BỘ GIÁO DỤC VÀ ĐÀO TẠO

ĐẠI HỌC KINH TẾ TÀI CHÍNH THÀNH PHỐ HỒ CHÍ MINH

Khoa Kinh Tế
~~~~~~~*~~~~~~~

CASE STUDY:

INTERNATIONAL ECONOMICS
Tên giảng viên : Nguyễn Anh Duy
Mã môn : ECO1103E
Năm học : 2020-2021 Học kỳ: 2A
Nhóm 5 – Tên thành viên :
- Nguyễn Minh Thư : 195081720
- Trần Thị Kim Trang : 195080945
- Trần Khả Vy : 195080704
- Trần Hoài Phát : 195081739
- Nguyễn Phạm Minh Anh : 195082463
- Nguyễn Bích Trâm : 195080788

TP. Hồ Chí Minh, ngày 12 tháng 4 năm 2021

Mục lục:
1. What is the economic integration? Present the benefits and challenges of Vietnam’s economic
integration during the past 20 years. Why Vietnam actively participates in many FTAs? What are the
benefits and costs of these FTAs?..........................................................................................................1
2. Explain the Rise of Non-tariff measures in recent years? What are the main motives of these
tools. Give some examples...................................................................................................................15
3. What are the main arguments of the authors ? Do you agree with them? What are the impact
on developing countries if the Great Decoupling process happens ? Give some examples.................18

Mục lục hình:

Figure 1. Devolopment of foreign trade in VietNam in percent of GDP................................................2
Figure 2. Current account balance of VietNam in percent of GDP.........................................................3
Figure 3. Gross foreign debt in VietNam in percent of GDP..................................................................3
Figure 4. FDI net inflows in VietNam in percent of GDP......................................................................4
Figure 5. VietNam's export structure......................................................................................................5
Figure 6. VietNam's import structure.....................................................................................................5
Figure 7. Structure of FDI inflows to VietNam, stock of FDI in 2015...................................................7
Figure 8. VietNam's import and export turnover, Balance of Trade in period of 2012 to 2019............12
Figure 9. Import-export turnover of Vietnam and CPTPP member countries in 2019-2020.................13
Figure 10. The situation of attracting FDI into VietNam......................................................................14
Figure 11. Average applied tariff and annual new notifications...........................................................16
Figure 12. SPS notifications, 1995-2010 (number of notified measures and notifying countries per
year).....................................................................................................................................................17
Figure 13. TBT notifications, 1995-2010 (number of notified measures and notifying countries per
year).....................................................................................................................................................17
1. What is the economic integration? Present the benefits and challenges of
Vietnam’s economic integration during the past 20 years. Why Vietnam
actively participates in many FTAs? What are the benefits and costs of these
FTAs?
a. What is the economic integration?
Economic integration is the unification of economic policies between different
countries, through the elimination of part or all of tariff and non-tariff restrictions on
trade and coordination of financial and monetary books.
Economic integration is sometimes referred to as regional integration because it often
happens between neighboring countries.
Economic integration aims to reduce costs for both consumers and manufacturers, and
promote trade transactions between countries participating in the agreement.
Vietnam has grown from a completely closed economy to an open economy in the
world.
b. Present the benefits and challenges of Vietnam’s economic integration during
the past 20 years
In mid-1980s at the start of renovation, Vietnam was a backward agricultural
country under a socialist economic system based on the centrally directed
allocation of resources through administrative means. At that time, most of the
workforce was involved in agricultural production but the country faced food
shortages and had to import rice. Industry was weak facing poor productivity.
Vietnam’s approach to economic reform has been characterized by two main
features:
 Firstly, it followed a top-down and step-by-step approach. Pilot projects on
an experimental basis in some localities were carried out before they are
applied to the whole country.
 Secondly, there was the consensus among the Vietnamese leadership not to
combine market-oriented reforms with political liberalization. Also, while
introducing market-oriented reforms the important role of state-owned
enterprise were maintained.
Since the beginning of the process of renovation, economic growth in Vietnam
has been remarkable. Between 1991-2009 Vietnam’s real GDP grew with the
average growth rate of 7.4 %.
 In 1990 Vietnam’s GDP per capita of 98 US dollars placed it among the
poorest countries in the world. In 2009 a GDP per capital of 1109 US dollars
led to Vietnam’s attainment of the lower middle-income status by the World
Bank classification methodology.
