Class 11 NCERT Solutions: Chapter 11 International Business Exercise 11.2 (Business Studies)

Exercise 11.2

Long Answer Questions

Question 1: “International business is more than international trade”. Comment. 

Answer: It is true that international business is more than just international trade. International business encompasses a considerably broader range of activities than international trade. International trade refers to the export and import of products, which is an essential component of international business. International trade in services such as travel and tourism, transportation, communication, banking, warehousing, distribution, and advertising is a component of international business. Foreign direct investments, contract manufacturing, and the establishment of wholly owned subsidiaries are elements of international business that are not included in international trade.

The following are some of the primary operations that include international business and help differentiate it from international trade:

1. Trade of Services is a significant component of international business. Travel and tourism, entertainment, communication, transportation, construction, advertising, R&D, and banking are all services that are part of international business.

2. Licensing and Franchising are elements of international business activities. A home business grants intellectual property rights to a foreign firm in exchange for a fee, allowing the foreign firm to produce and sell items under the home company’s trademarks, patents, or copyrights. Similarly, in exchange for a fee, a home nation grants a foreign firm the right to make and sell items under a common brand name using the same operations support system.

3. Foreign Investment refers to funds that are invested abroad for a profit. It is a crucial aspect of international business and consists of two components:

• Direct Investment: This is an investment made directly in a foreign company’s plants and machinery in order to begin production by acquiring controlling rights.
• Portfolio Investment: This is an investment in securities or a loan to a foreign firm with the objective of generating profits in the form of dividends or loan interest.

4. Merchandise refers to tangible goods, such as those that can be seen and felt. From this perspective, it is clear that, although merchandise exports mean shipping tangible goods abroad, merchandise imports mean bringing tangible goods from a foreign country to one’s own. Merchandise exports and imports, commonly known as trade in products, only include tangible goods and services and do not include trade in services which is included in international business.

Question 2: What benefits do firms derive by entering into international business?

Answer: International Business refers to those business activities that take place beyond the geographical boundaries of a country. It involves not only the international movements of goods and services but also capital, technology, and IP like patents, trademarks, copyright, etc.  
For example, India selling agricultural products to foreign countries is an international business. Advancements in technology and better communication facilities have increased international business with great success in various countries. International business provides a wide market range to organizations and gives them an opportunity to satisfy the needs of customers all over the world. 

The firms derive the following benefits by entering in international business:

1. Profit Opportunities: When compared to local business, international business is more profitable. When domestic prices are lower, businesses can make more money by selling their products in other countries.

2. Increased Resource Utilization: Many enterprises anticipate international growth and get orders from foreign clients to set up production capabilities for their products that are more in demand in the local market. It enables them to better utilize their excess resources. 

3. Growth Prospects: When demand falls or the domestic market reaches saturation point, business enterprises become irritated. By expanding internationally, such businesses can increase their growth potential significantly.

4. Decrease Competition: When domestic competition is fierce, internationalization appears to be the only option to achieve success and required growth. Many businesses are motivated to expand into overseas markets because of the fierce competition in the domestic markets.

5. Improved Business Vision: Many firms’ existence and goodwill depend on their ability to expand their worldwide business. The desire to expand and diversify, as well as to take advantage of the strategic advantages of internationalization, is expressed in the desire to become more international. 

Question 3: In what ways is exporting a better way of entering international markets than setting up wholly owned subsidiaries abroad?

Answer: Exporting goods and services refers to sending them from the home country to a foreign country. There are two major ways for a company to export products: direct and indirect exporting. In direct exporting, a company approaches overseas buyers and handles all formalities associated with exporting activities, including transportation and financing of products and services. Indirect exporting, on the other hand, is one in which the firm’s engagement in the export operations is minimal, and most of the tasks associated with the export of the goods are carried out by some middlemen such as export houses or buying offices of foreign clients based in the home country. Such companies do not interact directly with overseas clients for exports.

A wholly owned subsidiary is a corporation that is controlled or owned by another. The controlling company is referred to as the parent company, while the subsidiary is referred to as the daughter company. A corporation or a limited liability company can be established. It might also be owned by the government or the state. 

