Lesson 4 EBBA

International
Business
xin chào
05/05/2021 1
Homework
1. What are the main 5 exports from Vietnam (by
value)?
2. What are the main (tax) revenue streams for the

Vietnamese government (e.g. income tax)?
3. How does the Vietnamese government spend its

revenue (this can be represented by a pie graph)?
4. What is the ‘trade balance’ (export:import) in

Vietnam right now?
5. What is a good definition of a knowledge based

economy?
05/05/2021 ©Provox Training and Consulting for NEU 2

Government Policies &
International Trade
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Let’s look at one example
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The sharp cut in tax rates President Trump signed in 2017 was supposed to trigger an
investment boom. In June, six months after the tax cuts went into effect,
Trump called the tax-cut law an “economic miracle” and said, “Our country is doing so well. I
don’t think it’s ever done like this, in terms of the economy.”
The miracle was more like a mirage. One key element of the Republican tax legislation was a
sharp cut in the corporate tax rate, from 35% to 21%, which went into effect at the start of the
year. As expected, the tax cuts roughly doubled the growth rate in corporate profits. Investors
expected a stock-market rally. Yet equities have wobbled all year and the S&P 500 is now down
about 6% in 2018.
The market, apparently, hasn’t been fooled by the bubbly math accompanying the corporate tax
cuts. Earnings growth for the S&P 500 rose from 12% last year to an estimated 23% this year,
according to Goldman Sachs. But EPS growth is likely to drop back to 6% next year and just 4%
in 2020. Those numbers are still good, and the lower growth rates of the next two years will
come atop higher baseline profits. But the sharp slowdown in earnings growth that investors
now expect explains a good part of the stock-market selloff of the last two months.
Trump also claimed that corporations overflowing with profits would spend bigly on new
facilities and more workers. But that isn’t happening, either. A variety of indicators, such as
business fixed investment and capital goods orders, show that businesses are spending at
roughly the same pace, or perhaps even a bit less, than they were before the tax cuts went into
effect. “There has been a clear leveling off in both capital goods orders and shipments, which
suggests that the near stagnation in business equipment investment in the third quarter may be
the beginning of a more sustained weakness,” research firm Capital Economics wrote recently to
clients. Stagnation was not something Trump or his fellow Republicans promised.
Yahoo Finance 22/11/2018
05/05/2021 ©Provox Training and Consulting for NEU - EBBA 5
The sharp cut in tax rates President
Trump signed in2017 was supposed
to trigger an investment boom.
‘The biggest reform of all time’

(President Trump)
Did it happen?
05/05/2021 ©Provox Training and

Consulting for NEU - EBBA 6
After 20 months: CNBC 16 August, 2019
Half of corporate chief financial officers surveyed by Duke

University expect the economy to shrink by the second quarter
of 2020.
Promise of 3% growth – actually 2.9% (2018)
Early 2020 – 2% ‘Those levels assure the failure of

another tax cut promise’
Why – ‘Corporate executives blame the darkening outlook on

Trump’s trade war with China’.

The US economy shrank by 3.5% in 2020, the
worst year for growth since 1946 (Source: US
Bureau of Economic analysis)
GDP collapsed by an annual rate of 32.9%

between April and June of 2020
Joe Biden has drawn up a $1.9tn ($ 1 900 000 000 000 = VD 1

438 410 000 000 000) coronavirus and economic stimulus plan.
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Joe Biden has drawn up a $1.9tn ($ 1
900 000 000 000 = VD 1 438 410 000
000 000) coronavirus and economic
stimulus plan.
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53 million Americans aged 18-64 range qualify as “low-wage”,
with a median income of $10.22 an hour, and median annual
earnings of about $18,000 .
Brookings Institute 03 December, 2019
What affects and influences government
policies & international trade?
What factors should we be paying attention

to?
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• Assessing markets, performance & potential
• Alternative performance potential (GNP – GN

