VIETNAM UNIVERSITY OF COMMERCE E ENGLISH DEPARTMENT

THE PRESENTATION GROUP 6 TOPIC : It is undeniable that international trade is good for a countrys economy . However , It brings lots of obstacles to that country . What are disadvantages and what should a country do to overcome difficulties to gain success ?

GROUP MEMBERS : Nguyen Trong Thieu Nguyen Thi Thu Nguyen Tinh Tam Vu Thi Thuong Hoang Thi Phuong Nguyen Thi Quynh

HANOI 05/2010 HANOI

THE OUTLINE
TOPIC : It is undeniable that international trade is good for a countrys economy . However , It brings lots of obstacles to that country . What are disadvantages and what should a country do to overcome difficulties to gain success ?

1. Introduction :
1.1Welcoming audience. 1.2Introducing subject. 1.3Outlining structure. 1.4Giving instructions about questions.

2. Body :
2.1 Definition and roles of international trade. 2.2 Advantages of international trade with a countrys economy. 2.3 Disadvantages of international trade. 2.4 Solutions for a country to gain success in international trade. 2.5 International trade in Vietnam.

3. Conclusion :
3.1 Summing up. 3.2 Giving recommendations. 3.3 Thanking for audience. 3.4 Inviting questions.

BODY 1. Definition and roles of international trade .

1.1 Definition.
International trade is the exchange of goods and services between countries.

n this the demand and supply and the prices are affected by the global events. For example, the change in political conditions in Asia can increase manufacturing cost and cost of labor of an American company located in a country in Asia. This would then result in increase in the price of the product that you need to buy from a local mall. If there is a decrease in cost of labor, on the other hand then you may have to pay relatively less amount on the product.

1.2 Roles.
Global trading provides countries and consumers the chance to be exposed to those services and goods that are not available in their own country. Clothes, food, jewelry, stocks, wines, spare parts etc. and many more products are available in international market. Trading of services is also done like: banking, consulting and transportation, tourism. The goods and services that are bought from the global market are called imports and the goods and services that are sold in the overseas market are called exports. Exports and imports are recorded in a country's balance of payments (current account). International trading lets the developed countries use their resources effectively like technology, capital and labor. As many of the countries are gifted with natural resources and different assets (labor, technology, land and capital), they can produce many products more efficiently sell at cheaper prices than other countries. A country can obtain an item from another country if it cannot effectively produce it within the national boundaries. This is the specialty of international trade. Global trading allows the different countries to participate in global economy encouraging the foreign direct investors. These individuals invest their money in the foreign companies and other assets. Hence the countries can become competitive global participants International trading has become very important for every country of the world - be it big or small, developing nation or developed nation. The concept of globalization started way back 1980, developed due advancement of technology in areas transport and communication. Another encouraging

aspect is that the poor and developing nations are trying hard to beat the competition and to satisfy the needs of the customers overseas.

2. Advantages of international trade with a countrys economy.

Greater variety of goods available for consumption international trade brings in different varieties of a particular product from different destinations. This gives consumers a wider array of choices which will not only improve their quality of life but as a whole it will help the country grow. Every time we walk into a store, restaurant, theater or any other place of business to buy something, we trade whether the goods we are acquiring were produced across the street or across the globe. The key to understanding trade is to remember why it takes place. The reason people trade, regardless of where they live, is because they believe they will be better off by trading. When we consider the alternative each of us producing everything for ourselves trade simply makes more sense. Trade is beneficial because it allows people to specialize, or concentrate their work in the type of production that they do best. When people specialize by becoming a carpenter, a farmer, a doctor, a teacher or any of the thousands of other professions in our economy, they produce a good or service and trade for everything else that they need. In the same way, countries specialize in the production of goods that they can make most efficiently and trade with other countries for different goods and services. Even when one country has an absolute advantage in producing almost everything, there is still the potential for beneficial trade. Thats because different producers have different opportunity costs. Using resources to produce a particular good or service means that those resources cannot be used to produce something else. When a factory is used to make cars, the machines are not being used to make tractors. Those tractors that were not produced are the opportunity cost of the cars that were manufactured. Efficient allocation and better utilization of resources since countries tend to produce goods in which they have a comparative advantage. When countries produce through comparative advantage, wasteful duplication of resources is prevented. It helps save the environment from harmful gases being leaked into the atmosphere and also provides countries with a better marketing power. Promotes efficiency in production as countries will try to adopt better methods of production to keep costs down in order to remain competitive. Countries that can produce a product at the lowest possible cost will be able

