Chapter 1: Overview of International Trade PDF

CHAPTER 1 OVERVIEW OF INTERNATIONAL TRADE  CONTENTS 1 What is International Trade? 2 Classification of International Trade 3 Reasons For International Trade 4 Benefits of International Trade 5 Difference between...

CHAPTER 1 OVERVIEW OF INTERNATIONAL TRADE  CONTENTS 1 What is International Trade? 2 Classification of International Trade 3 Reasons For International Trade 4 Benefits of International Trade 5 Difference between Int’l Trade and Domestic Trad 6 Risks of Exporting and Importing 02/01/2022 2  LEARNING OBJECTIVES To learn the definition of international trade To appreciate the opportunities and challenges offered by international trade To understand the differences between int’l trade vs domestic trade 3  WHAT IS INTERNATIONAL TRADE? International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations. 4  WHAT IS INTERNATIONAL TRADE? Import-export trade Primary FDI Licensing Types of International Business Franchising Management contract Additional Manufacturing contract Turnkey project Joint Venture Strategic alliance 5  WHAT IS INTERNATIONAL TRADE? Import-export Sale and purchase of tangible goods and services to and from another country. Foreign direct investment Establishment or expansion of operations in a foreign country. 6 Article 27.- International purchase and sale of goods Export Import Temporary import for re-export Temporary export for re-import Transfer of goods through border-gates 7 Be taken out of Vietnam Exporting Be put in special areas in Vietnam EPZs Industrial Zones 8  9 706021- Chapter 1:Overview of International 10 Be put in Vietnam Importing Be taken out of special areas in Vietnam EPZs Industrial Zones 11 12 13 14 15  Temporary import for re-export Foreign countries Foreign Vietnam countries Special zones located in the Vietnamese territory 16  Vietnam Temporary Import export Foreign countries Special zones located in the Vietnamese territory 706021- Chapter 1:Overview of International 17  Transit Vietnam Goods A B 18  Transit Vietnam Import Export Procedures Procedures Goods A B 19  Transit Vietnam Import Export Procedures Bonded Procedures warehouse/ Transit center Goods A B 20 2. Characteristics of International Trade Separation of parties  belong to different countries Foreign currency  convertible currency Risk element  long distance / customs border Restriction  tariff / non-tariff barriers Governmental Control  permission/ license Need for Middlemen  Commercial Agency / Broker 21  3. Reasons for International Trade Natural Resources International Division of Trade Labour and Specialisation Reasons Theory of Comparative Cost Differences in Economic Growth Rate 22  4. Benefits of International Trade Job creation Bring in wide range of products & services to a country Exert pressure on domestic products to improve Expand consumer choices Improve standard of living Allows for economies of scale Allows firms to hone their competitive skills abroad 23  4. Benefits of International Trade Growth in World Merchandise Trade & GDP (1998 – 2008) 24  5. Trends and developments of Int’l Trade » Merchandise trade growth has stagnated ⋄ The global recession of 2008- 2009 ⋄ Energy prices in 2015 ⋄ Protectionism + trade war 25 5. Trends and developments of Int’l Trade Digital Technologies are transforming and disrupting the export Marketplace e-L/C eUCP e-B/L  Bolero system Web-based platform  Li&Fung  buyer optimize their purchases from supplier factories E-commerce continues to grow Usd 1.9 trillion # 9% of total retail spending Usd 4 trillion # 15% of total sales Overseas shopping is accelarating Asia-Pacific  the world’s largest e-commerce market 26  6. Difference between Int’l Trade and Domestic Trade Domestic Commercial Law vs Freedom of Contract The additional distance Diversity of Languagues Currencies Customs duties and Import quotas Local conditions/ economic policies Other variables  compel to use terms & devices not commonly used in domestic trade, ex: Incoterms rules, UCP… 27 7. The risks of Exporting and Importing Legal risks Transport risks Quality of goods risks Risks of cultural and languague differences Exchange rate fluctuations Non-payment risks Unforeseen events Investment risks 28  International Organization and International Trade Non- governmental organizations International (NGOs) organizations Intergovernment al organizations (IGOs) 29 International Organization and International Trade Local/Regional Chambers of Commerce ICC NGOs Others 30  Local Chamber of Commerce Assisting importers and exporters Organizing seminars and providing information on trade and trade-related procedures Promoting foreign markets in finding customers/agents/distributors Issuing Certificate of Origin (C/O) 31  The International Chamber of Commerce The World Business organization developer of int’l commercial, legal and banking Standard  UCP 600, Int’l Court of Arbitration, Incoterms ICC commissions and Working Parties (Task Forces)  review issues affecting world business ICC Commercial Crime Service Int’l Maritime Bureau  all types of maritime crime incl. Fraud, cargo theft and piracy Financial Investing Bureau  combat financial fraud and Money laundering Counterfeiting Intelligence Bureau  helps company to prevent the World fakingChambers Federation  serving the global chamber of their products. of commerce communitty  manage the ATA carnet System 32  Others NGOs in Int’l Trade Int’l Air Transport Association (IATA)  for the world’s air cargo simplifying and standardizing air transport documents  www.iata.org Int’l Federation of Freight Forwarder’s Associations (FIATA)  promoting standards and quality in int’l freight forwarding  www.fiata.com Int’l Maritime Committee (CMI)  promoting the unification of maritime and commercial law  the Hague/ Hague-Visby Rules  www.comitemaritime.com Int’l Road Transport Union (IRU)  representing commercial operators of road vehicles  www.iru.org 33  International Organization and International Trade UNCITRAL www.uncitral.org UNIDROIT www.unidroit.org IGOs WCO www.wcocmd.org ITC (UNCTAD/WTO) www.intracen.org 34  A Note on Terminology  Contractual Context Contract Exporter/Seller Importer/Buyer  Transport Context Carrier Shipper/ Consignor Consignee/ Receiver 35  A Note on Terminology » Banking Context (L/C) L/C Beneficiary Applicant 36