INTRODUCTION

1. Definition:
- The movement towards the expansion of economic and social ties between
countries through the spread of corporate institutions and the capitalist philosophy
that leads to the shrinking of the world in economic terms.
2. Culture
3. Political
- Against the State
+ Not have an active role in it
+ Losing power
 Replace: global companies, int’ organizations

- In defense of the State

+ guarantee internal and external security
+ underpin the law
+ fund national welfare systems
+ provide structures for popular representation
+ build the framework for economic and social activities
 fundamental role in creating institutional forms and strategies of globalization
process

- 2 realities co-exist:
● borderless virtual world (transactions can occur in seconds)
● borders still count (local realities are complex and different)

4. Economics
A/ Integration: ↑ reliance, opps to sell & buy, opps for labour and capital to locate, ↑
markets in finance
→ Markets and Productions

B/ Faster growth of trade relative to GDP

- End of Cold War  reduced military expenditures, boosted investment in other
areas
- Development of internet, digital economy  boosted trade
- Large developing economies embraced eco reform and initiated a catch-up process
growth  trade important role

C/ Globalisation of markets: global market, ↓ trade barriers, tastes and preferences are
converging on global norm

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D/ Globalisation of productions:
- Refers to the sourcing of goods and services from locations around the globe to
take advantage of national differences in cost & quantity of factors of
production (land, labor, capital)
→ Trade is increasingly driven by GVCs
- Fragmentation of production processes + int’ dispersion of activities 
emergence of borderless production systems.

● A supply chain: network of suppliers, factories,.. join in the sale, delivery &
production
● A value chain: full range of activities to bring products to customers → GVCs
● Outsourcing: the “acquisition of an input/service from an unaffiliated
company”
● Offshoring: the sourcing of input goods/services from a foreign country

- Goods and bads of GVCs (3 levels)

+ At global level: spread value added, employment; accelerate “catch-up” of DCs
+ At country level: jobs creation >”< potential long term development depends,..
+ At firm level: ↑ productivity, technological sophistication
→ moving from resource-based exports => exports of manufactures and services

5. HISTORY (5 milestones)
1/ The origins of eco globalisation (Antiquity-14th cen)
- Essential inventions:
+ Shipping: wheel
+ Writing: oldest form - record livestock, harvests, written legal contracts
- First form globalisation → great empires - politically unify vast, disparate
territories, enhanced movement of goods and pp

2/ The new horizons of the Renaissance (15th-18th cen)

- Major tech advances, expanded trade, a new milestone (new products, postal
services, printing press)
- Development in transportation (ships and fleets grew larger)
- European colonial enterprise + increased eco movement
- Trade - a tool of power
+ Mercantilism
+ Tariff

3/ The Industrial Revolution and explosion of int’ trade (late 18th-1914)

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 - Tech innovations and new production methods (mechanization - textile,
mining-coal, metallurgy)
- Emergence of stream era, new methods (railroad expanded, ships grew faster,
shipping costs dropped - Suez, Panama Canal)
- 2nd Industrial Revo - late 19th
+ Emergence of oil, advances in chemistry. mechanics
+ Innovations transformed modes of communication (underwater transatlantic
cable)
+ Distances - more manageable → prices set on a global scale
+ New laws facilitated capital movements

4/ The 2 WW stall the globalisation (1914-1945)

- 1st WW caused trade downturn in most Western, not US
- >”< second half of 20th → renewed multilateralism, a rise of MNEs

5/ Growing eco integration (1945-1990s)

- Cold War, decolonization → world fragmentation
- Govs experimented several political + economic models
- Ecosystem that promoted trade → Bretton Woods framework, tech progress
=> Facilitated global eco integration, MNEs were a vital driver.
- Political developments had impacts
- Tech advances - major role → intensive globalisation
- Post-war period marked rejection of protectionism in Western

6. DRIVERS OF GLOBALISATION (2 main drivers)

=> A 2-way relationship exists between technology and trade. Tech drives trade and
trade is one of the factors shaping technological progress
+ Trade affects tech: incentives (for firms) to innovate, tech transfer - market
size, competition, tech spillovers
+ Trade affects institutions that shape eco incentives facing firms
+ Exporting = a channel of tech transmission
1/ The increasing of technology development
- Reduce transportation costs
- Tech advances - major role at the end of the war → intensive globalisation
+ Commercial civil aviation → operators closer together
+ Productivity grew in the merchant marine
+ Telephone = the main mode of communication (e.g cost int’ phone call ↓)

2/ The reducing of trade barriers

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 - Lower trade barriers (custom duties - tariff, import bans, quotas) →
encouraging trade
- Int’ trade → a channel of communication that favors cross-border learning of
production methods, product designs, market conditions.

