International trade condition.pdf
-
Upload
billyverians -
Category
Documents
-
view
236 -
download
1
Transcript of International trade condition.pdf
-
2014 Made for Midterm Examination International Trade Subject
INTRODUCTION
Unprecedented Level of Trade...1
Trade Watch........... ....................1
Current Trade Situation
Reveal Government Role on
Trade......................................2
Trade Economic Blocs...............3
TRADE WAR : BUT WITHOUT REAL ENEMY......................4 EUROPE, ASIA, NORTH AMERICA TRADE WATCH..5 INTERNATIONAL
TRADE AUTHOR: BILLY VERIAN SALIM / 014201200003/ IB1 ADVISOR: MR.ERWIN RAMAEDHAN
Everyone knows about trade. When you live, you might use the shoes
made by China, clothes by Vietnam, Glasses by United States, Handphone
by Finland. How could you get products from all over the world? TRADE.
The question is how does the trade work out this current situation,
especially between Europe, North America and Asia.Let us figure it out.
Unprecedented Level of Trade Do you know what does the world do everyday? TRADE. This
activity has a role as breath of
the world. The total of trade in
the world has reached at
unprecedented level. More than
US$ 17,000 billion in form of
good (service excluded) has
flown annually among all over
TRADE WATCH- By having international trade, the world has become a single market. It means once you create a product, you may to sell it anywhere because you
see the world as one single market.It means that the one who benefit most is the multinational companies.What about government and customer? Do
you think they suffer most? NOT REALLY. Why? Sometimes you need their product, you need the foreign direct investment flown in, you need
product diversivication. It also depend what role do you take in international trade. Just like China, as one of the countries that have biggest volume
of export, it contributes a lot for China GDP.In contrast, once the government take a wrong strategy, It could turn down a country. Australia for the
very first time in 2012 has trade deficit.As a government, right role, right strategy could be very crucial. How to maximize the trade, and as well as
how utilize trade to increase the economic condition. Let us discuss next page!
the world. There is no more
independent countries, all are
depending each another. The
questions are Who is the winner of
the trade? And who suffer from
that? Or all over the world benefits
from the trade?(see Trade Watch)~
answer in page 4.
Trade is good if you are choosing the right role in doing International Trade. The
question is what is the right role part should be taken. Let us discuss in next page..
-
http://stats.oecd.org/index.aspx?queryid=
167
Current Trade Situation#1- Reveal Government Role on
Trade
Where is the previous
super power country
now? Every body agreed
that United States that
is located in North
America, was the super
power country. But
then, what is the
measurement of super
power country? Is it a
country with Trade
Deficit? Or country with
high unemployment?
Those things are
happening in United
States right now. If
those are the criteria,
Bangladesh, Ethiophia
and many more must be
a super power country
and even more
powerful than United
States. United States
which is currently in
recession together with
some European
countries like greece
and many more. Will
they do nothing? Willl
they let their GDP show
negative condition
caused by trade deficit?
UNITED STATES Reasons of Trades Crisis
Main source : Eamonn
Fingleton
The United States has been running consistent trade
deficits since 1980 due to high imports of oil and
consumer products. In recent years, the biggest trade
deficits were recorded with China, Japan, Germany,
Mexico and Saudi Arabia. United States records trade surpluses with Hong Kong, Australia, Netherlands and
Belgium.
TRADE DEFICIT DOESNt MATTER?
In recent years the
consensus both on Wall
Street and in the media
has been that the trade
deficits "don't matter." The
economic thinking
underlying this conclusion
is as facile as the profits-
don't-matter ethos that
created the disastrous late
1990s bubble in dot.com stocks.
Why does trade matter?
For a start the worsening
trend has obvious and
politically explosive
implications for American
jobs. True, most displaced
workers eventually find
new jobs but these are rarely as well paid.
Even if policymakers think
they can continue to ride
roughshod over the
legitimate concerns of
American workers, they will
eventually be jolted out of
their insouciance by a force
they cannot ignore:
money. The point is that
the trade deficits have to
be financed and the
question is how long
foreign investors will
continue to finance
America's recklessly misguided trade policies.
