International Marketing Group6 Ver1.1

8/8/2019 International Marketing Group6 Ver1.1

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Chronological Order

UNCTAD 1964

EXIM BANK 1982ECGC 1983

EU 1993

NAFTA 1994ASEAN 1967

SAARC 1985

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UNCTAD



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UNCTAD

It stands for United Nations Conference On Trade and

Development.

UNCTAD has 193 members.

The UNCTAD has its permanent secretariat in Geneva, Switzerland. UNCTAD has 400 staff members and an annual regular budget of

approximately US$50 million and US$25 million of extra budgetary

technical assistance funds.

The Conference ordinarily meets once in four years.

The United Nations Conference on Trade andDevelopment (UNCTAD) was established in 1964 as a permanent

intergovernmental body. It is the principal organ of the United

Nations General Assembly dealing with trade, investment, and

development issues.9/21/2010 4IM_SACHIN, LOKIK, ANAND_GROUP 6


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OBJECTIVES OF UNCTAD

The organization's goals are to "maximize the trade, investment and

development opportunities of developing countries and assist them in

their efforts to integrate into the world economy on an equitable basis.

UNCTAD was established in order to provide a forum where the

developing countries could discuss the problems relating to their

economic development. UNCTAD grew from the view that existing

institutions like WTO, the IMF , and World Bank were not properlyorganized to handle the particular problems of developing countries.

The primary objective of the UNCTAD is to formulate policies relating to all

aspects of development including trade, aid, transport, finance and

technology.

UNCTAD conducts certain technical cooperation in collaboration withthe World Trade Organization through the joint International Trade Centre

(ITC), a technical cooperation agency targeting operational and enterprise-

oriented aspects of trade development.

UNCTAD hosts the Intergovernmental Working Group of Experts on

International Standards of Accounting and Reporting (ISAR).9/21/2010 5IM_SACHIN, LOKIK, ANAND_GROUP 6


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GENERALISED SYSTEM OF

PREFERENCES (GSP)

It was argued in UNCTAD, that in order to promote exports of

manufactured goods from developing countries, it would be

necessary to offer special tariff concessions to such exports.

Accepting this argument, the developed countries formulated the

GSP Scheme under which manufacturers' exports and someagricultural goods from the developing countries enter duty-free or

at reduced rates in the developed countries. Since imports of such

items from other developed countries are subject to the normal

rates of duties, imports of the same items from developing

countries would enjoy a competitive advantage.



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REPORTS

UNCTAD produces a number of topical reports, including:

The Trade and Development Report

The Trade and Environment Review

The World Investment Report

The Economic Development in Africa Report

The Least Developed Countries Report

UNCTAD Statistics

The Information Economy Report

The Review of Maritime Transport

The International Accounting and Reporting Issues Annual

Review9/21/2010 7IM_SACHIN, LOKIK, ANAND_GROUP 6


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EXIM



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Exim Bank (India)

Export-Import Bank of India(EXIM) is the premier export finance

institution of the country, set up in 1982 under the Export-Import Bank of

India Act 1981.

Government of India launched the institution with a mandate, not just to

enhance exports from India, but to integrate the countrys foreign tradeand investment with the overall economic growth.

Exim Bank of India has been both a catalyst and a key player in the

promotion of cross border trade and investment.

Exim Bank of India plays a major role in partnering Indian industries,

particularly the Small and Medium Enterprises, in their globalizationefforts, through a wide range of products and services offered at all stages

of the business cycle, starting from import of technology and export

product development to export production, export marketing, pre-

shipment and post-shipment and overseas investment.



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Products of EXIM

Investment Banking

Commercial Banking

Retail Banking

Private Banking

Asset Management

Mortgages

Credit Cards



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Organization Structure

Exim Bank is managed by a Board of Directors, which has representatives

from the Government, Reserve Bank of India, Export Credit Guarantee

Corporation of India, a financial institution, public sector banks, and the

business community.

The Bank's functions are segmented into several operating groups suchas

Corporate Banking Group which handles a variety of financing

programmes for Export Oriented Units (EOUs), Importers, and overseas

investment by Indian companies.

Project Finance / Trade Finance Group handles the entire range of exportcredit services such as supplier's credit, pre-shipment Agri Business Group,

to spearhead the initiative to promote and support Agri-exports. The

Group handles projects and export transactions in the agricultural sector

for financing.



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Organization Structure.

Small and Medium Enterprise: The group handles credit proposals

from SMEs under various lending programmes of the Bank.

