MB0050

RESEARCH METHODOLOGY
Q1. Discuss the pros and cons of internationalization.
PROS OF INTERNATIONALISATION
SURVIVAL
Because most of the countries are not as fortunate as the United States in terms of market size,
resources, and opportunities, they must trade with others to survive; trade and adopt the geocentric
perspective. International competition may not be matter of choice when survival is at stake.
However, only firms with previously substantial market share and international experience could
expand successfully.
GROWTH OF OVERSEAS MARKETS
Developing countries, in spite of economic and marketing problems, are excellent markets.
According to a report prepared for the U.S. CONGRESS by the U.S. trade representative, Latin
America and Asia/Pacific are experiencing the strongest economic growth.
SALES AND PROFIT
Foreign markets constitute a larger share of the total business of many firms that have wisely
cultivated markets aboard. Many large U.S. companies have done well because of their overseas
customers. IBM and Compaq, foe ex, sell more computers aboard than at home. According to the
US dept of commerce, foreign profits of American firms rose at a compound annual rate of 10%
between 1982 and 1991, almost twice as fast as domestic profits of the same companies.
DIVERSIFICATION
Demand for mast products is affected by such cyclical factors as recession and such seasonal factors
as climate. The unfortunate consequence of these variables is sales fluctuation, which can frequently
be substantial enough to cause layoffs of personnel.
INFLATION AND PRICE MODERATION
The benefits of export are readily self-evident. Imports can also be highly beneficial to a country
because they constitute reserve capacity for the local economy.
CONS OF INTERNATIONALISATION
What make international business strategy different from the domestic are the differences in the
marketing environment. The important special problems in international marketing are given below:

POLITICAL AND LEGAL DIFFERENCES

The political and legal environment of foreign markets is different from that of the domestic. The
complexity generally increases as the number of countries in which a company does business
increases. It should also be noted that the political and legal environment is not the same in all
provinces of many home markets.
CULTURAL DIFFERENCES
The cultural differences, is one of the most difficult problems in international marketing. Many
domestic markets, however, are also not free from cultural diversity.
ECONOMIC DIFFERENCES
The economic environment may vary from country to country.
DIFFERENCES IN THE CURRENCY UNIT
The currency unit varies from nation to nation. This may sometimes cause problems of currency
convertibility, besides the problems of exchange rate fluctuations. The monetary system and
regulations may also vary.
DIFFERENCES IN THE LANGUAGE
An international marketer often encounters problems arising out of the differences in the
language. Even when the same language is used in different countries, the same words of terms may
have different meanings. The language problem, however, is not something peculiar to the
international marketing. For example: the multiplicity of languages in India.
DIFFERENCES IN THE MARKETING INFRASTRUCTURE
The availability and nature of the marketing facilities available in different countries may vary
widely. For example, an advertising medium very effective in one market may not be available or
may be underdeveloped in another market.
TRADE RESTRICTIONS
A trade restriction, particularly import controls, is a very important problem, which an international
marketer faces.
HIGH COSTS OF DISTANCE
When the markets are far removed by distance, the transport cost becomes high and the time
required for affecting the delivery tends to become longer. Distance tends to increase certain other
costs also.

DIFFERENCES IN TRADE PRACTICES

Trade practices and customs may differ between two countries.

Q2. Explain the relationship between law, business and international law. How is
international law considered to be mixed in nature?
RELATIONSHIP BETWEEN LAW, BUSINESS AND INTERNATIONAL LAW
One aspect of the Rule of Law requires that all persons adhere to the rules prescribed by law. When
one enters into the realm of business, laws which have been promulgated by the Courts (called the
Common Law) and by the legislature (called Statutory Law) can leave one in a flummoxed
state. This may be in part because whilst some of the laws may consist of common sense to some,
such as a promise should be kept, other laws are more technical and difficult to grasp, for example
the statutory duty to pay Central Provident Fund contributions and at what rate. Obviously, the
experienced business person would know more about legal rules than the less experienced business
person: but in the eyes of the law, all persons ought to adhere to the legal rules.
There is another area of law which affects the businesss trade and financing facilities. We may call
that Banking Law. If the international sale of goods is contemplated, there would be a need to
issue a Letter of Credit in support of f.o.b or c.i.f (or variations thereof) contracts. As one of the
documents used in international sale of goods is a Bill of Lading and another is the insurance policy
for the goods, the rights of parties are also dependent on the law governing these documents. So for
example, in the unfortunate event of damage caused to goods during transit, and assuming the
risk has passed to the buyer, the buyer will have to call on the insurance policy to make good any
losses. The buyer then enters into the realm of insurance law.
If one is not in the business of the sale of goods but offers services or construction work, then that
business must cope with, not only the contractual duties and obligations stipulated in contract, he
must also contend with the duty of care imposed by tort law. Professionals, who make negligent
mis-statements that are relied upon, will usually be liable for losses resulting (subject to the rules of
remoteness and causation). In construction work, it is always clearly the case that poor
workmanship can give rise to liability in contract and in tort.
The above heads of law which a business person should be aware of is by no means exhaustive.
Furthermore, other rules may exist which do not come clearly as a matter of law. If for example,
one was an architectural firm, that business would also need to conform to any professional rules
that exist within that profession. A business person needs to be aware of his obligations and duties,

