This slides are for the MBA students or teachers teaching or learning International Business as their subject.

1. Dr. Noor Firdoos Jahan
Professor, R v institute of Management
Bangalore
1

3. 3
 Difficulties Operating in Borderless World
 Challenges
• Economic
• Legal-political
• Socio-cultural
 Multinational Corporations
 Foreign Markets - Entrance

4. 4
Business is becoming a unified, global field
Companies that think globally have a
competitive edge
Domestic markets are saturated for many
companies
Consumers can no longer tell from which
country they are buying

5. 5
Domestic stage:
market potential is limited to the home country
production and marketing facilities located at home
International stage:
exports increase
company usually adopts a multi-domestic approach
Multinational stage:
marketing and production facilities located in many countries
more than 1/3 of its sales outside the home country
Global (or stateless) stage:
making sales and acquiring resources in whatever country
offers the best opportunities and lowest cost
ownership, control, and top management tend to be dispersed

6. 6
1. Domestic 2. International 3. Multinational 4. Global
Strategic Orientation
Stage of Development
Cultural Sensitivity
Manager Assumptions
Domestically
Oriented
Export- Oriented
multi-domestic
Multinational Global
GlobalInitial foreign
involvement
Competitive
positioning
Explosion of
international
operations
Of little
importance
“One best
way”
Very important
“Many good
ways”
Somewhat
important
“The least-cost
way”
Critically
important
“Many good
ways”
SOURCE: Based on Nancy J. Adler, International Dimensions
of Organizational Behavior, 4th ed. (Cincinnati, Ohio: South-
Western, 2002), 8-9.

7. 7
 Number is increasing
 Awareness of national borders decreasing
 Rising managers expected to know a 2nd or 3rd language
 Corporate Example – Nestle (Swiss)
• CEO Peter Brabeck–Letmathe (Austrian)
• Half of general managers (non-Swiss)
• Strong faith in regional managers who are native to the region

8. 8
 International management is management of
business operations conducted in more than
one country
 Fundamental tasks do not change
 Basic management functions
• are the same - domestic or international
• Greater difficulties and risks when performing on an
international scale

9. 9
Organization
Economic
•Economic
development
•Infrastructure
•Resource and
product
markets
•Per capita
Income
•Exchange
rates
•Economic
conditions
Legal-Political
•Political risk
•Government
takeovers
•Tariffs, quotas,
taxes
•Terrorism, political
instability
•Laws, regulationsSociocultural
•Socio values, beliefs
•Language
•Religion (objects, taboos, holidays)
•Kinship patterns
•Formal education, literary
•Time orientation

10. 10
 Economic development
 Infrastructure
 Resource and product markets
 Exchange rates
 Inflation
 Interest rates
 Economic growth

11. 11
● Countries categorized as “developing” or “developed”
● Criterion used to classify is per capita income
● Developing countries have low per capita incomes
● LDCs located in Asia, Africa, and South America
● Developed are North America, Europe, & Japan
● Driving global growth in Asia, Eastern Europe, & Latin
America

12. 12
A country’s physical facilities that support
economic activities
Airports, highways, and railroads
Energy-producing facilities
Communication facilities

13. 13
When operating in another country...
• Managers must evaluate market demand
• To develop plants, resource markets must be
available – raw materials and labor
Corporate Example – McDonald

14. 14
 Rate at which one country’s
currency is exchanged for
another country’s
 Has become a major concern for
companies doing business
internationally
 Changes in the exchange rate
can have major implications for
profitability of international
operations

15. 15
Political Risk– due to events or actions by host
governments
● Loss of assets
● Loss of earning power
● Loss of managerial control
● Government takeovers
● Acts of violence

16. 16
Events such as riots, revolutions, or
government upheavals that affect the
operations of an international company

17. 17
Government laws and regulations differ
from country to country
Make doing business a true challenge for
international firms
Internet has increased impact of foreign
laws on U.S. companies – expands
potential for doing business on global
basis

18. 18
 Culture – shared knowledge, beliefs, values, common
modes of behavior, and ways of thinking among
members of a society
• Intangible
• Pervasive
• Difficult for outsider to learn
 Managers need to understand difference in social values
to comprehend local cultures and deal with them
effectively

19. 19
 Research = national value systems influence
organizational and employee working relationships
• Power distance (high = accept inequality)
• Uncertainty avoidance (uncomfortable with uncertainty)
• Individualism and collectivism (Individualism take care of
themselves)
• Masculinity/femininity (preference for
achievement/assertiveness; femininity for relationship)
• Long-term/short-term orientation = 5th dimension
Ethical Dilemma: The Problem in Asia

20. 20

21. 21
• Assertiveness
• Future orientation
• Uncertainty avoidance
• Gender differentiation
• Power distance
• Societal collectivism
• Individual collectivism
• Performance orientation
• Humane orientation
Global Leadership and Organizational Behavior Effectiveness project
More comprehensive view of cultural
similarities and differences

22. 22
 Other Cultural Characteristics
• Language
• Religion
• Attitudes
• Social Organization
• Education
 Linguistic pluralism – several languages
exist
 Ethnocentrism – regard own culture superior

