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MODULE 2 INTERNATIONAL BUSINESS ENVIRONMENT Globalization of business WTO and trade liberalization emerging issues implications for India Regional Trade Blocks Inter regional trade amongregional groups.1.What do you mean by international business environment?INTERNATIONAL BUSINESS ENVIRONMENTKeegan observes by 1990s the concept of marketing is outdated and that time demanded a strategic concept. The strategic concept of marketing shifted focus on marketing from product to customer in the context of broader external environment. To succeed marketers must know customer in a context including competition, government policy regulation and economic, social, political macro forces that shape evolution of market. the difference in domestic and foreign environment need different strategies. What makes a business strategy successful in one market is a failure in another market. Environment plays a major role in international business.14. What are the different sets of environment in international business?There are 2 different environments in IB. 1.Internal environment 2.External environment1. INTERNAL ENVIRONMENTThe internal environment of the firm is also important. The competence of firm to do international business depends on number of internal factors as1. Mission and vision of firm, 2. Attitudes, 3.capabilities, and entire people in organization. 2. EXTERNAL ENVIRONMENTA firm in international business has 3 different set of external environment.1. Domestic environment 2.foreign environment 3.global environment- The diagram shows different environment of international International businessforigenglobalDomesticInternal environment

A company which wants to do business abroad should be having a relevant internal environment. Some government policies or regulations will be there in case of companies who do foreign business abroad. For those companies who do not outsource anything or dont produce anything domestically, dont have to bother about micro and macro environment.Foreign environment refers to environment of the relevant foreign market. The nature of business environment will be different for different market.The global environment refers to global factors which are relevant to business such as WTO principles and agreement. Similarly there are certain development like a hike in crude oil price which have global impact.As Cateora and Keaveney points out that the key to successful international business is adaption to the difference in environment that usually exist from one market to other. there are number of example of very prominent MNCs who burn their hand because of non adaption to the environment.P& G entered the Japan market with its US strategies in 1973 lost their business in 1987 ,but later with the adoption to the business environment in Japan it made huge profit. Apple computers and Colgate Palmolive products are also among those which failed in Japan.MICRO AND MACRO ENVIRONMENT OF INTERNATIONAL BUSSINESSMicro factors-actors in firms immediate environment which directly influence firms decision. For ex suppliers, markets, intermediaries, financial institution, middleman ,competitors Macro environment-it means that those environment outside the industries like cultural, economic, social, political, legal, technological.IMPACT OF CULTURAL ENVIRONMENT IN INTERNATIONAL BUSINESSAs Geert Hofstede a noted Dutch writer has put it, culture is the software of the mind. Kluckhohn has defined culture in simple terms as total life way of people. Culture refers to the learned, shared,and enduring orientation patterns in a society. People demonstrate their culturethrough values, ideas, attitudes, behaviors, and symbols. Culture affects even simple greetings and partings. For example, in China, friends express thoughtfulness by asking each other whether they have had their meal yet. In Turkey, a typical greeting is What is new with you? The Japanese, who still exercise formal greeting and parting rituals, routinely apologize to the other party just before ending a telephone conversation.culture include both material and non material culture. Material culture involves man made things and man made alternation in the environment. Non material culture include factors such as language, ideas ,beliefs, values music. 1.cultural risk Cross-cultural risk is defined as a situation or event where a cultural miscommunication puts some human value at stake. Cross-cultural risk arises routinely in international business because of the diverse cultural heritage of the participants. Unlike political, legal, and economic systems, culture has proven very difficult to identify and analyze. Its effects on international business are deep and broad. In cross-border business, some time companies step into different cultural environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors2. Negotiating goalNegotiators from different cultures may tend to view the purpose of a negotiation differently. For deal makers from some cultures, the goal of a business negotiation, first and foremost, is a signed contract between the parties. Other cultures tend to consider that the goal of a negotiation is not a signed contract but rather the creation of a relationship between the two sides. Although the written contact expresses the relationship, the essence of the deal is the relationship itself.3. CommunicationCulture can affect communication in different ways .but 2 aspects found different than others. First is the extent to which context affect what is said or how it is said. High context culture and low context culture are there .individual from high context culture view low context culture behaviors as sign of immaturity or lack of sophistication. Second dimension of communication that can vary by culture is the extend which communication is explicit or implicit. In explicit communication the burden of effective communication is on speakers.on the other hand in implicit communication the burden on both speaker and listener.4.Advertisement Culture affects the effectiveness of advertising. Advertising, for instance, is strongly influenced by language, which is one of the key elements of culture. Moreover, advertising budget and structure are based on buying habits and consumption style. 5.Cultural exchangeCultural exchange is very prominent now a days.contemporary China illustrate this point. For instance, it was widely believed that gender identity might affect consumption behavior. However, a recent study of masculinity appeal demonstrated that American respondents and Chinese respondents act the same when presented with such appeals, in other words, the masculinity appeal is not as effective as they expected. A possible explanation for this could be that the gender status in Chinese traditional culture has changed. 6.TimePeople from Britain and Germany are keen on following a time-bound schedule. The different 'time-cultures' might be the reason behind clashes, between people from diverse cultures..

With today's businesses entering a 'globalized' world, the interaction between different cultures is bound to happen. Merely learning different languages won't be enough. It is necessary for corporate houses to understand the social conditions of different countries, to successfully tap the respective markets . Culture influences a range of interpersonal exchange as well as value-chain operations such as product and service design, marketing, and sales. Managers must design products and packaging with culture in mind, even regarding color. While red may be beautiful to the Russians, it is the symbol of mourning in South Africa. What is an appropriate gift for business partners also varies around the world. While items such as pens are universally acceptable, others may not be appropriate. Examples include sharp items such as knives or scissors, which imply cutting off the relationship or other negative sentiments, chrysanthemums, which are typically associated with funerals, and hand-kerchiefs, which suggest sadness. Most companies want their employees to learn about other cultures and acquire a degree of cross-cultural proficiency. In Californias Silicon Valley, where IT firms are concentrated, Intel offers a seminar to its staff called Working with India. The seminar aims to help employees work more effectively with the estimated 400,000 Indian nationalsin the valley. Several other Silicon Valley firms offer similar training. Another computer firm, AMD, flies IT workers from India to its facilities in Texas for a month of cultural training with U.S. managers. Workers role-play, pretending to be native Indians, and study subjects like Indian political history, Indian movies, and the differences between Hinduism and other Indian religions. IMPACT OF POLITICAL ENVIRONMENT IN IB