and more importantly his rights, in the law. Only in this way does he ensure that commerce is
carried out directly in accordance with the law, and it is submitted, the most profitable way.
When examining the relationship between international law and municipal law, it is important to
analyse the clash between dualism and monism. Both concepts entail the concurrent existence of
international and domestic law.
The question to be assessed is the nature of the co-habitation of these legal orders. Is there a legal
order which supersedes the other? Or do they exist cooperatively and non-contentiously? Under the
dualism doctrine, a clear distinction is created between international and municipal law, establishing
them as separate legal orders which regulate different subjects. Thus, while international law
involves the regulation of the relationship between sovereign states, domestic law confers rights to
persons and entities within the sovereign state.
It is therefore important to point out that under the dualism doctrine, neither legal order has an
absolute, undeniable power to create, alter or challenge the rules of the other system. In that regard,
the use of international law in domestic courts can only be allowed through an instrument in
municipal law which confers rights to that effect. According to the dualism principle, in a case of
conflict between municipal and international law, the domestic courts would apply the former.
In contrast, monism asserts the supremacy of international law within the municipal sphere and
describes the individual as a subject of international law. The doctrine is established when
international and municipal law form a part of the same system of norms which are based on
general notions of fairness. The latter concept somewhat translates into an alternative theory which
entails that international and municipal law are superseded by a general legal order which rests
upon the rules of natural law.

Q3. Discuss the laws related to regulation and promotion of foreign trade in
India.?
Imports and exports are the two important components of a foreign trade. Foreign trade is the
exchange of goods and services between the two countries, across their international borders.
'Imports' imply the physical movement of goods into a country from another country in a legal
manner. It refers to the goods that are produced abroad by foreign producers and are used in the
domestic economy to cater to the needs of the domestic consumers. Similarly, 'exports' imply the
physical movement of goods out of a country in a legal manner. It refers to the goods that are
produced domestically in a country and are used to cater to the needs of the consumers in foreign
countries. Thus, the imports and exports have made the world a local market. The country which is
purchasing the goods is known as the importing country and the country which is selling the goods
is known as the exporting country. The traders involved in such transactions are importers and
exporters respectively.
In India, exports and imports are regulated by the Foreign Trade (Development and Regulation) Act,
1992, which replaced the Imports and Exports(Control) Act, 1947, and gave the Government of
India enormous powers to control it. The salient features of the Act are as follows:It has empowered the Central Government to make provisions for development and regulation of
foreign trade by facilitating imports into, and augmenting exports from India and for all matters
connected therewith or incidental thereto.
The Central Government can prohibit, restrict and regulate exports and imports, in all or specified
cases as well as subject them to exemptions.
It authorizes the Central Government to formulate and announce an Export and Import (EXIM)
Policy and also amend the same from time to time, by notification in the Official Gazette.
It provides for the appointment of a Director General of Foreign Trade by the Central Government
for the purpose of the Act. He shall advise Central Government in formulating export and import
policy and implementing the policy.
Under the Act, every importer and exporter must obtain a 'Importer Exporter Code Number' (IEC)
from Director General of Foreign Trade or from the officer so authorised.
The Director General or any other officer so authorised can suspend or cancel a licence issued for
export or import of goods in accordance with the Act. But he does it after giving the licence holder a
reasonable opportunity of being heard.

As per the provisions of the Act , the Government of India formulates and announces an Export and
Import policy (EXIM policy) and amends it from time to time. EXIM policy refers to the policy
measures adopted by a country with reference to its exports and imports. Such a policy become
particularly important in a country like India, where the import and export of items plays a crucial
role not just in balancing budgetary targets, but also in the over all economic development of the
country. The principal objectives of the policy are:To facilitate sustained growth in exports of the country so as to achieve larger percentage share in
the global merchandise trade.
Besides this Act, there are some other laws which control the export and import of goods. These
include:Tea Act,1953
Coffee Act, 1942
The Rubber Act, 1947
The Marine Products Export Development Authority Act, 1972
The Enemy Property Act, 1968
The Export (Quality Control and Inspection) Act, 1963
The Tobacco Board Act, 1975

Q4. Write short notes on:

a. Export cartels
b. Customs valuation?
Export cartels
Export cartels are exempted from the competition laws of most countries. While some scholars and
several WTO members have recently condemned such cartels, others have argued that they allow
efficiency gains that actually promote competition and trade. This paper examines the various issues
involved, with special reference to developing countries and to recent discussions on trade and
competition policy. After summarising the contending views on export cartels, and also the scanty
theoretical literature on the subject, it reviews the treatment of such cartels in various jurisdictions
and the limited empirical evidence that is available on their prevalence, efficiency justifications, and
effects on international trade. Insights from economic theory are then applied to the arguments for
and against export cartels, suggesting criteria that could help to determine their validity and an
importing countrys best response. The paper concludes that while importing countries should
evaluate foreign export cartels under a rule of reason, most of them will be constrained by a lack
of technical expertise and limited enforcement capacity. It suggests a novel approach, based on
parallels with anti-dumping procedures, which would strengthen their hands.