7. INSTITUTIONS (regulate global marketplace; promote multinational treaties

→ govern global business system)
IMF + WB
- Bretton Woods Conference (1994, New Hampshire)
- Focus on 2 key issues
● establish a stable system of exchange rates
● pay for rebuilding the war-damaged economies of Europe
=> IMF: enforce a set of fixed exchange rates that were linked to dollar
WB: make long-term loans

A/ IMF
- Was conceived in July 1944
- Came into formal existence in Dec 1945 (after Articles of Agreement)
- Began operations Mar 1, 1947
- Activities (policy advices; research, forecasts,..; loans; technical assistance,
training)
+ Lending: loans to members facing actual/potential balance of payments
problems
- 6 countries have about 40% of decision making power (Us, German, Japan,
France, UK, Saudi Arabia)
- Surveillance: oversee int’ monetary system, eco & financial policies

B/ WB
- Different from World Bank Group, extended of 5 int’ organisations - IBRD,
IDA, IFC, MIGA, ICSID
- Reduce poverty and support development
- Managed by 188 member countries: IBRD, IDA
- 6 strategies themes
=> Key areas: Thematic and sector strategies - reduce poverty in specific sector
Country assistance strategies - support a country ↓ poverty + achieve
sustainable development

C/ UN
- Founded in 1945 after WW2 by 51 countries → maintain int’ peace and
security, promote social progress

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 - 4 main purposes
+ keep peace
+ develop friendly relations
+ help nations work together to improve lives of poor people, conquer hunger, ….
+ a centre for hamonizing the actions of nations to achieve these goals

WTO (WORLD TRADE ORGANISATION)

CHAP 1: BASICS
- Began life on 1 Jan 1995
- GATT (1948 - 1994): last and largest round - Uruguay Round (1986 - 1994)
→ led to WTO creation

1. Principles: 5 main
(1) Trade without discrimination (MFN, NT)
(2) Freer trade: gradually, through negotiations
(3) Predictability: binding and transparency
(4) Promoting fair competition
(5) Encouraging development and economic reform

- Most-favored-nation: countries cannot normally discriminate bwt their trading

partners
- National treatment: Imported and locally-produced goods should be treated
equally
● Apply once a product/service/ item of intell’ property has entered the market

- Freer trade:
+ Lower trade barriers (custom duties,..)
+ “progressive liberalization”
+ Developing countries - more time to fulfil obligations

- Predictability:
+ Bind their commitments
+ Change their bindings by only negotiating with their trading partners

- Encouraging development and economic reform

+ DCs need flexibility in time
+ Developed countries allow duty-free and quota-free imports for almost all
products from LCDs

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2. GATT years: From Havana to Marrakesh
- 8 rounds Havana - Marrakesh; fail to create ITO (US không phê chuẩn)
- Need a thorough overhaul → Uruguay Round
- A provisional (tạm thời) Agreement
- Not succeed
+ Governments - other forms of protection
+ Loopholes
+ Trade in services - not covered by GATT rules

3. Uruguay Round
Post-Uruguay build-in agenda: timetable for future work

CHAP 2: AGREEMENTS
1. Overview
- Cover goods, services, intellectual property
- 6-part broad outline:
(1) An umbrella agreement (the Agreement Establishing WTO)
(2) Agreements for Goods
(3) Agreements for Service
(4) Agreements for Intellectual property
(5) Dispute Settlement
(6) Reviews of governments’ trade policies

2. Tariff: more bindings and closer to zero

- Tariff cuts
+ developed countries:
 40% cut on industrial products
 6.3% to 3.8%
 imported industrial products receive duty free treatment jump 20%  40%
+ fewer products charged high duty rates
- More bindings

3. Agriculture
Agreement on Agriculture (AOA)
- Make policies more market-oriented
- New rules and commitments apply to:
● market access: Tariffs only
● domestic support: domestic policies that have a direct effect on production
and trade have to be cut back

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 ● export subsidies: prohibits export subsidies

4. Standards and safety

(1) Sanitary and Phytosanitary Measures Agreement (SPS)
- Allow to set their own standards, must based on science
- Encourage to use int’ standards → not to be challenged legally in a WTO
dispute
- Can use measures - higher standards
- If a export country can demonstrate that measures it applied achieve same level
as in importing country → importing country is expected to accept the
exporting country's standards

(2) Technical regulations and standards (TBT)

- Technical regulations adn standards vary  difficult for producers and exporters
But also neccessary (enviromental protection, safety,…)  help trade
=> Ensure that regulations, standards, testing, certification procedures do not
create unnecessary obstacles (packaging, specific models,..)

