MBA 3rd Sem WTO and International Regulatory Environment

WTO and International Regulatory Environment

Q1. Fair trade and free trade must combine to present ‘globalization with a human face.’Discuss this statement with reference to the special.
Q2. ‘Non Discrimination’ is an important principle in the working of WTO. List the important areas when this principle is implemented with examples.
Q3. MFN is an important WTO concept. What is the main derogation of the MFN principle? Exceptions to the MFN Principle Discuss with examples.
Q4. (a) What are main stages in a typical dispute settlement process at WTO? Please list and describe briefly. Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise), which consists of all WTO members. The Dispute Settlement Body has the sole authority to establish “panels” of experts to
consider the case, and to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling.
(b) Give the event breakdown of a major dispute settlement case at WTO, for example, India’s case on QRs or India’s case on IPRs.
Q5. Write short notes on following
(a)The Bound tariff rate
(b) Applied rate of tariffs
(c) Autonomous liberalization
Q6. Regional trade Agreements (RTA) have emerged as the main instrument if trade promotion in today’s world after the failure of the Doha process. What are the advantages of RTAs compared to MTAs (Multiateral trade agreements)? Does India stand to gain from MTAs?
Q7. Environment is a hot topic in the world i.e. WTO has taken this subject on board as one of the key points in negotiations during the Doha Round. Has environment become a ground for protectionism? Discuss with reference to the US tuna dolphin case.
Q8. China’s accession to WTO was the major event at the Doha Ministerial at the turn of the century. What were the major gains of China following accession? What were the significant concessions and special measures signed by China as conditions to its entry into WTO?

Case Study

Electrolux is Sweden’s largest manufacturer of electrical household appliances and was one of the world’s pioneers in the marketing of vacuum cleaners. However, not all the products the Electrolux name are controlled by the Swedish firm. Electrolux vacuum cleaner sold and manufacturer in the United States, for example, have not been connected
with the Swedish Firm since the U.S subsidiaries were sold in the 1960s. The Swedish Firm reentered the U.S. market in 1974 by purchasing National Union Electric, which manufacturers Eureka vacuum cleaners.

Electrolux pursued its early international expansion largely to gain economies of scale through additional sales. The Swedish market was simply too small to absorb fixed costs as much as the home markets for competitive firms from larger countries. When additional sales were not possible by exporting, Electrolux was still able to gain certain
scale economies through the establishment of foreign production. Research and development expenditures and certain administrative costs could thus be spread out over the additional sales made possible by foreign operations. Additionally, Electrolux concentrated on standardized production to achieve further scale economies and
rationalization of parts.

Until the late 1960s, Electrolux concentrated primarily on vacuum cleaners and the building of its own facilities in order to effect expansion. Throughout the 1970s, though, the firm expanded largely by acquiring existing firms whose product lines differed from those of Electrolux. The compelling force was to add appliances lines to complement
those developed internally. Its recent profits ($220 million in 1983) have enabled Electrolux to go an acquisitions binge. Electrolux acquired two Swedish firms that made home appliances and washing machines. Electrolux management felt that it could use its existing foreign sales networks to increase the sales of those firms in 1973, Electrolux
acquired another Swedish firm, Facit, which already had extensive foreign sales and facilities. Vacuum cleaner producers were acquired in the United States and in France; and to gain captive sales for vacuum cleaner. Electrolux acquired commercial cleaning service firms in Sweden and in the United States. A French Kitchen equipment producer,
Arthur Martin, was bought, as was a Swiss home appliance firm. Therma, and a U.S. cooking equipment manufacturer, Tappan.

Except the Facit purchase, the above acquisitions all involved firms that produced complementary lines that would enable the new parent to gain certain scale economies, However, not all the products of acquired firms were related, and Electrolux sought to sell off unrelated businesses. In 1978 for example, a Swedish firm, Husgvarna, was bought because of its kitchen equipment lines. Electrolux was able to sell Husqvarna’s motorcycle line but could not get a good price for the chain saw facility. Reconciled to being in the chain saw business. Electrolux then acquired chain saw manufacturers in Canada and Norway, thus becoming one of the world’s largest chain saw producers. The above are merely the most significant. Electrolux acquisitions: the firm made approximately fifty acquisitions in the 1970s.

In 1980, Electrolux announced a takeover that was very different from those of the 1970s. It offered $175 million, the biggest Electrolux acquisition, for Granges Sweden’s leading metal producer and fabrication Granges was itself a multinational firm (1979 sales of $ 1.2 billion) and made about 50 percent of its sales outside of Sweden. The managing Directors of the two firms indicated that the major advantage of the takeover would be the integration of Granges aluminum, copper plastic, and other materials into Electrolux production of appliances. Many analysts felt that the timing of Electrolux’s bid was based on indications that Baijerinvest, a large Swedish conglomerate, wished to acquire a non–ferrous matels mining company. Other analysis felt that Elctrolux would be better off to continue international horizontal expansion as it had in the 1970s. The analysts pointed to large appliance makers such as AEG Telefunken of West Germany that were likely candidates for takeover because of recent poor performance.


1. What are Electriox’s reasons for direct investment?
2. How has Electrolux’s strategy changed overtime? How has this affected its direct investment activities?
3. What do you see as the main advantage and possible problems of expanding internationally primarily through acquisitions as opposed to building one’s own facilities?
4. Should Electrolux take over Granges?

Section C

1. Which of the following are not third-world regions?
2. Which of the following countries are not newly industrialized countries (NICs)?
3. Which country is not a transitional economy
4. Development economics focuses primarily on the poorest ___________ of the world’s
5. The poorest region of the world is
6. Of the world’s population, what portion lives in developing countries?
7. In which of the following countries would you expect material lifestyles to be most like those in the United States?
8. Compared to the income of the family of Balayya discussed in the text, the Smiths’ family income was roughly
9. Which of the following could be considered critical questions in development economics?
10. Which of the following characteristics are most likely found in developing countries?
11. Which of the following could not be considered a major economic system?
12. One classification of development levels used by the World Bank divides countries into three group on the basis of GNP per capita. They are
13. The World Bank’s GNP per capita classification for low-income, middle-income and high income countries respectively is
14. OPEC is the
15. The Paasche index uses _______________ weights.
16. Which of the following is not a problem in comparing developed and developing countries’ GNP?
17. The University of Pennsylvania researchers Summers and Heston compute the price level of GDP as the ratio of purchasing power parity (PPP) exchange rate to the actual exchange rate where
18. PPP is
19. The Physical Quality of Life Index (PQLI) combines three indicators. They are
20. Which of the following is not one of the Newly Industrialized Countries (NICs)?
21. According to the text, basic needs include
22. Which of the following statement is not true about LDCs?
23. Imitating labor standards from rich countries in LDCs may increase
24. Which of the following did Mahatma Gandhi, non-violent politician and leader of India’s nationalist movement, not advocate?
25. Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are
26. Which of the following is not TRUE?
27. Dani Rodrik points out that
28. Which of the following statement is NOT true about OECD aid?
29. Japan’s aid programs
30. Aid or official development assistance (ODA) includes
31 I = S + F
32. MNCs can help the developing country to
33. The balance on current account
34. Bilateral aid
35. International trade and specialization are determined by
36. India has a comparative cost advantage in
37. Japan has comparative cost in
38. Factor proportions theory is also known as the
39. The product cycle model indicates that while a product requires _______labor in the beginning, later as markets grow and techniques become common knowledge, a good becomes standardized, so that lesssophisticated countries can mass produce the item with ________labor.
40. The infant industry arguments refers to a tariff designed to

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