UNIT 1 INTERNATIONAL TRADE

Learning objectives in this unit

 Exchanging information

 Understanding international trade and its development

 Understanding Subject-specific Vocabulary: terms of trade, absolute advantage,

comparative advantage, the balance of trade, import quota, tariff

Case study:

 Dealing with the supply

Starting point:

Exploring key terms in associated with international trade.

Match the words or phrases with the definitions below.

1E 2I 3A 4F 5J 6B 7H 8C 9G 10D

1. International trade a. buying or bringing in products from another

country

2. Exporting b. a tax on goods coming into or going out of a

country

3. Importing c. the difference between the money that a

country receives from exports and the money it
spends on imports

4. Absolute advantage d. the total amount by which money spent by a

(lợi thế tuyệt đối) business or government is more than the
money it receives

5. Comparative advanatge e. the activity of buying and selling, or

(lợi thế tương đối) exchanging, goods and/or services between
countries

6. A tariff f. ability of a nation to produce a good more

 efficiently than any other nation.
Duty=tax=tax imposed on
imported goods

7. An import quota g. the amount of money you have left when you
sell more than you buy, or spend less than you
own

8. Balance of trade h. the amount of goods that a country allows to

(cán cân thương mại) be imported during a particular period of time

9. Surplus i. sending goods to another country for sale

Trade surplus: xuất siêu

10. Deficit: thâm hụt j. inability of a nation to produce a goods more

In sth/ of (money) efficiently than other nations, but an ability to
Be in deficit produce that good more efficiently than it does
any other- good.

PART 1: READING SECTION

1. Lead-in:

Work in groups and discuss the following question:

Why is trade with foreign companies more difficult than trade with domestic companies?

2. Reading comprehension

PROTECTIONISM AND FREE TRADE

The majority of economists believe in the comparative cost principle, which proposes that all
nations will raise their living standards and real income if they specialize in the production of
those goods and services in which they have the highest relative productivity. Nations may have
an absolute or a comparative advantage in producing goods and services because of factors of
production (notably raw materials), climate, division of labour, economies of scale, and so forth.
This theory explains why there is international trade between North and South, e.g.
semiconductors going from the USA to Brazil, and coffee going in the opposite direction. But it
does not explain the fact that over 75% of the exports of the advanced industrial countries go to
other similar advanced nations, with similar resources, wage rates, and levels of technology,
education, and capital. It is more a historical accident than a result of natural resources that the
US leads in building aircraft, semiconductors, computers and software, while Germany makes
luxury automobiles, machine tools and cameras.

However, the economists who recommend free trade do not face elections every four or five
years. Democratic governments do, which often encourages them to impose tariffs and quotas in
order to protect what they see as strategic industries- notably agriculture-without which the
country would be in danger if there was a war, as well as other jobs. Abandoning all sectors in
which a country does not have a comparative advantage is likely to lead to structural
unemployment in the short (and sometimes medium and long) term.

Other reasons for imposing tariffs include the following:

• to make imports more expensive than home-produced substitutes, and thereby reduce a
balance of payments deficit;
• as a protection against dumping (the selling of goods abroad at below cost price in order
to destroy or weaken competitors or to earn foreign currency to pay for necessary imports);
• to retaliate against restrictions imposed by other countries;
• to protect ‘infant industries’ until they are large enough to achieve economies of scale
and strong enough to compete internationally.
• With tariffs, it is impossible to know the quantity that will be imported, because prices
might be elastic. With quotas, governments can set a limit to imports.

The General Agreement on Tariffs and Trade (GATT), an international organization set up in
1947, had the objectives of encouraging international trade, of making tariffs the only form of
protectionism, and of reducing these as much as possible. The most favored nation clause of the
Gatt agreement specified that countries could not have favored trading partners, but had to grant
equally favorable conditions to all trading partners. The final Gatt agreement- including services,
copyright, and investment, as well as trade in goods- was signed in Marrakech in 1994, and the
organization was superseded by the World Trade Organization.
It took nearly 50 years to arrive at the final Gatt agreement because until the 1980s, most
developing countries opposed free trade. They wanted to industrialize in order to counteract what
they rightly saw as an inevitable fall in commodity prices. They practised import substitution
(producing and protecting goods that cost more than those made abroad), and imposed high tariff
barriers to protect their infant industries.

