một số câu hỏi tham khảo Kinh tế quốc tế

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lOMoARcPSD|10070358 PART : Trade Theory Why Nations Trade ? What are some of the major argument for and against a Free Trade ? What are the (Benefits and Costs) of Free Trade (Present: at Individual/Firms/Nation)?  Nation Trade because: Countries trade with each other when, on their own, they not have the resources, or capacity to satisfy their own needs and wants By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need Goods and services are likely to be imported from abroad for several reasons Imports may be cheaper, or of better quality They may also be more easily available or simply more appealing than locally produced goods In many instances, no local alternatives exist, and importing is essential This is highlighted today in the case of Japan, which has no oil reserves of its own, yet it is the world’s fourth largest consumer of oil, and must import all it requires The production of goods and services in countries that need to trade is based on two fundamental principles, first analysed by Adam Smith in the late 18th Century (in The Wealth of Nations, 1776), these being the division of labour and specialisation Division of labour: + A division of labour means breaking down production into small, interconnected tasks, and then allocating these tasks to different workers based on their suitability to undertake the task efficiently When applied internationally, a division of labour means that countries produce just a small range of goods or services, and may contribute only a small part to finished products sold in global markets For example, a bar of chocolate is likely to contain many ingredients from numerous countries Specialisation + Specialize in the manufacture and export of products can be produced most efficiently in that country : The exploitation of a country's comparative advantage, which means that trade encourages a country to specialise in producing only those goods and services which it can produce more effectively and efficiently, and at the lowest opportunity cost + When countries specialise they are likely to become more efficient over time This is partly because a country’s producers will become larger and exploit economies of scale Faced by large global markets, firms may be encouraged to adopt mass production, and apply new technology This can provide a country Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  with a price and non-price advantage over less specialised countries, making it increasingly competitive and improving its chances of exporting in the future - Importing products can be produced more efficiently in other countries - Trade is also likely to increase employment, given that employment is closely related to production Trade means that more will be employed in the export sector and, through the multiplier process, more jobs will be created across the whole economy The major argument for Free Trade - All countries can benefit if each country specializes in production those goods it can produce best and satisfy their other wants and needs by trading for them.This will lead to an optimum and efficient utilization of resources and, hence, economy in production - Free trade can raise aggregate economic efficiency and aggregate economic welfare - Because of unrestricted trade, global output increases since specialization, efficiency, etc., make production large scale Free trade enables countries to obtain goods at a cheaper price This leads to a rise in the standard of living of people of the world Thus, free trade leads to higher production, higher consumption and higher all-round international prosperity - Free trade will benefit a country even if it is less efficient than all other countries in every industry - Accessibility of Domestically Produced Goods and Services: Free trade enables each country to get commodities which it cannot produce at all or can only produce inefficiently Commodities and raw materials unavailable domestically can be procured through free movement even at a low price - Free trade would cause world resources to be utilized most efficiently, maximizing world welfare - Import products can be produced more efficiently in other countries - Competitive Spirit: Free Trade keeps the spirit of competition of the economy As there exists the possibility of intense foreign competition under free trade, domestic producers not want to lose their grounds Competition enhances efficiency Moreover, it tends to prevent domestic monopolies and free the consumers from exploitation - Greater International Cooperation: Free trade safeguards against discrimination Under free trade, there- is no scope for cornering raw materials or commodities by any country Free trade can thus promote international peace and stability through economic and political cooperation - Free from Interference: Free trade is free from bureaucratic interferences Bureaucracy and corruption are very much associated with unrestricted trade Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358   The major argument Against Free Trade (Protectionism): - Governments restrict free international trade in order to protect domestic industries from foreign competition The restriction of international trade is called protectionism - Supporters of "protectionist" laws claim that keeping out foreign goods will + Save jobs + Give ailing domestic industries a chance to recover and prosper + Reduce the trade deficits + More growth opportunities: Protectionism provides local industries with growth opportunities until they can compete against more experienced firms in the international market + Lower imports: Protectionist policies help reduce import levels and allow the country to increase its trade balance + More jobs: Higher employment rates result when domestic firms boost their workforce + Higher GDP: Protectionist policies tend to boost the economy’s GDP due to a rise in domestic production +Protectionism can also prevent dumping +Protectionism makes domestic firms less competitive in the export market +Protectionism could improve a nations economic well-being is when a country has monopoly power over a goods +Protectionism permits the new and upcoming firms to work and develop at an aceptable rate Because they will not be pressured by foreign, more experienced firms Benefits of International Trade - - - - High prices for exports and lower prices for imports is a net gain for a country Efficient allocation of resources is a result of such exchanges There’s an increase in overall welfare because of the larger bundle of goods from such affiance Trade liberalization increases real GDP Efficient allocation of resources has a positive influence on GDP International trade offers the exchange of ideas and technical flow of expertise Development of