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Definition: Mercantilism was an economic system of trade that spanned the 16th century
to the 18th century. Mercantilism was based on the principle that the world's wealth was
static, and consequently, governments had to regulate trade to build their wealth and
national power. Many European nations attempted to accumulate the largest possible
share of that wealth by maximizing their exports and limiting their imports via tariffs.
Positive impacts:
The mercantilism doctrine, which is an economic policy that emphasizes government
intervention in trade to promote domestic industry and accumulate wealth, can have certain
positive impacts on free trade policy. These may include:
Strategic Trade Policies: Mercantilism doctrine allows for strategic trade policies, such as
government subsidies and support for research and development, to promote key industries
and gain a competitive edge in global markets. This can foster innovation, technological
advancement, and global competitiveness, leading to economic growth and development.
Domestic Revenue Generation: Mercantilism doctrine may utilize tariffs and other
protectionist measures to generate revenue for the government. This revenue can be used to
fund public services, infrastructure development, education, and other social programs, which
can contribute to the welfare of the population.
Negative impacts:
The mercantilism doctrine, which is an economic policy that emphasizes government
intervention in trade to promote domestic industry and accumulate wealth, can have certain
negative impacts on free trade policy. These may include:
Trade Disputes and Protectionism: Mercantilism doctrine can lead to trade disputes and
protectionist measures, such as tariffs, quotas, and other trade barriers, which restrict the
flow of goods and services across borders. This can result in reduced trade and increased
tensions between countries, leading to trade conflicts, retaliatory measures, and potential
negative impacts on global trade relations.
Higher Consumer Prices: Mercantilism doctrine may result in higher consumer prices as a
result of tariffs, quotas, and other protectionist measures that increase the cost of imported
goods. This can reduce consumer choices, limit access to affordable goods, and lead to
higher living costs for consumers.
Retaliation from Trading Partners: Mercantilism doctrine may provoke retaliation from other
countries or trading partners, leading to a cycle of trade restrictions and retaliatory measures.
This can escalate trade tensions, disrupt global supply chains, and negatively impact
international trade relationships, leading to potential economic losses for all parties involved.
Conclusion: Mercantilism was the dominant economic theory and practice in Europe during
the early modern period, but it fell out of favor in the 19th and 20th centuries due to the rise of
liberal economic theory and the increased importance of manufacturing and industrialization.
Despite its decline, elements of mercantilism continue to influence international trade and
economic policy in some countries.
Although mercantilism is mostly viewed as an outdated economic theory, there has been an
emergence of mercantilist policies in recent times. Present-day mercantilism typically refers
to protectionist policies that restrict imports to support domestic industries. It can sometimes
be referred to as neomercantilism.
Modern mercantilist policies include tariffs on imports, subsidizing domestic industries,
devaluation of currencies, and restrictions on the migration of foreign labor. Mercantilist
policies can also explain the recent escalation of tariffs and trade restrictions between the US
and China.
Today, mercantilism is deemed outdated. The disaster of World War II underscored the
potential danger of nationalistic policies. It also prodded the world toward global trading and
relationships as a way to combat them.
2. Point out the positive and negative effects of free trade agreements on developing
countries? (done)
Positive effects:
- FTAs encourage business productivity and innovation
FTAs can increase nation's productivity and contribute to higher GDP growth by allowing
domestic businesses access to cheaper inputs, introducing new technologies and fostering
competition and innovation.
- FTAs can promote regional integration
FTAS promote regional economic integration and build shared approaches to trade and
investment, including through the adoption of common Rules of Origin and through broader
acceptance of product standards.
- FTAS enhance competitiveness and attract foreign investment
FTAs can enhance the competitiveness of exporting country in the partner market and add to
the attractiveness of such nation as an investment destination.
- FTAS offers more benefits over time
FTAS can continue to provide benefits to parties as the agreements are implemented,
including through phase-ins and in-built agendas that encourage ongoing domestic reform
and trade liberalization.