Exporting is a better strategy to reach foreign markets than establishing wholly owned subsidiaries abroad. Exporting is the simplest way to enter overseas markets as compared to other methods. It is a simpler process than establishing and maintaining joint ventures or wholly owned subsidiaries abroad. Exporting is less involved in the sense that businesses do not have to devote as much time and money as they do when they want to form joint ventures or establish manufacturing plants and facilities in host nations. Besides, other benefits that make exporting a better way of entering into international markets than setting up wholly owned subsidiaries are as follows:

1. Easy Access:  Exports are the simplest way to access overseas markets as compared to wholly owned subsidiaries.

2. Foreign Investment poses Minimal Risk: Exporting does not necessitate significant investment in foreign nations. As a result, foreign investment risks are lower compared to when a company establishes a wholly-owned subsidiary in a foreign nation.

3. Less Expensive: A wholly-owned subsidiary requires a foreign business to spend 100% of its equity. As a result, small and medium-sized manufacturers cannot consider this method of entering an international business.

4. Profit and Loss Risk: As a wholly owned subsidiary, the foreign business contributes 100% of the equity capital. As a result, it must bear the risk of losses on its own which is not an issue in exporting.

5. Government Intervention: Several governments are opposed to foreign firms establishing wholly owned subsidiaries. This type of corporate activity is filled with high political risk. 

Question 4: Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd., located in Australia. Discuss the procedure that Rekha Garments would need to go through for executing the export order.

Answer: Export is a key component of international business, involving the movement of goods and services across borders as well as the exchange of foreign currency between the parties involved. This complicates the export procedure, and the exporter is obligated to fulfil the legal and mandatory formalities imposed by the exporting country. No country in today’s world wants to supply illegal or low-quality goods and services to other countries, because international trade is now supervised by the World Trade Organization’s strict laws. As a result, before the items leave the borders of the home country, the exporter must undergo a set of strict procedures.

In the given question, Rekha Garments has received an order for exporting men’s trousers to a firm located in Australia. For this, it has to follow the following steps involved in export procedure:

1. Receipt of Enquiry and Sending Quotation: First of all, the Australian company will inquire from Rekha Garments about the availability of goods, quality, price, terms and conditions of exporting the product. Rekha Garments will then extend the information being inquired for in the form of quotation, commonly known as Proforma Invoice. The proforma invoice contains all the relevant information, like the price at which goods will be exported, minimum order quantity, quality and size, mode of delivery, mode of payment, etc.

2. Receipt of Order or Indent: Once the Australian company agrees to the terms and conditions laid down by Rekha Garments, it will place the order for the product. This order is called Indent, which contains detailed information about the goods to be exported, quantity, price to be paid, packaging, and delivery instructions.

3. Assessing the importer’s creditworthiness and securing a guarantee for payments: After receiving an order, to minimise the risk of non-payment, Rekha Garments will inquire about the creditworthiness of the Australian company. It will demand a Letter of credit from the importer for the security of the payment. A letter of credit is a guarantee given by the importer’s bank that in case of non-payment by an importer, the bank shall pay a certain amount of export bill to the exporter’s bank, on the behalf of the importer.

4. Obtaining an Export License: All export transactions in India are governed by custom law. An exporter once sure about the payment is bound to obtain an export license under this law, before proceeding further. Every exporter must get registered with an appropriate export promotion council, such as Engineering Export Promotion Council (EEPC) and Apparel Export Promotion Council (AEPC). Such registration enables an exporter to avail of various export-related benefits of the government.     

5. Obtaining Pre-shipment Finance: Once all the above procedures are accomplished, Rekha Garments will approach their bank to obtain pre-shipping finance to procure necessary items required for the production of the goods ordered and other related activities like packaging and transportation of goods to the port of shipment, delivery of goods, etc.

6. Production or Procurement of Goods: After obtaining the finance from the bank, Rekha Garments will start to procure the goods as per the instruction of the importer. The export firm either produces the goods itself or gets the ready-made goods from the market.

7. Pre-shipment Inspection: The government of India wants an assurance that only A-one quality goods are being exported from India. For this, various Inspection Agencies have been set up under the Export Quality Control and Inspection Act of 1963. After producing or procuring the goods, an exporter requires to obtain a pre-shipment inspection certificate from the concerned authorized Inspection Agency. The inspection certificate ensures the quality of the goods and is one of the important documents required at the time of export.

8. Excise Clearance: Excise Duty is the tariff charged by the government on the material used for manufacturing the goods to be exported under Central Excise Tariff Act. Rekha Garments will have to apply to the Excise Commissioner to obtain the excise clearance certificate. However, some goods are exempted from excise duty, and under such circumstances, an exporter either does not make any payment or gets a refund under the duty drawback scheme.

