MGT520 International Business Assignment Solution Spring 2013

As this is an era of globalization and international business requires
removing barriers, restrictions and ensuring safety in business activities
while trading goods, services, technology, and sharing investments among
different countries. World Trade Organization (WTO) which is an updated
form of General Agreement on Tariffs and Trade (GATT) is formed in
1990’s after successive rounds of negotiations and legislations. WTO is
considered as the principal international institution, responsible for laying
down rules for the smooth conduct of trade in goods and services among
Real time scenario:
Critics say that there are some grey areas in WTO which provide more space
and opportunities for developed countries as compared to developing
countries; as a result they are getting more benefits as compared to
developing countries in all forms of trade. In world’s economy agriculture is
placed as a pillar. It contributes a larger amount of exports and provides
employment to the skilled and unskilled labor in the developing countries.
Agriculture related issues have been addressed in the following sub
agreements by WTO.
1. Agreement on Agriculture (AOA): It covers the issues of domestic
support, market access and export competition.
2. Agreement on Application of Sanitary and Phyto-sanitary Standards
(SPS): It deals with Health and disease related issues
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3. Agreement on Technical Barriers to Trade (TBT): It deals with
standards, certification procedures which include packaging, marking and
labeling requirements.
4. Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPs): IT deals with Patents and copyrights, plant breeders’ rights.
The overall result of agricultural liberalization and implementation of the
Agreement on Agriculture (AOA) along with other sub agreements
mentioned above is not positive. As
• There has been a tendency in the developed countries to erect nontariff
trade barriers against the products of developing countries.
• Developing countries exports suffer due to low profit margins and
price fluctuations in international markets.
• Greater proportion of the agricultural land and farms leads to
increased productivity which increases the local competition, unemployment
and poverty.
• Prices of food items are kept artificially low to cater to the needs of
low paid urban labor and middle class people.
• They face tough resistance to reach the markets of developed
countries on the basis of food, human safety, animal, and plant health and
safety standards.
• Developing countries fear that their centuries old farm practices will
become dependent on multinationals. This issue rises due to intellectual
property rights for seeds and plant varieties. Multinational seed companies
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have now started claiming patent rights over the seed produced through their
research by introducing some new gene sequence.
Pakistan is an agrarian country and facing the same sort of issues like many
other developing countries. Statistics show that in spite of having a potential
comparative advantage over developed countries in the production of many
agricultural and food products such as cotton, rice, fruits, flowers, meat and
other dairy products, Pakistan has not been able to get the maximum benefits
from the recent developments and legislations occurred at WTO.
How Pakistan can get the optimum benefits (exports with improved profit margins, readily acceptance of products at international level by value addition and balanced imports from developed countries) by proving itself a dedicated member of WTO and mending its infrastructure (local resource, standards, country laws and economic policies).
A WTO rules are hardly negotiable here; provide your answer in context to
local infrastructure which gives an idea to capitalize the competitive edge we
have. For the complete information about Pakistan’s agriculture statistics
(local production of crops, imports and exports) and WTO’s sub agreements
(AOA, SPS, TBT, TRIPS) you can visit the following websites.
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