presentation content course name international economics

Protectionism policies can include setting quotas on the number of imported goods allowed in a country, imposing tariffs on imported goods, and offering subsidies for domestic producers.

THE MINISTRY OF FINANCE

UNIVERSITY OF FINANCE — MARKETING

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PRESENTATION CONTENT

Course Name: INTERNATIONAL ECONOMICS

October 25, 2022

Lecturer: Nong Thi Nhu Mai

Course section: 2231910006701

Class: IP_20DKQ

Member Group 5:

Nguyễn Thái Hùng — 1821002532 Nguyễn Thị Kim Chỉ - 2021001334 Nguyễn Đặng Nhã An —- 2021009195

I Introduction:

Over the years, imports and export have made great contributions to the country's renovation Exports have become one of the main drivers of economic growth, contributing to macroeconomic stability, creating jobs, and improving the mcome life of people The open economy is associated with export and mmport activities Thanks to the nght orientations of the Communist Party of Vietnam and the Government, which are always associated with the policy of international integration of the country's economy and the process of trade liberalization, it has created many achievements for the economy and the development of each individual's life To understand more about what Vietnam's trade agreements are and how they contribute to the economy, let's find out together!

Il Trade policy:

Definition: Trade policy is the set of agreements, regulations, and practices by a government that affect trade with foreign countries Each nation determines its own standards for trading, including its tariffs, subsidies, and regulations

Trade policies have a significant effect on the mternational economy and on financial markets They affect exchange rates, the availability of goods, and the prices that people pay for them, among many other economic factors

Trade policies can be aimed at a number of issues related to importing and exporting, such as foreign retaliation, jobs, or tariffs; or they may focus on protecting mtellectual property, setting standards that promote collaboration and reduce trade barriers, or establishing trade agreements and trade laws

Trade policy is established when a government sets standards and laws regarding international trade

In some cases, a nation will pursue a more aggressive protectionist policy designed to favor its domestic industries over ternational competitors Protectionism policies can include setting quotas on the number

of imported goods allowed in a country, imposing tariffs on imported goods, and offering subsidies for domestic producers

On the other hand, a nation may want to increase international investment and pursue a free trade policy (sometimes called an “open trade policy”) that reduces the barriers to doing business Many countries establish trade policies between the two extremes, adjusting them as the global economy and domestic political pressures change

The function of international trade policy:

e The policy of international trade that provides a country with goods it lacks in exchange for goods it produces in abundance; Such transactions, working in conjunction with other economic policies, tend to improve a country’s standard of living Much of the modern history of

international relations involves efforts to promote freer trade between nations It also creates favorable conditions for domestic enterprises to expand overseas markets, strongly participate in the international division of labor, and fully exploit the comparative advantages of the country and enterprises

¢ Besides, it is protecting the domestic market, creating conditions for domestic enterprises to be able to stand firm and rise up in international business activities, meeting the requirements of enhancing national interests

The benefit of trade:

A country might gain a variety of economic advantages from expanding its trade It can boost economic expansion, enhance the job market, bring down the cost of goods, and improve living conditions Trade growth increases the range of products that consumers and businesses can choose from

Trade policies that reduce tariffs, quotas, and other barriers to imports generally lead to lower prices and more options for consumers However, manufacturers that sell goods to domestic customers often prefer a more import-restrictive policy

A good trade policy should address the following requirements:

- Protect consumers

- In accordance with the selected model of industrialization (CNH) (trade policy of CNH)

> According to the above thinking, trade policy in each period depends on the development trend of world trade So far, world trade has gone through three stages of development Including:

1 Trade protection phase:

This is the period before the 80s of the 20th century

Countries apply the import-substituting industrialization model and use tariff barriers and non-tariff measures to protect domestic production

2 Open phase of the market

This period was from the mid-80s to the mid-90s of the 20th century

Countries applying the export-oriented mdustrialization model based on comparative advantage

The fence of abandonment is gradually reduced (through tariff reduction)

