GLOBAL MARKETING

By: Aastha Uppal Aishani Vij Apoorwa Middha Avantika Gupta Deviyani Bhasin Nitiz Kaila Sneha Kumar

GLOBALIZATION

Globalization refers to the increasing unification of the world's economic order through reduction of barriers to international trade. The goal is to increase material wealth, goods, and services through an international division of labor by efficiencies catalyzed by international relations, specialization and competition. It describes the process by which regional economies, societies, and cultures have become integrated through communication, transportation, and trade.

The term is most closely associated with the term economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, the spread of technology, and military presence. However, globalization is usually recognized as being driven by a combination of economic, technological, socio-cultural, political, and biological factors.

EFFECTS OF GLOBALIZATION

Effect on World Trade

Political Effects Ecological Effects Informational Effects

Industrial Effects

Financial Effects

Economic Effects

Effect on World Trade

From an economic perspective, the primary engine that is driving the complex effects of globalization on trade is liberalization. This means that globalization emphasizes that trading among member countries that trade in goods and services should be borderless.

Once markets are free from trade restrictions, factors of production capital and labour -- will be directed by the unrestricted forces of demand and supply, leading to efficient investment by producers. Labor would move from one sector into another with smooth transition and goods move from one market to another without friction. The ultimate result will be an increase in total output for all trading partners.

Industrial

Emergence of worldwide production markets and broader access to a range of foreign products Movement of material and goods between and within national boundaries.

Financial

Emergence of worldwide financial markets and better access to external financing for borrowers.

Economic

Realization of a global common market, based on the freedom of exchange of goods and capital. In the job market, employees compete indirectly in a global job market. Because workers compete in a global market, wages are less dependent on the success or failure of individual economies. Improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skillfully in order to face increased competition.

Political

The development of globalization has wide-ranging impacts on political developments, which particularly go along with the decrease of the importance of the state. Through the creation of institutions such as the EU, the WTO, the G8 or the International Criminal Court, the state loses power of policy making and thus sovereignty. However, many see the relative decline in US power as being based in globalization, particularly due to its high trade imbalance. The consequence of this is a global power shift towards Asian states, particularly China, that has seem tremendous growth rates.

Ecological

The advent of global environmental challenges that might be solved with international cooperation are climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species.

Informational

Increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fiber optic communications, satellites, and increased availability of telephone and Internet.

IMF

ABOUT THE IMF

T he IMF is an international organization of 185 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment

WHY WAS IT CREATED?

T he IMF was conceived in July 1944, when representatives of 45 governments agreed on a framework for international economic cooperation.

T he IMF's founders charged the new institution with overseeing the international monetary system to ensure exchange rate stability and encouraging member countries to eliminate exchange restrictions that hindered trade

WHAT DOES THE IMF DO?

T he IMF's primary purpose is to ensure the stability of the international monetary system the system of exchange rates and international payments.

T o maintain stability and prevent crises, the IMF reviews national, regional, and global economic and financial developments

The IMF also makes financing temporarily available to member countries to help them address balance of payments problems I t also provides technical assistance and training to help countries build the expertise and institutions they need for economic stability and growth

WHERE DOES THE IMF GET ITS MONEY?

T he IMF's resources come mainly from the quotas that countries deposit when they join the IMF. The United States, the world's largest economy, has the largest quota in the IMF.
T he IMF earns income from the interest charges and fees levied on its loans. It uses this income to meet funding costs, pay for administrative expenses, and maintain precautionary balances.

WORLD BANK

INTRODUCTION

The World Bank is an international financial institution that provides loans to developing countries for capital programs. The World Bank has a stated goal of reducing poverty. By law, all of its decisions must be guided by a commitment to promote foreign investment, international trade and facilitate capital investment.

World Bank is one of the five institutions created at the Bretton Wood Conference in 1944 after 2nd world war.

The World Bank consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), the latter created in 1960. Both institutions make loans to governments (or to public or private entities that have a government guarantee) for projects and programs related to "development," that is, loans designed to promote economic and social progress in member countries.

The IDA, however, provides concessional loans (interest free and long term) to the very poor countries (measured by per capita gross national product) that cannot afford IBRD loans.
Unlike the IBRD, which raises its funds on the international capital markets, the IDAs funding comes from donations from the worlds rich countries.

