TRƯỜNG ĐẠI HỌC THƯƠNG MẠI

BỘ MÔN THỰC HÀNH TIẾNG

__________________________
BÀI THI HẾT HỌC PHẦN
HỌC PHẦN: TIẾNG ANH THƯƠNG MẠI 2.4
Họ và tên sinh viên: Tạ Thanh Lan Mã lớp học phần: 2008ENPR5511
Mã sinh viên: 17D170078 Số báo danh (STT trong danh sách): 14
Ngày thi: 08/06/2020 Ngày nộp bài: 15/06/2020
Nội dung bài làm:
PHẦN 1: BÁO CÁO THU HOẠCH
What are the arguments for and against free trade? Give examples to illustrate
your points.

In the global context of increasingly interconnected relations, most nations are

today members of the World Trade Organization multilateral trade agreements. Free
trade is a trade policy that is a trend. The rise of free trade has also been one of the
most significant drivers of both economic growth and international development.
However, opinions are divided as to whether free trade is good or not. Many
people take the view that it opens up many opportunities for businesses. Others
argue that free trade will cause many problems with other adverse obstacles.
From my point of views, it is understandable.

Before diving into the arguments for and against of free trade, let’s cover the
basics – what is free trade? It is the idea that things should be able to be traded
between countries with as few restrictions or limitations as possible. The essence of
free trade, in the opinion of Jagdish Bhagwati, is the complete absence of restrictions
upon free exchange of goods and services. Free trade, to quote him, is the complete
“absence of tariffs, quotas, exchange restrictions, taxes and subsidies on production,
factor use and consumption.” In this regard, R.G. Lipsey writes, “…… a world of free
trade would be one with no tariffs and no restrictions of any kind on importing or
exporting. In such a world, a country would import all those commodities that it could
buy from abroad at a delivered price lower than the cost of producing them at home.
An example of free trade is the North American Free Trade Agreement, a treaty
Canada, Mexico and the United States entered in 1994. The major issues NAFTA
1
addresses include the elimination of tariffs on specific goods and services as well as
non-tariff barriers such as restrictions placed on products shipped across borders. The
agreement also brought product standards for the three countries to the same level.

There is an irrefutable fact that free trade brings many opportunities for
all. First of all, it increases consumer satisfaction.Trade restrictions like tariffs
and quotas are implemented to protect local businesses and industries. When
trade restrictions are removed, consumers of the different countries tend to see
lower prices because more products imported from countries with lower labor
costs become available at the local level as they will face greater variety of goods
and services.When we do not have tariff in free trade for imported and exported
good it causes reduce the cost of production thus price of goods in market also.
The increased competition makes sure goods and services are manufactured and
supplied at the lowest prices for consumers. For instance in Australia imported
motor vehicles (automotive and motor cycle) cost of production 35% higher than
if the 1998 tariff stages still existed. Clothing and footwear would also cost by
24% more.

Another point in favor of free trade is that it brings many opportunities for
cultural exchange. Trade opens the door for relationships that transcend
economic exchange. When nations trade with one another, not only material
goods but also people and ideas across borders. Free trade connects distant
people and regions, bringing cultures closer together through the exchange of
material goods and ideas. Fax machines, mobile phones, and the Internet are
rapidly spreading as tools of international business, but they are also tools of
friendship. For instance, ten years ago, there was almost no information‐
exchange technology available to the average Chinese citizen. If we wanted to
contact a friend in China, we usually had to do so by mail unless that individual
had a private phone, which was extremely rare in the inland provinces. Today,
despite difficulties, much of that has changed. We routinely communicate with
thousands of friends all over China via fax, cell phones, and email. Besides, the
convenient export of cultural products such as books, movies, music, ect is also a
good example of cultural exchange.Another example is that some scenes in the
2
film “Kong: Skull Island” have been officially started shooting in Ninh Binh
Province, a northern province of Vietnam. This is an opportunity to introduce the
country and people of Vietnam to the world. "Kong: Skull Island" is the best
evidence of the good cultural cooperation between Vietnam and the US. This is
also an opportunity for Vietnam tourism when the country's beautiful scenes will
appear in important films.

What makes free trade important is it contributes to the economic growth.

