Unit 3 international business 6th semester bbm notes pdf

INTERNATIONAL BUSINESSBBM – 6th Semester

University of Mysore

SYLLABUS – UNIT 3:

WTO – Origin, Membership, Structure andRole. Dispute Settlement Machinery, TRIPS,TRIMS, GATTS.

International Business – Unit 3

WORLD TRADE ORGANIZATION – WTO

(MARRAKESH Agreement Formed WTO on Jan 1, 1995)

World Trade Organization (WTO) is the successor of GATT(General Agreement of Trade and Tariff) GATT established in thewake of World War II.

WTO was formed to stabilize the economical condition of theGlobe. Its objectivity is to spread trade and commerce, withoutdiscrimination and to promote cooperation within and to othermembers. WTO is the largest organization with maximum countriesas its members across the globe.

“WTO is the biggest reform in International Business”


ORIGIN/ FACTS:

a. Location : Geneva, Switzerland.

b. Established : 01.01.1995.

c. Agreement : MARRAKESH Agreement FormedWTO on Jan 1, 1995

d. Created by : URUGUAY Round Negotiations(1986-1994)

e. Membership : 162 Countries as on 30.11.2015,Covers 97% of the World Trade.


UNIQUENESS IN ‘WTO’:

a. The formation of World Trade Organization is the biggest reform

in International Trade (After World War II) and was brought to

reality from attempts failed in 1948 in creation of ITO –

International Trade Organization.

b. World Trade Organization (WTO) is the only Global International

Organization dealing with the rules of trade between the nations,

c. WTO Agreements are negotiated, and signed by bulk of World

Trading Nations and ratified (Discussed in their parliament and is

approved) in their parliament,

d. WTO aims to help the producers of Goods and Services, Importers

and Exporters to conduct their business/ Trade smoothly.


MEMBERSHIP:

a. WTO is the successor of GATT where United States was the

original signatory and the leading proponent (leading nation

on decisions) on GATT‟s Free Trade Principles,

b. 162 Countries as on 30.11.2015 and covers 97% of the World

Trade.

c. WTO is considered Powerful as decisions are made by the

member countries and not by WTO staff who do not have a

formal voting powers,

d. Ministerial Conference must meet ones in two years,


STRUCTURE AND ROLE:

a. Unlike GATT, It‟s a legal entity,

b. Unlike IMF (International Monetary Fund) and World Bank

(WB), WTO – World Trade Organization is not a agent of the

UNITED NATIONS,

c. Unlike IMF and WB, there is no weighted voting (Super

powers and Technically developed nations influence poor

countries)., in brief all members have equal rights,

d. Under GATT the agreement under the WTO are permanent

and binding to the member countries,


STRUCTURE AND ROLE:

e. Unlike GATT, the Dispute Settlement is based not on

‘Dilatory’ (Dilatory means Delay or Slow) but Automatic

Mechanism. It is also quicker and binding on the member,

as such WTO is a POWERFUL BODY.

f. Unlike GATT, the WTO approach is „Rule Based‟ and „Time

Bound‟.

g. Unlike GATT, WTO have focus on Trade related aspects of

Intellectual Rights and Several other issues of Agreements,

h. Unlike GATT, WTO have a wider coverage, and covers trade

of goods and services,

i. Above all WTO is a large organizational body with a large

secretariat.


Structure of WTO – World Trade Center:

(Prepare the chart based on the information stated below):

Highest in the Hierarchy : MINISTERIAL CONFERENCE (MC)

The second in the Hierarchy: 1. Dispute Settlement Body (DSB)

2. General Council (GC)

3. Trade Policy Review Body (TPRB)

(Each Head has: Dispute Settlement Body (DSB), which is

displayed in the next slide)


Structure of WTO – World Trade Center:

Each Head has:

(a) Dispute Settlement Body (DSB):

a) Council I – For Trade in Goods,

b) Council II - For Trade of Services,

c) Council III – For Trade-related aspects of Intellectual Rights

(b) General Council (GC): a) Directorate General (DG) who controls the

„Secretariat of the WTO‟

(c) Trade Policy Review Body : (TPRB)

a) Committee I – On Trade and Development,

b) Committee II – On Balance of Payment (BOP) restrictions,

c) Committee III – On Budget, Finance and Administration.


