business environment unit 10

8/18/2019 Business Environment Unit 10

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Subject- B.E Unit-10 By- K. R. Ansari

General Agreement on Tariffs and Trade (GATT), set of multilateral trade agreements aimed

at the abolition of quotas and the reduction of tariff duties among the contracting nations. When

GATT was concluded by 23 countries at Geneva, in 1947 (to take effect on Jan. 1, 1948), it was

considered an interim arrangement pending the formation of a United Nations agency to

supersede it. When such an agency failed to emerge, GATT was amplified and further enlarged

at several succeeding negotiations. It subsequently proved to be the most effective instrument of

world trade liberalization, playing a major role in the massive expansion of world trade in the

second half of the 20th century.

GATT’s most important principle was that of trade without discrimination, in which each

member nation opened its markets equally to every other. As embodied in unconditional most-

favoured nation clauses, this meant that once a country and its largest trading partners had agreed

to reduce a tariff, that tariff cut was automatically extended to every other GATT member.

GATT included a long schedule of specific tariff concessions for each contracting nation,

representing tariff rates that each country had agreed to extend to others. Another fundamental

principle was that of protection through tariffs rather than through import quotas or other

quantitative trade restrictions; GATT systematically sought to eliminate the latter. Other general

rules included uniform customs regulations and the obligation of each contracting nation to

negotiate for tariff cuts upon the request of another. An escape clause allowed contracting

countries to alter agreements if their domestic producers suffered excessive losses as a result of

trade concessions.

GATT’s normal business involved negotiations on specific trade problems affecting particular

commodities or trading nations, but major multilateral trade conferences were held periodically

to work out tariff reductions and other issues. Seven such “rounds” were held from 1947 to 1993,

starting with those held at Geneva in 1947 (concurrent with the signing of the general

agreement); at Annecy, France, in 1949; at Torquay, Eng., in 1951; and at Geneva in 1956 and

again in 1960 – 62. The most important rounds were the so-called Kennedy Round (1964 – 67),

the Tokyo Round (1973 – 79), and the Uruguay Round (1986 – 94), all held at Geneva. These

agreements succeeded in reducing average tariffs on the world’s industrial goods from 4 0

percent of their market value in 1947 to less than 5 percent in 1993.

The Uruguay Round negotiated the most ambitious set of trade-liberalization agreements in

GATT’s history. The worldwide trade treaty adopted at the round’s end slashed tariffs on

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(Councils, Committees, Sub-committees), also comprising all members, administer and monitor

the implementation by members of the various WTO agreements.

Min isteri al Conferences

The topmost decision-making body of the WTO is the Ministerial Conference, which usually

meets every two years. It brings together all members of the WTO, all of which are countries orcustoms unions. The Ministerial Conference can take decisions on all matters under any of themultilateral trade agreements.

The WTO General Council

The General Council is the WTO’s highest -level decision-making body in Geneva, meetingregularly to carry out the functions of the WTO. It has representatives (usually ambassadors or

equivalent) from all member governments and has the authority to act on behalf of the

ministerial conference which only meets about every two years.

More specifically, the WTO's main activities are:

Negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade) and agreeing on rules governing the conduct of international trade (e.g.

antidumping, subsidies, product standards, etc.).

Administering and monitoring the application of the WTO's agreed rules for trade in

goods, trade in services, and trade-related intellectual property rights.

Monitoring and reviewing the trade policies of our members, as well as ensuring

transparency of regional and bilateral trade agreements.

Settling disputes among our members regarding the interpretation and application of the

agreements.

Building capacity of developing country government officials in international trade

matters

Assisting the process of accession of some 30 countries who are not yet members of the

organization.

Conducting economic research and collecting and disseminating trade data in support of

the WTO's other main activities.

Explaining to and educating the public about the WTO, its mission and its activities.

The WTO's founding and guiding principles remain the pursuit of open borders, the guarantee of

most-favoured-nation principle and non-discriminatory treatment by and among members, and a

commitment to transparency in the conduct of its activities. The opening of national markets to


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international trade, with justifiable exceptions or with adequate flexibilities, will encourage and

contribute to sustainable development, raise people's welfare, reduce poverty, and foster peace

and stability. At the same time, such market opening must be accompanied by sound domestic

and international policies that contribute to economic growth and development according to each

member's needs and aspirations.

UNCTAD, which is governed by its 194 member States, is the United Nations body responsible

for dealing with development issues, particularly international trade – the main driver of

development.