Despite the globalization of business, firms must abide by the local rules and regulations of the countries in which they operate. Until recently, governments were able to directly enforce the rules and regulations based on their political and legal philosophies. The internet has started to change this, as sellers and buyers have easier access to each other. global businesses monitor and evaluate the political and legal climate in countries in which they currently operate or hope to operate in the future.The study of political systems is extensive and complex. A political system is basically the system of politics and government in a country. It governs a complete set of rules, regulations, institutions, and attitudes. PROBLEMS IN POLITICAL ECONOMY IN IB.A main differentiator of political systems is each systems philosophy on the rights of the individual and the group as well as the role of government. Anarchism, which contends that individuals should control political activities. At the other extreme is totalitarianism, which contends that every aspect of an individuals life should be controlled and dictated by a strong central government. In reality, neither extreme exists in its purest form. Instead, most countries have a combination of both, the balance of which is often a reflection of the countrys history, culture, and religion. This combination is called pluralism. Democracy is the most common form of government around the world today. What businesses must focus on is to assess the balance to determine how local policies, rules, and regulations will affect their business. Depending on how long a company expects to operate in a country and how easy it is for it to enter and exit, a firm may also assess the countrys political risk and stability. A company may ask several questions regarding a prospective countrys government to assess possible risks:1. How stable is the government?2. Is it a democracy or a dictatorship?3. If a new party comes into power, will the rules of business change dramatically?4. Is power concentrated in the hands of a few5. How involved is the government in the private sector?Factors1. Economic SystemThe type of economic system a country builds is a political choice. Foreign countries often will have different economic systems. A country may operate in a market economy or capitalist economy where private individuals own most of the property and operate most of the businesses. A market economy is usually the best economic environment for a foreign business because of the protection of private property and contract rights. Some countries lean more towards a socialist economy where many industries and businesses are owned by the state. Operating businesses in this environment will be more difficult A few countries operate under a communistic economic system where the state pretty much controls all aspects of the economy. Conducting business in this environment ranges for difficult to impossible. The reality is that all economies are mixed economies that take parts from two or more of the 'pure' economic systems. For example, you can conduct business in communist China in Hong Kong and other special areas where a market economy is allowed to operate. 2.Government SystemBusinesses must often contend with different governmental systems. Examples include democracies, authoritarian governments, and monarchies. Some governments are easier to work with than others. Democracies, for example, are answerable to their citizens and the rule of law. Authoritarian regimes are usually answerable to no one, including the law. It is less risky to conduct business in democracies 3.Trade AgreementsCountries often enter into trade agreements to help facilitate trade between them. If a country has entered into a trade agreement with another country, conducting business in that country will usually be easier and less risky because the trade agreement will provide some predictability and protection. 4.Formal Trade BarriersA trade barrier is simply anything that makes it harder for a company to export products to a foreign country. Formal trade barriers are enacted by governments for the purpose of restricting imports to protect a country's domestic industries. Formal trade barriers include tariffs, which are taxes on imports that helps make domestic products more competitive, and product quotas that limits the number of products imported into the country. Informal Trade BarriersGovernments may impose regulations that aren't primarily promulgated as barriers to trade but have the same effect. Examples can include specific product standards and health and safety standards that businesses will be required to meet before the products can be sold. SOCIAL ENVIRONMENT IN INTERNATIOANL BUSINESS ENVIRONMENTThe main social factors or social environment taken into account can be grouped as1.consumer belief, preference ,habit and beliefThe customs and habits of people in forigen countries should be clearly observed and make products accrding to that. ex.Shrimp is popular in 3 markets Japan ,USA,and western Europe. But headless shrimp is preferred by customers in Europe and Japan prefer shrimp with head.2.EtiquetteWays of meeting, greeting method of showing respect, table manners etc is different in different country.Before indulge in international business employees of home country who are working in host country must be given training in etiquette of host country.3.Number of women in working populationThis will affect the consumption pattern. Because of huge percentage of working women in USA the demand for semi cooked food is more.So number of working women population increase consumption of more home appliances and canned foods in market.4.religionReligion is very important in social setup. Religious customs should take into consideration before starting international trade.Some countries religion do not allow the sales of certain products in their market.5.LanguageLanguage is an important factor. It is very important to give language training to employees before international trade. Language is an important area which should be given due importance.TECHNOLOGICAL ENVIRONMENT IN INTERNATIOANL ENVIRONMENTTechnology contribute greately to globalization.technology means both mechine and way of thinking available to solve the problems.according to UNCTAD Technology is described as the systematic knowledge for the manufacturing of a product.World Economic Forum stated that technology is one of the most important eight factors in the global competitiveness of nations.The major factors in technological environment what companies should take into consideration are1.Time lags in technology introduction/absorbtion Time lag will be there in tgechnological advancement in many of the countries.in many developed countries TV arrive very late.when the advanced coun tries were using colour TV India was using black and white TV.this is called time lag in technology adaption.in some cases many developed countries even import outdated technology to developing countries.2.Appropraite technologyRight technology in right time is very important.some technology may not be suitable for some countries.Japans success is mainly due to purchasing of appropriate technology.more than using highly sophisticated technology the technology should be appropriate.3.impact of technology in globalizationThe benefits of technology in globalization are1.less transport cost2.patented technology in which firm can exploit all demand without competition4.transfer of technologyTransfer of technology should be done in proper way.There are certain issues in transfer of technologya)developing countries obtain technology at high price.b)appropriateness of forigen technology to physical,economic ,social condition of developing countryc)heavy reliance on technology by developing counties.16.how economic environment affect international business?ECONOMIC ENVIRONMENTEconomic Environment refers to all those economic factors, which have a bearing on the functioning of a business. Business depends on the economic environment for all the needed inputs. It also depends on the economic environment to sell the finished goods. 1.A Centrally Planned Economy(CPE) It defined as an economy where decisions regarding production and distribution of goods is taken by a central authority, depending upon the fulfillment of a particular economic, social and political objective..2.market based economyIn the market based economic system, the decision to produce and distribute goods is taken by individual firms based on the forces of demand and supply. 3.Mixed economy Mixed economy combines all features of market economy and centrally planned economy.india is an example.The main economic factors which affect international business environment are1.Level of income and its distributionDemand depends upon the level of income of people in country and its distribution.GDP and percapita income is very important. On the basis of per capita income World Bank classifies countries as 1.Low income countries1. Low income country-US $875 or less2. Middle income- US $875 -10,7253. High income country-above 10,725 According to the level of income and its distribution the demand for goods are determined. Level of income and its distribution is important in international business environment.II.INFLATION

