FOREIGN DIRECT INVESTMENT

Foreign direct investment (FDI) or foreign investment refers to long term participation by country A
into country B. It usually involves participation in management, joint-venture, transfer of
technology and expertise. There are two types of FDI: inward foreign direct investment and outward
foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct
investment", which is the cumulative number for a given period. Direct investment excludes investment
through purchase of shares.

History
FDI is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing
foreign investment can be used as one measure of growing economic globalization. The figure below
shows net inflows of foreign direct investment in the United States. The largest flows of foreign
investment occur between the industrialized countries (North America, Western Europe and Japan). But
flows to non-industrialized countries are increasing sharply.

Types of F D I

A foreign direct investor may be classified in any sector of the economy and could be any one of the
following:

 an individual;
 a group of related individuals;
 an incorporated or unincorporated entity;
 a public company or private company;
 a group of related enterprises;
 a government body;
 an estate (law), trust or other social institution; or
 Any combination of the above.
Methods

The foreign direct investor may acquire voting power of an enterprise in an economy through any of the
following methods:

 by incorporating a wholly owned subsidiary or company

 by acquiring shares in an associated enterprise
 through a merger or an acquisition of an unrelated enterprise
 participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:

 low corporate tax and income tax rates

 tax holidays
 other types of tax concessions
 preferential tariffs
 special economic zones
 EPZ - Export Processing Zones
 Bonded Warehouses
 Maquiladoras
 investment financial subsidies
 soft loan or loan guarantees
 free land or land subsidies
 relocation & expatriation subsidies
 job training & employment subsidies
 infrastructure subsidies
 R&D support
 derogation from regulations (usually for very large projects)
Foreign direct investment in India

A recent UNCTAD survey projected India as the second most important FDI destination (after China) for
transnational corporations during 2010-2012. As per the data, the sectors which attracted higher inflows
were services, telecommunication, construction activities and computer software and hardware.
Mauritius, Singapore, the US and the UK were among the leading sources of FDI. FDI for 2009-10 at
USD 25.88 billion was lower by five per cent from USD 27.33 billion in the previous fiscal. Foreign
direct investment in August dipped by about 60 per cent to USD 1.33 billion, the lowest in 2010 fiscal,
industry department data released showed.

Foreign Institutional Investor (FII)

What Does Foreign Institutional Investor - FII Mean?

An investor or investment fund that is from or registered in a country outside of the one in which it is
currently investing. Institutional investors include hedge funds, insurance companies, pension funds and
mutual funds.
The term is used most commonly in India to refer to outside companies investing in the financial markets
of India. International institutional investors must register with the Securities and Exchange Board of
India to participate in the market. One of the major market regulations pertaining to FIIs involves
placing limits on FII ownership in Indian companies.

One who propose to invest their proprietary funds or on behalf of "broad based" funds or of foreign
corporate and individuals and belong to any of the under given categories can be registered for FII.

 Pension Funds
  Mutual Funds
 Investment Trust
 Insurance or reinsurance companies
 Endowment Funds
 University Funds
 Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own
behalf, and
 Asset Management Companies
 Nominee Companies
 Institutional Portfolio Managers
 Trustees
 Power of Attorney Holders
 Bank

An application for registration has to be made in Form A, the format of which is provided in the
SEBI(FII) Regulations, 1995 and submitted with under mentioned documents in duplicate addressed to
SEBI as well as to Reserve Bank of India (RBI) and sent to the following address within 10 to 12 days of
receipt of application.

Address for application

The Division Chief 
FII Division 
Securities and Exchange Board of India, 
224, Mittal Court, 'B' Wing, 1st Floor, 
Nariman Point, Mumbai - 400 021. 
INDIA. 

Supporting documents required are

 Application in Form A duly signed by the authorized signatory of the applicant.

 Certified copy of the relevant clauses or articles of the Memorandum and Articles of Association
or the agreement authorizing the applicant to invest on behalf of its clients
 Audited financial statements and annual reports for the last one year , provided that the period
covered shall not be less than twelve months.
 A declaration by the applicant with registration number and other particulars in support of its
registration or regulation by a Securities Commission or Self Regulatory Organization or any
other appropriate regulatory authority with whom the applicant is registered in its home country.
 A declaration by the applicant that it has entered into a custodian agreement with a domestic
custodian together with particulars of the domestic custodian.
 A signed declaration statement that appears at the end of the Form.
 Declaration regarding fit & proper entity.
The eligibility criteria for applicant seeking FII registration

As per Regulation 6 of SEBI (FII) Regulations, 1995, Foreign Institutional Investors are required to
fulfill the following conditions to qualify for grant of registration: 

 Applicant should have track record, professional competence, financial soundness, experience,
general reputation of fairness and integrity;
 The applicant should be regulated by an appropriate foreign regulatory authority in the same
capacity/category where registration is sought from SEBI. Registration with authorities, which
are responsible for incorporation, is not adequate to qualify as Foreign Institutional Investor.
 The applicant is required to have the permission under the provisions of the Foreign Exchange
Management Act, 1999 from the Reserve Bank of India.
 Applicant must be legally permitted to invest in securities outside the
 The applicant must be a "fit and proper" person.
 The applicant has to appoint a local custodian and enter into an agreement with the custodian.
Besides it also has to appoint a designated bank to route its transactions.
 Payment of registration fee of US $ 5,000.00

General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (typically abbreviated GATT) was negotiated during the
UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments
to create the International Trade Organization (ITO). GATT was formed in 1949 and lasted until 1993,
when it was replaced by the World Trade Organization in 1995. The original GATT text (GATT 1947) is
still in effect under the WTO framework, subject to the modifications of GATT 1994.