Happiness)
• Assess – locally (inflation, Unemployment, etc.)
• Trading
• Trade policies and instruments
• Government interventions
12
05/05/2021 Provox Training and Consulting for NEU - EBBA
We will look at
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1. Assessing markets: development, performance
& potential
2. Economic indicators
3. Trade policies and instruments
4. Trade policies - Reducing restrictions and

impact
5. Negative impact of trade wars
6. Why have restrictions?
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1. Assessing markets,
performance & potential
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Analysis - Assessment of markets, performance
and potential.
How can you measure the market … what can you use
to measure it?
Why?
Small, even tiny ,
details can give us a
winning edge
05/05/2021 ©Provox Training and Consulting for NEU - EBBA

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Managers in MNEs and other companies analyse critical
components to look at market performance and potential. They
explore and examine both informal and formal portfolios of
macro- and micro- measures to gauge (evaluate) a country’s
economic development, performance and potential.
Many factors can be analysed: subscriptions to magazines,

average electricity consumed, internet searches, etc.
Tiny details about ‘what an individual does, income, class,

status, buying behaviour, supermarket check out details … even
thinks’ give us information.

When you want to find out if someone is sick, what do
doctors do?

What do managers do to find out about
the ‘health’ of a country, market or
business they wish to deal with?
They define what they want to know and then use a
way of getting the information.
So what do the following mean?

• Emerging economy
(Mexico, Indonesia, S Korea and
• Developing economy
Turkey)
• Developed country
GNI
• BRIC
GNP
• BIC
GDP
• MIST
IMF
Data and information is everywhere and there are devices and software to help us
manage the HUGE amount of ‘data & information’ we need to process .
Here are some things that can us ‘quick – rule of thumb indicators’
that tell us if an economy is, a) doing well (expanding/developing) or
b), doing poorly/declining or c) needs a boost or about to ‘die’
(threatened by recession or inflation).
GNI - Gross National Income

GNP – Gross National Product
Which tell us about the economy of households (average),
businesses, etc., consumption, investment, spending, trading
Paul Samuelson, said about GDP “truly among the great inventions of the 20th
century, a beacon that helps policymakers steer the economy toward key
economic objectives.”
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GDP - Gross Domestic Product
Measures total financial performance, and includes the flow of all
economic activity, even if foreign firms are operating in that country.
Vietnam GDP 2018
(IMF) > $240 billion
- 0.24trillion
Vietnam GDP 2020
(IMF) > $350 billion
https://www.imf.org/en/News/Articles/202
1/03/01/pr2155-vietnam-imf-executive-
board-concludes-2020-article-iv-
consultation
21
Alternative measurements for performance and potential
Information and data so far is ‘official’ … what about the other
data? The unofficial and perhaps more real data!
Does previous performance tell us about the future?
Ecological (environmental) sustainability
NNP - Net National Product : Measures the depletion of natural

resources and degradation of the environment that result from
generating GNI.
Reasoning: If a company has depreciation of assets when making

a product so too should countries. NNP does so by depreciating
the country’s assets in relation to their use to generate growth.
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GPI – Genuine Progress Indicator
Begins with same accounting framework used to calculate GDP and then
adjusts for values such as educational development, health of the
population, quality of environment, livelihood security and free time (work
life balance, quality of life).
It is like gross Vs net profits, e.g. + (plus) is housework and voluntary work
and - factors like crime, pollution, etc. So to get to ‘0’ it depends on total
monetary gain from production (service and goods) minus total costs
including what some regard as ‘invisible’ (not accountable), e.g. pollution.
HDI - Human Development Index

Quality of life including; physical (longevity), intellectual (knowledge – adult
literacy + primary, secondary & tertiary education) and social standards
(GNI/capita) that shape a country’s overall quality of life.
Happiness (Happynomics)
▪ GNH – Gross National Happiness
▪ YBLI - Your Better Life Index ▪ HPI - Happy Planet Index
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Economic indicators
Assessment of markets, performance and potential.
Common indicators used to analyse and interpret meaningful and

possible performance, plus potential are usual indicators such as;
1. Inflation & deflation

