GLOBALISATION AND INTERNATIONAL INSTITUATIONS-WTO
One of the major objectives of the WTO is to create functions of trade between the nations free and smooth without having any conflicts (Harrison, 2007).
On the other hand, the goal of the WTO is to focus on the regional and bilateral agreements, which will help to create a dynamic and vulnerable framework to maintain the Trading facilitation agreement more simple and trouble-free.
The study will give an in-depth analysis of WTO agreement negotiations with China after a long 15 year gap. The study will also highlight globalisation and its impact on CSR activities (Yearwood, 2012). With the change in the Asian economy, which is mostly dominated by China, is on the verge of becoming one of the superpowers in the coming years.
1. Critically analysing the reason for China joining the WTO and issues that may arise in future
China is now one of the members of the prestigious organisation WTO. It took China 15 years to agree on the negotiations with WTO. Since 1970, the economy of China has been managed by a communist government, whose major agenda is to keep the economy close to other nations (GU, 2012).
In fact, China opened its economy in early 1980 by signing Trade agreements with GATT. China wanted to be one of the founders of the WTO in order to achieve the power to create a legal framework between nations.
However, as noted by Herz and Wagner (2011), the attempt failed because most of the founding nations, like the US, Europe, and Japan, asked China to reform its trade policies and tariff changes and bring open market operations policies, which was, of course, rejected by the latter.
One of the major reasons China joined the WTO is that It is now looking to explore its wings in other nations. China’s products and services are too advanced, which will help it outperform its rival companies worldwide (Horlick, 2001).
Joining the WTO has played a crucial role in developing the Chinese economy. This will improve China’s relationship with other developed nations, such as the US, UK, and European nations.
Apart from that, China’s membership in the WTO would develop the Chinese market via international trade and investment, and the global economy would open up for Chinese exports.
A trade agreement with the WTO will increase China’s GDP rate up to 15.5% annually. Besides that, China’s economy would be more than USD1.4 trillion to USD 5.02 trillion. This will help China boost its world rankings to the six largest economies (Charterhouse.org.uk, 2014).
As per the WTO statistics, china balance of trade is given below:
| Trade flows | 2000 | 2010 (%) share |
| Export from US to China | 20.1% | 5.6% |
| Import from US to China | 9.06% | 20.03% |
| Export from EU to China | 1.03% | 3.4% |
| Import from EU to China | 3.01% | 7.01% |
| Export from Japan to China | 7.01% | 15.03% |
| Import from Japan to China | 15% | 23.02% |
At the time of the Trade Agreement with China, Mr. Pierre-Louis Girard of Switzerland was chairperson. The negotiations was concluded and agreed to forward more than 950 pages of legal agreements acceptance (Epublications.bond.edu.au, 2014).
This acceptance is conducted in the light of more than 142 members of government of WTO. Some of the major negotiation commitments during the time of signing the agreement treaty are as given. (Refer to appendix 4)
Apart from that, the other major factor that influenced the chosen to join WTO is that WTO is now considered third major pillar of after UN and IMF who maintaining huge amounts of funds to encourage the world to remain one and provide financial security to the members (Fpc.state.gov, 2014). (Refer to appendix 1)
Graph 1: China GDP before the trade agreement with WTO
(Source: Wang, 2011, pp-450)
From the above, it has been found that although the Chinese economy is growing by 7.03% per year, fluctuations can still be seen because of the low international trade presence (Roy, 2007).
After the 2011 negotiations, it growth was rate is more than 10.03% per year. Large amounts of funding from the US and Europe for manufacturing units in China has encouraged the economy by double, and the opportunities for jobs are remarkable.
Evaluation of rising issues in future
Pricing Practices for domestic market
One of the rising issues is whether China’s domestic laws and regulations will be violated because of the new framework in trade and bilateral agreements.
China has to modify its existing norms as per the WTO complementary reforms (Reynolds, 2009). This has cost the china to exit the legal system which was still prevailing. This has cost the chosen with more than ¥23.01 billion.