high quality and more effective institution’s policies encourages domestic innovations Domestic productivity benefits from foreign development and researchers Global competition motivates companies to become more efficient because they face an open field Multinationals also operate on a larger scale leading to cost savings Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 - -  Consumers access a variety of goods and services at lower prices Hence, living standards of people improve The absence of restrictions and tariffs enable production and shipment; hence, ensuring availability of goods and services An increase in competition leads to a fall in monopoly power Thus, the market becomes more efficient Trade encourages efficiency Through specialization, countries have to concentrate on producing more of the goods they could produce very well over goods they cannot produce with efficiency Costs of International Trade - Loss of jobs and inequality in income caused by competition As states concentrate on free trade, the domestic industries adjust to this change As a result, they exist as the main exporters However, the same exporters face import competition - Less efficient firms exit the market Reason being resources are re-allocated according to whether the firm is growing or contracting As firms close, some countries can be at a loss at the expense of other countries - An increase in imports causes domestic industries to compete with imports Technology and capital might not be as developed in some countries As such, they cannot compete with developed countries in some industries What were the Mercantilists view on Trade ? What are the new contribution of Mercantilist’s views on Trade ? What is the weak point of Mercantilist’s ? Discuss?  The Mercantilists view on trade: - Mercantilism is an economic theory that advocates government regulation of international trade to generate wealth and strengthen national power Merchants and the Government work together to reduce the trade deficit and create a surplus It funds corporate, military, and national growth Mercantilism is a form of economic nationalism.It advocates trade policies that protect domestic industries - Export surpluses brought inflow of gold and silver - Trade policy was to encourage exports and restrict imports - One nation gained only at the expense of another  Mercantilism suggests that it is in a country’s best interest to maintain a trade surplus – to export more than it imports To ensure that a country exported a lot and imported only a little, the Mercantilists were in favor of high tariffs Mercantilism advocates government intervention to achieve a surplus in the balance of trade  The new contribution of Mercantilist’s views on Trade Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 To recognize the importance of International Trade Mercantilism suggests that countries | government should design policies that lead to an increase in their holdings of gold and silver - This was usually done by increasing exports and limiting imports This economic philosophy was used by Europeans from about the 1500s to the late 1700s - To ensure that a country exported a lot and imported only a little, the mercantilists were in favor of high tariffs Mercantilism advocates government intervention to achieve a surplus in the balance of trade The weak point of Mercantilist’s - The key problem with the mercantilist view is that it views trade as a zero sum game, where if one country benefits the other must lose As an economic philosophy, Mercantilism is flawed Mercantilism weakens country in long run; enriches only a few - In 1770s, Adam Smith argued that import restrictions would reduce the gains from specialization and make a nation poorer He used absolute advantage to explain the benefits of trade - It creates high levels of resentment Trickle-down economics works on paper It just doesn’t work well in real life thanks to the inherent greed that so many people have Why give others money when you can keep it for yourself? The rich tend to get richer in a system of mercantilism and the working class gets to be stagnant at best Eventually this creates resentment, which leads to rebellion, and ultimately it led to many colonies seeking out their own independence - It creates a preference for the mother nation to always be first Many colonies are also treated as a foreign nation in a system of mercantilism The colonies are forced to sell their local raw materials for a bargain basement price and then be forced to purchase manufactured goods at a higher price than necessary This creates an even wider wealth gap between the different income classes - There is always a risk of local raw materials and resources running out Because mercantilism is based on the complete use of natural resources, there will always be a day when those resources run out Natural resources are finite in nature, so even if there is an extensive reserve in place that can be accessed, that reserve will one day run out If that happens sooner rather than later, then the entire economy can collapse - The system is ultimately quite inefficient Because materials and goods are shipped back and forth between colonies and their mother nation, the price of goods is inflated more than it needs to be Even with modern shipping methods, it costs less to manufacture goods locally where -  Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 raw resources are available than it does to ship those items back and forth Because of this, it also creates vulnerabilities in both economies should those shipments be intercepted by someone else How were the Adams Smith (Theory of absolute advantage’s ) views on trade ? How were gains from trade generated ? What policies did Adam Smith advocate in International Trade ? What did he think was the proper function of government in the economic life of the Nation?  