The General Agreement on Tariffs and Trade (GATT) was first signed in 1947. The agreement was
designed to provide an international forum that encouraged free trade between member states by
regulating and reducing tariffs on traded goods and by providing a common mechanism for resolving
trade disputes. GATT membership now includes more than 110 countries.
GATT and the World Trade Organization

In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the
most significant changes was the creation of the World Trade Organization (WTO). The 75 existing
GATT members and the European Communities became the founding members of the WTO on 1 January
1995. The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in
1997). Since the founding of the WTO, 21 new non-GATT members have joined and 29 are currently
negotiating membership. There are a total of 153 member countries in the WTO.

Of the original GATT members, Syria and the SFR Yugoslavia has not rejoined the WTO. Since FR
Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in two), is
not recognised as a direct SFRY successor state; therefore, its application is considered a new (non-
GATT) one. The General Council of WTO, on 4 May 2010, agreed to establish a working party to
examine the request of Syria for WTO membership. The contracting parties who founded
the WTO ended official agreement of the "GATT 1947" terms on 31 December
1995. Serbia and Montenegro are in the decision stage of the negotiations and are expected to become
the newest members of the WTO in 2012 or in near future.

Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO
expanded its scope from traded goods to trade within the service sector and intellectual property rights.
Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations
(particularly the Tokyo Round) plurilateral agreements created selective trading and caused
fragmentation among members. WTO arrangements are generally a multilateral agreement settlement
mechanism of GATT

The World Trade Organization (W T O)

The World Trade Organization (WTO) is the only global international organization dealing with the
rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of
the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and
services, exporters, and importers conduct their business.

Who WTO is ….

There are a number of ways of looking at the World Trade Organization. It is an organization for trade
opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade
disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments
try to sort out the trade problems they face with each other.

The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The
bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and
earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently
the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to
open markets for trade. But the WTO is not just about opening markets, and in some circumstances its
rules support maintaining trade barriers — for example, to protect consumers or prevent the spread of
disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.
These documents provide the legal ground rules for international commerce. They are essentially
contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and
signed by governments, the goal is to help producers of goods and services, exporters, and importers
conduct their business, while allowing governments to meet social and environmental objectives

The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no
undesirable side effects — because this is important for economic development and well-being. That
partly means removing obstacles. It also means ensuring that individuals, companies and governments
know what the trade rules are around the world, and giving them the confidence that there will be no
sudden changes of policy. In other words, the rules have to be ‘transparent’ and predictable.Trade
relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the
WTO system, often need interpreting. The most harmonious way to settle these differences is through
some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute
settlement process written into the WTO agreements.

What WTO does ….

The WTO is run by its member governments. All major decisions are made by the membership as a
whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or
delegates (who meet regularly in Geneva).

While the WTO is driven by its member states, it could not function without its Secretariat to coordinate
the activities. The Secretariat employs over 600 staff, and its experts — lawyers, economists, statisticians
and communications experts — assist WTO members on a daily basis to ensure, among other things, that
negotiations progress smoothly, and that the rules of international trade are correctly applied and
enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the principles of
liberalization, and the permitted exceptions. They include individual countries’ commitments to lower
customs tariffs and other trade barriers, and to open and keep open services markets. They set
procedures for settling disputes. These agreements are not static; they are renegotiated from time to time
and new agreements can be added to the package. Many are now being negotiated under the Doha
Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.

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. All
WTO members must undergo periodic scrutiny of their trade policies and practices, each review
containing reports by the country concerned and the WTO Secretariat.

Dispute settlement

The WTO’s 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. Judgements by specially
appointed independent experts are based on interpretations of the agreements and individual countries’
commitments.

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 standards. The
WTO organizes hundreds of technical cooperation missions to developing countries annually. It also
holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help
developing countries develop the skills and infrastructure needed to expand their trade.

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.

What WTO stands for....

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of
activities. But a number of simple, fundamental principles run throughout all of these documents. These
principles are the foundation of the multilateral trading system.

Non-discrimination

A country should not discriminate between its trading partners and it should not discriminate between its
own and foreign products, services or nationals.

More open

Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include
customs duties (or tariffs) and measure such as import bans or quotas that restrict quantities selectively.

Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers should not be
raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and
consumers can fully enjoy the benefits of competition — choice and lower prices.

More competitive

Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to gain
market share; the issues are complex, and the rules try to establish what is fair or unfair, and how
governments can respond, in particular by charging additional import duties calculated to compensate
for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO
members are developing countries and countries in transition to market economies. The WTO agreements
give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions.

