Promotion of Global Business

IDEA

Globalisation UNIT 3
CONCEP
T

INSTITUTI
WTO
ONS
What is TRIPS?
 The Novartis Story!
• Why Western Pharmaceutical companies hate India?
• Why cancer drug invented in 1991, came to India in 2001?
• How much Cancer treatment cost?
• Why Gleevec prices has dropped in recent years?
• Business ---Diplomacy----Public Welfare (Conundrum)
• Novartis v. Union of India and Ors. (Natco and Cipla)
• The Patents Act, 1970-Background- Product/Process (Food, Medicine/Drug)
• Novartis- Background-1979-Swiss-$52 Billion
• WTO- TRIPS-1995-New Patent Law
• Compulsory License
• Who should Ideally win in such cases? Diplomacy, International Trade,
International agreements and relationships.
• How do you see a future pharmaceutical sector growth for India?
 What these three pictures depict about WTO?
1. Airbus (France) Bombardier (Canada) C Series- Canada v. Brazil (2002)-
Govt subsidies to Domestic companies (low interest loans, tax relief for
exporters, duty free raw material import, Govt. supported International
Advertising- Export subsidy)- UNFAIR??- Embraer (Brazil).

2. Muga Silk- A Geographical Indication- Trade Related Aspects of Intellectual

Property (TRIPS)- A mandate under the WTO (1995)

3. MFN and National Treatment-

MFN: Treating all the WTO members equally. Grant someone special favor-
repeat to all. Exception- FTA (Only Goods traded within that group)- Special
access to developing countries- Embargo/trade restriction- traded unfairly-
Strict conditions
National Treatment- Imported and Locally produced good should be treated
equally (Once the product has entered the market- Taxation, etc.)
 What does WTO do?
1. Trade Opening- MFN and National Treatment
(Indo- Pak and Indo-China)
2. Trade Rules- Muga Silk (Assam, India)
3. Trade Disputes- Airbus Bombardier and Brazil
 What is WTO?
• ONLY International Organization (Inter-governmental)
dealing global rules of trade- Ensures-Trade flows,
smoothly, predictably and freely amongst the
members.
• Run by member countries
• Successor to GATT (General Agreement on Tariffs and
Trade)
• Each member states receives a guarantee that its
export will be treated fairly and consistently in other
member state’s market.
Areas of Activity
 GATT to WTO
• GATT 1947 (Average Tariff 22%)
• GATT Limited to Goods
• 1947 to 1995 several rounds of International Negotiations
• Nine Rounds of Talks- Geneva, Annecy, Kennedy , Tokyo,
Uruguay, Doha, etc.
• Eliminating trade barriers and quotas
• Marrakesh Agreement, Morocco- WTO formed included
goods and services (1995)- General Agreement on Trade in
Services (GATS)
• TRIPS, National Treatment, trade promotion and dispute
settlement (New Concepts Introduced)
• WTO 1999 (Average tariff Reduced to 5 %)
The “Cat”Fish fight!!
 The U.S.- Vietnam Catfish Dispute
• Aquaculture Rise
• Catfish most profitable fish variety
($90 B annual contribution GDP; 1.5m jobs)
• Alabama and Mississippi (US) vs. Mekong Delta
(Vietnam)- Poor regions
• U.S. catfish imports 20% (2005)75%
(2015). U.S. Industries loosing Jobs and Sales.
• Vietnamese Advantage (Climate, Labor, Pond-
River connection, etc.)
 U.S. Industry fights back
• Fish Name change-Diff. variety of Fish;
• Dumping- selling below cost of production- Impose High tariff-
64%;
• 2007 Dog food controversy- 50,000 pet cats & dogs
sickened/killed Chinese pet food; “Manufacturing Image”.
• Lobbying- Alleged Vietnamese fish contaminated-
✓ Country of Origin should be mentioned- Consumer Rights
✓ High Inspection of Vietnamese fish-2% to 100 % inspection-
BUT High cost of Inspection- Budget deficit (500 tonnes per
month) + Food and Drug Administration (FDA) ONLY applies
to CATFISH—No longer applicable to Vietnamese fish
imports.
 Vietnamese Retaliation
• US farm export to Vietnam ($215 M-2006 to
$2.3B-2015)
• Vietnam retaliating to buy less U.S. Beef
• Jeopardize Political relations- WTO dispute
mechanisms
 The WTO challenges!
• Free Trade v. Trade Protectionism (Free trade
benefits v. Govt. Trade interventions)
• Domestic Govt. interfere in International
trade for Economic/non Economic reasons
Economic Reasons for trade protectionism:
✓ Fighting Unemployment,
✓ Protecting Infant Industries (Pharma sector in India),
✓ Promoting Industrialization,
✓ Improving comparative position (Vietnam threat US. Farm
exports).

