GOVERNMENT OF PARADISO Assignment Words: 592

Opportunity to Develop Microanalyses Industry In a recent discussion with executives of Group Parades, government officials had learned of this company’s Interest In pioneering the manufacture of microanalyses in Paradise. While the business leaders cautioned that they had barely initiated discussions with one of the multinational leaders in microanalyses production, their analysis showed that local production was feasible. They indicated that they were hoping that the government would provide appropriate support for such a project hen plans had been further developed.

The Government Negotiating Team The negotiating team was led by the Deputy Director of the International Investment and Technology Committee (TIC) of the Ministry of Industry and Trade. Other members of the team included representatives from the same Ministry departments of Industrial Development and of International Trade, and a staff member from the Central Bank of Parasols. The team was given broad authority to negotiate with foreign investors and local ratters, but was expected by the Minister of Industry and Trade to keep agreements within existing guidelines and laws.

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The government saw Microanalyses as an attractive Industry, and the team had authority to grant special financing and other incentives to priority projects. But the Minister wanted any agreements to fit into its overall policy of liberalizing of competition. Negotiations with microanalyses manufacturers also needed to fit Into the overall context of trade agreements that had been negotiated, or were being negotiated, with other countries.

In particular, Paradise had recently had preliminary discussions with Tropical and other members of the Exotica Common Market (COME) about the possibility of allowing free trade for high technology products like microanalyses. Preparation for Negotiations In preparation for further discussions of microanalyses industry development, the team had met briefly to review Information on the industry and the Issues that would come up. Before meeting again with any interested parties it would have to decide its position on important issues.

The issues the team had identified so far were: 1. Employment – The government was concerned about the layoffs that had occurred as a result of Its appropriation of state manufacturing companies, and was anxious to find new sources of attractive Jobs. Microanalyses plants that generated employment 1 OFF 2. Local content and exports – The government did not require a specific proportion of local content or exports. But greater local content aided employment, and the government expected that new investments not have an adverse impact on the lance of payments. Technology – The government wished to develop Paradise’s technological capabilities, but realized that in high technology industries it would have to rely on International companies for much technology. It hoped to bring in this technology on favorable terms, not paying excessive fees. 4. Tax and tariff incentives – Tax and tariff incentives were possible, but the team needed to be cautious in offering too generous a deal. The government was aiming to reduce still further its budget deficit, and excessive subsidies would be a problem.

Subsidies and incentives could also lead to protest from its trading partners. In any case, tax holidays and any special tariff protection for new projects were limited to a maximum of five years. 5. Government financing – The government was no longer willing to make equity investments in industrial projects, and government loans were limited. A government development bank still provided financing for priority projects, but financing was limited to a maximum of one third of the value of the project, and the rates were close to commercial terms.

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