It is a fact that the size of demand for a product depends not only on the level of income and its distribution, but it is also subject to the level of inflation in the country.It is because the purchasing power of the consumers depends on their real income.The higher the level of inflation, the lower is the real income and the purchasing power of the consumers. Thus, when a multinational firm decides to set up a manufacturingunit in a foreign country, it has to take into account the rate of inflation in the host countryIII CONSUMPTION BEHAVIOURConsumption behavior or the pattern of consumption influences the demand for a particular product to a sizeable extent. In a low income country, where the consumers care more for price rather than for the quality of the goods, multinational firms find it very difficult to sell their improved quality, high price products, even if they are for the daily use of common peopleiv) Availability of Human and Physical Resources :Easy availability of human and physical resources makes the manufacturing process easier and at the same time lowers the cost of production so as to confer upon the firm a competitive edge. This is because if such resources are in abundance, they are available with no difficulty and ata lower cost.

v) Network of Infrastructure :Building up of supportive infrastructure is a prerequisite for the development of industry. For successful operation, a firm needs uninterrupted power supply, good road/rail line, efficient communication system and so on. This is whey multinational firms must take into account the availability of infrastructure while analyzing the economic environment in a host country.(vi) Fiscal, Monetary and Industrial Policies :Various forms of economic policies pursued in the host country make the economic environment either congenial or act as a deterrent to the operation of a multinational firm. Corporate income tax, excise duty and tariff on import in the host country do influence international trade and investment.VII Industrial Policy :Again, one of the aspects of the industrial policy is related to the area where foreign investors can invest. If the policy is restrictive on this count, it permits foreign investors only into a very limited area of the industrial economy. On the contrary, a liberal policy environment helps attract foreign investment.

Q1: What do you understand by the term globalization?(july 2013,2marks,july 2012,july 2010,july 2009)Meaning of GlobalizationThe world is moving away from self-contained national economies toward an interdependent, integrated global economic system. Globalization refers to the shift toward a more integrated and interdependent world economy. The medieval proverb says merchants have no nation it means that a businessman can view world as one country for operation. The term sometimes also refers to the movement of people (labour) and knowledge (technology) across international borders. There are also broader cultural, political and environmental dimensions of globalization. According to IMF It represents the growing economic interdependence of the countries worldwide through increasing volume & variety of cross border transactions in goods & services & of international capital flows & also through the more rapid &widespread diffusion of technology.Globalization has two faces: 1) Globalization of markets The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Consumer products like citigroup credit cards, coca cola, Mc Donalds and StarBucks are the benefactors of this trend. Difference in the national market is being embedded through different dimensions Eg - Car companies make the different range of cars based on the economy of the country, local fuel cost, income levels, traffic congestion and cultural values. In many nations mostly the companies are competing with each other. Pepsi & Coca Cola, Ford and Toyota, Boeing & Airbus, Caterpillar & Komatsu in earth moving equipments.

2) Globalization of productionThe globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land, labor, and capital.

. EX:Medical transcription Doctors are outsourcing their radiology, MRI scan to India and when the US doctors are sleeping they are reading the reports and the next day the doctors can talk to the patient.US uses Indian engineers to debug software written in the US. Due to difference in the time the work is done and forwarded to the US for the next day.

