Page 47 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes 2.5 WTO – The Third Pillar in the Global Business

The third pillar of WTO policies that negatively affect developing countries is the whole issue of
tariffs. When the developing countries signed on to the Agreement in Agriculture, they were
assured of market access for their agricultural products in developed countries. But because of
tariff peaks and tariff escalations—and in spite of developed countries having fulfilled their
commitments on tariff reductions—market access has not been achieved. In the coming round of
negotiations, this will remain one major issue: how to ensure actual tariff reductions and do
away with tariff peaks and tariff escalations, so that products of export interest to developing
countries can gain entry to developed-country markets.
Tariffs are very often known to exporters who can perhaps plan accordingly. But non-tariff
barriers, in the WTO parlance, have affected developing country exports even more negatively
than tariffs. Each non-tariff barrier could be the focus of a lot of discussion. But suffice it to say
that a lot of these non-tariff barriers go against the very grain of the public pronouncements that
these countries make about globalization and liberalization, as well as against the context of a
new round. It is exactly these non-tariff barriers that are limiting exports from developing
countries.
Irrespective of the kind of policies that a lot of northern countries are following, domestic
agricultural production and rural incomes do fall in developing countries. And when rural
incomes fall and there is a shift away from the traditional agricultural systems, we have reduced
access to food. That, in turn, leads to migration from the rural areas.
Self Assessment

Fill in the blanks:
11. Council acts on behalf on the …………………. on all of the WTO affairs.
12. …………………. is generally by consensus and relative market size is the primary of
bargaining power.
13. Third conference was held in Seattle, Washington in ………....………….
14. Sixth WTO Conference Ministerial was held in Hong Kong from ………………….

Case Study Business in China

rom 1949 to 1979 China had a nearly autarkic economy and prohibited foreign
investment and restricted foreign trade. Although its brand of communism stressed
Fisolationism, China’s policy also reflected its historical belief that contact with
foreigners tended to corrupt its politics and harm its culture. However, fearing that it was
falling farther behind other countries economically, China enacted the Law on Joint
Ventures using Chinese and Foreign Investment in 1979. Since then, China has experienced
a dramatic rise in FDI. It has become the largest recipient of FDI among all developing
countries, and since 1993, it has ranked second to the United States for FDI inflows among
all countries. By mid-2002, total FDI in China had exceeded $700 billion and was invested
in nearly 400,000 ventures. Japan, Taiwan, and the United States are China’s most important
sources of FDI.
Contd...

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