Export Services Group offers variety of advisory and value-added

information services aimed at investment promotion.

Export Marketing Services Bank offers assistance to Indian

companies, to enable them establish their products in overseas

markets.

Besides these, the Support Services groups, which include:

Research & Planning, Corporate Finance, Loan Recovery, InternalAudit, Management Information Services, Information Technology,

Legal, Human Resources Management and Corporate Affairs.



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ROLE OF EXIM Exim Bank of India has been the prime mover in encouraging project

exports from India. The Bank provides Indian project exporters with acomprehensive range of services to enhance the prospect of their securing

export contracts, particularly those funded by Multilateral Funding

Agencies like the World Bank, Asian Development Bank, African

Development Bank and European Bank for Reconstruction and

Development. The Bank extends lines of credit to overseas financial institutions, foreign

governments and their agencies, enabling them to finance imports of

goods and services from India on deferred credit terms. Exim Banks lines

of Credit obviate credit risks for Indian exporters and are of particular

relevance to SME exporters.

The Banks Overseas Investment Finance programme offers a variety of

facilities for Indian investments and acquisitions overseas. The facilities

include loan to Indian companies for equity participation in overseas

ventures, direct equity participation by Exim Bank in the overseas venture

and non-funded facilities such as letters of credit and guarantees to

facilitate local borrowings by the overseas venture.9/21/2010 13IM_SACHIN, LOKIK, ANAND_GROUP 6


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ROLE OF EXIM.

The Bank provides financial assistance by way of term loans in Indianrupees/foreign currencies for setting up new production facility,expansion/modernization/upgradation of existing facilities and foracquisition of production equipment/technology. Such facilitiesparticularly help export oriented Small and Medium Enterprises for

creation of export capabilities and enhancement of internationalcompetitiveness.

Under its Export Marketing Finance programme, Exim Bank supports Smalland Medium Enterprises in their export marketing efforts includingfinancing the soft expenditure relating to implementation of strategic andsystematic export market development plans.

The Bank has launched the Rural Initiatives Programme with the objectiveof linking Indian rural industry to the global market. The programme isintended to benefit rural poor through creation of export capability inrural enterprises.



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ROLE OF EXIM

In order to assist the Small and Medium Enterprises, the Bank has put in

place the Export Marketing Services (EMS) Programme. Through EMS, the

Bank seeks to establish, on best efforts basis, SME sector products in

overseas markets, starting from identification of prospective business

partners to facilitating placement of final orders. The service is providedon success fee basis.

Exim Bank supplements its financing programmes with a wide range of

value-added information, advisory and support services, which enable

exporters to evaluate international risks, exploit export opportunities and

improve competitiveness, thereby helping them in their globalisation

efforts.



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ECGC



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EXPORT CREDIT GUARANTEE

CORPORATION OF INDIA The Export Credit Guarantee Corporation of India Limited (ECGC in short)

is a company wholly owned by the Government of India.

It provides export credit insurance support to Indian exporters and is

controlled by the Ministry of Commerce.

Government of India had initially set up Export Risks InsuranceCorporation (ERIC) in July 1957. It was transformed into Export Credit

and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit

Guarantee of India in 1983.

ECGC of India Ltd, was established to strengthen the export promotion

by covering the risk of exporting on credit. It functions under the administrative control of the Ministry of

Commerce & Industry, Department of Commerce, Government of India.

ECGC is the fifth largest credit insurer of the world in terms of coverage

of national exports. The present paid-up capital of the company is Rs.900

crores and authorized capital Rs.1000 crores.9/21/2010 17IM_SACHIN, LOKIK, ANAND_GROUP 6


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Functions:

Provides a range of credit risk insurance covers to exporters

against loss in export of goods and services

Offers guarantees to banks and financial institutions to enable

exporters to obtain better facilities from them Provides Overseas Investment Insurance to Indian companies

investing in joint ventures abroad in the form of equity or loan



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ECGC helps exporters as follows:

Offers insurance protection to exporters against payment risks

Provides guidance in export-related activities

Makes available information on different countries with its

own credit ratings Makes it easy to obtain export finance from banks/financial

institutions

Assists exporters in recovering bad debts



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EU



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THE EUROPEAN UNION (EU)

The EU was established by the Treaty of Maastricht in 1993 upon the

foundations of the European Communities.

The European Union (EU) is an economic and political union of 27 member

states which are located primarily in Europe.