Objectives of World Trade Organization (WTO):

a. To ensure the restrictions of tariffs and other barriers of trade,

b. To eliminate discriminatory treatment in international trade relations,

c. To facilitate higher standard of living,

d. To attain full employment,

e. To increase production,

f. To trigger trade and services among the members,

g. To ensure positive effect to developing countries,

h. To secure a level of share in growth of international trade, that reflects the

need of economic development,

i. To promote integration among the member nations,

j. To be more viable,

k. To conduct durable trading system,


Functions of the World Trade Organization (WTO):

a. To lay down a substantive (Core aspects of discussions) code

of conducting meetings aiming at reduced trade barriers

including tariffs,

b. To eliminate discriminations among members in international

relations.

c. To provide a institutional framework for the administration of

the Government,

d. To provide a code of member countries in the arena (Arena

means a platform for business in the Global Trade) of Global

Trade,


Functions of the World Trade Organization (WTO):

e. To frame an integrated structure of administration,

f. To promote peace,

g. To handle disputes constructively,

h. To liberalize the rules (Simplify rules of GATT)

i. To facilitate the implementation of administration and

fulfillment of objectives of WTO Agreements and other Multi

Lateral Trade Agreements,

j. To ensure the implementation of substantive (Substantive

means the main topic of discussion) code,


• Functions of the World Trade Organization (WTO):

k. To act as a forum (Forum is a platform where countries can

discuss and exchange their views) for trade negotiation and

liberalization,

l. To cooperate with International Monetary Fund (IMF) and

World Bank (WB) and its associates for establishing a

coherence (Coherence means arriving all ideas together) in

trade policy making.

m. To settle trade related disputes.


Criticism of WTO (World Trade Organization):

(For every good act, there are criticism and cannot be avoided)

a. WTO dictates policy,

b. WTO wants „Free Trade‟ at any cost,

c. WTO shows commercialization priority over Development,

d. WTO shows commercial interest priority over Environment,

e. WTO shows commercial interest priority over health and

safety norms,

f. WTO destroys Jobs and worsen poverty,

g. WTO doesn‟t gives support to small and weak countries.


TRIPS (Trade related aspects of intellectual property rights)

and TRIMS (Trade related investment measures) are some of

the focus on removal of quantitative restrictions and its

prospects and consequences. The other heads are Anti-

Dumping and Safeguards, Environment, Information

Technology & Regional Groups.

These TRIPS, TRIMS, Anti-Dumping & Safeguards,

Environment, Information Technology and Regional Groups

are the Agreement, Challenges and Opportunities in the

‘INTERNATIONAL STANDARDS IN TRADE AND

INDUSTRY.


TRIPS(TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS)

(TRIPS is into force since 1995)

a. TRIPS is the most comprehensive multilateral agreements on

intellectual property.

b. TRIPS is in force since 1995.

c. TRIPS has the „Greatest impact on the Pharmaceutical

Sector and Access to Medicines‟.

d. TRIPS Agreement introduced Global Minimum Standard for

protecting and enforcing the Patents.

e. TRIPS Agreement introduced detailed obligations for the

enforcement of „Intellectual Property Rights‟.


TRIPS and PATENT PROTECTION:

a. At the time TRIPS negotiations were on the way, 40 countries

did not „Grand Patent Protection‟ for Pharmaceutical

Products. The TRIPS require all the WTO members with few

exceptions to adapt their laws to the minimum standards of

IPR protection.

b. TRIPS Agreement, require WTO Members to provide

protection for a minimum term of 20 years from the filing

date of a patent application for any invention, including for a

Pharmaceutical products or Process. (Prior the time period

was quite shorter in many countries).

c. Prior to TRIPS countries gave patent only for the Process and

not for the product.


TRIPS THREE TRANSITION PERIOD:

The TRIPS Agreement provides for transition periods,

permitting developing countries additional time to bring

National Legislation and Practices into conformity with TRIPS

provisions.

There are 3 Main Transition Period: (1995-2000 and for

Least Developed Countries (LDC) till 2006)

(a) First Transition Period allowed certain countries to delay

providing product patent protection in the areas of technology

that has not been so protected at the time of TRIPS Agreement

coming into operation in that country.



(b) The Second Transition Period refers that those countries

where Patents are not protected shall be allowed additional 5

years to put in place a product patent regime for Technologies

and Product, where they have not provided patent protection,

such as Pharmaceuticals and Agro-Chemicals. During this

period, these countries are required to accept „Patent

Applications from 1995 onwards‟, and to keep such

applications pending in the „patent mail-box‟, until the mail

box is opened in 2005 to assess.