to gain a larger share in the market. Therefore an incentive to produce efficiently arises. This will help standards of the product to increase and consumers will have a good quality product to consume. More employment could be generated as the market for the countries goods widens through trade. International trade helps generate more employment through the establishment of newer industries to cater to the demands of various countries. This will help countries bring down their unemployment rates.

3.Disadvantages of international trade.

International trade is the exchange of goods and services among countries. It brings rise to a countrys economy, in which prices, supply, demand and living standard. International trade gives countries the opportunities to be exposed to products or services that are not available in their own countries. Local customers can buy a lot of products that have quality and cheap. However, international trade brings a lot of obstacles.

Local production may suffer: in the international trade, product factor is important to every country. when a country export product other country. It make competition strongly between two country. Of course, the domestic products must compete with foreign products. The number of imported goods coming into the country causing more and more goods in the market both from the number, type, and shape. The result will encourage someone to more consumptive, because the more choices of goods that can be consumed. Therefore, local production may suffer. Local industries may be overshadowed by their international competitors. Loss to human resources: When the company locate distributions in other country, especially poor country, they will attract a lots of the talents by high salary, working condition, treatment, bonus, etc.. If local country dont take solutions or reasonable policies, they will loss a lots of talented persons . International trade also make that country lightly fade national cultural character because of expanse of foreign culture into traditional culture. Rich countries may influence political matters in other countries and gain control over weaker nations. International trade does not reduce the standard of living, it increases it, for all countries involved

 The existence of dependence with importing countries To meet the needs of goods not produced in the country, the government will import from other countries. These activities can result in import dependence by importing countries Lethal small businesses International trade, industry competition can lead to other countries. Industry is not able to compete would be a loss, so it will turn off its production efforts. In the long run, this can lead to unemployment

4. Solutions for a country to gain success in international trade.

We recommend some tips for countries to overcome the obstacles in international trade and to be successful in the global business : Local company need to improve the quality and design of their products, develop new product lines in order to compete against import products and maintain their market, their business. Moreover, provide more extra services for the product such as bonus, special discount....It will help companies attract new customers and keep regular customers, avoid losing them to foreign businesses. Encourage local companies to develop international business strategies and use marketing skills effectively. In developing country, government should change the taxes, apply commercial laws to protect countrys economy. Its an important factor to improve domestic market and expend foreign market. Company should have reasonable treatment to keep the talents, avoid brain drain situation. Government should encourage companies develop the labour, improve quality of employees, their skills and ability because theyre important factors that make good products, increase companys profit and compete with the others . On the other hand , government can do some policies to protect the domestic industries :
Non-tariff Barrier:

Usually this type of barrier is imposed by a country on imports so that the quantity of imported items is restricted. Due to this, the availability of the imported item or items is restricted in the domestic market and the price too is very high.
Tariff Barrier:

This is barrier is in the form of duties, taxes, quotas etc. Because of this barrier, imports decrease and price of imported products increase which results in the fall in the demand giving boost to domestic products. Policies imposed on international trade, aims to protect domestic industries. Policies to protect the goods from the domestic competition of imported goods is called protectionism. Protectionism in international trade policy consists of tariffs, quotas, import restrictions, subsidies, and dumping. a. Tariff Tariffs are trade barriers in the form of determining the tax on imported goods. If an imported goods subject to tariffs, then the selling price of these goods in the country to be expensive. This causes people reluctant to buy these goods, so that goods produced in the country more enjoyed by the community. b. Quota Quota is a form of trade barriers that determine the maximum amount of a type of goods can be imported in a given period. Just as tariffs, quotas lead to imposition of the influence of the prices of imported goods are high because a limited number of goods. This can occur because of the restrictions on the amount of imported goods, causing the average cost for each item increases. Thus, the imposition of quotas to protect the goods from the competition of domestic goods abroad. c. Import Prohibition Import ban is government policy that prohibits the entry of certain goods into the country. Import ban policy is to avoid things that can harm society. For example banning imports of beef containing anthrax disease. d. Subsidy Subsidy is a government policy to provide assistance to domestic products. Government subsidies can be a tax break, providing facilities, provision of cheap bank credit or the giving gifts or incentives from the government. The existence of subsidies, the price of domestic goods become cheaper, so that goods produced in the country can compete with imported goods. e. Dumping Dumping is the policy conducted by a country with a way to sell goods abroad cheaper than sold in the country.

Voluntary Constraint:

This is a type of international trade barrier where in a country voluntarily restricts or stops imports from coming in. This is usually used to limit the competition that domestic industries will face with the coming in of imported goods. Whenever a country starts international trade with another country, these three barriers to international trade are always taken into account. It has been seen that lower developed countries and developing countries tend to favor these three barriers to international trade as the countries can earn foreign exchange by introducing tariff and non-tariff barrier, the local industries are protected from competition by foreign companies and industries and as less imported goods are available in the country, consumers tend to buy local products giving the local industries a boost.

5.International trade in Vietnam.

Like any developing country Vietnam can benefit from international economic integration if sound integration policies, together with a wide range of macroeconomic reforms such as state-owned enterprise reform, creation of an environment of equal competition for all forms of Vietnamese enterprises, etc are implemented in a sound manner. The costs and benefits will largely depend on the efficiency of the economy and the competitiveness of the Vietnamese products. Increasing the competitiveness and efficiency of the economy mainly through creating a favourable incentives environment for export processing industries is obviously the first current priority of the Governments policy now. Investment plans at all levels of the State as well as in state-owned enterprises are meant to be reoriented towards the export objective. Efforts to increase competitiveness of Vietnamese products shall be to focus both on economic efficiency and on product quality.

The Export-Import Tariff System.

Vietnams law on export-import tariffs was first launched on 1 January 1988. After several adjustments,the current export and import tariff law has been effective since 1 January 1999. It consists of ninety seven chapters and 6,247 items under eightdigit HS. The current tariff schedule has nineteen different tariff rates of which thirteen are fundamental tariff rates and six are special ones. They range from zero to 100 percent. The maximum tariff rates are imposed on such goods as alcohol, petroleum products, automobiles, motorbikes, cosmetics, glass and glass products. Vietnam utilises an accelerated taxing method by which low or minimum tariff rates are applied mainly to material inputs for production such as machinery, equipment,

materials. Thus, real effective rates of protection for final goods are often much higher than nominal ones. In short, Vietnams tariff schedule reflects a trend to protect mainly agricultural products, consumer goods and foodstuff and also give low protection to materials, machinery and equipment, especially those are presently not manufactured in Vietnam. Vietnams low import tariff rates also give an indication of considerable intervention by non-tariff barriers. Vietnams trade tax regime also contains provisions for exemptions whereby specific enterprises or users pay no duty or a lower rate of duty in specific areas or activities. These exemptions apply to items covered by incentives offered under the Law on Foreign Investment and the Law on Domestic Investment and specialised goods serving security, defense, scientific research, education and training, gifts and goods supplied under foreign aid. Entities which enjoy importexport tax exemptions include foreign investment enterprises, joint venture partners involved in business cooperation contracts and projects involving oil production distribution contracts. Such entities would all operate under the Law on Foreign Investment .Goods exempted under these provisions include equipment, machine components, spare parts, transport equipment and materials.