Its work can be summed up in three words: think, debate, and deliver.

Reflection on development is at the heart of UNCTAD’s work. It produces often-innovative

analyses that form the basis for recommendations to economic policymakers. The aim is to helpthem take informed decisions and promote the macroeconomic policies best suited to ending

global economic inequalities and to generating people-centred sustainable development.

UNCTAD is also a forum where representatives of all countries can freely engage in dialogue

and discuss ways to establish a better balance in the global economy.

In addition, UNCTAD offers direct technical assistance to developing countries and countries

with economies in transition, helping them to build the capacities they need to become equitably

integrated into the global economy and improve the well-being of their populations.

UNCTAD holds a ministerial-level meeting every four years to discuss major global economic

issues and to decide on its programme of work.

It also holds discussions with civil society, including at an annual symposium where members of

the public can express their views and interact with country representatives.

Every two years, UNCTAD organizes the World Investment Forum, which brings together major

players from the international investment community to discuss challenges and opportunities and

to promote investment policies and partnerships for sustainable development and equitable

growth.

Major Functions of UNCTAD

Globalization and development

On the basis of recent statistics – often yet to be published -- UNCTAD’s analyses contribute to

international debate on the consequences of globalization for developing countries.


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The organization examines global economic trends and the outlook for developing countries;

Undertakes studies on development strategies;

Analyzes debt issues;

Provides developing countries with technical assistance on the management of public debt; and

Provides assistance to the Palestinian people in support of their economic development.

Trade and commodities

UNCTAD promotes development through international trade.

Produces analyses and collects data to improve understanding of current and future problems in

this area;

Supports the participation of developing countries in international trade and international trade

negotiations on an equitable basis;

Seeks to strengthen international trade in services and promotes an integrated approach to trade,

the environment, and sustainable development; Analyzes issues related to competition policy and consumer protection; and

Focuses on the contribution of the commodity sector to development, advocating diversification

and risk management.

Investment and enterprise

UNCTAD offers member States expertise on all issues related to investment and enterprise

development.

Conducts cutting-edge research and analysis in the field of investment for sustainable

development;

Informs policymakers about the structure and evolution of foreign direct investment in the world,

and outlines the main trends in investment;

Provides technical assistance to enable beneficiary countries to attract more investment for

sustainable development, including through investment policy reviews;

Focal point for issues related to international investment agreements;

Promotes entrepreneurship and enterprise creation and expansion;

Participates in the setting of international accounting standards; and

Encourages responsible investment through initiatives such as the establishment of principles for

sustainable development in agriculture.

Categories of countries that receive special attention

UNCTAD helps more than 90 countries in their efforts to reach the targets they have set for

economic progress. These countries belong to categories that receive special attention from the

United Nations, and, in many cases, special treatment to compensate for the disadvantages they

face in the global economy.


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UNCTAD helps least developed countries – 49 States were recognized as such in 2013 – to

achieve the socioeconomic progress that will allow them to graduate from this category;

Supports landlocked developing countries which refuse to consider their landlocked nature as an

obstacle to development; and

Supports small island developing States in their continuing efforts to become less economically

vulnerable, despite the many challenges they face.

Technology and logistics

In a globalized, knowledge-based economy, it is essential to stimulate innovation in developing

countries to improve their competitiveness.

UNCTAD conducts research in science, technology (including information and communication

technology) and innovation for development;

Helps developing countries design and implement technology and innovation policies for

economic growth and sustainable development; and Carries out a broad programme of work to establish efficient services in transport, trade

facilitation, and customs.

World BankThe World Bank is a United Nations international financial institution that provides loans todeveloping countries for capital programs. The World Bank is a component of the World BankGroup, and a member of the United Nations Development Group.The World Bank Group consists of five organizations:

1. The International Bank for Reconstruction and Development (IBRD)The International Bank for Reconstruction and Development was created in 1944 to help Europe

rebuild after World War II. Today, IBRD provides loans and other assistance primarily to middleincome countries.IBRD is the original World Bank institution. It works closely with the rest of the World BankGroup to help developing countries reduce poverty, promote economic growth, and build prosperity.IBRD is owned by the governments of its 188 member countries, which are represented by a 25-member board of 5 appointed and 20 elected Executive Directors. The institution provides a combination of financial resources, knowledge and technical services,and strategic advice to developing countries, including middle income and credit-worthy lowerincome countries. Specifically, IBRD: Supports long-term human and social development that private creditors do not finance

