Boardroom Risk & Reputation

Changes in government international trade policies can present significant hurdles for businesses engaged in cross-border operations. Likewise, businesses may find themselves vulnerable to protectionist measures and government intervention in their foreign investments.

International trade dynamics can be disrupted by the imposition of tariffs, the implementation of quotas or embargoes, or the cessation of trade relations or agreements with other nations. Such developments can have far-reaching implications for businesses, leading to increased prices for inputs and commodities, disruptions in product availability, and challenges in delivering services to overseas customers. Moreover, trade disputes between governments can breed uncertainty, making it difficult for businesses to strategize effectively.

Foreign investments, too, face risks, ranging from government expropriation in extreme cases—such as with natural resource concessions—to subtler threats like regulatory or tax changes, license or permit revocations, withdrawal of incentives, or challenges in seeking recourse through local courts. The financial and strategic ramifications of such developments can be profound. Hence, it is crucial for investments to benefit from the protections afforded by investment treaties crafted to promote and safeguard investments.