role of wto in marketing

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ROLE OFWTO

IN MARKETING

Mr. OMAR ALAJIL ( .عمر أ (العجيل

M.Sc Food Technology

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TABLE OF CONTENT1. Introduction2. What is trade3. What is the benefits of international trade4. What is the barriers of international trade5. What is WTO6. function of WTO7. Understanding and Mis-understanding of

WTO

INTRODUCTION

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INTERNATIONAL MARKETING International marketing is the marketing activity

carried on across national boundaries. It is the marketing activities involved between

countries. It always crosses the boundaries of the country. International/global trade, inter-regional

trade, world trade and export marketing are some terms which are to some extent identical with the term international marketing.

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INTERNATIONAL MARKETING DEALS WITH IMPORTS AND EXPORTS. Exporting - Marketing domestically

produced goods and services in foreign countries

Importing - Purchasing foreign goods and services

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THE LARGEST INDIAN TRADE PARTNERS The largest Indian partners with their

total trade (sum of imports and exports) in millions of US Dollars for financial year 2012–2013 are as mentiond in next slide

the information is taken from Wikipedia site:

(http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_India)

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Country Export Import Total trade Trade Balance

All countries 300,400 490,736 791,136 -190,336.00 United Arab Emirates

36,265.15 38,436.47 74,701.61 -2,171.32

 China 13,503.00 54,324.04 67,827.04 -40,821.04 United States 36,152.30 24,343.73 60,496.03 11,808.57 Saudi Arabia 9783.81 34,130.50 43,914.31 -24,346.69 Switzerland 1,116.98 29,915.78 31,032.76 -28,798.80 Singapore 13,608.65 7,754.38 21,363.03 5,854.27 Germany 7,244.63 14,373.91 21,618.54 -7129.28 Hong Kong 12,278.31 8,078.58 20,356.89 4,199.74 Indonesia 5,331.47 14,774.27 20,105.75 -9,442.80 Iraq 1,278.13 20,155.94 21,434.07 -18,877.81 Japan 6,099.06 12,514.07 18,613.14 -6,415.01 Belgium 5,506.63 10,087.16 15,593.80 -4,580.53 Kuwait 1,060.80 16,569.63 17,630.43 -15,508.83 Iran 3,351.07 11,603.79 14,954.86 -8,252.72 South Korea 4,201.49 13,461.25 17,662.73 -9,259.76

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IMPORTANCE OF INTERNATIONAL MARKETING

1. Lowers prices2. Increases the real income and

national well being3. Furthers technological

development4. Provides higher standard of living5. Reduces dangers of monopolistic

exploitation

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IMPORTANCE OF INTERNATIONAL MARKETING

6. Ensures optimum use of resources7. Builds cultural relations8. Bridges the technological gap9. Bring international co-operation

and world peace10.Brings about rapid

industrialization

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SO INTERNATIONAL

MARKETINGIS

IMPORTANT

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Free and fair international trade is an ideal situation as free trade is beneficial to all participating countries.

However, various types of barriers/restrictions are imposed by different countries on international marketing activities.

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TRADE BARRIERS Such imposed or artificial

restrictions on import and exports are called Trade barriers which are unfair and harmful to the growth of free trade among the nations.

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TRADE BARRIERS

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TRADE BARRIERS

Tariff Barriers.

Non-Tariff barriers.

The trade barriers can be broadly divided into two broad groups.

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TARIFF BARRIERS Tariffs refer to a customs duty or a tax on

products that move across borders. The most important tariff barrier is the

customs duty imposed by the importing country.

A tax may also be imposed by the exporting country on its export.

However, governments rarely impose tariff on export, because countries want to sell as much as possible to other countries.

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TARIFFS Two important types of tariffs

Revenue tariffs - Designed to raise funds for the importing government

Protective tariffs - Designed to raise the retail price of an imported product to match or exceed that of a similar domestic product.

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IMPORTANT TARIFF BARRIERS ARE AS FOLLOWS

1. Protective tariff 2. Revenue tariff 3. Specific duty 4. Ad-valorem

duty 5. Compound duty 6. Anti-dumping

duty

7. Countervailing duty

8. Single column tariff

9. Double column tariff

10. Triple column tariff

11. Sliding scale duty /Seasonal duties

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DUMPING exporters attempt to

capture foreign markets by selling goods at rock-bottom prices, such practice is called dumping.

As a result of dumping, domestic industries find it difficult to compete with imported goods

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NON-TARIFF BARRIER A non-tariff barrier is any barrier other

than a tariff that raises an obstacle to free flow of goods in overseas markets.

Non-tariff barriers, do not affect the price of the imported goods but only the quantity of imports.