2. Unemployment
3. Debt
4. Income distribution
5. Poverty
6. Balance of payments
1
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Inflation
Venezuela: Bolivar 14 000 000 (Nov 2019)=
10 000 000 % ?
(2019 IMF)
Zimbabwe 2009
79,600,000,000 %

Inflation & deflation
Inflation - is the sustained rise in prices measured against a standard level of
purchasing power.
It is a result of:
• Aggregate demand growing faster than aggregate supply, essentially too
many people trying to buy too few products.
• Central bank increasing the supply (printing) money.
• Continuous fall in the national currency against other currencies.
Inflation influences; political stability, interest rates, living costs, consumer
confidence, etc.
Measuring device : Consumer Price Index (CPI) (EU Harmonized Index of

Consumer Prices (HICP))
Deflation - is the opposite of inflation—prices for products go down, not up.

It is helped by; overcapacity, shrinking credit, reduced corporate spending,
declining real estate values and dropping consumer demand. The result is
profits for companies fall and they make workers redundant (unemployed).
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Unemployment
The unemployment rate is the number and percentage (%)
of employable people out-of-work but seeking work
relative to the total labour force.
If you combine inflation with unemployment you get the

misery index.
The higher the number, the greater the economic misery,

and the more likely consumers reduce spending,
companies curb investment, the economy slows and there
is austerity.

Unemployment (statistics)
China 2019, in urban areas of China about 3.6 - 5.%

People aged 16 to 24 was 13.1% (Feb 2021)
Vietnam 2.01 – 2.5%

USA 4-6%
Syria 50%
Senegal 48%
Haiti 40.6%
Kenya 40%
Djibouti 40%
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3
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De
bt
Tra
p
Debt (Internal & external debt and debt crisis)
The total of a government’s financial obligations, i.e.
what the state has borrowed from its citizens,
foreign governments and organisations and
international institutions.
The larger the total debt, the more uncertain an

economy’s performance and potential are.

1. Internal debt
Is a consequence of a government spending more than it
collects in revenues (poor tax collecting, pay out more in social
security payments, a deficit in state run enterprises, etc.).
Result: uncertainties for consumers, investors and companies.
2. External debt
A result of a government borrowing money (and owing interest)
from lenders outside the country, e.g. banks, governments,
international financial institutions (e.g. the IMF or World Bank).
3. Debt crises occur when weaker economies have to pay debt

with resulting (knock-on effect) national socio-economic and
political costs.
4
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Income distribution
The GNI (gross national income) tells us how much income the
average person earns, but it does not tell us how it is distributed
among the population.
2017 (World Bank): Vietnam 2 700$ (134/183)

USA 58 270 $
UK 40 530$
Cambodia 3760 $
Switzerland 80 560$
Thailand 17 090 $
26 richest billionaires in the world own as many

assets as the 3.8 billion people who make up the
poorest half of the planet’s population
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Cost:
Inequality – Rich Vs. Poor which threatens economic performance
(e.g. city Vs. country) and socio-political stability.
Negatively affects country’s sense of fair play and inequality of

opportunity which weaken performance and potential. Especially
when this goes with unemployment, e.g. Spain.
Gini coefficient measures inequality (income distribution in

countries). O is equal
Sweden 0.23
China & USA 0.47
S Africa 0.65
UK 0.33 Vietnam 0.35
37
Average monthly income per capita in Vietnam from 2010 to 2020(in
million Vietnamese dong)
According to the World Bank, more than 45 m people were lifted out of poverty.
Poverty rates declined sharply from over 70 % to below 6 %(US$3.2/day )
https://www.worldbank.org/en/country/vietnam/overview
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5
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Abraham Maslow in 1943
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Poverty
Poverty is when an individual or community lacks the essentials for a
minimum standard of well-being and life and can include; food, clean water,
shelter, and may include social resources such as; access to information,
education and healthcare.
Outcomes
To do business in places where there is poverty means; market systems may
not exist, national infrastructures may not work, crime may be common
along with corruption, while the government will probable struggle to
regulate society and have may workable economic policies.
There are market opportunities even in developing economies , e.g. cheaper stores
(notably Wal-Mart and Aldi), pre-paid mobile service providers and new business
designs such as “cooperative consumption” that lets people share or rent rather
than own (Grab, GoViet, Airbnb).