9. Obtaining a Certificate of Origin: To avail of the benefits provided by the Australian company, Rekha Garments will obtain a certificate of origin. The certificate of origin is proof that the goods are actually been produced in the country from where it is being exported.

10. Reservation of Shipping Space: Rekha Garments will now approach the shipping company for reserving shipping space for the goods. The shipping company on acceptance of such an application, issues a shipping order to the captain of the ship, instructing him to board the goods after their customs clearance.

11.  Packing and Forwarding: Goods are then packed and marked properly with details, like the Name and address of an importer, Gross and net weight of the goods, Port of shipment and destination, Country of origin, and Road or Railway receipt.

12. Insurance of Goods: Rekha Garments will now obtain an insurance policy for the goods to be exported to avoid transit-related risks. The insurance protects the insurer against any risk of loss or damage to the goods caused due to sea perils at the time of transit. 

13. Customs Clearance: It will then prepare a shipping bill, giving details of the goods, the name and address of the exporter, the name of the loading port, the name of the destination port, and so on. The five copies of the bill, along with the following documents are submitted to the Customs Officer are Export Contract or Export Order, Letter of Credit, Commercial Invoice, Certificate of Origin, Certificate of Inspection, and Marine Insurance Policy. Only after receiving custom clearance from the Custom House, goods are loaded on the ship.

14. Obtaining Mates Receipt: Once the goods are loaded on the ship, the captain of the ship issues a mate receipt to the Port Superintendent. On receiving the port dues, Port Superintendent passes on the mate’s receipt to the exporter directly or through the C&F agent. Mate receipt contains information, like the name of the vessel, date of shipment, description of packages, marks and numbers, condition of the cargo at the time of receipt on board the ship, etc. 

15. Payment of Freight and Issuance of Bill of Lading: On receiving the mate receipt, the shipping company calculates the freight charges for the concerned goods. After receiving the charges, the bill of lading is issued by the shipping company as proof of accepting and delivering the goods to their destination.

16. Preparation of Invoice: After the goods are set for transmission, Rekha Garments will issue an invoice stating the number of goods and the amount to be cleared by the Australian company. Also, the C&F agent has to get the invoice duly attested by the customs. 

17. Securing Payment: Once the shipment is done and the goods have reached the destination port, the Australian company needs the following documents to claim his title on goods:

• Verified copy of the invoice. 
• Invoice of lading.
• Packing list.
• Insurance policy.
• Certificate of origin.
• Letter of credit.

These documents are passed on to the Australian company, by Rekha Garment’s bank after acceptance of a bill of exchange. The Australian company releases payment after the maturity of the bill of exchange. However, Rekha Garments can get the payment immediately by submitting a letter of indemnity. 

Question 5: Your firm is planning to import textile machinery from Canada. Describe the procedure involved in importing.

Answer: The purchase of goods from a foreign country is referred to as import trade. The Import procedure varies by country, depending on the country’s import and customs policies, as well as other statutory requirements. Import procedures are the procedures for import and export activities that include ensuring licencing and compliance prior to shipping goods, arranging for transport and warehousing after goods are unloaded, and obtaining customs clearance and paying taxes prior to the release of goods.

The firm is planning to import textile machinery from Canada. The steps involved in the import of textile machinery are as follows:

1. Trade Enquiry: The firm has to gather information about the firms in Canada exporting textile machinery. Then the firm will contact those exporting companies by using a trade enquiry to learn about their export prices and terms of export. A trade enquiry is a written request from an importing firm to an exporter for information on the price and various terms and conditions under which the latter is willing to export goods. The firm will receive a quotation from the exporter in response to this enquiry. The quotation includes information about the goods available, such as their quality and price, as well as the terms and conditions of the sale.

2. Procurement of Import License: Certain goods can be imported freely, while others require licensing. The given firm must consult the current Export-Import (EXIM) policy to determine whether the goods they intend to import require import licensing. If goods can only be imported with a license, the firm will have to obtain an import license. 

3. Obtaining Foreign Exchange: The supplier; i.e., the firm in Canada will now request payment in a foreign currency. Indian currency must be converted into foreign currency (Canadian Dollar) in order to make a payment. The Reserve Bank of India’s Exchange Control Department oversees all foreign exchange transactions in India (RBI).

Every importer is required by the current regulations to obtain the approval of foreign currency. For this, the firm will have to submit an application to a bank that the RBI has authorised to issue foreign currency in order to receive such a sanction. In accordance with the Exchange Control Act’s guidelines, the application must be submitted in the prescribed format and include an import license.

