GLOBAL BUSINESS NOTES MBA-
III-SEMSTER
UNIT-I
International Business: It is defined as the process of extending the business activities from domestic to
any foreign country with an intention of targeting international customers.
It is also defined as the conduction of business activities by any company across the nations
It can also be defined as the expansion of business functions to various countries with an objective of
fulfilling the needs and wants of international customers
1. Process of Internationalization
Domestic company :Most international companies have their origin as domestic companies. The
orientation of a domestic company essentially is ethnocentric. A purely domestic company
operates domestically because it never considers the alternative of going international. A
domestic company may extend its products to foreign markets by exporting, licensing and
franchising
International companies are importers and exporters, they have no investment outside of their
home country.
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Multinational companies have investment in other countries, but do not have coordinated
product offerings in each country. More focused on adapting their products and service to each
individual local market.
Global companies have invested and are present in many countries. They market their products
through the use of the same coordinated image/brand in all markets. Generally one corporate
office that is responsible for global strategy. Emphasis on volume, cost management and
efficiency.
Transnational companies are much more complex organizations. They have invested in
foreign operations, have a central corporate facility but give decision-making, R&D and
marketing powers to each individual foreign market.
Multinational Corporation In a report of the International Labour Organisation (ILO), it is observed
that, "the essential of the MNC lies in the fact that its managerial headquarters are located in one country
(home country), while the enterprise carries out operations in a number of the other countries (host
countries)."
A "multinational corporation" is also referred to as an international, transactional or global
corporation. Actually, for an enlarging business firm, multinational is a beginning step, as it gradually
becomes transnational and then turns into a global corporation. For, transnational corporation
represents a stage where in, the ownership and control of the concerned organization crosses the
national boundaries.
Features of MNCs :
1. MNCs have managerial headquarters in home countries, while they carry out operations in a number
of other (host) countries.
2. A large part of capital assets of the parent company is owned by the citizens of the company's home
country.
3. The absolute majority of the members of the Board of Directors are citizens of the home country.
4. Decisions on new investment and the local objectives are taken by the parent company.
5. MNCs are predominantly large-sized and exercise a great degree of economic dominance.
6. MNCs control production activity with large foreign direct investment in more than one
developed and developing countries.
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7. MNCs are not just participants in export trade without foreign investments.
Main Drivers of Globalization [International Business]
Cost driver companies consider the various lifestyle of the country before considering the price of the
product and services to rendered
Technology driver : increasing technology system, transportation, advancing in the level of world trade
system Government driver: reducing trade tariffs and non trade tariffs, reducing the role of political
policies Competition driver: organization becoming a global center, shift in open market system,
Privatization, Liberalization
Approaches in International Business
1.ETHNOCENTRIC ORIENTATION:
The ethnocentric orientation of a firm considers that the products, marketing strategies and techniques
applicable in the home market are equally so in the overseas market as well. In such a firm, all foreign
marketing operations are planned and carried out from home base, with little or no difference in
product formulation and specifications, pricing strategy, distribution and promotion measures between
home and overseas markets. The firm generally depends on its foreign agents and export-import
merchants for its export sales.
2.REGIOCENTRIC ORIENTATION :
In regiocentric approach, the firm accepts a regional marketing policy covering a group of countries which
have comparable market characteristics. The operational strategies are formulated on the basis of the
entire region rather than individual countries. The production and distribution facilities are created to
serve the whole region with effective economy on operation, close control and co-ordination.
3.GEOCENTRIC ORIENTATION :
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In geocentric orientation, the firms accept a world wide approach to marketing and its operations
become global. In global enterprise, the management establishes manufacturing and processing facilities
around the world in order to serve the various regional and national markets through a complicated but
well co-ordinate system of distribution network. There are similarities between geocentric and
regiocentric approaches in the international market except that the geocentric approach calls for a
much greater scale of operation.
4.POLYCENTRIC OPERATION :
When a firm adopts polycentric approach to overseas markets, it attempts to organize its international
marketing activities on a country to country basis. Each country is treated as a separate entity and
individual strategies are worked out accordingly. Local assembly or production facilities and marketing
organisations are created for serving market needs in each country. Polycentric orientation could be
most suitable for firms seriously committed to international marketing and have its resources for
investing abroad for fuller and long-term penetration into chosen markets. Polycentric approach works
better among countries which have significant economic, political and cultural differences and
performance of these tasks are free from the problems created primarily by the environmental factors.
