CHAPTER 8

INTERNATIONAL
TRADE
 The purchase, sale, exchange of goods and services with
foreign countries or across national borders.

Import: goods or services bought from international

markets or other countries.

THE Export: goods or services sold to international markets or

other countries
ECONOMIC Trade balance = Exports - Imports
BASIS FOR
TRADE Trade Deficit = Import > Export

Trade Surplus = Export > Import

 NEED OF TRADE

Distribution of natural, human Efficient production of various

Products are differentiated as to
and capital resources are goods requires different
quality and other attributes.
uneven. technologies.

Capital-Intensive Goods Land-Intensive Goods

Labor-Intensive Goods
Ex- Export of Samsung Product Ex- Export of Dalat Wine &
Ex- Export of Nike from VN
from VN Rice from VN
Import of solar panel from Italy
Import of Copper, Iron, Import of food items from other
for cars by VN
Lithanides from China by VN countries by VN
  Traditionally, trade was regulated through bilateral treaties between two nations. After
World War II, as free trade emerged as the dominant doctrine, multilateral treaties like the
GATT and World Trade Organization (WTO) became the principal regime for
regulating global trade.
 The WTO, created in 1995 as the successor to the General Agreement on Tariffs and
Trade (GATT), is an international organization charged with overseeing and adjudicating

MAJOR PALYERS
international trade.
 Regional arrangements such as Mercosur (1991) in South America; the North American
Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico

IN from 1994; ASEAN in Southeast Asia; and the European Union (EU) between 27
independent states constitute a second dimension of the international trade regulatory
framework.

INTERNATIONAL  Mercosur is a regional trade agreement among Argentina, Brazil, Paraguay, and
Uruguay, founded in 1991

TRADE  NAFTA has two supplements: the North American Agreement on Environmental
Cooperation (NAAEC) and the North American Agreement on Labor Cooperation
(NAALC).
 The Association of Southeast Asian Nations, commonly abbreviated ASEAN, is a
geopolitical and economic organization of 10 countries located in Southeast Asia,
which was formed on August 8, 1967, by Indonesia, Malaysia, the Philippines, Singapore,
and Thailand. Since then, membership has expanded to include Brunei, Burma
(Myanmar), Cambodia, Laos, and Vietnam. Its aims include the acceleration of
economic growth, social progress, cultural development among its members, and the
protection of the peace and stability of the region.
 Absolute advantage: If country can produce more of a product than the other
producer using the same number of resources.

Ex- Saudi Arabia- oil exploration and drilling

Comparative advantage: If country can produce the product at a lower

Basis of opportunity cost. Countries should import goods if the opportunity cost of
importing is lower than the cost of producing them locally.

International Ex- Import of Solar panel for battery cars by Vietnam

Trade
Specialize Advantage: Countries produce a surplus of the product in which they
specialize and trade it for a different surplus good of another country.

Ex- Rice Export by Vietnam

TRADE
PROTECTIONISM • Trade Protectionism - refers to government actions and
policies that restrict or restrain international trade to
protect local businesses and jobs from foreign
competition.
• It is a type of policy that limits unfair competition from
foreign industries.
• Objective: To make local businesses or industries more
competitive by increasing the price or restricting the
quantity of imports entering the country.
• Ex- VN protects its cotton trade.
 Supply and Demand Analysis of Exports and
Imports
World Price Domestic Price

• The interaction of world supply • Domestic supply and demand determine

and demand determines the the equilibrium domestic price.

equilibrium world price. • It is the price that would prevail in a

closed economy that does not engage in
• It is the price that equates the international trade.
quantities supplied and • It equates quantity supplied and
demanded globally. quantity demanded domestically.
TRADE
EQUILIBRIUM

1. Price of market balance: Where aggregate

demand = Aggregate supply

2. Supply Surplus: When Supply is more than

demand and country will go for export

3. Demand Surplus: When Demand is more than

Supply and country will go for import
USA ALUMINUM
INTERNATIONAL
MARKET TRADE
 Tariffs – are excise taxes or “duties” on the dollar values or physical quantities of
imported goods.

They may be imposed to obtain revenue or to protect domestic firms.

Revenue tariff – is usually applied to a product that is not being produced

domestically.

