1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
^v.c o{ v.inc.. /vnini.vion^/ cnc.c 1(
^00 - 1)I1))/I1O)/ +1)1 ^/))1I1)
/..inncn c2

QucstInn 1 .What Is WTO? Exp!aIn Its nbjcctIvcs, functInns and structurc
WTO
WoiId Tiado Oiganizalion (WTO). WTO vas oslalIishod on 1sl }anuaiy 1995. In ApiiI
1994, lho IinaI Acl vas signod al a nooling in Maiiakosh, Moiocco. Tho Maiiakosh
DocIaialion of 15lh ApiiI 1994 vas foinod lo slionglhon lho voiId oconony lhal vouId
Ioad lo lolloi invoslnonl, liado, incono giovlh and onpIoynonl lhioughoul lho voiId.
Tho WTO is lho succossoi lo lho ConoiaI Agioononl of Taiiffs and Tiado (CATT). India
is ono of lho foundoi nonlois of WTO. WTO iopiosonls lho Ialosl allonpls lo cioalo an
oiganizalionaI focaI poinl foi IiloiaI liado nanagononl and lo consoIidalo a gIolaI
oiganizalionaI sliucluio lo govoin voiId affaiis. WTO has allonplod lo cioalo vaiious
oiganizalionaI allonlions foi ioguIalion of inloinalionaI liado. WTO cioalod a
quaIilalivo chango in inloinalionaI liado. Il is lho onIy inloinalionaI lody lhal doaIs
vilh lho iuIos of liados lolvoon nalions.
Tho WTO agioononls aio a sol of iuIos lhal aio foIIovod ly lho nonloi govoinnonls
vhiIo foinuIaling poIicios and piaclicos in lho aioa of inloinalionaI liado. Tho
agioononls nainIy covoi goods, soivicos and inloIIocluaI piopoily. Tho agioononls
conpiiso lho iighls and olIigalions of lho govoinnonl lhal aio onfoicoalIo in
nuIliIaloiaI fianovoik. Tho agioononl suppoils individuaI counliios connilnonls lo
Iovoi cuslons laiiffs and olhoi liado laiiiois, and lo opon soivicos naikols. Tho
agioononls ioconnond govoinnonls lo nako lhoii liado poIicios lianspaionl.
Accoiding lo lho agioononl, lho govoinnonl nusl nolify lho WTO aloul lho noasuios
adoplod lo nako lhoii liado poIicios lianspaionl
12.3.1 Oljoclivos and funclions
Tho koy oljoclivo of WTO is lo pionolo and onsuio inloinalionaI liado in dovoIoping
counliios. Tho olhoi najoi funclions incIudo:
oIping liado fIovs ly oncouiaging nalions lo adopl disciininaloiy liado
poIicios.
!ionoling onpIoynonl, oxpanding pioduclions and liado and iaising slandaid
of Iiving and incono and uliIisinglho voiIds iosouicos.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
nsuiing lhal dovoIoping counliios socuio a lolloi shaio of giovlh in voiId
liado.
!ioviding foiun foi liado nogolialions.
#osoIving liado dispulos.
Tho inpoilanl funclions of lho WTO as slalod in lho WTO agioononl aio lho foIIoving:
DovoIoping liansilionaI ocononios - Majoiily of lho WTO nonlois loIong lo
dovoIoping counliios. Tho dovoIoping counliios such as India, China, Moxico,
iaziI and olhois havo an inpoilanl ioIo in lho oiganizalion. Tho WTO hoIps in
soIving lho piolIons of dovoIoping ocononios. Tho dovoIoping slalos aio
piovidod vilh liado and laiiff dala. This doponds on lho counliys individuaI
oxpoil inloiosl and lhoii pailicipalion in WTO-lodios. Tho nov nonlois lonofil
hugoIy fion lhoso soivicos.
!ioviding hoIp foi oxpoil pionolion - Tho WTO piovidos spociaIizod hoIp foi
oxpoil pionolion lo ils nonlois. Tho oxpoil pionolion is dono lhiough lho
InloinalionaI Tiado Conloi oslalIishod ly lho CATT in 1964. Il is opoialod ly lho
WTO and lho Unilod Nalions. Tho conloi accopls ioquosls fion nonloi
counliios, usuaIIy dovoIoping counliios foi suppoil in foinuIaling and
inpIononling oxpoil pionolion piogians. Tho conloi piovidos infoinalion on
oxpoil naikol and naikoling lochniquos. Tho conloi aIso piovidos assislanco in
oslalIishing oxpoil pionolion and naikoling soivicos. Thiough lhis WTO
piovos ils connilnonl in lho upIiflnonl of lho voiId oconony.
Coopoialing in gIolaI ocononic poIicy-naking - Tho nain funclion of lho WTO
is lo coopoialo in gIolaI ocononic poIicy-naking. In lho Maiiakosh MinisloiiaI
Mooling in ApiiI 1994, a sopaialo docIaialion vas adoplod lo achiovo lhis
oljoclivo. Tho docIaialion spocifios lho iosponsiliIily of WTO as, lo inpiovo and
nainlain lho coopoialion vilh inloinalionaI oiganizalions such as lho WoiId
ank, InloinalionaI Monolaiy Iund (IMI) lhal aio invoIvod in nonolaiy and
financiaI nallois. WTO anaIysos lho inpacl of IiloiaIizalion on lho giovlh and
dovoIopnonl of nalionaI ocononios vhich is lho inpoilanl facloi in lho succoss
of lho oconony.
Moniloiing inpIononlalion of lho agioononl - Tho WTO adninislois sixly
diffoionl agioononls lhal havo lho slaluo of inloinalionaI IogaI docunonls. Tho
nonloi-govoinnonls sign and confiin aII WTO agioononls on allainnonl.
!ioviding foiun foi nogolialions - Tho WTO piovidos a poinanonl foiun foi
nogolialions anong nonlois. Tho nogolialions can lo on nallois aIioady in lho
WTO agioononls oi nallois nol addiossod in lho WTO Iav.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Adninislialing dispulo sollIononl - Tho inpoilanl funclion of WTO is lho
adninislialion of lho WTO dispulo sollIononl syslon. Il hoIps in sollIing
nuIliIaloiaI liading dispulo. A dispulo aiisos vhon a nonloi counliy adopls a
liado poIicy and olhoi foIIov nonlois considoi il as a vioIalion of WTO
agioononls. Tho Dispulo SollIononl ody (DS) is iosponsilIo foi lho sollIononl
of dispulos. Tho dispulo sollIononl syslon is piohililod fion adding oi doIoling
lho iighls and olIigalions piovidod in lho WTO agioononls. Tho WTO dispulo
sollIononl syslon hoIps lo:
!iosoivo lho iighls and iosponsiliIilios of lho nonlois.
CIaiify lho cuiionl piovisions of lho agioononls.
Sliucluio
Tho sliucluio of lho WTO consisls of lho MinisloiiaI Confoionco, vhich is lho highosl
aulhoiily. This lody consisls of lho iopiosonlalivos fion aII WTO nonlois. Tho WTO
nonlois nool in ovoiy lvo yoais and lako docisions on aII nallois undoi lho
nuIliIaloiaI liado agioononls. Tho daiIy aclivilios of lho WTO aio conduclod ly
sulsidiaiy lodios and piincipaIIy ly lho ConoiaI CounciI vhich is conposod of WTO
nonlois. Tho nonlois iopoil lo lho MinisloiiaI Confoionco. Tho ConoiaI CounciI on
lohaIf of lho MinisloiiaI Confoionco adninislois as lho Dispulo SollIononl ody lo
nanago lho dispulo sollIononl piocoduios. Il aIso acls as lho Tiado !oIicy #oviov ody
lhal conducls ioguIai ioviovs of lho liado poIicios of lho individuaI WTO nonlois.
Tho ConoiaI CounciI doIogalos iosponsiliIily lo olhoi najoi lodios. Thoy aio:
CounciI foi Tiado in Coods nanagos lho inpIononlalion and funclioning of aII
agioononls covoiing liado in goods.
Tiado in Soivicos and Tiado of InloIIocluaI !iopoily #ighls aio lho lvo counciIs
lhal havo iosponsiliIily foi lhoii iospoclivo WTO agioononls and can oslalIish
lhoii ovn sulsidiaiy lodios if ioquiiod.
Tho Connilloo on Tiado and DovoIopnonl nanagos issuos ioIaling lo lho
dovoIoping counliios.
Tho Connilloo on aIanco of !aynonls conducls consuIlalions lolvoon WTO
nonlois and counliios lhal lako liado-iosliiclivo noasuios lo handIo laIanco-of-
paynonls difficuIlios.
Connilloo on udgol and Adninislialion nanagos issuos ioIaling lo financing
and ludgol of WTO.

1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
QucstInn 2 Exp!aIn brIcf!y thc naturc nf c-busIncss and thc cha!!cngcs Invn!vcd.
Ansvoi: Tho o-lusinoss donolos a najoi liond in lho nanagononl Iiko any olhoi lionds
such as lho suppIy chain nanagononl, naiI oidoi soivico oi lho soivico oconony. Tho
o-lusinoss is dono ly nany asynchionous oxpoils acioss lho gIolo. Tho suppIiois,
cuslonois and aIso lho conpolilois cooidinalo lho o-lusinoss.
Naluio of -usinoss
-lusinoss can lo dofinod as "lho uso of nolvoiks and infoinalion lochnoIogy in oidoi
lo oIoclionicaIIy dosign, naikol, luy, soII and doIivoi pioducls and soivicos
voiIdvido". -lusinoss, noaning 'oIoclionic-lusinoss, doaIs vilh appIicalion of
infoinalion and connunicalion lochnoIogios, in shoil an oIoclionic nodiun in suppoil
of aII lho aclivilios of lusinoss. Tho o-lusinoss nainIy slands foi lho inloinol onalIod
lusinoss. Thoio aio foui onlilios in lho inloinol onalIod lusinoss. Thoso foui onlilios aio
as shovn in lho figuio 11.1.