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NON-TARIFF BARRIER Import quotas - Limit the number of units of

products in certain categories that can cross a country’s border for resale

Embargo - Complete ban on the import of specified products

Subsidies - Government financial support of a private industry

Exchange control - Method used to regulate international trade among importing organizations by controlling access to foreign currencies

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THE MAIN IMPORTANT NON-TARIFF BARRIERS ARE AS FOLLOWS

1. Quota System 2. Export

Obligation 3. Prior Import

Deposits 4. Preferential

Arrangements

5. Consular Formalities

6. Foreign Exchange Regulations

7. State Trading 8. Other Non-

tariff Barriers

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TRADE BARRIERS GATT and WTO agreements

have eliminated many tariffs on many products Countries frequently use nontariff

barriers to boost exports and control the flows of imported products

WTO

World Trade Organization

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WTO The world trade organization (WTO)

started functioning from 1 st January 1995. WTO is the result of Uruguay Round of negotiations.

WTO is the successor to the General Agreement on Tariffs and Trade (GATT).

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GATT has ceased to exist as a separate institution and has become part of the WTO.

WTO has larger membership than GATT. India is one of the founder members of WTO.

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FROM GATT TO WTO 1 947- 23 countries including India signed GATT

agreement. GATT was created to regulate and liberalize world trade by reducing tariff barriers.

1948 – GATT came into force to liberalize world trade. 1949 – Second Round was held as Annecy in France.

Discussions were held to reduce tariff on number of goods. About 5000 tariff concessions on various products were agreed upon.

1950 – Third Round was held at Torquay (England). About 8700 Tariff concessions were agreed.

1956 – Fourth Round was held at Geneva. Tariff reduction at this round was worth 2.5 US $ Billion.

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1960 – The Fifth Round called Dillion Round was held at Geneva. It was held in two phase. Phase I- to create a single schedule of concessions for the EC based on its common external tariffs. Phase II- for general round of tariff negotiations.

1964 – The Sixth Round, called Kennedy Round was held at Geneva. Tariff reductions and anti-dumping measures were discussed. The round took 3 years to complete.

1973 – The Seventh Round, called the Tokyo Round was launched at Tokyo and concluded at Geneva. It took six years to conclude. Negotiations were held to reduce tariffs as well as non-tariff barriers on goods.

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1987 –The Eighth Round, called the Uruguay Round was Launched at Uruguay and concluded at Geneva after 8 years. Negotiations took place on various matters:-

1. Tariff and non-tariff measures. 2. Trade in services. 3. Trips agreement. 4. Trims agreement. 5. Trade in textiles. 6. Trade in agriculture. 7. Creation of WTO, etc.

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FROM GATT TO WTOYear Place Matters Covered Countries

participated1947 Geneva Tariff Reduction 231949 Annecy Tariff Reduction 131950 Torguay Tariff Reduction 381956 Geneva Tariff Reduction 261960 Geneva Tariff Reduction 261964 Geneva Tariff and Anti- dumping 621973 Tokyo/Geneva Tariff and Non-tariff 1021986 Uruguay/Geneva Tariff, Non-tariff, TRIPs,

TRIMs123

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URUGUAY ROUND The Uruguay round was launched at

Uruguay in 1986. It was the last round as far as GATT was concerned because at the end of this round, it was decided by the participating countries to replace GATT by WTO from 1 st January 1995.

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THE MAIN HIGHLIGHT OF URUGUAY ROUND ARE

1. Tariff and non-tariff measures. 2. Trade in services. 3. TRIPs agreement. 4. TRIMs agreement. 5. Trade in textiles. 6. Trade in agriculture. 7. Creation of WTO, etc.

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THE MAIN HIGHLIGHT OF URUGUAY ROUND ARE 1. Trade in services

Trade in services like banking, insurance, travel etc. has been brought under multilateral agreement. The GATTs agreement introduces a number of general obligations in the services.

2. Anti-dumping measuresThe developed countries have increasingly resorted to antidumping measures. The Uruguay round seeks to introduce new rules relating to dumping, which would benefit the developing nations.

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3. Agreement on AgricultureThe main objectives to increase market access to agriculture items in member nations. The member nations have to change or remove their non-tariff barriers like quotas on agriculture items.

4. TRIPs (Trade Related Aspects of Intellectual Property Rights) The TRIPs agreement provides protection of intellectual property rights including patents, trade marks, copyrights, etc. This agreement is expected to boost research and development and investment in property rights.

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5. TRIMs (Trade Related Investment Measures)The TRIMs agreement introduces a number of measures by member countries to treat foreign investments on par with domestic investments and also removal of QRs (quantitative restrictions) on imports. Certain measures that discriminate against foreign investments were to be withdrawn by member nations, such as dividend balancing requirements.

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6. Agreement on Textiles and ClothingThe MFA (Multi-Fiber agreement) was in force since 1973. Under MFA the developed countries (France, USA, Canada, Japan England etc.) that were importing textiles and clothing from developing nations were imposing quotas. At the Uruguay round, MFA has been withdrawn, which would benefit the textile exporting counties including India.