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Average monthly income per capita in Vietnam from 2010 to 2020(in
million Vietnamese dong)
According to the World Bank, in Vietnam more than 45 m

people were lifted out of poverty. Poverty rates declined
sharply from over 70 % to below 6 %(US$3.2/day )
https://www.worldbank.org/en/country/vietnam/overview
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6
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Balance of payments (BOP)
Is a report of trade and financial transactions (conducted by
individuals, businesses and government agencies) with the rest of the
world.
It tracks
a) the current account, which tracks cross-border payments for
goods and services (i.e., exports and imports)
b) the capital account, which tracks loans of cross-border payments
for assets.
Current account surplus - Positive net sales result from exports

exceeding imports
Current account deficit - Negative net sales result from imports
exceeding exports
Other models that managers and companies use to analyse
performance and potential in countries and markets:
GCI - Global competitiveness index
WCI - World competitiveness index
GII - Global innovation index

3. Trade policies and
instruments (for control and
restrictions)
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Trade policies and instruments.
Despite stating the benefits of ‘free-trade’,

governments intervene in trade to gain
economic, social, or political objectives, and even
personal (for top politicians) political longevity.
GATT (General Agreement on Tariffs and Trade) and

WTO regulate how trading works.
The logic of applying trade policies is that it will benefit their

respective nation and its citizens or national ‘stakeholders’,
whether they be consumers or sellers.

Instruments governments can utilise to
intervene in trade:
• Tariffs
• Subsidies
• Import quotas
• Export restraints
• Local requirements
• Administrative policies
• Antidumping policies

Tariffs
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Tariffs
• Oldest and simplest instrument of trade policy.
• Tax levied on imports (or exports)
• Can be a specific tariff (fixed charge for each unit) or Ad valorem
tariffs (levied as a proportion of value of each unit imported)
Why used?
• To protect domestic producers
• Provide revenue for the government

Tariffs
Winners:
Government
Domestic producers
Losers:
Consumers (pay more for certain
imported items)
e.g. Steel tariffs because of cheap imports – Gains and loses

Raises prices (-)
Users complain (-)
Jobs protected (+)
Reduce overall efficiency of world economy (-)

Subsidies
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Subsidies (payment to a domestic producer)
• Grants, low-interest loans, tax breaks, government take

a % share in business
• Helps domestic producers

a) compete against foreign imports
b) gain in export markets
e.g. Agriculture is widest subsidised industry (CAP in EU)

often to support ‘inefficient’ farmers.

Why used?
• Support during difficult times (e.g. Financial crisis 2008)
e.g. car manufacturers.
• Can help companies gain ‘first mover’ advantage (IQE in

Wales)
• Support industries in decline (reduce unemployment)
Problem
• Help give some a competitive advantage
• Can protect inefficient enterprises

Import quotas &
Export restraints
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Import quotas, Export restraints and embargoes
• Import quote - Restrict quantity of goods allowed into a country

(import licence), e.g. cheese, textiles, rice
• Tariff rate quota – lower tariff rate is applied on imports within a

quota, than those over the quota, common on agricultural
products (e.g. import of rice)
• Voluntary export restraint (VER) – quota imposed by the

exporting country, often at request of importing country, e.g.
Japanese cars into USA in 1981.