Preserves borrowers' financial strength by providing support in times of crisis, when poor people are most adversely affected

Promotes key policy and institutional reforms (such as safety net or anti-corruption reforms) Creates a favorable investment climate to catalyze the provision of private capital Facilitates access to financial markets often at more favorable terms than members can

achieve on their own

IBRD’s Services

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The World Bank Group works with middle income countries simultaneously as clients,shareholders, and global actors. As this partnership evolves, IBRD is providing innovativefinancial solutions, including financial products (loans, guarantees, and risk management products) and knowledge and advisory services (including on a reimbursable basis) togovernments at both the national and subnational levels.

IBRD finances projects across all sectors and provides technical support and expertise at variousstages of a project.IBRD’s financial products and services help countries build resilience to shocks by facilitating

access to products that mitigate the negative impact of currency, interest rate, and commodity price volatility, natural disasters and extreme weather.Unlike commercial lending, IBRD’s financing not only supplies borrowing countries with

needed financing, but also serves as a vehicle for global knowledge transfer and technicalassistance.Advisory services in public debt and asset management help governments, official sectorinstitutions, and development organizations build institutional capacity to protect and expandfinancial resources.

IBRD supports government efforts to strengthen not only public financial management, but toalso improve the investment climate, address service delivery bottlenecks, and other policy andinstitutional actions.

2. The International Development Association (IDA)

The International Development Association (IDA) is the part of the World Bank that helps the

world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing loans

(called “credits”) and grants for programs that boost economic growth, reduce inequalities, and

improve people’s living conditions.

IDA complements the World Bank’s original lending arm— the International Bank for

Reconstruction and Development (IBRD). IBRD was established to function as a self-sustaining

business and provides loans and advice to middle-income and credit-worthy poor countries.

IBRD and IDA share the same staff and headquarters and evaluate projects with the same

rigorous standards.

IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which

are in Africa. It is the single largest source of donor funds for basic social services in these

countries. IDA-financed operations deliver positive change for 2.8 billion people, the majority of

whom survive on less than $2 a day.

IDA lends money on concessional terms. This means that IDA charges little or no interest and

repayments are stretched over 25 to 38 years, including a 5- to 10-year grace period. IDA also provides grants to countries at risk of debt distress.

In addition to concessional loans and grants, IDA provides significant levels of debt relief

through the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief

Initiative (MDRI).

Since its inception, IDA has supported activities in 112 countries. Annual commitments have

averaged about $18 billion over the last three years, with about 50 percent of that going to

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Africa. For the fiscal year ending on June 30, 2014, IDA commitments reached $22.2 billion

spread over 242 new operations. 12 percent of the total was committed on grant terms.

3. International Finance Corporation (IFC)

The International Finance Corporation (IFC) is an international financial institution thatoffers investment, advisory, and asset management services to encourage private sector

development in developing countries. The IFC is a member of the World Bank Group and is

headquartered in Washington, D.C., United States. It was established in 1956 as the private

sector arm of the World Bank Group to advance economic development by investing in strictly

for-profit and commercial projects that purport to reduce poverty and promote development. The

IFC's stated aim is to create opportunities for people to escape poverty and achieve better living

standards by mobilizing financial resources for private enterprise, promoting accessible and

competitive markets, supporting businesses and other private sector entities, and creating jobs

and delivering necessary services to those who are poverty-stricken or otherwise vulnerable.Since 2009, the IFC has focused on a set of development goals that its projects are expected to

target. Its goals are to increase sustainable agriculture opportunities,

improve health and education, increase access to financing for microfinance and business clients,

advance infrastructure, help small businesses grow revenues, and invest in climate health.[5]

The IFC is owned and governed by its member countries, but has its own executive leadership

and staff that conduct its normal business operations. It is a corporation whose shareholders are

member governments that provide paid-in capital and which have the right to vote on its matters.

Originally more financially integrated with the World Bank Group, the IFC was established

separately and eventually became authorized to operate as a financially autonomous entity and

make independent investment decisions. It offers an array of debt and equity financing services

and helps companies face their risk exposures, while refraining from participating in

a management capacity. The corporation also offers advice to companies on making decisions,

evaluating their impact on the environment and society, and being responsible. It advises

governments on building infrastructure and partnerships to further support private sector

development.

