Question 4 (20 points) If necessary, refer to the articles posted on Blackboard

Question

Question 4 (20 points) If necessary, refer to the articles posted on Blackboard that were part of the International Trade History and Trade Rules vs. Trade Balance exercises. Explain why the World Trade Organization (and its predecessor) exists. In your opinion, is the economic growth since the end of World War II attributable to the WTO and have the benefits of that economic growth outweighed the subsequent economic disruption (industry relocations and job losses) to some? In your opinion, what might be the future consequences of the nationalistic and protectionist policies of the current U.S. president? Explain your responses. Question 5 (20 points) a. List and briefly describe the four types of economic integration agreements b. Describe their similarities and differences. between nations. c. In your opinion, should the NAFTA countries (Canada, Mexico, and the United States)consider becoming a customs union? Explain your response and how it would be beneficial or detrimental. Question 6 (25 points) Imagine you have been hired on the social media staff at Unilever an Anglo-Dutch global consumer goods firm. One of your responsibilities is to develop a strategy to Unilever's presence and use of social networking tools (blogs, QR Codes, Instagram, Google, YouTube, Face Book, Linked In, Twitter, etc.) to promote its businesses. You are also accountable for defending the firm and its products firm's strategy for gathering customer data and utilizing that data to perform data analytics to help develop and sell advertising tailored to specific users. using these tools. Finally, you contribute to the a. List and describe two ways you would use these tools to promote Unilever and its products (positive advertising). b. List and describe two ways you would use these tools to protect Unilever and its products (defensive advertising) c. In your opinion, is it ethical for social media and other Internet based businesses to profit from the use of the data they gather on users without compensating those users for the data they gather? Explain your opinion.

Explanation / Answer

Question 4)

The world trade organisation is an international body, governing and regulating international trade among participating nations. It was found on 1st of January 1995 and was a replacement of the then existing "General Agreement on Tarrifs and Trade" ( GATT). The prime objective of both of these was to  promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

The WTO provides an appropriate forum for countries to approach if they feel there trade interest has been compromised and violates the provisions of the WTO. It deals with both goods and services and the provisions are enforcing on all participating nations.

WTO has indeed been able to act as a growth spurring organisation. Post World War 2 most of the countries were reeling with debts and had very little to no capital left for investments. Further lack of demand was slowing down the economy and heavy taxes were present on import of foreign goods. This would further mean counter measures would be taken by other countries to protect their interest as well.

The Introduction of WTO impacted business at huge scales, the trade wars began to ease and all countries realised the importance of a global market place, where in you can sell your product/service freely without export cost hampering your profit margins, and further the duties therefore on imports would decline. A global market also helped countries in gaining resources from beyond its politicatl boundaries and as always, incase they felt there rights were violated, they always had a forum to approach ( As long as these were member countries).

Studies have shown the importance of WTO in all countries realising the importance of a Global market. On the contrary, though there might have been some cases wherein people might have lost jobs but this normally would be due to lack of skill as presented in the global markets. Overall, smaller countries would acquire more skill and knowledge and therefore since the countries were regarded as at the smae platform by WTO, it helped them to grow hand in hand with more developed nations.

Nationalistic and Protectionist Policies-

USA in the recent times has been involved with trade wars mostly with Asian countries like China and India, due to its nationalistic and protectionist policies. It has also been seen to implement sanctions against Iran and a few other middle eastern countries for its own interests. This in the long run would impact USA as well. It has criticised some countries that have blocked its goods example:- India imposes an import duty of 100% on Harley Davidson bikes but this neccesarily is due to the fact that a majority of Indians might not even have food to eat and the bike is conisdered as a luxury good.

Further, its sanctions on Middle eastern countries is normally seen due to the vast riches of Petroleum products present in the middle east, and the love USA has for the same.

In my view nationalistic and protectionist policies might not have an impact in the short run for USA considering that it has a very strong and vibrant economy, but on the other hand there surely would be a long term impact and other countries could counteract with a similar strategy for USA goods also.

Question 5)

(a) To integrate and harvest business, most of the countries in the modern era, have bilateral/Multilateral agreements in place. This helps them to grow there business and have equality in trade. The following are its types.