Adams Smith (Theory of absolute advantage’s ) views on trade - "It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” (Adam Smith) - Specialization and trade among regions and countries are based upon the same principle as among individuals - 1776 Adam Smith, The Wealth of Nation + Word’s wealth is not a fixed quantity + International trade  Increase the general level of productivity within a country  Increase world output (wealth) - Adam Smith argued that a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it - According to Smith, countries should specialize in the production of goods for which they have an absolute advantage and then trade these goods for the goods produced by other countries  Gains from trade generated - In 1770s, Adam Smith argued that import restrictions would reduce the gains from specialization and make a nation poorer He used absolute advantage to explain the benefits of trade Adam Smith argued that a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it - When one nation has absolute advantage in production of a commodity, but an absolute disadvantage with respect to the other nation in a second commodity, both nations can gain by specializing in their absolute advantage good and exchanging part of the output for the commodity of its absolute disadvantage  Policies Adam Smith advocate in International Trade - According to Smith, countries should specialize in the production of goods for which they have an absolute advantage and then trade these goods for the goods produced by other countries - Specialization and trade advantage both countries - Adam Smith and other classical economists advocated policy of laissez-faire, or minimal government interference with economic activity Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 Free trade would cause world resources to be utilized most efficiently, maximizing world welfare  The function of government in the economic life of the Nation - As one might expect from Smith’s conviction that markets were extremely efficient, he was in favor of a government that did not hamper the working of the market - However, Smith emphasized the fact that the government should + Maintain law and order + Ensure the defense of the nation from foreign enemies, + Erect and maintain public works that private citizens would not build + Subsidize education for those who could not afford it, and + Regulate international trade when free trade endangers ‘infant industries’ or compromises national security In that way was Ricardo’s law of Comparative Advantage superior to Smith’s Theory of Absolute Advantage ?( Compare the theory of Absolute Advantage and Comparative Advantage ?) Why this theory is more relevant to the modern trade situation ? How gains from Trade Arise with Comparative Advantage? - Ricardo’s law of Comparative Advantage superior to Smith’s Theory of absolute advantage:    A country has an absolute advantage when it produces a large number of goods with the same resources that other country are using, on the other hand, the comparative advantage means producing better quality at cheaper price incurring lower opportunity cost than the other country The Smith does not take the limitation of production factor into the account while Ricardo does According to Smith, a country would produce all the goods in which they are better performing They have low absolute cost after having an absolute advantage; spend fewer factors in making one unit of product, but it cannot be the manufacturing center of all goods and services A country cannot outperform in all types of goods and secondly, it cannot take an advantage of economies of scale which leads to inefficiency if a country tries to produce all goods and it may lead to an increase in prices Instead, Ricardo focused on the relative cost of production He emphasized that the country should produce those goods in which they have comparatively low opportunity cost than the other countries A country has to decide what to produce and what to sacrifice This gives other countries an opportunity to produce goods efficiently and to take advantage of economies of scale in which a large number of goods are produced at a low cost Compare the theory of Absolute Advantage and Comparative Advantage: Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 Comparative Advantage Absolute Advantage - Even if someone is absolutely more productive at activities, if he is comparatively more productive at activity than another relative to a 2nd person, he will be better off specializing and trading than producing in isolation - The causes of economic - David Ricardo, by progress and the creation of contrast, focused on wealth was Adam Smith’s main how wealth is shared topic of interest among different groups in society - According to Smith, the wealth of a nation derives from the level of the technology in use - The level of technology and its rate of improvement depend on the division of labor Definition Benefit Cost Comparative Advantage - Ability of country to produce good better than other country with same amount of resources - Trade is mutually beneficial - Benefits both the countries - Economic Nature - Opportunity cost of producing good impact the Country’s comparative advantage It is mutual and reciprocal Absolute Advantage - Ability of a country to produce more goods with same amount of resources than other country - Trade is not mutually beneficial - Beneits the Country with absolute advantage - Absolute cost of producing goods impacts if the country has absolute advantage - It is not mutual and reciprocal This theory is more relevant to the modern trade situation: Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358    A contemporary example: China’s comparative advantage with the United States is in the form of cheap labor Chinese workers produce simple consumer goods at a much lower opportunity cost The United States’ comparative advantage is in specialized, capital-intensive labor American workers produce sophisticated goods or investment opportunities at lower opportunity costs Specializing and trading along these lines benefit each The theory of comparative advantage helps to explain why protectionism is typically unsuccessful Adherents to this analytical approach believe that countries engaged in international trade will have already worked toward finding partners with comparative advantages If a country removes itself from an international trade agreement, if a government imposes tariffs, and so on, it may produce a local benefit in the form of new jobs and industry However, this is not a long-term solution to a trade problem Eventually, that country will be at a disadvantage relative to its neighbors: countries that were already better able to produce these items at a lower opportunity cost Gains from Trade with Comparative Advantage:     Country should specialize in the production of those goods in which it is relatively more productive even if it has absolute advantage in all goods it produces Gain from trade depends on the comparative cost conditions Comparative cost doctrine suggests that trade can provide benefit to all countries if they specialise in the production of those goods and, hence, export them in which they have comparative advantage The idea of gains from trade was at the core of the classical theory of international trade propounded by Adam Smith and David Ricardo According to Smith, the gains from trade arise form the advantages of division of labour and specialisation—both at the national and international level Such advantages arise, according to Smith, due to the absolute differences in costs Ricardo goes a step further He says that trade contributes “to increase the mass of commodities, and therefore, the sum of enjoyments…” Ricardo adds that the gain from trade consists