ST.

ALOYSIUS COLLEGE (AUTONOMOUS), MANGALORE

INETERNATIONAL BUSINESS ENVIRONMENT

ASSIGNMENT

Submitted to:
Prof. Dhananjaya k
Department of MBA
AIMIT
Submitted by:
Vinay prasad L S
1516178
MBA

SAARC

-SOUTH

ASIAN
REGIONAL COOPERATION

ASSOCIATION

FOR

BACKGROUND-The idea of regional cooperation in South Asia was first mooted in May 1980.
The Foreign Secretaries of the seven countries met for the first time in Colombo in April 1981.
The Committee of the Whole, which met in Colombo in August 1981, identified five broad areas
for regional cooperation. New areas of cooperation were added in the following years.
The South Asian Association for Regional Cooperation (SAARC) was established when its
Charter was formally approved on 8 December 1985 by the Heads of State or Government of
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan became a
member of SAARC during the Fourteenth SAARC Summit held in Delhi, India in April 2007.
Until 2009 China, Japan, Republic of Korea, USA, Iran, Mauritius, Australia, Myanmar and the
European Union have joined SAARC as Observers.
The SAARC Secretariat is based in Katmandu. It coordinates and monitors implementation of
activities,prepares for and services meetings, and serves as a channel of communication between
the Association and its Member States as well as other regional organizations.The Secretariat is
headed by the Secretary General, who is appointed from Member States in alphabetical order for
a three-year term by the SAARC Council of Ministers.H.E. Dr. Sheel Kant Sharma of India is the
current Secretary General of SAARC.
The Secretary General is assisted by eight Directors on deputation from Member States.The
SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day.
OBJECTIVES-SAARCs edifice is built upon a foundation of a strong set of objectives. Every
decision SAARC takes and every policy it frames is guided by the overall objectives it had set
for itself in the charter. Although promoting welfare economics and collective self-reliance
among the South Asian nations are the commonly quoted objectives, yet there are some equally
important focus areas which need a mention. Accelerating economic growth and cultural
development in South Asia is one of the priorities, which come under the broader goal of
improving quality of life.Giving every individual the opportunity to live in dignity and to realise
their full potentials also finds a place in the list of objectives. Understanding and appreciation
of one anothers problems is one of the rare objectives that one finds in any regional grouping.
SAARC also seeks collaboration in the field of economics, culture, technology and science. The
member countries aim to strengthen cooperation among themselves in international forums on
matters of common interests.
AGREEMENT-Cabinet clears 3 key agreements to be signed at SAARC Summit.

"The agreement will enable greater cooperation in the power sector among SAARC countries. It
is expected to improve the power availability in the entire SAARC region. It would facilitate
integrated operation of the regional power grid," he said.In another decision related to SAARC,
the Cabinet approved the signing and ratifying the SAARC Motor Vehicles Agreement.It also
approved the signing of a bilateral agreement for the regulation of passenger traffic between
India and Nepal on the sidelines of the SAARC summit.The Cabinet has also authorised the
Ministry of Road Transport and Highways to sign similar bilateral agreements and protocols with
other SAARC member-states, an official statement said.The agreement on motor vehicles
provides for the member-states allowing their vehicles to ply in their territories for transportation
of cargo and passengers subject to various terms and conditions.The agreement once signed will
result in closer regional economic cooperation and integration through enhanced regional
connectivity by allowing movement of goods and passengers in the region through road
transport, the statement said.The signing and ratification of the SAARC Regional Railways
Agreement by India was also cleared.It will strengthen transport connectivity in SAARC region.
Strengthened rail and transport connectivity will not only provide stimulus to the economic
development in the region as a whole but also promote social and cultural contact and encourage
tourism amongst the member-countries, said another statement.