23. 23
Exporting
High
HighLow Low
Ownershipof
ForeignOperations
Cost to Enter Foreign Operations
Licensing
Franchising
Joint Venture
Acquisition
Greenfield
Venture

24. 24
Receives >25% total sales revenues
from operations outside parent
company’s home country
• Managed as integrated worldwide business
system
• Controlled by single management authority
• Top managers exercise global perspective

25. 25
Managers must be sensitive to cultural subtleties
 Personal challenges – culture shock
 Managing Cross-culturally
• Leading
• Decision making
• Motivating
• Controlling
Managers must be culturally flexible and easily
adapt to new situations

26. Globalization implies integration of the
economy of the country with the rest of the
world economy and opening up of the
economy for foreign direct investment by
liberalizing the rules and regulations and by
creating favorable socio-economic and political
climate for global business.
26

27. According to IMF: -”The growing
economic interdependence of countries
worldwide through increasing volume
and variety of cross border transaction
in goods and services and of
international capital cash flows, and
through the more rapid and
widespread diffusion of technology.”
27

29.  Opening and planning to expand business
throughout the world.
 Erasing the difference between domestic
market and foreign market.
 Buying and selling goods and services
from/to any countries in the world.
 Locating the production and other physical
facilities on a consideration of the global
business dynamics ,irrespective of national
consideration.
29

30.  Basing product development and production
planning on the global market consideration.
 Global sourcing of factor of production i.e. raw-
material, components , machinery, technology,
finance etc. are obtained from the best source
anywhere in the world.
 Global orientation of organizational structure
.and management culture
30

31. Globalization have several benefits ,these are: -
 Free flow of capital and increase in the total
capital employed.
 Free flow of technology.
 Increase in industrialization.
 Spread of production facilities throughout the
globe.
 Balanced development of world economies.
 Increase in production and consumption.
 Commodities at lower price with high quality.
 Increase in jobs and income.
 Higher Standard of living.
 Balanced human development
31

32. Negative effects of
Globalization
 Loss of domestic industries
 Exploits Human resource
 Decline in income
 Unemployment
 Transfer of natural resources
 Lead to commercial and political
colonism
 Widening gap between rich and
poor
 Dominance of foreign institutions
32

33.  Growing global markets in services
people can now offer and trade services globally --
from medical advice to software writing to data
processing -- that could never really be traded
before.
W-2, W-4, 1099
bonuses & stock
statements
Indian accountant
US tax payers

34.  Market economic policies spreading
around the world, with greater privatization
and liberalization than in earlier decades.
ex: BRIC
 Widespread adoption of democracy as the
choice of political regime.

35.  Multilateral agreements in trade, taking on
such new agendas as environmental and
social conditions.
 New multilateral agreements – for services,
intellectual property , communications –
more binding on national governments
than any previous agreements.

36. Main sectors:
Main Destinations:
China, UAE, UK
North America is emerging as a destination.
India Inc. Investing Overseas
• Auto Components • IT
• Beverages • Metals
• Cosmetics • Mobile Communications
• Energy • Pharmaceuticals
• Financial Services • Software
• Industrial Goods

37. Additional economic indicators:
• India has a consumer base of 1.14 billion people
• India is the 4th largest economy in the world when measured by PPP
• India’s has a growing middle class of over 300 million people - 30% of India’s
population – and larger than the population of the US
• India is the 3rd largest global telecom market. The mobile subscriber base has
grown from 0.3 Million in 1996 to over 250 million currently.
• India is likely to add over 200 shopping malls by 2010 and 715 malls by 2015
• The number of billionaires in the country were 3 in 1999; 23 in 2006; and are 48
currently.

38. Buyer Acquisition Price
Reliance Industries Flag Telecom, Bermuda US$ 212m
Tata Motors Daewoo, Korea US$ 118m
Infosys Technologies Expert Information Services, Australia US$ 3.1m
Bharat Forge Carl Dan Peddinghaus, Germany N/A
Ranbaxy RPG (Aventis) Laboratories, France N/A
Wockhardt CP Pharmaceuticals, UK US$ 18m
Cadila Health Alpharma SAS, France US$ 5.7m
Hindalco Straits Ply, Australia US$ 56.4m
Wipro NerveWire Inc, USA US$ 18.5m
Aditya Birla Dashiqiao Chem, China US$ 8.5m
United Phosphorus Oryzalin Herbicide, USA US$ 21.3m
"Toyota Motor has
chosen to source from
India due to its
competitive cost of
manufacture, availability
of abundant engineering
talent, and strong
indigenous machine
tool."

39. "India has a fantastic pool of
software professionals. The world
needs to benefit from this.“
Bill Gates, Microsoft
Chairman
This market (India) is critical to
our plans for building a Ford
Motor Co. for the 21st century
Bill Ford,
Chairman and
CEO
India on its way to becoming IT,
manufacturing kingdom of the
world
The dynamism shown by India in
the last 15 years is phenomenal
Mr Yasukuni Enoki,
Japanese Ambassador
to India
Paul Wolfowitz,
President, World Bank
What are people talking about India?

