Trade association in law and practice
Sunday, 21 November 2010
M S Siddiqui
GLOBALIZATION has replaced the word 'country' by 'economy'. In the era of free market economy, the responsibility of economic development has largely been shifted to private sector. Business-related issues are integrated with the socio-political dimensions of an economy. Problems in trade and investment are closely linked with the problems of unemployment, income distribution, poverty, macroeconomic growth, regional and infrastructure development, socio-cultural changes, political structure etc.
Bangladesh economy is undergoing a transformation from agriculture-based economy to industrial economy. Due to advancement in technology, employment opportunities in agricultural sector are reducing day by day. One the other hand, small businesses are growing in rural areas, and services and industrial sectors are employing more and more people. There is a visible change in socio-cultural arena and polarization in all levels of society. At this juncture, civil society is concerned over the dominance of parliament by the business persons. This change in political power structure is a reality.
There is a change in businesses as well. The situation is demanding reform in business sector as well. There is an emerging bureaucracy in private sectors. The increasing role of private sector has introduced new concepts of democratization in business and finance of public companies, corporate culture, fair trade, good governance and economic freedom etc. The concepts like limited liability, separate entity, management through agent, professionalism, and competitiveness are coming up for evaluation and redefinition.
There are many associations of professionals. The lawyers, doctors, engineers, architects, auditors, accountants, etc. are usually organized into professional associations, which are established under different acts and authorized to issue professional degrees and certificates. These associations are enjoying freedom of running the organizations. These associations take active part in the establishment and implementation of rules which affect their profession and in the elaboration of new regulations to be endorsed by government regulatory authorities. Generally, professional associations lay down the educational qualifications and the level of experience required for practising the profession, they keep a register of the members of the profession, they promulgate code of conduct and code of ethics to be maintained by members, and enforce these standards through a complaints and disciplinary procedure. Similar to trade associations (TAs), a professional association represents the interests of its members. A trade association has been defined as an association which is formed or intended to be formed with the object of promoting any trade, commerce or industry or any group or class thereof or for representing for any purpose, in any manner and to any extent any trade, commerce or industry or any group or class thereof. Mentionable, the laws and rules for Trade Association are totally different from those of other associations.
There are mainly two categories of TAs. One category is established under conventions and the other under a legal framework. Conventional laws are prevalent in most developed countries like the UK and the USA. The business organizations in some developed economies like France, Italy and Germany and many newly developing countries are established under the legal system. The TAs all over the world have, however, similar organizational structure and common purpose, i.e. to serve the interests of the national economy and the business community.
The law provides compulsory membership of TAs for any individual, partnership firm, company or any other establishment engaged in production, import or export, or any other business products and services.
As per standard rule, TAs play a critical role in product standardization, harmonization and promotion of good business practices, presenting business interests before governments and public agencies, the determination of ethical rules for professions, etc.
TAs are formed under strict rule and monitored by regulating authorities. There are a number of laws and regulations to govern TAs. In many instances, professional associations act as self-regulating bodies for their profession and find their legitimacy in statutes. These associations have no bearing on the applicability of competition rules. TAs do not enjoy the freedom of professional associations and other self-regulating bodies which are regulated under competition rule.
There is a common perception that TA is a forum of business persons and the activities are limited to the extent of the protection of business and economic interests of the members. Trade organizations primarily focus on lobbying the legislature for preferential regulatory treatment. But in other countries, TA performs the role of an association to promote human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility. It is also a standard practice of policymakers to consult TA on each and every issue and solicit its opinion for shaping a policy and even the rule and regulation to govern the business or economic activities.
The business leaders are ambassadors of the nation and can play a pivotal role in the determination of global linkages and implementation of policies. They play the role of a catalyst for foreign investment and transfer of technology and for reshaping world's economic policies and political trends.
However, the principal function of a trade association is to provide services to its members, including the organizing of training activities in areas such as legal, marketing and product development. TAs organize and sponsor fairs and trade shows. They publish newsletters and trade journals. Trade associations also collect, aggregate and disseminate statistical information and industrial data, and prepare regular industry reports on developments in the market.
TAs have an important advisory function, as they take an active role in shaping the way their industry works. In particular, they promote product standards and best practices for their industries; they define and promote standard terms and conditions of sale, publish and enforce codes of ethics and, in some cases, they formulate and enforce industry self-regulation. They issue recommendations to their members on a variety of commercial and non-commercial issues.