 In the year 2014 GDP per capita reached 2052 US dollars. Economic
reforms included an increasing integration of Vietnam in the global
economy. This integration process is still underway with trade commitments

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 under ASEAN, accession to the World Trade Organisation (WTO) in 2007
and signing the Trans-Pacific Partnership Agreement (TPP) in 2015

VIETNAM’S INTEGRATION IN THE WORLD ECONOMY

 Overview about the integration of Vietnam in the world economy
Vietnam integrated very quickly in the world economy. From very low levels of
imports and exports as percent of GDP trade increased sharply whereas
imports where usually higher than exports. In 2015 the sum of exports and
imports in per cent of GDP reached around 200%. This is extremely high
compared for example with Germany with a value in the same year of around
70%, USA around 23% or China 42%. This percentage is in international
comparison especially for a country with a population of over 90 million
inhabitants as Vietnam very high and makes Vietnam more dependent on
world market developments than other countries.

Figure 1. Devolopment of foreign trade in VietNam in percent of GDP

In most of the years the current account balance in Vietnam showed negative
values, however the last year was more or less balanced. In some of the years
the current account deficit was very high with values of more than 5% or even
10% of GDP. Of course, net capital inflows allow the import of capital goods
which can increase productivity. However, such needed imports of machines
etc. are also compatible with a balanced current account or even a surplus (see
for example some to the successful Asian miracle countries in their development
phase). Current account deficits have several negative repercussions.They can
lead to a lack of domestic demand. They also lead to foreign debt which in the
case of Vietnam is debt in foreign currency. Foreign debt implies a dangerous
currency mismatch and the possibility of currency crises

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 Figure 2. Current account balance of VietNam in percent of GDP
Figure 3 shows the development of gross foreign debt of Vietnam in US-dollar.
Foreign debt after 2005 sharply increased, however deceased after 2012
somewhat. With an actual foreign debt level of 45.2% of GDP in early 2016
(IMF 2016) Vietnamese foreign debt is high. In case of a strong depreciation of
the dong the foreign debt can become a high burden. Most of the debt is public
debt. Public debt to GDP in 2015 was 58.3% with an increasing trend; end of
2014 public debt in foreign currency was 39.9% of GDP. While official loans to
Vietnam are shrinking, Vietnam might gradually seek ways to get more risky
commercial loans with floating interest rates. Therefore, the risk of changing
interest rates and exchange rates might substantially increase. Vietnam should
avoid such a dangerous development of foreign debt which exposes the country
to the danger of currency crises and makes it economically and politically
dependent on foreign creditors and donors.

Figure 3. Gross foreign debt in VietNam in percent of GDP

FDI net inflows in Vietnam in per cent of GDPSince the Foreign Investment
Law took effect in 1987, Vietnam has achieved substantial FDI inflows.
Measured in per cent of GDP, Vietnam reached its peak of attracting FDI in
1996. In 2008, thanks to joining WTO, Vietnam has again successfully attracted
large volumes of FDI projects. After 2008 due to the negative impact of the
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global financial crisis and Vietnam’s unstable macroeconomic development FDI
inflows remained relatively low, but still reached levels of 5% of GDP or more

Figure 4. FDI net inflows in VietNam in percent of GDP

 Structure of exports and imports in VietNam

Figure 5 and 6 show the export and import structure of Vietnam and its
development. Vietnam’s main export items at present come from raw products,
including mineral resources and agriculture, forestry and fishery products. In
2014 this group of products accounted for approximately 50% of exports.
Processed products like footwear, textiles or gaiters accounted for about 30% of
total exports. The industrial sector’s share of Vietnamese trade has been
continually increasing during the last ten years whereas the period has seen a
significant decline in the relative importance of agriculture exports. In general,
the main export merchandise of Vietnam comprises of raw materials or pre-
processed outsourced manufacturing based on labour-intensive and low value-
added productions. Vietnam mostly imports machinery, intermediate products
for manufacturing consumer goods and other products that are not yet made
domestically like cars, motorbikes and refrigerators. Crude oil accounts for
approximately 20% of total exports. But also the mining sector is important for
exports and characteristic for the export structure According to a report by the
Government to the National Assembly Standing Committee (8/2012 session)
the number of enterprises in mining has increased rapidly, from 427
enterprises in 2000 to nearly 2000 enterprises in 2014. Among these small and
medium scale enterprises make up 60%

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 Figure 5. VietNam's export structure

Figure 6. VietNam's import structure

Vietnam’s growth model is heavily reliant on trade in natural resources on the
basis of three reasons:The government focus on natural resource exploitation as
one of the main development strategies, as a result of this strategy huge capital
investment and investment in advanced technology takes place in the
exploitation and post-processing of natural resources, with only limited success,
at the same time, as mentioned, there are many private companies exporting
natural resources on a low technological level. As a result of this development
depletion and exhaustion of resources are accelerated, environmental
degradation is expedited and environmental costs became higher. The proportion
of exported services in relation to total exports went down from 11.6% in 2005
to 7.6% in 2012 and to 7.6% in 2014. More importantly, Vietnam’s service trade
balance has been constantly negative. Only tourism achieved surpluses, while
other crucial services such as transportation, telecommunication, finance,
insurances etc. all suffered from deficits (Online Newspaper of the Vietnamese
Government, 13.01.2013).

