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Group 5 - Midterm Asignment - International Economics
Group 5 - Midterm Asignment - International Economics
Group 5 - Midterm Asignment - International Economics
Table of Contents
Question 1: ........................................................................................................................................3
1/ What is primary function of tariffs in industrial nations? .................................................................. 3
2/ What is meant by the consumption, production, trade, revenue, and redistribution effects of an
import tariff? ............................................................................................................................................ 3
3/ Analyze case studies that the Government uses to protect the industry. ........................................ 3
4/ Why tension and trade war usually begin with tariff escalation? ..................................................... 4
5/ Explain Why tariff is tool that many big countries used in recent trade tension? ............................ 5
6/ Analyze the tweet of Donald Trump: .................................................................................................. 5
Question 2: ........................................................................................................................................6
1/ What are the technical, administrative, and other non-tariff barriers to trade? How do they
restrict trade? ........................................................................................................................................... 6
2/ What is the importance of these non-tariff trade barriers relative to tariff barriers? ..................... 6
Explain the rise of Non-tariff measures in Global Trades. ...................................................................... 6
3/ Why NTMs, and SPSS, are on the rise in recent years in trading activities? ..................................... 7
Give some examples in the Industrial sector, and export activities. ..................................................... 7
1
Question 3: ........................................................................................................................................9
1/ Why do nations subsidize exports (identify the main functions of subsidy)? ................................... 9
2/ To what problems do these subsidies give rise? ................................................................................ 9
3/ Discuss the Green energy subsidy in recent months of EU and US ................................................. 10
4/ Funding the green transition: A global subsidy race? ...................................................................... 10
5/ Analysize few industries that China use the Export subsidize. ........................................................ 10
Question 4: ...................................................................................................................................... 11
1/ What is economic integration? ......................................................................................................... 11
2/ How can Vietnam become the success story of Economic Integration? ......................................... 13
3/ Give numbers of Success of Vietnam Foreign Trade, economic integration. .................................. 13
4/ What are the strategies that Vietnam have to use in this volatile markets? .................................. 14
Question 5: ...................................................................................................................................... 14
1/ What are the RCEP (Reginal Comprehensive Economic Partnership)?............................................ 14
2/ What are the implications for global economy and ASEAN nations? .............................................. 14
Question 6: ...................................................................................................................................... 14
1/ Explain the free trade agreement between Vietnam EU. ................................................................ 14
2/ Explain the opportunities and challenges for Vietnam. ................................................................... 15
3/ Identify the key sectors that Vietnam can have advantage and strategic benefits and challenged
sectors..................................................................................................................................................... 15
4/ What are the preparation and strategies that Vietnam’s have to do gain competitive advantage
in this super FTA? ................................................................................................................................... 16
5/ Why do countries prefer engage in bilateral trading agreement in recent years, give your
explaination? .......................................................................................................................................... 16
Question 7: ...................................................................................................................................... 17
1/ Explain the impact of globalization on international economic? Give some examples. Identify the
challenges and key issues of the new geopolitics of globalization. ..................................................... 17
2/ What are the main tension between the West- China? ................................................................... 18
3/ What are the key success factors of China in global trade?............................................................. 18
4/ Will China become the centre of the world economy? .................................................................... 19
Question 8: ...................................................................................................................................... 20
1/ Discuss the new challenges of globalization with the slow-balization............................................ 20
2/ Analyze the impact of trade policy of Southeast Asian Nations and Vietnam in the trade tension
between US and China. .......................................................................................................................... 20
2
TASK
Tariffs can also be used as a tool for government revenue generation, as they generate
income for the government through the collection of taxes on imported goods. Additionally,
tariffs can be used as a means of controlling the flow of certain goods into a country, such as
those that may be deemed harmful or dangerous to the health and safety of citizens.
➔ Overall, tariffs are primarily used to protect domestic industries and support economic
growth, but they can also serve other purposes such as revenue generation and regulation of
trade.
3/ Analyze case studies that the Government uses to protect the industry.
Governments around the world have used a variety of measures to protect their domestic
industries, including tariffs, subsidies, and non-tariff barriers. Here are a few case studies of
government intervention to protect industries:
• United States steel industry: The US government has historically protected its domestic
steel industry through a combination of tariffs and other trade restrictions. In the 1980s,
the US imposed tariffs on imported steel to protect domestic producers from
competition. This allowed domestic steel producers to raise prices and increase profits.