Why used?
• Benefit local producers (+)
Problem
• Do not benefit consumers (-)
• If lack of capacity and neither domestic producers

nor imports can provide requirements – price
increases. (-)

Embargoes
A specific type of quota that prohibits all trade is an embargo.
Like quotas, countries or groups of countries may place embargoes

on either imports or exports, on whole categories of products
regardless of origin or destination, on specific products with specific
countries, or on all products with given countries.
Governments impose embargoes in an effort to use economic

means to achieve political goals, e.g. Iran, N. Korea ………………..
President Bill Clinton announced the formal normalization of

diplomatic relations between the United States of America and the
Socialist Republic of Vietnam on July 11, 1995
On Friday 16 April
which country
imposed
embargo/sanction
on which country?
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Local requirements
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Local content requirements (LCR) ‘ Buy local’
• A specific part (fraction / %) of a product must be produced
domestically, expressed in physical terms (amount) or value
Why used?
• Used in developing countries to shift manufacturing from
assembly of parts (manufactured elsewhere) into local production
of component parts
• In developed countries to protect jobs and industry from foreign
competition, e.g. Buy American Act (American if 51% of materials
by value in US produced)
• Limits foreign competition
Problem
● Do not benefit consumers!
Administrative & Antidumping
policies
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Administrative policies
• Bureaucratic rules designed to make it difficult for importers, e.g.
special permission requirements that cause delays at customs,
inefficiencies which create uncertainty and raise the costs of
carriage. Inspections are usually done at port of entry.
Antidumping policies
• Selling goods in a foreign market below cost of production, or
below ‘fair’ market value (fair profit margin) – could be to unload
goods, drive away competition, gain market share, etc.
• Antidumping policies punish the ‘dumpers’, e.g. in USA file a

petition with a government agency, if granted, antidumping duties
(countervailing duties) can be imposed.

Countertrade or offsets
• When a government requires an importer to provide
additional economic benefits such as jobs or technology
as part of the transaction, e.g. they must use local
suppliers if they are producing, e.g. Japanese car
manufacturers.
Example
• Raytheon (a military equipment supplier) had to undertake
shrimp farming to gain a Saudi Arabian contract.

Restrictions on Services
countries typically consider 4 factors:
1. ‘Essentiality’ (essential services)

2. Not-for-profit preference
3. Standards
4. Immigration
1. Essentiality
Countries can decide certain services are essential because they
serve strategic purposes or provide social assistance to citizens,
e.g. are media, communications, banking, utilities (water,
electricity, etc.) and domestic transport.

2. Not-for-Profit Services
Mail, education, and hospital health services are often not-for-
profit sectors in which few foreign firms compete.
3. Standards
Some services require face-to-face interaction between licensed
and qualified professionals, e.g. lawyers, accountants, architects,
electricians, engineers, medical personnel, real estate brokers and
teachers.
At present, there is little reciprocal recognition in licensing from one country to

another because occupational standards and requirements differ substantially
from country to country.
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05/05/2021 Provox Training and Consulting for NEU -
++ Additional policies that can be used (standards and
labels)
Standards and labels Countries a classification, labelling and

testing standard to allow the sale of domestic products but obstruct
foreign-made ones.
The professed purpose of standards is to protect the safety or health of the

domestic population, but some companies argue they are just a means to protect
domestic producers.

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Immigration
Satisfying the standards of a particular country is no

guarantee that a foreigner can then work there.
Additionally, governmental regulations often require an

organization to search extensively for qualified personnel
locally (i.e. national citizens), before it can even apply for
work permits for personnel it would like to bring in from
abroad.
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05/05/2021 Provox Training and Consulting for NEU -
What affects and influences government
policies & international trade?
What factors should we be paying attention

to?
05/05/2021 70
We will look at
05/05/2021 71
& potential

impact

72
4. Trade policies - Reducing
restrictions and impact
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How to counterbalance Government ‘restrictions’
When companies face possible losses because of import competition,

they can:
1. Move operations to another country.
2. Concentrate on market niches that attract less

international competition.
3. Adopt internal innovations, such as greater

efficiency or superior products.
4. Try to get governmental protection.

