6. HIERARCHY OF INTERNATIONAL INSTITUTIONS IN GLOBAL BUSINESS SYSTEM
Global Business System
TRADING ENVIRONMENT Trade within a country – GSP, EU Bilateral Trade Treaty - trade between two countries Regional Trade Treaty - trading bloc and REIs Multilateral Trading – WTO, UNCTAD, ITC
Unilateral Preferential Trading Arrangement • Generalized System of Preferences (GSP): Special import system of industrialized developed countries for the goods originating and exported from developing nations. A tariff concession approved by UNCTAD • GSP , is a preferential tariff system which provides for a formal system of exemption from the more general rules of the World Trade Organization (WTO) • Objectives of GSP – To assist developing countries to increase foreign exchange earnings – To foster industrialization of developing countries – To accelerate overall economic growth of developing countries
AGOA • AGOA: African Growth and Opportunity Act, or AGOA is a legislation to assist the economies of sub-Saharan Africa and to improve economic relations between the United States, and the region – approved by US Congress in May 2000 • Agricultural products is a promising area for AGOA trade • African countries in meeting U.S. sanitary and phytosanitary standards • The U.S. government is providing technical assistance to AGOA eligible countries • Nigeria and Angola are the largest exporters under AGOA • Every year an AGOA Forum is held, which brings together government leaders and private sector stakeholders from Africa and the United States • The legislation authorized the President of the United States to determine which sub-Saharan African countries would be eligible for AGOA on an annual basis - The eligibility criteria is to improve labor rights and movement toward a market- based economy which really helped a lot
The Lome Agreement/Cotonou Agreement of EU/ACP • The Lomé Convention is a trade and aid agreement between the European Union (EU) and 71 African, Caribbean, and Pacific (ACP) countries , first signed in February 1975 in Lomé , Togo • EU: European Union is the largest and strongest economic grouping in Europe, with common currency, bank and trade representative • ACP: The group of African, Caribbean, and Pacific countries are signatories of the Lome Convention with the European Commission. This guaranteed Europe itself regular supplies of raw materials, & to maintain privileged position.
Bilateral Trade and Investment Treaties • Provides fair trade relations between two countries • Provides assured market and export earnings • Sharing of technological progress • Assurances of supplies with guaranteed prices • Strong links between exporter and importer • It can discriminate to other county than that of the two contracting parties • A stronger nation might exact unreasonable terms from a weaker one • Primary commodity producers have low bargaining power as there is lack of storage and urgent need for export proceeds for such countries.
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