in the saving of cost resulting from obtaining the imported goods through trade instead of domestic production Ricardo’s comparative cost thesis may be applied to establish the existence of gains from trade In other words, gain from trade depends on the comparative cost conditions Comparative cost doctrine suggests that trade can provide benefit to all countries if they specialise in the production of Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  those goods and, hence, export them in which they have comparative advantage A country, thus, specialises in production and export in accordance with its comparative advantage Ricardo’s trading nations acquire complete specialisation in production As a result, global output becomes larger than under autarky Trade also enables each country to consume more than under isolation Thus, there is a production gain and a consumption gain arising out of international trade Such gains cannot be reaped in the absence of trade  - Principle of comparative advantage: Even if a nation has an absolute cost disadvantage in the production of both goods Even if a nation has an absolute cost disadvantage in the production of both goods + The less efficient nation  Specialize in and export the good in which it is relatively less inefficient o Where its absolute disadvantage is least + The more efficient nation  Specialize in and export the good in which it is relatively more inefficient o Where its absolute disadvantage is greatest There are gains from trade for both countries This is the second lesson of the Ricardian model Countries have comparative advantage in producing different goods and hence they can get mutual benefits from trade This is because countries differ from each other The more different they are, the larger the (potential) benefits from trade What are the sources of Comparative Advantage ?  Comparative advantage is a dynamic concept meaning that it can and does change over time For a country, the following factors are important in determining the relative unit costs of production:  The quantity and quality of factors of production available for example some countries have an abundant supply of good quality farmland, oil and gas, fossil fuels Climate and geography have key roles in creating differences in comparative advantage  Different proportions of factors of production – some countries have abundant lowcost labour suitable for volume production of manufacturing products  Increasing returns to scale and the division of labour – increasing returns occur when output grows more than proportionate to inputs Rising demand in the markets where trade takes place helps to encourage specialisation, higher productivity and internal Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 The WTO has found it impossible to negotiate a wide ranging global trade agreement Besides these advantages , the following disadvantage are also mentioned: - It hurt the process of developing international trade , causing economic isolation in a globalized world - Imposing dependency and stagnation in domestic businesses , resulting in stronger protection , makes the strategic , investment and business industries less flexible Investment and business activities are no longer effecttive - Cause lack of variety in design , style, quality of good , as commodity prices become more expensive than commercial liberalization , causing damage to consumers - Market distortion and loss of Economic Efficiency - Protectionism can be an ineffective and costly of sustaining jobs and supporting domestic economic growth - Higher prices for Consumers Example: In G-7, Japan and Germany particularly responded strongly to the trend of trade protectionism Ahead of the meeting, Japanese Finance Minister Shoichi Nakagawa announced that Tokyo would resist any manifestation of trade protectionism He emphasized that the lesson from the Great Depression in the early 20th century made it clear that the closure would lead to disaster and at the G-7 Conference, Japan will discuss measures to prevent this from happening again PART : Economic Integration : FTA – Common Market 12 What are the main drivers of Globalization? What are the benefits and challenges of Globalization ?  The main drivers of Globalization : The media and almost every book on globalization and international business speak about different drivers of globalization and they can basically be separated into five different groups: 1) Technological drivers Technology shaped and set the foundation for modern globalization Innovations in the transportation technology revolutionized the industry 2) Political drivers Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign direct investments in almost all over the world 3) Market drivers As domestic markets become more and more saturated, the opportunities for growth are limited and global expanding is a way most organizations choose to overcome this situation 4) Cost drivers Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 Sourcing efficiency and costs vary from country to country and global firms can take advantage of this fact Other cost drivers to globalization are the opportunity to build global scale economies and the high product development costs nowadays 5) Competitive drivers   With the global market, global inter-firm competition increases and organizations are forced to “play” international Benefits of Globalization - Improved Living Standards One of the main benefits of globalization is the massive rise in living standards in developing nations These same countries also have access to huge technological improvements without going through the difficulties that developed nations have experienced - Increased Creativity and Innovation Global competition can encourage creativity and innovation, helping companies to stay one step ahead of competitors This drive toward quality and price can improve products and keeps costs low The free movement of labor and capital means that ideas from developing nations can drive innovation around the world Before globalization, getting funding for an idea in an underdeveloped country was extremely difficult Since communications have evolved, individuals without access to funding can still make a difference in both their home market and around the world - Lowered Costs for Goods and Services Lowered costs help people in both developing and developed countries live better on less money Huge cost reductions from inexpensive manufacturing and logistics have lowered the cost of living for everyone around the world - Easy Access to Foreign Culture Globalization has also made it easier to access foreign culture, including food, movies, music, and art Challenges of Globalization - Job Mobility One of the most common critiques of the global trade system is how it ships jobs, especially manufacturing jobs, from