protection of intellectual property... there are exceptions. However, the international community is currently actively campaigning to extend most-favored-nation treatment, without discrimination, to all traders, especially in the fields of investment and commercial services.
+ Trade liberalization: Trade liberalization is always the top goal that the World Trade Organization must strive for. Its content is to gradually reduce tariff and non-tariff barriers, so that at some point in the future they will be completely eliminated for trade development. However, trade liberalization is never separated from state management and must comply with all current laws and regulations of each country. All countries in the world respond to this policy and they all officially declare their trade liberalization policy to gain international consensus.
+ Protection by tariff barriers: Although advocating trade liberalization, GATT/WTO still recognizes the need for trade protection due to the difference in economic and trade development levels among member countries. However, the basic principle of protection advocated by GATT/WTO is protection by tariff barriers, not supporting trade protection by non-tariff barriers or other administrative measures. Member countries are obliged to announce the maximum tariff ceiling, and then negotiate with other WTO countries to gradually reduce it. At the same time, each country must commit to a time frame for implementing the tariff reduction process to move towards the goal of eliminating tariff barriers.
+ Principle of stability in trade: Member countries must negotiate to set a ceiling tax with a reduction schedule, only continuous reduction without exceeding the committed ceiling tax. All trade policies must be announced publicly, clearly, and stably for a long time. If there are changes, they must be notified in advance to give businesses enough time to study, comment, and reflect their wishes before applying.
+ Principle of fair competition: WTO advocates fair competition in international trade, so that quality and price determine the fate of goods in competition in the international market. State power cannot be used to impose or distort fair competition in the international market.
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+ Principle of not limiting the quantity of imported goods: WTO advocates that the quantity of imported goods between member countries should not be limited. However, WTO also allows exemptions, allowing the application of the import quantity restriction regime (QR) when that country encounters difficulties in the balance of payments or low development level of the domestic economy, or environmental reasons, national security, especially for developing countries, underdeveloped countries and
countries in transition to market economies.
Right to refuse and right to self-defense in case of emergency: According to Article 25 of GATT 1994, in very special cases, a country can refuse to perform some obligations. In addition, Article 19 of GATT also allows a country to apply self-defense measures in case of emergency, when domestic production is threatened by imported goods.
Special conditions for developing countries: Recognizing the differences in the level of development of member countries (over 2/3 of GATT/WTO members are developing and least developed countries). WTO emphasizes special assistance for least developed countries and countries in the transition to a market economy. Developed industrial countries will not require reciprocity in their commitments, reduction or elimination of tariff or non-tariff barriers for developing countries and special trade preferences for least developed countries.
- WTO operating mechanism
First, dispute settlement. The WTO dispute settlement system is central to providing certainty and predictability to the multilateral trading system. WTO members commit not to take unilateral action against perceived violations of trade rules but can seek common ground in the multilateral dispute settlement system and accept its rules and rulings.
Second, monitoring national trade policies. Monitoring national trade policies is a fundamental activity throughout the WTO's activities, the main focus of which is the trade policy review mechanism (TPRM). The main objectives of the TPRM are to enhance transparency and understanding of trade policies and practices, improve the quality of negotiations between governments and the general public, and facilitate multilateral assessments of the effects of policies on the global trading system.
b. Association of Southeast Asian Nations and the ASEAN Free Trade Area (AFTA)
- The process of ASEAN formation
The Association of Southeast Asian Nations (ASEAN) was established in 1967 after the foreign ministers of Indonesia, Malaysia, the Philippines, Singapore and Thailand signed the ASEAN Declaration (also known as the Bangkok Declaration).
Over the past 30 years, ASEAN has grown from 5 members to 10 members and has carried out cooperation in many different fields. Many important conferences have been held.
organized, many important and basic documents including treaties, agreements, and declarations were signed.
Agreement on the Common Effective Preferential Tariff (CEPT) Scheme. This Agreement provides for measures and stages for the gradual reduction of import tariffs, towards the implementation of AFTA.
Regarding structure, member countries unanimously decided to organize the ASEAN Summit every three years and establish a ministerial-level AFTA council to monitor and promote the implementation of CEPT and AFTA.
- Activity content
In addition to economic and financial cooperation programs, in recent years ASEAN has adopted programs to stimulate trade and investment cooperation among members, demonstrated through the following five programs:
One is to build ASEAN into a free trade area by implementing the common effective preferential tariff scheme CEPT.
Second, commodity cooperation program: Establishment of ASEAN Data Bank on Commodities (ADBC) and Commodity Market Research Project.
Third, ASEAN trade fair: Rotated annually among countries with the participation of many countries in and outside the region.
Fourth, the private sector consultation program conducted by the ASEAN Chamber of Commerce and Industry.
Fifth, coordinate positions on resolving international trade issues affecting ASEAN.