Nowadays, however, many developing countries have huge debts with Western commercial
banks on which they are unable to pay the interest, let alone repay the principal. Thus they need
to rollover (or renew) the loans, to reschedule ( or postpone) repayments, or to borrow further
money from the International Monetary Fund, often just to pay the interest on existing loans.
Under these circumstances, the IMF imposes severe conditions, usually including the obligation
to export as much as possible.

Quite apart from IMF pressure, Third World governments are aware of the export successes of
the East Asian ‘Tiger’ economies (Hong Kong, Singapore, South Korea and Taiwan), and of the
collapse of the Soviet economic model. They were afraid of being excluded from the world
trading system by the development of trading blocks such as the North American Free Trade
Agreement (NAFTA), both signed in the early 1990s. So they tended to liberalize their
economies, lowering trade barriers and opening up to international trade.

2.1 Read the text and answer the following questions

a. Why are most economists against protectionism (chế độ bảo hộ), in general?

Because they believe in the comparative cost principle, which proposes that all nations will raise
their living standards and real income if they specialize in the production of those goods and
services in which they have the highest relative productivity.

 Comparative cost principle: Nguyên tắc chi phí so sánh

 Proposes: Đề xuất
 Specialize in: Chuyên môn hóa vào
 Relative productivity: Năng suất tương ứng cao nhất

b. Why are import tariffs or quotas imposed by most governments?

Impose (v) = levy

They impose tariffs and quotas in order to protect what they see as strategic industries-notably
agriculture-without which the country would be in danger if there was a war, as well as other
jobs. Besides, there are some other reasons for imposing tariffs and quotas such as reducing a
balance of payments deficit or as a protection against dumping.

c. Why has trade between developing nations recently increased and protectionism decreased?

Because of IMF pressure, their being aware of export successes of the East Asian 'Tiger'
economies, the collapse of the Soviet economic model and their being afraid of being excluded
from the world trading egystem by the development of trading blocks.

2.2. Read the text again and write questions for the following answers.

a.……………………………………………………………………………………………….
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………….

Factors of production, including labor, capital, the environment, economies of scale, and raw
materials, which are the most significant.

b.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………

Because it has more to do with a historical accident than a result of natural resources.

c.……………………………………………………………………………………………….
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………….

It has the objectives of encouraging international trade, of making tariffs the only form of
protectionism, and of reducing these as much as possible.

d.……………………………………………………………………………………………….
………………………………………………………………………………………………………
………………………………………………………………………………………………………
……………………………………………………….
It took nearly 50 years to arrive at the final Gatt agreement.

2.3 Exercises

2.3.1. Exercise 1. Replace the underlined words and phrases in the text with the ones below.

A. balance of payments B. balance of trade C. barter or counter-trade

D. climate E. commodities F. division of labour

G. economies of scale H. factors of production I. countries

K. protectionism L. quotas M. tariffs

(1) Nations import some goods and services from abroad, and export others to the rest of the
world. Trade in (2) products and raw materials is called visible trade in Britain and
merchandise trade in the US. Services, such as banking, insurance, tourism, and technical
expertise, are invisible imports and exports. A country can have a surplus or a deficit in its
(3) difference between total revenues from visible exports and total expenses on visible
imports, and in its (4) the gap between entire import expenditures and total export revenues.
Most countries have to pay their deficits with foreign currencies from their reserves,
although of course the USA can. usually pay in dollars, the unofficial world trading
currency. Countries without the currency reserves can attempt to do international trade tby
way of (5) direct trade of goods without financial exchange. The (imaginary) situation which
a country is completely self sufficient and has no foreign trade is called autarky.

The General Agreement on Tariffs and Trade (QATT), concluded in 1940 aims to maximize
international trade and to minimize (6) the support for domestic industries. GATT is based
on the comparative cost principles, which is that all nations will raise their income if they
specialize in producing the commodities in which they have the highest relative
productivity. Countries may have an absolute or a comparative advantage in producing
particular goods or services, because of (7) inputs (raw materials, cheap or skilled labour,
capital, etc), (8) weather circumstances, (9) work specialization into various jobs, (10)
savings in unit costs arising from large-scale production, and so forth. Yet most
governments still pursue protectionist policies, establishing trade barriers such as (11)
 charges for import taxes, (12) limits on the quatity of imports, administrative difficulties,
and so on.