- FTAs can help developing countries
FTAS can deliver enhanced trade and investment opportunities that contribute to the
economic growth of less-developed economies.
Negative effects:
- Negative Impacts on Domestic Industries: FTAs can lead to increased competition from
foreign goods and services, which may negatively impact domestic industries,
particularly those that are less competitive or lack the capacity to compete with foreign
producers. This can result in displacement of local industries, job losses, and economic
dislocation in certain sectors, particularly if appropriate safeguards or transition
measures are not in place.
- Implementation Challenges: Implementing the provisions of FTAs can pose challenges
for developing countries with limited administrative and institutional capacity.
Compliance with complex rules of origin, customs procedures, technical standards, and
other regulatory requirements may require significant resources, infrastructure, and
expertise, which may be lacking in some developing countries.
- Impact on Vulnerable Groups: FTAs can have negative impacts on vulnerable groups
within developing countries, such as small farmers, informal workers, and marginalized
communities. Increased competition from foreign goods and services, changes in
agricultural or industrial practices, and potential job losses can disproportionately affect
vulnerable groups and exacerbate income inequality, poverty, and social disparities.
- Adverse Working Conditions: As underdeveloped countries attempt to cut costs to gain
a price advantage, many workers in these countries face low pay, substandard working
conditions and even forced and abusive child labor.
- Fear to Job Loss: Free trade agreements have also drawn protests from the U.S.
public for decades due to feared job loss to foreign countries with cheaper labor. Yet
proponents of free trade say new agreements improve the economy on all sides. The
WTO acknowledges that free trade does indeed lead to job losses.
- Effect on the Environment: Others agree that the environment is another casualty of
free trade, says Alf Hornborg, a professor of human ecology at Lund University in Lund,
Sweden, noting:
“For centuries world trade has increased not only environmental degradation but also
global inequality. The expanding ecological footprints of affluent people are unjust as
well as unsustainable. The concepts developed in wealthier nations to celebrate
'growth' and 'progress' obscure the net transfers of labor time and natural resources
between richer and poorer parts of the world.“
4. Under the ACIA, in which circumstances may the host state expropriate the
investors' properties and their obligations after that? (done)
According to Clause 2 Article 14 Expropriation and Compensation under the ACIA (A Member
State shall not expropriate or nationalise a covered investment either directly or through
measures equivalent to expropriation or nationalisation, except:) the host state expropriate
the investors' properties in the following cases
- for a public purpose;
- in a non-discriminatory manner;
- on payment of prompt, adequate, and effective compensation
- in accordance with due process of law.
According to Clause 2 Article 14 Expropriation and Compensation under the ACIA the
compensation referred to in sub-paragraph shall:
- be paid without delay;
- be equivalent to the fair market value of the expropriated investment immediately
before or at the time when the expropriation was publicly announced, or when the
expropriation occurred, whichever is applicable
- not reflect any change in value because the intended expropriation had become known
earlier
- be fully realizable and freely transferable in accordance with Article 13 (Transfers)
between the territories of the Member States.
Some notes:
According to Article 3 Expropriation and Compensation under the ACIA. In the event of delay,
the compensation shall include an appropriate interest in accordance with the laws and
regulations of the Member State making the expropriation. The compensation, including any
accrued interest, shall be payable either in the currency in which the investment was
originally made or, if requested by the investor, in a freely usable currency.
5. What is the "rule of origin"? How many methods are there to calculate the "origin"
of export products to get tax preference? (done)
The "rules of origin" are the criteria that are applied to determine where a product is
manufactured. These rules are fundamental to trade rules because there are several
measures that lead to discrimination among exporting countries: quotas, tariffs, preferences,
anti-dumping measures. prices, countervailing duties, etc. Rules of origin are also used for
trade statistics and to create labels and label
Each FTA has its own rules of origin, applicable to goods that want to take advantage of
preferences tariffs under that FTA. Under CPTPP, a product will be considered originating
from CPTPP if it belongs to one of the three the following cases:ls (made in...) affixed to
products.