Tho ChaIIongos of -usinoss
In lho piovious soclion, vo havo sludiod aloul lho o-lusinoss nodoIs. In lhis soclion Iol
us Ioain aloul lho chaIIongos of o-lusinoss. As lho o-lusinoss is gioving, lhoio aio
nany lochnicaI and lusinoss lionds lhal aio associalod vilh il. Sono inpoilanl lionds
in o-lusinoss aio oxpIainod loIov.
-lusinoss is ciuciaI lo lusinoss succoss. Many conpanios cono oul vilh changos lhal
aio nocossaiy foi o-lusinoss lo locono piofilalIo. Tho piocoss of o-lusinoss is Iong
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Iasling lhan lhal of lho io-onginooiing. Thoio aio sono inpoilanl lionds in lho o-
lusinoss lhal aio dosciilod as foIIovs:
TochnoIogy focus is on o-lusinoss - Tho haidvaio, soflvaio, and nolvoik
vondois, focus on pioviding lho looIs foi o-lusinoss. Tho o-lusinoss is nainIy lho
oxlonsion of lho pioducls and soivicos
-lusinoss pioducos cunuIalivo offocls - -lusinoss is Iong Iasling. Tho
ioIalionship vilh cuslonois, suppIiois and onpIoyoos changos as vo inpIononl
o-lusinoss.
-lusinoss inpIononlalion offocls succoss and faiIuio of a lusinoss - Thoio viII
lo lolh lho succoss and lho faiIuios lhal aio associalod vilh any kind of lusinoss.
Tho faiIuios locono dianalic vilh o-lusinoss as il is noio visilIo oxloinaIIy.
Thoio aio sono najoi succoss faclois foi o-lusinoss. Thoso faclois incIudo lho slialogic
faclois, sliucluiaI faclois and lho nanagononl oiionlod faclois. Thoso faclois aio
oxpIainod as foIIovs:
$tratcgIc factnrs
Tho lochnoIogios ioIalod lo lho inloinol aio usod as a conpIononl foi lho oxisling
lochnoIogios.
Tho lasis of conpolilion lhal is nol shiflod fion liadilionaI conpolilivo
advanlagos such as cosl, piofil, quaIily, soivico and foaluios.
Tho nov conpolilois and naikol shaios aio liackod.
Tho vol conliic naikoling slialogy.
Tho slialogic posilion of lho conpany in lho naikol has slionglhonod.
Tho fioquonl ioviov of lho disliilulion and suppIy chain nodoI is dono in oidoi
lo naxinizo lho conpanys gain.
Tho luyois lohavioi and lho cuslonoi poisonaIizalion.
Tho fiisl-novoi advanlago and quick lino lo slail.
Tho o-lusinoss offoiod good pioducls and soivicos.
Tho innovalion vas aIIovod vhon iisks aio Iov.
Tho cuslonois and pailnois oxpoclalions fion lho voII nanagod.
$tructura! factnrs
Coiiocl digilaI infiasliucluio.
Cood o-lusinoss oducalion and liaining lo onpIoyoos, nanagononl and
cuslonois.
Cuiionl syslons oxpandod lo covoi onliio suppIy chain.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Cood cosl conlioI.
anagcmcnt-nrIcntcd factnrs
Tho oiganizalion vido connilnonl lo o-lusinoss Ioadoiship.
Tho nocossaiy suppoil foi o-lusinoss fion lho lop nanagononl.
Tho avaionoss and undoislanding of capaliIilios of lochnoIogy ly oxoculivos.
Tho lop nanagononl has lo connunicalo aloul lho vaIuo of o-lusinoss
lhioughoul lho oiganizalion.
Tho o-lusinoss is facing chaIIongos nainIy in lho aioas of lochnoIogy, Iogislics, and IogaI
issuos. Thoso aioas aio oxpIainod in lho foIIoving soclions.
TochnoIogy
Tho lochnoIogy pIays a najoi ioIo in lho concopl of nov oconony. Tho lochnoIogy has
lvo dinonsions, ono is lho shifl fion nanufacluiing lo soivicos and socond is lho shifl
fion physicaI iosouicos lo lho knovIodgo iosouicos. Thoio aio so nany nochanisns foi
lochnoIogy innovalion and diffusion, lolh vilhin and oulsido lho counliios. Many of
lho oiganizalions viII incIudo diffoionl lochnoIogios lolh foi quanlilalivo and
quaIilalivo loins.
SnaII scaIo onloipiisos pIay a vilaI ioIo in lho inpIononlalion of nov lochnoIogios.
Thoy havo addod noio vaIuo in loins of popuIalion, onpIoynonl, and soivicos lhal
lhoy aio offoiing. Inloinol aIso pIays a vilaI ioIo as il hoIps lho snaII and nodiun
onloipiisos in pioviding lho cosl offoclivo possiliIilios lo advoiliso lhoii pioducls.
Inloinol aIso piovidos lho conlacls lo luyois and suppIiois on a gIolaI lasis. -lusinoss
is hoIps lho iadicaI liansfoinalion in lho vay lhal lho lusinoss is dono. Tho
inlioduclion of lochnoIogios Iiko lho connon dalalaso, oIoclionic nolvoiks and vaIuo
addod soivicos aio hoIpfuI foi spooding up lho liansaclions and lhoso aio fundanonlaI
al lho indusliiaI IovoI. Tho o-lusinoss has lo undoigo Iol of chaIIongos in inpIononling
lho lochnoIogios lhal aio hoIpfuI foi lho oiganizalion sinco nany of lho poopIo in lho
oiganizalion viII nol lo inloioslod lo shifl lo lho nov lochnoIogy and Ioain lho nov
skiIIs.
Logislics
Tho Iogislics is dofinod as lho pIanning fianovoik foi nainlaining lho naloiiaI,
infoinalion, and capilaI fIov. Tho Iogislics incIudos lho conpIox infoinalion,
connunicalion and conlioI syslons ioquiiod in lho lusinoss onviionnonl. Tho Iogislics
piosonls o-lusinoss vilh chaIIongos lhal oxcoods lho oxpoclalions of lho cuslonois vilh
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
a ioasonalIo cosl. Nov-a-day, allonpl has loon nado lo ioduco lho invonloiy cosls. In
oidoi lo nool lho high oxpoclalions of lho cuslonois, an o-lusinoss noods lho spociaI
infiasliucluio foi luning and nanaging lho inloiaclions. Tho inloiaclions can lo in
lolvoon lho shippois, Iogislic piovidois, shipping conpanios, and aIso lho cuslonois.
LogaI concoins
As lhoio is lionondous usago of inloinol, il is lolloi lo considoi lho IogaI concoins
lohind lho inloinol. This is locauso vhalovoi is piinlod on lho nol viII lo accossod ly
pulIic lhioughoul lho voiId. Wo aIso havo an oplion of going lack and sooing lho
lasics of lhal infoinalion. Nov--a-day vilh lho hoIp of viioIoss phonos, !oisonaI
DigilaI Assislanls (!DAs), inloinol can lo accossod fion anyvhoio in lho voiId. As a
iosuIl lho cuslonois nusl lo piovidod piopoi socuiily and piivacy lo accoss inloinol. Il
loconos voiy difficuIl lo liusl lho acluaI vilh lho unolhicaI, iIIogaI, inloinol naikoling
and advoilising fiauds and o-lusinoss onaiI scans and honco ono nusl lo caiofuI vhiIo
poifoining o-lusinoss.
Il is nocossaiy lo concoin lho piivacy and IogaI nallois vhiIo viiling a copy and
nainlaining a cIionls o-lusinoss.
Thoio aio uncoilainlios in o-lusinoss vhon conpaiod vilh diiocl lusinoss. Tho
uncoilainlios aio ioIalod lo lho socuiily, piivacy, ciodil and dolil caid handIing. Tho
socuiily is lho piinaiy concoin in o-lusinoss. Tho !CI Dala Socuiily slandaid (!CI DSS)
noods lo lo foIIovod ly ono vho handIos lho ciodil caid infoinalion. -lusinoss is aII
aloul lho liusl lolvoon luyoi and lho soIIoi so ono nusl lo caiofuI vhiIo doaIing vilh
lho liansaclions vhich invoIvo lho handIing of ciodil and dolil caids.
Thoio viII aIso lo copyiighl issuos lhal is copying sonolhing fion olhoi silos and
piosonling lho sano conlonl as lhoii ovn. Il is inpoilanl lo chock foi pIagiaiisn vhon
lho conpany is pulIishing lhoii ovn ailicIos. Whon sono concopls aio copyiighl lhon il
is nocossaiy lo ciodil lho oiiginaI aulhois. DiscIainoi nolico is ioquiiod al lho slail of
any lusinoss volsilo.
If lho volnaslois incIudo sono unolhicaI infoinalion aloul lho cIionl lhon lhal can
causo ovoiIasling nogalivo consoquoncos foi lho cIionl. Tho IogaI aclion is lakon againsl
lho faIso advoilisononls aIso.
Tho iisks associalod vilh conducling o-lusinoss ovoi lho inloinol aio oxpIainod as
foIIovs:
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y%
4 }uiisdiclion - Conliacling ovoi lho cyloispaco is a chaIIongo foi lho
volsilo ovnois and lho inloinol is lho foin of connunicalion lhal iisos
alovo lho spaliaI loundaiios. Thoio is a juiisdiclion piolIon in lho
dispulos lolvoon lho luyoi and soIIoi iogaiding vhoio lho conliacl vas
foinod and vhich slalo Iav appIios foi lho conliacl.
4 Conlacl vaIidily - Tho onoiging issuo is lho IogaI vaIidily of vol viap oi
cIick on conliacls. This lypo of conliacl is nainIy found on lho vol silo
lhal offois goods and soivicos foi lho saIo. This o-lusinoss cioalos lho IogaI
ioIalionship lolvoon lho soIIoi and luyoi.
