Module 4 IBE.pptx international Business

Module 4
International Institutions

Introduction
International institutions refer to organizations and structures that
operate across national borders to foster cooperation, establish
norms, and manage collective issues. These institutions can be
governmental or non-governmental, and they play various roles in
global governance, including maintaining peace and security,
facilitating trade and economic development, protecting human
rights, and addressing environmental concerns.

UNITED NATIONS CONFERENCE ON TRADE AND
DEVELOPMENT (UNCTAD)
Introduction:
• UNCTAD was established in 1964 to promote trade, investment, and development in developing
countries.
• It is a permanent organ of the United Nations (UN) General Assembly.
• It is headquartered in Geneva, Switzerland.
• UNCTAD has approximately 195 members
• The highest policy-making body of UNCTAD is the Conference, which meets once every four
years to set policy guidelines and to formulate a program of work.

• The United Nations Conference on Trade and Development (UNCTAD) is the
United Nations’ key point for trade and development and for interlinked issues
in the areas of finance, technology, investment and sustainable development
• Its goal is to support the developing countries, particularly the least developed
countries and countries with their economies in transition, to integrate
profitably into the global economy.
• It also seeks to assist the global community to stimulate a global partnership for
development, boost coherence or consistency in the global economic policy
creation and guarantee development gains for all from trade.
• UNCTAD carries out ahead-of-the-curve study and analysis on both long-
standing and rising development issues.
• It structures the consensus around efforts to foster national and international
policies and approaches favorable to development and assists countries in
enforcing their development strategies.

Principles of UNCTAD
1. Development-Centered Globalization
• Focus on Developing Countries: UNCTAD prioritizes the needs and
interests of developing countries to ensure that they benefit from
globalization.
• Inclusive Growth: It promotes economic growth that includes all segments
of society, particularly the marginalized and disadvantaged groups.

2. Sustainable Development
•Environmental Sustainability: UNCTAD advocates for trade and development policies that are
environmentally sustainable.
•Social Equity: It emphasizes policies that promote social equity and reduce inequalities within and
among countries.
3. Equitable International Trade
•Fair Trade Practices: UNCTAD supports fair trade practices that ensure developing countries have a
level playing field in the global market.
•Market Access: It advocates for improved market access for goods and services from developing
countries.
4. Mutual Benefit
•Win-Win Cooperation: UNCTAD promotes international cooperation that benefits all parties
involved, recognizing the interconnectedness of the global economy.
•Shared Prosperity: It seeks to create policies that lead to shared prosperity among nations.

5. Economic Sovereignty
•National Policy Space: UNCTAD respects the right of countries to
formulate and implement their own development strategies and policies.
•Policy Flexibility: It supports flexibility in international rules to allow
developing countries to pursue policies that suit their unique circumstances
and development goals.
6.Multilateralism
•Global Cooperation: UNCTAD advocates for multilateral approaches to
trade and development issues, believing that global problems require global
solutions.
•Inclusive Negotiations: It ensures that all countries, particularly
developing ones, have a voice in international negotiations.

Achievements of UNCTAD
• One of the principal achievements of UNCTAD has been to conceive and implement the
Generalized System of Preferences (GSP).
• It was argued in UNCTAD that to promote exports of manufactured goods from developing
countries, it would be necessary to offer special tariff concessions to such exports.
• Accepting this argument, the developed countries formulated the GSP scheme under which
manufacturers' exports and some agricultural goods from the developing countries enter duty-free
or at reduced rates in the developed countries.
• Since imports of such items from other developed countries are subject to the normal rates of
duties, imports of the same items from developing countries would enjoy a competitive advantage.

INTERNATIONAL MONETORY FUND (IMF)
• In 1944, toward the close of World War II, the major Allied governments met in Bretton
Woods, New Hampshire, to determine what was needed to bring economic stability
and growth to the postwar world
• As a result of those meetings, the International Monetary Fund (IMF) came into
official existence on December 27, 1945, with the goal of promoting exchange-rate
stability and facilitating the international flow of currencies. The IMF began financial
operations on March 1, 1947
• Twenty-nine countries initially signed the IMF agreement
• There are 190 member countries today