less developed countries to developing countries Lower-skilled workers who lose manufacturing jobs in developed countries often have a difficult time finding new, comparably compensated work - Western Dominance Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 Despite huge growth in emerging markets, the Western developed world still holds the reigns on international order and on how capital flows from country to country - Loss of Cultural Identity While globalization has made foreign cultures easier to access, it has also begun to meld cultures together The success of certain cultures throughout the world have caused other countries to emulate these lifestyles and culture 13 What is the globalization? Describe the benefits and challenges of current wave of Globalization for Vietnam’s economy  Globalization is the connection of different parts of the world resulting in the expansion of international cultural, economic, and political activities It is the movement and integration of goods and people among different countries There are advantages and disadvantages to globalization, all of which have economic, social, political, and cultural impacts.globalization describes mainly trade practices, extending also to the communication patterns and cultural system that underlie these practices  Benefits of current wave of Globalization for Vietnam’s economy - Increasing export revenues As a result of integrating into the regional and global market, export revenues have increased continually since 1990, speeded up sine 1995 when Vietnam joined ASEAN and grew sharply since Vietnam joined WTO in 2007 - Rapid increase in foreign direct investment (FDI) As a WTO member, Vietnam has become an attractive destination for foreign investors Registered FDI surged to US$71 billion in 2008, compared with only $12 billion in 2006 During the three years of WTO membership, total registered FDI into Vietnam reached more than $114 billion, 4.5 times higher than the target set for the 2006-2010 period Of this, $29.5 billion was disbursed in the five years - Increase in enterprises’ awareness, adaptation and performance Joining WTO means that Vietnam has entered a large “play ground” where Vietnamese enterprises have to compete with many giant players-big foreign corporations with strong financial power and experience This is also a chance for state-owned enterprises pending on the Government protection and subsidies restructure their operation Otherwise they will be defeated even in the domestic market So under the competition pressure, the Vietnam’s enterprises will become more effective and competitive - More favorable legal system for trading activities Global economic integration and accession to the WTO have given Vietnam a chance to refine its policy and legal system to be more transparent, sustainable and predictable to be in line with WTO regulations and to attract more foreign investors Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  Moreover, as a WTO member, Vietnam is treated as a full WTO membership Vietnamese enterprises have a healthy environment for development in foreign markets If there are trade disputes, they can be treated under WTO’s Dispute Settlement Mechanism Challenges of current wave of Globalization for Vietnam’s economy - Low competitiveness of nation, enterprises and products Vietnamese enterprises are mainly medium and small-sized None of Vietnam’s state-owned enterprises was on the list of 1000 world biggest corporations, neither its commercial trademarks in the list of 1000 most prestigious global trademarks If we want to gain strong competitiveness in international market, we must have many strong enterprises like Sony, Toyota of Japan, or Hyundai, Samsung of South Korea - Issues relating to macro policies and administrative procedure A widening trade deficit, an overheating economy, and a global rise in commodity prices caused inflation to shoot up to 23 percent in 2008.This in turn triggered a crisis of confidence, big swings in interest rates, and a sharp fall of the dong, the local currency” Although this issue was over and the government has performed better when dealing with the global financial crisis, it is an important lesson that because the Vietnamese economy has integrated deeply into the global economy, the exchange rates, inflation, balance of payment and budget deficit will develop unpredictably - Difficulties in agricultural sector Agriculture [1] is the main sector in the economy, accounting for 20 percent of GDP and 66 percent of the national population However, it is confronting with vigorous competition in the global market Farmers lack knowledge and professional skills Production technology is small and backward, which increases the production costs compared to those of other countries and makes the quality of the products low Agricultural enterprises are often of small size and disperse As a result, they have weak financial capacity to improve production technology and labor productivity 14 What are the benefits and challenges of ASEAN Economic Community ? Describe the opportunities and economic benefits of Vietnam in the AEC ?  The benefits of ASEAN Economic Community: Trade - Concerning the free flow of goods: as of 2010, duties were eliminated on 99.2% of tariff lines for the ASEAN-6 Member States (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 In the other member states (Cambodia, Lao PDR, Myanmar and Viet Nam), 97.52% of tariff lines have been reduced to 0-5% Measures to reduce technical barriers to trade are also being implemented Investment - ASEAN is committed to building an investment environment to attract businesses: it created the ASEAN Comprehensive Investment Agreement (ACIA), which includes commitments towards the liberalization and protection of cross-border investments operations, together with best practices for the treatment of foreign investors and investments - For the free flow of capital, stock exchanges from Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam are working together to form the ASEAN Exchanges, aiming to promote ASEAN capital markets and to offer more opportunities to investors in the region Labor - ASEAN works towards facilitating the free flow of skilled labor: the ASEAN Agreement on the Movement of Natural Persons (MNP) provides a legal framework to ease temporary cross-border movements of people engaged in the trade in goods, services and investment Competitive Economic Region : By creating a competitive economic region, the AEC wants to foster a culture of fair competition, which includes protection of consumers and guarantees for intellectual property rights It also requires infrastructures (highways, airports and rail links, power grids and gas pipelines) under planning and development Equitable Economic Development : The AEC will enhance competitiveness