However, the high prices of domestic steel made US manufacturers less competitive in
the global market, leading to job losses in other industries.
• Japanese agriculture industry: The Japanese government has long protected its domestic
agriculture industry through a combination of import tariffs and subsidies. The high tariffs
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on imported agricultural products have made it difficult for foreign producers to compete
in the Japanese market. In addition, the government provides subsidies to Japanese
farmers to help them compete with foreign producers. This has led to higher prices for
consumers and has limited the ability of foreign producers to export to Japan.
• South Korean electronics industry: The South Korean government has provided
substantial support for its domestic electronics industry through a combination of
subsidies, tax breaks, and other incentives. This has allowed companies like Samsung and
LG to become global leaders in the electronics industry. However, this support has also
been criticized as distorting competition and creating unfair advantages for domestic
producers.
• Indian textile industry: The Indian government has used a range of measures to protect
its domestic textile industry, including import tariffs, export subsidies, and other trade
restrictions. This has helped the Indian textile industry to grow and develop, but has also
limited competition and hindered the growth of other industries.
4/ Why tension and trade war usually begin with tariff escalation?
Tension and trade wars often begin with tariff escalation because tariffs are one of the
primary tools used by governments to protect their domestic industries and to respond to
perceived unfair trade practices by other countries.
Tariffs are essentially taxes on imported goods, which increase the cost of those goods
for consumers and businesses that buy them. When a government imposes tariffs on imports
from another country, it makes those imports more expensive and less competitive with
domestic products. This can help to protect domestic industries from competition and can also
generate revenue for the government.
However, when one country imposes tariffs on imports from another country, the
affected country may respond by imposing its own tariffs on imports from the first country. This
can lead to a cycle of escalation, with each country imposing increasingly higher tariffs on each
other's goods. This can make it more difficult and expensive for businesses to trade with each
other, which can ultimately harm both countries economies.
Additionally, tariff escalation can lead to increased tensions between countries as each
side seeks to protect its own interests. This can make it more difficult to negotiate trade
agreements or resolve disputes, and can ultimately lead to a trade war if the situation continues
to escalate.
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5/ Explain Why tariff is tool that many big countries used in recent trade tension?
Tariffs are a tool that many big countries have used in recent trade tensions because they
provide a way for governments to protect domestic industries and respond to perceived unfair
trade practices by other countries.
When a country imposes a tariff on imports from another country, it makes those imports
more expensive and less competitive with domestic products. This can help to protect domestic
industries from competition and can also generate revenue for the government. Additionally,
tariffs can be used as a negotiating tool to encourage other countries to reduce their own trade
barriers or to negotiate more favorable trade agreements.
In recent years, many big countries have used tariffs as a way to respond to perceived
unfair trade practices, such as intellectual property theft, forced technology transfers, and
currency manipulation. For example, the United States has imposed tariffs on imports from
China, the European Union, and other countries in an effort to address what it sees as unfair
trade practices and to reduce its trade deficit. Similarly, China has imposed tariffs on imports
from the United States in response to U.S. tariffs.
However, the use of tariffs in trade tensions can also lead to retaliation and escalation, as
other countries may respond with their own tariffs, leading to a cycle of retaliation and counter-
retaliation. This can ultimately harm both countries's economies and lead to a trade war.
Therefore, while tariffs can be a useful tool in trade negotiations and in protecting domestic
industries, they should be used carefully and strategically to avoid unintended consequences.
This tweet by former President Donald Trump highlights his support for tariffs as a tool to
protect the economy of the United States. He refers to himself as a "Tariff man," suggesting that
he sees himself as a champion of the use of tariffs.
Trump argues that tariffs are a way for the United States to prevent other countries or
people from "raiding" the nation's wealth, and he believes that those who wish to do so should
have to pay a price for that privilege. He asserts that this is the best way to maximize the country's
economic power and suggests that the United States is currently taking in billions of dollars in
tariffs.
The tweet also echoes Trump's campaign slogan of "Make America Great Again," with the
phrase "Make American Rich Again" suggesting that the use of tariffs will lead to economic
prosperity for the country.