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Looking at the structure of international trade and services in Vietnam the
Smith- Ricardo model is largely confirmed. A large proportion of Vietnam’s
exports originate from absolute advantages. This is the case for natural resource
exports like crude oil and minerals; and it also the case for most of the
agricultural exports whose competitiveness largely depends on the climate in
Vietnam. In the industrial sector Vietnam exports low-tech-labour-intensive
products. If imports of intermediate goods for inputs in global value chains are
neglected imports are mainly final consumptions goods and investment goods.
This is exactly what the Smith-Ricardo model predicts. Unfortunately this
means also that all the fears in the tradition of Friedrich List are of key
importance for Vietnam. Vietnam finds itself in a structure of international trade
which without comprehensive government interventions reproduces
underdevelopment and prevents catching-up.
The high percentage of natural resource exports leads to an overvaluation of the
exchange rate – at least if the industrial sector is taken as a reference. Taking
this Dutch-Disease effect it becomes clear that the industrial sector in Vietnam
has been suffering from an exchange rate which is destroying its
competitiveness. Vietnam also suffers from the volatility of natural resource
prices. At the same time the high percentage of exports of unprocessed
agricultural products involves the risk stressed by the Prebisch-Singer
hypothesis that these products have to be sold for a very low price and lead to
bad term of trade for Vietnam.
For international trade FDI inflows are of most importance for Vietnam. Figure
9 shows the structure of the stock of FDI in Vietnam in 2015. FDI projects
mainly focused on the industrial sector contributing significantly to the process
of economic restructuring towards industrialization. A study conducted by
Central Institute for Economic Management (CIEM) in 2006 showed while FDI
in the 1990s mainly focused on the mining industries and import substitution,
since 2000 FDI in the processing industries and export-oriented fields has been
increasing significantly contributing to a surge in total export but also imports of
Vietnam in recent years. With around 30% the stock of FDI in the real estate
sector is relatively high in Vietnam. FDI in this area added to the real estate
bubble in Vietnam was not very helpful in industrial upgrading.

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Figure 7. Structure of FDI inflows to VietNam, stock of FDI in 2015

  Global value chains in industrial productions
Vietnam is integrated in global value chains and exports and imports large
volumes of intermediate goods. From the volume of trade especially the
textile/garment industry, shoemaking/leather industries and the electronic
industry are important to understand the integration of Vietnam in global value
chains:
 Textile and garment industry:
 For growth of Vietnam the textile and clothing industry plays a major
role. Ready-made garments (RMG) contribute substantially to the
proceeds of the export-based Vietnamese economy (Sarah 2011).
Currently, Vietnam ranks fourth in the league table of the biggest
clothing exporters
 In 2015 textile and apparel account for 13.6% of Vietnam’s total export
values; accordingly the sector ranks second in manufacturing after
electronic products in terms of net proceeds (Schweisshelm 2016).The
share of Vietnam in the global apparel export market was 3.7% in 2013
(Kak 2015). The textile association VITAS forecasts a total export
volume which growth much faster than in China and India. In 2015 in
export value of approximately 24 billion US dollars was achieved.
However, approximately 12 billion US dollars must be detracted for the
import of intermediate products, such that the value added in the industry
would be approximately USD 12 billion in 2015. A further growth is not
unrealistic given the drop in oil prices and the drop in costs for fibre
materials. According to VITAS, in 2015 52.8% of apparel exports go to
the US (Bangladesh 24.1%), while 17 % is exported to EU countries
(Bangladesh 59.7%) followed by Japan and Korea (VISTA 2015).
 In sum, Vietnam in the textile and garment industry is in the exploitation
curve located at the lowest level with the lowest value added. Remaining on
this level does not open a development perspective.