Theories of International Business
1.Product Life Cycle Theory
Raymond Vernon developed the international product life cycle theory in the 1960s. The international
product life cycle theory stresses that a company will begin to export its product and later take on
foreign direct investment as the product moves through its life cycle. Eventually a country's export
becomes its import. Although the model is developed around the U.S, it can be generalised and applied to
any of the developed and innovative markets of the world.
The product life cycle theory was developed during the 1960s and focused on the U.S since most
innovations came from that market. This was an applicable theory at that time since the U.S dominated the
world trade. Today, the U.S is no longer the only innovator of products in the world. Today companies design
new products and modify them much quicker than before. Companies are forced to introduce the products in
many different markets at the same time to gain cost benefits before its sales declines. The theory does not
explain trade patterns of today.
2.Porters Daimond Model
The Porter Diamond, properly referred to as the Porter Diamond Theory of National Advantage, is a model that
is designed to help understand the competitive advantage that nations or groups possess due to certain factors
available to them, and to explain how governments can act as catalysts to improve a country's position in a
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globally competitive economic environment. The model was created by Michael Porter, a recognized authority
on corporate strategy and economic competition, and founder of the Institute for Strategy and
Competitiveness at the Harvard Business School.
The Porter Diamond suggests that countries can create new factor advantages for themselves, such as
a strong technology industry, skilled labor, and government support of a country's economy. The Porter
Diamond is visually represented by a diagram that resembles the four points of a diamond. The four
points represent four interrelated determinants that Porter theorizes as the deciding factors of national
comparative economic advantage. These four factors are firm strategy, structure and rivalry; related
supporting industries; demand conditions; and factor conditions. These can in some ways also be
thought of as analogous to the eponymous forces of Porter's Five Forces model of business strategy.
Firm strategy, structure, and rivalry refer to the basic fact that competition leads to businesses
finding ways to increase production and to the development of technological innovations. The
concentration of market power, degree of competition, and ability of rival firms to enter a nation's
market are influential here. This point is related to the forces of competitors and barriers to new
market entrants in the Five Forces model.
Related supporting industries refer to upstream and downstream industries that facilitate innovation
through exchanging ideas. These can spur innovation depending on the degree of transparency and
knowledge transfer. Related supporting industries in the Diamond model correspond to the suppliers and
customers who can represent either threats or opportunities in the Five Forces model.
Demand conditions refer to the size and nature of the customer base for products, which also drives
innovation and product improvement. Larger, more dynamic consumer markets will demand and
stimulate a need to differentiate and innovate, as well as simply greater market scale for businesses.
The final determinant, and the most important one according to Porter's theory, is that of factor
conditions. Factor conditions are those elements that Porter believes a country's economy can create
for itself, such as a large pool of skilled labor, technological innovation, infrastructure, and capital.
INTERNATIONA BUSINESS ENVIRONMENT FOREIGN
ENVIRONMENT:
The home-based or the domestic export expansion measures are necessarily related to the conditions
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prevailing in possible markets. An Exporter has to overcome various constraints and adapt plans and
operations to suit foreign environmental conditions. The main elements of foreign environment affecting
marketing activities of a firm in a foreign country consist of the following.
A) POLITICAL DIMENSION:
Nations greatly differ in their political environment. Govt. policies, regulations and control mechanisms
regarding the countries, foreign trade and commercial relations with other countries or groups of countries.
At least four factors should be considered in deciding whether to do business in a particular country. They are
1.Attitudes towards International Buying:
Some nations are very receptive, indeed encouraging, to foreign firms, and some others are hostile. For
e.g.: Singapore, UAE and Mexico are attracting foreign investments by offering investment incentives, removal
of trade barriers, infrastructure services, etc.
1.Political Stability: A country's future and stability is another important issue. Government changes hands
sometimes violently. Even without a change, a region may decide to respond to popular feeling. A foreign
firm's property may be seized; or its currency holdings blocked; or import quotas or new duties may be
imposed. When political stability is high one may go for direct investments. But when instability is high, firms
may prefer to export rather than involve in direct investments. This will bring in foreign exchange fast and
currency convertibility is also rapid.
2.Monetary Regulations:Sellers want to realise profits in a currency of value to them. In best situations,
the Importer pays in the seller's currency or in hard world currencies. In the worst case they have to take the
money out of the host country in the form of relatively unmarketable products that they can sell elsewhere
only at a loss. Besides currency restrictions, a fluctuating exchange rate also creates high risks for the exporter.