5
While some people support the use of tariffs as a way to protect domestic industries and
address unfair trade practices, others argue that tariffs can lead to retaliation and escalation,
ultimately harming both sides. Additionally, some economists argue that tariffs can lead to higher
prices for consumers and reduced competitiveness for businesses, which can ultimately harm the
economy.
➔ Overall, while Trump's tweet highlights his support for tariffs, it also underscores the ongoing
debate over the effectiveness and potential drawbacks of this trade policy tool.
A nontariff barrier is a way to restrict trade using trade barriers in a form other than a
tariff. Nontariff barriers include quotas, embargoes, sanctions, and levies.
➔ They often seek barriers such as import taxes (called tariffs) and quotas to raise the price or
limit the availability of imports. Processors may try to restrict the exportation of raw materials
to depress artificially the price of their own inputs.
2/ What is the importance of these non-tariff trade barriers relative to tariff barriers?
Explain the rise of Non-tariff measures in Global Trades.
Ex: Vietnam have suffered these barriers when we export our goods agricultural products to
China, EU countries!
• The first reason was to regulate international trade, even in the absence of tariff barriers.
It exempts certain countries from paying additional taxes on goods, and instead, created
other meaningful non-traffic barriers.
• A second reason for introducing non-tariff barriers is to support weak industries that have
been affected by the reduction or withdrawal of tariff barriers. A final reason is that non-
tariff barriers are an avenue for interest groups to influence trade regulation in the
absence of trade tariffs.
• Another distinction between the effects of NTMs and tariffs on trade is the possible effect
on global supply chains, which can be disrupted by the imposition of NTMs. This is
especially evident in industries that operate under strict quality control procedures where
sudden changes in conformity assessment procedures or technical regulations could
temporarily restrict market access for exporters.
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• Finally, NTMs are estimated to be on average three times more costly than tariffs, which
suggests that NTMs may discourage trade more so than tariffs alone. Areas for further
research could include an analysis of the role that rising NTMs in the post-recession period
has played in the widely obsobser.
The reason for the rise of NTMs is their growing popularity as weapons of trade policy in
regional and global trade tensions. This can include government procurement limitations,
subsidies to export and import restrictions as well as import and export bans through unilateral
or multilateral sanctions. Meeting these complex and often opaque rules can require significant
resources, affecting in particular SMEs.
Most of the NTMs are technical regulations, such as sanitary and phytosanitary requirements
on food. The average cost of these measures alone amounts to 1.6 percent of the gross domestic
product, roughly US$1.4 trillion globally. But they also serve important purposes such as the
protection of human health or the environment; and can even boost trade under certain
conditions.
While costly to traders, failure to have essential technical NTMs in place or their poor
implementation may have serious detrimental impacts on sustainable development.
3/ Why NTMs, and SPSS, are on the rise in recent years in trading activities?
Give some examples in the Industrial sector, and export activities.
Many developing countries have greatly benefitted from integration into the global
economy through increased trade in goods and services. Their successful integration in
international markets was made possible by the implementation of appropriate conductive
policies such as tariff liberalization, as well as initiatives related to trade facilitation and aid for
trade.
Currently, deeper integration into the global economy depends not only on these
supportive policies (e.g. tariff liberalization, trade facilitation, and aid for trade) but increasingly
requires policy responses to various forms of non-tariff measures (NTMs) such as Sanitary and
Phytosanitary and Technical Barriers to Trade.
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Figure 2 reports incidence measures using the four types of NTM regulations according to the
channel through which they affect prices discussed above: customs, comprising the NTMs which
add costs at the border (e.g. import permit); process, comprising the NTMs which add to costs of
production (e.g. hygienic requirements); product, comprising the NTMs which add costs because
of requirements on product characteristics (e.g. production identity requirements); and consumer,
comprising the NTMs which add costs directly to consumers (e.g. administered minimum prices).
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The rise of the digital economy has led to a corresponding rise in NTMs covering digital
goods. Digital goods are intangible products that are stored, delivered, or consumed in an
electronic format. Examples include electronic books, internet radio, internet television, or
downloaded music files. Global digital trade barriers can be categorized in two ways: digital-
specific measures (e.g. restrictions on cross-border data flows and forced data localization), and
traditional market access and investment measures that affect digital goods and services as well.