Non Economic Reasons for trade protectionism:

✓ Maintain essential industries (US preserve Silicon Supplies for
Technology),
✓ Preserving national culture (Japan, South Korea & China has
banned Rice Imports for many years),
✓ Trade sanctions (Direct- Sanction on Iran by U.S.),
✓ Influence over countries (aid or credit) (“Under threat of U.S.
sanctions, India is rethinking its ties with Iran”)- (Indirect)
Major Instruments of trade control
• Tariffs
• Quota
• Subsidies
• Aids and Loans
• “Buy local” Legislations (Atmanirbhar !!)
• Standards and Labels
• Special permission to export/import (license, foreign
exchange usage, etc.)
• Administrative delays
• Embargo "Defence Ministry to impose import embargo on
101 items”
Some additional Points-WTO
 Special and Differential Treatment
provisions- GATT and WTO
• WTO- developing countries special rights
• Initiated at 4th Doha Ministerial Conference
• Longer time periods for implementing Agreements and
commitments (TRIPS-Product Patents-10 years)
• Measures to increase trading opportunities for developing
countries,
• Provisions requiring all WTO members to safeguard the trade
interests of developing countries,
• Support to help developing countries build the capacity to
carry out WTO work, handle disputes, and implement
technical standards, and
• Provisions related to least-developed country (LDC) Members.
• Mandate:
the Doha declaration mandates the Committee on Trade and
Development (CTD) to identify which of those special and
differential treatment provisions are mandatory, and to
consider the legal and practical implications of making
mandatory those which are currently non-binding. In addition,
the Committee is to consider ways in which developing
countries, particularly the LDCs, may be assisted to make best
use of special and differential treatment.

• Monitory Mechanisms:
The Bali Ministerial Conference in December 2013 established a
mechanism to review and analyse the implementation of
special and differential treatment provisions.
 Agricultural Agreement in WTO
• 1980s- Export subsidies- Developed Countries-
Prices down- Dumping
Agricultural Negotiations (Three pillars)
• Domestic support
• Market access (Reduce tariff protections- 36%
Developed, 24 % Developing)
• Export subsidies (Reduce 36% Developed, 24%
Developing)
Provisions which require WTO Members to safeguard the interests of
developing country Members  

• Example
• https://www.wto.org/english/tratop_e/
devel_e/teccop_e/s_and_d_eg_e.htm
Please refer to following areas on WTO
• Data and WTO- Understanding Trade!
• Building Trade Capacity?
• Dispute settlement?
• Interviews with Director General, WTO.
 Explain the Videos!
WTO YouTube page

1. From GATT to WTO (WTO E Campus) (Aditya and Kartik)

2. MFN and National Treatment (WTO E Campus) (Pranav and Saket)
3. The SPS Agreement (WTO E Campus) (Chaitanya and Swagat)
4. Regional Trade Agreements (WTO E Campus) (Shrutika and Akshat)
5. Rules of Origin (WTO E Campus) (Kovidh and Aditya)
6. General Exceptions (WTO E Campus) (Saksham and Abhishek)
7. Lets talk WTO (Athul and Aryan)
8. Aid for trade: Empowerment and diversification (Arnav and Trinankyur)
9. Aid for trade: Oceans and Fisheries (Aditya and Kaustav)
10.The Future of Trade- World Trade Report (Zaid and Aryaman saxena)
11.Lets Talk tariffs (Adesh and Shivansh)
12.Lets talk Membership (Gauri Lokesh and Aryaman)
13.Lets talk schedules (Sourav and Pankaj)
14.Block Chain and International trade (Kabir and Khushi)
15.Lets talk Most Favoured Nations (Niya and Shubham)
16.A vision for Trade in 2030: Public Forum (Acsh and Akul)
17.New Technology and Food Safety (Senieta and Alan)
18.National Disaster and Trade (Annica and Kushagra)
19.History of Multilateral Trading system (Mukund and Lakshay)
20.Aid for Trade Stocktaking Event: High-level panel
21.Women in Trade (Prateek and Paarth)
22.Addressing food safety concerns through trade and cooperation (Akshita and Aryandeep)
23.The global food crisis: What is the role of trade? Developing countries and the Doha Round (Harsh and Sneha)
24.Developing countries and the Doha Round(Ojaswin and Kanhaiya)
25.The Dispute Settlement System (Adrika and Tijo)
 Explain the Videos!
WTO YouTube page

