Question

Discuss the impact of WTO on international business?

Answer 1

The impact of WTO agreements is on every economic activity, say, agriculture, trading, service or manufacuring. The impact involves both threats and opportunities and are summarised below:

1. Entrepreneurship: World markets are opening up due to lowering of tariffs and dismantling of other restrictions in developed and developing countries. Enlightened entrepreneurs have opportunities to benefit from their comparative advantages. Entrepreneurial ability ( knowledge based ) will come to fore in the new environment.

2. Developed Vs. Developing countries: Developed countries benefitted by opening of service sector and tightening of IPRs. Developing countries may have greater opportunities in sectors in which they have cost-based advantages, e.g. Textiles, Agriculture, etc.,

3. Competitive Domestic Markets: Domestic markets have been increasingly threanted because of lowering of tariffs leading to free entry of foreign goods and because of foreign companies establishing manufacturing bases locally.

4. Business Process Re-engineering: Every company, whether serving domesic or international market, will have to undertake internal exercises to identify factors affecting its international competitiveness in terms of cost and quality, and see if it can stay competitive once the product becomes freely importable or tariffs are further lowered or both.

5. Effective Negotiations: The Governments and Nations that are in constant touch with their industries and affected groups will be able to determine with clarity how and what should be negotiatied at multilateral negotiations to the best of their advantage.