Role of IMF
• Economic observation and monitoring: The IMF prepares reports on the economies of its member nations and
identifies potential danger zones (such as imbalanced economies with significant current account deficits or
excessive debt levels).
• Loans to underdeveloped countries: $300 billion in loanable funds are available from the IMF for loans to
nations experiencing financial crises. This is contributed by the member nations, each of which made an initial
deposit. The IMF may be willing to provide loans as a component of a financial realignment in times of financial
or economic crisis
• Dependent loans/structural transformation: The IMF often requires that certain requirements be completed
before granting loans; Price controls are removed, deficit reduction measures are implemented, tightening
monetary policy is used to reduce inflation, and tariff barriers are removed to promote free trade.
• Dependent loans/structural transformation: The IMF often requires that certain requirements be completed
before granting loans; Price controls are removed, deficit reduction measures are implemented, tightening
monetary policy is used to reduce inflation, and tariff barriers are removed to promote free trade.

Objectives of IMF
• Foster global monetary cooperation: To establish IM corporation amongst its
members .This is done through a permanent institutions for collaboration in several Issues.
• Secure financial stability: To ensure foreign exchange rate stabiltity and maintain orderly
exchange arrangement among its members
• Facilitate international trade: To relax or eliminate the exchange rate and fix them at a
particular level to ensure the flow of the International Trade and promote IT to achieve
Balanced growth.
• Promote high employment and sustainable economic growth: To help the backward countries attain
Balanced economic growth.
• Reduce poverty around the world
• To Promote capital investment from developed to the Backward economies to develop their economic
resources.

World Trade Organisation
Intergovernmental organisation which regulates the international trade
• Officially commenced on 1st
Jan 1995 under the Marrakesh Agreement
• Signed by 123 nations in 1994
• WTO had replaced GATT (General agreement on tariffs and trade)
• They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial
standards and product safety, food sanitation regulations, intellectual property and much more.
• Headquarters is Situated at Geneva Switzerland

FUNCTIONS OF WTO
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations

ROLE OF WTO
• The main goal of WTO is to help the trading industry to become smooth, fair, free and
predictable. It was organized to become the administrator of multilateral trade and business
agreements between its member nations. It supports all occurring negotiations for latest
agreements for trade. WTO also tries to resolve trade disputes between member nations.
• Multi-lateral agreements are always made between several countries in the past. Because of this,
such agreements become very difficult to negotiate but are so powerful and influential once
all the parties agree and sign the multi-lateral agreement. WTO acts as the administrator. If
there are unfair trade practices or dumping and there is complain filed, the staff of WTO are
expected to investigate and check if there are violations based on the multi-lateral agreements.

Advantages of WTO
1. Businesses simplified :The World Trade Organization has committed itself to create guidelines that
make business easier. These laws and regulations are established by the WTO and guarantee compliance
by all countries with their trade regulations. This simplifies business.
2. Harmony is a value :The WTO's primary objective is to promote trade among member countries and to
ensure that every nation abides by the provisions of its trade treaty to preserve harmony and peace in
trade among the members. It takes specialized care of an important aspect of the economy of every
nation- Trade.
3. Rouses Monetary Progress: This international organization is responsible for all trade-related issues of
its member countries. It encourages countries to diversify their products to show they have enough
choices to satisfy people's needs. The process of globalization and the agenda of the World Trade
Organisation go hand in hand. As the trade between nations becomes free and uncomplicated, the world
becomes an even smaller place with all the products available everywhere.

Advantages of WTO
4. Productively Knobs Quarrels: The World Trade Organization is responsible for settling
disputes between nations while conducting trade among themselves. The WTO ensures that every
dispute is heard and the proper jurisdiction is used to resolve it.
5. Heightens Nations' Net Income: WTO's primary goal is to encourage trade between nations
and ensure trade flows. This allows countries to do business with each other and facilitates the
flow of the economy, ultimately leading to the diversification of capital and an increase in the
nation's net income.
6. The Lifestyle Cost is Reduced: WTO confirms that countries are successful as long as it is
trade-related. The WTO guidelines are followed by the countries to ensure that they maintain their
profile. This helps them live better lives by lowering their living costs. It ultimately improves the
lifestyle.

TRADE-RELATED INVESTMENT
MEASURES (TRIMS)
• The Agreement on Trade-Related Investment Measures (TRIMS) recognizes that certain
investment measures can restrict and distort trade.
• It states that WTO members may not apply any measure that discriminates against
foreign products or that leads to quantitative restrictions, both of which violate basic
WTO principles.
• A list of prohibited TRIMS, such as local content requirements, is part of the Agreement.
• Recently India was dragged to WTO by U.S. over former’s specification of Domestic
Content Requirement in relation to procurement of Solar Energy cells and equipment’s.