Q2:.define globalization

Definition of Globalisation 1.According to IMF It represents the growing economic interdependence of the countries worldwide through increasing volume & variety of cross border transactions in goods & services & of international capital flows & also through the more rapid &widespread diffusion of technology2.Charles U.L Hill defines globalization as the shift towards a more integrated and interdependent world economy. globalization has 2 more component-globalization of market and product.3. World Bank: Globalization is the growing integration of economies and societies around the world.Q3:.What are the advantages of globalization./how globalization leads to improvement in international trade.(June 2009)ADVANTAGE OF GLOBALISATIONThe advantage of globalization can be generally classified as 1.Increase in welfare and prosperityMost of the countries have resorted to trade relations with each other in order to boost their economy. Thus, globalization has induced international peace and security in a big way and there by increase welfare and prosperity.2.Free TradeFree trade is a policy in which a country does not levy taxes, duties, subsidies or quota on the import/export of goods or services from other countries. There are countries which have resolved to free trade in specific regions. This allows consumers to buy goods and services, comparatively at a lower cost.3. Global ConnectivityGlobalization has promoted international connectivity. With the use of the Internet, the world has definitely become a smaller place. There has been exchange of thoughts and ideas which has morally boosted and interlinked the mindset of people all round the world.4. New MarketsThe opportunities for new markets has increased dramatically. Numerous companies have started investing in different countries and luring customers for their brands. These ever-expanding markets have helped countries to raise capital in terms of foreign domestic investments, thus improving the economy of the country.5. Employment OpportunitiesOne of the most advantageous factors of globalization is that it fosters the generation of employment. This happens due to the emergence of new companies and new markets, where lots of skilled and unskilled labor is required. Immigration between countries also increases, providing better opportunities for people all round the world. By providing employment, globalization helps in increasing the standard of living of the people, and also reduces poverty.6. lower price with Quality ProductsThe competition among different companies finds place at an international level. It becomes important for the companies to focus on quality goods and services, in order to have a strong foothold in the market. The consumer is benefited in the process, and gets quality products at cheaper rates. 7.Environmental ProtectionMutual trade carried out by countries has brought about an understanding for the protection of the environment from which they benefit so much. Global environmental problems like cross-boundary pollution, over-fishing in the oceans, climate change, etc., are solved by discussions and conventions.8. Increase in welfare of Developing NationsIt is claimed that globalization increases the economic prosperity of developing nations. Developed countries invest in such countries with an aim of capturing new markets, which helps them improve their infrastructure and technologies to international levels. 9. Equality for AllGlobalization has helped in creating international criminal courts, and international justice movements are also launched to provide justice to people at a global level. Disputes are solved through global standards such as patents, copyright laws, and world trade agreements. Thus, it has ensured that people do not get discriminated with regard to country, caste, creed or sex.10. Ease of TransportationWith the advent of globalization, there has been an immense increase in the transportation of goods and services worldwide. Things which took weeks for conveyance can now easily be availed within a couple of days. Due to the development of containerization for ocean shipping, transportation costs are reduced to a great extent, lowering the cost of products in world markets11. Increase in IndustrializationFree flow of capital along with technology enables developing countries to boost up industrialization of countries. This increase industrialization.12.Unity in DiversityGlobalization has helped in bringing about integrity and social understanding everywhere. The dream for a global village and removing some barriers that had kept the world divided on various grounds. 13. External BorrowingIt has often been seen that a poor country is unable to provide adequate financing to its companies, which proves to an obstacle in the development of the country on the whole. With the help of globalization, there is opportunity for corporate, national, and sub-national borrowers to have better access to external finance, with facilities such as external commercial borrowing and syndicated loans.Q5: What are the demerits of globalization? /Has globalization benefitted all countries? discuss (June 2009)DEMERITS OF GLOBALISATIONGlobalization has also been criticized on several grounds. Its opponents do not hesitate to indulge in violence. Workers, peasants, women, students and weaker sections of society have raised their voice against globalization. In their opinion, globalization has benefited the rich and harmed the poor. The harmful effects of globalization save been discussed here.1 . Exploitation of Underdeveloped Countries:MNCs, based in developed countries, purchase at lower rates the raw materials of backward countries, process them in their own countries and sell the manufactured goods with big profit in backward countries. The huge profit, they make, is taken back to developed, rich countries.Of course, the MNCs have opened branches in backward countries, but the local people who work there are paid much lower salary/wage. These companies hardly spend anything for local development. They victimize poor countries and their people by exploiting their poverty and helplessness.2. Increase in Unemployment:The MNCs employ machines to reduce the number of employees. Further, the governments of developing countries have started withdrawing investment from industries in the public sector. All this has led to huge unemployment in those countries. The larger the unemployment, the larger the poverty.3. Widening of Rich-poor Gap:Globalization brings benefits to the rich who are small in number and keeps the vast majority of people in poverty and misery. It is a game of winners and losers. Those who are already rich succeed in taking advantage of privatisation while the poor and weak are doomed to suffer.4. Harmful Effects of Consumerism:Globalization produces consumerism. People being attracted by attractive goods and advertisements, want to buy these goods. They would not hesitate to earn money for this by unfair means. This has resulted in vast increase in corruption and other social evils.5. Adverse Effects on Social Security and Social Welfare:Because of privatisation, governments in many developing countries are withdrawing from the sector of social welfare, and private companies have entered educations, health and other such fields related to development.As a result of this, poor people are facing a lot of difficulties. 6. Harmful Effects on Small Industries and Small Business:In the free economy, the big fish has got license to eat the small fish. Small-scale and cottage industries cannot grow in competition with big ones. Most of them have begun to close. Similarly, small business people cannot compete with big ones.7. Cultural Homogenization:Globalization would lead to cultural homogenization. Each nation/society has its own distinct culture, but under globalization the cultures of developing countries are eroded and they are required to accept the values and norms of developed countries. In place of plurality of cultures, there will be a monoculture.8. Hostile to Humanism:Globalization would kill humanism. It aims at accelerating economic growth, and economic growth, according to its protagonists, can be quickly attained through privatisation. Pursuit of growth hardly respects human values. Human concerns like equality, justice are sacrificed without raising an eyebrow. Humanism thus falls a prey to globalization.9. Erosion of Democracy:Globalization has led to the weakening, erosion and even destruction of democracy. Globalization has considerably increased the wealth and power of multinational corporations and they have tended to interfere with and control the economic policy and politics of developing countries..10. Gender-Insensitive:Globalization is gender-insensitive. Women have suffered a lot under globalization. In the privatised economy, the interests and concerns of women, particularly of poor women, have been seriously ignored.11. Destructive of Environment:Globalization would destroy environment. In the name of economic development, environment is blindly destroyed. it is destroyed for establishing big industries and dams.12.Globalisation kills domestic businessThe domestic business of domestic company fails to compete with MNCS on technology and quality front.13.Transfer of natural resourceMNCS establish their manufacturing facilities in developing countries, exploit their natural resources and sell the product in other countries. through these means the natural resource of developing countries are transferred to other countries.Q;What is the meaning of liberalization?Trade liberalisation involves removing barriers to trade between different countries and encouraging free trade.Trade liberalisation involves: Reducing tariffs Reducing / eliminating quotas Reducing non-tariff barriers. Non-tariff barriers(NTF) are factors that make trade difficult and expensive. For example, having specific regulations on making goods can give an unfair advantage to domestic producers. Harmonising environmental and safety legislation makes it easier for international trade.WTO ORIGIN,IMPORTANCE, INDIA AND WTO INTRODUCTION After World War 2 several changes occur in world .1930 depressions also cause a great impact. Later USSR emerges as a most important power. International trade got very much importance. International organization also gains much importance. In July1944, representatives from 44 nations met at the Mount Washington Hotel in Bretton Woods, New Hampshire. It drew up a project for the International Bank for Reconstruction and Development (IBRD) to make long-term capital available to states urgently needing such foreign aid, and a project for the International Monetary Fund (IMF) to finance short-term imbalances in international payments in order to stabilize exchange rates. In 1946 the UN even started to work on preparation of charter for proposed ITO.50 countries participated in negotiations to create international trade organization. However ITO failed to materialized due to opposition in UN congress. Therefore instead of ITO General Agreement of Tariff and Trade came into existence signed with 23 members in Geneva in 1947. Seven rounds of negotiations occurred under GATT. The eighth GATT round known as the Uruguay Round was launched in September 1986, in Punta del Este, Uruguay. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on 1 January 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. WTO's current Director-General is Roberto Azevedo, who leads a staff of over 600 people in Geneva, Switzerland.The membership is 160 countries as on januvary 2014.WTO Goals/Aims The goals behind the functions of WTO were set out in the Marrakech Agreement preamble, and these include: Expanding the trade production in services and goods Ensuing large real incomes and demand are steadily growing Ensuring employment that is full Raising living standards.Q:What are the objectives of WTO?The important objectives of WTO are:1. To improve the standard of living of people in the member countries.2. To ensure full employment and broad increase in effective demand.3. To enlarge production and trade of goods.4. To increase the trade of services.5. To ensure optimum utilization of world resources.6. To protect the environment.7. To accept the concept of sustainable development6.What are the main functions of WTO(july 2012,july 2014)Most Important Functions1.Trade negotiations The WTO agreements cover goods, services and intellectual property. It is the propagator of the principles of liberalization, and globalization with the permitted exceptions. 2.Implementation and monitoring WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. 3.Dispute settlement The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgments by specially appointed independent experts are based on interpretations of the agreements and individual countries commitments.4.Building trade capacity WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards5.Outreach The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.Among all the WT0 functions, there are two that are considered most important by analysts. These are: It gives a provision for settling dispute and for negotiations in a forum. It overseas the operation, administration and implementation of the agreements covered..Additional Functions of the WTOAs todays society goes on with globalization, there is a vital importance that the trading systems be managed by the need for an international organization. As there is an increase in trade volume, issues such as violation of intellectual property, subsidies, trade barriers and protectionism come up due to every nations different rules of trading.1. The WTO serves as the nations mediator when problems arise. As a matter of fact, it could be said that the World Trade Organization one of the organizations most important in the globalized society of today and it can also be referred to as the result of globalization. 2. the World Trade Organization is an economic analysis and research center. Regular global trade picture assessments in its annual research reports and publications on specified topics are something the organization produces. 3. The WT0 also closely cooperates with the other 2 system components, the World Bank and the IMF 4. It is the duty of the World Trade Organization to go about facilitating operation, administration and implementation and further the objectives of the Multilateral Trade Agreements and this Agreement and shall also provide the operation, administration and implementation framework of the multilateral Trade Agreements. The World Trade Organization is playing an important role for administering the new global trade rules in the following ways:5. Various Conciliation Norms: WTO provides several conciliation mechanisms for finding an amicable solution to trade conflicts that can arise among members.