With over 500 million citizens, the EU combined generated an estimated28% share (US$ 16.5 trillion) of the nominal and about 21%

(US$14.8 trillion) of the PPP gross world product in 2009.

Sixteen member states have adopted a common currency, the euro,

constituting the euro zone.

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.



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Functions of EU

The EU has developed a single market through a standardised system of

laws which apply in all member states, and ensures the free movement of

people, goods, services, and capital, including the abolition of passport

controls by the Schengen Agreement between 27 EU states.

It enacts legislation in justice and home affairs, and maintains commonpolicies on trade agriculture, fisheries and regional development.

The EU operates through a hybrid system

of supranationalism and intergovernmentalism.

In certain areas, decisions are taken by independent supranational

institutions, while in others, they are made through negotiation betweenmember states.



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Functions of EU.

The core objectives of the European Economic Community were the

development of a common market, subsequently renamed the single

market, and acustoms union between its member states. The single

market involves the free circulation of goods, capital, people and

services within the EU, and the customs union involves the applicationof a common external tariff on all goods entering the market. Once

goods have been admitted into the market they cannot be subjected

to customs duties, discriminatory taxes or import quotas, as they travel

internally.



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Free Movement in EU

Free movement of capital: It is intended to permit movement of

investments such as property purchases and buying of shares

between countries. Until the drive towards Economic and Monetary

Union the development of the capital provisions had been slow.

Post-Maastricht there has been a rapidly developing corpus of ECJjudgements regarding this initially neglected freedom. The free

movement of capital is unique insofar as it is granted equally to

non-member states.

The free movement of persons: It means citizens can move freely

between member states to live, work, study or retire in anothercountry. This required the lowering of administrative formalities

and recognition of professional qualifications of other states.



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Free Movement in EU.

The free movement of services and of establishment: It allows self-

employed persons to move between member states in order to

provide services on a temporary or permanent basis. While services

account for between sixty and seventy percent of GDP, legislation in

the area is not as developed as in other areas. This lacuna has beenaddressed by the recently passed Directive on services in the

internal market which aims to liberalise the cross border provision

of services. According to the Treaty the provision of services is a

residual freedom that only applies if no other freedom is being

exercised.



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Competition Policy

The EU operates a competition policy intended to ensure

undistorted competition within the single market. The

Commission as the competition regulator for the single

market is responsible for antitrust issues, approving mergers,

breaking up cartels, working for economic liberalisation and

preventingstate aid.



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NAFTA



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NAFTA

It stands for The North American Free Trade Agreement.

NAFTA is an agreement signed by the governments

of Canada, Mexico, and the United States, creating a trilateral trade

bloc in North America.

The agreement came into force on January 1, 1994.

It superseded the Canada-United States Free Trade Agreement

between the U.S. and Canada.

In terms of combined purchasing power parity GDP of its members,

as of 2007 the trade bloc is the largest in the world and secondlargest by nominal GDP comparison.

NAFTA has two supplements, the North American Agreement on

Environmental Cooperation (NAAEC) and the North American

Agreement on Labor Cooperation (NAALC).



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NAFTA

The goal of NAFTA was to eliminate barriers of trade and

investment between the USA, Canada and Mexico. The

implementation of NAFTA on January 1, 1994, brought the

immediate elimination of tariffs on more than one half of U.S.

imports from Mexico and more than one third of U.S. exports toMexico. Within 10 years of the implementation of the agreement,

all US-Mexico tariffs would be eliminated except for some U.S.

agricultural exports to Mexico that were to be phased out in 15

years. Most US-Canada trade was already duty free. NAFTA also

seeks to eliminate non-tariff trade barriers.



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NAFTA

TradeOverall, NAFTA has not caused trade diversion, aside

from a few industries such as textiles and apparel, inwhich rules of origin negotiated in the agreement were

specifically designed to make U.S. firms prefer Mexican

manufacturers. The World Bank also showed that the

combined percentage growth of NAFTA imports wasaccompanied by an almost similar increase of non-NAFTA

exports.



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ASEAN



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ASEAN

It stands for Association of Southeast Asian Nations.

It is a geo-political and economic organization of 10 countries locatedin Southeast Asia, which was formed on 8 August 1967by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Sincethen, membership has expanded to include Brunei, Burma

(Myanmar), Cambodia, Laos, and Vietnam. ASEAN spans over an area of 4.46 million km2 with a population of

approximately 580 million people, 8.7% of the world population. In 2009,its combined nominal GDP had grown to more than USD $1.5 trillion. IfASEAN was a single country, it would rank as the 9th largest economy inthe world in terms of nominal GDP.