Case 3: Goods manufactured in CPTPP, using non-CPTPP origin materials but meet the
Product-Specific Rules of Origin specified in Appendix 3-D of Chapter 3.
This is the most common case (in the context of production it is usually in series, with
materials and processes taking place in many countries around the world). However, this
group of rules of origin is the most complex, and has the most differences between the
CPTPP and the FTAs that Vietnam Nam has signed before.
The treatment of recycled materials used in the production process refurbished goods
1. Each Party shall provide that recycled materials obtained in the territory of one or more
Party shall be deemed to be originating if used in the production or constituted in
refurbishment.
2. For more clarity:
(a) A refurbished good is originating only if it meets the requirements of Article 3.2 (Goods
originating goods); and
(b) Recycled materials that are not used or constituted in the process of refurbished goods
must meet the provisions of Article 3.2 (Goods with origin).
2. Each Party shall provide that if non-originating materials are used in the production of
goods, the value of which below shall be taken as the originating ingredient when determining
the price content
Area value of goods:
(a) the value of the processing of the non-originating material taking place in the territory of
territory of one or more Parties; and
(b) the value of the originating materials used in the manufacture of the materials non-origin
taking place in the territory of one or more of the Parties.
The Spaghetti Bowl Effect is an interesting phenomenon in trade economics where the
increasing number of Free Trade Agreements (FTAs) between countries slows down trade
relations between them. This term (spaghetti bowl) makes an analogy between the tangling of
spaghetti in a bowl with the tangling of different FTAs in a region. Spaghetti bowl
phenomenon was first discussed by Jagdish Bhagwati in 1995. In free trade agreements,
members agree on a lowered internal tariff to be applied between them, while at the same
time each member can have its own external tariff levied on imports from non-member
countries.
Positive impacts:
The "spaghetti bowl" phenomenon refers to the proliferation of overlapping and complex
network of bilateral and regional trade agreements among countries, which can have certain
positive impacts on international trade. These may include:
Increased Market Access: The "spaghetti bowl" phenomenon can lead to increased market
access for countries engaged in multiple trade agreements. By participating in multiple
bilateral or regional trade agreements, countries may gain access to new markets and export
opportunities, which can boost their trade and economic growth.
Diversification of Trade Partners: The "spaghetti bowl" phenomenon can help countries
diversify their trade partners. By engaging in multiple trade agreements with different
countries or regions, countries can reduce their dependence on a single market and spread
their trade risks. This can enhance resilience to economic shocks and provide greater stability
in international trade relations.
Economic Integration: The "spaghetti bowl" phenomenon can foster economic integration
among participating countries. Trade agreements can promote closer economic ties, including
the liberalization of trade in goods and services, investment, and other areas of economic
cooperation. This can lead to increased trade flows, investment, and economic collaboration
among countries, which can contribute to economic growth and development.
Regional Value Chains: The "spaghetti bowl" phenomenon can support the development of
regional value chains. Trade agreements can promote the integration of regional supply
chains, where countries specialize in different stages of production, leading to increased
intra-regional trade and economic interdependence. This can foster industrialization,
technology transfer, and economic development in the region.
It's important to note that the "spaghetti bowl" phenomenon can also have challenges, such
as overlapping and complex rules, administrative burdens, and potential conflicts among
different trade agreements. However, it can also provide opportunities for countries to expand
their trade and economic relations, promote regional integration, and foster cooperation
among participating countries. Balancing the benefits and challenges of the "spaghetti bowl"
phenomenon requires careful management and coordination among countries involved.
