also, what kind of trade policy do you think should the government adopt for the benefit of the country as whole

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?

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2

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

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PART III

PART II

Primary concern of government trade policy

•

Conclusion

•

PART I

STRUCTURE OF PRESENTATION

•

3

The frameworks: Definition & Fundamentals

4

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.

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5

Part I: THE FRAMEWORK
What is producer ?

In Social studies

PRODUCER

In Science

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6

Part I: THE FRAMEWORK
What is consumer ?

• The consumer is the one who pays to consume the goods and
services produced.

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7

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

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8

Part I: THE FRAMEWORK
Trade theory

New trade theory

can be interpreted

Porter’s theory of national
competitive advantage

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9

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.

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Administrative
policies

Local content

Antidumping
policies

Impor
t

Voluntary

requirements

quota

export

7
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

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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

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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"
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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
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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
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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.

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Governments sometimes use informal or
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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

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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

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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.

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THANK YOU !!!

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