Objectives of
TRADE-RELATED INVESTMENT MEASURES (TRIMS)
• TRIMs believe that there is a strong connection between trade and
investment. The goal of trade-related investments measures is to give fair
treatment to all investing members across the world.
• As the TRIMs deal says, members have to inform the World Trade
Organization (WTO) council to buy and sell various situation

Features of TRIMs
• It only applies to investment measures related to goods trade.
• This doesn’t apply to service trade.
• It doesn’t regulate the entry of foreign industry or investment.
• It is about the discriminatory treatment of imported/exported products.
• Concern measures were applied to both foreign domestic firms.
• A transition period of 2 years in the case of developed countries, 5 years in the case
of developing countries and 7 years in the case of LDCs, from the date this
agreement came into effect, which is 1st January 1995.

TRADE-RELATED ASPECTS OF
INTELLECTUAL PROPERTY RIGHTS
(TRIPS)
What is intellectual property ?
The property or output produced from human creativity using human
intellectual power, creative ideas, critical thinking and mind power such
output could take the shape of invention, design, trademark, literary and
artistic works etc.

TRADE-RELATED ASPECTS OF
INTELLECTUAL PROPERTY RIGHTS
(TRIPS)
TRIPS
↓
Trade related aspects of Intellectual property rights
↓
Most comprehensive & multilateral agreement on intellectual property
Trips is an international agreement administered by WTO
(world trade organization)
This trips agreement sets down minimum standards for many form of intellectual property regulations and this will be applied to
other WTO members

Features of TRIPS
• Standards: The TRIPS Agreement establishes minimum standards for intellectual property protection across
member countries, specifying subject matter, duration of rights, and the scope of protection.
• The incorporated commitments from the Paris Convention and Berne Convention have resulted in it
being dubbed as "Berne and Paris-plus" agreement.
• This integration offers a consistent approach to intellectual property protection across all member states.
• Enforcement: This component of the agreement emphasizes the importance of effective enforcement
mechanisms for domestic intellectual property rights. This feature outlines procedures for all IPR proceedings
such as criminal and civil cases, border measures, and temporary injunctions.
• Dispute Settlement: Disputes between WTO members regarding TRIPS obligations are settled through the
organization's established dispute settlement procedures. This provides a neutral and internationally recognized
framework for resolving complex IP challenges, standardizing fair and equal settlement among all.

Economic Integration
Economic integration is a process where countries agree to remove trade
barriers and align their economic policies to become more
connected. The goal is to improve productivity, increase economic
interdependence, and create a more interconnected global economy
Economic integration can involve:
• Removing government rules, taxes, and limits on trade
• Aligning monetary and fiscal policies
• Cooperating on infrastructure and other economic projects

Levels of Economic Integration
• Free Trade Area: If a group of countries agree to abolish all trade
restrictions and barriers among or charge low rates of tariffs in carrying
out international trade, such a group is called, 'free trade area. These
countries impose trade barriers and restrictions with regard to trade with
countries other than the members of the group independently.
An example is NAFTA

• Customs Union:The member countries of the customs union have two basic
features. They are:
(i) The member countries abolish all the restrictions and barriers on trade
among themselves or charge low rates of tariffs and
(ii) they adopt a uniform commercial policy of barriers and restrictions jointly
with regard to the trade with the non-member countries. Thus, customs
union is advanced in degree compared to a free trade area.
The European Union, or EU, is primarily a customs union.

• Common Market: Common market has three basic characteristics. They are:
(i) All member countries abolish all the restrictions and barriers on trade among
themselves or charge low rates of tariffs.
(ii) They adopt a uniform commercial policy of barriers and restrictions jointly
with regard to the trade with the non-member countries, and
(iii)They allow free movement of human resources and capital among the member
countries. Thus, common market is superior to customs union.
Most of the EU countries also operate as part of a single market.

• Economic Union: Economic union has four basic characteristics. They are:
(i) All member countries abolish all the restrictions on trade among themselves or charge
low rates of tariffs.
(ii) They adopt a uniform commercial policy of barriers with regard to trade with the non-
member countries.
(iii) They allow free moment of human resources and capital among themselves
(iv) They achieve uniformity in monetary policy and fiscal policy among the member
countries. Thus, economic union is superior to common market.
Example: European Union
In a nutshell, Economic Union > Common Market > Customs Union > Free Trade Area..