(c) The Third Transition Period refers to the Least Developed

Countries (LDC) until 2006 to implement their obligations

under the TRIPS Agreement in the view of their Economical,

Financial and Administrative Constraints. This period can be

extended by TRIPS Council on request by the LDC member

and extend time until 2016. In brief the LDC need not provide

nor enforce patent and data protection with respect to

Pharmaceuticals until 2016.


TRIMS - (TRADE RELATED INVESTMENT MEASURES)

(Formed on Jan 1, 1995 as a part of Uruguay Round Negotiations)

TRIMS (Trade Related Investment Measures) is not defined,

but provided an illustration (Illustration means Example).

These include: Local content requirements where

governments require enterprises to use, or to purchase

domestic products, trade balancing measures where

government imposes restrictions on imports by an enterprise

or link the amount of import to the levels of exports and

finally the foreign exchange balancing requirements where an

enterprise has the level of imports linked to the value of its

exports in an order to maintain a net foreign exchange

earnings. (This example provided is unclear)


GATT - (GENERAL AGREEMENT ON TRADE AND TARIFF)

Formed on October 30, 1947 at Geneva, and came into effect on Jan 1, 1948)

GATT (General Agreement on Trade and Tariff),

GATT was formed by 23 nations at Geneva on 30.10.1947,

and came into effect on 01.01.1948 of the Uruguay Round

Agreements, which established the WTO (World Trade Center)

on 01.01.1950.

The original GATT Text (GATT 1947) is still in effect under

the WTO framework subject to modifications in 1994.


Definition of GATT:

A treaty created following the conclusion of World War II. The

GATT was implemented to regulate the World Trade to aide

(Aide means Support the Governments across the Globe) in

the economic recovery following the war.

India is a founding member of GATT in 1947 and actively

participated in the Uruguay Round Negotiations.

GATT‟s main objective was to reduce the barriers of

international trade through the reduction of Tariffs, Quotas and

Subsidiaries.


Objectives of GATT:

a. To restore World Trade after World War II,

b. To expansion of International Trade,

c. To increase production,

d. To attain full employment,

e. To develop and full utilization of available resources,

f. To raise the standard of living of the World Community as a

whole,

g. To ensure orderly, fair and transparent international trade.


Principles of GATT:

Most Favored Nation status (MFN Status) – The first

principle is that every signatory will extend to every other

signatory member, the same and equal treatment in a non-

discriminatory manner.

National Treatment (NT Status): The second principle is

„National Treatment‟ that means the Imported Goods and

Domestic Goods (Foreign Goods and Local Goods) will be

treated equally, except for payment of Customs Duty at the

time of import.


Multi Lateral Ministerial Conferences of GATT and WTO:

The tenure of GATT - 1986-1994. – Punta Del Este, Uruguay

(September 1986), Montreal (December 1988), Brussels

(December 1990) and Marrakesh (April 1994).

The tenure of WTO - Post 1995 – Singapore (December

1996), Geneva (April 1998), Seattle (Nov-Dec 1999), Doha

(November 2001), Cancun (September 2003), Hong-Kong

(December 2005)


India’s Highlights of policy amendments – 2003:

Service Exports: (Duty free import facility for service sector)

Agro Exports:

Status Holders: (Firms who grow international business at

25% growth – Free Duty)

Hardware and Software: (Duty free upto US $ 10,000 subject

to STPI Certification)

Gems and Jewellery Sector:

Export Cluster: (Upgrading of infrastructure)


India’s Highlights of policy amendments – 2003:

Removal of Quantitative Restrictions: (69 items covering

Animal Products, Antibiotics, Vegetables etc, were removed

from restriction list)

EOU Scheme: (Export Oriented Unit, Special Export Zone,

Agri Export Zone)

EPCG Scheme: (Import of capital goods permitted to establish

in SEZ)

DEPB Scheme:

Advance License:

DFRC Scheme: (Boost exports)

International Business Environment

Please revert with your valuable suggestions, and most

important is also complaints therefore the same can be

delivered even better,:

SANJEEV KUMAR SINGH

+91 91640 76660

[email protected]

Date post:	15-Feb-2017
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Unit 3 international business 6th semester bbm notes pdf

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