The corporation is assessed by an independent evaluator each year. In 2011, its evaluation report

recognized that its investments performed well and reduced poverty, but recommended that the

corporation define poverty and expected outcomes more explicitly to better-understand its

effectiveness and approach poverty reduction more strategically. The corporation's total

investments in 2011 amounted to $18.66 billion. It committed $820 million to advisory services

for 642 projects in 2011, and held $24.5 billion worth of liquid assets. The IFC is in good

financial standing and received the highest ratings from two independent credit rating agencies in

2010 and 2011.

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The Multilateral Investment Guarantee Agency (MIGA)

MIGA is a member of the World Bank Group with 181 member countries. Our mission is to

promote foreign direct investment (FDI) into developing countries to help support economic

growth, reduce poverty, and improve people's lives.

Our strategy MIGA’s operational strategy plays to our foremost strength in the marketplace— attracting

investors and private insurers into difficult operating environments. We focus on insuring

investments in the areas where we can make the greatest difference

Countries eligible for assistance from the International Development Association (the world’s

poorest countries)

Fragile and conflict-affected environments

Transformational Projects – large scale and significant investments, with the potential for

bringing about transformational change in the host country

Energy Efficiency and Climate Change - complex energy and infrastructure projects thatimprove energy capacity as well as transportation projects that have a positive impact on

pollution control (such as mass transport)

Middle Income Countries where we can have strong impact

MIGA offers comparative advantages in all of these areas — from our unique package of products

and ability to restore the business community's confidence, to our ongoing collaboration with the

public and private insurance market to increase the amount of insurance available to investors.

As a multilateral development agency, MIGA only supports investments that are

developmentally sound and meet high social and environmental standards. MIGA applies acomprehensive set of social and environmental performance standards to all projects and offers

extensive expertise in working with investors to ensure compliance to these standards.

Our products

We fulfill our mission by providing political risk insurance guarantees to private sector investors

and lenders. MIGA’s guarantees protect investments against-non-commercial risks and can help

investors obtain access to funding sources with improved financial terms and conditions. Our

unique strength is derived from our standing as a member of the World Bank Group and our

structure as an international organization with our shareholders including most countries of the

world. Since our inception in 1988, MIGA has issued more than $28 billion in political risk

insurance for projects in a wide variety of sectors, covering all regions of the world.We also conduct research and share knowledge as part of our mandate to support foreign direct

investment into emerging markets. This underscores our position as a thought leader and source

of pertinent information for the political risk insurance community.

Our team

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Our people have extensive experience in political risk insurance, with backgrounds including

banking and capital markets, environmental and social sustainability, project finance and sector

specialties, and international law and dispute settlement. Meet our senior management.

Our shareholders

A Council of Governors and a Board of Directors representing our member countries guide the

programs and activities of MIGA. MIGA’s corporate powers are vested in the Council ofGovernors, which delegates most of its powers to a Board of Directors. Voting power is

weighted according to the share of capital each director represents. The directors meet regularly

at the World Bank Group headquarters in Washington, DC, where they review and decide on

investment projects and oversee general management policies.

The International Centre for Settlement of Investment Disputes (ICSID)

ICSID is the world’s leading institution devoted to international investment dispute settlement. Ithas extensive experience in this field, having administered the majority of all internationalinvestment cases. States have agreed on ICSID as a forum for investor-State dispute settlementin most international investment treaties and in numerous investment laws and contracts.ICSID was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). The ICSID Convention isa multilateral treaty formulated by the Executive Directors of the World Bank to further theBank’s objective of promoting international investment. ICSID is an independent, depoliticizedand effective dispute-settlement institution. Its availability to investors and States helps to promote international investment by providing confidence in the dispute resolution process.ICSID provides for settlement of disputes by conciliation, arbitration or fact-finding. TheICSID process is designed to take account of the special characteristics of internationalinvestment disputes and the parties involved, maintaining a careful balance between the interestsof investors and host States. Each case is considered by an independent Conciliation Commissionor Arbitral Tribunal, after hearing evidence and legal arguments from the parties. A dedicatedICSID case team is assigned to each case and provides expert assistance throughout the process.More than 490 such cases have been administered by ICSID to date.ICSID also promotes greater awareness of international law on foreign investment and the ICSID process. It has an extensive program of publications, including the leading ICSID Review- Foreign Investment Law Journal and it regularly publishes information about its activities andcases. ICSID staff organize events, give numerous presentations and participate in conferenceson international investment dispute settlement worldwide.