3.Government Bureaucracy:It is the extent to which the Government in the host country runs an
efficient system for assisting foreign companies: efficient customs handling, adequate market
information, etc. The problem of foreign uncertainty is thus further complicated by a frequently
imposed "alien status", this increases the difficulty of properly assessing and forecasting the dynamic
international business. The political environment offers the best example of the alien status.
A foreign political environment can be extremely critical; shifts in Government often means sudden
changes in attitudes that can result in expropriation, expulsion, or major restrictions in operations. The
fact is that a foreign company is foreign and thus always subject to the political whim to a greater degree
than a domestic firm.
CULTURAL ENVIRONMENT:
The manner in which people consume their priority of needs and the wants they attempt to satisfy, and the
manner in which they satisfy are functions of their culture which moulds and dictates their style of living. This
culture is the sum total of knowledge, belief, art, morals, laws, customs and other capabilities acquired by
humans as members of the society. Since culture decides the style of living, it is pertinent to study it especially
in export marketing. e.g. when a promotional message is written, symbols recognizable and meaningful to the
market (the culture) must be used. When designing a product, the style used and other related marketing
activities must be culturally acceptable.
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ECONOMIC ENVIRONMENT:
In considering the international market, each Exporter must consider the importing country's economy.
Two economic characteristics reflect the country's attractiveness as an export market. They are the country's
industrial structure and the country's income distribution by employment industrialization and socio economic
justices.
LEGAL ENVIRONMENT:
The legal dimension of international Business environment includes all laws and regulations regarding
product specification and standards, packaging and labeling, copyright, trademark, patents, health and safety
regulations particularly in respect of foods and drugs. There are also controls in promotional methods, price
control, trade margin, mark-up, etc., These legal aspects of marketing abroad have several implications which an
exporting firm needs to study closely.
Regional Strategy:
In international business the regional strategy is explained as business strategy directed in doing business
for a specific country, region in international business is one nation, large scale business operators will
have to design the business strategy based on each nation and which ultimately affects the international
business
Companies can source goods, technology, information, and capital from around the world, but business
activity tends to be centered in certain cities or city regions in a few parts of the world.
Global strategy:
Global strategy is the ability of an organization to apply a replicable and systematic methodology to
the unique challenges that are faced by the organization. A sound global strategy addresses questions
such as, how to build necessary global presence and what should be the optimal locations for various
value chain activities. Any company which implements the global strategy will have the following aspects
as its features Product is the same in all countries.
°Centralized control - little decision-making authority on the local level
°Effective when differences between countries are small
°Advantages: cost, coordinated activities, faster product development
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Unit-II
TRADE BARRIERS
Trade barriers may be (i) Tariff Barriers and (ii) Non Tariff Barriers or protective barriers.
TARIFF BARRIERS: Tariff barriers have been one of the classical methods of regulating international trade.
Tariffs may be referred to as taxes on the imports. It aims at restricting the inward flow of
goods from other countries to protect the country's own industries by making the goods costlier in that
country. Sometimes the duty on a product becomes so steep that it is not worthwhile importing it. In addition,
the duty so imposed also provides a substantial source of revenue to the importing country. In India, Customs
duty forms a significant part of the total revenue, and therefore, is an important element in the budget. Some
countries use this method of imposing tariffs and Customs duties to balance its balance of trade. A nation may
also use this method to influence the political and economic policies of other countries. It may impose tariffs
on certain imports from a particular country as a protest against tariffs imposed by that country on its
goods.
Specific Duties, imposed on the basis of per unit of any identifiable characteristic of merchandise such as per
unit volume, weight, length, etc. The duty schedules so specified must specify the rate of duty as well as the
determining factor such as weight, number, etc. and basis of arriving at the determining factor such as gross
weight, net weight or tare weight.
Ad valorem Tariffs are based on the value of imports and are charged in the form of specified percentage of
the value of goods. The schedule should specify how the value of imported goods would be arrived at. Most of
the countries follow the practice of charging tariffs on the basis of CIF cost or FOB cost mentioned in the
invoice. As tariffs are based on the cost, sometimes unethical practices of under invoicing are adopted
whereby Customs revenue is affected. In order to eliminate such malpractices, countries adopt a fair value
(given in the schedule) or the current domestic value of the goods as the basis of computing the duties.