The U.S. International Trade Commission (USITC) found that, within the first group, cross-border
data flow measures are the most restrictive for U.S. firms with cross-border operations. Further,
more than 120 countries require some form of data localization. Some of the leading countries
imposing these types of requirements include Brazil, China, the EU, India, Indonesia, and Russia.
➔ Overall, measures that add costs at the border are the most frequently used form of
NTMs. These measures affect more than 50% of world trade and about 55% of product
lines. NTMs related to processes and products are used less frequently, but they still cover
a substantial part of world trade (about 45% for process measures and about 35 percent
for product measures). Of note is that the coverage ratios are much larger than the
frequency indices for these measures.
➔ There are two likely reasons behind this difference. First, governments often have more
incentive to regulate sectors that are more heavily traded. Second, some of these behind-
the-border measures may have trade-inducing effects, as they guarantee quality and
safety. Finally, NTMs that add costs directly to consumers affect about 25% of products
but only 10% of the value of world trade (figure 2a). As these measures directly increase
domestic prices, they have a negative effect on consumption and thus result in a relatively
lower coverage ratio since they reduce imports. Similar patterns hold across broad
economic sectors (figure 2b).
Problems: They include the market-distortion argument (that subsidies impair the
efficient operation of the free market) and the corruptibility argument (that political actors are
acutely prone to corruption when enacting subsidies).
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3/ Discuss the Green energy subsidy in recent months of EU and US
EU leaders push back on US subsidies and expanding protectionism: The USA
government spend to develop an industry in their country rather than spend billions of subsidies
to import product from oversee. Also, this is less sticky than the tariff on import, as eventually,
IRA will have run its course, and imported from Europe would be on the same footing as
Americans made, but if it was an import tariff protectionism those can take many decades to
revisit.
They also use the global input-output matrix to map 40 countries’ basic metals input
sourcing from China. The World Input-Output Database (WIOD) provides world Input-Output
tables (WIOT) in current prices for 28 European Union (EU) countries and 15 other major
countries in the world for the period from 2000 to 2014. They match the export of each sector
with the WIOT using the two-digit International Standard Industrial Classification (ISIC, Revision
4) product classification for the 2008 to 2014 period. The WIOT is not available for the 2015-2018
period. Since our analysis covers 2008-2018, they have used the 2014 WIOT to proxy for 2015-
2018 period.
China’s move eclipsed the leadership of the U.S. steel and solar industry, which invented the
technology, still holds many of the world’s patents, and led the industry for more than three
decades. Just how China accomplished that and why it did is still a matter of concern and debate
among U.S. experts.
One clear result is that the U.S. steel and solar industry was hit hard by plunging prices and can
no longer supply more than a third of the rapidly growing U.S. appetite for solar panels, according
to a recent Department of Energy report exploring the “opportunities and challenges” of solar
manufacturing.
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China’s new dominance of nearly all aspects of solar use and manufacturing—markets that are
predicted to expand by 13 percent a year, according to the report—came through a “unique,
complex and interdependent set of circumstances” that is not likely to be repeated. But if the
United States innovates, cuts costs, and nurtures newer technologies, it might emerge as the
world’s second-largest solar panel manufacturer by 2020, the report concludes.
Achievements
During the last 30 years of the Innovation reform, from the 6th Congress to the 12th
Congress, the Party has put forth the right policy in expanding international economic
cooperation and raising Vietnam's position in the international arena. The biggest event was
Vietnam's accession to the World Trade Organization (WTO) in January 2007, marking
Vietnam's comprehensive integration into the world economy. In May 2008, a comprehensive
strategic cooperation partnership was signed between Vietnam and China. From 10/2015, is
one of the members involved in the negotiation of the Trans-Pacific Strategic Economic
Partnership (TPP).
Vietnam has made more transparent economic reforms and more liberal economic policy
reforms, contributing significantly to the development of a socialist-oriented market economy.
Vietnam. Through international economic integration, it has created opportunities for Vietnam
to access the achievements of science and technology in the world, step by step bringing the
activities of enterprises and the economy into the competitive environment. Vietnamese
enterprises have the opportunity to receive a lot of experience in modern production
management through joint venture projects with foreign partners.
