final examination international trade management

Trade agreements, whether multilateral or regional, appropriate and effective tools for monitoring and enforcing international labor standards... Provide your conclusion of the country’s

VIETNAM NATIONAL UNIVERSITY, HA NOI Course Code: INS3019 01 INTERNATIONAL TRADE MANAGEMENT

Lecturer: Ph.D Lê Hương Linh

Table of Contents

1 Overview of the UK’s international trade situation in 2022 Conduct the following aspects (including but not limited to) major exports, import goods, and major trading

partners 3

a Trading partner - The United State of America 3

b Exportation and Importation 4

2 Analysis of UK trading with U.S(major trading partners) 4

2.3 Trade agreements, whether multilateral or regional, appropriate and effective tools for monitoring and enforcing international labor standards 9

2.4 Conclusion 11

I Part 1:

Introduce a country’s trade composition and major trading partners Provide your conclusion of the country’s comparative advantages, bilateral trade relations, and factors that determine those relations based on the gravity model and trade integration

1 Overview of the UK’s international trade situation in 2022 Conduct the following aspects (including but not limited to) major exports, import goods, and major trading partners

The United Kingdom is a major international trading power In 2022, the population of the UK is about 67 million people and their GDP reached 3.21 trillion Even though the geography of the UK is quite small, it is still ranked as the second largest economy in Europe and led G7 in GDP growth about 4% in 2022

a Trading partner - The United State of America

The UK is still a vital market for US exports of goods and services, even in the face of ongoing regulatory obstacles brought on by the UK's exit from the European Union (often known as "Brexit"), high inflation brought on by rising energy prices, and the COVID-19 pandemic's aftereffects With a 21.5 percent increase from 2021, U.S exports of products and services to the UK totaled $157.1 billion in 2022, putting the UK in second place for trading in services and fifth place for exporting American goods

With a total bilateral stock in direct investment valued at over $1.5 trillion in 2021, the U.S.-UK investment relationship is the greatest in the world The amount of U.S direct investment going to the United Kingdom in 2021 exceeded $1 trillion, a 9.5% increase from 2020 There was a $22% growth in direct investment from the United Kingdom to the United States (inward) in 2020, totaling $565.2 billion These investments directly sustain over 2.6 million jobs 1.46 million in th— e United Kingdom and 1.17 million in the United States

The United Kingdom is home to 7,500 American companies of all sizes, and it is also the most popular place in Europe for American companies to establish regional offices that serve Europe, the Middle East, and Africa A recent survey indicates that U.S investment confidence in the UK has fallen for the third year running, largely as a result of persistent uncertainty and difficulties with the UK-EU trade relationship following Brexit, but also because of high inflation, immigration, relative political instability, policy uncertainty, and labor shortages

b Exportation and Importation

Financial and professional services, industrial supplies, agricultural products, IT and cyber security, consumer goods, smart grids, medical equipment, and travel and tourism are some of the main export sectors from the United States.

The UK brought in £906 billion in imports and exported £838 billion worth of goods and services in 2022 In 2022, 41% of the UK's exports of goods and services and 47% of its imports were from the EU The United Kingdom usually has a trade imbalance because it imports more than it exports In 2022, a £150 billion services trade surplus offset a £217 billion goods trade deficit In 2022, the total trade deficit was £67 billion

In 2022, the UK had an £83 billion trade deficit with the EU and a £16 billion trade surplus with non-EU nations In comparison to the preceding three months, the trade deficit with all nations stayed constant at £8.8 billion in the three months leading up to October 2023 In cash terms, both imports and exports decreased by 2.3% over that time

2 Analysis of UK trading with U.S(major trading partners) a Introduction

The economic landscape between the United Kingdom and the United States, two long standing allies, is marked by a dynamic and evolving trade relationship In 2022, the total trade in goods and services between these nations reached a significant milestone, with an estimated value of $295.6 billion This impressive figure is

indicative not only of the volume of trade but also of its complexity and depth At the forefront of this relationship is a noteworthy U.S trade surplus of $20.8 billion, driven by diverse sectors ranging from technology to financial services This introductory analysis will delve into the intricacies of this transatlantic partnership, exploring its historical context, current state, and future potential, thereby providing a

comprehensive overview of one of the most consequential economic alliances in the global arena

b Trade Theory

● Ricardo's Model - Comparative Advantage

- UK: The UK's comparative advantage lies predominantly in the services sector, particularly in financial, insurance, and business services Its service exports in 2019, amounting to $418 billion, represent a significant specialization in this domain However, the UK's trade performance has faced challenges post-2016, including a notable underperformance in trade value and a substantial trade deficit, indicating reliance on foreign capital and vulnerability to economic shifts