- ASEAN Free Trade Area (AFTA)
At the fourth summit in Singapore in January 1992, the ASEAN heads of state signed the AFTA agreement through the CEFT scheme. The main purpose of AFTA is to enhance the global competitiveness of ASEAN enterprises by creating a larger regional market.
+ AFTA's operating mechanism
AFTA/ASEAN will be realized through the implementation of the Common Effective Preferential Tariff (CEPT) scheme, the harmonization and balancing of standards among ASEAN countries, and the mutual recognition of inspection and certification of goods. In addition, AFTA will also be formed through the removal of barriers to foreign investment, consultation at the macroeconomic level among ASEAN countries. In addition, AFTA also requires members to compete fairly with each other and promote and encourage joint ventures. However, among the above mechanisms, the CEPT scheme is the most important and according to the new decision, member countries will reduce tariffs on
products originating from ASEAN to 0% to 5% by 2003.
+ The CEPT plan has two import tax reduction programs proposed by member countries: one is the products with tax reduction in the fast track program; the other is the normal track program .
The normal pace program allows ASEAN countries to reduce tariffs on goods produced within ASEAN to between 0% and 5% by 2000 for products currently subject to a 20% tariff; while goods taxed at more than 20% will have to be reduced to 20% by 1998.
The fast-track programme requires tariffs on 15 ASEAN product categories with the largest trade shares in the region to be reduced to between 0% and 5% by 1998 for those subject to tariffs of 20% or less; and by 2000 for those subject to tariffs above 20% (starting from January 1993).
c. Asia-Pacific Economic Cooperation (APEC)
- Formation process
In the context of the Cold War coming to an end, the international economy is facing severe challenges: globalism, which has grown strongly after World War II, is beginning to encounter intractable difficulties with many deadlocks in the Uruguay/WTO negotiation process; regionalism is forming and developing strongly, the economic crisis in the 1980s poses objective demands to gather the forces of economies in the Asia-Pacific region to cope with fierce international competition.
In the above international context, in January 1989, the Australian Prime Minister called for the establishment of a ministerial-level economic advisory forum in Asia-Pacific to coordinate the activities of governments to promote economic development throughout the region and promote the global multilateral trading system. In November 1989, at the initiative of Australia, the Economic Ministers and Foreign Ministers of 12 countries in the Asia-Pacific region, namely the United States, Canada, Japan, South Korea, Brunei, Indonesia, Singapore, Malaysia, the Philippines, Thailand, Australia, and New Zealand, met in Canberra (Australia) and decided to officially establish the Asia Pacific Economic Cooperation (APEC).
- Operational objectives
APEC advocates expanding trade to create economic growth. Right from the beginning, APEC is determined not to be a closed trade bloc but to move towards "Open Regionalism" with countries outside the bloc, implementing trade and investment liberalization on a global scale; APEC will only focus on solving economic issues on the basis of common interests, mutual support, and will not mention political issues.
politics and security. That shows that the purpose of APEC is for the prosperous development of the entire Asia-Pacific region. The above main objectives are the pillars that regulate APEC's activities and are consistently reflected in APEC cooperation programs.
d. International Monetary Fund (IMF)
- Background
On July 1, 1944, representatives of 44 countries allied against Germany-Hitler met, discussed and negotiated to come up with a multilateral international treaty of great historical significance. That was the treaty on the regulation of the international monetary organization of the post-war world and was the basis for the establishment of the International Monetary Fund (IMF) in May 1946.
At the Bretton Woods Conference, the draft Agreement on the International Monetary System and the establishment of the International Monetary Fund (IMF) quickly received support from delegates of countries because their establishment was extremely necessary in the economic and political context of that period.
Thus, the International Monetary Fund was born in a context favorable for a form of international economic cooperation, it represents a high level of internationalization of the world economy. The birth of the IMF is also a manifestation of a major change in the comparison of economic power between countries with the emergence of the United States as the global economic hegemon. The overall goal of the IMF is:
+ Facilitate balanced growth of world trade.
+Encourage exchange rate stability and systematic exchange arrangements and encourage competitive devaluation of currencies.
+ Seek to eliminate exchange restrictions and limits on world trade growth.
+ Provide funding to members, on a temporary and secure basis, allowing them to correct imbalances without worsening the country's situation.
- IMF's operational functions
The main functions of the IMF include:
+ One is to determine the currency parity system and exchange rates of member countries.
+ Second, provide credit to member countries with temporary balance of payments difficulties.
+ Third, monitor the situation of the international monetary system and the economic policies of member countries.
g. European Union (EU)
- Europe's progress towards unification
World War II left serious economic and social consequences on the world.
most of Europe. The reconstruction of Europe became an urgent need and the Marshall Plan for the reconstruction of Europe, sponsored by the United States, was initiated. The Organization for European Economic Cooperation (OEEC) of 16 countries was established in 1948 with the encouragement of the United States to stabilize currencies and trade relations and combine the strengths of the economies. However, since the OEEC was not strong enough to generate the necessary economic growth, other areas of cooperation were initiated by France to develop a common market in order to:
+ Eliminate all restrictions on the free movement of products, capital and labor among countries in the bloc.