40. 40
World Trade Organization
Created by : Uruguay Round negotiations (1986-94)
Membership :153 countries (on 23 July 2008)
Budget : 185 million Swiss francs for 2008
2007 Secretariat Staff : 625
Head : Director-General, Pascal Lamy
Established: 1 January 1995
Location :- Geneva, Switzerland

41. 41
INTERNATIONAL TRADIND ENVIRONMENT
 WTO (WORLD TRADING
ORGANISATION)
The creation of WTO on
January 1, 1995 marked the
biggest reform of international
trade. GATT was founded in
1947 with 23 countries including
India. The WTO which is based
in Geneva has a larger
membership than GATT with the
present number being 150
including India – a founder
member.
WTO is a replacement of GATT.

42.  The formation of the World Trade Organisation (WTO) in 1995 was a
watershed development in the sphere of international trade. It was a major
advancement in the multilateral trade regime, with the previous regime
embodied in the form of a treaty known as the General Agreement on Tariffs
and Trade (GATT).
 GATT was signed in 1948 and had close to 30 member countries. Its
primary objective was to see that impediments to international trade --
mainly in the form of tariffs -- were reduced or removed in order to facilitate
the movement of goods across borders. In the course of six to seven
rounds of negotiation, it succeeded in getting countries to lower their tariff
rates, thus enabling greater movement of goods.
 However, over time, the nature and character of global trade started to get
very complex. Countries began to realise that GATT did not have all the
answers to the questions posed by the increasingly complicated nature of
global trade.
42

43. 43
•This led member countries to launch a new round of
negotiations, from 1986-1994, known as the Uruguay
Round (UR).
•This series of negotiations was much more elaborate
and detailed. It not only covered trade in goods but also
brought trade in services and intellectual property rights
within the ambit of the multilateral trading regime.
• Even within trade in goods, a far more thorough set of
rules was discussed and negotiated. Further, trade in
agricultural goods was brought into the fold of the
multilateral trading regime in a major way. In GATT,
trade in agricultural goods was, at best, minimal and at
the fringes of the discussions.

44. 44
OBJECTIVES OF WTO
The basic objectives of WTO are :
 To encourage open, fair and undistorted competition.
 To ensure international trade without discrimination.
 To create an environment of comparative advantage to
expand production and trade. This would ensure optimum
utilization of world’s resources.
 To resolve disputes between trading countries.
 To ensure that the developing countries secure a better
share of growth n international trade.
 To protect and preserve the environment of the world.
 To raise employment opportunities in its member nations.
 To raise the standard of living of the people of its member
nations.

45. FUNCTIONS OF WTO
 It administers and implements the multinational trade
agreements.
 It acts as a forum for multilateral trade negotiations.
 It resolves trade differences and disputes among
member nation through proper forums and conciliation
mechanisms.
 It monitors the execution of tariffs and non tariff
measures as agreed by member nations.
 It periodically reviews trade policies of member countries
to check whether they conform to WTO guidelines.
 It co-operates with other institutions involved in global
economic policy making.
 It provides advise to member nations when required.

46.  The WTO has about 150 members, accounting for about 95% of
world trade. Around 30 others are negotiating membership.
 Decisions are made by the entire membership. This is typically by
consensus. A majority vote is also possible but it has never been
used in the WTO, and was extremely rare under the WTO’s
predecessor, GATT. The WTO’s agreements have been ratified in all
members’ parliaments.
 The WTO’s top level decision-making body is the Ministerial
Conference which meets at least once every two years.
46

47. 47
•Below this is the General Council (normally ambassadors and
heads of delegation in Geneva, but sometimes officials sent from
members’ capitals) which meets several times a year in the
Geneva headquarters. The General Council also meets as the
Trade Policy Review Body and the Dispute Settlement Body.
•At the next level, the Goods Council, Services Council and
Intellectual Property (TRIPS) Council report to the General
Council.
•Numerous specialized committees, working
groups and working parties deal with the individual agreements
and other areas such as the environment, development,
membership applications and regional trade agreements.

48. 48

49. The WTO is based on nine principles:
1. Transparency
2. MFN treatment
3. National treatment
4. Free trade principle
5. Dismantling trade barriers
6. Rule-based trading system
7. Treatment for LDCs
8. Competition principle
9. Environment protection
49

50. 50
Rule Based
Trading
System
Treatment
For LDCs
Competition
On BoP
Environment
Protection
Transparency
Dismantling
Trade
Barriers
Principles
Of
WTO
MFN
Treatment
National
Treatment
Free
Trade
Principle

51. 1)Agriculture
2) Sanitary & Phyto Sanitary measures
3) Technical barriers to trade
4) Agreement on Textiles and clothing
5) Anti - Dumping, safeguard and countervailing duties
6) Customer valuation
7) Rules of origin
8) Services
9) Trade - Related Intellectual Property Status (TRIPs)
10) Trade - Related investment Measures (TRIMs)
11) Dispute settlement
12) Labour
13) Transfer of Technology
14) Information and Technology Agreement
51

