Organizational Policy and International Trade: Comprehensive Analysis

Analysis, Pages 9 (2102 words)

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Many countries worldwide are forging international relations to reach out and bridge socio-cultural, economic and political barriers. However, foreign collaboration is guided with diplomatic rules to keep the national identity and maintain the character of interstate governance. In which case, foreign policies are made to set the protocols in the processes of international relations. But what are really the underlying fundamentals of organizational policy for domestic and foreign relations?

That question could find significant response in the continuously emerging globalization, in which mostly poor, undeveloped and developing countries wishes to participate and compete in the global market.

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Meanwhile, rich and highly developed countries positioned their foreign economic policies to measure competitiveness, develop areas of investments in furtherance of economic sourcing. This paper will discuss and analyze how organizational policy affects the course of international trade relations, specifically relating why some organizations in the Middle East require an international competition policy.

What is organizational policy? Organizational experts and scholars define organizational policy as a course or method of action chosen generally by organizations and other stakeholders as a guiding stricture in determining how the existing condition may positively or negatively affect the processes of decision-making.

As further defined, internal and external organizational policy are the categories in dealing with the decision-making as exemplified by the government organization’s intrastate (domestic) and interstate (international) policies (Yanow 1996: pp. 1-2).

Based on the definition and description of organizational policy for domestic and international relations are the functions of government or system of governance. It may be explained that a legitimate and constitutional representative of a country in international relations is the government organization and specifically referring the leadership mandate of the President.

Therefore organizational policy is also being referred to as the governmental function. The competing worlds This section of the paper will discuss the “figurative” situation of competing worlds, and how policies on international competition are affected.

Likewise, this topical discussion will relate some countries in Middle East that seeks positioning at the global landscape, requiring the policy for international competition. The WTO role in international competition As discussed in Stephen Woolcock’s (2003) journal entitled: ‘International Competition Policy and the World Trade Organization’, the World Trade Organization (WTO) serves as the “umbrella organizer” of countries and its governments who are members of the United Nations (UN). In 1995, the WTO has reestablished the Government Agreement on Tariff and Trade (GATT) which was created in 1947.

Today, GATT-WTO’s 153 memberships compose both poor and rich countries (WTO 2008: p. 8). In Woolcock’s analyses, trade policies under the WTO are principally based on multilateral (multi-party) trade which means providing only the general guidelines, particularly on international competition. With Woolcock’s analyses, it may be acknowledged that unilateral or independent international policy on competition may dominate or defeat the multilateral trade treaties as a “covenant” or accord of cooperating member countries.

It may be reflected that one of the effects of unilateral treaties dominates the trade competition, wherein only the rich and highly developed countries can select or even dictate to which among the poor and undeveloped countries it may cooperate the trade and other economic cooperation in the form of investments. The bottom-line of the “supply qualification” is according to the production capacity and efficiency of the producing countries. Reaffirming the above perceptions, Bernard Hoekman and Petros C. Mavroidis (2002) in their journal entitled: ‘Economic Development, Competition Policy, and the World Trade Organization’ has emphasized that the GATT-WTO 1994 Ministerial Meeting under the Uruguay Rounds have formulated the guideline that only efficient and productive economies can participate in the international trade and commerce. As cited, a “quota” has been established and strongly prescribed to the participating countries in order to consistently source out the needed and required volume of supply. However, the poor and undeveloped countries may not able to compete and follow the guideline (Hoekman & Mavroidis 2002: pp.5-7).

Accordingly, the result of the GATT-WTO Uruguay round was a “defective venture with non-substantive trading exchange”, allowing only the rich and highly developed countries to having the “protectionist’s leverage” in the foreign trade system (Woolcock 2003: pp. 2-5). Indicative of this finding acknowledges the situation that poor and undeveloped member countries to the GATT-WTO may only be categorized as non-performer and subservient to the “trade dictations or prescriptions” of the rich and highly developed countries, and in compliance with the WTO accord.

Competing for competitiveness The study research conducted by the Canadian parliament’s International Development Research Centre (IDRC) has cited that a number of organizations in the Middle East seek an international competition policy to enable a national economic competitiveness. According to IDRC, various economic studies found that nonexistent policy of competition restricts efficient involvement of poor, undeveloped and developing countries in the international trading system, jeopardizing the predictably beneficial and liberal system of trade.

It could be indicated that the nonexistent policy of competition is also non-competitive. However, a small number of countries like Morocco, Tunisia, Egypt and Jordan in Middle East and North Africa [being referred by its acronym as MENA] have initiated legislative advocacy to enact policy of competition. Unlike Saudi Arabia and Dubai being the “business hub” of foreign investments are countries that maybe benefiting trade equity on its crude oil and petrochemical exports, as translated by the foreign investors’ complementation on skills and technology deployment on the local labor force and production (IRDC 2005: pp. 1-2). Correlating the above discussion on the existing globalization could partly an effect [if not indirectly affected] by GATT-WTO’s imposition to meeting the raw materials requirements of rich and highly developed countries, and “draw the line” of competing worlds amidst the disadvantages of poor, undeveloped and developing countries [like MENA]. The global issue of non-achievement to competitiveness addresses the situation of a domestic economy that is “stagnated” by poverty and underdevelopment.

It analyzes the situation that locally created “business environment” may not be viable to compete in the global market as a result of inadequate domestic production. Another consideration could be attributed by the insufficiency of required skills in the labor force and the technologies in production or processing of raw materials. Indicative of the disadvantages of generally poor countries to compete in the global trade, the domestic business environment of the small and medium sized industries would be unfavorable or unfeasible.