Even when limited restrictions like tariffs are applied, all countries involved tend to
realize greater economic growth. Once countries can freely move products across
borders, then each nation gets to take advantage of the manufacturing, commercial,
and industrial strengths of every other economy in the agreement. As an illustration,
the Office of the US Trade Representative estimates that being a signatory of NAFTA
(the North American Free Trade Agreement) increased the United States’ economic
growth by 5% annually.

While many economists believe that free trade is the best way to maximize
the potential of the global economy, there are some drawbacks that come after
the free trade as well, causing many debates that whether the benefits they got
worth the price.The main argument against the free trade is that it creates a fear
of job loss. While free trade benefits consumers to buy more goods at lower
prices and businesses that have the strength to compete without protective
tariffs, it forces local companies to reduce their workforce to gain advantages in
terms of costs and prices. The implementation of the North American Free Trade
Agreement (NAFTA) in 1994 removed some of the trade restrictions between the
United States has been criticized for causing thousands of job losses in this
country, especially in low skilled or manufacturing occupations. Since labor is
cheaper in Mexico, many manufacturing industries withdrew part of their
production from the high-cost United States, which has drawn many protests
from the U.S. public.

One of the most contentious issues surrounding globalization is the

concern that free trade hurts the environment, both locally and globally. Despite

3
long-term environmental impacts of free trade is unclear, there are some theories
and evidence have so far suggested that this unconstrained environmental
protection could lead to many consequences such as: degradation of natural
resources risk, destruction of ecosystems risk or else. Natural resources can be the
primary and most valuable export in many countries. Since free trade agreements
involve more transportation and greater specialization, they often use up more
materials and may decimate local resources like fuel, timber, and minerals. For
instance, Brazil exporting five percent of the world's lumber which is significantly
responsible for the deforestation of the Amazon. In terms of destruction of ecosystems,
as free trade expands, the scale of economic activity is increasing with more goods are
produced, which means more byproducts are formed, resulting in air, water pollution,
let alone transportation burns more fuel and therefore reduce ecosystem quality.

Last but not least, there are fewer revenue generation opportunities in free trade.
Free trade agreements allow a country to have access to more markets throughout the
world, which will benefit large companies because they have enough resources to
operate overseas anyways. But when it comes to small businesses, domestic firms
often find it difficult to compete with larger competitors in the global marketplace.
When a service provider in the United States charges $30 for a service, someone in a
developing country might get the same value from a $5 purchase. Therefore, in order
to gain a price advantage, local businesses have to invest in new technology and cut
down employment. This disadvantage can create lower revenue potential in the
industries impacted by free trade the most.

To sum up, free trade allows that every individual and business in every country
is free to engage in mutual commercial activity, in any way with any individual or
business in any other country with little or no trade barriers to inhibit their exchange.
Meanwhile, there is also a high possibility that free trade can pose a certain threat to
the workforce, environment and even the business which is small or lacks proper
Intellectual property rights. Therefore, businesses need to be aware of Free trade as a
double-edged sword, so that they can take proactive steps to guard.

4
PHẦN 2. BÀI TẬP TÌNH HUỐNG
Situation: The creator of an exciting range of fashion jewellery (necklaces, earrings
and bracelets), sold under the brand name Eternity, meets a business angel to get
additional investment to develop their business. The owner of the business has already
borrowed 100,000 euros from a family member, and in return has given that person a
20% stake in their business.
Student A: You are the owner of business
You want to:
 Get an equity investment of 250,000 euros to make more products and market
them.
 Keep a shareholding of at least 50% so that you continue to own and control
your business
 Get management advice from the angel, when necessary
 Keep control over recruiting senior managers.
In return, you expect to:
 Offer the angel a 25% stake in the business
 Give the angel a seat on the board of directors, but without voting rights
 Offer the angel a 10% share in the profits from any future products sold under
the Eternity brand
Student B: You are the business angel
You want to
 Invest 200,000 euros of equity capital in the jewellery business
 Help to manage the business
 Provide excellent contacts with sales outlets for this type of jewellery
 Put the owner in touch with other potential investors in the business
In return, you expect to
 Have a 35% stake in the business
 Be offered a seat on the Board of Directors, with voting rights
 Have a 35% share in the profits of all future products sold under the Eternity
brand.
 Advice on recruitment of senior managers as the business expands.