3 The globalization phase

Countries implement the policy of international economic integration, participating m bilateral and regional Free Trade Agreements and the World Trade Organization (WTO) The import-substituting CNH model or the export-oriented CNH model no longer retains their classical meaning The world is moving to a competitive coconut industrialization model

This phase mainly took place from 1995 to the present and is getting stronger and stronger

TH Vietnam cooperates with major economies and Global integration

- Vietnam from 1995 to 2010: Vietnam promotes cooperation with major economies and this is the period when Vietnam adjusts the legal system, accelerates administrative procedure reform, and cuts import taxes in order to adapt to the new context and fulfill the integration commitments

Specifically:

Vietnam promotes cooperation with major economies and regional integration: 1995: Signed the Cooperation Agreement with the European Union (FCA)

On 15/12/1995, Vietnam officially jomed the Agreement on the CEPT to establish AFTA Vietnam-US trade negotiations (BTA signing 2002)

Join the Association of Southeast Asian Nations, join the ASEAN Free Trade Agreement, and ASEAN+

Global integration - joming the World Trade Organization (WTO):

Signing a number of bilateral FTAs

Vietnam has implemented its imtegration commitments such as tax reduction, nondiscrimination, use of technical barriers, and hygiene and safety in accordance with WTO regulations, etc

- Vietnam from 2010 to present: Vietnam strives to develop, expand and diversify its market, strengthen and promote

globally

trade exchanges, and strengthen international economic integration in the region and

This is the period when Vietnam participates in the negotiation and signing of free trade agreements, including the new generation free trade agreement

Specifically:

s Vietnam has negotiated, signed, and implemented 17 FTAs Among them are 4 new generation FTAs: The comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the FTA between Vietnam - EU (EVFTA), the FTA between Vietnam and the United Kingdom of Great Britain and Northern Ireland (UKVFTA), the Regional Comprehensive Economic Partnership (RCEP)

e According to the Ministry of Industry and Trade of Vietnam (2021), the Ministry has actively contributed to building and shaping multilateral institutions at regional and global levels such as ASEAN, APEC, and WTO:

(supporting Cambodia in developing the Declaration on ASEAN inter- insurance, promoting the potential of women in business, peace, and security)

- In APEC: discuss promulgating safe travel procedures in the APEC region

EU, ensuring higher benefits than before in opening the market for some agricultural products

IV Vietnam deploys 7 instruments of international trade:

1 Tariff:

Overview of tariffs in international trade business:

Tariffs are of three types: export tariffs, import tariffs, and transit taxes

Import and export tariffs:

An import tax is a tax that a country or territory levies on goods of foreign origin during importation Export tax is a type of tax on goods that the State wants to limit

Leansit tax

Cargo transit means the transportation of goods owned by foreign organizations or individuals through the Vietnamese territory, mcluding transshipment, transshipment, storage, consignment separation, and change in modes of transport or other work performed during transit

Transit goods are goods that are transported from one country or another through the territory of Vietnam within a specified time Including other activities such as transmission, storage, order separation, and other activities during transit (Article 241 Commercial Law 2005)

- Preferential tax rate

- Special preferential tax rates

- Ordinary tax

Scope of application:

- Preferential tax rates: are applied to goods imported from WTO member countries and countries or groups of countries with MFN agreements in trade relations For example, since joming the WTO, Vietnam has applied an MFN tax to the WTO's member countries on an average of 13.4% (except for countries with Vietnam that are members of bilateral or free trade agreements)

- Special preferential tax rates: are applied to goods imported from countries or groups of countries with which Vietnam has a special agreement on import tax under the institution of a free trade area, a customs union, or to facilitate trade benefits for border trade exchanges, specifically: other ASEAN countries, Japan, Korea, China, India, Australia

- Ordinary tax: applied to goods imported from countries and groups in Vietnam that do not have an agreement on MFN The normal tax rate is calculated at 150% of the preferential tax rate The trend of applying special preferential tax rates in the future:

- Continue to cut tax rates, gradually moving towards 0%

- Expanding the application of special preferential tax rates for many partners because Vietnam is continuing to participate in bilateral and multilateral free trade agreements such as TPP, ASEAN - EU