OBJECTIVES AND FUNCTIONS OF

WTO

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OBJECTIVES OF WTOWTO desires to achieve the objectives as decided by GATT. These are as follow- 1. Free trade i.e. trade without discrimination 2. Growth of less developed countries. 3. Protection and preservation of environment. 4. Optimum utilization of available world’s resources. 5. Raising living standard of citizens of member counties. 6. Settlement of trade disputes among member countries

through consultation and dispute settlement procedures. 7. Generating employment opportunities at global. 8. Enlargement of production and trade.

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FUNCTIONS OF WTO1. Administration of agreement

It looks after the administration of the 29 agreements (signed at the conclusion of Uruguay round in 1994), plus a number of other agreements, entered into after the Uruguay round.

2. Implementation of reduction of trade barriersIt checks the implementation of the tariff cuts and reduction of non-tariff measures agreed upon by the member nations at the conclusion of the Uruguay round.

3. Examination of Members‘ Trade PoliciesIt regularly examines the foreign trade policies of the member nations, to see that such policies are in line with WTO guidelines.

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4- Collection of foreign trade informationIt collects information in respect of export-import trade, various trade measures and other trade statistics of member nations.

5- Settlement of disputesIt provides conciliation mechanism for arriving at and amicable solution to trade conflicts among member nations. The WTO dispute settlement body adjudicates the trade disputes that cannot be solved through bilateral talks between member nations.

FUNCTIONS OF WTO

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FUNCTIONS OF WTO6. Consultancy services

It keeps a watch on the development in the world economy and it provides consultancy services to its member nations.

7. Forum for negotiationWTO is a forum where member nations continuously negotiate the exchange of trade concessions. The member nations also discuss trade restrictions in areas of goods, services, intellectual property etc.

8. Assistance of IMF and IBRDIt assists IMF and IBRD for establishing coherence in universal economic policy administration.

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Trading without discrimination is the main principle of the World Trade Organization; this principle is divided into six aspects that involved the organization goals:

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1. Most Favored Nations (MFN): Treating other people equally

2. National Treatment: Treating foreigners and locals equally

3. Freer Trade: gradually through negotiation4. Predictability: through binding and

transparency5. Promoting fair competition6. Encouraging development an economic

reform

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it’s really important to emphasize that the WTO is a “member driven”, with decisions taken by consensus among all member governments.

All major decisions are made by the membership as a whole, either by ministers or by their ambassadors or delegates. Decisions are normally taken by consensus.

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WHY SHOULDDEVELOPING COUNTRIES

JOIN THE WTO

54WHY SHOULD DEVELOPING COUNTRIES JOIN THE WTO

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COUNTRIES SHOULD JOIN THE WORLD TRADE ORGANIZATION BECAUSE

the opening of national markets to international trade with justifiable exceptions or with adequate flexibilities, will encourage and contribute to * development, * raise people's welfare, * reduce poverty, * and foster peace and stability.

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THE OPENING OF NATIONAL MARKETS TO INTERNATIONAL TRADE

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At the same time, such market opening must be accompanied by sound domestic and international policies that contribute to economic growth and development according to each member's needs and aspirations

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Understanding And

Mis-understanding OF

WTO

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10 BENEFITS OF THE WTO TRADING SYSTEM

1. The system helps promote peace

2. Disputes are handled constructively

3. Rules make life easier for all

4. Freer trade cuts the costs of living

5. It provides more choice of products and qualities

6. Trade raises incomes7. Trade stimulates

economic growth8. The basic principles

make life more efficient

9. Governments are shielded from lobbying

10. The system encourages good government

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10 MISUNDERSTANDING ABOUT THE WTO

1. The WTO dictates policy

2. The WTO is for free trade at any cost

3. Commercial interests take priority over development …

4. … and over the environment

5. … and over health and safety

6. The WTO destroys jobs, worsens poverty

7. Small countries are powerless in the WTO

8. The WTO is the tool of powerful lobbies

9. Weaker countries are forced to join the WTO

10. The WTO is undemocratic

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A senior official at the Indian commerce ministry said about WTO Developing countries’ interests are rarely taken seriously at such forums. Rich countries are allowed to violate WTO rules with impunity, but when India tries to aid its farmers, “long-term dumpers of subsidized grain” like the U.S. and European Union cry, “Trade-distorting!”

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IN INDIA

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SUMMARY

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SUMMARY Free and fair international trade is an ideal

situation as free trade is beneficial to all participating countries. The trade barriers can be broadly divided into two broad groups.

1. Tariff Barriers. 2. Non-Tariff barriers. Tariffs refer to a customs duty or a tax on

products that move across borders. A non-tariff barrier is any barrier other than a

tariff that raises an obstacle to free flow of goods in overseas markets..

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The world trade organization (WTO) started functioning from 1 st January 1995.

WTO is the result of Uruguay Round of negotiations.

Main Functions Of WTO like Administration of agreement, Implementation of reduction of trade barriers, Examination of Members‟ Trade Policies, Collection of foreign trade information, Settlement of disputes, Consultancy services, Forum for negotiation, Assistance of IMF and IBRD etc are the.

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