How to counterbalance Government ‘restrictions’
Each option entails costs and risks, e.g. in the case of US vehicle
producers –
- Move some production abroad (such as sub-contracting with
foreign suppliers for cheaper parts)
- Developing niche (SUVs, minivans) products on less competitive
markets
- Adopt innovations such as lean production techniques to improve
efficiency and product quality.
- Get help from government subsidies, but governments need to
balance gain in one company/industry and loss in another
- Perhaps a company is inefficient and protectionism can be counter-
productive and lead to trade war

3 examples of present
trade policies – having
restrictions and impact
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TPP – CPTPP
France & USA
UK and BREXIT
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• Trade war between the US and China
• The United States withdrew from TPP (Obama’s policy), but

The Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) is a free trade
agreement between: Canada, Australia, Brunei, Chile,
Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore and Vietnam. Once fully implemented, the 11
countries will form a trading bloc representing 495
million consumers and 13.5% of global GDP.
• Vietnam may face increase tax on exported products
• Ex US President Donald Trump previously stated

that there may be further restrictions on access
to the US market by using other protective
measures, which may conflict with Vietnam's
expansionary motivation.
• What is President Biden’s policy on Vietnam???
Xi Jinping: US-China trade war will produce no winners
17 November 2018
Ex US Vice-President Mike Pence

later said he was prepared to
"more than double" the tariffs
imposed on Chinese goods.
Mr Xi warned against further

escalations of tensions,
"History has shown that
confrontation, whether in the
form of a cold war, a hot war
or a trade war, will produce
no winners,"

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Tech tax - "unusually burdensome" for US tech firms
The US is preparing tariffs on $2.4bn worth of French exports as

retaliation against the country's new digital services tax
(Facebook, Apple, Amazon, Netflix and Google). Unfairly targeting
US companies ‘discriminate or otherwise impose undue burdens
on US companies.’
French companies could face tariff rates of up to 100%

include cheese, sparkling wine, make-up and handbags.

82
Up
da
Digital Tax Collection Triggers New U.S. Tariffs on France
te
January 6, 2021

Update: On January 7, 2021
The U.S. Trade Representative announced that the tariffs
on French goods have been suspended.
On January 6th, the United States planned to put into

effect new 25 % tariffs on $1.3 billion in French products.
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The UK's manufacturing sector shrank in November
2019 at its fastest pace in 18 months as global demand
weakened, a survey has indicated.
"Output is falling at the fastest rate since early 2009 as order

inflows from domestic and overseas markets continue to
deteriorate.
CBI chief economist Rain Newton-Smith said: ‘Alongside BREXIT

uncertainty, (businesses) are also contending with softer global
demand. A no-deal Brexit would put the brakes on UK growth
and realise businesses’ worst fears.’ (1.3% growth in 2019 and
1.2% in 2020.)
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& potential

impact

85
5. Negative impact of trade war
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Negative impact
1. Fewer imports of a product mean fewer

import-handling jobs, such as those in the
container-shipping industry.
2. Import restrictions on one industry can

cause lower sales in other industries because
they must incur higher costs for parts and
components that are produced locally, e.g U.S.
import restrictions on steel raised automobile
and farm equipment manufacturing costs.
Cons
3. Consumer suffers
u mer
s suff
er
87
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Why do governments have barriers (restrictions)?
1. Protect essential industries, jobs and national security

2. Protect consumers ????
3. Maintain or extend spheres of influence (foreign policy
goals)
4. Promote acceptable practices abroad (e.g. human rights)
5. Preserve national culture, environment, …

Protect jobs and industries
• Protect jobs (coal, car industry,
• Protect ‘start-ups’ or infant industries and promote
industrialisation, shield them until they are big enough to compete
on the market
• Improve statistical (comparative) position
• Political interests
e.g. EU CAP & USA steel tariffs (2002), US – China …. Political/economic

Car industry protection may make them more inefficient.
Problems
1. How effective are governments at identifying ‘start-ups’ and
infant?
2. Protectionism may mean managers do not make critical decisions

about innovation, etc., that make their businesses really
competitive.
AI map
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USA (2018) 850 000 people working in AI
USA attracted 38% of global investment
2040 start-up companies (40% of global start ups

worldwide)
Baidu
Tencent
Alibaba
Iflytel
Lenovo
Huawei
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Protect national security (non-economic rationale)
• Industries important for national security (defence –

aerospace, advanced electronics and communication, semi-
conductors ..) industries that supply defence industries, utilities
(power)
Protecting consumers
• Protection from unsafe and toxic products/services
(beef from mad cow diseased countries, tuna – mercury, growth
hormone treated animals, horse meat, etc.)

