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IBM unit 2

IBM unit 2

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International Business Management
 
Unit:II
 
P r e p a r e d  B y :  V . H a r i b a b u ,  M B A
age
International Trade & Regulatory Frame work 
International Trade:
It is an exchange of goods and services across nationalboundaries or territories. International trade is branch of economy which togetherwith international finance forms the larger branch of international economy.Traditionally trade was regulated through between two nations. Since the SecondWorld War multi lateral countries institutions like GATT (General Agreement onTariffs & Trade), WTO (World Trade Agreement) have attempted to create aglobal regulated trade structure to solve the international business problems ortrade barriers.The regulation for international trade done through the WTO at the global level.The economic integration as well as regional trade blocks are classified into fourcategories:1. Free Trade Area,2. Customs union,3. Common market, and4. Economic.The above four areas integrate the entire world economy for the internationalbusiness development.
1)
Free Trade Area:
If a group of countries agree to abolish all traderestriction and barriers to carry out international trade such group is calledfree trade area. But these countries impose trade barriers and restrictionswith regard to trade over the other countries.
2)
Customs union:
This type of group of countries basically has two features.
The member countries abolish all the restrictions and barriers on tradeamong themselves or charge low rates of tariffs.
They adopt a uniform commercial policy of barriers and restrictions jointlywith regard to the trade with non-members countries.
1)
Common Market:
It has three basic characteristics:
 
International Business Management
 
Unit:II
 
P r e p a r e d  B y :  V . H a r i b a b u ,  M B A
age
All members’ countries abolish all the restrictions and barriers by charginglow rates of tariffs.
They adopt uniform policy over the non-member countries.
They allow free movement of human resources and capital among themember’s countries thus common market is superior to customs union.
1)
Economic Union:
It has four basic characteristics:
All members of countries charges low rates of tariffs among them.
They adopt common commercial policy of barriers over the non-member ofcountries.
They allow free movement of HR, capital among themselves.
They have uniformity in the case of monetary policy & fiscal policy amongthe member’s countries. Thus economic union is superior to common market.
Regional Trade Blocks:
1)
ASEAN: The Association of South-East Asian Nations: 
It is establishedwith six countries namely Singapore, Brunei, Malaysia, Philippines, Thailand andIndonesia, agreed in Jan 1992 to invite free trade among 6 countries.
Goals:
Accelerate economic growth.
To promote regional peace and stability.
To increase GDP almost all 700 billion dollars.
Total trade above 850 million US dollars.
Encourage the free flow of foreign capital.
1)
European Union: EU: 
The European economic community is also known asEuropean common market. Originally EU having six countries viz., France,Germany, Italy, Belgium, Netherland and Luxembourg formed into the EuropeanEconomic Community by the treaty of Rome 1957. By 2004 it is having 25countries as its members.
Goals:
 
International Business Management
 
Unit:II
 
P r e p a r e d  B y :  V . H a r i b a b u ,  M B A
age
Elimination of customs duties with regard to exports & imports of goodsamong member countries.
Impose common tariff and common commercial policy with regard to non-member countries.
Promote the economic and social development.
To maintain the common policy in the area of transport.
Common policy in the area of agriculture. Etc.
1)
NAFTA: North American Free Trade Agreement: 
It is established on 1
st
Jan1994 with three countries: they are U.S.A, Canada, and Mexico. This signed onthe free trade agreement in 1994.
Goals: 
Eliminate all tariffs and trade barriers.
To create new business opportunities in Mexico.
To reduce the prices of the products and services by enhancing thecompetition.
To enhance industrial development.
To improve and consolidate political relationship among member countries.
1)
MERCOSUR: 
The treaty of Asuncion signed by Argentina, Brazil, piraguas,Uruguay, on March 26, 1991 created MERCOSUR. It is a customs union. It isthe South America’s largest trade block collecting a market of 575 millionpeople. It is the fastest growing trading block in the world.
Goals:
Fixing of a common external tariff and adopting of a common trade policywith regard to non-member status or countries.
Co-ordination of macro-economic, agriculture, industry, taxes, monetarysystem, exchange and capital, service, customs, frees competition betweenmember’s countries.Thus the regional agreements helped a lot for the international trade and to avoidor abolish the trade barriers within the member countries. Directly and indirectlyit is good sign for global business people as well as for all countries of the world.

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