Three other entities are associated with, but legally and financially independent of the IBRD and the IDA: The International Finance Corporation (IFC), the International Center for Settlement of Investment Disputes (ICSID), and the Multilateral Investment Guarantee Agency (MIGA). Collectively, these five entities are known as the World Bank Group.

THE WORLD BANK-NOT A BANK IN THE COMMON SENSE OF THE WORD

Single person cannot open an account or ask for a loan. Rather, the Bank provides loans, grants and technical assistance to countries and the private sector to reduce poverty in developing It has over 187 member countries and provides over $24 billion annually for activities ranging from agriculture to trade policy, from health and education to energy and mining. and transition countries.

WORLD BANK FUNCTIONS

1) Although the IMF and the IBRD Seem Like Very Similar Institutions, Formally They Differ in Fundamental Ways. a) Both are multilateral institutions whose charters call for weighted voting; both also focus on economic matters in member countries. b) The IBRD, however, is an investment bank that intermediates between investors, who buy the Banks bonds, and developing countries, which borrow from the Bank.

2) The IBRDs Lending Stresses Market-Based Economic Development and Poverty Reduction. a) The IBRD initially focused on project lending, concentrating on investment in physical capital in developing countries. b) In the 1960s and 1970s the IBRD began to focus on investing in human capital. c) The debt crisis of the 1980s prompted the IBRD to make market-based adjustment loans.

3) In the 1990s the Bank Tried to Improve its Responsiveness While Stressing Poverty Alleviation and Corruption Reduction. In the 1990s the World Bank, a relatively large institution with its headquarters in Washington, D.C., came under criticism from many quarters. Critics claim it is a top-down, unresponsive institution that is out of touch with grassroots development realities in member countries. In response, the Bank has formed an Inspection Panel to monitor the Banks compliance with its own policies.

4)The IFC, MIGA and ICSID Help Mobilize the Private Sector. The International Finance Corporation (IFC), formed in 1956, promotes private sector investment in poor countries that would otherwise not easily attract private investment. Established in 1988, the Multilateral Investment Guarantee Agency (MIGA) is the most recent addition to the World Bank Group. MIGA is an investment insurance agency that encourages foreign direct investment in developing nations.

The International Center for Settlement of Investment Disputes (ICSID) was established by treaty in 1966 in order to provide a forum for arbitration or mediation of disputes between foreign investors and their host countries. Its purpose is to promote increased flows of international investment by providing a forum outside the host state for settlement of investment disputes.

MFA MULTI FIBRE ARRANGEMENT

INTRODUCTION

The Multi Fibre Arrangement (MFA) governed the world trade in textiles and garments from 1974 through 2004, imposing quotas on the amount developing countries could export to developed countries.

The MFA was introduced in 1974 as a short-term measure intended to allow developed countries to adjust to imports from the developing world. Developing countries have a natural advantage in textile production because it is labour intensive and they have low labour costs. According to a World Bank/International Monetary Fund (IMF) study, the system has cost the developing world 27 million jobs and $40 billion a year in lost exports.

However, the Arrangement was not negative for all developing countries. For example the European Union (EU) imposed no restrictions or duties on imports from the very poorest countries, such as Bangladesh, leading to a massive expansion of the industry there. At the General Agreement on Tariffs and Trade (GATT) Uruguay Round, it was decided to bring the textile trade under the jurisdiction of the World Trade Organization. The Agreement on Textiles and Clothing provided for the gradual dismantling of the quotas that existed under the MFA. This process was completed on 1 January 2005. However, large tariffs remain in place on many textile products.

Bangladesh was expected to suffer the most from the ending of the MFA, as it was expected to face more competition, particularly from China. However, this was not the case. It turns out that even in the face of other economic giants, Bangladeshs labour is cheaper than anywhere else in the world. While some smaller factories were documented making pay cuts and layoffs, most downsizing was essentially speculative the orders for goods kept coming even after the MFA expired. In fact, Bangladesh's exports increased in value by about $500 million in 2006. However, poorer countries within the developed world, such as Greece and Portugal, are expected to lose out.

