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Trend Of Trade Globlization And Integration Of Vietnam Economics Essay

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Published: Mon, 5 Dec 2016

In recent years, international trade grows faster than the world’s economy and this trend will continue. Particularly for developing countries, trade is the primary means to implement the benefits of globalization. Import increases competition and diversity of the local market, bringing benefits to consumers, and export expands markets on abroad, bring business benefits. But further more important, trade has helped companies in the country exposed to the best practices of foreign companies and understand the requirements and demands of customer, encourage to create more and more high efficiency. Trade has helped the company with opportunities for improving the input capital, such as machine, as well as increasing labor power. It also promotes the redistribution of labor and capital to the areas where has higher labor power. Especially, it helps to shift some services and manufacturing from industrialized countries to developing countries, creating new opportunities for growth.

TRENDS OF TRADE GLOBALISATION AND VIETNAM’S INTERGRATION

The flow of international trade has entered to the operation of the developing economies, impacted on the entire economic structure in general and the distribution of income, employment, recruitment, and especially to increasing labor power. In 1990, transaction volume of goods and services rose twice for the rate of global GDP and the share of developing countries rose from 23% to 29%. The numbers that sum does not reflect the significant the changes in structure in 10 years has created new opportunities for growth in developing economies.

The change in structure of trade has created new patterns of international exchange of goods, services and ideas. Trafficking in these structures are part of the new model. Processing components that overseas becomes increasingly common business practices, and the use of the Internet will increasingly open process that encourages new producers around the world are developing air network. The exact number is difficult, but in the early 1990s, about one third of total manufacturing trade (about $ 800 million) as structural components. This type of trade has generated a global production networks are constantly expanding the branch connecting within transnational companies with the design, production and distribution structures do not have to do together. These networks help companies reach new markets, establish new trade relations and facilitate the transfer of technology. Advances in information technology to assist companies in developing countries integrate into the global production network.

The trade growth rate and services in recent years, electronic commerce is a part of new commercial section mold. For example, General Electric shows information about purchasing the required components on the Internet, so that companies from around the world want to be the supplier that structures. For the long term, electronic trading will become a large area, there are opportunities to expand trade, that also requires a framework law must be expanded. Thanks to advances in information technology and communications is that the trade has rapidly increased to 25% alone between the years 1994 to 1997. This form of trade has created more opportunities for some developing countries can easily create a variety of popular services.

The founder of the World Trade Organization (WTO) in 1995 based on the General Agreement on Tariffs and Trade (GATT) is a step in the most recent multimedia to create a beneficial environment for the exchange of goods and services. Many other important measures must be followed to keep the reform momentum. Trade negotiations in the future requires an agenda for long-term vision, to achieve trade liberalization, opening up wider markets and reduce trade barriers in agriculture as well as service remains the needs priority. The selling agricultural products was created for regional economies are developing countries a real chance, if this opportunity is not hampered by the trade barriers of rich countries. Countries has to increase the using the WTO’s mechanism. For example, a country wishing to strengthen commitment to reduce (or maintain) low trade barriers, it can “bind” its tariffs by combining decided to lower tariffs and with the international obligations of them at the WTO. More and more countries as the WTO and international trade rules are mechanisms to advance to the national target (rather than the issue of barriers to self-determination), and some countries can support such institutions are increasing.

The commercial services export has increased on every continent throughout the 1990s. This change has a special meaning because the service is often used in the manufacture and production of both goods and other services. The increasing international competition means lower price and improve quality, increase the competitiveness of the industry is going down. Both the industrial economy and developing economies have benefited from opening its market. The developing countries will benefit greatly by lowering tariff barriers for agricultural products and services by using labor-intensive construction sector and the maritime industry. Meet the strong growth of trade flows is committed to growing the economy growing for the liberalization of its trade regime. Their determination was expressed in many forms: participation in WTO (110 out of 1522 developing countries as members in 1999), participation in regional trade agreements and reforms carried out unilaterally. But the promotion of trade reform is facing resistance on increasing, especially in the industrial economy, where adjustment in response to the pressure of competition on international markets may be a painful process.

The success of trade reform will require reallocation of resources between economic groups, and that adjustments may have to pay dearly for some groups. More and more governments recognize the success of trade reform requires the institutions of the labor market must be flexible. These companies compete against imports are also promoting trade reform by using anti-dumping laws to reverse the achievements of market reforms that have won before. At least 29 countries have laws that apply in 1997 and many other countries have recorded them.

Although the 1990s that witnessed dramatic progress in liberalizing the trade regime, but maintain the momentum of progress in 25 years will be more difficult. For developing countries, it is important to fully integrate and use all the technical expertise is in hand to achieve good results in the areas of agricultural trade liberalization and free products by the exchange of services most closely related to their future development. Recognizing that trade reform is to create both losers and is the starting point. The real challenge will be convincing winners down a portion of their profit to compensate for those lost to be affected, if not then this will hinder the reform process.