Protect the environment

The WTO’s agreements permit members to take measures to protect not only the environment but also
public health, animal health and plant health. However, these measures must be applied in the same way
to both national and foreign businesses. In other words, members must not use environmental protection
measures as a means of disguising protectionist policies.

World Intellectual Property Organization (WIPO)

What is WIPO?

The World Intellectual Property Organization (WIPO) is a specialized agency of the United Nations. It is
dedicated to developing a balanced and accessible international intellectual property (IP) system, which
rewards creativity, stimulates innovation and contributes to economic development while safeguarding
the public interest.

WIPO was established by the WIPO Convention in 1967 with a mandate from its Member States to
promote the protection of IP throughout the world through cooperation among states and in
collaboration with other international organizations. Its headquarters are in Geneva, Switzerland.
The Director General is Francis Gurry.

What is Intellectual Property?

Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and
symbols, names, images, and designs used in commerce.

IP is divided into two categories:  Industrial property, which includes inventions (patents), trademarks,
industrial designs, and geographic indications of source; and Copyright, which includes literary and
artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings,
paintings, photographs and sculptures, and architectural designs.  Rights related to copyright include
those of performing artists in their performances, producers of phonograms in their recordings, and
those of broadcasters in their radio and television programs. 

How WIPO Works?

The terms governing WIPO’s mandate, functions, finances and procedures are set out in the WIPO
Convention.
 Member States

WIPO’s Member States determine the strategic direction and activities of the Organization. They meet in
the Assemblies, committees and working groups (WIPO decision-making bodies).

There are currently 184 Member States, i.e. over 90 percent of the countries of the world (membership
criteria).

Secretariat

The WIPO Secretariat, or International Bureau, is based in Geneva. WIPO staff, drawn from more than
90 countries, include experts in diverse areas ofIP law and practice, as well as specialists in public policy,
economics, administration and IT.

The respective divisions of the Secretariat are responsible for coordinating the meetings of Member States
and implementing their decisions; for administering the international IP registration systems; for
developing and executing the programs designed to achieve WIPO’s goals; and for providing a repository
of IP expertise to assist its members.

 Oranigam
 Director General
 External Offices

NGOs, IGOs, Civil Society

IPO works with a wide spectrum of stakeholders, including other intergovernmental organizations, non-
governmental organizations, representatives of civil society and of industry groups. Some 250 NGOs and
IGOs currently have official observer status at WIPO meetings. 

Program and Budget

Every two years WIPO’s Director General presents a Program and Budget  document to Member States
for approval. This details objectives, performance measures and budgetary planning for all proposed
program activities.

WIPO is unusual among the family of UN organizations in that it is largely self-financing. About 90
percent of the Organization's budgeted expenditure of 618,8 million Swiss francs for the 2010-2011
biennium will come from earnings from the services which WIPO provides to users of the international
registration systems (PCT, Madrid system, The Hague System etc.). The remaining 10 percent will be
made up mainly of revenue from WIPO’s arbitration and mediation services and sales of publications,
plus contributions from Member States. These contributions are relatively small. The five largest
contributing countries each donate about one-half percent of the Organization's budget.
Financial Regulations and Rules

The financial activities of  WIPO are governed by the Financial Regulations and Rules .

Oversight

An Internal Audit and Oversight Division; an External Auditor [PDF]; and an Audit Committee help
ensure accountability, transparency and oversight of WIPO's operations and activities.

India and WTO

India is a founder member of the General Agreement on Tariffs and Trade (GATT) 1947 and its
successor, the World Trade Organization (WTO), which came into effect on 1.1.95 after the conclusion of
the Uruguay Round (UR) of Multilateral Trade Negotiations. India's participation in an increasingly rule
based system in the governance of international trade is to ensure more stability and predictability, which
ultimately would lead to more trade and prosperity for itself and the 149 other nations which now
comprise the WTO. India also automatically avails of MFN and national treatment for its exports to all
WTO members.
According to the WTO Secretariat Report, along with the policy statement by the Government of India,
India is expected to snatch most of the business deals that are presently catering the developed nations
which includes major service based industries like telecom, financial services, infrastructure services
such as transport and power. The increase in availability and reduction in tariffs has prompted many
developed nations to go for business with India especially in IT and ITeS industry. If the trend continues
then by 2025, India is expected to cater to the software and services demands of major giants of the
business world. Analyzing the present relationship with the promising economic growth of India, one can
be sure that India is going to enjoy a very candid and bright relationship with WTO and associated
member nations by 2025.
WTO and Indian Economy

The WTO is a multilateral trade body, which puts together the rules for global trade. India, as one of the
important members, has played a significant role in the trade negotiations since the WTO came into
being. It is believed that the WTO should evolve as a forum not only for trade but also for fair trade.
India is seen as a force to reckon with, as a negotiator having the potential to engage the world on trade
issues and be seen as a major economic power. Developing find under-developed countries looks upon
India for support, advice and guidance. The evolution of G-110 demonstrates that India can be the
relying point for the least developing and small economies that continue to be subjected to trade
distortions. 
The book WTO and Indian Economy is a modest attempt to deal with such a debatable subject. It is
divided into three sections followed by a glossary of WTO and related terms. About forty-six eminent
economists/researchers from different backgrounds have contributed in this book. The coverage of this
book quite comprehensive; the paper not only studies the results of ongoing impact of WTO but also
provide futuristic insights too. The scholars have tried to grasp various issues related to WTO in context
of agriculture, global market and Indian economy. The book will be of great use o policy makers, public
analysts, scholars and students of Economics and Commerce.