- US: The US demonstrates a broader spectrum of comparative advantages across various sectors Its main exports to the UK, such as gold, crude petroleum, and gas turbines, reflect a diversified export strategy The US's extensive export of services like financial services aligns with its comparative advantages in technology and high-value goods, indicating an efficient utilization of its diverse economic resources.

● Heckscher-Ohlin Model - Factor Endowments:

- UK: The UK's specialization in services, particularly financial services, aligns with its abundance of skilled labor and capital This specialization, reflective of its factor endowments, plays a critical role in its trade patterns, influencing its export portfolio predominantly towards service-oriented sectors

- US:The US's diverse export base can be attributed to its vast natural resources and advanced technological capabilities These factor endowments enable the US to export a variety of goods and services, showcasing its economic complexity and adaptability in global trade

In summary, the UK's and US's trade dynamics, when analyzed through Ricardo's and Heckscher-Ohlin's models, reveal a clear distinction in their economic strengths and trade strategies The UK's focus on services, driven by its skilled labor and capital, contrasts with the US's diverse and technologically advanced export structure, which leverages its broad spectrum of natural and technological resources Understanding these models provides valuable insights into the trade relations between the UK and US, highlighting areas of strength and potential growth within their respective economies

c Gravity model

The Gravity Model, when applied to the UK-U.S trade relationship, offers significant insights into the dynamics of their trade volumes This model, by considering the economic size and distance between countries, along with other factors, helps explain the substantial trade volume between these two nations.

● Economic Size: The substantial trade volume between the UK and the U.S., estimated at $295.6 billion in 2022, can be partly attributed to the large economic size of both countries The U.S., with its diverse and robust economy, and the UK, with its strength in services, contribute to a high level of bilateral trade

● Distance: Despite the physical distance across the Atlantic, the trade volume between the UK and U.S remains high This can be attributed to advanced logistics, technology, and strong historical ties, which have reduced the impact of geographical distance on trade

● Other Influencing Factors: Various other factors, including political relationships, trade policies, and global economic conditions, also play a significant role in shaping the trade volumes For instance, ongoing

negotiations and agreements between the two countries directly influence trade flows

- Role of Shared Language and Legal Systems

● Shared Language: The shared language between the UK and U.S significantly reduces communication barriers, fostering smoother trade relations This is especially relevant in the service sector, where language plays a critical role in transactions

● Legal Systems: The similarity in legal systems between the UK and the U.S facilitates trade by reducing legal and regulatory complexities This similarity is particularly beneficial for businesses operating across both countries, as it helps in navigating the regulatory environments more efficiently

d Trade integration

The trade integration between the UK and the US in 2023 is marked by several notable developments and collaborations, especially in the areas of investment flows, regulatory alignment, and technology and innovation collaboration

● Investment Flows and Regulatory Alignment: While there has been a lack of progress on a comprehensive UK-US Free Trade Agreement (FTA), partly due to the change in the US administration from Donald Trump to Joe Biden, the two countries have focused on building a foundational trade agreement This agreement, modeled on the Indo-Pacific Economic Framework, aims to cover various subjects including digital trade, labor protections, and agriculture However, it's important to note that as of late 2023, talks for this foundational trade partnership have been abandoned

● Focus on Technology and Innovation Collaboration: In terms of technology and innovation, the UK and US have launched the "Atlantic Declaration," a first-of- -kind economic partnership This partnership aims to address the its biggest economic challenges of the time, focusing on strengthening supply chains, developing future technologies, and investing in each other’s industries Key elements of this partnership include collaboration in critical technology supply chains, the launch of a new civil nuclear partnership, and research collaboration in areas such as AI, future telecoms (5G & 6G), quantum computing, semiconductors, and engineering biology