6.Checks of Trade Barriers: The WTO will be forum where countries continuously negotiate exchange of barriers all over the world .

Q:What do you mean by bilateral and multilateral trade agreement?(july 2014)Trade agreement are divided into 2.multilateral and bilateral. In bilateral trade agreement is between 2 countries in which exchange of goods are happening. It is associated with liberalization. In multilateral agreement three or more countries are involved in free trade without discrimination. It will help in economic integrity.7.How Indian economy is related with WTO/(2010 JULY,2006 JULY)World Trade Organization and Indian Economy:1.GATS (General Agreements on Trade in Services)-It is a known fact that trade in services is the rapidly growing field in the global scenario. According to WTO, in the year 2001, services constituted about 60% of the worlds output (in GDP). The trade in services has particularly increased in developing countries. The total trade in services occupied more than 50% in the exports of the developing countries. The rapid growth and change has prompted the members of the WTO to bring in changes in rules and regulations on trade in services and GATS was introduced on 1st January 1995. This is one of the important agreements of WTO which contains two main parts: the frame work of agreement containing rules and regulations and the schedule of Nations who gave the commitment on access to their domestic markets by foreign suppliers. Each WTO member lists in its national schedule those services, which it wished to guarantee access to foreign suppliers. All member countries are considered as MFNs (Most Favoured Nations) i.e, all commitments apply on non discriminatory basis to all member countries.Coverage of GATS:The GATS covers all internationally traded services with two exceptions: services provided by the Government and services in Air transport sector. The GATS defines that trade in services can be made in four ways, they are:1. Services supplied from one country to another (e.g. International telephone calls)2. Consumers from one country making use of another country (e.g. Tourism)3. A company from one country setting up subsidiaries or branch to provide services in another country (e.g. Banking)4. Individual travelling from their own country to supply services in other country (e.g. Actress or construction worker)Benefits of Services Liberalisation:1. An efficient services infrastructure provides a base for economic success. Services such as telecommunications, banking, insurance and transport supply strategically important inputs for all sectors.2. People can have access to world-class services.3. Trade liberalisation in services leads to low cost. The best e.g. telecommunications.4. Faster innovation takes place with liberalised services e.g. ATM, Phone banking, Internet banking etc.5. More FDIs are attracted in the countries, which will bring the new skills and technologies into the country. The domestic employees can learn the new skills from the MNCs.