5. Textiles
- Agreement on Textiles and Clothing (ATC)
+ From 1974 until end of Uruguay Round, trade was governed by Multifibre
Arrangement (MFA)
+ Since 1995, ATC took over MFA
+ By 1/1/2005, was fully integrated into normal GATT rules → ATC no longer
exists

- Transitional safeguards:
+ were not the same as normally, they can be applied on imports from specific
exporting countries
+ importing country had to show that domestic industry was suffering/threaten
with serious damage

6. Services
General Agreement on Trade in Services (GATS)
- the 1st and only set of multilateral rules governing int’ trade in service
- GATS has 3 elements:
(1) the main text containing general obligations and disciplines
(2) annexes dealing with rules for specific sectors
(3) individual countries’ specific commitments to provide access to their markets

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 - General obligations and disciplines
+ total coverage: covers all int’lly - traded services
+ defines 4 ways (or “modes”) of trading services
● “cross-border supply”- mode 1
● “consumption abroad” - mode 2
● “commercial presence” - mode 3
● “presence of natural persons” - mode 4
+ MFN treatment (on principle of non-discrimination, equal opportunities all
members)
+ Commitments on market access and national treatment (NT)
+ Transparency (governments must publish all relevant laws and regulations;
notify WTO of any changes)
+ Regulations: objective, reasonable (Govs retain their right to set qualification
requirements for doctors and lawyers, and to set standards to ensure consumer
health, safety)
+ Recognition (give a chance to negotiate comparable pacts; these recognition
agreements have to be notified to WTO)
+ Int’ payments and transfers
● must not normally restrict money being transferred out of country as payment
for services supplied
● only exception: balance of payments difficulties
+ Progressive liberalization (GATS requires more negotiations besides Uruguay
Round - began in early 2000 => Doha Development Agenda)

- The annexes
+ Movement of natural persons: stay temporarily in a country to provide a service
+ Financial services
+ Telecommunications: public suppliers are given access without
discriminination
+ Air transport services: aircraft repair, maintenance services, marketing; traffic
rights and directly related activities are excluded

7. Intellectual Property
Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS)
- Negotiated in Uruguay Round
- an attempt to narrow the gaps in the way these rights are protected around the
world, and to bring them under common int’ rules
→ establishes minimum levels of protection that each gov has to give to the
intellectual property of fellow WTO members
- Covers 5 broad issues

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 (1) basic principles
(2) adequate protection
(3) enforce those rights adequately
(4) settle disputes
(5) special transitional arrangements
- Basic principles
● MFN
● NT
● intellectual property protection should contribute to technical innovation and
the transfer of technology

- Common ground-rules: adequate standards of protection

World Intellectual Property Organisation (WIPO)
● Paris convention → Protection of Industrial Property
● Berne convention → Protection of Literary and Artistic Works

- Types of inte’ prop: 8 areas covered

+ Copyright and related rights
+ Trademarks (nhãn hiệu)
+ Geographical indications
+ Industrial designs
+ Patents (sáng chế)
+ Integrated circuits layout designs
+ Undisclosed info, including trade secrets (bí mật kinh doanh)
+ Curbing anti-competitive licensing contracts

- Transition arrangements: to ensure laws and practices conform with TRIPS,

took effect 1/1/1995
● developed countries: 1 year
● developing countries: 5 years, until 2000
● LDCs: 11 years, until 2006, extended to 2016 for pharmaceutical patents

8. Anti-dumping, subsidies, safeguards

(1) Anti-Dumping Agreement
- “Dumping”: a company exports a product at a price lower than the price it
normally charges on its own home market
- Allow countries to act in a way that would normally break the GATT principles
- Anti-dumping action = charging extra import duty on the particular product
from particular exporting country → bring its price closer to “normal value”/
remove injury to domestic industry
+ 3 methods to calculate “normal value”
● based on the price in the exporter’s domestic market

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 ● the price charged by the exporter in another country
● a calculation = exporter’s production costs + other expenses + normal profit
margins
+ can only be applied if the dumping is hurting the importer’s domestic industry
+ must expire 5 years after the date of imposition, unless an investigation shows
otherwise

(2) Agreement on Subsidies and Countervailing Measures (SCM)

- This agreement does 2 things:
+ disciplines the use of subsidies
+ regulates the actions countries take to counter the effects of subsidies
- “specific” subsidy - a subsidy available only to an enterprise, industry, group of
enterprises/ industries… that gives the subsidy
- 2 categories of subsidies:
● Prohibited
+ Subsidies that require recipients to meet certain export targets/ to use domestic
goods instead of imported goods
+ Dispute Settlement: if the subsidy is confirmed prohibited → withdrawn
immediately, otherwise complaining country can take counter measures

● Actionable
+ Complaining country has to show that the subsidy has an adverse effect (hurt
domestic industry, hurt rival exporters, domestic subsidies hurt exporters trying
to compete in that country’s domestic market)
+ confirmed adverse effect → withdraw or countervailing duty be imposed

