General agreement on tariffs and trade(GATT)and World trade organization (WTO) have attempted to create a globally regulated trade

structure. The trade agreements have often resulted in protest and discontent with claims of unfair trade that is not mutually beneficial. The regulation of international trade is done through WTO at the global level And through several other regional arrangements such as NAFTA SAARC MERCOSUR etc

Increasing flows of trade and investment are integrating the global economy. Trade and investment agreements are creating a global legal system. Governments seek to capture trade and investment flows and the economic benefits of participating in globalization by becoming members of trade agreements

The goal of business strategy is to allow the firm to achieve its goals in an unpredictable environment. Trade agreements reduce uncertainty and enhance predictability of the laws governments impose on foreign firms. The reduction of barriers to international business expand the firms strategic options.

Bilateral agreements are between two nations at a time. They are fairly easy to negotiate and give those two nations favored trading status between each other. A bilateral trade laws/regulations usually include a broad range of provisions regulating the conditions of trade between the contracting parties These include stipulations governing customs duties and other levies on imports and exports and other legal regulations.

Bilateral agreement is defined as An economic contract between two nation states These are used to improve economic trade imbalances between nations Taxes, tariffs and quotas are often lifted reduced or restricted on specific goods and services to realign trade deficits and restore economic stability between the parties

1.

Non convertible currencies: currencies that cannot be

2.

3.

freely exchanged against each other(like Uzbekistan, Ukraine, Moldova) Centrally controlled economies : economies with no or very few official free market exchanges where a central planning bureaucracy determines and controls all official flows of goods and capital(as in Korea, Cuba) Lack of hard currency : a national currency that is not accepted as a unit of payment by international suppliers (e.g. bilateral agreement signed between the governments of Iran and Ukraine in which Iranian oil & gas have been exchanged for metal scrap, weapons etc.

1. 2. 3. 4.

Commercial relationships between countries Reducing constraints Reinforcing countrys trade Economic development

It involves 2 or 3 countries who wish to regulate trade between the nations without discrimination They are usually intended to lower trade barriers between participating countries And as a consequence increase the degree of economic integration between the participants. Multilateral trade negotiations between GATT and member nations that are aimed at reducing tariff and non tariff trade barriers

With the increased influence globalization, the actions of one nations more than ever. Multilateral agreements have become an increasingly important means for nations to resolve important issues in a way that establishes common ground and resolves actual and potential points of difference.

Multilateral agreements to deter military escalation: e.g. Antarctica treaty specified an agreement among several nations to prohibit all military activity and nuclear testing as well to promote scientific cooperation. Multilateral agreements for economic purposes: e.g. multilateral agreement that promotes the economic interests of the member parties is the European union. Eu have allowed for the development of single currency Euro, also the common Euro passport for citizens of member nations.

Multilateral agreements for environmental purposes: e.g. Kyoto protocol designed to promote the environmental interests of the parties in agreement(carbon dioxide emissions) Multilateral agreements for humanitarian purposes: e.g. united nations millennium declaration which states a general agreement among the countries signed it to uphold human dignity and equality

Introduction:
Commodity agreements are arrangements between producing and consuming countries to stabilise markets and raise average prices. Such agreements are common in many markets, including the market for coffee, tea, and sugar. Meaning: International Commodity Agreements which are inter- governmental arrangements concerning the production of & trade in, certain primary products with a view to stabilizing their prices.

The basic objective is to stimulating a dynamic & steady growth & ensuring reasonable predictability in the real export earnings of the developing countries so as to provide: Expanding the resources for economic & social development. Consider the interest of the consumers in importing countries Considering the remunerative & equitable & stable prices for primary commodities. Considering the import purchasing power Increased imports & consumption & also coordination of production & marketing policies

1. Quota agreements: In international trade, a governmentimposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Limits on the amount of a goods produced, imported, exported or offered for sale. International quota agreements seek to prevent a fall in commodity prices by regulating prices. This agreement undertake to restrict the export or production by a certain percentage of the basic quota decided by the Central Committee or Council. This type of agreement mostly in the case of the commodities like coffee, tea & sugar This agreement avoids accumulation of stocks require no financing & do not call for continuous operating decisions.

2. Buffer Stock Agreements: A practice in which a large investor, especially a government, buys large quantities of commodities during periods of high supply and stores them so they do not trade or circulate. The investor then sells them when supply is low. This is done to stabilize the price. It is to stabilizing the prices by maintaining the demand & supply balance. It is more useful for the commodities like tea, sugar rubber, copper. This arrangements only for those products which can be stored at relatively low cost without the danger of deterioration & this is one of the limitation of this agreement.

3.Bilateral or Multilateral Contracts: Bilateral agreements may be formed as business or personal agreements between individuals or companies. They may also be formed between sovereign countries in the form of trade agreements or agreements in other areas. In either case, a bilateral agreement is a binding contract between the two parties that have agreed to mutually acceptable terms. International sale & purchase contracts may also be entered into by two or more major exporters & importers. Bilateral contract to purchase & sell certain quantities of a commodity at agreed prices. In this agreement, an upper price & a lower price are specified.

If the market price, throughout the period of the agreement, remains within these specified limits the agreement becomes inoperative. If the market price rises above the upper limit specified, the exporter country is obliged to sell to the importing country a certain specified quantity of the upper price fixed by the agreement. On the other hand, if the market price falls below the lower limit specified, the importer is obliged to purchase the contracted quantity at the specified lower price.

regulation of export Increased import purchasing power Assurance of suppliers Management of surplus Price stabilisation

Uncertainty over future price trends Absence of appropriate market Need to build in enough flexibility Lack of transparency Currency issues Regulation of export quotas

Gsp is a US trade programme designed to promote economic growth in the developing world By providing preferential duty free entry for upto 4800 products from 129 designated beneficiary countries and territories. Gsp was instituted on 1 Jan 1976 by the trade act of 1974.

Gsp exempts wto member countries from most favored nation mfn principle for the purpose of lowering tariffs for developing countries Mfn requires wto member countries to treat imports coming from all other wto member countries equally i.e by imposing equal tariffs on them.

Chapter No.2

Page No.132

Cont.,
-----IT IS A SCHEME DESIGNED BY THE UNCTAD TO ENCOURAGE

----- a

EXPORTS OF DEVELOPING COUNTRIES TO DEVELOPED COUNTRIES. UNDER THIS SCHEME, DEVELOPED COUNTRIES GRANT DUTY CONCESSION ON IMPORTS OF SPECIFIED MANUFACTURERS AND SEMI- MANUFACTURERS FROM DEVELOPING COUNTRIES.

number of countries such as, Usa, Japan, Norway, new Zealand, Finland, Sweden, Hungary, Switzerland, Australia etc, have introduced the gsp.
countries, it is subjected to certain stringent limitations.

----- the gsp facility is available only to developing

Under Gsp, the import of hand tools from India to US will not be subject to custom duty whereas imports of hand tools from Japan will b charged custom duty at rate of 15% Hence under this system developing countries have been allowed to compete on a preferential basis.

Increases export earnings Promotes industrialization Accelerates rate of economic growth

Elimination of tariffs Lower costs of imports Expand international reach Special treatment for LDC (least developed countries)