The WTO: An Analysis of Impact, Change and Prospects, Michael R. Czinkota & Valbona Zeneli, Journal of Business Administration Research

In 1948, after years of negotiations, more than 50 nations signed the Havana Charter to create the International Trade Organization (ITO). But in the 1950s, President Truman decided not to resubmit the ITO charter to Congress for ratification, due to perceived threats to national sovereignty and the danger of too much ITO intervention in markets (Guide, 1994). The result was the much more limited General Agreement on Tariffs and Trade (GATT), which brought rules and regulations to world trade.

A breakthrough occurred in 1994. Negotiators conceived of a totally new organization, which the Uruguay Round (1986-1994) negotiations agreed on—the World Trade Organization (WTO). The crucible of the WTO’s formation and success was how it would be able to manage the changes that had occurred in international trade and its public sector structure since the Havana Charter of 1948. The context at the time of the Charter’s passage was that of a gradual increase in overall trade, combined with several powerful macro- and microeconomic shifts such as increased globalization, the emergence of new regional and plurilateral trade initiatives, and the global activities of Asia. As a key trade driver, financial flows overtook trade flows in determining exchange rates.

Since 1948, world trade has grown very rapidly, with trade in goods growing yearly by an average of 6 percent a year in real terms (WTO, 2016). In 1948, total world trade was valued at just above $58 billion, with the United States accounting for 34 percent of free world trade flows. Japan’s imports exceeded U.S. exports by 160 percent (Yearbook 1956). By 1994, world trade exceeded $4 trillion and the United States had a share which had declined to  12 percent. Almost twenty years later, in 2013, total world trade in goods and services amounted to $20 trillion. The United States held a world market share of 19 percent at $3,848 billion, heavily influenced by a high level of imports. Germany’s share was 13 percent and Japan’s $1,547 billion represented a share of 7 percent (OECD, 2014). The United States, the European Union and China have been the three largest global players for international trade since 2004 when China passed Japan (Eurostat, 2016).

On the microeconomic front, there had been exponential transformations of computer technology, expanded communication via the Internet, and major supply chain extensions. Also considered, but questionable even at the peak of the momentum and optimism surrounding the Uruguay Round, was whether the WTO could effectively handle social issues including labor laws, competition, and emigration.

Today, with aspiring provisions and a rejuvenated framework of multilateralism enabled by global political shifts brought on by the fall of communism, the WTO seeks to reduce tariffs, eliminate trade barriers and quotas, and expand coverage of services, intellectual property, foreign direct investment, and agriculture.

In light of recent changes in the trade context and decreased multilateralism, the WTO should become more inclusive, introduce smaller and more limited negotiation events based on subject areas, and transition into a more social-network based platform to include civil society and private sector in rule-making and agenda setting of future trade agreements.

Professor Michael R. Czinkota,  Georgetown University Washington D.C., USA

Professor Valbona Zeneli, Marshall Center, Garmisch, Germany

Full article can be found at: http://www.sciedupress.com/journal/index.php/jbar/article/view/9672

Birmingham Insights on Asia — (2) The Impact of the Government Policy on the Small and Medium-Sized Enterprises’ (SMEs) Export Activities in China

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This comment is based on Zheng Guan’s Dissertation written under the supervision of Prof. Michael Czinkota at the University of Birmingham, UK.
Recommendations for the Government Sector
1) Enhance SMEs’ export assistance and promotion activities. The government should develop more preferential export policies

Birmingham Insights on Asia — (1) The Impact of the Government Policy on the Small and Medium-Sized Enterprises’ (SMEs) Export Activities in China

Gallery

This gallery contains 1 photo.

This comment is based on Zheng Guan’s Dissertation written under the supervision of Prof. Michael Czinkota at the University of Birmingham, UK.
On a year-to-year comparison of export activities, most of firms surveyed exported more. However due to increased costs caused

OECD proposals to have impact on transfer pricing in India

NEW DELHI: Once implemented, the measures proposed by OECD to curb tax avoidance activities would have “far reaching implications” in India’s transfer pricing landscape as well as a significant impact on US multinationals with overseas operations, according to experts.

Paris-based Organisation for Economic Cooperation and Development (OECD), which sets the global tax standards, published a seven-point BEPS ( Base Erosion and Profit Sharing) recommendations on Tuesday.

Companies having international operations would have to work towards not only adhering to compliance obligations but also review the operating structures in various jurisdictions, he said in a statement.
The proposals, which have been prepared after extensive consultations with various stakeholders including G20 nations.

Read Full Article in The Economic Times

The Rationale for Export Promotion : Part 1

Exports are important. Yet, why should firms be enticed into exporting through the use
of public funds? Profit opportunities for exporters should be enough of an
incentive for firms to export. To explore this issue, I will use our Georgetown University research, which was  initially published in the AMA  Journal of  International Marketing.  First off, it is helpful to understand the export process within the firm. Typically, firms evolve along different stages to become experienced exporters. They start out being uninterested in things international. Management frequently will not even fill an unsolicited export order. Should  international market stimuli continue over time, however, a firm may move to the stage of export awareness, or even export interest. Management will begin to accumulate information about international markets and may consider the feasibility of exporting. At the export trial stage, the firm will fill selected export orders, serve a few customers, and expand into countries that are geographically close or culturally similar to the home country. At the export
evaluation stage, firms consider the impact of exporting on overall corporate
activities. Unless initial expectations are met, the firm is likely to discontinue its export efforts, seek alternative international growth opportunities or restrict itself to the domestic market. Success will lead the firm over time, to become an export adapter, make frequent shipments to many customers in more countries, and incorporate international considerations into its planning.

By: Michael R. Czinkota