Write your answer here:

1. I 7. H

2. E 8. D

3. B 9. F

4. A 10. G

5. C 11. M

6. K 12. L

2.3.2 Odd one out

1. absolute advantage, comparative advantage, free trade
2. autarky, invisible trade, visible trade
3. deficit, dumping, surplus
4. banking, insurance, merchandise
5. comparative advantage, quotas, tariffs
6. climate, quotas, taxes
7. import substitution, barter, non-tariff barriers
8. debt, reschedule, subsidize
9. liberalize-protect- substitution
10. counter trade- balance-visable trade

PART 2: LISTENING SECTION

1. Listening. In the recording a customer, Mr Rusconi, and a supplier, Mr Garcia, are

talking on the phone. You’ll hear TWO VERSIONS of this conversation.
Decide which of these words describe the IMPRESSION the two men give
in each version of the conversation.
 friendly informal helpful aggressive
formal hostile polite impatient

2. Listen to the two phone calls again. How does each speaker make himself sound more
friendly and helpful in the second call?

2.1. Listening to the speakers and choose one correct option

a. The first person wants to know if the check-in time of the flight is ...

4.15 □ 4.50□ 4.55 □

b. The second person wants to leave a message for ...

Mr Geoffrey □ Mr Geoffreys □ Mr Jeffrey □ Mr Jeffreys □

c. The third person wants to book some theatre tickets. He wants ...

2 seats on July 3rd □ 3 seats on July 2nd □

2 seats on July 2nd □ 3 seats on July 3rd □

d. The fourth person wants to know if she can change to ...

a double room from the 29th □
a single room from the 29th □
a single room from Friday □

e. The fifth person wants you to tell his agent in Greece to call him on ...

23983 before 3 □ 28393 after 3.30 □

29383 before 3 □ 23893 after 3.30 □
TWO of these four answers are correct!
f. The sixth person wants to know if there is...
a party for delegates at the conference □
a cheap party rate for delegates at a conference □
g. The seventh person wants to know ...
Mr Wilson's room number □ if Mr Wilson is in room 405 □
if Mr Wilson will be back at 4.05 □ if Mr Wilson left the hotel at 4.05 □
h. The eighth person wants to know how long it takes to get to the airport...
by car □ by train □ by taxi □
2.2. Listening to three short messages and completing each of them.

Message 1:

SUSAN GRANT of Richmond Studios called about order for 1 x MQ 20, sent 3 weeks
ago – on (1)……………of this month.

Sent you cheque for (2) £………….to get it at special offer price (giá chào hàng đặc biệt)
but no (3) (n)……………………….of order.

Please confirm receipt of order and (4) …………………..

Any problems, phone Susan Grant on (5) 0303 ………………..

When can she expect (6) (n)………………..?

Address (7) …………….High Street, Woodbridge, (8) …………………., IP12 4SJ.

Message 2:

PETER (1)……………of Eastern Enterprises in

(2) …………… called:

Can’t (3) …………………..on (4)..…………….afternoon because of problem with hotel

– no room because of (5) ………………..

All other hotels in town full because of (6) …………….

Will come on Monday morning (7) (….............) if OK with you.

Please tell him if this change of date is (8)………..

Please call him if you have ideas for (9)…………… on 617 (10)……………….
 Message 3:

(1)……………..… called:

Staying 2 extra days in (2) …………………..and trying to get flight back on (3)..
……………. . Direct flight is full- they’ve put him on (4) ………………..

May not be back till (5) …………….

If not back, please take over at meeting on Tuesday with (6)………………….

All info in file on his desk with (7)…………..’s name on.

Please collect O.F. from (8) ……………. Hotel first thing in the morning.

Any problem: leave a message at his hotel (9) (……………) or send fax (10)
(……………….)

PART 3: SPEAKING SECTION

3.1. Work in pairs. Asking and giving information.

1. What may you say to require information?

2. If someone asks you for information what may you reply?

3. When someone gives you some information what may you reply?

4. If you want to give someone some information what may you say?

5. If someone hasn’t given enough information what may you say?

Requiring information

Could you tell me when the delivery will arrive?

(Please let us know when the delivery will arrive.)

I’d like some information about the meeting on September 30.

If someone asks you for information you can reply:

As far as I know,.../ Well, I can tell you that the delivery will arrive on …

I’m afraid I don’t know.

I don’t have that information available just now, can I call you back?

I’m not sure, I’ll have to find out. Can I let you know tomorrow?

I’m afraid I can’t tell you that, it’s confidential.

Reply:

Oh, I see.

That’s interesting.

Thanks for letting me know.

