Characteristics and impacts of FTA in international trade (1)

C H A R A C T E R I S T I C S A N D I M P A C T S O F F T A I N I N T E R N A T I O N A L T R A D E GROUP 8 HOÀNG KHÁNH LINH 19071402 PHẠM NGUYỆT NHI 19071455 TRẦN THU HUYỀN 1907184 HOÀNG VĂN PHONG 19071467 Table of Contents I Introduction II Characteristics of FTA in international trade III Impacts of FTA IV Main advantages and disadvantages of FTA V Vietnams Free Trade Agreements VI Case study VII Conclusion Free Trade Agreement (FTA) is understood as economic cooperation agreements signed be.

CHARACTERISTICS AND

INTERNATIONAL TRADE

GROUP 8

HOÀNG KHÁNH LINH - 19071402 PHẠM NGUYỆT NHI -19071455 TRẦN THU HUYỀN - 1907184

HOÀNG VĂN PHONG - 19071467

Table of Contents

I Introduction

II Characteristics of FTA in international trade III Impacts of FTA

IV Main advantages and disadvantages of FTA

V Vietnam's Free Trade Agreements

VI Case study VII Conclusion

Free Trade Agreement (FTA) is understood as economic cooperation agreements signed between two or more

members in order to remove barriers in import and

export and promote trade between member countries

I INTRODUCTION

Remove the majority of tariff barriers.

The reduction in trade barriers and changing trade patterns caused by liberalization may adversely

affect the terms-of-trade of a country.

Limited to trade and investment Contents are not direct trade but

East Asia FTAs provide incomplete coverage of sectors and are likely to lead

to inefficient resource allocation Regional trade agreements of East Asian countries are

free trade agreements , and not a customs union

COMMITMENT TO FLEXIBILITY

The roadmap for tax reduction has been accelerated Normally, the roadmap to eliminate tariff barriers

is applied within

years 5-10 5-10

FTAs allow an importing party

to suspend preferential tariff treatment if origin fraud is detected or the exporting country fails to cooperate in systematic origin verification.

FTAs apply a legal mechanism in

resolving arising disputes.

FTAs apply the dispute

settlement regulations as the

State sues the State or investors

sue the State.

APPLICATION OF A LEGAL

MECHANISM

Long-term

FTAs may lead to replacement of some domestic

production by Imports from more efficient

suppliers of FTA partner countries.

Formation of the FTA has made it cheaper to

import rather than produce domestically.

Trade diversion is said to reduce economic welfare

because resources are being diverted from an

efficient producer to a less efficient producer.

Short-term impact

FTAs may lead to increased efficiency of domestic

production on account of increased com-petition from FTA partners.

Economies of scale, as producers now can serve domestic and FTA part-ner country market at preferential duty.

Possibility of Increased foreign investment from outside the FTA partner countries.

Long-term impact:

Main advantages and disadvantages of an

FTA

that NAFTA could

increase U.S economic

many original NAFTA

rules and processes but

also kept others intact.

Lower Government

Spending:

Many governments subsidize local industries After the trade agreement removes subsidies, those funds can be put

to better use.

Technology Transfer:

Local companies also receive access to the latest technologies from their multinational partners As local economies grow, so do job opportunities.

Multinational companies provide job training to local employees

DISADVANTAGES "

Increased Job Outsourcing:

Theft of Intellectual Property:

Reducing tariffs on imports allows companies to

expand to other countries Many U.S manufacturingindustries did lay off workers as a result of NAFTA

Many developing countries don't have laws to protectpatents, inventions, and new processes The laws they

do have aren't always strictly enforced As a result,

corporations often have their ideas stolen They mustthen compete with lower-priced domestic knock-offs

DISADVANTAGES "

Poor Working Condition:

Degradation of Natural Resources

Multinational companies may outsource jobs to

emerging market countries without adequate laborprotections Women and children are often subjected

to grueling factory jobs in sub-standard conditions

Free trade leads to the depletion of timber, minerals,and other natural resources FTA threaten native

populations as well As development moves into

isolated areas, indigenous cultures can be destroyed.Local peoples are uprooted Many suffer disease anddeath when their resources are polluted

Vietnam's Free Trade

Agreements

The FTAs that Vietnam has joined include

Vietnam - Japan Economic Partnership Agreement (VJEPA): This is the first

bilateral FTA of Vietnam, signed on December 25, 2008 and took effect from October 1, 2009.

Vietnam - Chile Free Trade Agreement (VCFTA): was signed on 11/11/2011

and took effect from 01/01/2014 This is Vietnam's first FTA with an American country.

Vietnam - Korea Free Trade Agreement (VKFTA): was signed on May 5, 2015 and officially took effect on December 20, 2015 VKFTA does not replace

AKFTA, but both of these FTAs are in effect and businesses can choose which FTA is more beneficial.

The FTAs Vietnam

is negotiating

include

The Vietnam - EU FTA was launched in June 2012 in Brussels (Belgium), and has undergone 10 official sessions and many midterm sessions

The last 10

years

FTA Vietnam - Customs Union of Russia

- Belarus - Kazakhstan, was launched in March 2013 After 8 official negotiation sessions and many midterm meetings

at the technical level, the two sides have agreed on the content of the Agreement with its comprehensive scope, high level of commitment and ensuring a balance of interests.

U.S - Taiwan Free Trade

Agreement: The Economic Case

INTERNATIONAL TRADE

CASE

CASE SUMMARY

A formal trade agreement The United States and Taiwan signed a Trade and InvestmentFramework in

Taiwan joined the World Trade Organization in which significantly aided the growth in bilateral trade

Taiwan is a vital security partner with U.S., which would benefit from deepening ties on both fronts

The next step in the economic relationship should be a formal trade agreement and the Biden Administration should make an FTA with Taiwan a top priority

A free trade agreement with Taiwan would increase trade for both countries, increase U.S exports to Taiwan, and provide market-based alternatives to China.

1994

2002

Impact of FTA decisions on behalf of international trade

The removal of quantifiable barriers

would have a negligible impact on U.S.

production and GDP, but would have a

small impact on Taiwan production and

GDP.

An FTA between the United States and Taiwan would have positive economic effects for both countries The increase in trade for both countries has a mutual positive impact on economic growth.

It is is an opportunity for purely positive

engagement in the Asia-Pacific and

reinforce Taiwan Administration’s

messaging with concrete policy that

would benefit America economically and

strategically.

To build on the growth in the existing trade relationship, securing a formal FTA should be a top priority.

The development of FTA is associated with the development of world trade The information presented above clearly shows the importance of FTAs in promoting free trade, economic

cooperation and investment The dramatic increase in the number

of FTA signatories is a clear demonstration of is superiority.

Countries should update and capture information to understand the opportunities and challenges when participating in this

agreement.

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