Godavari Ayurbed Co.

Synopsis:

The case is about the barriers and opportunities created by the World Trade Organization (WTO) to the industries of its member countries. It shows the scenario of international trade of Nepalese company after joining WTO by Nepal, illustrating the case of one of the Ayurved Company of Nepal, struggling to trade internationally.

Case Analysis:

Prem Raj Tiwari's company, Gorkha Ayurved Co., received a hefty order from a Swedish importer in August 2000. This made Mr. Tiwari very happy and enthusiastic because this is the largest export order that his company ever received. But this happiness not remains longer as he received an email from the importer side withdrawing the order. The Swedish counterpart stated that they cancel the deal because of some difficulties. The difficulties were the new requirement of importer's, i.e. the company's product samples should have to pass the satisfactory and sufficient sanitary and quality standard tests in order to access in their market. Also, the requirement of certificate of good manufacturing practices (GMP), which is a system of quality assurance and quality control during the whole production process, for each consignment was also a problem in front of Mr. Tiwari in order to export his company's product to Swedish market. Some of the mentioned test such as microbiological tests is not available in Nepal. So due to the unawareness of these requirements for such a specific test, which stopped him to trade internationally made him to delve into the issue of quality and sanitary standard in international trade.

As per fundamental rule of WTO, the member countries are bound to comply with all the agreed rules and regulations of it. So the companies planning to expand their market outside the national boundary are also compelled to follow these rules and regulations. Since, Nepal is also member country of WTO, all the industries those wish to expand its market outside the Nepal or export its products outside the national boundary, are also bound by the rules of WTO as the other member countries do. In the case of Mr. Tiwari's company also, in order to export his products in other counties, he should have comply with the rules and regulations of WTO. Here, the buyers can ask for compliance with international standard under the WTO's Sanitary and Phytosanitary Measures (SPS) Agreement. Even though, the initial investments are higher in order to meet those requirements, the opportunities and profits margins provided by these investments are better. As mentioned in the case, Mr. Tiwari have received a lot of business enquires from foreign countries like Germany, France, Italy, Sweden, the Czech Republic and Australia over the previous couple of years and this shows the good prospects for the exports of ayurved products. So, if he wants to win the hearts of importers and all those lucrative