52. International peace:- by helping the trade
to flow smoothly and dealing with disputes
over trade issues
Risk reduction:- Confidence to nations to
do more and more trade, thereby
stimulating economic growth

53.  Founder member
 Ensured more stability and predictability
 MFN status and national treatment for its
exports
 India is expected to snatch most of the
business deals that are presently catering the
developed nations which includes major
service based industries like telecom,
financial services, infrastructure services
such as transport and power
[Source: WTO Secretariat Report]

54. The WTO has both favourable and non-favourable impact on the Indian economy.
FAVOURABLE IMPACT:
1)Increase in export earnings
2) Agricultural exports
3) Textiles and Clothing
4) Foreign Direct Investment
5) Multi-lateral rules and discipline
6)GDP share
7)IT & ITes
8)Telecom
9)Mobile tariffs in India
10)TRIPS in India
11)Sanitary and Phytosanitary Measures and Technical barriers to trade
54

55.  Increase in export earnings can be viewed from growth in
merchandise exports and growth in service exports:
• Growth in merchandise exports: The establishment of the WTO
has increased the exports of developing countries because of
reduction in tariff and non-tariff trade barriers. India’s
merchandise exports have increased from 32 billion us $
(1995) to 185 billion u $ (2008-09).
• Growth in service exports: The WTO introduced the GATS
(general Agreement on Trade in Services) that proved
beneficial for countries like India. India’s service exports
increased from 5 billion us $ (1995)to 102 billion us $ (2008-
09) (software services accounted) for 45% of India’s service
exports)
55

56. Reduction of trade barriers and domestic
subsidies raise the price of agricultural
products in international market, India
hopes to benefit from this in the form of
higher export earnings from agriculture
56

57. The phasing out of the MFA will largely
benefit the textiles sector. It will help the
developing countries like India to increase
the export of textiles and
57

58. As per the TRIMs agreement, restrictions on
foreign investment have been withdrawn
by the member nations of the WTO.
• This has benefited developing countries by
way of foreign direct investment, euro
equities and portfolio investment. In 2008-
09, the net foreign direct investment in
India was 35 billion us $.
58

59. It is expected that fair trade conditions will
be created, due to rules and discipline
related to practices like anti-dumping,
subsidies and countervailing measure,
safeguards and dispute settlements.
Such conditions will benefit India in its
attempt to globalise its economy.
59

60. 59.2 54.8
46.3 39.2 32.2
24
13.3 16.6
21.6
23.7
27.2
26.7
27.5 28.6 31.1 36.6 40.6
49.3
1950-51 1960-61 1970-71 1980-81 1990-91 2001-02
Primary Secondary Tertiary

61.  Key contributor to the Services Sector
accounting for 5.8% of India’s overall GDP
[Source: PWC report for CII]
 The increase in availability and reduction in
tariffs has prompted many developed nations
to go for business with India especially in IT
and ITeS industry
 Software exports from the Rajiv Gandhi
Chandigarh Technology Park rose from
Rs.504 crore in 2007-08 to Rs.750 crore last
year.

63.  The WTO Agreement on Basic
Telecommunications provided for
liberalization of trade
 India’s approach was primarily defensive
 MFN exemptions: for different accounting
rates into Pakistan, Bangladesh, Nepal and
Bhutan
 1998 – 25% FDI
 2001 – 49% FDI
 2003 – 74% FDI but mgmt. control with
Indian operators

64. 0.23
0.22
0.19
0.17
0.16
0.11 0.11 0.11
0.09
0.05 0.05
0.04
0.03
0.02
0
0.05
0.1
0.15
0.2
0.25
Belgium
Italy
UK
France
Brazil
Philippines
Taiwan
Argentina
Malayasia
HongKong
Thailand
Pakistan
China
India

65. Seven types
• Copyrights
• Trademarks
• Geographical indications
• Industrial designs
• Patents
• Integrated circuits
• Trade secrets

66. India’s patent policy allowed very little
scope for patents in agriculture
Protecting some of the geographical
indications of interest to India e.g. Basmati
rice, Darjeeling tea, Mysore Dosa
Exclusive Marketing Rights for the
producers of patented drugs and
agrochemicals

67. Protects human, animal and plant life and
health including from pests and diseases
of food
Size, shape, weight and packaging
material requirements including labeling
and handling safety
Peanuts, Marine products, Mushrooms in
EU

68. 1) TRIPs
2) TRIMS
3) GATS
4) TRADE AND NON – TARIFF Barriers
5) LDC exports
68

69.  Protection of intellectual property rights has been one of the major concerns of the WTO. As
a member of the WTO, India has to comply with the TRIPs standards. However, the
agreement on TRIPs goes against the Indian patent act, 1970, in the following ways:
• Pharmaceutical sector :Under the Indian Patent act, 1970, only process patents are granted
to chemicals, drugs and medicines. Thus, a company can legally manufacture once it had
the product patent. So Indian pharmaceutical companies could sell good quality products
(medicines) at low prices. However under TRIPs agreement, product patents will also be
granted that will raise the prices of medicines, thus keeping them out of reach of the poor
people, fortunately, most of drugs manufactured in India are off –patents and so will be less
affected.
• Agriculture : Since the agreement on TRIPs extends to agriculture as well; it will have
considerable implications on Indian agriculture. The MNG, with their huge financial
resources, may also take over seed production and will eventually control food production.
Since a large majority of Indian population depends on agriculture for their livelihood, these
developments will have serious consequences.
Micro-organisms: Under TRIPs Agreement, patenting has been extended to
micro-organisms as well. These mills largely benefit MNCs and not developing countries like
India
69