One of the most important functions of trade association is alternative dispute resolution (ADR). Bangladesh does not have mandatory provision of ADR. The volume of international trade and investment is low because there is no law and even practice of ADR under common law. Some of the chambers like Dhaka Chamber, Metropolitan Chamber and International Chamber of Commerce have joined hand to organize ADR in Bangladesh. This is not yet widely practised and not known to the business community.
The important role played by trade associations in modern economies is widely recognized. Many of the activities of trade associations are protected as an expression of fundamental rights of individuals and corporations, such as the right to form an association in the first place or to join an existing one, the right to express one's views and opinions and the right to freely petition the government. All the rights and freedom are subject to enforcement of competition law and rule.
Business persons join TA as regulatory obligation in almost all countries of the world. The majority of the members join trade association because of the specified nature of their industries and for achieving integrity. Making self-regulations, achieving creditability, getting expertise in specific industry issues, speaking with a unified voice to media, specific promises, and forming collective policy position are the main reasons to join the trade associations. Trade associations consist of individuals and firms with common commercial interests, joining together to further their commercial or professional goals. The important role played by trade associations in modern economies is widely recognized. Their activities benefit their members but they may also contribute towards increasing the efficiency of the market. They pursue creation of a congenial atmosphere with de-regulation, alternative dispute resolution etc. Trade associations play valuable, fundamental roles as forums for the discussion and exchange of views on important issues of common interest for the sector which they represent.
In most instances, trade associations serve legitimate purposes, such as the preparation of industry studies, advocacy before government entities to bring to their attention industry-specific interests, the development of guidelines for product standardization, the dissemination of aggregate market information to help firms make investment decisions, the dissemination of good industry practices, and the like. Trade associations can also educate members about proper antitrust compliance.
One of the primary functions of trade associations is to build consensus among the members on public policy issues affecting the industry and to promote these policy interests with the government and with other public institutions. Such activities may create a level playing field among the members of the association and to a certain extent limit competition in the industry.
The writer, a part-time teacher at Leading University, can be reached at e-mail: shah@banglachemcial.com
GLOBALIZATION has replaced the word 'country' by 'economy'. In the era of free market economy, the responsibility of economic development has largely been shifted to private sector. Business-related issues are integrated with the socio-political dimensions of an economy. Problems in trade and investment are closely linked with the problems of unemployment, income distribution, poverty, macroeconomic growth, regional and infrastructure development, socio-cultural changes, political structure etc.
Bangladesh economy is undergoing a transformation from agriculture-based economy to industrial economy. Due to advancement in technology, employment opportunities in agricultural sector are reducing day by day. One the other hand, small businesses are growing in rural areas, and services and industrial sectors are employing more and more people. There is a visible change in socio-cultural arena and polarization in all levels of society. At this juncture, civil society is concerned over the dominance of parliament by the business persons. This change in political power structure is a reality.
There is a change in businesses as well. The situation is demanding reform in business sector as well. There is an emerging bureaucracy in private sectors. The increasing role of private sector has introduced new concepts of democratization in business and finance of public companies, corporate culture, fair trade, good governance and economic freedom etc. The concepts like limited liability, separate entity, management through agent, professionalism, and competitiveness are coming up for evaluation and redefinition.
There are many associations of professionals. The lawyers, doctors, engineers, architects, auditors, accountants, etc. are usually organized into professional associations, which are established under different acts and authorized to issue professional degrees and certificates. These associations are enjoying freedom of running the organizations. These associations take active part in the establishment and implementation of rules which affect their profession and in the elaboration of new regulations to be endorsed by government regulatory authorities. Generally, professional associations lay down the educational qualifications and the level of experience required for practising the profession, they keep a register of the members of the profession, they promulgate code of conduct and code of ethics to be maintained by members, and enforce these standards through a complaints and disciplinary procedure. Similar to trade associations (TAs), a professional association represents the interests of its members. A trade association has been defined as an association which is formed or intended to be formed with the object of promoting any trade, commerce or industry or any group or class thereof or for representing for any purpose, in any manner and to any extent any trade, commerce or industry or any group or class thereof. Mentionable, the laws and rules for Trade Association are totally different from those of other associations.