and expansion of SMEs in ASEAN through various projects under the Strategic Action Plan for ASEAN SME Development (2010-2015) Integration into the Global Economy - Thanks to various “ASEAN+1” free trade agreements with the People’s Republic of China, Japan, the Republic of Korea, Australia, New Zealand and India, ASEAN is positioned in the middle of global supply chain, developing strong trade connections with the major Asian economies and generating new business opportunities - Increased business interest in the AEC ASEAN is benefiting from a steady increase in Foreign Direct Investment (FDI), with an average growth of 14% since 2000 Challenges of ASEAN Economic Community: - The Trump administration's 'America first' policy injected ambiguity in economic activities - The risk intensified as the trade war between the US and several countries - China, India, Russia, Mexico, Canada, the European Union - became effective These have -  Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  long-term implications in terms of reconfiguration of manufacturing supply-chains and confidence in the multilateral trading framework of the WTO - Simultaneously, the world economy is witnessing the process of Brexit, an outcome of a referendum when Britain decided to leave the European Union - While it marked the rise of populist policies, it also criticised globalisation, particularly trade and immigration, for income inequality and economic insecurity - The ASEAN countries are not aloof from these adverse global developments There are concerns over how AEC 2015 has benefitted individual ASEAN members and its businesses and people - Low awareness of AEC often lead to debates of uneven benefit of economic integration and conflicts of interest between the 'winners' and 'losers' - These are limiting the governments from committing to bold measures and compelling them to undertake populist policies to raise their future political prospects - As a result, the pace of ASEAN economic integration may be slowed Implementation could be uneven and attention might be paid to more inclusive and people-centric trade and investment measures - However, trade will remain at the core of AEC Although tariffs have been almost eliminated for flow of goods in the region, facilitation initiatives, such as the ASEAN Single Window and Self-Certification Scheme, will gain importance The opportunities of Vietnam in the AEC - Opportunity to get a wider market This is a good opportunity for Vietnamese businesses to expand their markets The AEC creates a unified market and manufacturing area, which leads to the economy of many countries to become more prosperous, resulting in increased income and formation of a new amount of middle-income consumers with high incomes – also the very potential customers of businesses - Extended Export Opportunities When participating in AEC, the export market for goods in Vietnam will be increasingly expanding When AEC is formed, Vietnamese enterprises can sell goods to ASEAN countries almost domestic sales This is one of the advantages for the flow of goods of businesses The import and export procedures will be more cumbersome and the reform of the procedure of origin, towards allowing enterprises to certification of origin will also facilitate the business customs clearance of goods to the market ASEAN Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 - Opportunity to enhance competitiveness for Vietnam's exports When AEC is established, Vietnamese enterprises will have a wider market In addition, when the tax rate in ASEAN is reduced to 0%, Vietnamese enterprises will have conditions to reduce costs, lower prices for exports, contribute to increasing competitiveness - Opportunity to attract investment sources AEC will also help Vietnam to better improve the business environment from customs clearance, administrative procedures to create more balanced investment incentives  The benefits of Vietnam in the AEC - Reduce the risks in export-imports from minimizing dependency to the Chinese market, increasing the replacement of the ASEAN market for the Chinese market - Creating opportunities for Viet Nam to be deeper into the value chain and the regional supply chain is firstly the supply chain value agricultural products and intermediate products - To promote the process of implementing strategic breakthroughs to Vietnam to basically become industrialization in the modern direction in 2020 - Strengthening the comprehensive understanding between Vietnam and other AEC member countries, expanding socio-cultural exchanges across countries, facilitating the development of Vietnamese values and identity in AEC Why Vietnam actively participates in many FTAs ? What are the benefits and costs of Vietnam when we sign FTAs and joint WTO ?  Vietnam actively participates in many FTAs because - Having better trade relations with some other partners in other regions contributed to helping Vietnam balance its trade deficit - Tranfers the knowledge and technology - Take advantage of reduced tariff - Enable vietnam is economic develpment to continue to shift away from exporting low tech manufacturing products to high tech goods - FTAs has contributed to raising Vietnamese exports Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  FTAs also help Vietnam improve its infrastructure, attract more investment capital; accelerate administrative reform; abolish barriers for the market access Benefits and cost of Vietnam when we sign FTAs o Benefits - Enable Vietnam’s economic development to continue to shift away from exporting low-tech manufacturing products and primary goods to more complex high-tech goods - Sophisticated business practices and technology will help boost Vietnamese labor productivity and expand the country’s export capacity - Trade agreements will allow Vietnam to take advantage of the reduced tariffs, both within the ASEAN Economic Community (AEC) and with the EU and US to attract exporting companies to produce in Vietnam and export to partners outside ASEAN - Vietnam's participation in trade agreements will also ensure compliance with national standards, from employee rights to environmental protection o Cost  - Such agreements are likely to trigger aggressive competition from foreign rivals on local businesses – particularly in the agriculture sector including meat and dairy products from the EU, Australia and Canada - If local firms not adapt, make use of new market opportunities and potential partnerships with foreign firms – they could find competing in the market challenging - The Vietnamese government would also need to continue on its path of reforms – strengthening the banking sector, removing corruption, refining legal and tax structures, and improving trade facilitation Benefits and costs of Vietnam when we joint WTO o Benefits - Vietnam has access to