70. The Agreement on TRIMs also favours
developed nations as there are no rules in
the agreement to formulate international
rules for controlling business practices of
foreign investors. Also, complying with the
TRIMs agreement will contradict our
objective of self –reliant growth based on
locally available technology and resources.
70

71. GATS: The Agreement on GATS will also
favour the developed nations more. Thus,
the rapidly growing service sector in India
will now have to compete with giant foreign
firms. Moreover, since foreign firms are
allowed to remit their profits, dividends and
royalties to their parent company, it will
cause foreign exchange burden for India.

72. Reduction of trade and non-tariff barriers
has adversely affected the exports of
various developing nations.
Various Indian products have been hit by.
Non- tariff barriers. These include textiles,
marine products, floriculture,
pharmaceuticals, basmati rice, carpets,
leather goods etc.

73.  Many member nations have agreed to
provide duty – free and quota – free market
access to all products originating from least
developed countries.
 India will have to now bear the adverse effect
of competing with cheap LDC exports
internationally.
 Moreover, LDC exports will also come to the
Indian market and thus compete with
domestically produced goods

75. Regional economic integration has
enabled countries to focus on issues that
are relevant to their stage of development
as well as encourage trade between
neighbors. Integration also called regional
trading block.

77. There are about five additive levels of economic integration
impacting the global landscape:
 Free trade. Tariffs (a tax imposed on imported goods)
between member countries are abolished or significantly
reduced. Each member country keeps its own tariffs in regard
to third countries. The general goal is to develop economies of
scale and comparative advantages, which promotes economic
efficiency.
 Custom union. Sets common external tariffs among member
countries, implying that the same tariffs are applied to third
countries. Custom unions are particularly useful to level the
competitiveness playing field and address the problem of re-
exports (using preferential tariffs in one country to enter
another country).

78.  Common market. Factors of production, such a labor and capital,
are free to move within member countries, expanding scale
economies and comparative advantages. Thus, a worker in a
member country is able to move and work in another member
country.
 Economic union. Monetary and fiscal policies between member
countries are harmonized, which implies a level of political
integration. A further step concerns a monetary union where a
common currency is used, such as with the European Union (Euro).
 Political union. Represents the potentially most advanced form of
integration with a common government and were the sovereignty of
member country is significantly reduced. Only found within nation
states, such as federations where there is a central government and
regions having a level of autonomy.

79. The pros of creating regional agreements include the following:
 Trade creation. These agreements create more opportunities for countries
to trade with one another by removing the barriers to trade and investment.
Due to a reduction or removal of tariffs, cooperation results in cheaper prices
for consumers in the bloc countries. Studies indicate that regional economic
integration significantly contributes to the relatively high growth rates in the
less-developed countries.
 Employment opportunities. By removing restrictions on labor movement,
economic integration can help expand job opportunities.
 Consensus and cooperation. Member nations may find it easier to agree
with smaller numbers of countries. Regional understanding and similarities
may also facilitate closer political cooperation.

80. The cons involved in creating regional agreements include the following:
 Trade diversion. The flip side to trade creation is trade diversion. Member countries may
trade more with each other than with nonmember nations. This may mean increased trade
with a less efficient or more expensive producer because it is in a member country. In this
sense, weaker companies can be protected inadvertently with the bloc agreement acting as
a trade barrier. In essence, regional agreements have formed new trade barriers with
countries outside of the trading bloc.
 Employment shifts and reductions. Countries may move production to cheaper labor
markets in member countries. Similarly, workers may move to gain access to better jobs
and wages. Sudden shifts in employment can tax the resources of member countries.
 Loss of national sovereignty. With each new round of discussions and agreements within
a regional bloc, nations may find that they have to give up more of their political and
economic rights. In the opening case study, you learned how the economic crisis in Greece
is threatening not only the EU in general but also the rights of Greece and other member
nations to determine their own domestic economic policies.

81. 81
TRADING Blocks
Trading bloc is a voluntary
grouping of countries of a
specific region for common
benefits. It indicates regional
economic integration of
countries for mutual benefits.
Generally countries close to
each other geographically
form trading Blocks. This kind
of regional economic
integration has intensified over
the year. European union,
NAFTA, OPEC, ASEAN,
SAARC etc. are some of the
prominent trading Blocks.

82. 82
OBJECTIVES OF TRADING Blocks
 To remove trade restriction among participating nations.
 To improve political, social and cultural relations among
member nations through improved trade ties.
 To promote growth of the region as a whole through co-
operation of member countries.
 To encourage open transfer of resources i.e. raw material,
labour & capital between nations.
 To establish a collective bargaining force against non-
members.
 To levy common tariffs and other barriers against non-
members.
 To provide assistance to member countries with special
reference to international trade.
 To promote economic growth of the region through mass
production and marketing of goods.