Additionally, the UK and US have initiated transatlantic dialogues to boost their trade relationship, with joint events in both countries aimed at deepening trade and investment ties These dialogues are a platform for discussions on modern, innovative approaches to international trade, focusing on digital, green trade, and support for SMEs

These developments indicate a strong and evolving economic relationship between the UK and the US, focusing on areas beyond traditional trade agreements and embracing new challenges and opportunities in the global economy

d Conclusion

In conclusion, the trade relationship between the United Kingdom and the United States, marked by a significant trade volume of $295.6 billion in 2022, showcases distinct comparative advantages The UK's specialization in services, driven by skilled labor and capital, contrasts with the U.S.'s diversified export base, reflecting its abundant resources and technological capabilities

The application of the Gravity Model underscores the significance of economic size, reduced geographical barriers, shared language, and legal systems in facilitating robust trade ties Trade integration initiatives, including foundational agreements and technology collaboration, signal a commitment to deepen economic cooperation

Looking ahead, the future of UK-U.S trade relations holds promise While comprehensive trade agreements face challenges, innovative partnerships like the "Atlantic Declaration" demonstrate a readiness to address evolving global economic dynamics Nevertheless, vigilance is required to navigate political transitions and trade imbalances

In this evolving landscape, adaptability and innovation will shape the course of their trade relations The UK and the U.S remain dedicated to a resilient and mutually beneficial transatlantic partnership, transcending conventional trade paradigms and retaining global significance

Part 2: International trade policies

Topic 2: Trade Standards and Labor

There are numerous conflicting views on international labor standards Some argue that importing from countries with low-enforced labor standards will harm wages and working conditions in the importing (developed) country Others contend that trade agreements should be used to ensure that labor in developing countries is not exploited, underpaid, or subjected to abusive working conditions

Question: Are trade agreements, why either multilateral or regional, appropriate and effective tools for monitoring and enforcing international labor standards?

2.1 Executive summary

Our research will discuss the impact of trade restrictions, which is a key topical problem concerning economy and development in Northern and Southern nations It will include eight main sections to highlight issues: Identification of the problem, review of the literature, formulation of a hypothesis, design of the research, data collecting, data analysis, drawing conclusions, and communication of results These sections will assist you in better understanding the meaning and impact of trade sanctions on the globe today, as well as how they are changing and how developed and poor nations are affected Let's start with the specifics: how and what influence it has now, which argument would be the proper answer today

2.2 Introduction

Increased trade in manufactured goods between developed countries (the “North”) and developing countries (the “South”) has been one of the most prominent developments in the world economy in recent decades For a number of newly industrialized economies, especially in east Asia, exports of manufactures have been an important source of their phenomenal growth The east Asian “miracle,” along with the collapse of communism, has contributed to a deep change in perspective in much of the South regarding the advantages of open trade regimes The emergence of developing countries as exporters of manufactures has been greeted with considerable ambivalence in the North, however While many in the North view such trade as a source of global growth, others are profoundly alarmed by competition with countries where wage rates are a fraction of those in many Northern countries High unemployment rates in western Europe and stagnant wages of unskilled workers with associated increases in inequality in the United States have greatly increased these fears and fueled the calls for protection The current situation thus represents an ironic reversal of the situation in the 1960s and 1970s when most developing countries were pursuing protectionist import-substitution policies and supporting a “New International Economic Order” to redress the alleged unfairness of the international economic system

One manifestation of the Northern concern is the emergence of international labor and environmental standards as a major issue on the post-Uruguay Round trade agenda The

quotations above illustrate the controversies regarding linkage of trade and labor standards Labor unions, human rights activists, and some governments in the North argue that market access in the North should be conditioned on upgrading of labor standards in the South to prevent “social dumping” and a “race to the bottom” on such

standards Sanctions on trade in response to violations of labor standards are sometimes referred to as a “social clause.” Other Northern governments, notably the United Kingdom, and nearly everyone in the South are much more skeptical of the benefits of a social clause, viewing it mostly as protectionism, even if sometimes well-intentioned It should also be noted, however, that this is not exclusively a North-South issue, narrowly defined Some relatively high-income European countries’ interest in social harmonization in the European Community may derive from fears about competition from accession to the European Union by lower-income countries In addition, middle-income countries such as Korea increasingly face competition from lower-middle-income countries in Asia and elsewhere For the remainder of this paper, the North-South divide should be interpreted broadly For example, the economies in transition in eastern Europe can be viewed as part of the South