NON - TARIFF MEASURES (BARRIERS)
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To protect the domestic industries against unfair competition and to give them a fair chance of survival
various countries are adopting non-tariff measures. Some of these are :
Quantity Restrictions, Quotas and Licensing Procedures:-
Under quantity restriction, the maximum quantity of different commodities which would be allowed to be
imported over a period of time from various countries is fixed in advance. The quota fixed normally depends
on the relations of the two countries and the needs of the importing country. Here, the Govt. is in a position
to restrict the imports to a desired level. Quotas are very often combined with licensing system to regulate the
flow of imports over the quota period as also to allocate them between various importers and supplying
countries.
Foreign Exchange Restrictions -Exchange control measures are used widely by a number of developing countries
to regulate imports. Under this system an importer has to ensure that adequate foreign exchange is available
for imports by getting a clearance from the exchange control authorities of the country.
Technical Regulations -
Another measure to regulate the imports is to impose certain standards of technical production, technical
specification, etc. The imported commodity has to meet these specifications. Stringent technical regulations
and standards beyond international norms, expensive testing and certification, and complicated marking and
packaging requirements.
Voluntary Export Restraint:
The agreement on 'voluntary' export restraint is imposed on the exporter under the threat of sanctions to
limit the export of certain goods in the importing country. Similarly, establishment of minimum import prices
should be strictly observed by the exporting firms in contracts with the importers of the country that has set
such prices.
In case of reduction of export prices below the minimum price level, the importing country imposes anti-
dumping duty which could lead to withdrawal from the market. Voluntary export restraints mostly affect trade
in textiles, footwear, dairy products, cars, machine tools, etc.
Local Content Requirement:-
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A local content requirement is an agreement between the exporting and the importing country that the
exporting country will use some amount or, content of resources of the importing country in its process of
production. If the exporting country agrees to do that only then the importing country will import their goods.
Embargo:- Embargo is a specific type of quota prohibiting trade. Like quotas, embargoes may be imposed on
imports, or exports of particular goods, regardless of destinations, in respect of certain goods supplied
tospecific countries, or in respect of all goods shipped to certain countries. Although the embargo
is usually introduced for political purposes, the consequences, in essence, could be economics
Difference between Tariff and Non-Tariff Barriers
Anti - Dumping
Anti dumping is a new weapon in the trade war. Anti dumping is one policy which is creating a non tariff
barrier, hindering free trade.
If a company exports a product at a price lower than the one charged in its home market, it is said to be
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dumping. If the importing company succeeds, its country will levy an anti dumping duty on the product
exported by the Indian Co. to him. This adds to the landed cost of the product and reduces the Indian
exporter's competitiveness.
Trade Bloc
An agreement between states, regions, or countries, to reduce barriers to trade between the participating
regions Trading blocs are a form of economic integration, and increasingly shape the pattern of world trade.
Economic integration is the unification of economic policies between different states through the partial or full
abolition of tariff and non-tariff restrictions on trade taking place among them prior to their integration
The degree of economic integration can be categorized into five stages:
Preferential trading area
Free trade area,
Customs union,
Common market
Economic union,
Stages/types / Forms/ of economic integration
Preferential Trade Area
Preferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce or eliminate
tariff barriers on selected goods imported from other members of the area. This is often the first small step
towards the creation of a trading bloc.
Free Trade Area
Free Trade Areas (FTAs) are created when two or more countries in a region agree to reduce or eliminate
barriers to trade on all goods coming from other members.
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Customs Union
A customs union involves the removal of tariff barriers between members, plus the acceptance of a common
(unified) external tariff against non-members. This means that members may negotiate as a single bloc with 3rd
parties, such as with other trading blocs, or with the WTO
Common Market
A ‘common market’ is the significant step towards full economic integration, and occurs when member
countries trade freely in all economic resources – not just tangible goods. This means that all barriers to trade
in goods, services, capital, and labour are removed.
The main advantages for members of trading blocs[this can be written for any trade bloc]
Free trade practices
Market access and trade creation.
Trade creation and trade diversion
Economies of scale
lowering costs and lower prices for consumers.
Jobs creation and employment opportunities
Protection of individual interests of member countries.
NAFTA
North American Free Trade Agreement (NAFTA) established a free-trade zone in North America; it was signed in
1992 by Canada, Mexico, and the United States and took effect on Jan. 1, 1994. NAFTA immediately lifted tariffs
on the majority of goods produced by the signatory nations. It also calls for the gradual elimination of all
trade barriers between these three countries.
Goals of the NAFTAto reduce barriers to trade
to increase cooperation for improving working conditions in North America
to create an expanded and safe market for goods and services produced in North America
to establish clear and mutually advantageous trade rules
to help develop and expand world trade and provide a catalyst to broader international cooperation
NAFTA structure
Free Trade Commission: Made up of ministerial representatives from the NAFTA partners.