The Regional Rail Agreement will also enable low-cost, energy efficient and environmentallysustainable transportation in the SAARC region and provide trade and economic links for landlocked countries and semi-isolated regions.On bilateral front, the MoU on tourism with Nepal
would help India increase foreign tourist arrivals from Nepal to the country.
This in turn will result in economic development and employment generation.The cabinet also
passed a resolution moved by Home Minister Rajnath Singh congratulating Modi on his
"successful" visits to Myanmar, Australia and Fiji.
ACHIEVEMENT-According to the declaration of the 16thSAARC Summit (April 2010),
SAARCs scope and substance of cooperation had expanded to diverse fields. The SAARC
Summits have indeed created a platform for closed-door bilateral talks exclusive to the
participating nations. These meetings have somewhat led to the progress in regional
cooperation.The scope of regional cooperation in SAARC has proliferated, and it has started to
engage political, economic, social, cultural and other aspects in its dialogue. Even the member
nations interactions with the Chambers of Commerce and Industry and the corporate sectors
seem to be developing gradually.
However, SAARC is seen as a failure by many analysts. According to observers, it has achieved
very little over the last three decades. Besides deteriorating regional security environment and
growth of terrorism in Pakistan and Afghanistan, inter-state disputes are also a nagging concern

for the grouping. Social and economic sectors have registered a dismal growth, and so is the
intra-regional trade.
Theres a need for India and other member states to collectively tackle challenges such as
poverty, energy crisis, and terrorism among others. India should take the centre stage and remove
the perceived mistrust and a sense of insecurity among the member nations. But first, India and
Pakistan should focus on improving bilateral ties.

BRICS-BRAZIL-RUSSIA-INDIA-CHINASOUTH AFRICA
BACKGROUND-The acronym "BRICs" was initially formulated in 2001 by economist Jim
O'Neill, of Goldman Sachs, in a report on growth prospects for the economies of Brazil, Russia,
India and China which together represented a significant share of the world's production and
population.
In 2006, the four countries initiated a regular informal diplomatic coordination, with annual
meetings of Foreign Ministers at the margins of the General Debate of the UN General Assembly
(UNGA). This successful interaction led to the decision that the dialogue was to be carried out at
the level of Heads of State and Government in annual Summits. As of the First Summit, held in
Yekaterinburg in 2009, the depth and scope of the dialogue among the Members of BRICs
which became BRICS in 2011 with the inclusion of South Africa was further enhanced. More
than an acronym that identified countries emerging in the international economic order, BRICS
became a new and promising political-diplomatic entity, far beyond the original concept tailored
for the financial markets.
OBJECTIVESThe BRICS countries act as one to promote a more legitimate international
system, including advocating reform of the UN Security Council.
The BRICS group is a South-South framework for cooperation.

The BRICS group also acts as a bridge between developed and developing countries. For
example, in the WTO, the BRICS countries are trying to promote a fair order regarding
agricultural policies.
They are attempting to promote the liberalization of the international economic order to diminish
agricultural subsidies in the United States and the European Union, which would make
developing countries agricultural products more competitive.

The BRICS group will also play an increasingly important role in assisting developing countries
in gaining an advantage in trade and climate change negotiations, as well as on issues related to
the export of manufacturing products.
Developing countries on the periphery of the group will be able to leverage the NDB and the
CRA to increase their bargaining power.
The group established the BRICS Business Council, made up of 25 prominent entrepreneurs
from the five countries and representing many industries and economic sectors.
The BRICS also formed an information-sharing and exchange platform that expands beyond
economic cooperation to also involve educational, cultural, and environmental engagement.
They have a shared interest in challenging the current governance of Western financial
institutions like the International Monetary Fund and the World Bank for that they have
announced the establishment of the bank
They will advocate for the interests of middle powers on global forum.
AGREEMENTS-The New Development Bank (NDB), formerly referred to as the BRICS
Development Bank, is a multilateral development bank established by the BRICS states (Brazil,
Russia, India, China and South Africa). According to the Agreement on the NDB, "the Bank shall
support public or private projects through loans, guarantees, equity participation and other
financial instruments." Moreover, the NDB "shall cooperate with international organizations and
other financial entities, and provide technical assistance for projects to be supported by the
Bank."
The initial authorized capital of the bank is $100 bln divided into 1 mln shares having a par value
of $100,000 each. The initial subscribed capital of the NDB is $50 bln divided into paid-in shares
($10 bln) and callable shares ($40 bln). The initial subscribed capital of the bank was equally
distributed among the founding members. The Agreement on the NDB specifies that the voting
power of each member will be equal to the number of its subscribed shares in the capital stock of
the bank.
ACHIEVEMENT-The BRICS bloc of emerging economies will set up its development bank
with a total capital of $100 billion within five years, but member countries still haven't agreed on
their share in the bank's structure.
The bank is being set up by Brazil, China, India and South Africa to fund infrastructure projects.
But it has been slow in coming, with prolonged disagreements over funding and management of
the institution.
The start-up capital of $50 billion would eventually be built up to $100 billion. Russia has
proposed that each member contributes an equal, 20 percent share. Other BRICS officials say