The International Monetary Fund (IMF) is an organization of 188 countries, working to foster

global monetary cooperation, secure financial stability, facilitate international trade, promote

high employment and sustainable economic growth, and reduce poverty around the world.

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Why the IMF was created and how it works

The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New

Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a

framework for economic cooperation to avoid a repetition of the competitive devaluations that

had contributed to the Great Depression of the 1930s.

The IMF's responsibilities: The IMF's primary purpose is to ensure the stability of the

international monetary system — the system of exchange rates and international payments that

enables countries (and their citizens) to transact with each other. The Fund's mandate was

updated in 2012 to include all macroeconomic and financial sector issues that bear on global

stability.

Functions of IMF

The IMF’s fundamental mission is to ensure the stability of the international monetary system. It

does so in three ways: keeping track of the global economy and the economies of member

countries; lending to countries with balance of payments difficulties; and giving practical help to

members.Surveillance

The IMF oversees the international monetary system and monitors the economic and financial

policies of its 188 member countries. As part of this process, which takes place both at the global

level and in individual countries, the IMF highlights possible risks to stability and advises on

needed policy adjustments.

Lending

A core responsibility of the IMF is to provide loans to member countries experiencing actual or

potential balance of payments problems. This financial assistance enables countries to rebuild

their international reserves, stabilize their currencies, continue paying for imports, and restore

conditions for strong economic growth, while undertaking policies to correct underlying problems. Unlike development banks, the IMF does not lend for specific projects.

Technical Assistance

The IMF helps its member countries design economic policies and manage their financial affairs

more effectively by strengthening their human and institutional capacity through technical

assistance and training. The IMF aims to exploit synergies between technical assistance and

training — which it calls capacity development — to maximize their effectiveness.

Organization and FinanceThe IMF has a management team and 17 departments that carry out its country, policy,

analytical, and technical work. One department is charged with managing the IMF’s resources.This section also explains where the IMF gets its resources and how they are used.

Management

The IMF has a Managing Director, who is head of the staff and Chairperson of the Executive

Board. The Managing Director is appointed by the Executive Board for a renewable term of five

years and is assisted by a First Deputy Managing Director and three Deputy Managing Directors.

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Staff

The IMF’s employees come from all over the world; they are responsible to the IMF and not to

the authorities of the countries of which they are citizens. The IMF staff is organized mainly into

area; functional; and information, liaison, and support responsibilities.

IMF resources Most resources for IMF loans are provided by member countries, primarily through their

payment of quotas.

Quotas

Quota subscriptions are a central component of the IMF’s financial resources. Each member

country of the IMF is assigned a quota, based broadly on its relative position in the world

economy.

Special Drawing Rights (SDR)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member

countries’ official reserves.Gold

Gold remains an important asset in the reserve holdings of several countries, and the IMF is still

one of the world’s largest official holders of gold.

Borrowing arrangements

While quota subscriptions of member countries are the IMF's main source of financing, the Fund

can supplement its quota resources through borrowing if it believes that they might fall short of

members' needs.
http://www.imf.org/external/mmedia/view.aspx?vid=1069384221001http://www.imf.org/external/mmedia/view.aspx?vid=1069384221001http://www.imf.org/external/np/exr/facts/finfac.htmhttp://www.imf.org/external/np/exr/facts/finfac.htmhttp://www.imf.org/external/np/exr/facts/quotas.htmhttp://www.imf.org/external/np/exr/facts/quotas.htmhttp://www.imf.org/external/np/exr/facts/sdr.htmhttp://www.imf.org/external/np/exr/facts/sdr.htmhttp://www.imf.org/external/np/exr/facts/gold.htmhttp://www.imf.org/external/np/exr/facts/gold.htmhttp://www.imf.org/external/np/exr/facts/gabnab.htmhttp://www.imf.org/external/np/exr/facts/gabnab.htmhttp://www.imf.org/external/np/exr/facts/gabnab.htmhttp://www.imf.org/external/np/exr/facts/gold.htmhttp://www.imf.org/external/np/exr/facts/sdr.htmhttp://www.imf.org/external/np/exr/facts/quotas.htmhttp://www.imf.org/external/np/exr/facts/finfac.htmhttp://www.imf.org/external/mmedia/view.aspx?vid=1069384221001

business environment unit 10

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