Nb: United States here is just the example to
show the role of government
National Foreign Trade Council in 2007 state
that United state is very famous with the
country that trigger free trade most. In the last
150 years, the United States has achieved a
dramatic transformation from an agrarian
society to a manufacturing economy that drove
economic growth through much of the 20th
century, and now to a highly-skilled and
innovative service driven economy with
extraordinarily productive workers. Even with
high incomes and healthy appetites, Americans
cannot consume everything they produce.
Successful engagement in the global economy,
with 95 percent of the worlds population living
outside of the United States, is vital to U.S.
employment and economic growth. Without
new markets to sell U.S. goods, services, and
agricultural products, Americans would face the
prospect of fewer economic opportunities and a
lower standard of living.
In the same year with previous statement,
National Foreign Trade Council said that by the
existence of NAFTA, United States could
increase its export to Canada and Mexico as big
as 85.
This case shows that United States have right
strategy by having free trade, unless the united
states could be having worst trade deficit
because Amercans cannot consume everything
they produce. In other condition, Americans
have hight interdependence with oil which
makes America very high import volume
-
Trade between countries is very
common. Billions of USD are
flown every day among countries.
Someway people might have got
familiar with this new term, which
is free trade. In this part we will
recognize the 3 big Trade blocs
namely, NAFTA, EU, AFTA +3
(ASEAN + China, Japan and
South Korea)
Concepts of Free Trade
Agreement
Free trade is simply explained as
the agreement to eliminate the
trade barriers between countries.
Free trade is also the manifestation
in eliminating the protectionism.
3 Big Region Blocs.
In the world, United States has
become the highest imported
country and it is followed by China
and Germany. In other condition,
China is becoming the most
exported country and it is followed
by United States. Someway, when
people talk about trade in this era,
it might not talk as a single country
only but the trade blocs. For
example, the existence of
European Union makes this blocs
could exceed the united states in
terms of the number of exports.
As what have been explained
before, America relies its export
also through the trade blocs called
NAFTA. Free Trade helps
America to minimize the trade
deficit it had.
For Asia, there are trade blocs
which are SAARC and AFTA
(ASEAN Free Trade Agreement).
Focusing on AFTA, it is primarily
encompasses members from South
East Asia only but there are some
issues that AFTA is going to be
ASEAN +3 (Japan, China and
South Korea).
By having these trade blocs, it
means that every member within
the trade blocs could gather to ease
the trade for each members. The
question does the trade blocs only
mean giving easier and cheaper
way to trade within the members
of trade blocs? (Continued to
Trade War)
Current Trade Situation #2
-
TRADE BLOCS Trade war, but No Real Enemy in the Trade War.
Free Trade between trade bloc members is more than
just free trade
Free trade in the trade blocs is essentially intended to foster
the number of trade like to increase the number of export.
But in the trade it is not merely talk about export but import.
By having the trade blocs, the number of import will be high
as well because there is the tariff advantage, so is it only
about the trade?
Let us see in the corporate point of view. How does the
company see the free trade? Basically, what the corporation
need is the cheap labor market and the big number of
customer. By having the free trade, a corporation could
choose a place that has cheap labor market within the country
that has collaboration in the free trade. With establishing the
company inside country member within trade blocs, the
company could export the product to the other country
member with very low or almost no tax and it is called as tax
advantage. Simply, the free trade is also one of the strategy to
have advantage in the trade. If there are lots of foreign direct
investment triggered by the free trade, it means that the
export will be also extremely increasing. This statement is
highly proven by what China had these years. The value of
the Chinas export even could reach 8 times bigger than
United States. The only reason is because the advancement
of industry in China, either from Chinas company itself and
from foreign direct investment.
I N S I D E T H I S I S S U E
1 Free Trade between trade blocs is more than just free trade
2 The essential of trade blocs is no more essential. All is just about easy trade everywhere. NO
REAL ENEMY IN THE TRADE WAR.
From the explanation above, it shows that
country is acompeting each other to have high
export and the trade bloc is also one of the
strategy.
In sum, the one who benefit most from the
trade bloc is the multinational company.
They could choose wich country provide best
labor market, then automatically, they will
have one single market along trade blocs.