Its aims include the acceleration of economic growth, social progress,

cultural development among its members, the protection of the peaceand stability of the region, and to provide opportunities for membercountries to discuss differences peacefully.



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OBJECTIVES OF ASEAN

Mutual respect for the independence, sovereignty, equality,

territorial integrity, and national identity of all nations;

The right of every State to lead its national existence free

from external interference, subversion or coercion;

Non-interference in the internal affairs of one another;

Settlement of differences or disputes by peaceful manner;

Renunciation of the threat or use of force; and

Effective cooperation among themselves.



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Policies of ASEAN

Apart from consultations and consensus, ASEANs agenda-settingand decision-making processes can be usefully understood in termsof the so-called Track I, Track II and Track III.

Track I refers to the practice of diplomacy among governmentchannels. The participants stand as representatives of their

respective states and reflect the official positions of theirgovernments during negotiations and discussions. All officialdecisions are made in Track I. Therefore, "Track I refers tointergovernmental processes".

Track II differs slightly from Track I, involving civil society groups andother individuals with various links who work alongside

governments. This track enables governments to discusscontroversial issues and test new ideas without making officialstatements or binding commitments, and, if necessary, backtrackon positions.



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Policies of ASEAN.

Track II dialogues are sometimes cited as examples of the

involvement of civil society in regional decision-making process by

governments and other second track actors, NGOs have rarely got

access to this track, meanwhile participants from the academic

community are a dozen think-tanks. However, these think-tanks are,in most cases, very much linked to their respective governments,

and dependent on government funding for their academic and

policy-relevant activities, and many working in Track II have

previous bureaucratic experience. Their recommendations,

especially in economic integration, are often closer to ASEANsdecisions than the rest of civil societys positions.



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Policies of ASEAN.

The track that acts as a forum for civil society in Southeast Asia is

called Track III. Track III participants are generally civil society groups

who represent a particular idea or brand. Track III networks claim to

represent communities and people who are largely marginalised

from political power centres and unable to achieve positive changewithout outside assistance. This track tries to influence government

policies indirectly by lobbying, generating pressure through

the media. Third-track actors also organise and/or attend meetings

as well as conferences to get access to Track I officials.



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Free Trade Area in ASEAN

ASEAN Free Trade Area (AFTA), is a common external preferentialtariff scheme to promote the free flow of goods within ASEAN.

The ASEAN Free Trade Area(AFTA) is an agreement by the membernations of ASEAN concerning local manufacturing in all ASEANcountries.

The AFTA agreement was signed on 28 January 1992 inSingapore. When the AFTA agreement was originally signed, ASEANhad six members, namely, Brunei, Indonesia, Malaysia, thePhilippines, Singapore and Thailand. Vietnam joined in 1995, Laosand Myanmar in 1997, and Cambodia in 1999. The latecomers havenot fully met the AFTA's obligations, but they are officially

considered part of the AFTA as they were required to sign theagreement upon entry into ASEAN, and were given longer timeframes in which to meet AFTA's tariff reduction obligations



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ASEAN Comprehensive Investment

Area The ASEAN Comprehensive Investment Area (ACIA) will

encourage the free flow of investment within ASEAN. Themain principles of the ACIA are as follows.

All industries are to be opened up for investment, with

exclusions to be phased out according to schedules National treatment is granted immediately to ASEAN investors

with few exclusions

Elimination of investment impediments

Streamlining of investment process and procedures Enhancing transparency

Undertaking investment facilitation measures



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Trade in Services in ASEAN

An ASEAN Framework Agreement on Trade in Services wasadopted at the ASEAN Summit in Bangkok in December1995.

Under AFAS, ASEAN Member States enter into successive

rounds of negotiations to liberalise trade in services withthe aim of submitting increasingly higher levels of commitments. The negotiations result in commitments thatare set forth in schedules of specific commitments annexedto the Framework Agreement. These schedules are oftenreferred to as packages of services commitments.

At present, ASEAN has concluded seven packages of commitments under AFAS.



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Free Trade Agreements With Other

Countries

ASEAN has concluded free trade agreements with PR China,

Korea, Japan, Australia, New Zealand and most recently India.

The agreement with People's Republic of China created

the ASEANChina Free Trade Area (ACFTA), which went into

full effect on January 1, 2010.

In addition, ASEAN is currently negotiating a free trade

agreement with the European Union.