The exchange bank endorses and forwards the applications to the Reserve Bank of India’s Exchange Control Department. The Reserve Bank of India sanctions the release of foreign exchange after scrutinising the application on basis of the Government of India’s exchange policy in effect at the time of application. The firm can now obtain the necessary foreign exchange from the relevant exchange bank. 

4. Placing Order or Indent: The firm will now place an import order or indents with the firm in Canada for the supply of textile machinery after obtaining the import license. The import order includes details about the cost, size, grade, and quality of the goods ordered, as well as packing, shipping, ports of departure and arrival, delivery schedule, insurance, and payment method instructions.  The import order will include the firm’s instructions regarding the quantity and quality of goods required, the method of forwarding them, nature of packing, mode of payment and price, and so on. 

Indentations are typically prepared in duplicate or triplicate. Indent types include open indent, closed indent, and confirmatory indent. Because all of the necessary particulars of goods, price, and so on are not mentioned in the indent, the exporter is free to complete the formalities at his own end.  On the other hand, a closed indent is one that clearly states the full particulars of the goods, price, brand, packing, shipping, insurance, and so on. A confirmatory indent is one in which an order is placed subject to the importer’s agent’s confirmation.

5. Obtaining a Letter of Credit: If a letter of credit is the preferred method of payment between the firm and the firm in Canada, the domestic firm will have to obtain one from its bank and send it to the supplier. A letter of credit, as previously mentioned, is a guarantee made by the bank of the importer that it will honour payment of export bills to the bank of the exporter up to a certain amount.

6. Arrangement of Finance: Prior to the arrival of the goods at the port, the firm should make arrangements to pay the firm in Canada. To avoid grossly overpaying demurrages (fines) on imported goods that are lying uncleared at the port due to lack of payments, advanced planning for financing imports is required.

7. Advice for Shipment Receipt: The firm in Canada will now send the firm, the shipment advice after loading the goods onto the ship. Information regarding the shipment of goods is included in shipment advice. The shipment advice includes information such as the invoice number, bill of lading/airways bill number and date, vessel name with date, port of export, description of goods and quantity, and date of vessel sailing.

8. Retirement of Documents:  After the goods have been shipped, the firm in Canada gathers the required paperwork in accordance with the contract and letter of credit terms and gives it to their banker for negotiation with the firm in the manner indicated in the letter of credit. A bill of exchange, commercial invoice, bill of lading or airline bill, packing list, certificate of origin, marine insurance policy, etc. are generally included in a set of documents. Retirement of import documents refers to the acceptance of a bill of exchange for the purpose of receiving delivery of the documents. When retirement is finished, the bank will give the importer the import documents.

9. Goods Arrival: The firm in Canada ships the goods in accordance with the agreement. The person in charge of the carrier, whether it be a ship or an airline, notifies the person in charge at the dock or the airport of the arrival of goods in the importing country. The import general manifest document is presented by him. The specific details of the imported goods are listed in an import general manifest document. It is a document that the unloading of cargo is based.

10. Custom Clearance: After they cross Indian borders, all imported goods are required to go through customs clearance. A number of formalities must be completed in the somewhat time-consuming process of customs clearance. The firm will have to appoint C&F agents who are familiar with such formalities and play a crucial role in getting the goods cleared through customs. Also, the firm must first obtain a delivery order also called an endorsement for delivery. 

Question 6: Identify various organisations that have been set up in the country by the government for promoting the country’s foreign trade.

Answer: Foreign trade results in a global division of labour and specialisation. India has a large number of labours. The Indian government implements several incentives and initiatives to assist commercial enterprises in increasing the competitiveness of their exports and imports. The Government of India has established several institutions from time to time to promote the process of foreign trade in our country and to provide infrastructure and marketing support to organisations.

The following are some of the most important institutions :

1. Department of Commerce: The Department of Commerce of the Ministry of Commerce, Government of India is the supreme authority in charge of the country’s external trade and all affairs related to it. Increased commercial links with other countries, state trading, export promotion measures, and the development and regulation of particular export-oriented businesses and commodities are examples of such initiatives. Foreign trade policies are devised by the Department of Commerce. It frames the import and export policy of the country.

2. Export Promotion Councils (EPCs): Export Promotion Councils are non-profit organisations that are incorporated under the Companies Act or the Societies Registration Act, as the case may be. The primary goal of export promotion councils is to increase and promote the country’s exports of certain items under their jurisdiction. There are now 21 EPCs dealing with various commodities.