TRADING BLOCKS

The European Union (EU)

The European Union (EU) is an economic and political union of 27 member states which are located

primarily in Europe.[7] The EU traces its origins from the European Coal and Steel Community (ECSC)
and the European Economic Community (EEC) formed by six countries in the 1950s. In the intervening
years the EU has grown in size by the accession of new member states, and in power by the addition of
policy areas to its remit. The Maastricht Treaty established the European Union under its current name
in 1993. The last amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force
in 2009.

The EU operates through a hybrid system of supranational independent institutions and inter

governmentally made decisions negotiated by the member states. Important institutions of the
EU include the European Commission, the Council of the European Union, the European Council,
the Court of Justice of the European Union, and the European Central Bank. The European
Parliament is elected every five years by EU citizens.

The EU has developed a single market through a standardized system of laws which apply in all member
states including the abolition of passport controls within the Scheme area. It ensures the free movement
of people, goods, services, and capital, enacts legislation in justice and home affairs, and maintains
common policies on trade, agriculture[fisheries and regional development. A monetary union, the euro
zone, was established in 1999 and is currently composed of seventeen member states. Through
the Common Foreign and Security Policy the EU has developed a limited role in external
relations and defense. Permanent diplomatic missions have been established around the world and the
EU is represented at the United Nations, the WTO, the G8 and the G-20.

With a combined population of 500 million inhabitants, in 2010 the EU generated an estimated 28%
(US$16.106 trillion) of the global economy, or 21% (US$14.793 trillion) when adjusted in terms
of purchasing power parity.

E u and India

India and the European Union (EU) are committed to an equal and dynamic dialogue on all areas of
mutual of interest and concern as major actors in their own regions, and as emerging global players on
the world stage. In today’s rapidly evolving international order, India and the EU are increasingly called
upon to play major roles, both within their respective regions and beyond. The challenge for both is to
strengthen the EU-India partnership through institutional and civil society frameworks and mechanisms
that will sustain the necessary political will to fully realize all joint endeavors.
The India-EU political partnership is already embedded in a strong institutional architecture. Annual
ministerial meetings and summits are the most visible feature of an ongoing political dialogue. Senior
officials and experts regularly meet on issues of common concern such as terrorism, human rights, trade
and development. Political relations are also strengthened by the regular exchange of visits between EU
and Indian parliamentarians and draws on the strengths of the two civil societies. 

The EU is India’s first partner in terms of trade and actual investment inflows and one of its major
partners in the fields of economic and development cooperation. Their vibrancy and diversity reflect both
the strengths of the respective democracies and the multi-lingual, multi-cultural societies in Europe and
India. 

The launching of an India-EU Round Table of eminent personalities and the creation of an India-EU
network of Think Tanks are significant steps towards greater mutual cooperation in all fields. In the same
spirit, the development of academic and cultural exchanges plays an increasing role in broadening the
spectrum of India-EU relations. At the same time, the momentum generated by various on-going projects
under the India-EU Economic Cross-Cultural Programmed serves to boost cooperation in the fields of
media, academia and business enterprises

The EU maintains diplomatic relations with nearly all countries in the world. It has strategic
partnerships with key international players, is deeply engaged with emerging powers around the globe,
and has signed bilateral Association Agreements with a number of states in its vicinity. Abroad, the
Union is represented by a network of 136 EU Delegations, which have a similar function to those of an
embassy.
Below are 10 examples, which illustrate what the Union does around the world, in order to defend
Europe’s interests and promote its values.

1. The Union is supporting stability in the Balkans. Assistance projects in seven countries receive
EU funding, helping build stable societies. In Kosovo (1), the EU has deployed a 1900-strong
justice and police force to help secure the rule of law. Countries in the Western Balkans are
already candidates or potential candidates for membership of the EU as part of
its enlargement policy.
2. The Union is member of the Quartet, alongside the United Nations, the United States and Russia,
which is working to push for peace in the Middle East. Resolution of the Arab-Israeli conflict is a
strategic priority for Europe. The EU’s objective is a two-state solution with an independent,
democratic, viable Palestinian state living side-by-side with Israel and its other neighbors.

3. The Union is offering its neighbors a privileged relationship within the European Neighborhood
Policy . The policy is designed to strengthen the prosperity, security and stability of all partners
and to avoid the emergence of new dividing lines between the enlarged EU and countries of the
southern Mediterranean, Eastern Europe and the southern Caucasus.

4. The Union was instrumental in negotiating the Kyoto Protocol on change and, boasting a
domestic low-carbon agenda that is probably the most advanced and sophisticated in the world,
remains a crucial player on this issue, indispensable for pushing an ambitious agenda of change.
The Union is focusing on building a coalition for a legally binding agreement on climate change.
 5. The Union works closely with the United Nations on a host of issues. The Union’s belief in
multilateralism reflects an attachment to negotiated, binding rules in international relations, and
is explicitly spelled out in the Treaty of Lisbon . Wherever possible, the Union seeks to replace or
moderate power politics by rules and norms, hence making international relations more similar
to the domestic order: more peaceful and predictable.