Republic of China (Taiwan) has also expressed interest in an

agreement with ASEAN but needs to overcome diplomatic

objections from China.



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SAARC



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SAARC

It stands for The South Asian Association for Regional

Cooperation.

SAARC is an organization of South Asian nations, founded in

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 2007.

Meetings of heads of state are usually scheduled annually;

meetings of foreign secretaries, twice annually.

Headquarters are in Kathmandu, Nepal.



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The Objectives of the SAARC

To promote the welfare of the people of South Asia and to improve theirquality of life

To accelerate economic growth, social progress and cultural developmentin the region and to provide all individuals the opportunity to live indignity and to realize their full potential

To promote and strengthen collective self-reliance among the countries ofSouth Asia

To contribute to mutual trust, understanding and appreciation of oneanother'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

To cooperate with international and regional organisations with similaraims and purposes.



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SAFTA



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SAFTA It stands for South Asian Free Trade Area.

The Agreement on the South Asian Free Trade Area is an agreement reached

at the 12th SAARC summit at Islamabad, on 6 January 2004.

It creates a framework for the creation of a free trade area covering 1.4

billion people in India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and

the Maldives. The seven foreign ministers of the region signed a framework

agreement on SAFTA with zero customs duty on the trade of practically allproducts in the region by end 2016. The new agreement i.e. SAFTA, came

into being on 1 January 2006 and will be operational following the

ratification of the agreement by the seven governments.

SAFTA requires the developing countries in South Asia, that is, India,

Pakistan and Sri Lanka, to bring their duties down to 20 percent in the first

phase of the two year period ending in 2007.

In the final five year phase ending 2012, the 20 percent duty will be reduced

to zero in a series of annual cuts. The least developed nations in South Asia

consisting of Nepal, Bhutan, Bangladesh and Maldives have an additional

three years to reduce tariffs to zero. India and Pakistan have signed but not

ratified the treaty.9/21/2010 45IM_SACHIN, LOKIK, ANAND_GROUP 6


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The basic principles of SAPTA

overall reciprocityand mutuality of advantages so as to benefit

equitably all Contracting States, taking into account their respective

level of economic and industrial development, the pattern of their

external trade, and trade and tariff policies and systems;

negotiation oftariff reform step by step, improved and extended insuccessive stages through periodic reviews;

recognition of the special needs of the Least Developed Contracting

States and agreement on concrete preferential measures in their

favour;

inclusion of all products, manufactures and commodities in their

raw, semi-processed and processed forms.



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TRADE

BARRIERS



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Trade Barriers

A trade barrier is a general term that describes any

government policy or regulation that restricts international

trade.

Most trade barriers work on the same principle: the

imposition of some sort of cost on trade that raises the price

of the traded products. If two or more nations repeatedly use

trade barriers against each other, then a trade war results.

The barriers can be majorly divided in two types, namely:

Tariff barriers

Non-tariff barriers

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Tariff Barriers

Tariff is a tax levied on goods traded internationally.

When imposed on goods being brought into the country,

it is referred to as an import duty.

Import duty is levied to increase the effective cost ofimported goods to increase the demand for domestically

produced goods.



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Tariff Barriers

Another type of tariff, less frequently imposed, is the export

duty, which is levied on goods being taken out of the country,

to discourage their export. This may be done if the country is

facing a shortage of that particular commodity . It may also be

done to discourage exporting of natural resources.

When imposed on goods passing through the country, the

tariff is called transit duty.



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Classification of Tariffs on the

basis of quantification of tariffs

Specific Duty: Is a tax of so much local currency per

unit of the goods imported (based on weight, number,

length, volume or other unit of measurement). For example, Rs 800 on each TV set or washing

machine or Rs.3000 per metric ton of cold rolled steel

coils.



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Ad-Valoremduty: This kind is most commonly used; it is

calculated as a percentage of the value of the importedgoods - for example, 10, 25 or 35 per cent. This duty is

imposed at a fixed percentage on the value of an

imported commodity.

In the ad-valorem duty, the percentage of the duty isdecided, but the actual amount of the duty changes as

per the FOB value of a product.



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Comp

oun

dd

uty: The "specific" part of the compound duty(called compensatory duty) is levied as protection for the local

raw material industry.

A tariff is referred to as a compound duty when the

commodity is subject to both specific and ad-valorem duties.

It is imposed on manufactured goods that contain rawmaterials that are themselves subject to import duty.