 Shoemaking and leather industries:
 The shoemaking industry also plays an important role in the Vietnamese
export economy. Vietnam is the world's third largest exporter of shoes and
handbags after China and Italy. In 2013, the most important markets were
the US (Vietnam is the second most important supplier for the US behind
China)
 In 2015, 77% of the export value in the shoemaking industry is generated
in FDI companies (Vietnam News 28.02.2015). One contributing factor to
the growth of the sector is the increasing number of companies relocating
production from China and Bangladesh to Vietnam
 But also in this sector, the dependence on imported pre-fabrics, mainly
from China,South Korea and Taiwan, is high. Raw materials of leather
shoe’s production accounted for 80% of the value of shoes. Vietnam’s
enterprises only produce limited items for the shoe production such as
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 labels.... but completely ignore other accessories such as eyelets, hooks….
Most Vietnamese businesses in the footwear sector are small and medium
sized and lack capital, advanced technology, high-quality human
resources, initiative by other industries for improvement and good
management. Overall labor productivity in the sector is low.The
production of Vietnam's footwear industry is mainly export processing;
design capability are weak 70% of businesses dependentirely on foreign
resources, technical equipment, technology, design and marketing
 In substance, the logic of the exploitation curve also applies to the
shoemaking industry where Vietnam concentrates on low value adding, low tech
and labour intensive tasks in the global value chain.
 Electronics industry
 The electronic industry is the biggest export-earner for Vietnam. The
largest single-investor, Samsung, now produces more than half of its
smartphones globally in Vietnam
 According to the evaluation of the Electronic Industries Association of
Vietnam (VEIA), Vietnam appeared to be one of the largest manufacturing
hubs of mobile phones, photocopy machines, printer etc. in the world. The
export of electronics and components in 2013 has grown to over 34% of
Vietnam’s export basket (VEIA 2014). However, the added value still is
low and raw materials have been mainly imported.In 2014, Vietnam’s
electronicindustryexported over 32 billion US- dollars, but imported goods
of 28 billion dollars (VEIA 2014)
 A recentsurvey of the Central Institute for Economic Management (CIEM)
showed that enterprises with 100% foreign investment in the electronic
industry in the provinces of Hung Yen, Hai Duong, Ba Ria-Vung Tau, Binh
Duong and Dong Nai perform only the simplest stages in the production
chain, while the design and other sophisticated phases of the production are
determined by the parent company abroad. A study conducted by the
Fulbright School in Ho-Chi-Minh City draws the same conclusion. The
process of industrial upgrading, moving up the value chain and gaining a
strong foothold in global supply chains is slow. Value- added from the
manufacturing sector as a percentage of output declined steadily from 31
percent in 2000 to 21 percent in 2005 and to only 13 percent in 2013
 The three key industries looked at in Vietnam are highly integrated in
global value chains, however tasks taken over in Vietnam are mainly low value
adding, low tech and labour intensive productions. The local content is relatively
small and intermediate products are mainly imported. In the framework of the
exploitation curve Vietnam is located at the lowest level:
 In the textiles and garment industry and shoemaking and leather industries
subcontracting and small and medium-sized companies pay an important
role
 The technological and managerial level of most of the enterprises in this
sector is in internationalcomparison low. Economies of scale are not
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 exploited in a sufficient way. In the electronics industry FDI firms
dominate the production of low value tasks. Here, economies of scale are
exploited. However, the local content, the transfer of technology and spill-
over effects to Vietnamese firms and other industries are
disappointing.There are not many linkages between FDI firms and
domestic firms

 Effects of free trade agreements

The economic integration process of Vietnam started from 1995 with four most
significant milestones:
 First, Vietnam negotiated and signed a bilateral trade agreement with the
US in 2000. This was an important rehearsal for Vietnam’s broader
participation in free trade agreements and WTO membership. The US-
agreement allowed Vietnam to reach the largest export market in the world
without discrimination.
 Second, Vietnam joined the Association of Southeast Asian Nations
(ASEAN) and the ASEAN Free Trade Agreement (AFTA) in 1995
followed by a free trade agreement with other additional partners
(ASEAN+) since 1997.
 Third, Vietnam joined the WTO in January of 2007. Along with these
agreements in 2009 Vietnam signed a comprehensive Economic
Partnership Agreement (EPA) with Japan which is essentially a bilateral
trade agreement. Fourth, Vietnam concluded a number of trade
agreements (that have either been signed or will be concluded in 2015).
Among these are the Trans-Pacific Partnership Agreement (TPP) and the
EU-Vietnam Free Trade Agreement. Both could be considered as a high-
standard free trade agreement affecting many fields in the economy and
society.
c. Why does Vietnam actively participate in many FTAs? What are the benefits
and costs of these FTAs?