+ Harmonize different economic policies among countries.
+ Establish a common tariff for foreign countries that are not members of the bloc.
- European Free Trade Area (EFTA)
EFTA opposed the EEC's policy of total integration, so it advocated a free trade area that would remove restrictions on the flow of technological products between member states and allow each country to maintain its own external tariff structure.
EFTA also provides the benefits of free trade between member states, but allows each state to pursue its own economic interests vis-à-vis outside countries. This is particularly advantageous for the UK, which has well-developed trade relations with Commonwealth countries and which, according to the UK, would create too close a collaboration with outside countries, potentially undermining the sovereignty of each member state.
h. North American Free Trade Area (NAFTA)
Based on the agreement between the countries of the North American region, the North American Free Trade Agreement (NAFTA) signed on August 12, 1992, later known as NAFTA, officially took effect from January 1, 1994 after being ratified by Canada, the United States, and Mexico, with the aim of eliminating tariff barriers and other barriers in the transfer of goods, services, and investment within 13 years and creating a free trade area with a total domestic output of 6.6 trillion USD in 1992. The ultimate goal of NAFTA is to create a single economic union in North America that is internationally competitive by combining the comparative benefits of member economies in terms of technology, capital, resources, and labor in the production and trade exchange process.
1.1.3.2 Entities involved in international business
Companies of all types, sizes and in all industries
are all involved in international business. Manufacturing companies, service companies, and retail companies all seek customers outside their national borders.
- An international company is a company that is directly involved in any form of international business. Therefore, the difference between companies is in the scope and level of participation in international business. For example, although an import company only purchases goods from foreign importers, it is still considered an international company.
Large companies with factories distributed around the world are also called international companies, or multinational companies (MNCs). Multinational companies usually include companies or other units whose ownership is private, state or mixed, established in many different countries and therefore the association of one or more companies or units can create great advantages for the operations of other companies, especially sharing knowledge and resources with other companies.
+ The role of multinational corporations in the global economy
First and foremost, MNCs are products of their host countries. Most host countries have always received top priority from MNCs whenever they are in trouble. Furthermore, MNCs today place a higher priority on innovation (than the host countries used to) regardless of where innovation takes place. Some MNCs have even outsourced research and development (RD) to their foreign companies.
In today's business world, MNCs have become truly borderless. MNCs have become truly "stateless" as they operate for the benefit of their shareholders who are located in different countries around the world. This relationship is further enhanced by the growing trend among large MNCs today to promote foreigners to top management positions. Some German and French companies even use English as the common language for global management communication within the multinational.
+ All MNCs are large companies
Today, giant MNCs are increasingly emerging due to a wave of mergers or acquisitions of companies that were at risk of bankruptcy. The world's top 100 MNCs alone are worth nearly $2 trillion, accounting for a large portion of the world's total FDI, and the recent wave of mega-mergers has made already large MNCs even larger. However, in today's marketplace, size is not always the most important issue. These new MNCs are starting to create specialized teams and link them together within the same group in much the same way that competitors compete with each other outside the group.
+ MNC's market is difficult for competitors to penetrate.
Leading MNCs have taken years to build their position. This makes other companies think that growth and development is very slow and depends on physical assets such as a system of many factories in many places, and this helps create high barriers for new competitors to enter the industry.
+ Doing business with multinational companies
Direct investment by MNCs has a long-term impact and is less volatile. Portfolio investment is always volatile and can be moved elsewhere in a very short time and this often happens as seen in the exodus of investors from newly opened markets in 1997-1998. As for FDI, although spending plans are declining, very few firms are leaving so FDI is more stable than portfolio investment but there have been periods of FDI volatility. Most governments want to attract foreign investors rather than let them go. These objectives cannot be achieved in a short time and the cost of leaving is also very high so most FDI activities are concentrated in only a few countries and of course the poorest countries will not be able to have the resources and capabilities of MNCs to create new industries for themselves, develop and catch up with other countries.
- Entrepreneurs and small and medium-sized enterprises : Small companies are increasingly participating in international trade and investment. Technological innovation has removed many practical obstacles to the export activities of small businesses.
While traditional distribution channels allow only large companies to penetrate distant markets, electronic distribution is a low-cost and effective solution for many small and medium-sized businesses.
There are four misconceptions that are holding back small business exporting activities:
+ Myth 1: Only large companies can export successfully. The reality is that exporting increases the sales and profits of small companies, and it also makes manufacturers and distributors less dependent on the state of the domestic economy. Furthermore, selling abroad gives small companies a competitive advantage over companies from other countries before those companies enter the domestic market.
+ Myth 2: Small businesses cannot access export advice. Governments have support programs to meet the needs of companies, whether they are just starting out or have already started exporting. Companies also receive free information about market research resources, financing, and trade events.