During early 2005, textile and clothing exports from China to the West grew by 100% or more in many items, leading the US and EU to cite China's WTO accession agreement allowing them to restrict the rate of growth to 7.5% per year until 2008. In June, China agreed with the EU to limit the rate to 10% for 3 years. No such agreement was reached with the US, which imposed its own import growth quotas of 7.5% instead.

When the EU announced their new quotas to replace the lapsed MFA, Chinese manufacturers accelerated their shipping of the goods intended for the European market.

This used up a full year's quota almost immediately. As a result, 75 million items of imported Chinese garments were held in European ports in August 2005.

On Jan 1, 2006 the worldwide quota of apparels and textiles came to an end. Since within the quota a buyer was forced to buy where the quota was available and not where goods were produced most efficiently it shielded the developing economies (India, China) from two sources of competition namely global supply chain force and competition from large suppliers. The end of the quotas was the beginning of the era of globalization in the sector of apparels and textiles.

UNCTAD

UNCTAD

In the early 1960s, growing concerns about the place of developing countries in international trade led many of these countries to call for the convening of a full-fledged conference Specifically devoted to tackling problems and identifying appropriate international actions

The first United Nations Conference on Trade and Development (UNCTAD) was held in Geneva in 1964

UNCTAD

Promotes the development-friendly integration of developing countries into the world economy Aims to help shape current policy debates and thinking on development, ensuring that domestic policies and international action are supportive in bringing about sustainable development

KEY FUNCTIONS OF UNCTAD

It

functions as a forum for intergovernmental deliberations, supported by discussions with experts and exchanges of experience, aimed at consensus building undertakes research, policy analysis and data collection for the debates of government representatives and experts

It

KEY FUNCTIONS OF UNCTAD

It

provides technical assistance tailored to the specific requirements of developing countries, with special attention to the needs of the least developed countries and of economies in transition. When appropriate, UNCTAD cooperates with other organizations and donor countries in the delivery of technical assistance

MAIN ACTIVITIES OF UNCTAD

Trade and commodities

Commodity diversification and development Competition and consumer policies Trade Negotiations and Commercial Diplomacy Trade Analysis and Information System (TRAINS) Trade and environment

Investment and enterprise development

International investment and technology arrangements Investment Policy Reviews Investment guides and capacity building for the LDCs Empretec: Promotes entrepreneurship and development

MAIN ACTIVITIES OF UNCTAD

Macroeconomic policies, debt and development financing

Policy analysis and research Technical and advisory support DMFAS programme: Computer-based debt management and financial analysis system specially designed to help countries manage their external debt.

Technology and Logistics

ASYCUDA programme: Integrated customs system that speeds up customs clearance procedures and helps Governments to reform and modernize their customs procedures and management. E-Tourism Initiative

MAIN ACTIVITIES OF UNCTAD

Technology TrainForTrade programme Transport and Trade Logistics

Africa Least developed countries (LDCs)

Landlocked developing countries (LLDCs)

Small island developing States (SIDS)

OFFICE OF THE SECRETARY GENERAL

MEMBERSHIP OF UNCTAD

MEMBERSHIP OF UNCTAD

MEETINGS

The intergovernmental machinery of UNCTAD consists basically of the Conference, the Trade and Development Board, two Commissions, and expert meetings

The Conference meets every four years

In-between the quadrennial Conferences, the Trade and Development Board oversees the activities of the organization.

MEETINGS

The board meets in Geneva in a regular session and up to three times a year in executive sessions to deal with urgent policy issues, as well as management and institutional matters. The Commissions meet once a year; each Commission convenes a number of expert meetings on specific topics.

ASSOCIATIONS & ALLIANCES

In performing its functions, the secretariat works together with

Member Governments Interacts with organizations of the United Nations system and regional commissions Governmental institutions Non-governmental organizations The private sector Trade and industry associations Research institutes and universities worldwide

GATT

GATT

The General Agreement on Tariffs and Trade (GATT), which was signed in 1947, is a multilateral agreement regulating trade among about 150 countries. According to its preamble, the purpose of the GATT is the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis. The GATT functioned de facto as an organization, conducting eight rounds of talks addressing various trade issues and resolving international trade disputes.