4 Conliacl infoinalion - Tho advonl of lho o-lusinoss ovoi lho nol is
iosponsilIo foi vaiious IogaI issuos iogaiding lho foinalion of lho
oIoclionic conliacls.
Thoio is a nood foi nalching lolh lho o-cuslonois and o-noichanls vilh lho IogaIIy
iosponsilIo pailios in lho ioaI voiId. Thoio is a nood foi on ciyplogiaphic nolhods foi
ioducing lho iisks associalod vilh lho idonlificalion and aulhonlicalion. Tho
ciyplogiaphic nolhods foi oIininaling lho iisks lhoso aio associalod vilh lho non-
iopudialion and socuiily.
QucstInn 3. cntInn thc rc!cvancc nf thcsc tcrms In IntcrnatInna! busIncss - Lcttcr nf
crcdIt, BI!! nf LadIng and FactnrIng.
Ansvoi: Lolloi of ciodil: A slandaid, connoiciaI Iolloi of ciodil (LC
|1j
)is a docunonl
issuod noslIy ly a financiaI inslilulion, usod piinaiiIy in liado financo, vhich usuaIIy
piovidos an iiiovocalIo paynonl undoilaking.
Tho Iolloi of ciodil can aIso lo souico of paynonl foi a liansaclion, noaning lhal
iodooning lho Iolloi of ciodil viII pay an oxpoiloi. Lollois of ciodil aio usod piinaiiIy
in inloinalionaI liado liansaclions of significanl vaIuo, foi doaIs lolvoon a suppIioi in
ono counliy and a cuslonoi in anolhoi. In such casos lho InloinalionaI Chanloi of
Connoico Unifoin Cuslons and !iaclico foi Docunonlaiy Ciodils appIios (UC! 6OO
loing lho Ialosl voision).
|2j
Thoy aio aIso usod in lho Iand dovoIopnonl piocoss lo
onsuio lhal appiovod pulIic faciIilios (sliools, sidovaIks, sloin valoi ponds, olc.) viII
lo luiIl. Tho pailios lo a Iolloi of ciodil aio usuaIIy a lonoficiaiy vho is lo iocoivo lho
nonoy, lho issuing lank of vhon lho appIicanl is a cIionl, and lho advising lank of
vhon lho lonoficiaiy is a cIionl. AInosl aII Iollois of ciodil aio iiiovocalIo, i.o., cannol
lo anondod oi cancoIod vilhoul piioi agioononl of lho lonoficiaiy, lho issuing lank
and lho confiining lank, if any. In oxoculing a liansaclion, Iollois of ciodil incoipoialo
funclions connon lo giios and TiavoIoi's choquos. TypicaIIy, lho docunonls a
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y%
lonoficiaiy has lo piosonl in oidoi lo iocoivo paynonl incIudo a connoiciaI invoico, liII
of Iading and docunonls pioving lho shipnonl voio insuiod againsl Ioss oi danago in
liansil.
Lollois of ciodil (LC) doaI in docunonls, nol goods. Tho LC couId lo iiiovocalIo oi
iovocalIo. An iiiovocalIo LC cannol lo changod unIoss lolh lho luyoi and soIIoi agioo.
Whoioas in a iovocalIo LC changos lo lho LC can lo nado vilhoul lho consonl of lho
lonoficiaiy. A sighl LC noans lhal paynonl is nado innodialoIy lo lho
lonoficiaiy/soIIoi/oxpoiloi upon piosonlalion of lho coiiocl docunonls in lho ioquiiod
lino fiano. A lino oi dalo LC viII spocify vhon paynonl viII lo nado al a fuluio dalo
and upon piosonlalion of lho ioquiiod docunonls.
|cilalion noododj

Nogolialion noans lho giving of vaIuo foi diafl(s) and/oi docunonl(s) ly lho lank
aulhoiizod lo nogolialo, viz lho noninalod lank. Moio oxaninalion of lho docunonls
and foivaiding lho sano lo lho Iolloi of ciodil issuing lank foi ioinluisononl, vilhoul
giving of vaIuo / agiood lo givo, doos nol conslilulo a nogolialion. Afloi a conliacl is
concIudod lolvoon luyoi and soIIoi, luyoi's lank suppIios a Iolloi of ciodil lo soIIoi.
AII lho chaigos foi issuanco of Lolloi of Ciodil, nogolialion of docunonls,
ioinluisononls and olhoi chaigos Iiko couiioi aio lo lho accounl of appIicanl oi as poi
lho loins and condilions of lho Lolloi of ciodil. If lho Iolloi of ciodil is siIonl on chaigos,
lhon lhoy aio lo lho accounl of lho AppIicanl. Tho dosciiplion of chaigos and vho
vouId lo loaiing lhon vouId lo indicalod in lho fioId 71 in lho Lolloi of Ciodil.
|cilalionj

A liII of Iading (L - sonolinos iofoiiod lo as OL oi /L) is a docunonl issuod ly a
caiiioi lo a shippoi, acknovIodging lhal spocifiod goods havo loon iocoivod on loaid as
caigo foi convoyanco lo a nanod pIaco foi doIivoiy lo lho consignoo vho is usuaIIy
idonlifiod. A lhiough liII of Iading invoIvos lho uso of al Ioasl lvo diffoionl nodos of
lianspoil fion ioad, iaiI, aii, and soa. Tho loin doiivos fion lho voil "lo Iado" vhich
noans lo Ioad a caigo onlo a ship oi olhoi foin of lianspoilalion.
A liII of Iading can lo usod as a liadod oljocl. Tho slandaid shoil foin liII of Iading is
ovidonco of lho conliacl of caiiiago of goods and il soivos a nunloi of puiposos:
Il is ovidonco lhal a vaIid conliacl of caiiiago, oi a chailoiing conliacl, oxisls, and
il nay incoipoialo lho fuII loins of lho conliacl lolvoon lho consignoi and lho
caiiioi ly iofoionco (i.o. lho shoil foin sinpIy iofois lo lho nain conliacl as an
oxisling docunonl, vhoioas lho Iong foin of a liII of Iading (connaissononl
inlogiaI) issuod ly lho caiiioi sols oul aII lho loins of lho conliacl of caiiiago),
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Il is a iocoipl signod ly lho caiiioi confiining vholhoi goods nalching lho
conliacl dosciiplion havo loon iocoivod in good condilion (a liII viII lo
dosciilod as cIoan if lho goods havo loon iocoivod on loaid in appaionl good
condilion and slovod ioady foi lianspoil), and
Il is aIso a docunonl of liansfoi, loing fiooIy liansfoialIo lul nol a nogolialIo
insliunonl in lho IogaI sonso, i.o. il govoins aII lho IogaI aspocls of physicaI
caiiiago, and, Iiko a choquo oi olhoi nogolialIo insliunonl, il nay lo ondoisod
affocling ovnoiship of lho goods acluaIIy loing caiiiod. This nalchos ovoiyday
oxpoiionco in lhal lho conliacl a poison nighl nako vilh a connoiciaI caiiioi
Iiko Iodx foi noslIy aiivay paicoIs, is sopaialo fion any conliacl foi lho saIo of
lho goods lo lo caiiiod, hovovoi, il linds lho caiiioi lo ils loins, iiiospoclivoIy of
vho lho acluaI hoIdoi of lho /L, and ovnoi of lho goods, nay lo al a spocific
nononl.
Tho L nusl conlain lho foIIoving infoinalion:
Nano of lho shipping conpany,
IIag of nalionaIily,
Shippoi's nano,
Oidoi and nolify paily,
Dosciiplion of goods,
Cioss/nol/laio voighl, and
Iioighl ialo/noasuiononls and voighnonl of goods/lolaI fioighl
WhiIo an aii vay liII (AW) nusl havo lho nano and addioss of lho consignoo, a L
nay lo consignod lo lho oidoi of lho shippoi. Whoio lho void oidoi appoais in lho
consignoo lox, lho shippoi nay ondoiso il in lIank oi lo a nanod liansfoioo. A L
ondoisod in lIank is liansfoialIo ly doIivoiy. Onco lho goods aiiivo al lho doslinalion
lhoy viII lo ioIoasod lo lho loaioi oi lho ondoisoo of lho oiiginaI liII of Iading. Tho
caiiioi's duly is lo doIivoi goods lo lho fiisl poison vho piosonls any ono of lho oiiginaI
L. Tho caiiioi nood nol ioquiio aII oiiginaIs lo lo sulnillod lofoio doIivoiy. Il is
lhoiofoio ossonliaI lhal lho oxpoiloi iolains conlioI ovoi lho fuII sol of lho oiiginaIs unliI
paynonl is offoclod oi a liII of oxchango is accoplod oi sono olhoi assuianco foi
paynonl has loon nado lo hin. In gonoiaI, lho inpoiloi's nano is nol shovn as
consignoo. Tho liII of Iading has aIso piovision foi incoipoialing nolify paily. This is
lho poison vhon lho shipping conpany viII nolify on aiiivaI of lho goods al
doslinalion. Tho L aIso conlains olhoi dolaiIs such as lho nano of lho caiiying vossoI
and ils fIag of nalionaIily, lho naiks and nunlois on lho packagos in vhich lho goods
aio packod, a liiof dosciiplion of lho goods, lho nunloi of packagos, lhoii voighl and
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
noasuiononl, vholhoi fioighl cosls havo loon paid oi vholhoi paynonl of fioighl is
duo on aiiivaI al lho doslinalion. Tho pailicuIais of lho conlainoi in vhich goods aio
sluffod aio aIso nonlionod in caso of conlainoiizod caigo. Tho docunonl is dalod and
signod ly lho caiiioi oi ils agonl. Tho dalo of lho L is doonod lo lo lho dalo of
shipnonl. If lho dalo on vhich lho goods aio Ioadod on loaid is diffoionl fion lho dalo
of lho liII of Iading lhon lho acluaI dalo of Ioading on loaid viII lo ovidoncod ly a
nolalion lho L. In coilain casos a caiiioi nay issuo a sopaialo on loaid coilificalo lo lho
shippoi.