General policy that consider lost employment situation of workers before the forces of trade. These policies must address the concerns of the workers laid off in general, because many workers blame trade for lost jobs and reduced pay, whether the foreign trade sector is responsible or not. Promote trade liberalization in the labor market policies have helped workers to adapt to the impacts of world trade and reduce pressure from the closure of the domestic market for foreign goods.

The government must change these policies still allowed to exist despite the current trade laws, policies hinder rather than promote trade. Examples, anti-dumping law has been allowed to exist under the management of the WTO. These laws to ensure that products sold are not sold as affordable in the domestic market. But such rules can easily become barriers to imports, reducing the market expansion and reverse the results obtained from the previous trade agreements. One solution to this problem is to handle and decide on the price of those imports as well as domestic companies under the same criteria given. According to this view, the only antitrust issues such as state fish big fish swallowed him.

Above are some of the issues of global trade. An inevitable trend in the XXI century participate also of the extent of developing country brings many challenges. Comb through the process of trade integration of our country from the period 1986 to date there have been many positive changes, creating new sources of air relay for growth and stable development of economy.

After the Sixth Party Congress, beginning in 1987, Congress has gradually developed the legal framework for each area of ​​operation, has issued a series of laws such as the Foreign Investment Law, Land Law land, import / export tax law, as the basis for attracting investment, determining ownership of land, and the legal institutionalization of tariff barriers. Besides, the Government issued a decree on management of foreign exchange for permission to open foreign currency accounts and allowing money to pay for imports and repayment of foreign banks into the system and two-level ; easing the establishment of trade organizations in foreign countries. An important step for Vietnam’s trade activities, transformed itself from a planned mechanism to a market economy, as an end in the foreign trade monopoly of the state and encourage private economic sectors are allowed to operate in all fields.

Entering 1989, the National Assembly of the legal trade through economic contracts Ordinance. The government continues to lift quotas on imported goods, only the export quota for imported goods and 10 for 14 items, then this figure gradually dropped to 7 respectively and 12 items. From 30 exports tax reduced to 12 in the tax rate also decreased. Manufacturers are entitled to supply goods to all foreign trade companies have been licensed accordingly. Regard imports, the number of taxable items from 120 to 30 with the tax rate bracket expansion from 50 to 50% up to 5-120%, in line with each sector imports. SOEs are entitled to allow exports to countries with strong currencies, cancel a previous request to produce enough targets to countries in economic assistance the Council before making other export transactions. Payment terms have been innovations such as transfer rates, according to the executive administration according to executive management market has approached state and then change the official exchange rate announced by the average exchange rates, interbank in order to create autonomy for commercial banks in the regulations between foreign currencies with non-USD USD. Government to terminate support domestic production, to cancel the export support from the budget that SOEs must take responsibility for production and business activities, and no longer use price control policy ( the two price system) – this becomes a new source of motivation for manufacturers of export goods.

In the year 1990 – 1992, Congress continued to improve the Foreign Investment Law, to apply the law on special consumption tax, sales and profits, issued a series of laws such as Company Law, Law State Bank of Vietnam, Bank Law, Law on Credit Institutions, Credit Cooperatives Law & other credit institutions, … to build a legal framework for the operation of this institutional system. Government issued regulations on the establishment of export processing zones stimulate exports, thus, export performance has been paying special attention to increase radically. System list import and export goods will be applied proved relatively harmonious. Import raw materials for export, exempt from import tax reimbursement. In particular, the reduction of rice export tax rate from 10% to 1% had a legal basis for Vietnam to become the second biggest rice exporters in the world. For the first time allowed private companies directly involved in international trade activities. Economic families are encouraged to thoroughly follow the trend of signing the contract, and rural credit policies applied in the banking system began to take effect, especially the role of banks Vietnam’s agriculture in the agricultural sector, for families to borrow the funds to invest in production. Preferential Trade Agreement between Vietnam and the EEC (now EU) was signed to provide export quotas for textile, ready-made clothes in Vietnam in Europe, and spent some incentives for imports from Europe.

Through 1993, the next event Vietnam joins the Customs Cooperation Council is amending the Constitution, amendment of the Land Law. From here the transfer of farmland use rights in the production and allows to use them as collateral for loans to farmers production, this is an important step toward economic goods, it allows individuals to have ownership of property income and personal property. In 1994, Vietnam took the position as observer of the GATT (the predecessor of WTO), and begin the process of simplifying administrative procedures relating to international trade activities. Licensed exports – imports eased, only three export commodities (rice, wood, kerosene) and 15 imported products must comply with strict regulations on licensing. Duty management responsibility has been transferred from the Ministry of Finance to the Ministry of Trade, the foreign exchange market inter-bank was opened. Parallel with the Foreign Investment Law, the Law on Domestic Investment Encouragement has been issued.