2.Trade Related Investment Measures (TRIMs)It refers to certain condition or restrictions imposed by a Government in respect of foreign investment in the country. The TRIM text provides that the foreign capital would not be discriminated by the member Governments.Features of TRIMs1. Abolition of restriction imposed on foreign capital2. Offering equal rights to the foreign investor on par with the domestic investor3. No restrictions on any area of investment4. No limitation or ceiling on the quantum of foreign investment3.Trade Related Intellectual Property Rights (TRIPs)Intellectual property rights may be defined as Information with commercial value. IPR have been characterised as a composite of ideas and creative expression. Plus the public willingness to bestow the status of property. It includea. Protection of patentb. Copyrightc. Industrial designd. Geographical indicatione. Trademarksf. Trade secretsg.Layout BENEFITS TO INDIA7.How Indian economy is related with WTO/(2010 JULY,2006 JULY)World Trade Organization and Indian Economy:Benefits for Service sector in India:In the line with the global trend, the services sector in India is growing rapidly and the contribution of services in Indias GDP increased to 54.2% in 2000-01 from 51.5% in 1998-99. The total trade in services from India is accounting to 1.3% in the total world trade in services. India exhibits a strong revealed comparative advantage in services related goods. The importance in service sectors in India are telecommunications, IT, ITES, BPO and Banking and financial services. India has permitted 100% FDI in IT and ITES and more than 51% in telecommunications.1. The GATT secretariat estimated that largest increase in the level of merchandise trade in goods (in general, it would be US $ 745 billion .by the end of 2005) will be in the areas of clothing (60 per cent), agriculture, forestry and fishery products (20 per cent) and processed food and beverages (19 per cent). India's competitive advantage lies in these fields. Hence, it is logical to believe that India will obtain large gains in these sectors. India's textile and clothing exports will increase due to the phasing out of Multi-fiber Arrangement (MFA) by 2005 . 3. The reduction in agricultural subsidies and barriers to export of agricultural products, agricultural exports from India will increase. 4. The multilateral rules and disciplines relating to anti-dumping, subsidies and countervailing measures, safeguards and disputes settlement machinery will ensure greater security and predictability of international trade. This would be favorable environment for India's international business.

5. India along with other developing countries has the market access to a number of advanced countries due to the imposition of the clauses concerning to trade without discrimination.

DISADVANTAGE TO INDIA

Despite the benefits of WTO to India, many economists and sociologists argue that, India would be in a disadvantageous position by becoming a member of WTO. Their argument include:

1. Trade Related Intellectual Property Rights (TRIPs) : Protection of intellectual property rights (patents, copyrights, trademarks etc.) has been made stringent. It is argued that the TRIPs agreement goes against the Indian Patents Act, 1970. Only process patents can be granted in food, chemicals and medicines under the Indian Patents Act. 2. TRIPs agreement provides for granting product patents also. Under TRIPs patents can be granted to methods of agriculture and horticulture, bio-technological process including living organism like plants and animals. The duration of patents under TRIPs is 20 years.

3.Introduction of product patents in India will lead to hike in drug prices by the MNCs who have the product patent. This will hit the poor people who will not have the generic option open.

4.The extension of intellectual property right to agriculture has negative effects on India. Presently, plant breeding and seed production are largely, in the public domain. Indian scientists have undertaken plant breeding and multiplication is in the hands of National and State Seed Corporations. Government, through this machinery, provides seed to Indian farmers at very low prices. Indian scientists, in future will find it extremely difficult to breed new varieties and Indian research institutions will be unable to compete financially with MNCs and will be denied access to patented genetic material.5.MNCs will get the control over our genetic resources and as such the control over food production would be jeopardized.6. Patenting has also been extended to a large area of micro-organisms.

7.Application of TRIMs agreement undermines any plan or strategy of self-reliant growth based on local technology and resources.

8.Services: Service sector like insurance, banking, telecommunications, transportation is backward in India compared to that of developed countries. Therefore, inclusion of trade in services is detrimental to the interest of India. Liberalization of service sector would be under tremendous pressure.