1. From GATT to WTO (WTO E Campus) (Jeevan and VJ)

2. MFN and National Treatment (WTO E Campus) (Shivam and Anirudha)
3. The SPS Agreement (WTO E Campus) (Nimish and Yash)
4. Regional Trade Agreements (WTO E Campus) (Aditya and Ayam)
5. Rules of Origin (WTO E Campus) (Aritra)
6. General Exceptions (WTO E Campus)
7. Lets talk WTO (Tarun and Shivam)
8. Aid for trade: Empowerment and diversification
9. Aid for trade: Oceans and Fisheries (Arpit)
10.The Future of Trade- World Trade Report (Rubin and Derek)
11.Lets Talk tariffs (Yashi and Suhani)
12.Lets talk Membership (Prince and Swapnamay)
13.Lets talk schedules (Justin and Puneet)
14.Block Chain and International trade (Rishabh and
15.Lets talk Most Favoured Nations (Pratham and Karan)
16.A vision for Trade in 2030: Public Forum
17.New Technology and Food Safety (Vikesh and saumya)
18.National Disaster and Trade (Sakshi and Jaya)
19.History of Multilateral Trading system (Sidhant and Yuvraj)
20.Aid for Trade Stocktaking Event: High-level panel
21.Women in Trade (Aditi and Simran)
22.Addressing food safety concerns through trade and cooperation (Arushi and Anubhav)
23.The global food crisis: What is the role of trade? Developing countries and the Doha Round (Pragati)
24.Developing countries and the Doha Round (Ankit and Harsh)
25.The Dispute Settlement System (Raghav)
 Problems exporters face: JMJ Exports
• https://www.jmjexports.com
• Is the dispute going to affect Indian Fish Export
industry? How?
• Is this dispute a
Legal/Political/Social/Cultural/Economic issue?
• What can be the solution to this problem?
• How should JMJ exports deal with this issue?
___________ Globalization
 How do you define Globalization?
An English Princess—with Welsh title—comes out of a
French Hotel—with an Egyptian Companion—later
labeled as Pakistani national—enters a German car---with
a Dutch engine—Belgian chauffeur—drunk with Scottish
whiskey—car chased by Italian journalist—on Japanese
scooters and bikes– into a Swiss built tunnel crash—
initially rescued by an American Doctor—using Brazilian
medicine—whole story is being read on a laptop designed
at Cupertino, USA—manufactures in Suzhou, China.
But, why is Globalisation important to
you?
 What is Globalization ?
It is the process of INTERACTION and
INTEGRATION among people, companies and
governments world wide. (IMF)

Key Question-
How Would you measure Globalization?
 Globalization Literature
• Centre for Monitoring Indian Economy
• Our World in Data
• World Bank
• WEF (Rakuten expansion in Football Advertising)
• Newspapers
• Books - Ruchir Sharma, Stiglitz, Friedman, etc.
• Journals
• Economic Globalization
• Cultural Globalization
• Political Globalization
 Economic Globalization
• Widespread international movement of goods,
services, capital, technology and information.
• Globalization of Production, finance, markets,
technology, Organization regimes, institutions,
corporations, labor. EXAMPLES??
• Thanks to improved transportation and
telecommunications, importance of data
• GATT—WTO—enabler!
Benedict?
 Cultural Globalization
• Transmission of IDEAS (Innovation),
MEANINGS (Weekend) & VALUES (Kaizen)
around the world to EXTEND and INTENSIFY
social relations.
• Creates a Homogeneous world
• Netflix and Prime, Nike and Asics, Education,
Technology and gadgets, American comfort
food McDonalds and KFC.
• Together CG assist EG
 Political Globalization
• Refers to the growth of the worldwide political
system both in size and complexity.
• UN, World Bank, WTO (Dispute settlement),
Environment, Global Warming, US Iran
disputes, Anti Google Law (Singapore) etc.
• How WORLD BANK operates?
• Friedrichs (2002). "The world bank and globalization”

• “…In the late 1970s and 1980s, hydropower dam projects were conducted in
order to recreate Thailand's economy into an export-oriented economy. The
projects were funded by loans from the World Bank and was part of
globalization efforts. The local villagers whom the project would directly affect
were not notified, and the World Bank disregarded their concerns. As a result of
the building of the dams, villages that heavily depended on the river lost their
livelihood and their means of economic gains (i.e., fishing). The projects
contaminated the river, which made the river unfit for villagers to drink,
bathe, and do laundry without experiencing negative health conditions such
as rashes. Furthermore, the projects resulted in the extinction of 40 edible plant
species, 45 mushroom species, and 10 bamboo species, all of which the
income of the local markets were dependent on, some of which were
important for medical usage. Furthermore, the decline in fish population
exterminated fishermen's ways of life, as 169 different fish species were
affected and 56 species became extinct. The globalization efforts in Thailand
resulted in environmental impacts that affected the social and economic
welfare of indigenous populations…”
 Criticism to Globalization
Stiglitz v. Friedman