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NAFTA Coordinators: Senior trade department officials designated by each country.
NAFTA Working Groups and Committees: Over 30 working groups and committees have been established to
facilitate trade and investment and to ensure the effective implementation and administration of NAFTA.
NAFTA Secretariat : Made up of a “national section” from each member country. Responsible for administering
the dispute settlement , Maintains a tri-national website containing up-to-date information on past and current
disputes.
Commission for Labor Cooperation : Created to promote cooperation on labor matters among NAFTA
members and the effective enforcement of domestic labor law. www.naalc.org.
Commission for Environmental Cooperation : Established to further cooperation among NAFTA partners in
implementing the environmental side accord to NAFTA and to address environmental issues of continental
concern, with particular attention to the environmental challenges and opportunities presented by continent-
wide free trade.
European Union (EU)
Comprising 28 European countries and governing common economic, social, and security policies. Originally
confined to Western Europe, the EU undertook a robust expansion into central and eastern Europe in the early
21st century. The EU was created by the Maastricht Treaty, which entered into force on November 1, 1993.
Structure of EU
1. The EU Council sets the policies and proposes new laws. The political leadership, or Presidency of the EU,
is held by a different leader every six months.
2. The European Parliament debates and approves the laws proposed by the Council. Its members are
elected every five years.
3. The European Commission staffs and executes the laws. José Manuel Barroso is the President who serves
under 28 Commissioners.
Objectives of EU
an area of freedom, security and justice without internal frontiers;
an internal market where competition is free and undistorted;
sustainable development, based on balanced economic growth and price stability, a highly competitive
social market economy, aiming at full employment and social progress, and a high level of protection
and improvement of the quality of the environment;
the promotion of scientific and technological advance;
the combating of social exclusion and discrimination, and the promotion of social justice and
protection, equality between women and men, solidarity between generations and protection of the
rights of the child; the promotion of economic, social and territorial cohesion, and solidarity among
Member States.
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South Asian Association for Regional Cooperation (SAARC)
South Asian nations, which was established on 8 December 1985 when the government of Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan, and Sri Lanka formally adopted its charter providing for the promotion of
economic and social progress, cultural development within the South Asia region and also for friendship and co-
operation with other developing countries. It is dedicated to economic, technological, social, and cultural
development emphasizing collective self-reliance. Afghanistan joined the organisation in 2007. Meetings of
heads of state are usually scheduled annually.
Objectives of SAARC
o to promote the welfare of the people of South Asia and to improve their quality of life;
o 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 realise their full potential ;
o to promote and strengthen selective self-reliance among the countries of South Asia;
o to contribute to mutual trust, understanding and appreciation of one another's problems;
o to promote active collaboration and mutual assistance in the economic, social, cultural,
technical and scientific fields;
o to strengthen co-operation with other developing countries;
o to strengthen co-operation among themselves in international forums on matters of
common interest; and
o to co-operate with international and regional organisations with similar aims and purposes.
SAARC organizational structure:
1.SAARC Council: At the top, there is the Council represented by the heads of the government of
the member countries.
2.Council of Minister: It is to assist the council. It is represented by the foreign ministers
of the member countries.
3.Standing Committee: It is comprised by the foreign secretaries of the member government.
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4.Programming Committee: It consist of the senior official of the member governments.
6.Technical Committee: It consist of the represented of the member nations.
7.Secretaria: The SAARC secretariat is located in Nepal.
ASEAN
On 8 August 1967, five leaders - the Foreign Ministers of Indonesia, Malaysia, the Philippines, Singapore and
Thailand - sat down together in the main hall of the Department of Foreign Affairs building in Bangkok, Thailand
and signed a document. By virtue of that document, the Association of Southeast Asian Nations (ASEAN) was
born.
ASEAN STRUCTURES AND MECHANISMS
ASEAN Summit, ASEAN Coordinating Council
ASEAN Community Councils , ASEAN Sectoral Ministerial Bodies
Committee of Permanent Representatives , National Secretariats
Committees Abroad , ASEAN Chair
ASEAN Secretariat, The highest decision-making organ of ASEAN is the Meeting of the ASEAN Heads of State
PRINCIPLES of ASEAN
o Mutual respect for the independence, sovereignty, equality, territorial integrity, and national
identity of all nations;
o The right of every State to lead its national existence free from external interference,
subversion or coercion;
o Non-interference in the internal affairs of one another;
o Settlement of differences or disputes by peaceful manner;
o Renunciation of the threat or use of force; and
o Effective cooperation among themselves
Objectives : 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 in the region and adherence to the principles of the United Nations
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The General Agreement on Tariffs and Trade (GATT)
The General Agreement on Tariffs and Trade (GATT) was created after World War II to aid global economic recovery
through reconstructing and liberalizing global trade. GATT's main objective was to reduce barriers to international trade
through the reduction of tariffs, quotas and subsidies. It has since been superseded by the creation of the World Trade
Organization (WTO).