A free trade agreement (FTA) is a form of international integration in which member
countries agree to reduce or eliminate tariff and non-tariff barriers on most goods and
services. when dealing with each other in the direction of forming a unified market for
goods and services.
In the context of global economic integration, expanding trade liberalization, the
signing wave of Free Trade Agreements (FTAs) is taking place all over the world and
becoming a new trend of importance. In the international economic system, which
country cannot stand outside, fully aware of this, in recent years, Vietnam has been
very active in negotiating and signing bilateral and multilateral FTAs. As of January
2021, Vietnam officially joined and signed the implementation of 14 effective FTAs
(of which 7 FTAs signed as ASEAN members and 6 FTAs signed as an independent
party) and 01 FTA was officially signed will take effect in May 2021 and is currently
negotiating 2 FTAs. Among the 14 FTAs that have already taken effect and are being

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implemented, the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) is the first new generation FTA that Vietnam has joined,
followed by the Agreement. concentration. Commercial design. freedom from
Vietnam - European Union (EVFTA).
NO. FTA STATUS PARTIES
1 AFTA Effective since 1993 ASEAN
2 ACFTA Effective since 2003 ASEAN, China
3 AKFTA Effective since 2007 ASEAN,South Korea
4 AJCEP Effective since 2008 ASEAN,Japan
5 VJEPA Effective since 2009 Vietnam,Japan
6 AIFTA Effective since 2010 ASEAN, India
7 AANZFTA Effective since 2010 ASEAN,Australia, New
Zealand
8 VCFTA Effective since 2014 Vietnam,Chile
9 VKFTA Effective since 2015 Vietnam,South Korea
10 VN-EAEU FTA Effective since 2016 Vietnam,Russia,Belarus,
Amenia,Kazakhstan,Kyrg
yzstan
11 CPTPP Effective since 30/12/2018, Vietnam,Canada,Mexico,
came into effect in Vietnam Peru,Chile,New
since 14/01/2019 Zealand,Australia,Japan,
Singapore,Brunei,
Malaysia
12 AHKFTA Effective in Hong ASEAN,Hongkong
Kong,Laos,Myamar,Thailands,Si (China)
ngapore ang VietNam since
14/01/2019
13 EVFTA Effective since August 01,2020 Vietnam,EU
14 RCEP Effective since November ASEAN, China,
25,2020 Korea,Japan,Australia,
New Zealand
15 UKVFTA Effective since May 1,2021 Vietnam, The UK
16 Vietnam-EFTA Negotiations commenced in May Vietnam, EFTA
FTA 2012
17 Vietnam –Israel Negotiations commenced in Vietnam, Israel
FTA December 2015

Previously, in trade relations, about 60-70% of Vietnam did business with East Asia,
but the results were often at a loss, with great losses. Typically, in 2017, Vietnam's
trade balance with East Asia had a deficit of nearly 70 billion USD, of which the
ASEAN region alone accounted for 65 billion USD. The participation in negotiation
and signing of many new-generation free trade agreements helps Vietnam to re-
balance the trade balance and create impetus for reform.

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The participation in the FTAs has created more motivation and brought many positive
impacts to the Vietnamese economy, Minister Tuan Anh said: "The import and export
market is expanding and diversifying; the market for translation The financial
department is more developed with the participation of many foreign investors; the
institutional and policy system has been gradually improved to meet the requirements
of integration and implementation of commitments in FTAs, etc. Since 2007, the
implementation of FTAs has contributed to boosting Vietnam's GDP by more than
300%, and its import-export turnover by 350%. "
Participation in FTAs has helped increase Vietnam's exports of goods. Evidence is, in
1995, exports reached only 5.4 billion USD, in 2000 it was 14 billion USD. By 2007,
Vietnam exported over 48 billion USD and recently in 2017, this figure has reached
over 213 billion USD.
In 2019, in the context of slowing global trade and economic growth due to global
trade tensions and competition among major economies, Vietnam continues to
maintain import and export growth in at a high level, the total import-export turnover
in 2019 exceeded USD 500 billion; of which export turnover reached $ 263.45 billion,
up 8.1% over 2018; Import turnover in 2019 reached 253.51 billion USD, an increase
of 7% compared to 2018.

Figure 8. VietNam's import and export turnover, Balance of Trade in period of 2012 to 2019

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 Officially taking effect for Vietnam from January 14, 2019, the CPTPP Agreement has
initially brought about positive effects. According to the report of the Ministry of
Industry and Trade, in 2019, trade exchange turnover between Vietnam and 10 CPTPP
member countries reached more than 77 billion USD, up nearly 4% compared to 2018.