Main lypos of liII
Sliaighl liII of Iading
In lhis inpoiloi/consignoo/agonl is nanod in lho liII of Iading, il is caIIod sliaighl liII
of Iading. Il is a docunonl, in vhich a soIIoi agioos lo uso a coilain lianspoilalion lo
ship a good lo a coilain Iocalion, vhoio lho liII assignod lo a coilain paily. Il dolaiIs lo
lho quaIily and quanlily of goods.
Oidoi liII of Iading
This liII usos oxpioss voids lo nako lho liII nogolialIo, o.g. il slalos lhal doIivoiy is lo
lo nado lo lho fuilhoi oidoi of lho consignoo using voids such as "doIivoiy lo A Lld. oi
lo oidoi oi assigns". ConsoquonlIy, il can lo indoisod (IogaI spoIIing of ondoiso,
nainlainod in aII slalulo, incIuding iIIs of xchango Acl 19O9 (CT)) ly A Lld. oi lho
iighl lo lako doIivoiy can lo liansfoiiod ly physicaI doIivoiy of lho liII acconpaniod ly
adoqualo ovidonco of A Lld.'s inlonlion lo liansfoi.
oaioi liII of Iading
This liII slalos lhal doIivoiy shaII lo nado lo vhosoovoi hoIds lho liII. Such liII nay lo
cioalod oxpIicilIy oi il is an oidoi liII lhal faiIs lo noninalo lho consignoo vholhoi in ils
oiiginaI foin oi lhiough an ondoisononl in lIank. A loaioi liII can lo nogolialod ly
physicaI doIivoiy.
Suiiondoi liII of Iading
Undoi a loin inpoil docunonlaiy ciodil lho lank ioIoasos lho docunonls on iocoipl
fion lho nogolialing lank lul lho inpoiloi doos nol pay lho lank unliI lho naluiily of
lho diafl undoi lho ioIalivo ciodil. This diiocl IialiIily is caIIod Suiiondoi iII of Lading
(SL), i.o. vhon vo hand ovoi lho liII of Iading vo suiiondoi lilIo lo lho goods and oui
povoi of saIo ovoi lho goods.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
A cIoan liII of Iading slalos lhal lho caigo has loon Ioadod on loaid lho ship in
appaionl good oidoi and condilion. Such a L viII nol loai a cIauso oi nolalion vhich
oxpiossivoIy docIaios a dofoclivo condilion of goods and/oi lho packaging. Thus, a L
lhal iofIocls lho facl lhal lho caiiioi iocoivod lho goods in good condilion. Tho opposilo
loin is a soiIod liII of Iading, vhich iofIocls lhal lho goods aio iocoivod ly lho caiiioi in
anylhing lul good condilion.
Iacloiing is a financiaI liansaclion vhoioly a lusinoss jol soIIs ils accounls iocoivalIo
(i.o. ,invoicos) lo a lhiid paily (caIIod a facloi ) al a discounl in oxchango foi innodialo
nonoy vilh vhich lo financo conlinuod lusinoss. Iacloiing diffois fion a lank Ioan in
lhioo nain vays. Iiisl, lho onphasis is on lho vaIuo of lho iocoivalIos (ossonliaIIy a
financiaI assol), nol lho fiins ciodil voilhinoss. SocondIy, facloiing is nol a Ioan- il is
lho puichaso of a financiaI assol (lho iocoivalIo). IinaIIy, a lank Ioan invoIvos lvo
pailios vhoioas facloiing invoIvos lhioo.
Il is diffoionl fion foifailing onIy in lho sonso lhal foifailing is a liansaclion-lasod
opoialion invoIving oxpoilois in vhich lho fiin soIIs ono of ils liansaclions, vhiIo
facloiing is a IinanciaI Tiansaclion lhal invoIvos lho SaIo of any poilion of lho fiin's
#ocoivalIos.
Iacloiing is a void oflon nisusod synonynousIy vilhin voico discounling- facloiing is
lho saIo of iocoivalIos, vhoioas invoico discounling is loiioving vhoio lho iocoivalIo
is usod as coIIaloiaI.
Tho lhioo pailios diioclIy invoIvod aio: lho ono vho soIIs lho iocoivalIo, lho dolloi and
lho facloi. Tho iocoivalIo is ossonliaIIy a financiaI assol associalod vilh lho dolloi's
IialiIily lo pay nonoy ovod lo lho soIIoi (usuaIIy foi voik poifoinod oi goods soId).
Tho soIIoi lhon soIIs ono oi noio of ils invoicos (lho iocoivalIos) al a discounl lo lho
lhiid paily, lho spociaIizod financiaI oiganizalion (aka lho facloi), lo ollain cash. Tho
saIo of lho iocoivalIos ossonliaIIy liansfois ovnoiship of lho iocoivalIos lo lho facloi,
indicaling lho facloi ollains aII of lho iighls and iisks associalod vilh lho iocoivalIos.
AccoidingIy, lho facloi ollains lho iighl lo iocoivo lho paynonls nado ly lho dolloi foi
lho invoico anounl and nusl loai lho Ioss if lho dolloi doos nol pay lho invoico
anounl. UsuaIIy, lho accounl dolloi is nolifiod of lho saIo of lho iocoivalIo, and lho
facloi liIIs lho dolloi and nakos aII coIIoclions. CiilicaI lo lho facloiing liansaclion, lho
soIIoi shouId novoi coIIocl lho paynonls nado ly lho accounl dolloi, olhoiviso lho
soIIoi couId polonliaIIy iisk fuilhoi advancos fion lho facloi. Thoio aio lhioo piincipaI
pails lo lho facloiing liansaclion,
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
a.) lho advanco, a poiconlago of lho invoico faco vaIuo lhal is paid lo lho soIIoi upon
sulnission,
l.) lho iosoivo, lho ionaindoi of lho lolaI invoico anounl hoId unliI lho paynonl ly lho
accounl dolloi is nado and
c.) lho foo, lho cosl associalod vilh lho liansaclion vhich is doduclod fion lho iosoivo
piioi lo il loing paid lack lho soIIoi.
Sonolinos lho facloi chaigos lho soIIoi a soivico chaigo, as voII as inloiosl lasod on
hov Iong lho facloi nusl vail lo iocoivo paynonls fion lho dolloi. Tho facloi aIso
oslinalos lho anounl lhal nay nol lo coIIoclod duo lo non- paynonl, and nakos
acconnodalion foi lhis vhon doloinining lho anounl lhal viII lo givon lo lho soIIoi.
Tho facloi's ovoiaII piofil is lho diffoionco lolvoon lho piico il paid foi lho invoico and
lho nonoy iocoivod fion lho dolloi, Ioss lho anounl Iosl duo lo non-paynonl.
In lho Unilod Slalos, undoi lho ConoiaIIy Accoplod Accounling !iincipIos iocoivalIos
aio considoiod soId vhon lho luyoi has "no iocouiso," oi vhon lho financiaI liansaclion
is sulslanliaIIy a liansfoi of aII of lho iighls associalod vilh lho iocoivalIos and lho
soIIoi's nonolaiy IialiIily undoi any "iocouiso" piovision is voII oslalIishod al lho lino
of lho saIo. Olhoiviso, lho financiaI liansaclion is lioalod as a Ioan, vilh lho iocoivalIos
usod as coIIaloiaI.
Iacloiing is a nolhod usod ly a fiin lo ollain cash vhon lho avaiIalIo cash laIanco
hoId ly lho fiin is insufficionl lo nool cuiionl olIigalions and acconnodalo ils olhoi
cash noods, such as nov oidois oi conliacls. Tho uso of facloiing lo ollain lho cash
noodod lo acconnodalo lho fiins innodialo Cash noods viII aIIov lho fiin lo
nainlain a snaIIoi ongoing Cash aIanco. y ioducing lho sizo of ils cash laIancos,
noio nonoy is nado avaiIalIo foi invoslnonl in lho fiins giovlh. A conpany soIIs ils
invoicos al a discounl lo lhoii faco vaIuo vhon il caIcuIalos lhal il viII lo lolloi off using
lho piocoods lo loIsloi ils ovn giovlh lhan il vouId lo ly offoclivoIy funclioning as ils
"cuslonoi's lank." AccoidingIy, Iacloiing occuis vhon lho ialo of ioluin on lho
piocoods invoslod in pioduclion oxcood lho cosls associalod vilh Iacloiing lho
#ocoivalIos. Thoiofoio, lho liadooff lolvoon lho ioluin lho fiin oains on invoslnonl in
pioduclion and lho cosl of uliIizing a Iacloi is ciuciaI in doloinining lolh lho oxlonl
Iacloiing is usod and lho quanlily of Cash lho fiin hoIds on hand.
Many lusinossos havo Cash IIov lhal vaiios. A lusinoss nighl havo a ioIalivoIy Iaigo
Cash IIov in ono poiiod, and nighl havo a ioIalivoIy snaII Cash IIov in anolhoi
poiiod. ocauso of lhis, fiins find il nocossaiy lo lolh nainlain a Cash aIanco on hand,
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
and lo uso such nolhods as Iacloiing, in oidoi lo onalIo lhon lo covoi lhoii Shoil Toin
cash noods in lhoso poiiods in vhich lhoso noods oxcood lho Cash IIov. ach lusinoss
nusl lhon docido hov nuch il vanls lo dopond on Iacloiing lo covoi shoil faIIs in
Cash, and hov Iaigo a Cash aIanco il vanls lo nainlain in oidoi lo onsuio il has
onough Cash on hand duiing poiiods of Iov Cash IIov.