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Maintaining or extending spheres of influence (foreign policy goals)
through punishment or reward
• Punish: Countries have foreign policy objectives and target specific

countries – preferential trade terms to build a good relationship
or to punish (embargoes, unilateral trade sanctions, UN sanctions,
etc.) ‘rogue’ states (e.g. Cuba, N Korea, Iraq, Iran, Myanmar) to
hasten ‘regime change’ to create economic hardship for
inhabitants.
• Reward: they may support their spheres of influence, by giving aid

and credits to, and encouraging imports from, countries that join
a political alliance or vote a preferred way within international
bodies. (e.g The EU + 77 members of the African, Caribbean, and Pacific Group
of States signed Cotonou Agreement which formalized preferential trade
relationships and strengthened political ties.)
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NEU - EBBA 95
The ACP-EU Partnership Agreement,
signed in Cotonou, in 2000, was concluded
for a 20-year period from 2000 to 2020. It is
the most comprehensive partnership
agreement between developing countries and
the EU. Since 2000, it has been the
framework for EU's relations with 79 countries
from Africa, the Caribbean and the Pacific
(ACP).
In 2010, ACP-EU cooperation was

adapted to new challenges such as
climate change, food
security, regional
integration, state fragility and
aid effectiveness.
** OACPS - In April 2020, the ACP Group of States became an international
organisation: the Organisation of African, Caribbean and Pacific States (OACPS).
http://www.acp.int

Protecting Human rights
• Part of foreign policies for some democracies, they

use trade policy as a tool to try to improve human
rights, e.g. USA and Myanmar, S Africa (1980s and
1990s)
NGOs, UNICEF, IMF, EU commission

Environment and national culture
• Trade controls are used to pressure foreign governments to

change their positions on environmental protection, goods that
are dangerous or immoral. This is done through limiting products ,
but can also include frozen bank accounts, cutting off or improving
foreign aid, etc.
• Keep out unwanted products, such as narcotics, ivory, endangered

species, etc.
18 April, 2021

NEU - EBBA 98
• Culture: prohibit exports of art and historical artefacts, protect
national culture. Japan, South Korea, and China maintained an
almost total ban on rice imports, largely because rice farming has
been a historically cohesive force in each nation.
Examples
1. Canada relies on a “cultural sovereignty” argument to prohibit
foreign ownership or control of publishing, cable TV, and bookselling.
2. France – ban English on advertising and in the language.
3. The Anti-Spiritual-Pollution Campaign ( 清除精神污染 )

was a political campaign (from Oct 1983 to Dec 1983). To curb
Western-inspired liberal ideas among the Chinese populace, a
by-product of reforms begun in 1978.
NEU - EBBA 99
Does Free Trade work?
b e
ay
• Protectionism can create inefficiencies – e.g. Brazil built car
)
t
factories behind tariff barriers, but when barriers lifted 30 years
m n
later they were obviously inefficient.
. e
… ext
• Can support ‘infant industries’ e.g. Airbus (UK, Spain, France,
U m
Germany) began production in mid-1970s and had 5% of the
market, 2012 -45%
d
… . i te
• Depends on a strategic trade policy – but need to be careful
o
N al
used)
i m
about target industries and how subsidies (tax payers money is
• Every day trade policies, domestic policies, trading systems are
(to
altering, developing and reducing policies as the situation
shifts, changes and demands.
Some Conclusions –
watch what is going on!
• Repeal of corn laws 1846 (high tariff on imported corn – reversed free
trade proposition because of starvation).
• Everyone is number ONE (‘look after no. 1) – patriotism!
• No one wants to damage themselves and compromise national security
• GATT started after WW II - After 1995 morphed into WTO (in 2014 – 160
members) - Is the WTO policing the worlds trade well?
• Lack of TRUST & VISION (human characteristics) … we are still evolving

and developing
• Depends on good (economic +++) relations between partners

101
• October 2018
Headlines
Manufacturing prices dropped by 7.6% as a result of China’s entry into WTO
(200-2006) and cost 3.4m USA jobs.
• October 2018
China asks WTO permission to impose sanctions on USA
• November 2018 (CNBC - Satish Shankar of Bain & Co)

The trade war between the U.S. and China is pushing many global companies to
rethink their supply chains.
Even if trade tensions eventually simmer, companies will still try and shift
some of their supply chains to Southeast Asia.
As companies rethink their supply chains, SMEs in the region will adopt
more technologies into their daily operations that could potentially unlock a $1
trillion opportunity.