83. 83
IMPORTANT TRADING Blocks
NAFTA OPEC SAARC ASEAN EU SAFTA MERCOSUR

84.  THERE ARE TWO VIEWS :
 1)ANALYST LIKE PREEG ARGUE THAT TRADE
BLOCS ARE DESIRABLE BECAUSE THEY
COMPLIMENT GLOBAL TRADE.
 2)OTHER ANALYST ARGUE THAT TRADE BLOCS
ARE NOT DESIRABLE BECAUSE THEY ARE
THREAT TO FREE TRADE AND NEED TO
PROTECTIONISM

85. TRADE BLOCS COMPLIMENT GLOBAL
TRADE
THEY PROTECT INTRA REGIONAL
TRADE FORM OUTSIDE FORCES.
THEY ESTABLISH REGIONAL
SECURITY.

86.  IMPORT QUOTAS(LIMITING THE AMOUNT OF
IMPORTS INTO THE COUNTRY SO THAT DOMESTIC
CONSUMERS BUY PRODUCTS MADE BY THEIR
COUNTRIES IN THEIR REGION).
 CUSTOM DELAYS (ESTABLISHING BUREAUCRATIC
FORMALITIES THAT SLOW DOWN TRADE FROM
THE OTHER REGION)
 SUBSIDIES BARRIER (GIVING HEAVY SUBSIDIES
TO PROTECT REGIONAL TRADE )
 VOLUNTRY BOYCOTTS AND TECHNICAL
BARRIERS.

87.  History:
• The Organization of the Petroleum Exporting
Countries (OPEC) is a permanent,
intergovernmental Organization, created at the
Baghdad Conference on September 10–14,
1960.
 Functions:
• The OPEC MCs coordinate their oil production
policies in order to help stabilise the oil market
and to help oil producers achieve a reasonable
rate of return on their investments. This policy is
also designed to ensure that oil consumers
continue to receive stable supplies of oil.

88. OPEC FUND: The OPEC Fund for
International Development is a
multilateral development finance
institution. It was established in
January 1976, by the member countries
of the Organization of the Petroleum
Exporting Countries.

89.  The Secretariat carries out the executive
functions of the Organization in accordance with
the provisions of the OPEC Statute and under
the direction of the Board of Governors
 Members: Algeria, Angola, Indonesia, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE,
Venezuela.

90.  IT’S A PERMANENT ORGANIZATION ESTABLISHED IN 1960
AT THE BAGHDAD CONFERENCE BY IRAN IRAQ, KUWAIT,
SAUDI ARABIA, AND VENEZUELA.
 IT WAS LATER JOINED 8 OTHER MEMBERS.
 ITS HEAD QUARTER IS IN VIENNA.
 ITS OBJECTIVE IS TO COORDINATE AND UNIFY
PETROLEUM POLICIES AMONGS THE MEMBER COUNTRIES
 TO SECURE FAIR AND STABLE PRICES FOR PETROLEUM
PRODUCERS.
 PROPER PRICE AND REGULAR SUPPLY OF PETROLEUM
FOR CONSUMING NATIONS.

91.  ESTABLISHED IN 1967 .
 5 FOUNDING MEMBERS : INDONESIA , MALAYASIA,
PHILLIPINES, SINGAPORE AND THILAND.
 LATER ON JOINED BY BRUNEI, MYANMAR,VIETNAM ETC.
 ASEAN FREE TRADE AREA (AFTA) .
 ASEAN BEYOND TRADE HAS POLITICAL ROLE AS VISIBLE
BY THE FORMATION OF ASEAN REGIONAL FORUM OF
WHICH CHINA, INDIA AND USA ARE MEMBERS.
 ASEAN AS A TRADING BLOC HAS BEEN A HUGE SUCCESS
LEADING TO PROSPERITY AND ELIMINATION OF POVERTY
IN THE MEMBER COUNTRY

93. SAARC

96.  The South Asian Association for Regional
Cooperation (SAARC) was established when its
Charter was formally adopted on December 8, 1985
by the Heads of State or Government of
Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan and Sri Lanka.
 SAARC provides a platform for the peoples of South
Asia to work together in a spirit of friendship, trust
and understanding. It aims to accelerate the process
of economic and social development in Member
States.

97.  Agriculture and Rural Development;
 Health and Population Activities;
 Women, Youth and Children;
 Environment and Forestry;
 Science and Technology and Meteorology;
 Human Resources Development; and
 Transport.
 Recently, high level Working Groups have also been
established to strengthen cooperation in the areas of
Information and Communications Technology, Biotechnology,
Intellectual Property Rights, Tourism, and Energy.

