Implications Of Free Trade Agreement

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Free trade agreements should stimulate trade between two or more countries. The strengthening of international trade has the following six main advantages: in Vietnam`s import structure, EU products from the industrial sector accounted for 97% of the total value of Vietnam`s imports (General Statistics Office of Vietnam, 2018). This is why this paper examines the impact of tariff reductions in the industrial sector on the Vietnamese economy under the EVFTA, using the predictable general equilibrium (CGE) approach. The rest of this study is structured as follows. The following section summarizes the literature that includes the CGE models and examines the impact of tariff removal on the economy. Section 3 shows the theoretical framework for CGE modeling. And Section 4 describes the data and methodology of the research. Section 5 then examines the empirical results of this study. The last part contains the conclusions and political implications. It is clear from the above results that Vietnam`s trade balance will be in deficit due to zero industrial tariffs. More and more industrial products from EU countries will invade the Vietnamese market, which will lead to fierce competition for domestic companies, but will create a great opportunity for Vietnamese companies to be able to improve the business environment, improve product quality and diversify product types.

Ganguly, A. and Das, K. (2017), “Multi-sectoral analysis of foreign investment and trade liberalization in India: a CGE modelling approach,” Global Business Review, Vol. With regard to imports, the removal of tariffs will further stimulate imports and lead to a trade deficit. As shown in Table VII, the impact of the removal of tariffs on the industrial sector on import values is greater than on export values. In particular, import values in the agriculture, industry and services sectors increased by 9.61, 13.15 and 8.21%, respectively. Environmental protection measures can prevent the destruction of natural resources and crops. Labour laws prevent poor working conditions. The World Trade Organization imposes rules on free trade agreements.

A better solution than protectionism is to include rules in trade agreements that protect against inconvenience. Although most of these studies use different analytical methods, they show similar results on the importance of reducing and eliminating tariffs for economic development and well-being. In this article, the authors made an ex-post assessment of the impact of EVFTA on certain critical factors of the Vietnamese economy, such as household consumption, production factors, trade balance and the state budget, under the scenario of the elimination of the customs barrier of the industrial sector, establishing a SAM based on the last table of Vietnamese inflows/exits for 2012, and then using the static model. Ganguly and Das (2017) followed a CGE modelling approach and built a SAM to assess the impact of FDI and trade liberalization in India. Its article showed that any change in trade policy will change not only the volume of exports and imports from different sectors, but also the level of GDP, the exchange rate and government revenues. Erero and Bonga-Bonga (2018) recently conducted a study to assess the impact of tariff reduction on Congo`s economy using a CGE model. In its paper, it was found that formal sector production and employment increase when tariffs fall, because this policy of tariff reduction fuels import competition, and local producers must survive import competition by attempting to import input-efficient technologies and production practices. Duong, N.B (2016), “Vietnam-EU Free Trade Agreement: Implications and Political Implications for Vietnam,” SECO Working Paper No. 07/2016, World Trade Institute, IL. Nguyen, D.K.L.

and Cao, T.H.V. (2016), “Do free trade agreements generally and individually

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