markets for goods and services in all member countries with reduced import tariffs and non-discriminatory service sectors Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 - When participating in WTO, Vietnam's business environment is increasingly improved - Vietnam has the same status as other members in global trade policy making, has an opportunity to fight to establish a fairer, more reasonable, conditional economic order to protect the interests of the country, the business - Integration into the world economy also promotes the domestic reform process, ensuring that Vietnam's reform process is more synchronized and more effective - WTO accession will enhance our position in the international arena, creating conditions for Vietnam to effectively implement foreign policies o Costs - Competition will be fiercer, with more "competitors", on a wider and deeper scale - In the world, the "distribution" of benefits of globalization is uneven Countries with low developed economies benefit less - International economic integration in a globalized world, interdependence among countries will increase In the context of limited potential of the country, incomplete legal system, limited experience in operating a market economy, this is not small difficulty - International economic integration raises new issues in protecting the environment, protecting the national security, preserving the fine cultural identity and traditions of the nation, against pragmatic lifestyles and pursuing coin 15 Present the different level of Economic Integration ? What is the advantage and benefit of FTA and Custom Union for one country ?  The different level of Economic Integration : Economic integration can be classified in five additive levels Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 - - - - -   Free trade Tariffs (a tax imposed on imported goods) between member countries are significantly reduced, some abolished altogether Each member country keeps its own tariffs in regard to third countries Custom union Sets common external tariffs among member countries, implying that the same tariffs are applied to third countries; a common trade regime is achieved Common market Services and capital are free to move within member countries, expanding scale economies and comparative advantages However, each national market has its own regulations such as product standards Economic union (single market) All tariffs are removed for trade between member countries, creating an uniform (single) market There is also free movements of labor, enabling workers in a member country is able to move and work in another member country Monetary and fiscal policies between member countries are harmonized, which implies a level of political integration Political union Represents the potentially most advanced form of integration with a common government and were the sovereignty of member country is significantly reduced Advantage of Free Trade Agreements (FTA) : Free trade agreements are designed to increase trade between two or more countries - Increased Economic Growth - More Dynamic Business Climate: Often, businesses were protected before the agreement These local industries risked becoming stagnant and noncompetitive on the global market With the protection removed, they have the motivation to become true global competitors - Lower Government Spending: Many governments subsidize local industry segments After the trade agreement removes subsidies, those funds can be put to better use - Foreign Direct Investment: Investors will flock to the country This adds capital to expand local industries and boost domestic businesses - Expertise: Global companies have more expertise than domestic companies to develop local resources When the multinationals partner with local firms to develop the resources, they train them on the best practices That gives local firms access to these new methods - Technology Transfer: Local companies also receive access to the latest technologies from their multinational partners Benefits of Free Trade Agreements (FTA ) Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358  - Contribute to greater economic activity and job creation in the country , and deliver opportunities for big and small businesses to benefit from greater trade and investment - Reduce and eliminate tariffs, improve rules that affect issues like intellectual property - Free trade agreements give businesses and consumers improved access to a wider range of competitively priced goods and services, new technologies, and innovative practices - Free trade agreements help obtain more benefits from foreign investment - Promote regional economic integration and build shared approaches to trade and investment between one country and trading partners - Support stronger people-to-people and business-to-business links that enhance Australia’s overall bilateral relationships with FTA partners - Free trade agreements can continue to provide additional benefits and trading partners over time, including via in-built agendas that encourage ongoing domestic reform and trade liberalisation Advantages of Custom Union - Increase in trade flows and economic integration The main effect of a free-trade agreement is that it increases trade between member countries It helps improve the allocation of scarce resources that satisfy the wants and needs of consumers and boosts foreign direct investment (FDI) Customs unions lead to better economic integration and political cooperation between nations and the creation of a common market, monetary union, and fiscal union - Trade creation and trade diversion The effectiveness of a customs union is measured in terms of trade creation and trade diversion Trade creation occurs when the more efficient members of the union sell to less efficient members, leading to a better allocation of resources Trade diversion occurs when efficient non-member countries sell fewer goods to member countries because of external tariffs It gives less efficient countries in the union the opportunity to capitalize on their position and sell more goods within the union Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 -  Reduces trade deflection: One of the main reasons a customs union is favored over a free trade agreement is because the former solves the problem of trade deflection This occurs when a non-member country sells its goods to a low-tariff FTA (free trade agreement) country, which then resells to a high-tariff FTA country, leading to trade distortions The presence of a common external tariff in customs unions helps avoid problems that arise from tariff differentials Benefits of Custom Union - - - - - - a) To Producers : Producers get a larger and wider market and can thus produce more goods The Custom Union lowers cost of production It offers equal protection to all manufacturers against third