Many modern technologies and advanced production lines are used to create new
developments in the manufacturing industry. International economic integration forces
Vietnamese enterprises to compete in both domestic and foreign markets.
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in the world, of which 6 FTAs are actively participating outside of ASEAN framework or with
ASEAN partner countries and many cultural cooperation agreements. with foreign countries and
international organizations, Viet Nam has also actively participated in negotiating the
Comprehensive Economic Partnership Agreement (RCEP) in order to reach a comprehensive
economic agreement in line with the conditions of Vietnam and ASEAN countries. Vietnam
officially joined the ASEAN Economic Community and successfully completed the rotating
ASEAN Presidency in 2010. In 2011, Vietnam has actively participated in programs to implement
the Community ASEAN by 2015. With the active implementation of priority measures to
implement the AEC Master Plan, Vietnam is considered one of the member countries with the
highest implementation rates of measures in the AEC. Foreign economic relations in particular
and international economic integration, in general, have contributed significantly to the socio-
economic development of the country, opening up new development space for the Vietnamese
economy, deepening relations with countries in the region and the world, and raising the
position of Vietnam in the international arena.
Limitations
However, the process of economic integration also helps Vietnam to recognize the
limitations and challenges it faced: Firstly, the guidelines, policies, and policies of Party and State
laws on international economic integration are slow to be reformed compared with the
requirement of expanding external relations, international integration, and incomplete
integration. Enough and taken seriously. International economic integration is also affected by
one-way, short-term, and local approaches.
Therefore, not fully utilize the opportunities and respond effectively to the challenges. In
relations with other countries, we are passive and have not built up mutually beneficial relations,
depending on each other with countries.
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Thirdly, international economic integration is not closely linked to the requirements of
improving efficiency, sustainable development, protecting political security and social order and
safety, and preserving and promoting the cultural identity of the nation. It has not been
synchronized with the process of increasing linkage between regions and areas throughout the
country. The mechanism of directing, managing, supervising, and coordinating the process of
integration, from the central to local levels, between branches and sectors still faces many
shortcomings.
Fourthly, the enterprises in our country are mostly small-scale, and weak in management
and technology. In the field of industrial production, the level of equipment is backward, the
infrastructure is poor.
Lastly, human resources in general and external staff have not basically met the demand
in both quantity and quality. Awareness of international law, and business technology in business
management is limited.
There are is main approaches: The approach which belongs to the federalist school, is
that integration is a final product rather than a process. The product is the formation of a federal
state like the United States or Switzerland. To assess association, they are primarily interested
in the legal and institutional aspects.
Today, Viet Nam is one of the stars of the emerging markets universe. Its economic
growth of 6-7% rivals China, and it exports are worth as much as the total value of its GDP.
Since 2010, Viet Nam’s GDP growth has been at least 5% per year, and in 2017 it peaked at 6.8%
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Whereas its GDP per capita was barely $230 in 1985, it was more than ten times that in 2017
($2,343). Corrected for purchasing power, it stands even higher, at over $6,000.
4/ What are the strategies that Vietnam have to use in this volatile markets?
• Completing the information organization system
• Mechanism of relationship, information coordination
• Completing the information exchange model between the Ministry of Industry and
Trade and the local industry and trade industry
• Establishing a model for providing information from the Customs statistical database
Applying information technology and e-commerce to organize effective use of market
information sources
2/ What are the implications for global economy and ASEAN nations?
The RCEP has the potential to shape trade and investment patterns in Asia and the Pacific
well into the future and to influence the direction of global economic cooperation at a challenging
time.
RCEP will eliminate about 92 per cent of import taxes between the signatory countries
within 20 years, and establish common rules for e-commerce, commerce and intellectual
property rights. RCEP is designed to cut both costs and time for traders by allowing them to
export goods to any of the signatory countries, without having to meet the specific requirements
of each member country.
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• Opening the Vietnamese market for EU services operators.
• Promoting and protecting investment.
• Mechanism to resolve future disagreements.
• Safeguarding social and environmental protection standards.
• Promoting democracy and respect for human rights.
This can be done in two ways – first, through more diversified sourcing partners through
larger trade networks and cheaper imports of intermediate goods from partner countries, which
should boost the competitiveness of Vietnam’s exports.