India is one of the founder members of the WTO. The GATT was not an organization but it was only a legal agreement. On the other hand WTO is designed to play the role of watchdog in the spheres of trade in goods, trade in services, foreign investment, intellectual property rights etc. Regional Trade Blocks , Inter regional trade among regional groups. Trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs and non-tariff barriers) are reduced or eliminated among the participating states. Advocates of worldwide free trade are generally opposed to trading blocs, which, they argue, encourage regional as opposed to global free trade. Scholars and economists continue to debate whether regional trade blocs are leading to a more fragmented world economy or encouraging the extension of the existing global multilateral trading system. Trade blocs can be stand-alone agreements between several states (such as the North American Free Trade Agreement (NAFTA) or part of a regional organization (such as the European Union). Depending on the level of economic integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.Significance of regional trade blocs on international trade. EU, NAFTA, SAPTA, SAARC, AFTA, APEC, EFTAThe Role and Importance of Trading Blocs 8.What are the importance of regional trade block?(JULY 2014)Trading blocs have played a positive role in the development of international trade. This can be explained with the help of following points:1. Economic integration: Trading blocs have resulted in economic integration. It represents various forms of economic integration in a region like SAARC, OPEC, ASEAN, EU etc. Trading blocs unifies different independent economies and bring the nations closer.Trading blocs helps in enhancing degree of regional co-operation and interrelationship. It brings the nation closer by unifying independent economies and facilitates economic cooperation among the members of the group.2. Free transfer of resources: Trading blocs helps in elimination of tariff, and non-tariff barriers and facilitates free transfer of resources across the border of member countries. This help in optimum utilisation of available resources.This is because no country in the world is self-sufficient and they need to depend upon one another for the fulfillment of their requirement.3. Increase in Trade: Free transfer of resources helps in increasing the productivity of member nations. They eliminate trade barriers and encourage free trade. This increase import and export activities of member nations, which results into increase in trade revenues.Trading blocs are sound and efficient to create sustainable economic growth. Trading blocs are created to encourage trading partners to buy and sell goods already made in their home countries. It also encourages economies of scale.4.Create Employment opportunities: Large-scale production and distribution leads to an increase in employment opportunities directly and indirectly. This results into increase in income level of the people, which enhances the standard of living of the economy.Trading blocs tend to increase in income and employment level of the member countries. Capital is required to generate more and more employment opportunities. Trading blocs lead to free transfer of resources viz natural, human and capital resources, which are optimally utilised for creating employment opportunities.4.Benefit to the consumers: Formation of trading blocs enables transfer of technologies across borders resulting into improvement in productivity and quality of goods and services ultimately benefiting the consumers to a greater extent.Removal of trade barriers and free transfer of resources have resulted into mass production and distribution. This facilitates provision of quality product in competitive prices to the consumers.6. Cooperative spirit: Trading blocs leads to economic, political and cultural integration of member -countries. This develops a spirit of cooperation and coordination among member nations. This helps in maintaining good relations among the member nations.7. Competition: Trading blocs has resulted into increase in competition between companies of entire region. It also facilitates to face competition effectively. Trading blocs gives competitive advantage not only to large establish firms but also to the newly emerging firm.8. Development of region: Trading bloc plays an important role in contributing the development, industrialisation and economic growth of whole region. Trading blocs are a sound and efficient way to create sustainable economic growth.Liberal policies and removal of trade barriers has resulted in the growth of industries in those regions. This in turn increased the production and distribution activities leading to economic growth of those regions.1.The South Asian Association for Regional Cooperation (SAARC)The idea of regional political and economical cooperation in South Asia was first raised in 1980 and the first summit was held in Dhaka on 8 December 1985, when the organization was established by the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Since then the organization has expanded by accepting one new full member, Afghanistan, and several observer members. 1. It is an economic and geopolitical cooperation among eight member nations that are primarily located in South Asia continent. 2. Its secretariat is headquartered in Kathmandu, Nepal. 3. The idea of regional political and economical cooperation in South Asia was first coined in 1980 and the first summit held in Dhaka on 8 December in 1985 4. The 18th SAARC Summit was held at Kathmandu, Nepal in November 2014. Objectives of SAARCThe objectives and the aims of the Association as defined in the Charter are: to promote the welfare of the people of South Asia and to improve their quality of life; to accelerate economic growth, social progress and cultural development; to promote and strengthen selective self-reliance among the countries of South Asia; to contribute to mutual trust, understanding and appreciation of one another's problems; to promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields; to strengthen co-operation with other developing countries; to strengthen co-operation among themselves in international forums on matters of common interest; andPrinciplesThe principles are as follows Respect for sovereignty, territorial integrity, political equality and independence of all members states Non-interference in the internal matters is one of its objectives Cooperation for mutual benefitAfghanistan was added to the regional grouping on April 2007, With the addition of Afghanistan, the total number of member states were raised to eight (8). 2.SAARC Preferential Trading Arrangement (SAPTA)In December 1991, the Sixth Summit of SAARC held in Colombo approved the establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAARC Preferential Trading Arrangement (SAPTA) by 1997. Given the consensus within SAARC, the Agreement on SAPTAwas signed on 11 April 1993 and entered into force on 7 December 1995 well in advance of the date stipulated by the Colombo Summit. The Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.The basic principles underlying SAPTA are:a. overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems;b. negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;c. recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour; andd. inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.Four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities. Each Round contributed to an incremental trend in the product coverage and the deepening of tariff concessions over previous Rounds.III.The European Union (EU) HISTORYThe European Union is set up with the aim of ending the frequent wars between neighbors, which culminated in the Second World War. As of 1950, the European Coal and Steel Community begins to unite European countries economically and politically in order to secure lasting peace. The six founders are Belgium, France, Germany, Italy, Luxembourg and the Netherlands. in 1957, the Treaty of Rome creates the European Economic Community (EEC), or Common Market. The EU was created by the Maastricht Treaty, which entered into force on November 1, 1993. The European Union (EU) is an economic and political union of 28 member states that are located primarily in Europe. Originally confined to western Europe, the EU undertook a robust expansion into central and eastern Europe in the early 21st century. The EUs members are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. . The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states. The 7 Institutions of the EU include the European Commission, the Council of the European Union, the European Council, , the European Central Bank, the Court of Auditors, and the European Parliament.. Brussels is the de facto capital of the union. OBJECTIVES OF EU1. An area of freedom, security and justice without internal frontiers;2. An internal market where competition is free and undistorted;3. sustainable development, based on balanced economic growth and price stability4. The promotion of scientific and technological advance;5. Promotion of social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child;6. Promotion of economic, social and territorial cohesion, and solidarity among Member States.FUNCTIONING OF EUThe EU is considered by many to be a potential superpower. With a combined population of over 500million inhabitants, or 7.3% of the world population, the EU in 2012 generated a nominal gross domestic product (GDP) of 16.584 trillion US dollars, constituting approximately 23% of global nominal GDP and 20% when measured in terms of purchasing power parity, which is the largest nominal GDP and GDP PPP in the world. The EU was the recipient of the 2012 Nobel Peace Prize.1.Internal market(COMMON MARKET) The EU has established a single market across the territory of all its members.Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people, and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they cannot be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union. Half the trade in the EU is covered by legislation harmonized by the EU.3.Free movement of capital is intended to permit movement of investments such as property purchases and buying of shares between countries. The free movement of persons means that EU citizens can move freely between member states to live, work, study or retire in another country.4.The free movement of services and of establishment allows self-employed persons to move between member states to provide services on a temporary or permanent basis. While services account for 6070% of GDP, legislation in the area is not as developed as in other areas. 2.CompetitionThe EU operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalisation and preventing state aid.3.Monetary unionThe creation of a European single currency became an official objective of the European Economic Community in 1969. However, it was only with the advent of the Maastricht Treaty in 1993 that member states were legally bound to start the monetary union no later than 1 January 1999. On this date the euro was duly launched by eleven of the then 15 member states of the EU. It remained an accounting currency until 1 January 2002, when euro notes and coins were issued and national currencies began to phase out in the eurozone, which by then consisted of 12 member states. The eurozone (constituted by the EU member states which have adopted the euro) has since grown to 18 countries, the most recent being Latvia which joined on 1 January 2014.The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the eurozone. It is also intended as a political symbol of integration and stimulus for more. Since its launch the euro has become the second reserve currency in the world with a quarter of foreign exchanges reserves being in euro. The euro, and the monetary policies of those who have adopted it in agreement with the EU, are under the control of the European Central Bank (ECB).The ECB is the central bank for the eurozone, and thus controls monetary policy in that area with an agenda to maintain price stability. It is at the centre of the European System of Central Banks, which comprehends all EU national central banks and is controlled by its General Council, consisting of the President of the ECB, who is appointed by the European Council, the Vice-President of the ECB, and the governors of the national central banks of all 28 EU member states.4.common agricultural policy(CAP)Although farmers in many European Union countries are efficient and produce high yields, land, input and fuel costs make them uncompetitive with farmers elsewhere. Without additional financial support, many farmers would be unable to sustain their businesses and the overall rural economy would suffer significantly. As a result, the EU operates the Common Agricultural Policy, which supports farmers by providing a range of price guarantees, direct payments and other instruments, including quotas and tariffs on some imported produce. By setting this up on a pan-European basis, national governments can no longer provide separate direct support for their agricultural sectors, but instead administer funds distributed via the CAP. Criticism of European Union EU From an economic perspective the EU can be criticised for various reasons1.Common Agricultural Policy CAPThe CAP was one of the most inefficient economic policies and waste of money. It subsidised farmers to produce goods that nobody wanted. The excess supply was often dumped on world markets creating falling prices and incomes for world farmers. After many years, the worst excesses of CAP have been reformed. But, it remains persistently difficult to end the culture of subsidising agriculture. The taxpayer pays the burden of higher prices and cost to EU.2.Regulated Labour MarketsUnemployment in the European Union has been persistently high for the past two decades. This is especially a problem in countries like France and Spain. One reason is the highly regulated labour markets that the EU social charter encourages. The EU has failed to deal with regional unemployment.3.Anti Inflation BiasThe ECB has inherited the German Bundesbanks anti inflationary stance. However, they often overdo this leading to lower growth. This is especially a problem for countries in the EU, who may struggle with a common monetary policy and interest rate.4.Euro has Created Lower Economic Growth.The EU pushed the creation of the Euro. However, in practise, member countries have struggled to cope with the fixed exchange rate, and lack of independent monetary policy.Countries in the Euro have been pushed into bond crisis because markets fear a lack of liquidity (ECB cant act as lender of last resort and print money to buy bonds). This has seen higher bond yields on debt of Euro countries. As a result of bond crisis, governments have been pushed into spending cuts and budget austerity.However, despite the fiscal austerity, there is no alternative for promoting economic recovery. Monetary policy is set by the ECB. As a consequence economic growth in the Eurozone has been disappointingNorth American Free Trade Agreement (NAFTA)The North American Free Trade Agreement (NAFTA), came into effect on January 1, 1994, between Canada, the United States, and Mexico, creating the largest free trade region in the world, generating economic growth and helping to raise the standard of living for the people of all three member countries. By strengthening the rules and procedures governing trade and investment, the NAFTA has proved to be a solid foundation for building Canadas prosperity and has set a valuable example of the benefits of trade liberalization for the rest of the world.