country imports and minimizes the possibility of transshipment or trade deflection It levels the economic environment and promotes fair competition by reducing disparities in production costs for manufacturers in the various countries with regard to taxes on imported raw materials and intermediate goods from third countries b) To Traders within the CU: Traders get wider source of goods therefore, bargaining power in dealing with suppliers resulting in cost savings for their customers c) To the Importers: Because the CU removes border controls and trade barriers, importing goods becomes faster since traders not have to go through so many customs procedures in different countries This reduces transaction costs and results in timely deliveries d) To Consumers: Consumers get a wider choice of goods and they also benefit from the advantages of increased productivity which leads to lower prices e) To the CU Members: In a CU with a Free Trade Area, intra-regional trade is enhanced as there are no tariffs or quotas on goods originating from within the region, It seeks to maintain a price advantage for regionally produced goods over goods produced outside the Customs Union f) To Land locked Countries: Land locked countries that are neighbours to CU members who have access to the sea, will in actual terms no longer be landlocked, given that their goods will be cleared at first port of entry and will have free circulation Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 - rights when moving to such, countries as all customs formalities would have been discharged at the port of entry g) To the Region as a Whole (CU Members): A customs union promotes cross-border investment and serves to attract investment, both Foreign Direct Investment (FDI) and domestic investment, as the enlarged market is more attractive to investors than the previously small individual national markets What are the principles of WTO and how ist differ a FTA ?  The principles of WTO - Trade without discrimination Under the WTO agreements, countries cannot normally discriminate between their trading partners Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to the same for all other WTO members Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents - Freer trade: gradually, through negotiation Lowering trade barriers is one of the most obvious means of encouraging trade The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively - Predictability: through binding and transparency Sometimes, promising not to raise a trade barrier can be as important as lowering one, because the promise gives businesses a clearer view of their future opportunities With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices The multilateral trading system is an attempt by governments to make the business environment stable and predictable Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 In the WTO, when countries agree to open their markets for goods or services, they “bind” their commitments For goods, these bindings amount to ceilings on customs tariff rates Sometimes countries tax imports at rates that are lower than the bound rates Frequently this is the case in developing countries In developed countries the rates actually charged and the bound rates tend to be the same - Promoting fair competition The rules on non-discrimination — MFN and national treatment — are designed to secure fair conditions of trade So too are those on dumping (exporting at below cost to gain market share) and subsidies The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade - Encouraging development and economic reform The WTO system contributes to development On the other hand, developing countries need flexibility in the time they take to implement the system’s agreements And the agreements themselves inherit the earlier provisions of GATT that allow for special assistance and trade concessions for developing countries  Differ from a FTA The WTO includes many agreements in different areas of trade (goods, services, intellectual property, investment, etc.) These agreements are aimed at unifying rules for global trade and reducing trade barriers However, the WTO has only succeeded in reducing but not reaching the level of removing barriers to the majority of trade as in FTAs Therefore, there is no FTA agreement in the WTO BENEFITS OF RCEP The RCEP Agreement is identified as a priority content in Vietnam's integration strategy After the RCEP Agreement is signed and put into effect, Vietnam will become one of the leading countries in the world participating in deep and broad integration into all three of the world's largest free trade agreements Agreement (CPTPP), (EVFTA) and (RCEP) RCEP is the largest region to facilitate Vietnam to take advantage of intra-regional tariff preferences, so Vietnamese businesses can expect the Agreement to further improve tariff preferences, rules of Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com) lOMoARcPSD|10070358 origin the internal block is more harmonious, easier to respond Customs procedures will be agreed to facilitate trade RCEP also brings Vietnam a market with a strong standard of living and economic growth with huge consumer demand but not too high requirements for product quality Along with opening up a large consumer market, the RCEP Agreement will help Vietnam reduce transaction costs, create a more friendly business environment by harmonizing existing regulations, and applying regulations within the framework of various ASEAN FTAs At the same time, contribute to strengthening technical cooperation and position of Vietnam in the settlement of trade and investment disputes BENEFITS OF EVFTA The EVFTA will enhance broad and expanding relationships in many key areas, resulting in the creation of jobs, development of expertise, and the transfer of innovative knowhow, the generation of tax revenues, and the introduction of cutting-edge technology, as well as the provision of many new goods and services to benefit consumers The agreement’s strong commitment to open, fair, and rules-based trade will widen export markets for Vietnam The improved regulatory co-operation and coherence through this EVFTA will bring advantages to Vietnam which will not only attract foreign investors but bring advantages to the Vietnamese society to access high-quality products The EVFTA will create considerable opportunities for Vietnam’s agriculture as it will boost agricultural exports, improve the sector’s competitiveness and promote Vietnam’s international economic integration The EU is currently the second-largest market for Vietnamese exports of key produce and commodities such as coffee, cashew nuts, and pepper EU will truly commit to promote Vietnam’s advantages and potentials in the agricultural and healthcare sectors Downloaded by Plants vs Zombiesss TV (tranphuzap2@gmail.com)