2 Subsidies:

a) Prohibited Subsidies (Red Light Subsidy)

Consists of:

Export subsidies (subsidy based on export results, e.g export bonus, input material subsidy for export, tax exemption/reduction higher than that enjoyed by similar products sold domestically, preferential export imsurance, preferential export credit )

a) There are two forms of export subsidies:

- Direct subsidies: The State directly gives businesses advantages when exporting goods

For example: directly providing money (financing, preferential loans, or contributing shares), exempting taxes, and fees, or applying low tax rates for exports

- Indirect subsidies: The State indirectly supports enterprises

For example, support for businesses such as mtroduction, exhibition, advertising, tramuing, facilitating export transactions, technical assistance, and training of experts

Eunction:

¥ Positive:

Contributing to promoting the development of domestic production and promoting export Contributing to adjusting the structure of the industry, and the structure of the economic region

Tools for bargaining in international negotiations

¥ Negative:

Distorting natural competition in a free trade environment

The opportunity cost of subsidies is huge, which can limit industry growth

long-term subsidies

Inefficient in terms of finance, and budget

The probability of choosing the wrong beneficiary is very high

This may lead to retaliation

Application trend: Currently, export subsidies are still widely applied, especially subsidies for agricultural products Direct export subsidies tend to be reduced due to competition between governments with trade relations In contrast, indirect subsidies are increasing and often hidden

- Subsidies to prioritize the use of domestic goods over imported goods

- These are subsidies that are currently prohibited by all WTO members

b) Unclaimed allowance (Green light allowance)

Consists of:

- Non-specific subsidies: Ie subsidies that are not directed at any one enterprise/industry/geographical area Criteria for recerving subsidies are objective; not allow the competent authority to arbitrarily consider and do not create special preferential consequences for any object

- The following benefits (whether individual or not)

conditions on the type of grant and the specific level of subsidy)

unemployment rate)

- Subsidies to assist in adjusting production conditions to the new business environment

Member States can apply for these benefits without being challenged by other members (i.e the type of subsidy that is unconditionally allowed)

¢) Subsidies are not prohibited but can be sued (Yellow Light Subsidy)

Includes all specific subsidies (except for green light subsidies) These subsidies can be applied by the Member States, but if they cause damage to another Member State or to another Member State's manufacturing industry of the like product, they may be sued

About Vietnam - a WTO member since 2007, Vietnam has:

Abolish import substitution subsidies (such as preferential taxes on localization rates) and export subsidies in the form of direct allocations from the state budget (such as compensation for export losses, bonuses, and incentives) according to export turnover, interest rate support for export contracts ) With "indirect" export subsidies (mainly in the form of investment mcentives for the production of exports), no more will be granted since WTO accession However, for domestic and foreign investment projects that have enjoyed this type of preference since before the date of WTO accession, we have a transition period of five years to completely abolish it

Other subsidies such as the textile-garment industry, which are banned under the SCM agreement, either directly or indirectly, have been abolished since Vietnam's accession to the WTO

Finally, joming the WTO, Vietnam only abolished export subsidies and localization subsidies, the "yellow light" and "green light" subsidies (see also WTO regulations on subsidies) are still allowed maintain and

no one prohibits the State from transferring the former export subsidy and localization subsidy to the development of wrigation, improvement of rural transport, improvement of seed quality, development of post-harvest technology, building cold storages for aquatic products and buffer warehouses to store rice and coffee for farmers, avoiding them having to sell massively when in the crop

Along with the roadmap to gradually reduce export support activities, including export support credits, the Government and the Development Assistance Fund should also study and consider expanding to preferential credit activities for developing countries The above "green light" activities, especially research and development (R&D) or environmental protection activities, serve as development orientations for Vietnamese import and export enterprises in integration

3 Export and import quotas:

According to the current provisions of Vietnamese law, only i certain cases, imported and exported goods will be subject to the application of export quotas or import quotas by competent state agencies There are currently three cases of goods subject to export and import quotas, including:

- First, According to Point a, Clause 1, Article 18 of the Law on Foreign Trade Management: "according

to international treaties to which the Socialist Republic of Vietnam is a signatory" This is the case where