Negative impacts:
The "spaghetti bowl" phenomenon, which refers to the proliferation of overlapping and
complex network of bilateral and regional trade agreements among countries, can also have
1. Trade Costs and Administrative Burdens: The "spaghetti bowl" phenomenon can result
in increased trade costs and administrative burdens for businesses. Having multiple
trade agreements with different rules of origin, customs procedures, and
documentation requirements can be complex and time-consuming, leading to higher
compliance costs and administrative burdens for businesses engaged in international
trade. This can create inefficiencies and raise the cost of doing business, particularly
for small and medium-sized enterprises (SMEs).
2. Inconsistent Rules and Standards: The "spaghetti bowl" phenomenon can result in
inconsistent rules and standards among different trade agreements. Trade agreements
may have varying rules of origin, tariff schedules, technical regulations, and other
provisions, which can create confusion and uncertainty for businesses. This can result
in compliance challenges, trade disputes, and non-tariff barriers to trade, hindering the
smooth flow of goods and services across borders.
3. Potential for Trade Conflicts: The "spaghetti bowl" phenomenon can lead to potential
conflicts among different trade agreements. Trade agreements may have overlapping
or conflicting provisions, leading to disputes among participating countries. Resolving
such conflicts can be time-consuming and resource-intensive, and may require legal
arbitration or diplomatic efforts, which can disrupt trade flows and create uncertainty
for businesses.
4. Exclusion of Less Developed Countries: The "spaghetti bowl" phenomenon can result in
exclusion of less developed countries from trade agreements. Smaller and less
developed countries may face challenges in participating in multiple trade agreements
due to limited capacity, resources, and negotiating power. This can result in
asymmetrical trade relations, where smaller countries face difficulties in fully benefiting
from the trade agreements, potentially leading to marginalization and unequal
outcomes.
5. Distortions and Inequities: The "spaghetti bowl" phenomenon can lead to distortions
and inequities in trade relations. Trade agreements may not always be balanced in
terms of benefits and costs, and some countries may gain more advantages than
others. This can result in uneven distribution of benefits, potentially exacerbating
income inequalities and creating winners and losers among participating countries.
6. Lack of Coherence and Integration: The "spaghetti bowl" phenomenon can result in lack
of coherence and integration in regional or global trade architecture. Multiple and
overlapping trade agreements can make it challenging to achieve a coherent and
integrated approach to trade policy, resulting in fragmented and inconsistent trade
relations among countries. This can hinder the progress towards broader trade
liberalization, harmonization of standards, and regional or global economic integration.
It's important to note that the negative impacts of the "spaghetti bowl" phenomenon can vary
depending on the specific context and implementation of trade agreements. Managing and
among participating countries to ensure that trade agreements are effectively implemented
Sanitary and Phytosanitary Measures (SPS) are all regulations, conditions and mandatory
requirements for imported goods in order to protect the lives and health of people, animals
and plants, through ensuring food safety and/or preventing the entry of diseases of plant and
animal origin.
The EVFTA has a separate Chapter on SPS (Chapter 6). In addition to emphasizing the
responsibility of Parties to fully comply with SPS obligations under the WTO, the SPS
Chapter of the EVFTA also adds a number of new commitments, notably:
The SPS measures shall be applied uniformly to the entire territory of the exporting Party
(except for goods from high-risk areas). For Vietnam, this obligation is understood as
Vietnam's SPS control procedures for EU imports must be applied uniformly, whether the
goods come from the territory of Germany or any other EU member.
However, in case of disease and pest risk, Vietnam or the EU has the right to apply separate
SPS measures geographically partitioned according to the level of risk (high risk, low risk, no
risk). For example, if the disease is of high risk in France but not in Germany, then Vietnam
will only apply restrictive measures to French products but not to products imported from
Germany.
Technical barriers to trade (TBT) are standards and technical regulations that a country
applies to imported goods and/or conformity assessment procedures of imported goods to
ensure the compliance with the standards or technical regulations.