Export turnover of Vietnam to 10 countries is nearly 40 billion USD, an increase of
more than 7% compared to 2018. If in 2018, Vietnam had a trade deficit of 0.9 billion
USD from CPTPP countries, in 2019, Vietnam had a trade surplus with these
countries. 1.6 billion USD.

Figure 9. Import-export turnover of Vietnam and CPTPP member countries in 2019-2020

Particularly for the EVFTA Agreement, after nearly three months of entry into force
(from August 1, 2020), many Vietnamese exports to the EU have enjoyed preferential
treatment from this agreement. Some products have increased sharply in both turnover
and price. In addition, in the context of the COVID-19 epidemic which is seriously
affecting the world economy as well as Vietnam, the implementation of EVFTA also
plays an important role in helping to offset the economic slowdown.
In the first eight months of 2020, the complicated developments of the COVID-19
epidemic in the world, especially in Vietnam's leading trading partner countries, have
affected import and export turnover of many aspects. goods: the total value of goods
import and export of the country reached 337.23 billion USD, equivalent to the same
period last year. In which, export value was 175.36 billion USD, up by 2.3% and
import was 161.87 billion USD, down by 2.4%. This achievement is a testament to
the right leadership of the Party on international economic integration, including
the participation in FTAs and the timely direction of the Government in enhancing
implementation and exploitation. Effective free trade agreements have taken effect

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towards promoting international economic integration in the direction of effectiveness
and efficiency.
After Vietnam signed and joined a series of free trade agreements (FTAs), it became a
large open economy. After more than 30 years of opening, integrating and reforming
the business environment, Vietnam has become an attractive destination for foreign
investors. FDI inflows into Vietnam have increased sharply, registered capital and
implemented capital have improved over the same period of years. The data to attract
FDI investment in the first quarter of 2019 is a concrete proof. Accordingly, the total
registered capital in the first 3 months of 2019 reached 10.8 billion USD, up 86.2%
over the same period in the first quarter of 2018. Of which, 785 newly registered
projects totaled US $ 3.8 billion (up 80%); capital contribution, share purchase reached
nearly 5.7 billion USD (up over 200%); FDI disbursement reached 4.12 billion USD
(up 6.2%) over the same period in 2018.

Figure 10. The situation of attracting FDI into VietNam

In addition, FTAs also bring many other benefits, notably ensuring equal access.
Among the FTAs, especially the new generation one, pays great attention to equality.
This requires the State to create equality at home, between state enterprises and private
enterprises, ... thereby helping private enterprises to access more equal resources.
FTAs also help Vietnam to improve.
Besides, the FTA helps Vietnam to restructure and balance the import-export market,
avoid relying too heavily on certain markets, helping enterprises (enterprises) have a
medium-term advantage over competitors in the region. penetrating into some
important markets such as the US, EU, etc. In addition, the new FTAs are also an

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important driving force to help Vietnam improve the market economy institutions,
innovate the growth model.

 The benefits of FTAs:

The benefits of the free trade agreements will enable Vietnam’s economic
development to continue to shift away from exporting low-tech manufacturing
products and primary goods to more complex high-tech goods like electronics,
machinery, vehicles and medical devices.
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. Second,
through partnership with foreign firms that can transfer the knowledge and technology
needed to make the jump into higher valued-added production.
Once in effect, such trade agreements will allow Vietnam to take advantage of the
reduced tariffs, both within the ASEAN Economic Community (AEC) and with the
EU and US to attract exporting companies to produce in Vietnam and export to
partners outside ASEAN.
In conclusion, Free Trade Agreements are the key for Vietnam to connect the global
trade network. Since Vietnam accesses the global trade system, with FTAs, the
Vietnamese economy has acquired outstanding achievements. It has enhanced the
country’s position in global value chains through new business and investment
opportunities, facilitating stable and sustainable development. New-generation FTAs
bring a lot of benefits to member States, attracting investment capital, improving
administrative institutions and business environments.

 The cots of FTAs:

First, although competition with international enterprises enhances domestic
production capacity, it is a threat to small businesses with low production capacity and
low efficiency.
Second, the complexity and breadth of commitments in the "new generation" FTA will
make it difficult for Vietnamese businesses to access, as well as take full advantage of
the opportunities that the "world" agreements offer. New generation ”launched.
Third, in parallel with the commitment of member countries to reduce tariffs is
Vietnam's commitment to reduce import tariffs. Therefore, participating in "new
generation" FTAs will mean that the proportion of state budget revenue from import
taxes to the total state budget revenue will tend to decrease, affecting expenditures. ,
public consumption.