Particularly in 1995, there are many diplomatic and political events very positive impact for attracting investment and trade promotion for the next years. Dated 12/07/1995, the United States to lift embargo against Vietnam, announced the implementation of normalization of relations. Till 28.07.1995, Vietnam officially joined ASEAN. Become a member of AFTA, Vietnam also means starting to engage in tariff reduction commitments for agricultural and industrial imports. A series of trade policy and trade support on a more open: exports to quota only remains the sole rice, and imported goods subject to quota management is only 7 items the rate of sales tax was unified tax rates from 18 to 11 levels; issued the list of goods immediately applied tariffs in 1996 with the Common Effective Preferential (CEFT) for AFTA. Besides the advent of the Civil Code lay the foundation for all legal activities in the civil and cultural life – social, as well as the synchronization mechanism of law for the operation of SOEs in the block Law on State Enterprises was born.

Period from 1996 to now, the government continues to promulgate the list of goods in 1997 to apply for preferential tariffs for AFTA Common Effective. Coordination of laws, in order to improve the legal framework for market economy and promote the integration process of Vietnam issued respectively: the State Budget Law, Mineral Law, Law on Value Added Tax Business & Income Tax, Commercial Law. The trade policy of Vietnam is a significant step forward: the allocation of rice export quotas to the provincial People’s Committees as well as other establishments under the Central Government as all the impediments in the sale of rice in the country no longer resources, local firms export directly products without import-export licenses, import management under the scope of tariff quotas or no license as before and the highest tax rate decreased to 60%. Import and export tax law is amended to add conditions and type of anti-dumping duty husband. Excise tax is revised, expanded part.

The process of trade reform in Vietnam was marked by events on May 11, 1998. Vietnam became a full member of the Asian Pacific Economic Cooperation Forum (APEC), has submitted plans action on the short schedule, medium and long term for the implementation of tariff measures, non-tariff, trade, services, investment, customs procedures, intellectual property rights, competition policy … Next is one of 10 events were rated as most important in Vietnam in the early years of the twenty-first century, Vietnam – US Trade Agreement was signed, formally has taken effect from the date December 10th 2001. And in 2002, the Ordinance on electronic commerce has been drafted and Commercial Law has also been adjusted for appropriate amendments to the Agreement on Trade in Vietnam – the U.S. has in effect and the request from the Vietnamese WTO Nam is striving to join in 2005. Integration process of Vietnam’s trade was quantified export over the years as well as contribute to the rate of economic growth of the country.

The Exports and Imports of Vietnam from 1986 – 1997

Unit: million USD

Year

Export

Import

% Export/GDP

% Import/GDP

1986

1.731

1.775

7,17

17,97

1987

2.042

2.107

6,46

15,92

1988

2.475

2.535

4,24

16,15

1989

2.985

3.532

23,85

34,06

1990

4.054

5.250

26,42

33,41

1991

5.198

7.543

32,59

31,08

1992

7.330

10.481

32,42

29,86

1993

8.956

11.459

28,22

32,72

1994

9.365

10.326

34,40

42,00

1995

9.500

10.350

36,30

47,00

1996

7.255,9

11.143,6

43,10

56,90

1997

9.185,0

11.592,3

43,56

51,70

Source: World Bank Report, 2001 General Statistics Office’s Yearbook

The process of trade liberalization in Vietnam emerged a number of key aspects such as:

• It removes the controls on foreign exchange and apply an oriented rate policy that is more oriented market. Being continue the reform, restructure relatively thorough financial system over the wide area.

• Loosen the control gradually restricted to the accession to international trade activities as well as tools to loosen the export and import management.

• Create and modify the tax system to stimulate export production activities in the country and promote multilateral trade and the area has a very positive impact on the economy of Vietnam in general and in particular trade .

• Develop a legal framework for trading activities, from product market for the goods to market products and services.

3. CONCLUSION

According to the general policy, the implementation of Vietnam’s integration has made certain achievements, but there are other opportunities and challenges that concern not only of the leaders, the Government, that also of individual citizens and individual businesses. Although current trends contribute to economic growth of developing countries are exports and services, but if the economy of a country is not based primarily on the existence and growth of domestic production, it is difficult to ensure stability. To ensure that the industrial – agricultural production will not be extinct, Vietnam should develop the products with high competitiveness and promote trade in the global economy, it is inevitable. A small country, from the planned economy move to the market economy, when they want to integrate step by step will have to gradually adjust policies and laws, but how to do? That question is not only of policies in Vietnam to answer, that’s also the work of activists who concern.


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