98.  The President of the Islamic Republic of Afghanistan, His Excellency
Mr. Hamid Karzai; the Chief Adviser of the Government of the People’s
Republic of Bangladesh, His Excellency Dr. Fakhruddin Ahmed; the
Prime Minister of the Kingdom of Bhutan, His Excellency Lyonpo
Khandu Wangchuk; the Prime Minister of the Republic of India, His
Excellency Dr. Manmohan Singh; the President of the Republic of
Maldives, His Excellency Mr. Maumoon Abdul Gayoom; the Prime
Minister of Nepal, Rt. Hon’ble Mr. Girija Prasad Koirala; the Prime
Minister of the Islamic Republic of Pakistan, His Excellency Mr.
Shaukat Aziz; and the President of the Democratic Socialist Republic of
Sri Lanka, His Excellency Mr. Mahinda Rajapaksa, met at the
Fourteenth Summit meeting of the South Asian Association for
Regional Cooperation (SAARC) held in New Delhi, India on April 3-4,
2007.

99. The Heads of State or Government
welcomed the entry of the Islamic Republic
of Afghanistan into SAARC. This was a
historic moment as Afghanistan assumed
its rightful place as a valued member of the
SAARC fraternity

100.  The SAARC Secretariat was established in Kathmandu on 16
January 1987. Its role is to coordinate and monitor the
implementation of SAARC activities, service the meetings of the
Association and serve as the channel of communication between
SAARC and other international organisations. The Secretariat
has also been increasingly utilised as the venue for SAARC
meetings.
 The Secretariat comprises the Secretary General, seven
Directors and the General Services Staff. The details of its
officials and working divisions responsible for areas of work can
be viewed under respective links.

102.  1.SAARC Agricultural Information Centre (SAIC), Dhaka
 2.SAARC Meteorological Research Centre (SMRC), Dhaka
 3.SAARC Tuberculosis Centre (STC), Kathmandu
 4.SAARC Documentation Centre (SDC), New Delhi
 5.SAARC Human Resources Development Centre (SHRDC),
Islamabad
 6.SAARC Coastal Zone Management Centre, Maldives
 7.SAARC Information Centre, Nepal
 8.SAARC Energy Centre, Pakistan
 9.SAARC Disaster Management Centre, India

103.  BORN IN 1985
 7 MEMBERS COUNTRIES :BANGLADESH, BHUTAN,
INDIA,MALDIVES,NEPAL,PAKISTAN AND SRI LANKA
 IT HAS 1.3 BILLION INHABITANTS
 REPRESENTS 22% OF THE WORLD POPULATION BUT ONLY
1.9% OF THE WORLD GNP.
 SAARC HAS BEEN A SHEER FAILURE.
 THE TOTAL EXTERNAL TRADE OF THE REGION – 0.8% OF
WORLD EXPORTS AND 1.3% OF WORLD IMPORTS
 THE REASON BEING POLITICAL DISPUTE BETWEEN
MEMBER COUNTRIES

104. STILL SOME PROGRESS HAS BEEN
ACHIEVED
SAPTA (SOUTH ASIAN
PREFERENTIALTRADING AGREEMENT)
HAS COME INTO FORCE IN 1995
CONSENSUS ON SAFTA(SOUTH ASIAN
FREE TRADE AREA)HAS BEEN
REACHED

105.  The council of ministers have signed the
SAARC preferential trading arrangement
agreement on April 11, 1993.
Objectives:-
 To gradually liberalize the trade among
members of SAARC
 To eliminate trade barriers among SAARC
countries & reduce or eliminate tariffs
 To promote and sustain mutual trade &
economic cooperation among member
countries

106.  The North American Free Trade Area is the trade
bloc in North America created by the North American
Free Trade Agreement (NAFTA) and its two
supplements, the North American Agreement on
Environmental Cooperation (NAAEC) and the The
North American Agreement on Labor Cooperation
(NAALC), whose members are Canada, Mexico and
the United States. It came into effect on 1 January
1994.

108.  The agreement was initially pursued by conservative
governments in the United States and Canada supportive of free
trade, led by Canadian Prime Minister Brian Mulroney, U.S.
President George H. W. Bush, and the Mexican President Carlos
Salinas de Gortari.
 The three-nation NAFTA was signed on 17 December 1992,
pending its ratification by the legislatures of the three countries.
 There was considerable opposition in all three countries, but in
the United States it was able to secure passage after Bill Clinton
made its passage a major legislative initiative in 1993.

109. The NAFTA Secretariat, comprised of a
Canadian Section, a Mexican Section and
a United States Section, is responsible for
the administration of the dispute settlement
provisions of the North American Free
Trade Agreement (NAFTA).

110.  The objectives of this Agreement, as elaborated more
specifically through its principles and rules, including
national treatment, most-favored-nation treatment and
transparency, are to:
• a) eliminate barriers to trade in, and facilitate the cross-border
movement of, goods and services between the territories of the
Parties;
• b) promote conditions of fair competition in the free trade area;
• c) increase substantially investment opportunities in the
territories of the Parties;
• d) provide adequate and effective protection and enforcement
of intellectual property rights in each Party's territory;

111. • e) create effective procedures for the implementation
and application of this Agreement, for its joint
administration and for the resolution of disputes; and
• f) establish a framework for further trilateral, regional and
multilateral cooperation to expand and enhance the
benefits of this Agreement.
 2. The Parties shall interpret and apply the
provisions of this Agreement in the light of its
objectives set out in paragraph 1 and in
accordance with applicable rules of international
law.