Vietnam is a member of an international treaty, which applies export quotas and import quotas to such goods

- Second, According to Point b, Clause 1, Article 18 of the Law on Foreign Trade Management: "For goods to ensure macro-balance, economic growth in each period" This is the case in which imported and exported goods are goods that directly affect the economic development of the country At this time, the competent authority will make a decision to apply export quota measures import quotas

- Third, according to point c, clause 1, Article 18 of the Law on Foreign Trade Management "when the mmporting country applies import quota measures to Vietnamese exports" In this case, Vietnam also applies an import quota measure on its goods in retaliation or an export quota on its own goods for the purpose of limiting the number of exports to stabilize the economy in country

v⁄ 1989: Vietnam abolished import quotas for all but 14 items

¥ 1995: Export quota only one commodity was applied, namely, textiles and garments exported under the Agreements that Vietnam signed with the EU, Canada, and Norway Implementation management mechanism according to the mter-Ministry of Trade - Light Industry Notice No

14/TB-LB dated November 15, 1994

¥ 1995: Import quotas only apply to rice products In order to protect domestic agricultural products because this is a sensitive industry

¥ 2003: Applying tariff quotas for raw milk, condensed milk, poultry eggs, corn, salt, cotton yarn,

etc

¥ Recently, the commitment of the EU-Vietnam Free Trade Agreement (EVFTA) clearly states that the EU grants Vietnam a quota of 80,000 tons of rice per year: 30,000 tons of milled rice, 20,000 tons of unmilled rice, and 30,000 tons of fragrant rice In particular, the EU will completely liberalize broken rice

> This commitment helps Vietnam to export an estimated 100,000 tons to the EU annually With stable demand, especially at a high level, for specialty rice from Asia, the EU will continue to be a potential rice export market for Vietnamese enterprises in the coming time

However, according to experts, currently, less than 20% of businesses understand and understand free trade agreements (FTAs) Moreover, besides the advantages of EVFTA, enterprises must improve the quality of Vietnamese rice themselves, and change their market approach to be able to dominate and expand more market share

4, Prohibition of Vietnam’s import and export:

- Vietnam bans the import of weapons and ammunition for the purpose of protecting national security And ban the import of toxic chemicals, scrap, and waste for the purpose of protecting human health and the environment Such import quantity restrictions are considered exceptional and consistent with WTO tules

- Previously, Vietnam banned the import of cigarettes and cigars under the pretext of restricting smoking

in order to protect human health while still allowing domestic tobacco production Therefore, WTO members believe that Vietnam is protecting the domestic tobacco industry and is not considered an exception and is not accepted by WTO law Therefore, in order to jom the WTO, Vietnam had to commit

to abolishing this provision

- Below is a list of 14 goods banned from export and import mm Vietnam (According to Appendix I of Decree 69/2018 / ND-CP):

1 Weapons, explosives, Ammunition;

2 Cannons of all kinds;

3 Schedule | substances, in the sense of the Chemical Weapons Convention;

4 Used consumables, equipment cells, and vehicles;

5 Products and goods banned from dissemination and circulation;

6 Used technology products;

7 Popular publications circulating in Vietnam;

8 Right-hand drive vehicle;

9 Supplies and vehicles used;

10 Chemicals in Annex II] of the Rotterdam Convention;

11 Pesticides banned in Vietnam;

12 Specimens and rare wild plants;

13 materials, or discard, healing equipment using the chemical C.F.C;

14 Products and materials containing chat hoa hoc asbestos;

5 Local content requirements:

- According to the official dispatch on 1/8/2019 of the Ministry of Industry and Trade of Vietnam, stipulating that goods must have a domestic value-added content (VAC) ratio of 30% (the lowest threshold ) and the final production stage is not simple processing operations This stage must fundamentally change the nature of the goods, not simple processing

as specified im Article 10 of the draft Circular are considered "products of Vietnam"

- Goods temporarily imported into Vietnam for re-export, goods transshipped or transited in Vietnam are also not allowed to be shown as Vietnamese goods on their labels