6. The Union runs military, political or civilian missions to help build and secure the peace in a
number of countries in Europe, Africa and beyond, such as in Afghanistan.

7. The Union is committed to human rights and works to ensure they are respected universally. The
EU has made human rights a central aspect of its external relations: in the political dialogues it
holds with third countries; through its development policy and assistance; or through its action
in multilateral fore, such as the United Nations.

8. The Union acts as single player in foreign trade and supports the principles of free and fair
international trade. As it negotiates with one voice, it can exercise real influence. Together, the
European Union's 27 members account for 19% of world imports and exports. Since its technical
norms are widely used throughout the world, it often sets the terms of the debate.

9. The Union supports the social and economic development of its partners, and stands ready to
help when they are faced with disaster. Together, the EU and its Member States are the world’s
largest donor of development and humanitarian aid. Their contributions account for 60% of the
world’s official development assistance.

10. The Union is facing up to the challenges of managing global international economic and
financial issues , for instance in the context of the G-20. It contributes to the ongoing effort to
reform international financial institutions, such as the World Bank and IMF and to re-regulating
the international financial sector. The common currency, the euro, bestows additional influence
upon the euro area and the European Central Bank.

North American Free Trade Agreement

Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994. This
agreement will remove most barriers to trade and investment among the United States, Canada, and
Mexico.

Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were
eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over
periods of 5 to 15 years.  This allowed for an orderly adjustment to free trade with Mexico, with full
implementation beginning January 1, 2008. 
The agricultural provisions of the U.S.-Canada Free Trade Agreement, in effect since 1989, were
incorporated into the NAFTA. Under these provisions, all tariffs affecting agricultural trade between the
United States and Canada, with a few exceptions for items covered by tariff-rate quotas, were removed by
January 1, 1998.

Mexico and Canada reached a separate bilateral NAFTA agreement on market access for agricultural
products. The Mexican-Canadian agreement eliminated most tariffs either immediately or over 5, 10, or
15 years. Tariffs between the two countries affecting trade in dairy, poultry, eggs, and sugar are
maintained.

Rules of Origin

NAFTA improves incentives for buying within the North American region and ensures that North
American producers receive the primary benefits of all newly established tariff preferences. Goods not
originating from the United States, Mexico, or Canada must be significantly transformed or processed in
one of those countries before they receive NAFTA's lower duties for shipment to one of the two other
countries.

The NAFTA rules of origin for agricultural products were constructed to prevent Mexico from becoming
an export platform for processed products made from subsidized raw materials originating in non-
NAFTA countries. There are also strong rules of origin for U.S. import-sensitive commodities, such as
citrus and dairy items.

Bulk Commodities: All bulk agricultural commodities, and certain processed products such as orange
juice and cheese, are exempt from the the minimize provision, which otherwise allows up to 7 percent of
non-NAFTA-origin product to be included in final NAFTA goods.

Citrus: All single-fruit juices (fresh, frozen, concentrated, reconstituted, fortified) must be made from
100-percent NAFTA-origin fresh citrus fruit. The minimize provision does not apply to any citrus
products.

Dairy Products: Only U.S. or Mexican milk or milk products can be used to make cream, butter, cheese,
yogurt, ice cream, or milk-based drinks traded under NAFTA preferential rates.

Vegetable Oils: With the exception of certain industrial fatty acids and acid oils, refining of crude oils
within a NAFTA country does not confer NAFTA origin. Making margarine and hydrogenated oils from
imported crude oils does not confer origin.

Sugar: Refining does not confer origin. In order for sugar to be considered of North American origin, all
processing of sugarcane or sugar beets must take place in NAFTA territory.

Peanut Products: Mexico must produce the peanuts to qualify for NAFTA preferential rates on peanuts
and peanut products exported to the United States. U.S. exports of peanut products to Mexico are subject
to this same rule.
Association of Southeast Asian Nations (ASEAN)

ESTABLISHMENT

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok,
Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of
ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand.

Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar
on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of
ASEAN.

AIMS AND PURPOSES

As set out in the ASEAN Declaration, the aims and purposes of ASEAN are:

1. To accelerate the economic growth, social progress and cultural development in the region
through joint endeavors in the spirit of equality and partnership in order to strengthen the
foundation for a prosperous and peaceful community of Southeast Asian Nations;
2. To promote regional peace and stability through abiding respect for justice and the rule of law in
the relationship among countries of the region and adherence to the principles of the United
Nations Charter;
3. To promote active collaboration and mutual assistance on matters of common interest in the
economic, social, cultural, technical, scientific and administrative fields;
4. To provide assistance to each other in the form of training and research facilities in the
educational, professional, technical and administrative spheres;
5. To collaborate more effectively for the greater utilisation of their agriculture and industries, the
expansion of their trade, including the study of the problems of international commodity trade,
the improvement of their transportation and communications facilities and the raising of the
living standards of their peoples;
6. To promote Southeast Asian studies; and
7. To maintain close and beneficial cooperation with existing international and regional
organizations with similar aims and purposes, and explore all avenues for even closer
cooperation among themselves.
FUNDAMENTAL PRINCIPLES

In their relations with one another, the ASEAN Member States have adopted the following fundamental
principles, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976:

1. Mutual respect for the independence, sovereignty, equality, territorial integrity, and national
identity of all nations;
2. The right of every State to lead its national existence free from external interference, subversion
or coercion; 
3. Non-interference in the internal affairs of one another; 
4. Settlement of differences or disputes by peaceful manner; 
5. Renunciation of the threat or use of force; and 
6. Effective cooperation among themselves.