Customs valuation
Customs Valuation is the process where customs authorities assign a monetary value to a good or
service for the purposes of import or export. Generally, authorities engage in this process as a means
of protecting tariff concessions, collecting revenue for the governing authority, implementing trade
policy, and protecting public health and safety. Custom duties, and the need for customs valuation,
have existed for thousands of years among different cultures, with evidence of their use in the
Roman Empire, the Han Dynasty and the Indian sub-continent. The first recorded customs tariff
was from 136 in Palmyra, an oasis city in the Syrian desert. Beginning near the end of the 20th
century, the procedures used throughout most of the world for customs valuation were codified in
the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade The
primary basis for customs valuation under the Agreement is transaction value as defined in Article
1. Article 1 defines transaction value as the price actually paid or payable for the goods when sold
for export to the country of importation. Article I must be read together with Article 8, which lets
Customs authorities make adjustments to the transaction value in cases where certain specific parts
of the good - considered to be a part of the value for customs purposes - are incurred by the buyer
but are not actually included in the price paid or payable for the imported goods.

Q5. How does the TRIPs agreement protect IPRs? What are the 7 Intellectual
Properties defined in TRIPs?
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international
agreement administered by the World Trade Organization (WTO) that sets down minimum
standards for many forms of intellectual property (IP) regulation as applied to nationals of other
WTO Members. It was negotiated at the end of the Uruguay Round of the General Agreement on
Tariffs and Trade (GATT) in 1994.
Intellectual property refers to rights in creations of the human mind which arise under the laws of
patents, copyrights, trademarks, trade secrets, unfair competition and related laws. Article 2 of the
Convention Establishing the World Intellectual Property Organization (WIPO) defines intellectual
property as follows:
"intellectual property" shall include the rights relating to:
- literary, artistic and scientific works;
- performances of performing artists, phonograms, and broadcasts;
- inventions in all fields of human endeavor;
- scientific discoveries;
- industrial designs;
- trademarks, service marks, and commercial names and designations;
- protection against unfair competition; and
- all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic
fields.
Intellectual property rights (IPRs) are the legal rights given to creators of intellectual property. IPRs
usually give the creator of intellectual property the right to exclude others from exploiting the
creation for a defined period of time. Intellectual property laws provide the incentives that foster
innovation and creativity, and strive to ensure that the competitive struggle is fought within certain
bounds of fairness. The protection of IPRs contributes significantly to technological progress,
competitiveness of businesses and our country's well-being.

The agreement covers five broad issues:

how basic principles of the trading system and other international intellectual property

agreements should be applied

how to give adequate protection to intellectual property rights
how countries should enforce those rights adequately in their own territories
how to settle disputes on intellectual property between members of the WTO
special transitional arrangements during the period when the new system is being
introduced.

Q5. Which are the various kinds of investment treaties and how do they
function
International investment rulemaking is taking place at the bilateral, regional, interregional and
multilateral levels. It requires policymakers, negotiators, civil society and other stakeholders to
be well informed about foreign direct investment, international investment agreements (IIAs)
and their impact on sustainable development.
UNCTAD's Work Programme on IIAs actively promotes international investment rules that
effectively foster sustainable development and inclusive growth.
The main aspects of this work are:

to monitor trends, identify key emerging issues and provide cutting-edge knowledge on

IIAs from a sustainable development perspective;

to deliver trainings, seminars and workshops and offer ad-hoc advice to strengthen the

capacity of beneficiaries in handling the complexities of the IIA regime; and

to facilitate the sharing of best practices and experiences with the view to fostering
global investment governance.

FUNCTIONS
Bilateral Investment Treaties (BITs) are the primary legal mechanism protecting foreign direct
investment (FDI) around the world. BITs are thought to encourage FDI by establishing a broad set
of investors rights and by allowing investors to sue a host state in an international tribunal if these
rights are violated. Perhaps surprisingly, the empirical literature connecting BITs to FDI flows has
produced conflicting results. Some papers have found that BITs attract FDI, while others have
found no relationship or even that BITs repel FDI. Extant literature has often suggested that BITs
may encourage investment from both protected and unprotected investors, yet the literature has not
allowed for a full evaluation of this claim. nstitutionalist authors have argued that treaties can be
designed to induce compliance. An effective treaty is costly enough to shirk that the commitments
made in the treaty are necessarily credible. BITs could function as an effective hands-tying
mechanism if, and only if, the ex post cost of expropriating (and not paying the resulting award) is

high enough that countries will refrain from doing so. Elkins, Guzman, and Simmons (2006)
suggest several ways that BITs tie the hands of host states through ex post costs. First, BITs dispute
settlement procedures make the expectations of the host state explicit: any action deemed
expropriation by the adjudicating body must be compensated with the prescribed award. This
disallows states from claiming that no expropriation has taken place when it has, or that proper
compensation has been rendered when it has not. Second, by involving the home state of the
investor in a dispute, BITs raise the stakes of non-compliance by potentially tying it to diplomatic
relations.