As opined by Powell (2012), another major issue will be ensuring the existing industries and trade within the domestics market will be in endangered.
Although China is reforming its law to cater to domestic industries, the major portion of the law will be changed, which will discourage local investors in the near future.
China agriculture import fell down from 14.02% to 21.01% due to reforms made in the pricing strategy. Most of the edible products are hamper such as wheat, maize, rice and oil etc (Nber.org, 2014).
Lack of Judicial Review
With the WTO agreement, China will be entering into the development and improvement of the livelihoods of the populations, but the 20 years of reform and market opening will increase the emergence of serious market disorders, including smuggling, corruption, bribery, and tax evasions (Pieterse, 2004).
However, it will threaten the existing economy because there will be fundamental obstacles to creating an economy based on the values of reliability, honesty, and truthfulness after the WTO agreement.
The longer the queue of investors, the more they are waiting and using bribery to enter the armlet of China, which has hampered the economy with USD 40 billion of tax evasion (Larouer, 2006).
Lack of Transparency
Lastly, FDI in the economy will give a competitive edge to the country’s GDPO in terms of its growth. As evidence, more than 57.03% of overall imports and exports have benefitted the Chinese economy by increasing the job opportunities for 20 million jobs (Horlick, 2001).
However, FDI has also created long-term problems of corruption, which is due to the lack of transparency in the law and the confusion of the percentage of investment made and joint ventures, which has led to a lack of transparency in local regulations and international law practices (Fpc.state.gov, 2014).
2.Critical evaluation of globalization has revolutionised international business and its impacts towards CSR
Globalisation will remain one of the influential topic of decades because of its internationalization and no barriers for trade has made it most chosen topic. During the years has created some of the strong bond between the individuals and nations which creates long term relationship.
One of globalization’s most important roles is creating intergovernmental organizations, which have been pillars of development in recent years (Freit.org, 2014).
Before the LPG (liberalizations, Privatizations and Globalizations) countries and states are looking to promote their national interests. Countries are only looking after their own security and safety. Some of the major role played by globalisation to revolutionised the global business are as given below:
Growth assessed due to globalisation in business
Business are now being global whether it is food chain or retail chain or electronic products. now days companies worldwide are manufacturing the products and services to cater worldwide audience rather only local audience (Roy, 2007).
This is one of the major revolutions brought by globalization in the economies of world. Companies like IBM, Apple, McDonalds, Coca-Cola and British oxygen are making the products not only for the loval customer but also to the international customers (Globalpolicy.org,2014).
Increasing trade integration between the nations has helped the economy to contribute towards the overall GDP. For instance, openness of European nation has resultant into increase in the market. Globalization has reduced the risk and has better the opportunity for the general populations. (Refer to appendix 2)
Graph 2: Globalisation has worsen or better the opportunity for nations
(Source: Ghauri and Powell, 2008, pp-127)
From the above graph, it has been found that, although globalization has increased the purchasing power of customers and created whooping job opportunity but it has failed to improve the security problems and poor labour law which has impacted largely on the employees (Ghauri and Powell, 2008).
However, with the rising global inflation and recession has attracted the business of the nations due to globalisation. Today’s most of the nations are affected by the economic downturn because of these companies are largely dependent on the other nation like US, UK and other Europe nations (Healey, 2001).
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As discussed by Herz and Wagner (2011), most of the emerging nations has benefitted due to free economy. One of them is China which is also known for its vast growth and standard quality of life. During the year 1978 to 2007, china GDP was poor which as 16,458 Yuan.
Due to globalsiation, China has been able to create enough capital by improving the living standard of the citizens (GU, 2012).
Business being strong in china which shows that rate of investment has gradually being improved by 88.6% in 2010 to 95.3% in 2012.
Some of the major driving forces of globasliation which helped the business and free trade are WTO, IMF and GATT. Along with that, EU and NAFTA have abolished the single market economy (Powell, 2012).