn Contents List of figures ix List of tables x Acknowledgements x1 1 Introduction 1 Triad power and corporate strategy l Corporate strategy and trade policy 3 Structure of the book 3 2 Corporate strategic management 7 Introduction 7 Corporate strategic management and trade policy 8 The four options for strategic planners 10 Why non-efficiency strategies fail 14 Conclusion 17 3 Trade policy and corporate strategy 19 The relevance of trade policy to corporate strategies 19 Trade policy formulation 19 Corporate influence on trade policy: the 1986 softwood lumber case 23 Problems in the administration of US trade law 27 US trade law implementation: an inefficient outcome 28 Conclusion 30 4 Corporate strategy for trade barriers 31 The Canadian corporate response to US trade policies 31 Corporate strategy and trade policy 32 Corporate strategy and administered protection in this model 37 V Contents Corporate responses in Canada to US-administered protection 37 The rise of other types of protection in the United States 41 Conclusion 42 Appendix: Data on anti-dumping and countervail actions 43 5 Global corporate strategy and the Free Trade Agreement 49 Sources of competitive advantage 49 Competitive strategies in global industries 50 An application to Canada-US free trade 54 Surveys and conclusion 63 6 Trade and industrial policy in the triad 65 Introduction: trade policy in the triad 65 The assessment of international trade strategies 66 The US trade deficit 68 A classification of non-free trade policies 69 US trade policy 75 Japanese trade policy 78 Trade policy in the EC 80 Trade policy for the NICs 84 Conclusion 84 7 Globalization and national responsiveness 86 Corporate strategies for Europe 1992 86 The significance of sovereignty and integration 90 Investment and the Free Trade Agreement 93 The foreign ownership issue 96 Economic nationalism, free trade and triad power 99 Conclusion 101 8 An industrial policy for a small open economy 102 Introduction: trade and industrial policy 102 Optimal trade and industrial policy in a small open economy 102 Building a model of trade and industrial policy 104 A strategic model of industrial policies 105 Industrial policy, entry barriers and small firms 110 Industrial policy and innovation 111 The issue of industrial targeting 114 Industrial policy and footloose manufacturing industries 116 Conclusion 117 vi Contents 9 Industrial policy and global competition: Ontario's experience 119 The creation of efficient industrial policies 119 Industrial policy and global competition 122 The key objective: indigenous multinationals 123 Free trade and global strategy 124 An assessment of the Premier's Council Report 124 A model of the nature of industrial policy 126 The fourteen recommendations reviewed 128 Conclusion 135 10 Conclusion 137 The global economy and efficient management 137 Efficiency versus shelter 138 Sovereignty and corporate strategy 140 Notes 142 Bibliography 150 Name index 159 Company index 161 Subject index 163 vii