REGIONAL ECONOMIC GROUP & DIFFERENCE B/W UNLAWFUL & ILLEGAL AGREEMENT

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MASTER OF COMMERCE – M.Com First Year (IBO) Solved Assignments for July 2019 and January 2020 Admission Cycles

IBO Tutor Marked Solved Assignment

Course Code : IBO – 01
Course Title : International Business Environment
Assignment Code : IBO-01/TMA/2019-20

Coverage : All Blocks

IBO – 01 International Business Environment Solved Assignment for 2019-20

Q4.) iii) Formation of regional economic groupings does not lead to trade diversion.

Ans : Regional integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. Regional Integration is also known as the process by which two or more nation-states agree to cooperate and work closely together to achieve peace, stability and wealth. 

When a country applies the same tariff to all nations, it will always import from the most efficient producer, since the more efficient nation will provide the goods at a lower price. With the establishment of a bilateral or regional free trade agreement, that may not be the case. If the agreement is signed with a less-efficient nation, it may well be that their products become cheaper in the importing market than those from the more-efficient nation, since there are taxes for only one of them. Consequently, after the establishment of the agreement, the importing country would acquire products from a higher-cost producer, instead of the low-cost producer from which it was importing until then. In other words, this would cause a trade diversion.

iv) There are no differences between unlawful agreement and illegal agreement.

Ans : There is a difference between illegal and unlawful agreements. Illegal agreements are those consideration or object of which is not legal as well as punishable in nature for example, agreement to murder someone. On the other hand, unlawful agreement are those which are not enforceable by the law i.e performance of the agreement can be done but there is no legal recourse in the eye of law. Therefore, every illegal agreement will not be enforceable by law and therefore, will be unlawful. But not every agreement not force able by law is illegal in nature. Hence, every illegal agreement is unlawful but every unlawful agreement is not illegal.