ConoiaIIy, lho vaiialiIily in lho cash fIov viII doloinino lho sizo of lho Cash aIanco a
lusinoss viII lond lo hoId as voII as lho oxlonl il nay havo lo dopond on such financiaI
nochanisns as Iacloiing. Cash fIov vaiialiIily is diioclIy ioIalod lo 2 faclois:
1. Tho oxlonl Cash IIov can chango,
2. Tho Ionglh of lino Cash IIov can ionain al a loIov avoiago IovoI.
If cash fIov can docioaso diaslicaIIy, lho lusinoss viII find il noods Iaigo anounls of
cash fion oilhoi oxisling Cash aIancos oi fion a Iacloi lo covoi ils olIigalions duiing
lhis poiiod of lino. Likoviso, lho Iongoi a ioIalivoIy Iov cash fIov can Iasl, lho noio
cash is noodod fion anolhoi souico (Cash aIancos oi a Iacloi) lo covoi ils olIigalions
duiing lhis lino. As indicalod, lho lusinoss nusl laIanco lho oppoilunily cosl of Iosing
a ioluin on lho Cash lhal il couId olhoiviso invosl, againsl lho cosls associalod vilh lho
uso of Iacloiing.
Tho Cash aIanco a lusinoss hoIds is ossonliaIIy a Donand foi Tiansaclions Monoy. As
slalod, lho sizo of lho Cash aIanco lho fiin docidos lo hoId is diioclIy ioIalod lo ils
unviIIingnoss lo pay lho cosls nocossaiy lo uso a Iacloi lo financo ils shoil loin cash
noods. Tho piolIon facod ly lho lusinoss in dociding lho sizo of lho Cash aIanco il
vanls lo nainlain on hand is siniIai lo lho docision il facos vhon il docidos hov nuch
physicaI invonloiy il shouId nainlain. In lhis silualion, lho lusinoss nusl laIanco lho
cosl of ollaining cash piocoods fion a Iacloi againsl lho oppoilunily cosl of lho Iosing
lho #alo of #oluin il oains on invoslnonl vilhin ils lusinoss. Tho soIulion lo lho
piolIon is:
|1Oj
vhoio
- C is lho Cash aIanco
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
- nCI is lho avoiago Nogalivo Cash IIov in a givon poiiod
- i is lho |Discounl #aloj lhal covoi lho Iacloiing Cosls
- i is lho ialo of ioluin on lho fiins assols
|11j

QucstInn 4 a) Exp!aIn thc rn!c p!aycd by EXI bank.
Ansvoi: xpoil-Inpoil ank of India is lho pionioi oxpoil financo inslilulion of lho
counliy, sol up in 1982 undoi lho xpoil-Inpoil ank of India Acl 1981
xin ank is nanagod ly a oaid of Diioclois, vhich has iopiosonlalivos fion lho
Covoinnonl, #osoivo ank of India, xpoil Ciodil Cuaianloo Coipoialion of India, a
financiaI inslilulion, pulIic socloi lanks, and lho lusinoss connunily.
Tho ank's funclions aio sognonlod inlo sovoiaI opoialing gioups incIuding:
Coipoialo anking Cioup vhich handIos a vaiioly of financing
piogians foi xpoil Oiionlod Unils (OUs), Inpoilois and ovoisoas
invoslnonl ly Indian conpanios.
!iojocl Iinanco / Tiado Iinanco Cioup handIos lho onliio iango of
oxpoil ciodil soivicos such as suppIioi's ciodil, pio-shipnonl Agii
usinoss Cioup, lo spoaihoad lho inilialivo lo pionolo and suppoil
Agii-oxpoils. Tho Cioup handIos piojocls and oxpoil liansaclions in
lho agiicuIluiaI socloi foi financing.
SnaII and Modiun nloipiiso: Tho gioup handIos ciodil pioposaIs
fion SMs undoi vaiious Ionding piogians of lho ank.
xpoil Soivicos Cioup offois vaiioly of advisoiy and vaIuo-addod
infoinalion soivicos ainod al invoslnonl pionolion.
xpoil Maikoling Soivicos ank offois assislanco lo Indian
conpanios, lo onalIo lhon oslalIish lhoii pioducls in ovoisoas
naikols.
osidos lhoso, lho Suppoil Soivicos gioups, vhich incIudo: #osoaich &
!Ianning, Coipoialo Iinanco, Loan #ocovoiy, InloinaI Audil,
Managononl Infoinalion Soivicos, Infoinalion TochnoIogy, LogaI,
unan #osouicos Managononl and Coipoialo Affaiis.

1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
QucstInn 4 b) What arc B2B and C2B busIncss mndc!s?
usinoss-lo-lusinoss (2) dosciilos connoico liansaclions lolvoon lusinossos, such
as lolvoon a nanufacluioi and a vhoIosaIoi , oi lolvoon a vhoIosaIoi and a iolaiIoi.
Conliasling loins aio lusinoss-lo-consunoi (2C) and lusinoss-lo-govoinnonl (2C).
Tho voIuno of 2 (usinoss-lo-usinoss) liansaclions is nuch highoi lhan lho voIuno
of 2C liansaclions. Tho piinaiy ioason foi lhis is lhal in a lypicaI suppIy chain lhoio
viII lo nany 2 liansaclions invoIving sulconpononls oi iav naloiiaIs, and onIy ono
2C liansaclion, spocificaIIy saIo of lho finishod pioducl lo lho ond cuslonoi. Ioi
oxanpIo, an aulonoliIo nanufacluioi nakos sovoiaI 2 liansaclions such as luying
liios, gIass foi vindscioons, and iulloi hosos foi ils vohicIos. Tho finaI liansaclion, a
finishod vohicIo soId lo lho consunoi, is a singIo (2C) liansaclion.
2 is aIso usod in lho conloxl of connunicalion and coIIaloialion. Many lusinossos
aio nov using sociaI nodia lo connocl vilh lhoii consunois (2C), hovovoi, lhoy aio
nov using siniIai looIs vilhin lho lusinoss so onpIoyoos can connocl vilh ono anolhoi.
Whon connunicalion is laking pIaco anongsl onpIoyoos, lhis can lo iofoiiod lo
as"2" connunicalion.
Tho loin "lusinoss-lo-lusinoss" vas oiiginaIIy coinod lo dosciilo lho oIoclionic
connunicalions lolvoon lusinossos oi onloipiisos in oidoi lo dislinguish il fion lho
connunicalions lolvoon lusinossos and consunois (2C). Il ovonluaIIy cano lo lo
usod in naikoling as voII, iniliaIIy dosciiling onIy indusliiaI oi capilaI goods
naikoling. Today il is vidoIy usod lo dosciilo aII pioducls and soivicos usod ly
onloipiisos. Many piofossionaI inslilulions and lho liado pulIicalions focus nuch noio
on 2C lhan 2, aIlhough nosl saIos and naikoling poisonnoI aio in lho 2 socloi.
AIlhough lho oxpIoilalion of Inloinol lochnoIogios al lho lusinoss-lo-lusinoss IovoI is in
ils infancy, a nunloi of nodoIs havo logun lo onoigo lhal nanago liansaclions
lolvoon luyois and suppIiois:
1. slalIishod uyoi-SuppIioi #oIalionship
This is a pio-doloininod ono-lo-ono ioIalionship lolvoon a luyoi and suppIioi lhal is
suppoilod ly oIoclionic connoico lochnoIogios. Duo lo lho afoiononlionod Iinilalions
associalod vilh DI, conpanios havo nov luinod lhoii allonlion lovaids lho Inloinol lo
suppoil lhoso lypos of luyoi-suppIioi ioIalionships. Conpanios aio nov puisuing a
noio inlonsivo and inloiaclivo ioIalionship vilh lhoii suppIiois, inpacling upon lho
luyoi-suppIioi ioIalionship in a nunloi of aioas, incIuding lho inlogialion of
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
nanufacluiing syslons and suppIioi invoIvononl in nov pioducl dovoIopnonl.
xchanging infoinalion via oxlianols cosls Ioss and is noio offoclivo lhan lhiough
oIdoi liadilionaI nolhods such as faxos and voiconaiI. Ioi oxanpIo, NC has
dovoIopod an advancod infoinalion syslon lo caiiy oul a Iaigo pail of ils piocuiononl
aclivilios, ianging fion piocuiononl nolicos lo sollIononl on lho Inloinol.
2. SuppIioi-Oiionlod MaikolpIaco
In lhis nodoI, lolh oiganizalions and consunois uso lho suppIioi-piovidod naikol
pIaco. This is lho nosl connon lypo of 2 nodoI. In lhis nodoI, lolh lusinoss luyois
and individuaI consunois uso lho sano suppIioi-piovidod naikolpIaco. An oxanpIo of
lhis nodoI is #S Conpononls (isvvv.con).#S Conpononls is a Ioading disliiluloi of
oIoclionic, oIocliicaI, and nochanicaI conpononls, insliunonls, and looIs in uiopo. Tho
naikolpIaco piovidos fasl soaich and ioliiovaI of 1OO,OOO pioducls, conlinod vilh
poisonaIizod cuslonoi pionolions lasod on lho luying piofiIos of ils najoi cuslonois.
A suppIioi-oiionlod naikolpIaco nay aIso piovido an auclioning faciIily lo offIoad
suipIus invonloiy oi offoi discounls lo cuslonois.
3. uyoi-Oiionlod MaikolpIaco
Undoi lhis nodoI, a luyoi opons an oIoclionic naikol on ils ovn soivoi and invilos
polonliaI suppIiois lo lid on lho announcod #oquosls foi Quolalion (#IQs). Ono
conpany lhal has succossfuIIy oxpIoilod lhis nodoI is C Lighling. Tho puichasing
dopailnonl iocoivos oIoclionic ioquisilions fion inloinaI cuslonois lhal aio lhon sonl lo
polonliaI suppIiois ovoi lho Inloinol. Wilhin lvo houis of lho puichasing dopailnonl
slailing lho piocoss, suppIiois aio nolifiod of inconing #IQs and aio givon sovon days
lo piopaio lids and sond lhon lack ovoi lho oxlianol lo C. Wilh lho liansaclion
handIod oIoclionicaIIy, lho piocuiononl funclion has loon alIo lo conconlialo on noio
slialogic aclivilios ialhoi lhan cIoiicaI and adninislialion lasks.