Regional Economic Integration in Europe
Regional economic integration removes trade barriers in a region, allowing
for the free flow of goods, services, and people. The European Union is a
perfect example of this type of structure. Other parts of the world also have
started to integrate their own economic systems. As you read this section,
think about what opportunities neighboring countries can offer one another
when trade barriers are removed. What did European trade look like before
the EU? How has economic integration benefitted European nations, and
what new challenges has it created?

EUROPEAN UNION
•The EU was formed as a result of the devastation of two world wars
on Western Europe and the desire for a lasting peace, and the desire
by the European nations to hold their own on the world’s political
and economic stage
•The forerunner of the EU was the European Coal and Steel
Community, which had the goal of removing barriers to trade in
coal, iron, steel, and scrap metal formed in 1951
•The European Economic Community was formed in 1957 at the
Treaty of Rome with the goal of becoming a common market

There are five main institutions of the EU:
The European Council - resolves major policy issues and sets policy
directions
The European Commission - responsible for implementing aspects of
EU law and monitoring member states to ensure they are complying
with EU laws
The Council of the European Union - the ultimate controlling
authority within the EU
The European Parliament - debates legislation proposed by the
commission and forwarded to it by the council
The Court of Justice - the supreme appeals court for EU law

The Single European Act
The Single European Act: was adopted by the EU in 1987committed the EC
countries to work toward establishment of a single market by December 31,
1992 was born out of frustration among EC members that the community
was not living up to its promise provided the impetus for the restructuring of
substantial sections of European industry allowing for faster economic
growth than would otherwise have been the case.

The Establishment Of The Euro
• The Maastricht Treaty committed the EU to adopt a single
currency
• By adopting the euro, the EU has created the second largest
currency zone in the world after that of the U.S. dollar
• The euro is used by 12 of the 25 member states
• For now, three EU countries, Britain, Denmark and Sweden, that
are eligible to participate in the euro-zone, are opting out.

Association Of
Southeast Asian Nations(ASEAN)
• It was formed in 1967
• Currently includes Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand, Vietnam, Myanmar, Laos, and Cambodia
• Wants to foster freer trade between member countries and to
achieve some cooperation in their industrial policies
• An ASEAN Free Trade Area (AFTA) between the six original
members of ASEAN came into effect in 2003

Regional Economic Integration
In USA
• There is a move toward greater regional economic integration
in the Americas
• The biggest effort is the North American Free Trade Area
(NAFTA)
• Other efforts include the Andean Community and
MERCOSUR
• A hemisphere-wide Free Trade of the Americas is under
discussion

Regional Economic Integration
In USA
• The North American Free Trade Area (NAFTA) became
law January 1, 1994
• NAFTA’s participants are the United States, Canada, and
Mexico.

NAFTA:
• Abolished tariffs on 99 percent of the goods traded between
members
• removed most barriers on the cross-border flow of services protects
intellectual property rights
• Removes most restrictions on FDI between the three member
countries
• Allows each country to apply its own environmental standards,
provided such standards have a scientific base
• Establishes two commissions to impose fines and remove trade
privileges when environmental standards or legislation involving
health and safety, minimum wages, or child labor are ignored

NAFTA’s supporters argue that:
• Mexico will benefit from increased jobs as low cost
production moves south, and will attain more rapid
economic growth as a result
• The U.S. and Canada will benefit from the access to a
large and increasingly prosperous market and from the
lower prices for consumers from goods produced in
Mexico
• U.S. and Canadian firms with production sites in
Mexico will be more competitive on world markets

Critics of NAFTA’s argued that:
• That jobs would be lost and wage levels would
decline in the U.S. and Canada
• Mexican workers would emigrate north
• pollution would increase due to Mexico's more
lax standards
• Mexico would lose its sovereignty

• Research indicates that NAFTA’s early impact was
subtle, and both advocates and detractors may have
been guilty of exaggeration
• The agreement has helped to create the background
for increased political stability in Mexico
• Several other Latin American countries have indicated
their desire to eventually join NAFTA
• Currently both Canada and the U.S. are adopting a
wait and see attitude with regard to most countries

Module 4 IBE.pptx international Business

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