112.  The Parties affirm their existing rights and
obligations with respect to each other under the
General Agreement on Tariffs and Trade and other
agreements to which such Parties are party.
 In the event of any inconsistency between this
Agreement and such other agreements, this
Agreement shall prevail to the extent of the
inconsistency, except as otherwise provided in this
Agreement.

113.  BORN IN JANUARY 1994.
 MEMBER NATIONS:US,CANADAAND MEXICO.
 it’s the WORLD LARGEST FREE TRADE AREA.
 UNDER NAFTA, ALL NON TARIFF BARRIERS TO
AGRICULTURE WERE ELIMINATED.
 MANY TARRIFFS ARE BEING ELIMINATED
OVER A PEROID OF 5-15 YRS.

114.  TWO WAY TRADE BETWEEN US & MEXICO HAS
INCREASED BY MORE THAN 55%.($11.6
BILLION).
 TWO WAY TRADE BETWEEN US &CANADA
INCREASED MORE THAN 50%(16.3 BILLION.)
 HUGE BENEFITS HAVE ACCRUED TO THE NAFTA
MEMBER COUNTRIES.
 NAFTA HAS BEEN A ROARING SUCCESSS.

115.  IT IS A FAMILY OF DEMOCRATRIC EUROPEAN
COUNTRIES.
 COMMITED TO WORKING TOGETHER FOR
PEACE AND PROSPERITY.
 ITS HISTORICAL ROOTSLIE IN THE SECOND
WORLD WAR.
 IDEA OF EUROPEAN INTEGRATION WAS
CONCEIVED TO PREVENT SUCH KILLING AND
DESTRUCTION FROM EVER HAPPENING AGAIN.

116. Member states of the EU:
• Austria, Belgium, Bulgaria, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden, United Kingdom

117.  The euro is the currency of 13 European Union
countries: Belgium, Germany, Greece, Spain,
France, Ireland, Italy, Luxembourg, the Netherlands,
Austria, Portugal, Slovenia and Finland.
 Euro banknotes and coins have been in circulation
since 1 January 2002 and are now a part of daily life
for 315 million Europeans living in the euro area

118. The Eurosystem, which consist of
the European Central Bank (ECB) and
the national central banks of the 13
countries belonging to the euro area, has
the exclusive right to issue euro
banknotes. All decisions on the designs,
the denominations, etc. of the euro
banknotes are taken by the ECB.

119.  The Eurosystem is in charge of defining and
implementing the monetary policy of the euro area.
Its primary objective in this respect is to maintain
price stability in the euro area. It furthermore
conducts foreign-exchange operations (consistent
with the exchange-rate policy defined by the
Council), holds and manages the official foreign
reserves of the euro-area Member States and
promotes the smooth operation of payment systems

120. 19 September 1950: European Payments
Union (EPU)
18 April 1951: European Coal and Steel
Community established
25 March 1957: Treaty of Rome
29 December 1958: European Monetary
Agreement

121.  EUROPEAN PARLIAMENT.(ELECTED BY
PEOPLES OF MEMBER STATES)
 COUNCIL OF EUROPEAN
UNION(REPRESENTING THE GOVERNMENTS
OF MEMBER STATES).
 EUROPEAN COMMISION(DRIVING FORCE AND
THE EXECUTIVE BODY).
 COURT OF JUSTICE.
 COURT OF AUDITORS.

122.  THE RULE OF LAW IS FUNDAMENTAL TO THE EUROPERAN
UNION.ALL EU DECISIONS ARE BASED ON
TREATIES.,WHICH ARE AGREED BY ALL EU CONTRIES.
 EU CONSISTED OF JUST 6 COUNTRIES:
BELGIUM,GERMANY,FRANCE,ITALY,LUXEMBOURG &
NETHERLANDS.
 FURTHER ADDITIONS HAVE BEEN REAPEATEDLY TAKEN
PLACE.
 LAST INCREASE TOOK PLACE IN 2004,WITH 10 NEW
COUNTRIES JOINING IN.

123.  IT HAS ENSURE FREEDOM,SECURITY & JUSTICE.
 JOB CREATION.
 REGIONAL DEVELOPMENT & ENVIRONMENTAL
PROTECTION.
 IT HAS HELPED RAISED LIVING STANDARDS,BUILT A
SINGLE EUROPE WIDE MARKET.
 LAUNCHED THE SINGLE EUROPEAN CURRENCY- THE
EURO.
 IT HAS STRENGTHNED EUROPES VOICE IN THE WORLD.

124.  Established in 1991 by Brazil, Argentina, Paraguay,
Uruguay.
 These four members generate 70% GNP of South
America.
 By 1996, MERCOSUR had abolished tariffs on
goods accounting for 90% of the trade between its
members countries, with remaining tariffs to be
abolished by 2000.
 MERCOSUR & EU Signed a cooperation
agreement to pave the way for a free trade accord
in 2001.

125. Thank You