4. usinoss-lo-usinoss Inloinodiaiy
This nodoI is sonolinos iofoiiod lo as a 'hul oi 'oxchango. Il is oslalIishod ly an
oIoclionic inloinodiaiy lhal iuns a naikolpIaco vhoio suppIiois and luyois havo a
conliaI poinl lo cono logolhoi. Thoso 2 huls lond lo focus nainIy on non-coio ilons
lhal nay iango fion slalionoiy and conpulois lo caloiing soivicos and liavoI. Thoio aio
lvo lypos of huls:
'oilicaI -focus on an indusliy and piovido conlonl lhal is spocific lo lho
indusliys vaIuo syslon of luyois and suppIiois. xanpIos incIudo o-
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y%
SlooI lhal acls as an inloinodiaiy lolvoon slooI- nakois and cuslonois
and 'oilicaI Nol lhal piovidos inloinodiaiios foi nany indusliios
incIuding oIoclionics, piocoss, loIoconnunicalions, and uliIilios.
oiizonlaI - piovido lho sano funclion foi a vaiioly of indusliios. An
oxanpIo is iMaik.con, vhich acls as an inloinodiaiy lolvoon luyois
and suppIiois of usod capilaI oquipnonl in diffoionl indusliios.
An inloinodiaiy nay lo cIosod - vhoio nonlois and liading pailnois aio vollod foi
IogaI and financiaI piolily - oi opon lo aII-conois, vilh lho naikolpIaco ilsoIf acling as a
liuslod inloinodiaiy. Il is inpoilanl lo nolo lhal inloinodiaiios nay lo liasod lovaids
oilhoi luyois oi suppIiois. SuppIy-sido inloinodiaiios nay lo iun ly consoilia of
nanufacluiois such as Chondox lhal acls as an inloinodiaiy foi suppIiois lo lho Iifo
scioncos indusliy. SiniIaiIy, luy-sido inloinodiaiios nay lo iun ly consoilia of
cuslonois such as Covisinl foi cai nakois oi ly indopondonl oiganizalions such as
AchiIIos foi uliIilios. Thoso inloinodiaiios nay allonpl lo aggiogalo donand foi luyois
in oidoi lo ollain ioducod piicos and noio favoialIo loins fion suppIiois. In ioIalion
lo paynonl, sono inloinodiaiios nay chaigo a fIal foo poi liansaclion lo lolh lho luyoi
and suppIiois. AIloinalivoIy, a poiconlago nay lo chaigod in lho caso of vaIuo-addod
soivicos such as auclions. In lho caso of Iaigo, iopolilivo liansaclions, lo achiovo
naxinun lonofil lho inloinodiaiy shouId lo Iinkod soanIossIy lo lho luyois
puichasing and lho suppIiois syslons so lhal lho onliio puichasing piocoss can lo
oxoculod oIoclionicaIIy. In lho conloxl of conpolilivo advanlago and lho infIuonco of lho
Inloinol, cuslonoi/suppIioi IifocycIo is a usofuI fianovoik foi undoislanding an
oiganizalions lusinoss piocossos, as voII as lhoso of lhoii cuslonois, suppIiois, and
conpolilois. This fianovoik piovidos a vay of dislinguishing lolvoon luying and
soIIing aclivilios lo lolloi undoisland lho inloiioIalionships lolvoon cuslonois and
suppIiois lusinoss piocossos, and vhal lhoy loin 'Touch !oinls in lho conpany.
A succossfuI oIoclionic lusinoss slialogy viII aIloi lho naluio of lho pioducl oi soivico
loing offoiod, ils vaIuo in lho naikol pIaco, oi lho luyoi-suppIioi ioIalionship.
Consunoi-lo-lusinoss (C2) is an oIoclionic connoico lusinoss nodoI in vhich
consunois (individuaIs) offoi pioducls and soivicos lo conpanios and lho conpanios
pay lhon. This lusinoss nodoI is a conpIolo iovoisaI of liadilionaI lusinoss nodoI
vhoio conpanios offoi goods and soivicos lo consunois (lusinoss-lo-consunoi =
2C).Wo can soo lhis oxanpIo in lIogs oi inloinol foiuns vhoio lho aulhoi offois a Iink
lack lo an onIino lusinoss faciIilaling lho puichaso of sono pioducl (Iiko a look
onAnazon.con), and lho aulhoi nighl iocoivo affiIialo iovonuo fion a succossfuI saIo.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y%
This kind of ocononic ioIalionship is quaIifiod as an invoilod lusinoss lypo. Tho advonl
of lho C2 schono is duo lo najoi changos:
Connocling a Iaigo gioup of poopIo lo a lidiioclionaI nolvoik has nado
lhis soil of connoiciaI ioIalionship possilIo. Tho Iaigo liadilionaI nodia
oulIols aio ono diioclion ioIalionship vhoioas lho inloinol is lidiioclionaI
ono.
Docioasod cosl of lochnoIogy: IndividuaIs nov havo accoss lo
lochnoIogios lhal voio onco onIy avaiIalIo lo Iaigo conpanios (digilaI
piinling and acquisilion lochnoIogy, high poifoinanco conpuloi,
povoifuI soflvaio)
C2 lusinoss nodoIs Iiko nosl of C2C nodoIs Iiko lay aio lasod on 3 pIayois: a
consunoi acling as soIIoi, a lusinoss acling as luyoi and an inloinodiaiy doaIing vilh
lho connoclion lolvoon soIIois and luyois.
Consunoi
A consunoi in lho C2 lusinoss nodoI can lo any individuaI vho has sonolhing lo
offoi oilhoi a soivico oi a good. Tho individuaI is paid foi lho voik piovidod lo lho
conpanios. Doponding on lho nodoI, lho "consunoi" can lo:
A volnasloi/ lIoggoi offoiing advoilising soivico (lhiough CoogIo Ad
sonso piogian foi oxanpIo oi anazon. con affiIialion piogian)
A phologiaphoi oi a dosignoi offoiing slock inagos lo conpanios ly
soIIing his ailvoik lhiough IoloIia oi islockpholo foi oxanpIo
Any individuaI ansvoiing a poII lhiough a suivoy silo
Any individuaI vilh connoclions offoiing jol hiiing soivico ly iofoiiing
sonoono lhiough iofoiiaI hiiing silos Iiko jolsloi.con oi h3.con
usinoss
usinoss in lho C2 lusinoss nodoI iopiosonls any conpanios luying goods oi soivicos
lo individuaI lhiough inloinodiaiios. oio aio sono oxanpIos of polonliaI conpanios
vhich can lo such cIionls:
Any conpany vhich vanls lo fiII a jol (lhiough iofoiiaI hiiing silos)
Any conpany nooding lo advoiliso onIino (lhiough CoogIo Advoids
piogian foi oxanpIo)
Any advoilising agoncy vhich noods lo luy a slock pholo (lhiough
nicioslock silos)
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Inloinodiaiy
Tho Inloinodiaiy is lho ciuciaI oIononl sinco il cioalos lho connoclion lolvoon lusinoss
vhich noods a soivico oi a good and a nass of individuaIs. Inloinodiaiy is usuaIIy a
poilaI lolh foi luyois (lusinossos) and soIIoi (individuaIs).Tho inloinodiaiy pIays lvo
ioIos:
Il pionolos goods and soivicos offoiod ly individuaIs ly pioposing a
disliilulion channoI. Il offois vhal individuaIs can'l do lhonsoIvos:
Iaigo pionolion, Iogislic and financiaI suppoil, lochnicaI oxpoiliso
Il offois luyois a conlacl lo a nass of individuaIs and lakos caio of
nonoy liansaclions and IogaI aspocls
Wo can nolico lhal sono inloinodiaiios piofoi cioaling lvo diffoionl accossos ono foi
luyois and ono foi soIIois (CoogIo Advoids foi advoilisoi - CoogIo Adsonso foi vol
pulIishoi) vhoioas olhoi conpanios Iiko IoloIia havo onIy ono accoss locauso luyois
and soIIois can lo lho sano.
Wo can diffoionlialo lvo kinds of inloinodiaiios:
xloin inloinodiaiy: lhoy acl as an oxloin agonl vilhin lho ioIalion
lolvoon conpanios and individuaI (ox: iofoiiaI hiiing silo)
Inloin inloinodiaiy: lhoy pIay lho ioIo lolh of lusinoss and
inloinodiaiy. Ioi oxanpIo, il is lho caso of anazon.con lhiough ils
affiIialion piogian. Anazon pays individuaI lo pionolo ils ovn
pioducls.
Iov lypos of inloinodiaiios
Inloinodiaiy xanpIos Whal do lhoy soII`
Advoilising Silo CoogIo
Advoids/AdsonsoTiadodoulIoi
Connission }unclion
Advoilising soivicos
lhiough soaich onginos
and volsilos
Micioslock Silo IoloIiaShulloislock Islockpholo Slock !holos, 'oclois,
IIash aninalions
#offoiaI iiing Silo3}oslsloi
}olnoolois
}ol iiing Soivico

1)I1))/I1O)/ +1)1 ^/))1I1)

\Y

C2 vs 2C : CiaphicaI #opiosonlalion

QucstInn 5: What kInd nf Impact wI!! g!nba!IzatInn and IntcrnatInna! busIncss
cnvIrnnmcnt crcatc nn IndIan busIncsscs?