The General Agreement on Tariffs and Trade (GATT) was formed in 1947 with a treaty signed by 23 countries, and signed
into international law on January 1, 1948. GATT remained one of the focal features of international trade agreements until
it was replaced by the creation of the World Trade Organization on January 1, 1995. By this time, 125 nations were
signatories to its agreements, which covered about 90% of global trade.
The aim behind GATT was to form rules to end or restrict the most costly and undesirable features of the pre- war
protectionist period, namely quantitative trade barriers such as trade controls and quotas. The agreement also provided
a system to arbitrate commercial disputes between nations, and the framework enabled a number of multilateral
negotiations for the reduction of tariff barriers. GATT was regarded as a significant success in the post-war years.
Objectives:
The General Agreement on Tariff and Trade was a multilateral treaty that laid down rules for conducting
international trade. The preamble to the GATT can be linked to its objectives.
To raise the standard of living of the people,
To ensure full employment and a large and steadily growing volume of real income and effective
demand.
To tap the use of the resources of the world fully.
To expand overall production capacity and international trade.
GATT Rounds:
Between 1947 and 1995 there were 8 rounds of negotiations between the participating countries. The first 6 rounds were
related to curtailing tariff rates, 7th round included the non-tariff obstacles.
The 8th round was entirely different from the previous rounds because it included a number of new subjects for
consideration. This 8th round known as “Uruguay Round” became most controversial. The discussions at this round only
gave birth to World Trade Organization (WTO).
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World Trade Organization (W T O) : Location: Geneva, Switzerland, Established: 1 January 1995, Created by:
Uruguay Round negotiations (1986-94) , Membership: 159 countries on 2 March 2013 , Budget:
197 million Swiss francs for 2013, Secretariat staff: 640, Head: Director-General
WTO is an organization comprising of developed, developing and least developed countries, under the UN
Umbrella, headquartered in Geneva. Its aim is to promote trade amongst member nations, especially after
globalization of trade, arrange aid technically and in other forms for growth of trade amongst member
countries, creating all possible facilitation measures. Main Functions of WTO To facilitate the implementation,
administration and further operations of the agreement establishing the WTO.
Functions:
Administering WTO trade agreements
Forum for trade negotiations
Handling trade disputes
Monitoring national trade policies
Technical assistance and training for developing countries
Cooperation with other international organizations
WTO Organizational structure
Council for Trade in Goods : There are 11 committees under the jurisdiction of the Goods Council each with a
specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate
from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman
and only 10 members. The body also has several groups relating to textiles.
Council for Trade-Related Aspects of Intellectual Property Rights : Information on intellectual property in the
WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other
international organizations in the field.
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Council for Trade in Services: The Council for Trade in Services operates under the guidance of the General
Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS).
It is open to all WTO members, and can create subsidiary bodies as required.
Trade Negotiations Committee: The Trade Negotiations Committee (TNC) is the committee that deals with the
current trade talks round. The chair is WTO's director-general. As of June 2012 the committee was tasked with
the Doha Development Round
TRIMS and TRIPS : The WTO administers the implementation of a set of agreements, which include the General
Agreement on Tariffs and Trade, other agreements in the goods sector (e.g., agriculture, textiles, sanitary and
psycho-sanitary measures, Trade Related Investment Measures-TRIMs, anti-dumping, etc.), and in addition,
agreements in two other areas, viz., trade in services, and Trade Related Intellectual Property Rights (TRIPs) ,
TRIPs deals with the following IPRs
o Copyright and related rights;
o Patents, Trademarks, Geographical indications, including appellations of origin;
o Industrial designs, Integrated circuit layout-designs;
o Protection of undisclosed information, Control of anti-competitive practices in contractual
licenses
o Term of patents 20 years, Limited compulsory licensing, no license of right
o Almost all fields of technology patentable. Only area conclusively , excluded from patentability is
plant varieties; debate regarding some areas in agriculture and biotechnology, Very limited scope
for
o governments to use patented inventions
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