3. Commodity Boards: Commodity Boards are boards formed specifically by the Government of India to promote the production and export of traditional commodities. These boards supplement the EPCs. Commodity boards’ functions are similar to those of EPCs. There are now seven commodities boards: the Coffee Board, the Rubber Board, the Tobacco Board, the Spice Board, the Central Silk Board, the Tea Board, and the Coir Board.

4. Export Inspection Council (EIC): The Government of India established the Export Inspection Council of India under Section 3 of the Export Quality Control and Inspection Act 1963. The council’s goal is to promote sound export trade development through quality control and pre-shipment inspection. The council is the ruling body for quality control and pre-shipment inspection of commodities destined for export. Except for a few exceptions, all goods going for export must be approved by EIC.

5. Indian Trade Promotion Organisation (ITPO): The Ministry of Commerce established the Indian Trade Promotion Organization on January 1, 1992, under the Companies Act 1956. Its headquarters is in New Delhi. It was constituted by the merger of two erstwhile agencies, the Trade Development Authority and the Trade Fair Authority of India. ITPO is a service organisation that interacts with commerce, industry, and government in a regular and close relationship. It serves the industry by organising trade fairs and exhibits both within and outside the country. 

6. Indian Institute of Foreign Trade  (IIFT): The Indian Institute of Foreign Trade was established by the Government of India in 1963 as an autonomous entity registered under the Societies Registration Act with the primary goal of professionalising the country’s foreign trade administration and management. It was recently certified as a Deemed University. It offers training in international trade, conducts research in international business fields, and analyses and disseminates statistics on international trade and investments.

7. Indian Institute of Packaging (IIP): The Indian Institute of Packaging was established in 1966 as a national institute by the Ministry of Commerce, the Government of India and the Indian Packaging Industry, and other interested parties. Its headquarters and primary laboratory are in Mumbai, while three regional laboratories are in Kolkata, Delhi and Chennai. It is a training and research institute for packaging and testing. It offers a good infrastructure to meet the diverse demands of the package manufacturing and package user industries. It meets the packaging requirements of both the local and international markets. It also provides technical consulting, package development testing services, training and educational programmes, promotional award contests, information services, and other related activities.

8. State Trading Organisations: A large number of Indian domestic firms found it extremely difficult to compete in the global market. At the same time, current trade channels were inappropriate for promoting exports and diversifying business with countries other than European countries. Under these circumstances, the State Trading Organisation (STC) was established in May 1956 with the principal aim to promote trade, particularly export trade among the world’s different trading partners. Later, the government established several more organisations, like the Metals and Minerals Trading Corporation (MMTC) and the Handloom and Handicrafts Export Corporation (HHEC).

Question 7: What is IMF? Discuss its various objectives and functions.

Answer: International Monetary Fund came into existence on 27th December 1945 and has its headquarters located in Washington DC, United States. It has 190 countries as its members as of December 2022. Its board is constituted of members from as many as more than 180 countries worldwide, thus each representing its own nation. Such representation is congruent to the level of importance a particular nation holds as regards to its financial position in the world. The major idea underlying the setting up of IMF is to evolve an orderly international monetary system, thereby facilitating a system of international payments and adjustments in exchange rates among national currencies.

Objectives of the International Monetary Fund(IMF)

The objectives of the International Monetary Fund are as follows:

1. International Monetary Cooperation: The most important objective of the IMF was to establish monetary cooperation among the various member countries. One of the major causes of the Second World War was the absence of monetary cooperation amongst the countries of the world. Hence it was considered necessary to establish international monetary cooperation to prevent the outbreak of war in future. 

2. To Ensure Stability in Foreign Exchange Rates: There was a lot of instability in foreign exchange rates before the Second World War, which produced adverse repercussions on international trade. So, IMF was established to eliminate this instability of foreign exchange.

3. To Eliminate Exchange Control: Every country has resorted to exchange control as a device to fix its exchange rate at a particular level before the Second World War, which produced adverse effects on international trade. So IMF came up to remove or relax these exchange controls. 

4. To Promote International Trade: Another important objective of the IMF was to promote international trade by removing all the obstacles and hindrances, which had the effect of restricting it.

5. To Promote Investment of Capital in Backward and Underdeveloped Countries: IMF exports capital from the richer to the poorer countries so that the poor countries can develop their economic resources for achieving a higher standard of living.

Question 8: Write a detailed note on the features, structure, objectives, and functioning of WTO.