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On the basisofthepurpose they

serve

Revenue Tariff: A revenue tariff aims at collecting substantial

revenues for the government. A revenue tariff increases

government funds, but does not really obstruct the flow of

imported goods. Here, the duty is imposed on items of mass

consumption, but the rate of the duty is low.



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Protective Tariff: It is aimed at protecting home industries by

restricting or eliminating competition. A protective tariff isused to raise the price of imported goods as a protective

measure against the competition from foreign markets. A

higher tariff allows a local company to compete with foreign

competition. Protective tariffs are usually high so as to reduceimports.



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Anti

dumping

duty: Dumping is the commercial practice ofselling goods in foreign markets at a price below their normal

cost or even below their marginal cost so as to capture foreign

markets. It is harmful to less developed countries where the

cost of production is high.

The government of the foreign country will counter thisdumping with imposing "anti-dumping" duties. Anti-dumping

are special duties additional to the normal ones, designed to

match the difference between the price in the home country

and the price abroad.



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Non-tariffBarriers

Non-tariff barriers (NTBs) include all the rules, regulations and

bureaucratic delays that help in keeping foreign goods out of

the domestic markets.

Types of Non-tariff barriers:

1) Quotas

A quota is a limit on the number of units that can be imported

or the market share that can be held by foreign producers. For

example, the US has imposed a quota on textiles imported

from India and other countries. Deliberate slow processing ofimport permits under a quota system acts as a further barrier

to trade.



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2)Emb

argo

When imports from a particular country are totally banned, it

is called an embargo. It is mostly put in place due to political

reasons. For example, the United Nations imposed an

embargo on trade with Iraq as a part of economic sanctions in

1990.3)Voluntary Export Restraint (VER)

A country facing a persistent, huge trade deficit against

another country may pressurize it to adhere to a self-imposed

limit on the exports. This act of limiting exports is referred toas voluntary export restraint. After facing consistent trade

deficits over a number of years with Japan, the US persuaded

it to impose such limits on itself.



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4)Subsidies to Local Goods

Governments may directly or indirectly subsidize localproduction in an effort to make it more competitive in the

domestic and foreign markets. For example, tax benefits may

be extended to a firm producing in a certain part of the

country to reduce regional imbalances, or duty drawbacks

may be allowed for exported goods, or, as an extreme case,

local firms may be given direct subsidies to enable them to

sell their goods at a lower price than foreign firms.



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5) LocalContent Requirement

A foreign company may find it more cost effective orotherwise attractive to assemble its goods in the market in

which it expects to sell its product, rather than exporting the

assembled product itself. In such a case, the company may be

forced to produce a minimum percentage of the value added

locally. This benefits the importing country in two ways it

reduces its imports and increases the employment

opportunities in the local market.



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6) Technical Barriers

Countries generally specify some quality standards to be metby imported goods for various health, welfare and safety

reasons. This facility can be misused for blocking the import of

certain goods from specific countries by setting up of such

standards, which deliberately exclude these products. The

process is further complicated by the requirement that testingand certification of the products regarding their meeting the

set standards be done only in the importing country.



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7)Procurement Policies

Governments quite often follow the policy of procuring their

requirements (including that of government-owned

companies) only from local producers, or at least extend some

price advantage to them. This closes a big prospective market

to the foreign producers.



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8) InternationalPrice Fixing

Some commodities are produced by a limited number ofproducers scattered around the world. In such cases, these

producers may come together to form a cartel and limit the

production or price of the commodity so as to protect their

profits. OPEC (Organization of Petroleum Exporting Countries)

is an example of such cartel formation. This artificial limitation

on the production and price of the commodity makes

international trade less efficient than it could have been.



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9) ExchangeControls

Controlling the amount of foreign exchange available to residents

for purchasing foreign goods domestically or while travelling abroad

is another way of restricting imports.

10) Direct and Indirect Restrictionson Foreign Investments

A country may directly restrict foreign investment to some specificsectors or up to a certain percentage of equity. Indirect restrictions

may come in the form of limits on profits that can be repatriated or

prohibition of payment of royalty to a foreign parent company.

This create problems because, Foreign companies are generally

interested in setting up local operations when they foreseeincreased sales or reduced costs as a consequence.



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Advantages of Trade Barriers

1. Trade barriers increase the competitiveness of domestic

producers both domestically and on foreign markets.

2. They raise money for the government in terms of revenue

which can be used for government spending.

3. They improve the balance of payments position by

decreasing imports as they become more expensive and less

attractive to purchase.



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THANK YOU

Documents

International Marketing Group6 Ver1.1