2. Explain the Rise of Non-tariff measures in recent years? What are the main
motives of these tools. Give some examples.
During the past two decades, applied tariffs in the Asia-Pacific region have halved. At
the same time, the number of non-tariff measures (NTMs), including sanitary and
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phytosanitary (SPS) measures and technical barriers to trade (TBTs), has risen
significantly (figure 1). Both in relative and absolute terms, the impact of NTMs vis-à-
vis tariffs as an impediment to trade has increased. While the higher tariffs imposed by
the United States and China during the past two years have made headline news, the
rising importance of NTMs as barriers to trade at the regional and global levels is
expected to continue.1 In fact, a key concern is that trade tensions evolve from existing
relatively transparent tariff wars to discriminatory implementation of NTMs, the
impact of which is much more difficult to assess and predict.
“NTMs are not inherently good or bad – they add to trade costs, but can be important
instruments in achieving SDGs, and can even promote trade.” NTMs are policy
measures other than ordinary customs tariffs that can potentially have an economic
effect on international trade in goods, changing quantities traded, or prices or both.”

Figure 11. Average applied tariff and annual new notifications

First, the number of notified regulatory barriers has been increasing since the mid-
1990s ( Figure 2a) Second, over the same period, the number of specific trade
concerns raised by WTO members in the Technical Barriers to Trade Committee has
also been trending upwards.1 Evidence from disputes, however, is inconclusive.
Looking at the cross section, there is clear evidence of the predominance of regulatory
measures over other non-tariff measures. This is reflected both in new data collected
from official sources by the UN Conference on Trade and Development and in the
evidence from business surveys conducted by the International Trade Centre.
According to this latter source, about half of the non-tariff measures considered to be
burdensome by firms in the 11 developing and least developed countries where
surveys have been conducted, are TBT/SPS measures. Business surveys also show
that, for exporters, more than 70% of burdensome non-tariff measures raise a
procedural obstacle. Evidence from business surveys also reveals that TBT/SPS are a
major concern for EU exporters, representing more than half (52%) of all problems
they report. The equivalent share for US exporters is much lower, at 22%, although the
two figures cannot be compared due to different methodologies.
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 Figure 12. SPS notifications, 1995-2010 (number of notified measures and notifying
countries per year)

Figure 13. TBT notifications, 1995-2010 (number of notified measures and notifying
countries per year)
The main motives of these tools:
Non-tariff measures, and in particular technical barriers to trade and sanitary and
phytosanitary measures, are often the first-best instruments to achieve public policy
objectives. They can be used to correct market failures arising from information
asymmetries or imperfect competition, and to pursue non-economic objectives, such as
the protection of public health. At the same time, however, non-tariff measures can
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also be used by political incumbents to protect domestic producers. A recent report by
the WTO discusses how the fragmentation of supply chains and growing attention by
consumers to quality and safety of food products have contributed to an increase in
both governmental and private measures related to food safety and quality (WTO
2012). It also illustrates the intertwining of public policy goals and domestic producer
interests in the context of climate change mitigation policies.
Some recent examples of non-tariff barriers:
• Until recently China ruled that all avocados coming from countries such as
Kenya had to be frozen to -30°C and peeled before shipping!
• Trucks of fruit coming from North Macedonia to Serbia are subject to customs
and sanitary checks, and long wait times at the border. Fresh fruit deteriorates the
longer trucks have to wait at the border!
• Within the African Continental Free Trade Area, businesses have to contend
with 55 separate national standards, 55 test certificates and 55 national inspection
procedures. This slows the speed at which trade takes place.

3. What are the main arguments of the authors ? Do you agree with them?
What are the impact on developing countries if the Great Decoupling process
happens ? Give some examples
The main arguments of the authors talk about the current economic divide that is
intensely occurring between the world's two largest economies, China and the United
States. Furthermore, they talked about the history of the 1930s separating the US and
Japan, thereby talking about future predictions.
From the perspective of experts in many fields to consider the possible consequences
of the pandemic on the future link between China and the US. With an already slowing
economy affected by this year's pandemic, China will likely do what it can to alleviate
economic tensions with the United States - like trying to appease Trump by adhering
to goal of phase one. Many problems that Washington will face is that China is the
second largest creditor of the US, holding more than 1 trillion USD of US debt.
Now that the Trump administration is using the coronavirus epidemic to further push
its economic decoupling agenda, the big question is what will happen to US-China
relations. The US supply chain is related to and dependent on China. Or it could be
shifting the supply chain to countries with more political ties to the United States to
reduce trade with China.