Answer: The Bretton Woods conference initially decided to establish the International Trade Organisation (ITO) to promote and ease international trade among member countries and to overcome numerous barriers and discriminations that were in place at the time. But, due to severe resistance from the United States, the idea never materialised. Instead of rejecting the idea entirely, the Bretton Woods conference participants opted to reach an agreement among themselves to free the world from high customs, tariffs, and several other forms of limitations that were prevalent at the time. This agreement became known as the General Agreement on Tariffs and Trade (GATT). 

Structure of WTO: GATT entered into effect on January 1, 1948, and remained in effect until December 1994. Under the auspices of GATT, many rounds of discussions have taken place to remove tariff and non-tariff obstacles. The most recent one, known as the Uruguay Round, was the most thorough in terms of problem coverage, as well as the longest in terms of the time of discussions, lasting seven years from 1986 to 1994. 

As a result of this decision, the GATT was renamed as the World Trade Organization (WTO) on January 1, 1995. The World Trade Organization’s headquarters are in Geneva, Switzerland. The establishment of the WTO represents the implementation of the initial plan to establish the ITO, which emerged about five decades ago. Despite the WTO being the successor to GATT, it is far more powerful. It controls not just commodities commerce, but also services and intellectual property rights. Unlike GATT, the WTO is a permanent organisation established by an international treaty approved by member governments and legislatures.

Features of WTO: 

The features of the World Trade Organisation (WTO) are as follows:

1. In order to promote international trade, WTO agreements cover trade in goods and services.

2. There are 164 members of WTO at present, and every member is obligated to follow the laws and policies framed under WTO rules.

3. India has been on the frontline of establishing fair international laws and regulations as a significant member of the WTO.

4. India has complied with the WTO’s demands and has responsibly liberalized trade by abolishing import restrictions and lowering tariffs. 

Objectives of WTO:

The objectives of World Trade Organisation (WTO) are:

1. Creating and Enforcing International Trade Regulations: The General Agreement on Trade in Services, the Trade-Related Aspects of Intellectual Property Rights Agreement, and the Agreement on International Trade in Goods, all serve as the foundation for the World Trade Organization (WTO). The WTO uses a multilateral dispute settlement system to enforce its rules when one of its member countries violates a trade agreement. The methods and decisions must be respected and adhered to by the members through signed agreements. Creating and Enforcing International Trade Regulations

2. Making the Decision-Making Process More Transparent: The WTO has made an effort to promote transparency in decision-making by encouraging participation and, in particular, the use of the consensus rule. Such measures work together to increase institutional transparency.

3. Collaboration between International Economic Institutions: The onset of globalization has made strong collaboration amongst multilateral institutions necessary. The World Trade Organization, the International Monetary Fund, the United Nations Conference on Trade and Development, and the World Bank are some international economic institutions These institutions help develop and carry out a framework for international economic policy. Policy making may be disturbed in the absence of regular cooperation and mutual participation.

4. Serving as the World’s Leading Forum: The WTO is the international platform for regulating and negotiating additional trade liberalization. The foundation of WTO liberalization initiatives is based on members’ benefits to make the best use of their comparative advantages as a result of a free and fair trade system.

5. Settlements of Trade Disputes: Before the WTO, trade disputes usually arise from the breach of agreements between the member nations. Such trade disputes are settled through a multilateral system with predetermined rules and regulations.

Functions of WTO:

1. Implementation of Trade Policy Review Rules: The member nations of the world organizations have come to an overall consensus due to the stability and assurance of trade agreements. The rules are examined to make sure that the multilateral trading system continues even in the face of continuously changing trade conditions. Additionally, it helps in creating a reliable and transparent foundation for conducting business. 

2. Discussion of Plans of Member Nations: Trade negotiations within the global trading system are made possible through WTO. Without trade negotiations, the economy may stagnate, and issues related to dumping and tariffs might go unsolved. Consistent trade discussions are also a requirement for further trade liberalization.

3. Administrating and Carrying out Bilateral and Multilateral Trade Agreements: The parliaments of different member nations must ratify any bilateral and multilateral trade agreements. The non-discriminatory trading system can not be implemented until such ratification occurs. Every member will be ensured to be treated fairly in the marketplace of other countries due to the signed contracts.

4. Settlement of Trade Disputes: Trade disputes are addressed by the WTO’s dispute settlement process. Independent tribunal specialists interpret the agreements and issue judgments mentioning the essential obligations of the involved member nations. It is advised to consult with other members to resolve disagreements.