There are mainly two categories of TAs. One category is established under conventions and the other under a legal framework. Conventional laws are prevalent in most developed countries like the UK and the USA. The business organizations in some developed economies like France, Italy and Germany and many newly developing countries are established under the legal system. The TAs all over the world have, however, similar organizational structure and common purpose, i.e. to serve the interests of the national economy and the business community.
The law provides compulsory membership of TAs for any individual, partnership firm, company or any other establishment engaged in production, import or export, or any other business products and services.
As per standard rule, TAs play a critical role in product standardization, harmonization and promotion of good business practices, presenting business interests before governments and public agencies, the determination of ethical rules for professions, etc.
TAs are formed under strict rule and monitored by regulating authorities. There are a number of laws and regulations to govern TAs. In many instances, professional associations act as self-regulating bodies for their profession and find their legitimacy in statutes. These associations have no bearing on the applicability of competition rules. TAs do not enjoy the freedom of professional associations and other self-regulating bodies which are regulated under competition rule.
There is a common perception that TA is a forum of business persons and the activities are limited to the extent of the protection of business and economic interests of the members. Trade organizations primarily focus on lobbying the legislature for preferential regulatory treatment. But in other countries, TA performs the role of an association to promote human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility. It is also a standard practice of policymakers to consult TA on each and every issue and solicit its opinion for shaping a policy and even the rule and regulation to govern the business or economic activities.
The business leaders are ambassadors of the nation and can play a pivotal role in the determination of global linkages and implementation of policies. They play the role of a catalyst for foreign investment and transfer of technology and for reshaping world's economic policies and political trends.
However, the principal function of a trade association is to provide services to its members, including the organizing of training activities in areas such as legal, marketing and product development. TAs organize and sponsor fairs and trade shows. They publish newsletters and trade journals. Trade associations also collect, aggregate and disseminate statistical information and industrial data, and prepare regular industry reports on developments in the market.
TAs have an important advisory function, as they take an active role in shaping the way their industry works. In particular, they promote product standards and best practices for their industries; they define and promote standard terms and conditions of sale, publish and enforce codes of ethics and, in some cases, they formulate and enforce industry self-regulation. They issue recommendations to their members on a variety of commercial and non-commercial issues.
One of the most important functions of trade association is alternative dispute resolution (ADR). Bangladesh does not have mandatory provision of ADR. The volume of international trade and investment is low because there is no law and even practice of ADR under common law. Some of the chambers like Dhaka Chamber, Metropolitan Chamber and International Chamber of Commerce have joined hand to organize ADR in Bangladesh. This is not yet widely practised and not known to the business community.
The important role played by trade associations in modern economies is widely recognized. Many of the activities of trade associations are protected as an expression of fundamental rights of individuals and corporations, such as the right to form an association in the first place or to join an existing one, the right to express one's views and opinions and the right to freely petition the government. All the rights and freedom are subject to enforcement of competition law and rule.
Business persons join TA as regulatory obligation in almost all countries of the world. The majority of the members join trade association because of the specified nature of their industries and for achieving integrity. Making self-regulations, achieving creditability, getting expertise in specific industry issues, speaking with a unified voice to media, specific promises, and forming collective policy position are the main reasons to join the trade associations. Trade associations consist of individuals and firms with common commercial interests, joining together to further their commercial or professional goals. The important role played by trade associations in modern economies is widely recognized. Their activities benefit their members but they may also contribute towards increasing the efficiency of the market. They pursue creation of a congenial atmosphere with de-regulation, alternative dispute resolution etc. Trade associations play valuable, fundamental roles as forums for the discussion and exchange of views on important issues of common interest for the sector which they represent.
In most instances, trade associations serve legitimate purposes, such as the preparation of industry studies, advocacy before government entities to bring to their attention industry-specific interests, the development of guidelines for product standardization, the dissemination of aggregate market information to help firms make investment decisions, the dissemination of good industry practices, and the like. Trade associations can also educate members about proper antitrust compliance.
One of the primary functions of trade associations is to build consensus among the members on public policy issues affecting the industry and to promote these policy interests with the government and with other public institutions. Such activities may create a level playing field among the members of the association and to a certain extent limit competition in the industry.
The writer, a part-time teacher at Leading University, can be reached at e-mail: shah@banglachemcial.com