The essential of trade blocs is no more
essential. All is just about easy trade
everywhere.No real enemy in the trade, every
country is friend when the country want to be
exported.
Europe Union for example. Free trade
agreement on Europe Union is initially only
making the trade between European country
that are joining European Union. Someway
there is the new term of TAFTA (Translantic
Free Trade Agreement, the collaboration
between United States and EFTA). The
question is what does the collaboration for?
For being friends in the trade war. War to get
more export. Every country aim it.
-
I. ASIA TRADE WATCH
Asia has varies country that play crucial role
on trade. In short, there are 8 Asian countries
that belong to top 20 most exported country,
namely China, Japan, South Korea,
Hongkong, Singapore, Saudi Arabia, India,
Taiwan. The highest is China. It is because
China has largest number of foreign direct
investment. Corporations from United States,
Europe are moving to the China and make tha
basis production there.
In essence that every country would like to
foster the trade, there is one most important
trade bloc in Asia, which is ASEAN. This
trade bloc could foster the trade, foreign
direct investment in South East Asian
country. This AFTA is currently in process of
having collaboration with China, Japan and
South Korea, which are the countries that
have biggest volume of Trade in Asia. This
trade bloc simply recognize as the coalition to
attract foreign direct investment which allow
them to have one big single market.
Countries like Indonesia, Vietnam and any
other countries which have labor market will
be benefit from this (as what China has done
by attracting FDI from attractive labor
market).
II. North America Trade Watch
North America that consists of Canada,
Mexico and United States are all top 20 most
exported country. United States has very
important role on either export or import
because it is the most imported country and
the second highest of the most exported
country.
The free trade agreement which was
established from 1994 has linked 450 million
people and producing $17trillion worth of
Good and services.
U.S. goods and services trade with
NAFTA totaled $1.2 trillion in 2012.
Exports totaled $597 billion; imports
totaled $646 billion. Both Canada and
Mexico were the top two purchasers of
U.S. exports in 2013.
By having the NAFTA, it triggers the
foreign direct investment from U.S. as
well till the level of $425.5 billion in
2012. Without this free trade, the U.S.
Export will not be in this level. The same
goes to Canada and Mexico. Most of their
goods flow to the United States.
III. Europe Trade Watch
Europe has 49 countries and 28 of them
are Europe Union members. Within the
European Union agreement there is the
EFTA (European Free Trade
Association). EFTA is successful to
increase the trade between EFTA
countries.
Germany for instance, because of the free
trade the Germany export to the EFTA
members are very high like France,
Netherland and Italy.
EFTA is also very crucial not only for
within the EFTA members, but also
crucial with third party that makes
agreement with EFTA countries. More
Exploration in the subpoint 4.
IV. General Condition Trade
Watch Between Asia, Europe
and North America
1. Trade Sanctions
Trade sanction is trade penalty imposed by a
country or group of countries on another
country or group of countries.
There are so many trade embargos because of
the existence of disputes. The example is North
Korea which get embargo from EU, US and
UN, Russia has implied embargo to all fruits
and meat from Europe Union, United States,
Australia, Canada and Norway.
In the trade, it is not only talking about ease the
trade but as
2. Agreement with either a country
and with trade blocs(third party
trade blocs)
Beside the free trade agreement between
countries, trade bloc is also making the
agreement with other country and trade
bloc. For instance, Europe Union as the
trade bloc also makes some agreement
with the other trade bloc or other country.
The followings are the example of the
agreement between EU and other country
and trade blocs:
- TTIP (Transatlantic Trade and
Investment Partnership)- United
States-EU
- EU-Canada (Implementation 2016
- EU also negotiate with ASEAN
countries
- India-EU relation, and so on.
AFTA is also going to expand the
agreement from South East Asia into
AFTA +3(China, Japan and South
Korea). Some Information also state that
EU would like to negotiate with ASEAN
country to make free trade agreement.
ASIA, EUROPE and
NORTH AMERICA TRADE WATCH
Reference: - Wikimedia.org - Asean.org
- BBC.co.uk - Europa.eu
- Atlas.media.mit.edu - naftanow.org - Ustr.gov/trade-agreement
- Intl.econ.cuhk.edu.hk