1 FINAL REPORT  WHOSE INTERESTS SHOULD BE THE PRIMARY CONCERN OF GOVERNMENT TRADE POLICY, THE INTERESTS OF PRODUCERS (FIRMS AND THEIR EMPLOYEES) OR CONSUMERS?  ALSO, WHAT KIND OF TRADE POLICY DO YOU THINK SHOULD THE GOVERNMENT ADOPT FOR THE BENEFIT OF THE COUNTRY AS WHOLE? Company Proprietary and Confidential Company Proprietary and Confidential Members of group • • • • • • • Trần Bảo Kiều ID: 71106118 Nguyễn Thị Thủy Tiên ID: 71106074 Đỗ Thị Cẩm Thu ID: 71106146 Nguyễn Hoàng Hoài Thương ID: 711060 Nguyễn Phúc Như Thúy ID: 71106072 Huỳnh Châu Phương Thảo ID: 71106062 Trần Huệ Quân ID: 71106137 73 Company Proprietary and Confidential Company Proprietary and Confidential Company Proprietary and Confidential Company Proprietary and Confidential PART III PART II Primary concern of government trade policy • Conclusion • PART I STRUCTURE OF PRESENTATION • The frameworks: Definition & Fundamentals Part I: THE FRAMEWORK Government trade policy • Trade is the form that the ownership of goods and services is transferred from a person or entity to another by getting something in exchange from the buyer, then this will build the network known as the market Company Proprietary and Confidential Company Proprietary and Confidential Part I: THE FRAMEWORK What is producer ? In Social studies PRODUCER In Science Company Proprietary and Confidential Company Proprietary and Confidential Part I: THE FRAMEWORK What is consumer ? • The consumer is the one who pays to consume the goods and services produced Company Proprietary and Confidential Company Proprietary and Confidential Part I: THE FRAMEWORK Trade theory • Mercantilism makes a crude case for government involvement in promoting exports and limiting imports • The theory of Smith, Ricardo, Heckscher – Ohlin from part of the case for unrestricted free trade Company Proprietary and Confidential Company Proprietary and Confidential Part I: THE FRAMEWORK Trade theory New trade theory can be interpreted Porter’s theory of national competitive advantage Company Proprietary and Confidential Company Proprietary and Confidential Part I: THE FRAMEWORK Trade theory • The theories of international trade also matter to international businesses because firms are major players on the international trade scene Company Proprietary and Confidential Company Proprietary and Confidential Company Proprietary and Confidential Company Proprietary and Confidential Administrative policies Local content Antidumping policies Impor t Voluntary requirements quota export instruments of trade s restraints policy Tariffs Subsidies Part II: PRIMARY CONCERN OF GOVERNMENT TRADE POLICY 10 11 Tariffs A tariff is a tax levied on imports/ exports They must pay a higher price for imported product TO CONSUMERS The tariff affords producers some protection against foreign competitors by increasing the cost of imported foreign goods TO PRODUCERS TO WHOLE COUNTRY The tariff increases the government revenues Company Proprietary and Confidential Company Proprietary and Confidential 12 Subsidies Subsidies are the money that government pays for suppliers They must pay a higher price for imported product TO CONSUMERS The tariff affords producers some protection against foreign competitors by increasing the cost of imported foreign goods TO PRODUCERS TO WHOLE COUNTRY The tariff increases the government revenues Company Proprietary and Confidential Company Proprietary and Confidential 13 is a direct restriction on the quantity of some good that Import quotas may be imported into a country The import quota prevents domestic consumers from buying TO CONSUMERS an imported goods The extra profit that producers make when supply is limited TO PRODUCERS by an import quota Import quotas likely protected by domestic producers against TO WHOLE COUNTRY the "price fever" Company Proprietary and Confidential Company Proprietary and Confidential 14 Voluntary export restraints TO CONSUMERS TO PRODUCERS is a quota on trade imposed by the exporting country, typically at the request of the importing country’s government consumers of the product in the exporting country experience Consumers of the product in the importing country suffer a an increase in well-being as a result of the VER reduction in well-being as a result of the VER producers in the importing country experience an increase in Producers in the exporting country experience a decrease in well-being as a result of the VER well-being as a result of the quota The aggregate welfare effect for the country is found by TO WHOLE COUNTRY summing the gains and losses Company Proprietary and Confidential Company Proprietary and Confidential 15 Local-content requirements (LCRs) are impose to Local content regulate investments requirements TO CONSUMERS Consumers face higher final prices The revenue of domestic firm would increase TO PRODUCERS TO WHOLE COUNTRY • • Creating a lot of jobs for local labor in the country Limiting foreign competition for domestic producer Company Proprietary and Confidential Company Proprietary and Confidential 16 Anti-dumping policies TO CONSUMERS are designed to punish foreign firms that engage in dumping Increase consumer welfare Protect the economic interests of domestic producers from TO PRODUCERS unfair foreign competition Company Proprietary and Confidential Company Proprietary and Confidential Governments sometimes use informal or 17 administrative policies to restrict imports Administrative policies and boost exports Domestic consumers will have to pay more for that product TO CONSUMERS Help prevent some competitive product appear in country TO PRODUCERS TO WHOLE COUNTRY Free trade of country will be restricted Company Proprietary and Confidential Company Proprietary and Confidential 18 Part III: CONCLUSION • The foreign trade policy can’t protect the producers’ and the consumers’ benefits at the same time • • The consumer’s income determines their benefit wanting The producer’s capability of productive and the consumer’s income are relative to the country’s development of economy Company Proprietary and Confidential Company Proprietary and Confidential 19 WHAT KIND OF TRADE POLICY GOVERNMENT SHOULD ADOPT • Maximize one’s benefit at the condition that the other one’s lest loss, in order to get overall benefit Company Proprietary and Confidential Company Proprietary and Confidential 20 THANK YOU !!! Company Proprietary and Confidential Company Proprietary and Confidential ... Producers in the exporting country experience a decrease in well-being as a result of the VER well-being as a result of the quota The aggregate welfare effect for the country is found by TO WHOLE COUNTRY. .. quota on trade imposed by the exporting country, typically at the request of the importing country? ??s government consumers of the product in the exporting country experience Consumers of the product... of government trade policy • Conclusion • PART I STRUCTURE OF PRESENTATION • The frameworks: Definition & Fundamentals Part I: THE FRAMEWORK Government trade policy • Trade is the form that the