This paper provides an analytical review of the controversies surrounding labor standards The first section summarizes some of the key background features of North-South trade in manufactures, highlighting the role of the huge disparities in wage rates between countries and the magnitude of trade The main point is that both North and South gain overall from such trade, but that the gains from trade are likely to be distributed unevenly, with some groups in each country expected to lose from trade In particular, unskilled labor in the North loses The second section provides a brief overview of the history of international labor standards and reviews the current situation It points to the difficulties most past attempts to harmonize international labor standards have encountered and reviews the rising pressures for stronger actions Next, the arguments for and against international labor standards and conditioning trade against such standards are examined Here an important distinction is made between standards related to fundamental human rights and those related to wages and working conditions The final section considers some possible options The main conclusion is that trade sanctions to enforce international labor standards have little merit on economic grounds, but that international agreements identifying core labor standards may, apart from being worthwhile on ethical grounds, also serve to defuse calls for protection Unless ways are found to redress the growing problems of unskilled labor in the North, however, the pressures for protection will persist Workers in the South suffer most from trade protection in the North, and the net effect will be to retard the progress of labor standards, which depend primarily on income levels

2.3 Trade agreements, whether multilateral or regional, appropriate and effective tools for monitoring and enforcing international labor standards

International trade is inescapably born out of the necessity for nations to have a common lawful component to manage in a linked together and reasonable approach inside the adjust of each other's interface trade sentiments We will easily find an interchangeable understanding, but in theory there still doesn't seem to be an official definition For the majority of countries, a few types of one-sided barriers, such as tariffs, non-tariff

barriers, and outright prohibitions, govern international trade In order to allow all parties to benefit from increased exchange, one option to reduce these barriers is through exchange understandings The potential coalitions of interested parties are many in the majority of modern economies, and the variety of potential one-sided borders is astounding However, certain exchange barriers are put in place for non-economic motives as well, such as national security concerns or the desire to preserve or keep local culture distinct from outside influences Thus, the complexity of successful exchange understandings should come as no surprise

The items of transactions and discussions that specify the conditions of the worthwhile trade of goods and administrations between the parties are exchange ascension between two or more imperial states Every one of the 200 or so nations that make up the world has the right to decide what can enter their borders Each country acknowledged that they might not all be absolute establishment lists, but to differing degrees Soon after it became evident that trade between the two countries was feasible, regular exchange transactions began In the majority of developed economies, there exist a wide range of potential one-sided barriers and coalitions of interested parties Additionally, certain exchange barriers are put in place for non-economic purposes like national security or the desire to preserve or isolate local culture from outside influences Thus, the complexity of successful exchange understandings should come as no surprise Exchange agreements can be bilateral or multilateral, meaning they involve two or more countries:

- Two countries are involved in respectful ascension Both countries agreed to relax exchange restrictions in order to increase trade opportunities They granted each other special exchange status and reduced their respective obligations Important domestic enterprises that get government funding or support frequently serve as the focal point They work in the automotive, oil, or food manufacturing industries in the majority of countries

- Exchange agreements between countries reduce trade barriers for imported goods and, thus, should increase consumers' welfare by expanding their options, facilitating access to higher-quality products, and lowering prices Understandings of broad interaction are essential organizational building blocks for territorial integration They reduce exchange rates and embody many of the principles that govern how economies function If they go ahead as planned, they can increase international arrangement involvement, which would enhance global trade and speculation, economic growth, and social welfare

Global trade is growing steadily alongside advances in production and consumption If, as could be expected, trading activities in the past were mostly tangible goods, there are now a growing number of intangible goods and services The quantity and scope of the typical individuals in the trading market have also increased, engaging in specialized and cross-industry commercial transactions These days, exchange methods are too progressive, and a multitude of contemporary commercial administrations are established Additionally, there is development in the cooperation of producers and merchants between nations through growth, venture advancement exercises, innovation exchange involvement, and traditional method support As a result of this development, agreements between trading nations are also gradually expanding in scope