Protective tariff – is implemented to shield domestic producers from foreign

Trade Barriers competition.

and Export
Nontariff barrier (NTB) – includes onerous licensing

Subsidies Import quota – is a limit on the quantities or total values of specific items that
are imported in some period.

requirements, unreasonable standards pertaining to product quality, or simply

bureaucratic hurdles and delays in customs procedures.

Voluntary export restriction (VER) – is a trade barrier by which foreign firms

voluntarily limit the amount of their exports to a particular country.

Export Subsidy – consists of a government payment to a domestic producer of

export goods and is designed to aid that producer.

Dumping: a firm or industry sells products on the world market at prices below
the cost of production. Closely related to subsidies is dumping.
 For raising revenue

To reduce the overall level of imports by making them

more expensive
To counter dumping by raising the price of the dumped
Purpose of commodity

Trade Barriers To retaliate against restrictive measures imposed by

other countries
and Export To protect “infant” industry until it has “grown”

Subsidies
To protect vital industries such as agriculture

* Dumping - send (goods unsalable in the home market)

to a foreign market for sale at a low price.
AUTO TARIFF AND EXPORT OF JAPANESE CARS
TO AUSTRALIA
Quality &
Preference
matters
 International trade contributes and increases the world _________
• Population
• Inflation
• Economy
• Trade Barriers

Free international trade maximizes world output through________.

• Countries reducing various taxes imposed.
• Countries specializing in production of goods they are best suited for.
• Perfect competition between countries and other special regions
• The diluting the international business laws & conditions between countries

QUESTIONS Domestic company limits it’s operations to ___________ political boundaries.

• International
• National
• Transnational
• Global

Trade between two or more than two countries is known as ________.

• Internal Business
• External Trade
• International Trade
• Unilateral Trade
 5. _____refers to the tax imposed on imports.
• Imported Tax
• Tariffs
• Subsidies
• Import Quotas

6. _____ means selling the products at a price less than on going price in the
market.
• Quota
• Tariff
• Subsidy
• Dumping

QUESTIONS 7. A voluntary export restraint is the opposite form of _____.

• Import quotas
• International tariffs
• Subsidies
• Dumping

8. ___ is a group of countries agree to abolish all trade restrictions and barriers.
• Common market
• Economic Union
• Custom Union
• Free Trade Area
 9. EU stands for _____
• Export Union
• European Union
• EXIM Union
• Export Unit

10. The full form of WTO is __________

• World Tariff Organization
• World Trade Organization
• Western Trade Organization
• World Transport Organization

QUESTIONS 11. ________was replaced by WTO on January 1, 1995.

• NAFTA
• IMF
• IRDB
• GATT

12. In International Trade, Full form of NAFTA is ___________.

• National American Free Trade Agreement
• North Asian Free Trade Agreement
• New Anti-Tariff Free Trade Agreement
• North American Free Trade Agreement
 13. AFTA is ___________.
• ASEAN Free Trade Area
• American Free Trade Area
• Asian Free Trade Area
• Agreement for Free Trade Area

14. ASEAN stands for ___________.

• The Association of Southeast American Nations
• The Association of Southeast Asian Nations
• The Agreement of Southeast American Nations
• The Agreement of Southeast Asian Nations

QUESTIONS 15. __________was established by a multilateral treaty of 23 countries in 1947.

• WTO
• UN
• GATT
• NAFTA

16. In International Trade, IMF stands for ___________.

• International Monetary Fund
• International Money Fund
• International Market Fund
• International Monetary Firm
 17. An import tariff is a tax or duty levied on ___________ commodities.
• Imported
• Exported
• Transported
• Both A & B

18. An _____________ is a tax or duty levied on exported commodities.

• Import Tariff
• Export Tariff
• Transport Tariff
• Free Trade Tariff (FTT)

QUESTIONS 19. __________refers to purchase of goods from a foreign country.

• Foreign Trade
• Export Trade
• Import Trade
• EXIM Trade 

20. In most countries, foreign trade represents a significant share of ______

• EXIM
• FDI
• Income Per Capita
• GDP
VIETNAM BoT
& HOW TARIFF
ACTS
• Vietnam Balance of Trade | 2021 Data | 2022 Forecast | 19
90-2020 Historical | Calendar (tradingeconomics.com)

• Giá xe VN siêu đắt vì những khoản T

huế này | Cách tính thuế ô tô chuẩn n
hất - YouTube