What are your
conclusions
from the lecture?
05/05/2021 103
Homework questions
• What policies doe the Vietnamese government use to protect
Vietnamese business? For example, does it use tariffs or subsidies,
or does it restrict trade?
• In a developing country (like Vietnam) is the most valuable thing

knowledge?
• If the definition of a knowledge based economy is ‘an economy

where production and services are based on knowledge-intensive
activities that contribute to an accelerated pace of technical and
scientific advance’ what part does this play in the Vietnamese
economy?

104
Case Study
Government policies and International trade

Consulting for GUST 105

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International

2. What are the main (tax) revenue streams for the

3. How does the Vietnamese government spend its

4. What is the ‘trade balance’ (export:import) in

5. What is a good definition of a knowledge based

05/05/2021 ©Provox Training and Consulting for NEU 2

‘The biggest reform of all time’

05/05/2021 ©Provox Training and

Half of corporate chief financial officers surveyed by Duke

Promise of 3% growth – actually 2.9% (2018)

Early 2020 – 2% ‘Those levels assure the failure of

Why – ‘Corporate executives blame the darkening outlook on

05/05/2021 ©Provox Training and Consulting for NEU - EBBA 7

GDP collapsed by an annual rate of 32.9%

Joe Biden has drawn up a $1.9tn ($ 1 900 000 000 000 = VD 1

What factors should we be paying attention

• Alternative performance potential (GNP – GN

• Assess – locally (inflation, Unemployment, etc.)

• Trade policies and instruments

3. Trade policies and instruments

4. Trade policies - Reducing restrictions and

5. Negative impact of trade wars

6. Why have restrictions?

05/05/2021 ©Provox Training and Consulting for NEU - EBBA

Many factors can be analysed: subscriptions to magazines,

Tiny details about ‘what an individual does, income, class,

05/05/2021 ©Provox Training and Consulting for NEU - EBBA 17

05/05/2021 ©Provox Training and

So what do the following mean?

GNI - Gross National Income

Does previous performance tell us about the future?

Ecological (environmental) sustainability

NNP - Net National Product : Measures the depletion of natural

Reasoning: If a company has depreciation of assets when making

HDI - Human Development Index

Common indicators used to analyse and interpret meaningful and

1. Inflation & deflation

Venezuela: Bolivar 14 000 000 (Nov 2019)=

05/05/2021 Provox Training and Consulting for NEU - EBBA 27

Measuring device : Consumer Price Index (CPI) (EU Harmonized Index of

Deflation - is the opposite of inflation—prices for products go down, not up.

If you combine inflation with unemployment you get the

The higher the number, the greater the economic misery,

05/05/2021 Provox Training and Consulting for NEU - EBBA 30

China 2019, in urban areas of China about 3.6 - 5.%

Vietnam 2.01 – 2.5%

The larger the total debt, the more uncertain an

05/05/2021 Provox Training and Consulting for NEU - EBBA 33

Result: uncertainties for consumers, investors and companies.

3. Debt crises occur when weaker economies have to pay debt

2017 (World Bank): Vietnam 2 700$ (134/183)

26 richest billionaires in the world own as many

Negatively affects country’s sense of fair play and inequality of

Gini coefficient measures inequality (income distribution in

05/05/2021 ©Provox Training and Consulting for NEU - EBBA

According to the World Bank, in Vietnam more than 45 m

Current account surplus - Positive net sales result from exports

GCI - Global competitiveness index

WCI - World competitiveness index