Firstly, the gross domestic products (GDP) from domestic production could fall short of supplying the local consumption due prevailing “outsourcing” of local investors for “staple” and selective goods for exportation. Secondly, the export and import oriented economy may always resort to “concentrated production” without nationalizing or centralizing the economic development that is supposed to be beneficial for all sectors of society. Thirdly, foreign investments may contradict or oppose to achieving domestic competitiveness in order to maintain the cheapest cost of labor and raw materials that favors profitable ventures.

Finally, the nonexistent international competition policy entangles the small business sector to unfair trade in the global market due pricing dictation of the foreign buyers. In sum, competing for competitiveness may be viewed as envisioning the restructuring of economic competency as attributed by the potentials of locally-based businesses, specifically the small and medium sized entrepreneurs. From this point of view, the locally generated businesses may create a synergy of collaboration to promoting their competitive potentials that could pave its way towards domestic or national linkages in establishing an economic sector.

The economic sector could serve as a catalyst to reinforce the needs of domestic economy, specifically in ushering the advancement for international competition policy. Developing competitiveness The journal of Rod Falvey, Annamaria La Chimia, Oliver Morrissey and Evious Zgovu, entitled: ‘Competition Policy and Public Procurement in Developing Countries’ which was published in 2007 by the Centre for Research in Economic Development and International Trade (CREDIT) at the University of Nottingham, has discussed the potential strength of small enterprises.

Based on Falvey et al. ’s examination, the development of competition in poor, undeveloped and developing countries is a result of emerging small enterprises that creates small market segments and competes with the large businesses, varying from local and foreign-based investments. As cited, it appears that small enterprise units that sprung in various industry sectors creates an impact in catering to the secondary utilities, services and materials that are immediately needed by large enterprises or firms (Falvey et al. 2007: pp. 2-4). It may be perceived that the relevance of the seemingly “mushrooming” numbers of small businesses in poor, undeveloped and developing countries are indicating the domestically and locally generated competition that has been attracted by the needs of the large enterprises, like the requirements on secondary raw materials sources, manpower pooling and retail market distribution to exemplify a few.

However, it may not be literally assumed that indicating the prevalence of small businesses signifies the requirement for international competition policy since it is only the domestic economic interdependence that is being catered. Which means a local demand for supply could be just a “relief” or superficial to achieving a domestic economic independence. In some degree, the small business enterprises shows the abilities to survive in a “domesticated” framework of economy that is hindered by the globally protected supply chain, in which outlines the GATT-WTO economic sanctions.

It would be noteworthy to define that “competition policy” per se is a “set of measure” to be enacted by governments to guarantee an equally competitive production and business environments for every participants of the marketplace, wherein competition is enabled by law or policy environment that measures the relevance of competitiveness and competitions.

To cite, trade policy of rich and highly developed countries influences [or even limits] the initiatives of governments in poor countries to enact domestic laws that directly or indirectly unfavorable to international market competition which may liberalize the domestic competition (Jacquemin et al, 1998; in Falvey et al. 2007: pp. 5-7). Findings and conclusion The derivatives depicted in this paper have found the empirical studies or theories on organizational policy affecting international competition on trade.

While globalization promotes the liberal market and open trade policies, many poor countries are unable to liberate their domestic economies. Although foreign trade are important for exchange of commerce, the deficient and defective competition between poor and rich countries prevail in the unequal sharing the bowl of economy. It may not be negated that creating an organizational policy is fundamental in the life of an organization, like the policy in GATT-WTO.

However, it is undeniable that other organizational policies are strongly dominated and subdued, which is manifesting in the organizational functions of governments in poor, undeveloped and developing countries. As found in the overall examination of empirical studies, the rationale for business policy is the creation of available, viable, participative and competitive business environment. Whereas, a business environment where individual participants creates a synergy towards establishing a sustainable economy for national development.

Supportive by a national interest in achieving the competitive edge to global business, represented by foreign trade and commerce, a national economic policy needs the vital role and functions of both governmental and non-governmental organizations. This business rationale acknowledges the vision and mission of poor economies, like the small number of countries in Middle East and North Africa, as well as many other countries in Asia. In conclusion, the policy issue on international trade competition may be settled by “deliberalizing” or regulating the existing global marketing guidelines of the GATT-WTO.

The modification of such an organizational policy that may be affecting the development of a policy [that is “internally” created for domestic interdependence] could recognize the popular needs. What has been significant in the requirement for an international competition policy is the envisioning of legitimate liberalized trade and commerce where both poor and rich countries shall converge and share the genuinely guaranteed and efficient economic performance of every businessmen, organizations and governments.

This economic convergence for equally competitive and effective international competition policy shall displace inefficient labor forces, markets, unproductive production areas and business monopolies. Thus, a legitimately competitive organizational policy retains the benefits and sustainability of global population. List of References Falvey, R. , La Chimia, A. , Morrissey, O. and Zgovu, E. (2007). ‘Competition Policy and Public Procurement in Developing Countries’. Centre for Research in Economic

Development and International Trade (CREDIT), University of Nottingham.

Hoekman, B. and Mavroidis, P. C. (2002). ‘Economic Development, Competition Policy, and the World Trade Organization’. The World Bank Development Research Group.

International Development Research Centre (2005). ‘Competition, Efficiency and Competition Policy in the Middle East and North Africa Region’.

‘International Competition Policy and the World Trade Organization’. [online] available from

‘The World Trade Organization’. World Trade Organization, ISBN: 978-92- 870-3418-2. Yanow, D. (1996). ‘How Does a Policy Mean? Interpreting Policy and Organizational Actions’. Georgetown University Press, ISBN 0878406123, 9780878406128.