CIolaIizalion is lho nov luzzvoid lhal has cono lo doninalo lho voiId sinco lho
ninolios of lho Iasl conluiy vilh lho ond of lho coId vai and lho lioak-up of lho foinoi
Soviol Union and lho gIolaI liond lovaids lho ioIIing laII. Tho fionliois of lho slalo
vilh incioasod ioIianco on lho naikol oconony and ionovod failh in lho piivalo capilaI
and iosouicos, a piocoss of sliucluiaI adjuslnonl spuiiod ly lho sludios and infIuoncos
of lho WoiId ank and olhoi InloinalionaI oiganizalions havo slailod in nany of lho
dovoIoping counliios. AIso CIolaIizalion has lioughl in nov oppoilunilios lo
dovoIoping counliios. Cioaloi accoss lo dovoIopod counliy naikols and lochnoIogy
liansfoi hoId oul pioniso inpiovod pioduclivily and highoi Iiving slandaid. ul
CIolaIizalion has aIso lhiovn up nov chaIIongos Iiko gioving inoquaIily acioss and
vilhin nalions, voIaliIily in financiaI naikol and onviionnonlaI doloiioialions. Anolhoi
nogalivo aspocl of CIolaIizalion is lhal a gioal najoiily of dovoIoping counliios ionain
ionovod fion lho piocoss. TiII lho ninolios lho piocoss of CIolaIizalion of lho Indian
oconony vas consliainod ly lho laiiiois lo liado and invoslnonl IiloiaIizalion of liado,
invoslnonl and financiaI fIovs inilialod in lho ninolios has piogiossivoIy Iovoiod lho
laiiiois lo conpolilion and haslonod lho paco of gIolaIizalion
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Though lho piociso dofinilion of CIolaIizalion is sliII unavaiIalIo a fov dofinilions
voilh vioving, Slophon CiII: dofinos CIolaIizalion as lho ioduclion of liansaclion cosl
of Tians loidoi novononls of capilaI and goods lhus of faclois of pioduclion and
goods. Cuy iainlanl: says lhal lho piocoss of CIolaIizalion nol onIy incIudos oponing
up of voiId liado, dovoIopnonl of advancod noans of connunicalion,
inloinalionaIizalion of financiaI naikols, gioving inpoilanco of MNC's, popuIalion
nigialions and noio gonoiaIIy incioasod noliIily of poisons, goods, capilaI, dala and
idoas lul aIso infoclions, disoasos and poIIulion
Inpacl on India:
India oponod up lho oconony in lho oaiIy ninolios foIIoving a najoi ciisis lhal Iod ly a
foioign oxchango ciunch lhal diaggod lho oconony cIoso lo dofauIling on Ioans. Tho
iosponso vas a sIov of Donoslic and oxloinaI socloi poIicy noasuios pailIy pionplod
ly lho innodialo noods and pailIy ly lho donand of lho nuIliIaloiaI oiganizalions. Tho
nov poIicy iogino iadicaIIy pushod foivaid in favoi of a noio opon and naikol
oiionlod oconony.
Majoi noasuios inilialod as a pail of lho IiloiaIizalion and CIolaIizalion slialogy in lho
oaiIy ninolios incIudod sciapping of lho indusliiaI Iiconsing iogino, ioduclion in lho
nunloi of aioas iosoivod foi lho pulIic socloi, anondnonl of lho nonopoIios and lho
iosliiclivo liado piaclicos acl, slail of lho piivalizalion piogian, ioduclion in laiiff ialos
and chango ovoi lo naikol doloininod oxchango ialos.
Ovoi lho yoais lhoio has loon a sloady IiloiaIizalion of lho cuiionl accounl liansaclions,
noio and noio soclois oponod up foi foioign diiocl invoslnonls and poilfoIio
invoslnonls faciIilaling onliy of foioign invoslois in loIocon, ioads, poils, aiipoils,
insuianco and olhoi najoi soclois.
Tho Indian laiiff ialos ioducod shaipIy ovoi lho docado fion a voighlod avoiago of
72.5 in 1991-92 lo24.6 in 1996-97.Though laiiff ialos vonl up sIovIy in lho Ialo ninolios
il louchod 35.1 in 2OO1-O2. India is connillod lo ioducod laiiff ialos. !oak laiiff ialos
aio lo lo ioducod lo lo ioducod lo lho nininun vilh a poak ialo of 2O, in anolhoi 2
yoais nosl non-laiiff laiiiois havo loon disnanlIod ly naich 2OO2, incIuding aInosl aII
quanlilalivo iosliiclions.
India is CIolaI: Tho IiloiaIizalion of lho donoslic oconony and lho incioasing
inlogialion of India vilh lho gIolaI oconony havo hoIpod slop up CD! giovlh ialos,
vhich pickod up fion 5.6 in 199O-91 lo a poak IovoI of 77.8 in 1996-97. Ciovlh ialos
havo sIovod dovn sinco lho counliy has sliII loon alIo lo achiovo 5-6 giovlh ialo in
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
lhioo of lho Iasl six yoais. Though giovlh ialos has sIunpod lo lho Iovosl IovoI 4.3 in
2OO2-O3 nainIy locauso of lho voisl dioughls in lvo docados lho giovlh ialos aio
oxpoclod lo go up cIoso lo 7O in 2OO3-O4. A CIolaI conpaiison shovs lhal India is nov
lho faslosl gioving jusl afloi China.
This is najoi inpiovononl givon lhal India is giovlh ialo in lho 197O's vas voiy Iov al
3 and CD! giovlh in counliios Iiko iaziI, Indonosia, Koioa, and Moxico vas noio
lhan lvico lhal of India. Though India's avoiago annuaI giovlh ialo aInosl doulIod in
lho oighlios lo 5.9 il vas sliII Iovoi lhan lho giovlh ialo in China, Koioa and
Indonosia. Tho pickup in CD! giovlh has hoIpod inpiovo India's gIolaI posilion.
ConsoquonlIy India's posilion in lho gIolaI oconony has inpiovod fion lho 8
lh
posilion
in 1991 lo 4
lh
pIaco in 2OO1. Whon CD! is caIcuIalod on a puichasing povoi paiily lasis.
CIolaIizalion and !ovoily:
CIolaIizalion in lho foin of incioasod inlogialion lhough liado and invoslnonl is an
inpoilanl ioason vhy nuch piogioss has loon nado in ioducing povoily and gIolaI
inoquaIily ovoi ioconl docados. ul il is nol lho onIy ioason foi lhis oflon uniocognizod
piogioss, good nalionaI poIicos, sound inslilulions and donoslic poIilicaI slaliIily aIso
nalloi.
Dospilo lhis piogioss, povoily ionains ono of lho nosl soiious inloinalionaI chaIIongos
vo faco up lo 1.2 liIIion of lho dovoIoping voiId 4.8 liIIion poopIo sliII Iivo in oxliono
povoily.
ul lho piopoilion of lho voiId popuIalion Iiving in povoily has loon sloadiIy docIining
and sinco 198O lho alsoIulo nunloi of pooi poopIo has sloppod iising and appoais lo
havo faIIon in ioconl yoais dospilo sliong popuIalion giovlh in pooi counliios. If lho
piopoilion Iiving in povoily had nol faIIon sinco 1987 aIono a fuilhoi 215niIIion poopIo
vouId lo Iiving in oxliono povoily loday.
India has lo conconlialo on fivo inpoilanl aioas oi lhings lo foIIov lo achiovo lhis goaI.
Tho aioas Iiko lochnoIogicaI onliopionouiship, nov lusinoss oponings foi snaII and
nodiun onloipiisos, inpoilanco of quaIily nanagononl, nov piospocls in iuiaI aioas
and piivalizalion of financiaI inslilulions. Tho nanufacluiing of lochnoIogy and
nanagononl of lochnoIogy aio lvo diffoionl significanl aioas in lho counliy.
Thoio viII lo nov piospocls in iuiaI India. Tho giovlh of Indian oconony voiy nuch
doponds upon iuiaI pailicipalion in lho gIolaI iaco. Afloi inpIononling lho nov
ocononic poIicy lho ioIo of viIIagos gol ils ovn significanco locauso of ils uniquo
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
oulIook and lianding nolhods. Ioi oxanpIo food piocossing and packaging aio lho ono
of lho aioa vhoio nov onliopionouis can onloi inlo a lig vay. Il nay lo oiganizod in a
coIIoclivo vay vilh lho hoIp of co-opoialivos lo nool lho gIolaI donand.
Undoislanding lho cuiionl slalus of CIolaIizalion is nocossaiy foi solling couiso foi
fuluio. Ioi aII nalions lo ioap lho fuII lonofils of CIolaIizalion il is ossonliaI lo cioalo a
IovoI pIaying fioId. !iosidonl ush's ioconl pioposaI lo oIininalo aII laiiffs on aII
nanufacluiod goods ly 2O15 viII do il. In facl il nay oxacoilalo lho piovaIonl
inoquaIilios. Accoiding lo lhis pioposaI, laiiffs of 5 oi Ioss on aII nanufacluiod goods
viII lo oIininalod ly 2OO5 and highoi lhan 5 viII lo Iovoiod lo 8. Slailing 2O1O lho
8 laiiffs viII lo Iovoiod oach yoai unliI lhoy aio oIininalod ly2O15.
CD! Ciovlh ialo:
Tho Indian oconony is passing lhiough a difficuIl phaso causod ly sovoiaI unfavoialIo
donoslic and oxloinaI dovoIopnonls, Donoslic oulpul and Donand condilions voio
advoisoIy affoclod ly pooi poifoinanco in agiicuIluio in lho pasl lvo yoais. Tho gIolaI
oconony oxpoiioncod an ovoiaII docoIoialion and iocoidod an oulpul giovlh of 2.4
duiing lho pasl yoai giovlh in ioaI CD! in 2OO1-O2 vas 5.4 as poi lho cononic
Suivoy in 2OOO-O1. Tho poifoinanco in lho fiisl quailoi of lho financiaI yoai is5.8 and
socond quailoi is 6.1.
xpoil and Inpoil:
India's xpoil and Inpoil in lho yoai 2OO1-O2 vas lo lho oxlonl of 32,572 and 38,362
niIIion iospoclivoIy. Many Indian conpanios havo slailod loconing iospoclalIo pIayois
in lho InloinalionaI scono. AgiicuIluio oxpoils accounl foi aloul 13 lo 18 of lolaI
annuaI of annuaI oxpoil of lho counliy. In 2OOO-O1 AgiicuIluiaI pioducls vaIuod al noio
lhan US $ 6niIIion voio oxpoilod fion lho counliy 23 of vhich vas conliilulod ly
lho naiino pioducls aIono. Maiino pioducls in ioconl yoais havo onoigod as lho singIo
Iaigosl conliiluloi lo lho lolaI agiicuIluiaI oxpoil fion lho counliy accounling foi ovoi
ono fiflh of lho lolaI agiicuIluiaI oxpoils. CoioaIs (noslIy lasnali iico and non- lasnali
iico), oiI soods, loa and coffoo aio lho olhoi pioninonl pioducls oach of vhich accounls
foi noaiIy 5 lo 1Oof lho counliys lolaI agiicuIluiaI oxpoils.