Each country has its own TBT system which is developed for many different management
purposes (for example, to protect the safety and health of users, and protect the
environment...). Requirements such as labeling, packaging, minimum/maximum standards of
product quality… are TBT measures. The WTO has a separate agreement on TBT, with
provisions to ensure that countries maintain a transparent and reasonable TBT system that
does not create disguised barriers.
The EVFTA also has a separate Chapter on TBT (Chapter 5), with commitments to bind
Vietnam and the EU (including Germany) in promulgating and implementing TBT measures
for goods. The TBT Chapter of the EVFTA emphasizes compliance with the TBT Agreement
of the WTO, and also adds some additional principles on how Vietnam or the EU (including
Germany) issues and maintains TBTs to limit the abuse of TBT measures to protect domestic
production, notably:
• More specific requirements for the promulgation and implementation of technical regulations
in general
Regarding technical regulations, the EVFTA has its own requirements in comparison to the
WTO as follows:
+ Before promulgating technical regulations, the EU/Vietnam must ensure a number of
requirements: (i) Considering different management methods, not just legal regulations,
endeavoring to assess the impact of regulations, (ii) Using international standards such
as ISO, IEC, ITU, Codex when appropriate, in case the application of standards is
different from international standards, it is necessary to clarify the difference and
explain the reasons why those international standards are inappropriate for its country,
(iii) Notifying the Government of the other Party of the proposed regulation and allowing
at least 60 days for the other Party to comment;
+ In the process of implementing technical regulations, the EU/Vietnam must ensure a
number of requirements: (i) Reviewing technical regulations when necessary to ensure
convergence with relevant international standards, (ii) Regular reviewing standards that
are not based on international standards with the aim of increasing compatibility with
international standards, (iii) Considering equivalence recognition of technical
regulations of the other Party upon request.
Marking and labeling requirements are the most common technical regulations. The EVFTA
has a number of specific commitments on TBT related to marking and labeling of goods,
notably:
+ Mandatory information on labels and marks of goods will only includes information that
is relevant to consumers/users; or information about the product's conformity with
mandatory technical regulations;
+ Except for the public interest, if the goods have met the relevant mandatory standards,
it is not required to register or apply for approval of the labels or marks before being
circulated on the market;
+ It is permissible to attach or supplement labels, in authorised premises in the territory of
importing country (for example, in the customs or bonded licensed warehouse at the
point of import), but may require keeping (not removing) the original label on products;
+ Permitting information in other language in addition to the language required by the
importing country, or internationally accepted nomenclatures, pictograms, symbols or
graphics, and other information;
+ Encouraging the approval of non-permanent labels that are not fixed, can be
detached/peeled off from goods or marking or labeling in the accompanying
documentation rather than physically attached to the product.
According to Article 3 of the Law on Plant Protection and Quarantine, plant quarantine is the
activity of preventing, detecting and controlling plant quarantine objects, objects subject to
control and strange harmful organisms.
Article 28 of the Law on Plant Protection and Quarantine 2013 stipulates that the dossiers,
order and procedures for granting an import phytosanitary license are as follows:
+ Commercial contract;
- The order and procedures for granting an import phytosanitary license are prescribed as
follows:
+ Within 15 days from the date of receipt of complete and valid dossiers, the central agency
specialized in plant protection and quarantine shall consider and grant the import plant
quarantine permit; in case of refusal, it must reply in writing and clearly state the reason.
10. Conditions to export agricultural products to China? And suggesstion for export
enterpries?
- SPS conditions must be met to export goods to China
Product Registration: Agricultural products intended for export to China may need to be
registered with the relevant Chinese authorities, such as the General Administration of
Customs of China (GACC), and obtain necessary permits or licenses.
Product Inspection and Certification: Agricultural products may need to undergo inspection
and certification by Chinese authorized organizations to ensure compliance with Chinese
SPS standards. This may include testing for contaminants, residues, and other quality
parameters, as well as verification of production and processing practices.
Pest and Disease Control: Agricultural products must comply with Chinese regulations related
to pest and disease control. This may include requirements for treatment, fumigation, or other
measures to prevent the spread of pests and diseases.