ASEAN COMMUNITY

The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a
shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace,
stability and prosperity, bonded together in partnership in dynamic development and in a community of
caring societies.

At the 9th ASEAN Summit in 2003, the ASEAN Leaders resolved that an ASEAN Community shall be
established.

At the 12th ASEAN Summit in January 2007, the Leaders affirmed their strong commitment to accelerate
the establishment of an ASEAN Community by 2015 and signed the Cebu Declaration on the
Acceleration of the Establishment of an ASEAN Community by 2015.

The ASEAN Community is comprised of three pillars, namely the ASEAN Political-Security

Community, ASEAN Economic Community and ASEAN Socio-Cultural Community. Each pillar has its
own Blueprint, and, together with the Initiative for ASEAN Integration (IAI) Strategic Framework and
IAI Work Plan Phase II (2009-2015), they form the Roadmap for and ASEAN Community 2009-2015.

ASEAN CHARTER
The ASEAN Charter serves as a firm foundation in achieving the ASEAN Community by providing legal
status and institutional framework for ASEAN. It also codifies ASEAN norms, rules and values; sets clear
targets for ASEAN; and presents accountability and compliance.

The ASEAN Charter entered into force on 15 December 2008. A gathering of the ASEAN Foreign
Ministers was held at the ASEAN Secretariat in Jakarta to mark this very historic occasion for ASEAN.

With the entry into force of the ASEAN Charter, ASEAN will henceforth operate under a new legal
framework and establish a number of new organs to boost its community-building process. 

In effect, the ASEAN Charter has become a legally binding agreement among the 10 ASEAN Member
States.

ASEAN Motto

The motto of ASEAN is “One Vision, One Identity, One Community”.

ASEAN flag
The ASEAN flag represents a stable, peaceful, united and dynamic ASEAN. The colours of the flag --
blue, red, white and yellow -- represent the main colours of the flags of all the ASEAN countries.

The blue represents peace and stability. Red depicts courage and dynamism. White shows purity and
yellow symbolizes prosperity.

The ten stalks of paddy represent the dream of ASEAN's Founding Fathers for an ASEAN comprising all
the ten countries in Southeast Asia bound together in friendship and solidarity. The circle represents the
unity of ASEAN.

The specification of Pantone Colour

adopted for the colours of the ASEAN flag are:
Blue: Pantone 19-4053 TC
Red: Pantone 18-1655 TC
White: Pantone 11-4202 TC
Yellow: Pantone 13-0758 TC

For the printed version, the specifications of colours (except white) will follow those for the colours of the
ASEAN logo, i.e.:

Blue: Pantone 286 or Process Colour 100C 60M 0Y 6K

Red: Pantone Red 032 or Process Colour 0C 91M 87Y 0K
Yellow: Pantone Process Yellow or Process Colour 0C 0M 100Y 0K
 

The ratio of the width to the length of the flag is two to three and the size specifications for the official
flags are:

Table Flag: 10 cm x 15 cm
Room Flag: 100 cm x 150 cm
Car Flag: 10 cm x 30 cm
Field Flag: 200 cm x 300 cm

The  South Asian Association for Regional Cooperation  (SAARC)

INTRODUCTION

The South Asian Association for Regional Cooperation (SAARC) comprises Bangladesh, Bhutan, India,
the Maldives, Nepal, Pakistan and Sri Lanka. SAARC is a manifestation of the determination of the
peoples of South Asia to work together towards finding solutions to their common problems in a spirit of
friendship, trust and understanding and to create an order based on mutual respect, equity and shared
benefits. The main goal of the Association is to accelerate the process of economic and social
development in member states, through joint action in the agreed areas of cooperation.
EVOLUTION

The idea of regional cooperation in South Asia was first mooted in November 1980. After consultations,
the Foreign Secretaries of the seven countries met for the first time in Colombo, in April 1981. This was
followed, a few months later, by the meeting of the Committee of the Whole, which identified five broad
areas for regional cooperation. The Foreign Ministers, at their first meeting in New Delhi, in August
1983, formally launched the Integrated Programmed of Action (IPA) through the adoption of the
Declaration on South Asian Regional Cooperation (SARC).

At the First Summit held in Dhaka on 7-8 December 1985, the Charter establishing the South Asian
Association for Regional Cooperation (SAARC) was adopted.

OBJECTIVES

The objectives 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 in the region and to
provide all individuals the opportunity to live in dignity and to realize their full potential;
 to promote and strengthen collective 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 cooperation with other developing countries;
 to strengthen cooperation among themselves in international forums on matters of common
interest; and
 to cooperate with international and regional organizations with similar aims and purposes.

