Important concepts in International Business


Published on

Published in: Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Important concepts in International Business

  1. 1. Dr.K.Prabhakar
  2. 2. Free trade areaA group of countries agreeing to abolish all trade restrictions and barriers or charge low rates of tariffs. They may impose barriers on othre countries.
  3. 3.  They abolish all trade barriers and low tariffs They have uniform commercial policy towards non-member countries.
  4. 4.  All members will abolish restrictions and barriers Uniform policy with respect to other memebers Free movement of human resources and capital.
  5. 5.  All members will have no barriers and least tariffs Uniform policy with respct to non members Free movement of capital and human resoruces Uniform monetary and fiscal policy.
  6. 6.  Increases size of markets The resources are pooled. Rapid technological innovations and economies of scale. Reduced prices for cusumers.
  7. 7.  Trade diversion A can of beer from a potential country is 1.20$ Non partner is 1$. Now If there is tariff for partner it will cost 1.20 for the country If it is 40% tariff for non partner it will be 1.40$. With out the trade agreement countries will be benefited by free trade so that they can get it for 1$.
  8. 8.  Tariff refers to tax imposed on imports. Specific tariffs- fixed charge per unit 1000rs for a TV Ad Valorem- Propotion to the value of imported good 100% on imported cars. Advantages Revenue, jobs protected. Disadvantages Highers prices They reduce the efficiency of world economy as the highly efficiently produced goods will not be available to customers.
  9. 9.  To protect the domestic producer government pays by costs. In India fertilizer subsidy, power subsidy,pesticides, fixing prices for agricultural inputs etc Due to this foreign produced cannot enter the market. However, advanced countries also provide subsidies USA =.05%, Japan=2%, Sweden=2%, Ireland=7and they in the form of cash grant.
  10. 10.  It provides easy access to foreign markets Boeing has the advantage of first mover. However, WTO discourages subsidies as they encourage inefficiency.
  11. 11.  India started reducing the subsidies for fertilizers and other farm subsidies The reservation of SSI is removed for most of the SSI units.
  12. 12.  Import quota is direct restriction on quantity of goods which are imported into a country. These are done by issuing import licences for different goods. They are removed from 31 March 2001.
  13. 13.  It is by exporting country not to export beyond a quantity to a particular country. US request to Japan on import of cars during 1981. Local content requirement is another form of restriction.
  14. 14.  LCR requires atleast a particular percentage (50% of compenents or 50% of value should be manufactured in a country).
  15. 15.  National security. ( Chinese communication hardware) Protecting domesting industries. ( loss of dolls business, locks etc in India) Protecting jobs Retaliation: Due to political reasons we retaliate other coutries. US not to trade with Cuba.
  16. 16.  Market Agriculture Textiles ( Multi Fiber Agreement- 1 January 2005) Trade Related Intellectual property rights. Trade related investment Measures. Trade in services
  17. 17.  Government should lessen its control over market forces
  18. 18.  Trade distorting support policies should be stopped (Amber Policy or Green Box) Expenditure on research, disease control, expansion of infrastructure, environmental protection, fod security and direct payment for environmental programme.
  19. 19.  1 January 2005. Protection of Patents for 20 years. Copy rights and computer programmes is protected for 50 years Trade marks for 7 years
  20. 20.  Abolition of restriction on Foreign capital Offering equal rights to foreign investor No limitation for a foreign company No limitation on import of machinary Not to force use of local material Export is not mandatory Restriction on repartiation, divident and royalty