(3) Agreement on Safeguards

- “grey area” measures: persuade exporting countries to restrain exports
“voluntarily” or to agree to other means of sharing markets
=> WTO prohibits “grey area” measures + sets time limits (a “sunset clause”) on all
safeguard actions → members must not seek, take voluntary export restraints
- A safeguard measure should not last more than 4 years, though can be extended
up to 8 years)
- DCs’ exports are shielded from safeguard actions
- Safeguards Committee oversees the operation of the agreement

9. Non-tariff barriers
(1) Agreement on Import Licensing Procedures (ILP)
- import licensing should be simple, transparent, predictable

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 - sets criteria for automatic licensing → the procedures used do not restrict trade.
If licenses not issued automatically, the agreement tries to minimize the
importers’ burden in applying for licenses
- agencies handling licensing should not normally take > 30 days to deal with an
application - 60 days when all applications are considered at the same time.

(4) Agreement on Customs Valuation (ACV)

- Rules for the valuation of goods at customs
- provides a set of valuation rules, expanding and giving greater precision
compared to which in original GATT
- customs administrations have the right to request further info in cases where
they have reason to doubt the accuracy of declared value of imported goods

(5) Preshipment Inspection Agreement (PSI)

- establishes an independent review procedure (by specialised private
companies- “independent entities” → check shipment details: price, quantity,
quality)
#GATT principles: apply to activities of agencies mandated by governments

(6) Rules of Origin Agreement (ROO)

- “Rules of origin” = the criteria used to define where a product was made
- establishes a harmonization work programme, based upon a set of principles

(7) Trade-Related Investment Measures Agreement (TRIMS)

- countries must inform fellow members through the WTO of all investment
measures that do not conform with the agreement

10. Plurilaterals: of minority interest

- 4 agreements remained form Tokyo Round  narrower group of signatories,
known as “plurilateral agreements”
+ trade in civil aircraft
+ gov procurement
+ dairy products
+ bovine meat
=> bovine meat, dairy agreements – terminated in 1997

11. Trade policy reviews

- Frequency of reviews depends on country’s size:
● 4 biggest traders: once 2 years
● next 16 countries: once 4 years

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 ● remaining countries: every 6 years
- 2 documents: policy statement by gov under review + detailed report by WTO

CHAP 3: SETTING DISPUTES

- Principles: equitable, fast, effective, mutually acceptable
- Dispute Settlement Body: has the sole authority
● to establish “panels”
● accept/ reject the panels’ findings/ results of an appeal
● to authorize retaliation
+ 2 stages:
 1st: consultation (up to 60days)
 2nd: the panel (up to 45days for a panel to be appointed + 6 months for the
panel to conclude)
Country “in the dock” can block the creation of a panel once

- Panels:
+ consists of 3 (possibly 5) experts
+ report is passed to DSB
+ for each case, panellists can be chosen from a permanent list or elsewhere
+ how they work (9) (before 1st hearing, 1st hearing, reburals, experts, 1st drae,
interim report, review, final report, the report becomes a ruling)

- Appeals:
+ each appeal is heard by 3 members of a permanent 7-member Settlement
Appellate Body, members of SAB have 4-year terms
+ appeals should not last > 60days, max: 90 days
+ DSB has to accept/ reject the appeals report within 30days

- Decisions

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CHAP 5: THE ORGANIZATION
There are 4 levels

4th level: 11
committees dealing
with specific
subjects

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FREE TRADE AGREEMENTS (FTAs)
1. Levels

- FTA: eliminate tariffs and non-tariff barriers, but each country maintains its own
trade policies, including trade tariffs outside the region (ASEAN, NAFTA, ..)
- Customs Union: members conduct free trade among themselves + maintain
common tariffs & other trade policies outside the arrangement (CARICOM,
MERCOSUR)
- Common Market: eliminating barriers to labor and capital flows across national
borders within the market (CARICOM, MERCOSUR)
- Economic Union: EU

2. Why countries form FTAs? Economic + political reasons

- by eliminating tariff and some non-tariff barriers, FTAs permit the products of
FTAs partners easier access to one another’s market.
- used to protect local exporters from losing out to foreign companies that might
receive preferential treatments under other FTAs
- slow progress in multilateral negotiations
- political considerations are also a motivation

3. Impacts
- Trade creation:

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  occurs when a member of an FTA replaces domestic production of a good with
imports of the good from another member of the FTA
 improve eco welfare within group bc resources are shifted to more efficient
uses.
- Trade diversion:
 occurs when a member of an FTA switches its import of a good from an
efficient non-member to a less efficient member bc the removal of tariffs
within group and the continuation of tariff on imports from non-member makes
it cheaper
 reduce eco welfare bc resources are being diverted from an efficient producer
to a less efficient one.

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