Objective- Equitable and sustainable development

• Economic Impacts- Inequitable economic growth,
Global economic crises, Job loss fear in Developed
economies, Iran US relations/Qatar issue affecting
multiple countries, Technological/Intellectual property
theft, Tax Havens in other countries.
• Cultural Impacts- Western values i.e. American
fashion & lifestyle- Glorifying drugs, premarital sex,
teenage pregnancies, juvenile crimes, materialism,
unethical, bicultural identity loss (ABCD).
• Political Impacts- American hegemony- Rich v.
Poor, UN and WTO heavy say, Labor
exploitation, Lack of technology transfer.
• Environmental Impacts- Global warming, Oil
spills, air/Noise pollution, e-waste (High
demand and consumption)
 Exploring more on Globalisation!!
• Videos (Columbia Business School-Globalisation: Where Do
We Go from Here?)
• In March 2021 online conference, luminaries including Glenn
Hubbard (Dean Emeritus, Columbia Business School), Joseph
Stiglitz (Nobel Laureate), Robert B. Zoellick (Former
President, World Bank), Amit Khandelwal, Jerome A Chazen
Professor of Global Business, Columbia GS and Henry Kravis
(Co-CEO, KKR & Co.) debate what the next iteration of
globalization will look like.
• Thomas L. Friedman and James Manyika: The world’s gone
from flat, to fast, to deep.
 Books
• The Lexus and Olive Tree by Thomas L
Friedman
• Globalisation and its Discontents by Joseph
Stiglitz
• Shoe Dog by Phil Knight
 Additional Reading Material

Erasmus University

Afesorgbor, S.K, van Bergeijk, P.A.G, & Demena, B.A. (2021). Does COVID-19 threaten globalization?
(No. 683). ISS Working Papers - General Series. Retrieved from http://hdl.handle.net/1765/135563
The End of Globalisation?
Michael A. Witt, INSEAD Affiliate Professor of Strategy and International Business | November 22, 2016

Part 1: https://knowledge.insead.edu/economics/the-end-of-globalisation-5046

The End of Globalisation? How

Executives Should Respond
Michael A. Witt, INSEAD Affiliate Professor of Strategy and International Business | November 30, 2016

Part 2: https://knowledge.insead.edu/economics/the-end-of-globalisation-how-executives-should-respond-5060
Some additional Points-WTO
 Special and Differential Treatment
provisions- GATT and WTO
• WTO- developing countries special rights
• Initiated at 4th Doha Ministerial Conference
• Longer time periods for implementing Agreements and
commitments (TRIPS-Product Patents-10 years)
• Measures to increase trading opportunities for developing
countries,
• Provisions requiring all WTO members to safeguard the trade
interests of developing countries,
• Support to help developing countries build the capacity to
carry out WTO work, handle disputes, and implement
technical standards, and
• Provisions related to least-developed country (LDC) Members.
• Mandate:
the Doha declaration mandates the Committee on Trade and
Development (CTD) to identify which of those special and
differential treatment provisions are mandatory, and to
consider the legal and practical implications of making
mandatory those which are currently non-binding. In addition,
the Committee is to consider ways in which developing
countries, particularly the LDCs, may be assisted to make best
use of special and differential treatment.

• Monitory Mechanisms:
The Bali Ministerial Conference in December 2013 established a
mechanism to review and analyse the implementation of
special and differential treatment provisions.
 Agricultural Agreement in WTO
• 1980s- Export subsidies- Developed Countries-
Prices down- Dumping
Agricultural Negotiations (Three pillars)
• Domestic support
• Market access (Reduce tariff protections- 36%
Developed, 24 % Developing)
• Export subsidies (Reduce 36% Developed, 24%
Developing)
 Explain the Videos!
WTO YouTube page

1. Lets talk WTO

2. Aid for trade: Empowerment and diversification
3. Aid for trade: Oceans and Fisheries
4. The Future of Trade- World Trade Report
5. Lets Talk tariffs
6. Block Chain and International trade
7. Lets talk Most Favoured Nations
8. A vision for Trade in 2030: Public Forum
9. New Technology and Food Safety
10. National Disaster and Trade
11. History of Multilateral Trading system
 Activity

1. https://www.un.org/ldcportal/special-treatment-under-wto-rules/
2. Trade and foreign policy have always been intertwined — speech
delivered by DDG Wolff
3. Trade in War’s Darkest Hour — Churchill and Roosevelt’s daring
1941 Atlantic Meeting — article by Hunter Nottage
4. Clash of the GATT negotiators article by Roy Santana
5. GATT 1947: How Stalin and the Marshall Plan helped to conclude
the negotiations article by Roy Santana
6. GATT 1947 and the grueling task of signing article by Roy Santana
7. 1947 press release announcing the signing of the GATT
8. The GATT years: from Havana to Marrakesh
9. The Uruguay Round