Objectives of NAFTA to reduce barriers to trade to increase cooperation for improving working conditions in North America to create an expanded and safe market for goods and services produced in North America to establish clear and mutually advantageous trade rules to help develop and expand world trade and provide a catalyst to broader international cooperation4.ASEANAssociation of South East Asian Nation (ASEAN) was formed by Bangkok declaration 1967 by 5 countries. Indonesia,Malaysia,Philippines,Singapore and Thailand with a view to accelerate economic development. Brunai joined the association in 1984.the economic growth of ASEAN was mainly due to natural resources like rubber ,palm oil and tin.the Asian Free Trade Area was cearted in 1992 by 6 nations.later Vietnam,lao PDR,Myanmar,Combodia joined AFTA and the membership become 10.Features of AFTA1. Significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6, have been brought down to the 0-5 percent tariff range.2. The new agenda called AFTA Plus Program include Preferential liberalization of service and investment, intellectual property cooperation, harmonization of product standards.3. Following the signing of the Protocol to Amend the CEPT-AFTA Agreement for the Elimination of Import Duties on 30 January 2003, ASEAN-6 has committed to eliminate tariffs on 60 percent of their products in the IL by the year 2003.

5.Asia-Pacific Economic Cooperation APEC APEC is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region.1.APEC has 21 members - referred to as "Member Economies" that account for more than a third of the world's population

2.APEC's 21 Member Economies are Australia; Brunei Darussalam; Canada; Chile; People's Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; Viet Nam.3.APEC was established in 1989 to enhance economic growth and prosperity for the region and to strengthen the Asia-Pacific community. 4.Since its inception, APEC has worked to reduce tariffs and other trade barriers across the Asia-Pacific region by creating efficient domestic economies and dramatically increasing exports. 5.APEC also works to create an environment for the safe and efficient movement of goods, services and people across borders in the region through policy alignment and economic and technical cooperation.6.APEC is the only inter-governmental grouping in the world that operates on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. 7.EFTAEFTA was founded by the Stockholm Convention in 1960. The immediate aim of the Association was to provide a framework for the liberalisation of trade in goods amongst its Member StatesEFTA (the European Fair Trade Association) is an association of ten Fair Trade importers in nine European countries (Austria, Belgium, France, Germany, Italy, The Netherlands, Spain, Switzerland and the United Kingdom). EFTA was established informally in 1987 by some of the oldest and largest Fair Trade importers. It gained formal status in 1990. EFTA is based in the Netherlands EFTA was founded by seven countries: Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. Finland joined in 1961, Iceland in 1970 and Liechtenstein in 1991. In 1973, the United Kingdom and Denmark left EFTA to join the EC. They were followed by Portugal in 1986 and by Austria, Finland and Sweden in 1995. Today the EFTA Member States are Iceland, Liechtenstein, Norway and Switzerland

FUNCTIONS 1. The aim of EFTA is to support its member organizations in their work and to encourage them to cooperate and coordinate.2. It facilitates the exchange of information and networking, it creates conditions for labour division and it identifies and develops joint projects3. It organizing meetings of the members (on food, handicrafts, marketing, managers) and by circulating relevant information to them.4. It is also maintaining a database of EFTA suppliers, called Fair data, which contains details on suppliers and their products.EFTA is the EUs third largest trading partner and the four EFTA nations are widely known for their developed economies as well as their obvious proximity to the European Union, be that geographically, politically or culturally.


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