Overall, the current split is the result of two decades of steadily growing Chinese
economic might, which many, like Trump, see as the cause of the emptiness of
industries as important as Western production.
In my view, I completely agree with the points made by the authors. The Chinese
economy is growing stronger and able to compete with the United States. Taking
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advantage of the Corona epidemic, the United States could divide China. But it is very
difficult because the economy of the United States in particular and the world in
general have a very high mutual relationship (Beata Javorcik, chief economist of the
European Bank for Reconstruction and Development, said: “One China's province was
shut down and all of a sudden factories around the world were out of supply. "That
fosters the notion of how dependent we are on China and we have less redundancy.
how "has built up in the global supply chain.). America can separate from China if it
has the right policies and the right time. As a result, it could boost the US economy
and defeat China.
The impact on developing countries if the Great Decoupling process happens depends
on the individual company and its strategic goals, and must be rated according to
standards that the U.S. and Chinese governments may allow. These ties will be costly
and disruptive to transform, even in a gradual and phased manner.
For the more hawkish members of the Trump administration, undoing 40 years of
ever-closer economic relations with China and rolling back U.S. reliance on Chinese
factories, firms, and investment was always the end game of the endless trade war—
even before the coronavirus pandemic turbocharged Washington’s desire to
disentangle itself from what many view as a dangerous economic bear hug. Now,
lawmakers and administration officials are mulling a raft of measures to cleave parts
of the two largest economies in the world: Bans on a wide variety of sensitive exports,
additional tariffs on Chinese goods, forced reshoring of U.S. companies, even pulling
out of the World Trade Organization altogether, which is seen by some as facilitating
China’s so-called economic imperialism.
It’s not just economic ties between China and the United States that are in danger.
Europe, too, is increasingly talking of rolling back the deep trade and investment ties it
has developed with Beijing in recent decades (even as it is cutting trade ties with itself,
as the United Kingdom leaves the European Union). Other countries are also pulling
up the drawbridges—all leery that today’s unprecedented level of economic
integration has gone too far, bringing more pain and less gain.
The threat of a great decoupling is a potentially historic break, an interruption perhaps
only comparable to the sudden sundering of the first huge wave of globalization in
1914, when deeply intertwined economies such as Britain and Germany, and later the
United States, threw themselves into a barrage of self-destruction and economic
nationalism that didn’t stop for 30 years. This time, though, decoupling is driven not
by war but by peacetime populist urges, exacerbated by a global corona virus
pandemic that has shaken decades of faith in the wisdom of international supply chains
and the virtues of a global economy.

Decoupling refers to the deliberate dismantling—and eventual re-creation elsewhere—

of some of the sprawling cross-border supply chains that have defined globalization
and especially the U.S.-China relationship in recent decades. The modern version of

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the concept traces back, ironically, to Chinese policymakers in the 1990s who were
themselves worried about over dependence on the U.S. dollar and high-end American
technology.
Trump has long contended that China has exploited the U.S. economy for its own
enrichment at the expense of the American worker, and there is some economic data to
back that up. As a result, since taking office, the Trump administration has sought to
partially decouple economically from China, first by reducing U.S. imports through
higher tariffs, later by more restrictive screening of Chinese investment in critical
sectors.
More recently, the administration has expanded controls on exports to China of
potentially sensitive technologies, and this week it banned a federal retirement fund
from investing in Chinese stocks. Administration officials even briefly flirted with the
idea of defaulting on government debt held by China. These days, efforts to tear up
and rebuild supply chains are gaining momentum, whether in semiconductors, rare-
earthelements, or medicines and personal protective equipment needed to deal with the
ravages of the coronavirus pandemic.
“What the pandemic has done is expose our very significant dependence on Chinese
production, and overseas production generally, but particularly in key areas on
Chinese manufacturing production and Chinese supply chains,” said Sen. Josh
Hawley, a Missouri Republican, who is leading the legislative charge to repatriate U.S.
supply chains and withdraw from the WTO. “I’d like to see as much production
brought back to our shores as we can.”
Other U.S. allies around the world are eyeing ways to follow suit. Australia, bristling
at Chinese trade threats, is also looking to diversify its own export markets and supply
chains away from China. Europeans are having second thoughts about ever-closer
trade and investment ties with Beijing. Some European policymakers in recent years
have been spooked by an aggressive wave of Chinese takeovers of critical
infrastructure from ports to power grids, fearing it could give Beijing undue leverage
over their countries. Chinese diplomats have taken on an aggressive stance against
some Western countries, including the Netherlands, with vague threats of sanctions or
other forms of coercion as relations sour amid the pandemic.

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