Secondly, through partnership with foreign firms that can transfer the knowledge and
technology needed to make the jump into higher value-added production. An example of this is
the recently launched VSmart phone manufactured by Vietnamese conglomerate Vin-group.
Such sophisticated business practices and technology will help boost Vietnamese labor
productivity and expand the country’s export capacity.
The rules of origin articles vary among FTAs, thus the local content requirements differ
among FTAs and even among production sectors within an FTA. The challenge for Vietnamese
exporters is to fully and clearly understand and be aware of the rules of origin regulations in each
FTA to comply with these requirements and to be well-prepared to prove the origins of products
status if necessary.
3/ Identify the key sectors that Vietnam can have advantage and strategic benefits
and challenged sectors.
Challenges of the rules of origin to Vietnam’s garment industry
The garment industry, a key export earning sector, accounted for 15% of GDP in 2012.
The deepening and widening of international integration through FTAs have brought promises to
this industry. However, to realise that the Vietnamese garment enterprises are facing many
challenges, especially from the rules of origin.
The local content requirements on garment products in Vietnamese export markets are
very different. In some FTAs such as AFTA, FTA with China, Korea and Chile, the local content
requirements are not stringent (raw materials can be imported and only the final stages of cutting
and sewing the fabric take place in Vietnam), but for the FTAs such as ASEAN – Australia/New
Zealand, ASEAN – India, the local content requirements are much more stringent (final products
are required to have a minimum localisation rate of around 35–40%). While ASEAN – Japan FTA
requires a minimum of 35–40% local contents and fabric is sourced from ASEAN countries or
Japan.
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Vietnam is importing approximately 70–80% of fabrics and raw materials (higher in 2012,
86.7%) while the remaining 20% of fibre and fabric produced locally. Therefore, final garment
products cannot meet the quality requirements to export. In 2015, while Vietnam’s total exports
value worth 27.3 billion USD, its imports reached 13.5 USD billion for raw materials. Domestic
raw materials are estimated at around 7.8 billion USD (Ly, 2016). Moreover, the fabric imported
in Vietnam is mainly from China (accounting for 35% of the total), Korea (15%), and Taiwan (9.4%)
(Minh, 2016). Both China and Taiwan are not members of TPP: hence, garment products of
Vietnam shall not be able to meet the strict regulations on the rules of origin of new-generation
FTAs.
4/ What are the preparation and strategies that Vietnam’s have to do gain
competitive advantage in this super FTA?
Global Competitiveness index is created based on three criteria: The basic requirements
including institution, infrastructure, macroeconomic environment, primary education and
health.
The efficiency enhancers including higher education and training, efficiency of goods
market, labor market efficiency, financial market development, technological readiness and the
market size.
The innovation and sophistication factors including business sophistication and
innovation. Vietnam’s ranks in these three indicators are very low, only 72nd, 70th and 88th,
respectively.
For instance, related to the Law on Investment and Law on Enterprises, the government
is required to release 51 new legal documents. However, as of 1 July 2016, there have been only
21 documents released (Quang, 2016a). Vietnam will also have to add 43 articles in the Labor
Code; 12 decrees need to be amended, completed, removed or reissued. Some new issues such
as freedom of association or the establishment independent trade unions, etc. should be
legalized (Quang, 2016b).
5/ Why do countries prefer engage in bilateral trading agreement in recent years, give
your explaination?
Bilateral agreements are not the same as trade deals. The latter involves decreasing or
eliminating import quotas, export restrictions, tariffs, and other trade-related barriers among
states. Also, the rules governing trade deals are established by the World Trade Organization
(WTO).
On the other hand, bilateral agreements are not bound by the rules set by the WTO and
do not solely focus on trade-related issues. Instead, the agreement usually targets individual
policy areas, aiming to increase cooperation and facilitate trade between countries in certain
areas.
• Advantages of Bilateral Agreements:
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- Since it involves only two countries, entering into a bilateral agreement is much easier
as compared to multilateral trade agreements.
- It gives companies access to new markets.
- When the parties involved see demand, they will open more job opportunities.
- Bilateral agreements also enable consumers to buy goods at lower prices. For
instance, some types of products may be more expensive without an agreement.