(1) Economic Union:-

An economic union, also reffered to as absolute integration, allows for complete integration among a group of countries, this maybe on regional consideration or any other depending on mutual considerations. It allows for free mobility of commodities and factor resources. Examples of such an agreement :-

Benelux (Belgium, the Netherlands and Luxembourg).

(2) Customs Union:-

A Customs Union has a common external tariff against all non-member countries, whereas within the union itself there is unrestricted free trade.

From the customs union gradually, complete economic union is evolved.

Example:-"The Rome Treaty (1958) laid the basis of a customs union of the six member countries, leading finally to an economic union by 1970"

(3)Free Trade Area:-

A Free Trade Area considers abolition of all trade restrictions within the group, but all individual countries within the group are free to maintain any sort of relation with the non-member countries depending on there individual understanding.

Countries in a free trade do not have to maintain a common external tariffs. Examples:-

"The European Free Trade Association (EFTA), 1959, and the Latin American Free Trade Association (LAFTA) serve as examples of such free trade areas".

4) Partial Integration:-

Partial Integration aims at the establishment of a common market in a given product or products.

Example:- The European Coal and Steel Community (ECSC), formulated in 1952, is a partial integration agreement by which members have created a common market in coal and steel products within their respective territories.

Question 5 (B)

The similarity between these agreements is that it aims at achieving one standard economic ground for all participating countries thereby eliminating any tarrif that is bad for trade. It ultimately aims at a home ground for the countries where all of them can buy products and services at the same cost from each other without being discriminated with.

The difference lies in the degree and approach to be followed, the degree of free trade and restriction free policies varies in all of the agreements and depends on the participating nations and there understanding as explained above.

Question 5 (C):-

A small background of the NAFTA tells us, that it was formulated in the year 1994 on the 1st of january and is collectively reffered to as North American Free Trade Agreement.

A customs union as explained above, would allow for free trade among participating nations, but a common external policy when it comes to other nations. In my view, this might not be as benificial for the union in general. Nafta also includes smaller countries like mexico and canada that have major relations with Asian countries in trade, whereas USA on the other hand is a big economy and is sheltered by an impact because of this.

Externally same policy formulation, always has an impact on small countries, since other countries also form counteractive measures, and this inturn impacts overall business. Therefore there should not be one external policy for countries like USA and Mexico in my opinion. Though in the short run these might work but in the long run the smaller countries would on an overall scale suffer and therefore this might not be recommended in general.

Question 6):-

Introduction:- Positive and Negative Advertising are widespread today and have far reaching effects on the consumers. Positive Advertising aims at telling the benifits one has from purchasing the product whereas negative advertising aims, at showing products of competitors in bad light, or not as able.

For explanation here, i have taken the example of two of unilivers major products ie. Dove soap and Lifeboy

A) One campaign of note would be Dove's campaign for young women to help boost their self-esteem. The commercial would discuss the beauty of everyone and the importance of inner beauty, instead of direct promotion.This psychologically impacts the brand's market to buy the products to support these efforts.

Further a second strategy, could be to donate some of the profits in CSR which normally is a mandate for most companies and then advertise it creating a positive impact on the companies brandd value as a social entity more than a profit mongering one.

B) Defensive advertising is a type of advertising that is undertaken for combating a potentially damaging or negative effect of a competitors ads.

Lets say a company depicts Unilivers products in a bad light, saying that the compositon of its products is harmful, in that case Uniliver could do a defensive ad, protecting its position and describing the contents, also a second advertisement could involve, inviting consumers to visit the factory.

(c) Data analytics has evolved in the recent era, and helps companies to develop strategies and target its customers in a better way. In my opinion, data analytics is vital for companies to judge customer sentiment and be able to modify/discontinue products as may be needed, it also helps at implementing marketting strategies. On the contrary at some places privacy of the consumers might get compromised, which needs to be checked, but in my opinion users should not be compensated for this exercise. They may get an option to opt out if they want from giving vital information. As data helps companies in prediction of sales and is a vital tool today in devleloping strategies in genral

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