GATT

The Uruguay Round, which was completed on December 15, 1993 after seven years of negotiations, resulted in an agreement among 117 countries (including the U.S.) to reduce trade barriers and to create more comprehensive and enforceable world trade rules. Until the Uruguay Round of GATT negotiations, the word environment did not appear in the GATT text. Several provisions and sections of GATT may be relevant to environmental issues.

GATT

Consideration of GATT's relationship to environmental policy is an emerging concern in trade and environmental policy circles. This agreement also created the World Trade Organization (WTO), which came into being on January 1, 1995. Reports by panels of experts have been an essential part of the GATT dispute settlement system since the 1950s. This system continues in the WTO, with some changes in procedure and enforcement.

ASPECTS of GATT

General Most-Favoured-Nation Treatment National Treatment on Internal Taxation and Regulation

General Elimination of Quantitative Restrictions

Non-discriminatory Administration of Quantitative Restrictions Subsidies General Exceptions

ASPECTS of GATT
The GATT Final Act Embodying the Results of the Uruguay Round contains several other relevant items:

Trade-Related Aspects of Intellectual Property Rights Agreement on Subsidies and Countervailing Measures Agreement Establishing the Multilateral Trade Organization

WTO - WORLD TRADE ORGANISATION

INTRODUCTION TO WTO

An international body founded in 1995 to promote international trade and economic development by reducing tariffs and other restrictions. 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. The WTO is a place where member governments try to sort out the trade problems they face with each other. 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).

At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds 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. 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 WTO was born out of negotiations, and everything it does is the result of negotiations.

FUNCTIONS

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.

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.

Dispute Settlement

The WTOs 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. Judgement is passed 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. 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 nongovernmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO, with the aim of enhancing cooperation and increasing awareness of WTO activities.

ATC AGREEMENT ON TEXTILES AND CLOTHING

INTRODUCTION TO ATC

The textile and clothing industries are important to a large number of developing countries. However, the world trade in textiles and clothing has been subject to an ever-increasing array of bilateral quota arrangements over the past three decades. The range of products covered by quotas expanded from cotton textiles under the Short-Term and Long-Term Arrangements of the 1960s and early 1970s to an everwidening list of textile products fashioned from natural and man-made fibres under five extensions of the MultiFibre Arrangement (MFA) over the period 1974-1994.

MULTI FIBRE AGREEMENT

The purpose behind the Mulit-Fibre Arrangement was to allow developed countries time to adjust to competition from developing countries, which could produce the same textile products much more cheaply. It was thought that developing countries could flood the markets in developed countries with less expensive textiles, which would have had a negative effect on the developed countries. Critics of the Arrangement argued this hampered development. It was in effect from 1974 through the end of 2004. It is formally called the Agreement on Textile and Clothing.

ATC THE BASIC AIM

The basic aim of the Agreement on Textiles and Clothing (ATC) is to secure the removal of restrictions currently applied by some developed countries to imports of textiles and clothing. To this end the Agreement sets out procedures for integrating the trade in textiles and clothing fully into the GATT system by requiring countries to remove the restrictions in four stages over a period of 10 years ending on 1 January 2005.

The flexibility available under the integration procedures has, however, enabled countries to remove restrictions in the first two stages only on a limited number of products. The first major impact of the integration programme is therefore expected when the third-stage integration takes place (on 1 January 2002); the bulkof the restrictions will be withdrawn in the last phase, when the transition period ends and the Agreement expires.

WTO AGREEMENT ON TEXTILES AND CLOTHING

The World Trade Organization (WTO) Agreement on Textiles and Clothing (the Agreement) provided for the phased liberalization and elimination over the transition period of quotas on textiles and apparel imported from WTO member countries. The Agreement was approved as part of the Uruguay Round Agreements Act by the U.S. Congress in December, 1994. The Agreement went into effect on January 1, 1995.

This Agreement sets out provisions to be applied by Members during a transition period for the integration of the textiles and clothing sector into GATT 1994.

Article 2 of the Agreement states that product integration, including the phase out of Multi-Fiber Agreement (MFA) quotas and the acceleration of quota growth rates for products not yet integrated into the WTO, is to occur over 10 years, in three stages. ("Integrated" products are removed from the universe of textile products subject to MFA-type quotas.)

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