Personally, I think people prefer engage in bilateral trading agreement in recent years
because all the terms are similar but the bilateral trading will be more flexible because it can
adjust itself according to the agreement for the benefit of both parties.
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contributes to increases in the standard of living. Consumers also have access to a wider variety
of goods.
18
• Your global customer has a presence in China and strongly suggests you do as well. E.g.
SOVCN Client which is a large international tire suppler for automobiles.
• Competitive threat: Main competitor(s) has a presence in China that could affect your
current market position or hinder your ability to expand in the future. Example: In global
terms, McDonald’s has long been at the top of the fast-food pecking order with 36,000
restaurants worldwide, compared to KFC’s 23,000. But in China, the tables are turned.
KFC opened its first branch in China in 1987. It now operates almost 6,000 restaurants in
more than 1,100 cities across the country and claims 11.6% of China’s fast-food market.
McDonald’s came to China only three years later but has only 2,500 restaurants and a
market share of 5.6%.
• Cost savings: China’s enormous cost advantage over the leading industrial economies may
have reduced in recent years, but with its unmatched scale, immense internal market,
heavy investments in automation, well-developed supply chains and steady advances in
technology-intensive industries, China very much remains the world’s workshop.
Example: SOVCN client who sources and assembles toys for export to Europe.
• Push factor: Company’s stakeholders are insisting on a China presence. PE investor
requires the company to enter the China to create synergies for their portfolio
While China's economic growth has been impressive in recent years, some challenges could
impact its future prospects, such as demographic changes, environmental concerns, and
geopolitical tensions. Ultimately, whether or not China becomes the center of the world economy
will depend on a variety of factors, including how it navigates these challenges and how other
countries respond to its rise.
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Question 8: (Thanh Nhã, Gia Khang & Trà My answer)
1/ Discuss the new challenges of globalization with the slow-balization.
About challenge. Changes in a world of globalization and international integration pose
many challenges for small and medium-sized countries, especially in maintaining independence
and self-reliance in international relations. Most of the small and medium-sized countries are
developing countries or are underdeveloped, needing investment, technology transfer, aid, etc.
from developed countries, so it is easy to become dependent on one power. economically certain
country. From economic dependence will lead to political dependence, being dominated,
manipulated, no longer maintaining independence and autonomy in deciding internal issues as
well as international relations. That is perhaps the acute challenge facing small and medium-sized
countries today.
Another challenge for small and medium-sized countries is to create a relative "balance"
in relations with big countries, not too favoring any big country to avoid becoming a cause of
confrontation between major powers. Leading to armed conflict and war. Practice shows that,
when the interests between big countries are rubbed, there may be a conflict, the big countries
try to convert that conflict to the small and medium countries. In other words, large countries
will seek to conduct "proxy wars" like in the twentieth century in small and medium-sized
countries, especially where there is a high concentration of conflicts of interest between large
countries.
2/ Analyze the impact of trade policy of Southeast Asian Nations and Vietnam in the
trade tension between US and China.
The fact of the matter is that the US-China trade war has not only opened up economic
opportunities for Vietnam, but also highlighted the constraints that the country has to grapple
with. These constraints limit Vietnam’s ability to fully capitalise on the opportunities that come
by
Positive impacts: A report by the Development Bank of Singapore has suggested that at
its current rate of growth, Vietnam’s GDP will surpass Singapore’s by 2029.4 In fact, Vietnam’s
real GDP climbed 6.79 percent on-year during the first quarter of 2019, according to official
government data. This was its second-strongest first-quarter growth in the past decade,
surpassed only by 2018’s 7.45 percent.5 Over the years, the United States has been the largest
market for Vietnam’s exports (with China the third-largest), while China has been the largest
source market for Vietnam’s imports (except in 2018, when China ranked second after South
Korea). As of December 2018, the United States and China together account for 36 percent of
Vietnam’s export earnings, and nearly a third of Vietnam’s import bill. Vietnam has a substantial
trade surplus with the United States, which reached nearly US$34 billion in 2018. It also has a
correspondingly large deficit with China, amounting to almost US$24 billion A survey by the
American Chamber of Commerce in Guangzhou showed that Chinese companies were losing
market share to companies elsewhere in Asia, in particular to Vietnam.
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