their share should depend on the size of their economies, Russia's Deputy Finance Minister
Sergei Storchak said.
"Russia's stance is that this is a new development bank, based on new principles, so we vote for
equal participation, 20 percent from each," Storchak told journalists.
Establishing the bank was first proposed in 2012. It was approved last year at a BRICS summit
in South Africa.
Officials from the group met last weekend in Sydney on the sidelines of a meeting of the finance
ministers and central bank governors from the Group of 20 developed and developing nations.
"After numerous attempts, we were able to agree that the process of building up the capital ...
will be stretched over time," Storchak said. "We managed to come to an agreement that the
period of contributions to the capital's share can be up to five years."
The group has struggled to take coordinated action in the past year, after the scaling back of U.S.
stimulus prompted an exodus of capital from their markets. That in turn raised fears about the
health of the BRICS economies.
The five-year span allows time for the global economy to improve and for growth in emerging
markets to revive, which would help in replenishing domestic budgets, Storchak said.
The location of the bank, another long-debated issue, was not decided in Sydney.
"There are interesting diplomatic negotiations because each country has declared that they will
propose their candidates (for the bank's headquarters)," Storchak said. "We have reached an
agreement that it should be decided through ... consensus."
The group's other project, a $100 billion fund designated to steady currency markets has also
been off to a slow start, awaiting a final approval.

SAFTA-SOUTH ASIAN FREE TRADE

AREA
BACKGROUND-The Agreement on SAARC Preferential trading Arrangement (SAPTA)[2]
was signed on 11 April 1993 and entered into force on 7 December 1995, with the desire of the
Member States of SAARC (India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the

Maldives) to promote and sustain mutual trade and economic cooperation within the SAARC
region through the exchange of concessions.
The establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish
a SAPTA by 1997 was approved in the Sixth Summit of SAARC held in Colombo in December
1991.
The basic principles underlying SAFTA are as under;overall reciprocity and mutuality of
advantages so as to benefit equitably all Contracting States, taking into account their respective
level of economic and industrial development, the pattern of their external trade, and trade and
tariff policies and systems;negotiation of tariff reform step by step, improved and extended in
successive stages through periodic reviews;recognition of the special needs of the Least
Developed Contracting States and agreement on concrete preferential measures in their
favour;inclusion of all products, manufactures and commodities in their raw, semi-processed and
processed forms.In 2011, Afghanistan joined SAFTA
OBJECTIVES-The objective of the agreement is to promote competition in the area and to
provide equitable benefits to the countries involved. It aims to benefit the people of the countries
by bringing transparency and integrity among the nations. SAFTA was also formed in order to
increase the level of trade and economic cooperation among the SAARC nations by reducing the
tariff and barriers and also to provide special preference to the Least Developed Countries
(LDCs)among the SAARC nations.
AGREEMENT-The purpose of SAFTA is to encourage and elevate common contract among the
countries such as medium and long term contracts. Contracts involving trade operated by states,
supply and import assurance in respect of specific products etc. It involves agreement on tariff
concession like national duties concession and non-tariff concession.
ACHIEVEMENT1. SAFTA-A Free Trade Agreement confined to goods, but excluding all services like
information technology. Agreement was signed to reduce customs duties of all traded goods to
zero by the year 2016.
2. SAPTA-South Asia Preferential Trading Agreement for promoting trade amonst the member
countries came into effect in 1995.
3. SAARC -visa exemption decided that certain categories of dignitaries should be entitled to a
Special Travel document, which would exempt them from visas within the region.
4. Greater cultural co-operation
5. Advantages of Least Developed Countries-It has provided forum for bilateral and regional
agreements to the small poor nations for collaboration among themselves for development.