5
Make a dialogue between the 2 students to negotiate a compromise
Discuss the strategies used to get a good deal in each situation.
Answer:
A: Thanks you for coming. I’m A, the owner of Eternity – a brand of exciting fashion
jewellery. I met with Curley a few days ago to discuss some of our company's plans to
expand, and she mentioned that you and your corporation may be able to help us.
B: Allright. She has also told me a little about your business and what you plan to do.
It really appealed to me, and that's why I came here. Now let’s agree on the
commercial terms
A:  Certainly! First of all, since our company specializes in selling some kinds of
jewelry such as necklaces, bracelets, rings with high-class materials, and we are
looking to create more diverse products to stimulate our customers' taste as well as
market them, we need a lot of capital. Could I get an equity investment of 250,000
euros from you? I have also borrowed money from a family member of about 100,000
euros. In returns, I offer you a 25% stake in the business.
B: I’m afraid I had something different in mind. This is the first time I invest in your
company, so there will be some risks that we may not control. From my point of view,
250,000 euros is a large amount of money to invest in this field from the first time.
How about 200,000 euros? Besides, in return, I’d rather have a 35% stake in the
business instead of 25% as you mentioned previously.
A: I understand where you’re coming from. However, I have already borrowed
100,000 euros from a family member recently, and in return I have given him a
20% stake in business. I still need to compromise with other investors, so 35% of
stake may be quite a lot. I come up with a win-win deal I think we could agree on.
Currently, you can invest 200,000 in our business. If the business is successful, you
can increase your investment to € 250,000 euros in the next cooperation. In terms of
stake in businiess, we temporarily offer you 25% and it will increase if you show more
contribution to the company's operation.
B: That’s a fair suggestion. Let’s move to another issue. As you all know, I have
invested in many large and small businesses in the country. Therefore, I have a lot of
experience in company management. I can do this for your company. In return, I

6
would like to take a position on the Board of Director as well as have the right to vote
on company issues.
A: Certainly, you will have a seat on the board of directors, but without voting rights.
As an owner of Eternity, I would keep a shareholding of at least 50% so that I continue
to own and control my business. I also appreciate your suggest in terms of helping me
manage our company. If necessary, I will get management advice from you.
B: I agree with you on that point. However, why do I not have right to vote? I’m afraid
that doesn’t work for me. I take a position in Board of Director but I have no right to
vote? I have a feeling that I look like a scarecrow .That seems unfair to me.
A: You have a quite strong point there. However, if you look at it from my point of
view, you’ll see that it is the company’s policy. Typically, company issues are often
decided by the business owner, through voting of internal employees such as
managers, deputy directors, etc. as it involves many different activities. It is hard for
investors to grasp the issue. However, I can give you the right to vote on some aspects
of the product such as raw materials, sources of products, so on.
B: I’m satisfied with this decision. Besides, to support your business, I will provide
excellent contacts with sales outlets for this type of jewellery. At the same time, as an
experienced businessperson, I have a wide range of relationships, so I would like to
introduce you to some other potential investors interested in the jewelry industry.
A: That’s a great suggestion.
B: In return, I’m hoping for a 35% share in the profits of all future products sold under
the Eternity brand.
A: Unfortunately, we can’t do that. We need to share profits with other investors,
based on the level of contribution. At your level, I think 35% share of profits is a bit
too much. I can offer you a 10% share in the profits from any future products sold
under the Eternity brand. That’s very reasonable, don’t you think?
B: I’m prepared to compromise, but only 10% share in the profits are not worth my
contribution. If I participate in promotional activities with you or recommend your
product to others, can you increase my share in the profit of product to 20%?
A: That might be OK.
B: What about recruiting personnel?
A: I would rather keep control over recruiting senior managers.

7
B: Fine. But I would like to give you some advice on recruitment of senior managers
as the business expands.
A: I highly appreciate it.
B: Let me summarize our negotiation. I temporarily invest 200,000 euros in your
business and take 25% stake in return. I will also take a position in Board of Director
and have right to vote on some certain issues. You continue to own and control your
business with my support in management. Besides, I will provide some excellent
contacts with sales outlets for this type of jewellery and other potential investors in the
business. In return, you give me 20% share in profit of all future products sold under
the Eternity brand. In terms of recruiting personnel, you will keep control over
recruiting senior managers and sometime I can give you some advice on it as the
business expands. I think we’ve covered everything.
A: Right, we’ve got a deal. But I think we should get this in writing.
B: That should be no problem.