PRINCIPLES

- Cooperation within the framework of the Association is based on respect for the principles of sovereign
equality, territorial integrity, political independence, non-interference in the internal affairs of other
states and mutual benefit. 
- Such cooperation is to complement and not to substitute bilateral or multilateral cooperation. 
- Such cooperation should be consistent with bilateral and multilateral obligations of the member states.

- Decisions at all levels in SAARC are taken on the basis of unanimity. 

- Bilateral and contentious issues are excluded from its deliberations.
The South Asian Association for Regional Cooperation (SAARC) is an organization of South nations,
founded in December 1985 and dedicated to economic, technological, social, and cultural development
emphasizing collective self-reliance. Its seven founding members are Bangladesh, Bhutan, India,
the Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined the organization in 2005. Meetings of
heads of state are usually scheduled annually; meetings of foreign secretaries, twice annually. It is
headquartered in Kathmandu, Nepal.

Membership

Current members (alphabetically)

  Afghanistan
  Bangladesh
  Bhutan
  India
  Maldives
   Nepal
  Pakistan
  Sri Lanka

Observers

  Australia
  China
  Burma
  European Union
  Iran
  Japan
  Mauritius
  South Korea
  United States
INSTITUTIONAL STRUCTURE

SAARC secretariat

Established in Kathmandu on 16 January 1987, the SAARC Secretariat is responsible to coordinate and
monitor the implementation of SAARC activities, service the meetings of the Association and serve as the
channel of communication between SAARC and other international organizations.

The Secretariat comprises of the Secretary-General, a Director from each member state and the General
Services Staff. The Secretary-General is appointed by the Council of Ministers upon nomination by a
member state, on the principle of rotation in alphabetical order, for a period of two years. Mr. Abul
Ahsan from Bangladesh was the first Secretary-General (16 January 1987 - 15 October 1989) followed
by Mr. Kant Kishore Bhargava from India (17 October 1989 - 31 December 1991) and Mr. Ibrahim
Hussain Zaki from the Maldives (1 January 1992 - 31 December 1993). The present Secretary-General,
Mr. Yadab Kant Silwal from Nepal, assumed the office from 1 January 1994. The next Secretary-General
from Pakistan, Mr. Naeemuddin Hasan will assume office on 1 January 1996.

Directors are appointed by the Secretary-General, upon nomination by member states for a period of
three years which, in special circumstances, may be extended by the Secretary-General for a period not
exceeding another full term, in consultation with the member state concerned. 
Following are the Directors presently serving in the Secretariat:

-Bangladesh : Mr. Liaquat Ali Choudhury (from 5.7.1995) 

-Bhutan : Ms. K.C. Namgyel (from 17.10.1995) 
-India : Mr. Ashok K. Attri (from 3.10.1994) 
-Maldives : Mr. Ahmed Latheef (from 1.10.1993) 
-Nepal : Mr. Prabal S.J.B. Rana (from 17.8.1992) 
-Pakistan : Mr. Tahir Iqbal Butt (from 6.1.1994) 
-Sri Lanka : Mr. Ranjith P. Jayasooriya (from 10.2.1995).

INTEGRATED PROGRAMME OF ACTION (IPA)

The IPA is a key component of the SAARC process and includes twelve agreed areas of cooperation, each
being covered by a designated Technical Committee.

In response to the emphasis given by successive Summits on the need to further consolidate and
streamline IPA and to make it more result oriented, a comprehensive set of guidelines and procedures
was adopted in 1992 for the rationalization of SAARC activities. As a result of this, there is now a greater
focus on activities that would bring tangible benefits to the people of South Asia.

The Secretary-General reports on the progress in the implementation of IPA to the Standing Committee,
both at its inter-Summit and pre-Summit Sessions.

The Standing Committee has also taken the initiative to review the institutional mechanisms and activities
of the Association, including, the evaluation of the functioning of the Technical Committees,
amalgamation/alteration of their mandate and also a review of the role of the Secretariat.

Southern African Development Community (SADC)

The Southern African Development Community (SADC) started as Frontline States whose objective was
political liberation of Southern Africa. SADC was preceded by the Southern African Development
Coordination Conference (SADCC), which was formed in Lusaka, Zambia on April 01, 1980 with the
adoption of the Lusaka Declaration (Southern Africa: Towards Economic Liberation). 

The formation of SADCC was the culmination of a long process of consultations by the leaders of the
then only majority ruled countries of Southern Africa, thus Angola, Botswana, Lesotho, Mozambique,
Swaziland, United Republic of Tanzania and Zambia, working together as Frontline States. In May 1979
consultations were held between Ministers of Foreign Affairs and Ministers responsible for Economic
Development in Gaborone, Botswana. Subsequently a meeting was held in Arusha, Tanzania in July 1979
which led to the establishment of SADCC.

On August 17, 1992, at their Summit held in Windhoek, Namibia, the Heads of State and Government
signed the SADC Treaty and Declaration that effectively transformed the Southern African Development
Coordination Conference (SADCC) into the Southern African Development Community (SADC). The
objective also shifted to include economic integration following the independence of the rest of the
Southern African countries.
Currently SADC has a membership of 15 Member States, namely; Angola, Botswana, Democratic
Republic of
Congo (DRC),Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South
Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe.