Packaging and Labeling: Packaging and labeling requirements for agricultural products may
need to comply with Chinese regulations, including proper labeling of product information,
origin, and other relevant details.
Compliance with Maximum Residue Limits (MRLs): Agricultural products intended for export
to China must comply with Chinese regulations on maximum residue limits (MRLs) for
pesticides, veterinary drugs, and other chemical residues. This may require careful
monitoring of production and processing practices to ensure compliance with Chinese MRLs.
Other Requirements: Depending on the specific agricultural product, there may be additional
requirements related to packaging materials, labeling of genetically modified organisms
(GMOs), and other relevant regulations.
Labeling and packaging: Agricultural products exported to China must be labeled and
packaged according to Chinese regulations. This may include requirements for product
name, weight, ingredients, nutritional information, production date, shelf life, and country of
origin, among others. Labels and packaging must be in compliance with Chinese regulations,
and any specific requirements for the type of product being exported.
Testing and certification: Some agricultural products may require testing and certification by
accredited laboratories or certification bodies to ensure compliance with Chinese regulations.
This may include testing for quality, safety, and other relevant parameters. Exporters may
need to obtain relevant certificates or documents to prove compliance with Chinese TBT
requirements.
Intellectual property rights: Exporters need to ensure that their agricultural products do not
infringe upon any intellectual property rights (IPR) in China. This includes trademarks,
patents, copyrights, and other IPR. Exporters should verify that their products do not violate
any IPR laws in China and take appropriate measures to protect their own IPR.
- Required document
The exporter may prepare the following documents to import food products into China:
Commercial invoice;
A detailed packaging list;
Bill of lading;
Certificate for export from country of origin;
Hygiene/Health certificate;
Certificate of bottling date (for drinks);
Certificate of free sale;
Sample of original label;
Sample of Chinese label; and
Inspection certificate issued by AQSIQ.
Proper documentation: Accurate and complete documentation is crucial for exporting goods
to China. Vietnamese businesses should ensure that all required documents, such as
commercial invoices, packing lists, certificates of origin, and other relevant certificates or
permits, are properly prepared and submitted. Any discrepancies or omissions in
documentation can result in delays or even rejection of the goods by Chinese customs.
Building relationships with Chinese partners: Building and maintaining good relationships with
Chinese partners, such as importers, distributors, or agents, can be crucial for successful
exports to China. Vietnamese businesses should establish trust, communicate effectively, and
be responsive to the needs and expectations of their Chinese partners. Cultivating strong
business relationships can lead to long-term business success in the Chinese market.
Quality control and product safety: Chinese consumers have high expectations for product
quality and safety. Vietnamese businesses should ensure that their products meet or exceed
Chinese standards for quality and safety. Implementing robust quality control measures,
obtaining relevant certifications, and conducting product testing can help ensure that products
meet Chinese requirements and gain consumer confidence.
Logistics and transportation: Efficient logistics and transportation are critical for timely and
cost-effective exports to China. Vietnamese businesses should carefully plan and manage
their logistics and transportation arrangements, including packaging, labeling, shipping, and
customs clearance. Engaging reliable logistics partners, understanding Chinese customs
procedures, and ensuring compliance with import/export documentation requirements are key
considerations.
Stay updated with regulations: Chinese regulations and trade policies can change, and it's
important for Vietnamese businesses to stay updated with the latest developments. Regularly
monitoring changes in Chinese import/export regulations, tariffs, and trade policies can help
businesses adapt and comply with the evolving landscape.
In conclusion, exporting goods to China can be a lucrative opportunity for Vietnamese
businesses, but it requires careful planning, compliance with regulations, understanding of
the Chinese market, building strong relationships with Chinese partners, and attention to
quality control, logistics, and payment terms. Being well-prepared and proactive in navigating
the complexities of exporting to China can help Vietnamese businesses achieve success