NAFTA-NORTH
AMERICAN
TRADE AGREEMENT

FREE

BACKGROUND-In 1994, the North American Free Trade Agreement (NAFTA), a state-of-theart market-opening agreement, came into force. Since then, NAFTA has systematically
eliminated most tariff and non-tariff barriers to trade and investment between Canada, the United
States, and Mexico. By establishing a strong and reliable framework for investment, NAFTA has
also helped create the environment of confidence and stability required for long-term investment.
NAFTA was preceded by the Canada-U.S. Free Trade Agreement.

OBJECTIVES-NAFTA its main objectives is the liberalization of trade between Canada,

Mexico and the United States, stimulate economic growth and give the NAFTA countries equal
access to each other's markets.
AGREEMENT-The North American Free Trade Agreement is an agreement signed by Canada,
Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement
came into force on January 1, 1994. It superseded the CanadaUnited States Free Trade
Agreement between the U.S. and Canada.
NAFTA has two supplements: the North American Agreement on Environmental Cooperation
(NAAEC) and the North American Agreement on Labor Cooperation (NAALC).
ACHIEVEMENTS-Spanning 1992 to 2007, agricultural exports grew from the US to Canada
and Mexico at 156%
From 1993 to 2007, there was percentage increment of goods exports by 231% to the U.S from
Canada and Mexico
In 2006, the export of services from the US to Mexico and Canada increased from $25 billion to
$62 billion (125%). The same period witnessed increase in services export reach $37 billion from
Canada and Mexico
In 2006, the U.S. foreign direct investment (FDI) increased to $331 billion in Canada and
Mexico.

ASEAN- ASSOCIATION OF SOUTHEAST

ASIAN NATIONS
BACKGROUND-ASEAN was preceded by an organisation formed in 1961 called the
Association of Southeast Asia (ASA), a group consisting of the Philippines, Malaysia, and
Thailand. ASEAN itself was created on 8 August 1967, when the foreign ministers of five
countries: Indonesia, Malaysia, the Philippines, Singapore, and Thailand, signed the ASEAN
Declaration, more commonly known as the Bangkok Declaration.
OBJECTIVES-The ASEAN Declaration states that the aims and purposes of the Association
are: (1) to accelerate the economic growth, social progress and cultural development in the
region through joint endeavors in the spirit of equality and partnership in order to strengthen the
foundation for a prosperous and peaceful community of Southeast Asian nations, and (2) to
promote regional peace and stability through abiding respect for justice and the rule of law in the
relationship among countries in the region and adherence to the principles of the United Nations
Charter. In 1995, the ASEAN Heads of State and Government re-affirmed that "Cooperative
peace and shared prosperity shall be the fundamental goals of ASEAN."
The creation of ASEAN was motivated by a common fear of communism, and a thirst for
economic development.
ASEAN grew when Brunei Darussalam became its sixth member on 7 January 1984, barely a
week after gaining independence.
AGREEMENTS-The ASEAN Free Trade Area (AFTA)is a trade bloc agreement by the
Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.
The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement
was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia,
Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and
Cambodia in 1999. AFTA now comprises the ten countries of ASEAN. All the four latecomers
were required to sign the AFTA agreement to join ASEAN, but were given longer time frames in
which to meet AFTA's tariff reduction obligations.
The primary goals of AFTA seek to:
Increase ASEAN's competitive edge as a production base in the world market through the
elimination, within ASEAN, of tariffs and non-tariff barriers; and
Attract more foreign direct investment to ASEAN.

ACHIEVEMENTS- During its thirty years, ASEAN has demonstrated the capability to react to
international developments and to handle interstate relations on a constructive and cooperative
basis. It is perhaps the most valuable achievement of ASEAN that the Association taking
advantage of its wellestablished dialogue mechanisms has successfully managed to keep
residual conflicts between the members (especially territorial dispute) from developing into full
blown crises. The article then deals with the question to what degree past experiences,
performances, patterns of organization and past interpretations of ASEAN's role in the
international system should be maintained and where innovation is required. We argue that
although ASEAN should not surrender its basic rules and norms, the Association requires re
engineering in key sectors to meet the challenges of the new international order in the aftermath
of the Cold War.