Population size: 257, 726,000 (257.7 Million inhabitants) 

Gross Domestic Product (GDP) : 471,118 US$ billion (471.1 US$ billion)

SADC's Vision is that of a common future, a future within a regional community that will ensure
economic well-being, improvement of the standards of living and quality of life, freedom and social
justice and peace and security for the people of Southern Africa. This shared vision is anchored on the
common values and principles and the historical and cultural affinities that exist between the people of
Southern Africa.

The SADC Mission is to promote sustainable and equitable economic growth and socio-economic
development through efficient productive systems, deeper co-operation and integration, good
governance, and durable peace and security, so that the region emerges as a competitive and effective
player in international relations and the world economy.
The Regional Indicative Strategic Development Plan (RISDP) and the Strategic Indicative Plan for the
Organ (SIPO) remain the frameworks for SADC Regional integration that provide SADC Member States
with a consistent and comprehensive programmed of long-term economic and social policies, and at the
same time, it provides the SADC Secretariat and other SADC Institutions insights of SADC approved
economic and social policies and priorities.
The RISDP reaffirms the commitment of SADC Member States to good political, economic and corporate
governance entrenched in a culture of democracy, full participation by civil society, transparency and
respect for the rule of law. In this context, the African Union’s New Partnership for Africa's Development
(NEPAD) is embraced as a credible and relevant Continental framework, and the RISDP as SADC’s
Regional expression and vehicle for achieving the ideals contained therein. The RISDP emphasizes that
good political, economic and corporate governance are prerequisites for sustainable socio-economic
development, and that SADC’s quest for poverty eradication and deeper integration levels will not be
realised in the absence of good governance.
The Organ on Politics, Defense and Security Cooperation plays a vanguard role as part of the
institutional mechanisms for promoting and maintaining peace and stability in the region and the SIPO
provides the institutional framework for the daily implementation of the Organ’s Objectives. 

The SIPO, alongside the SADC Mutual Defense Pact of 2004 guides the implementation of the Protocol
on Politics, Defense and Security Cooperation. The SIPO is divided into four main sectors of Political;
Defense; State Security; and Public Security. 

SADC comprises eight (8) Institutions, namely, the Summit of Heads of State & Government,
SADC Tribunal, Council of Ministers, Organ on Politics, Defense & Security Cooperation, Sect oral
/Cluster Ministerial Committees, SADC Secretariat, Standing Committee of Senior Officials, and
SADC National Committees.

With its chairpersonship held on a rotational basis, SADC applies the Troika system from Summit, the
Organ, Council and the Ministerial Committee of the Organ (MCO) as well as the Senior Officials level. 

The SADC Troika System vests authority in the incumbent Chairperson, Incoming Chairperson who is the
Deputy Chairperson at the time and the immediate Previous Chairperson to take quick decisions on
behalf of SADC that are ordinarily taken at policy meetings scheduled at intervals stipulated by the
Articles 10, 11 and 13 of the Treaty. This also applies to the Troika of the Organ on Politics, Defence and
Security Cooperation and when combined, the two are referred to as theDouble Troika.
At multilateral level, SADC continues to enjoy mutually beneficial cooperation at Continental and
international level. In this regard, at the April 2006 Consultative Conference, SADC and its International
Cooperating Partners (ICPs) adopted the Windhoek Declaration, which is a Framework for a New
Partnership between SADC and its ICPs. 

This Declaration encompasses the establishment of Thematic Groups as a platform to give attention to
specific priority by SADC and ICPs interested in particular areas an opportunity for pooling resources
for implementing specific programmes in areas of common interest.

Aims of the SADC

SADC's aims are set out in different sources. The sources include the treaty establishing the organization
(SADC treaty); various protocols (other SADC treaties, such as the corruption protocol, the firearms
protocol, the OPDS protocol, the health protocol and the education protocol); development and
cooperation plans such as the Regional Indicative Strategic Development Plan (RISDP) and the Strategic
Indicative Plan of the Organ (SIPO); and declarations such as those on HIV and AIDS and food security.
Not all of the pre-2001 treaties and plans have been harmonized with the more detailed and recent plans
such as the RISDP and SIPO.

In some areas, mere coordination of national activities and policies is the aim of cooperation. In others,
the member states aim at more far-reaching forms of cooperation. For example, on foreign policy the
main aim is coordination and cooperation, but in terms of trade and economic policy, a tighter
coordination is in progress with a view to one day establishing a common market with common
regulatory institutions.

Flag of SADC

The flag of the organization came from the people of the member countries; a competition was held to
design a new flag and in 1995 the new design was chosen. The new flag has a navy blue field with a
green circle in the centre, and the SADC logo is in the centre of the green circle. In the official
description of the flag, the blue symbolizes the sky and ocean that bring water and life, and the green
represents the rich flora and fauna. The region's rich gold wealth is represented in the colour of the
lettering. The flag was first used in the 1995 SADC Summit at the World Trade Centre in Johannesburg.