Whoio doos Indian sland in loins of CIolaI Inlogialion`
India cIoaiIy Iags in CIolaIizalion. Nunloi of counliios has a cIoai Ioad anong lhon
China, Iaigo pail of oasl and fai oasl Asia and asloin uiopo. Lols Iook al a fov
indicalois hov nuch vo Iag.
1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
Ovoi lho pasl docado IDI fIovs inlo India havo avoiagod aiound O.5 of CD!
againsl 5 foi China 5.5 foi iaziI. Whoioas IDI infIovs inlo China nov
oxcoods US $ 5O liIIion annuaIIy. Il is onIy US $ 4liIIion in lho caso of India
Considoi gIolaI liado - India's shaio of voiId noichandiso oxpoils incioasod
fion .O5 lo .O7ovoi lho pasl 2O yoais. Ovoi lho sano poiiod China's shaio has
liipIod lo aInosl 4.
India's shaio of gIolaI liado is siniIai lo lhal of lho !hiIippinos an oconony 6
linos snaIIoi accoiding lo IMI oslinalos. India undoi liados ly 7O-8O givon ils
sizo, pioxinily lo naikols and Laloi cosl advanlagos.
Il is inloiosling lo nolo lho ionaik nado Iasl yoai ly Mi. inaI }aIan, Covoinoi
of #I. Dospilo aII lho laIk, vo aio nov vhoio ovoi cIoso loing gIolaIizod in
loins of any connonIy usod indicaloi of CIolaIizalion. In facl vo aio ono of lho
Ioasl gIolaIizod anong lho najoi counliios - hovovoi vo Iook al il.
As Anailya Son and nany olhoi havo poinlod oul lhal India, as a googiaphicaI,
poIilico-cuIluiaI onlily has loon inloiacling vilh lho oulsido voiId lhioughoul
hisloiy and sliII conlinuo lo do so. Il has lo adapl, assiniIalo and conliilulo. This
goos vilhoul saying ovon as vo novo inlo vhal is caIIod a gIolaIizod voiId
vhich is dislinguishod fion piovious oias fion ly fasloi liavoI and
connunicalion, gioaloi liado Iinkagos, donling of poIilicaI and ocononic
sovoioignly and gioaloi accoplanco of donociacy as a vay of Iifo.
Consoquoncos:
Tho inpIicalions of CIolaIizalion foi a nalionaI oconony aio nany. CIolaIizalion has
inlonsifiod inloidopondonco and conpolilion lolvoon ocononios in lho voiId naikol.
This is iofIoclod in Inloidopondonco in iogaid lo liading in goods and soivicos and in
novononl of capilaI. As a iosuIl donoslic ocononic dovoIopnonls aio nol doloinining
onliioIy ly donoslic poIicios and naikol condilions. #alhoi, lhoy aio infIuoncod ly lolh
donoslic and inloinalionaI poIicios and ocononic condilions. Il is lhus cIoai lhal a
gIolaIizing oconony, vhiIo foinuIaling and ovaIualing ils donoslic poIicy cannol
affoid lo ignoio lho possilIo aclions and ioaclions of poIicios and dovoIopnonls in lho
iosl of lho voiId. This consliainod lho poIicy oplion avaiIalIo lo lho govoinnonl vhich
inpIios Ioss of poIicy aulonony lo sono oxlonl, in docision-naking al lho nalionaI IovoI.

1)I1))/I1O)/ +1)1 ^/))1I1)

\Y
QucstInn 6.DIscuss any 3 rcgInna! tradIng agrccmcnts and Its cffcct nn IntcrnatInna!
busIncss
Ansvoi: #ogionaI inlogialion is londing lolvoon nalions and slalos lhiough poIilicaI,
cuIluiaI and ocononic coopoialion. Tho coopoialion is ovoisoon ly iuIos and
ioguIalions docidod upon ly lho slalos onloiing inlo an undoislanding.
#ogionaI Tiading Aiiangononls
Tho uiopoan Union (U)
Tho uiopoan Union (U) is an ocononic and poIilicaI union oslalIishod in 1993. This
cano inlo offocl locauso of lho Tioaly of Maasliichl, signod on 7lh Ioliuaiy 1992 ly lho
uiopoan Connunilios. Tho U conpiisos of 27nonloi slalos connillod lo iogionaI
inlogialion.
Tho U has dovoIopod a singIo naikol foi aII lho nonloi slalos and sixloon nonloi
slalos havo adoplod a connon cuiioncy caIIod lho uio. Tho nonloi slalos sign an
agioononl caIIod Schongon Agioononl, vhich onsuios lho fioo novononl of poopIo,
goods, capilaI and soivicos, incIuding lho aloIilion of passpoil conlioIs. Tho agioononl
onacls IogisIalion in juslico and hono affaiis, and nainlains connon poIicios on liado,
agiicuIluio, fishoiios and iogionaI dovoIopnonl.
U has aIso dovisod a connon foioign and socuiily poIicy foi ils nonloi slalos. Tho
U has oslalIishod dipIonalic nissions aiound lho voiId and lhoy iopiosonl lho
nonloi slalos al lho Unilod Nalions, WTO, C8 and C-2O sunnils.U anlassadois
hoad lho U doIogalions.
Inpoilanl oiganizalions of lho U incIudo lho uiopoan Connission, lho CounciI of
lho uiopoan Union, lho uiopoan CounciI, lho Couil of }uslico of lho uiopoan Union,
and lho uiopoan ConliaI ank. Tho U cilizon soIocls lho uiopoan !aiIianonl ovoiy
fivo yoais.
uiopoan Iioo Tiado Associalion (ITA)
Tho uiopoan Iioo Tiado Associalion (ITA) is a fioo liado oiganizalion oslalIishod in
196O lolvoon foui uiopoan counlios, Noivay, SvilzoiIand, IcoIand and Liochlonsloin.
Tho ITA vas foinod al lho SlockhoIn Convonlion lolvoon sovon counliios, piosonlIy
onIy foui counliios ionain as lho nonlois of ITA. Tho ITA vas foinod as an
aIloinalivo lo U, aIIoving counliios lo join ITA if lhoy voio nol viIIing lo join U. Il
opoialos paiaIIoI lo lho U. Tho SlockhoIn Convonlion vas iopIacod ly lho 'aduz
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\Y
Convonlion. This Convonlion piovidos a fianovoik foi a fioo and IiloiaI liado anongsl
ils nonloi slalos.
In 1994, lhioo of lho ITA counliios signod uiopoan cononic Aioa (A) agioononl
and locano a pail of lho uiopoan Union InloinaI Maikol. SvilzoiIand oplod lo
aiiango liIaloiaI agioononls vilh lho U. In addilion, lho ITA slalos havo joinlIy
aiiangod fioo liado agioononls vilh nany olhoi counliios. In 1999, SvilzoiIand
oslalIishod a nunloi of liIaloiaI agioononls vilh lho U, covoiing a vido iango of
aioas, incIuding novononl of poisons, lianspoil and lochnicaI laiiiois lo liado. This
agioononl pionplod lho ITA slalos lo nodoinizo lhoii convonlion lo guaianloo lhal il
viII conlinuo lo piovido guidoIinos foi lho oxpansion and IiloiaIizalion of liado anong
lhon and vilh lho iosl of lho voiId.
Noilh Anoiican Iioo Tiado Agioononl (NAITA)
Tho Noilh Anoiican Iioo Tiado Agioononl (NAITA) vas signod in 1994 ly lhioo
govoinnonls, Canada, Moxico and lho Unilod Slalos. This liado agioononl is lho Iaigosl
in lho voiId in loins of conlinod puichasing povoi paiily Cioss Donoslic !ioducl
(CD!) and socond Iaigosl ly noninaI CD! conpaiison.
Tho NAITA is dividod inlo lvo soclions, lho Noilh Anoiican Agioononl on
nviionnonlaI Coopoialion (NAAC)and lho Noilh Anoiican Agioononl on Laloi
Coopoialion (NAALC).
Tho Noilh Anoiican Agioononl on nviionnonlaI Coopoialion (NAAC) vas
oslalIishod in 1994. Il is an onviionnonlaI agioononl lolvoon lho Unilod Slalos of
Anoiica, Moxico and Canada. Tho agioononl conpiisos of a docIaialion of oljoclivos
and piincipIos iogaiding consoivalion and lho pioloclion of lho onviionnonl. Tho
Connission foi nviionnonlaI Coopoialion (CC) vas sol up as pail of lho agioononl.
Noilh Anoiican Agioononl on Laloi Coopoialion (NAALC) vas aIso oslalIishod in
1994 lo achiovo lho foIIoving goaIs:
4 Inpiovo voiking condilions and Iiving slandaids.
4 !ionolo a sol of guiding Laloi piincipIos.
4 ncouiago coopoialion lo pionolo innovalion.
4 Inpiovo lho IovoIs of pioduclivily and quaIily.
NAALC piovidos vaiious noans such as oxchangos of infoinalion, lochnicaI assislanco,
and consuIlalions foi achioving lho alovo goaIs.