If you want to give someone some information you can say:

I’d like you to know that the meeting will be at 9 a.m. on the fifth of this

month.

I think you should know that...

(We should like to inform you that...)

If someone hasn’t given enough information you can say:

Could you tell me some more about...?

I’d also like to know...

Can you give me some more details about...?

3.2. Work in pairs. One of you should look at File 1, the other at File 2. Imagine that you’re on
the phone. You each have a copy of the same price list – but both copies are partially illegible.
You’ll need to ask questions to find out the missing information.

Imagine that you work for the same company, but you don’t know each other well. So you
should speak politely to each other.

File 1:
File 2:

PART 4: CASE STUDY

Dealing with the supply.

You and your partner have just joined the Buying Department of BROADWAY AUTOS. Read
this information about the company:

About Broadway Autos

BROADWAY AUTOS is a subsidiary (CÔNG TY CON) of Broadway International

(INCORPORATED) Inc. of Portland, Oregon. BROADWAY manufactures (PRODUCTS) and
markets (SALES) two types of battery-driven electric vehicles: short-range delivery vehicles and
one-person cars for disabled people. The vehicle bodies are manufactured in BROADWAY'S
own factory, but all other components including electric motors, batteries and wheels are bought
to two months' stock and assembled in the factory. Over the years BROADWAY has built up a
good relationship with its suppliers, most of whom have been working with them for many years.

You notice this article in today’s newspaper:

Arcolite to close Winterthur factory

ARCOLITE ELECTRIC AG have announced 200 redundancies (SA THẢI NHÂN SỰ) at their
long-established factory in Winterthur, Switzerland. Production will continue at their main plant
in Lausanne, according to the announcement.

Arcolite's Director General, Dr Franz Andres, told our reporter: "This represents a rationalization
of our resources. We shall be creating 50 new jobs in our Lausanne plant. We have been wanting
to expand on our Winterthur site for some time now, but this has finally proved to be
uneconomic. I can assure our customers that there will be no interruption to supplies and we
have sufficient stock to (=ENOUGH SUPPLY:ĐỦ NGUỒN CUNG) fill our current order book."

Arcolite shares fell from SF (ĐỒNG FRANCE THUỴ SĨ) 3.220 to 2.975 on the Zurich Exchange
after the announcement.

It’s a fact that Arcolite is your company’s sole (=ONLY, DUY NHẤT) supplier. You kind of
depend on them, and they've been supplying you for quite a long time now. Therefore, to be on
the safe side, Mr North wants you to find out about other suppliers. No local firms can supply the
product, so you will have to contact possible suppliers abroad for lightweight batteries. How can
you deal with this problem? Work in groups and write an enquiry to a battery company abroad.
 BÀI TẬP NHÓM

Dear Sir,

I hope this message finds you well. My name is Hoai Phuong, and I represent ABC
Company, a distributor of electronic components in Vietnam.

We are currently looking for a reliable supplier for lithium-ion batteries to meet our
market demands. I would like to inquire about the following:

HS CODE: 850760 lithium ion

Could you share your price list or quotation for bulk orders, including any applicable
discounts? Include FOB or CIF pricing for quantities. We would like to order 1000
packs. We usually pay by confirmed 120-day irrevocable letter of credit. Please, let us
know if you offer volume-based discounts.

Before placing an order we would need to examine samples of this product. Could you
provide a sample order for 1000 packs for testing? Please include pricing and shipping
details for the samples.

We usually pay by confirmed 180-day irrevocable letter of credit.

 1 freight: hàng hoá
2major = main

competitive(=cheap
) rates(=price):
3consignment:
hàng hoá, lô hàng
6closely: mật thiết

1. Transport companies
2. Shipping lines
3. Fleet of vehicles
4. Documentation
5. Provider
6. Air carriers
 1. What is FDI ?
2. What are the (pros) advantages and disadvantages (cons) of FDI?
Generate (v) = create/product
Employment (v)
 Employment Generation: cơ hội việc làm
Seek to control: tìm cách kiểm soát
1. When investors establish (=set up) a plant overseas(=abroad), this is called
FOREIGN DIRECT INVESTMENT. If they buy shares or long-term debt
obligations, this is called FOREIGN PORTFOLIO INVESTMENT.
2. The amount of cash that remains after a company has paid taxes and other
cash expenses is CASH FLOW.
3. Rate of return(tỉ suất lợi nhuận) is often measured in terms of profits
realized on ASSETS EMPLOYED
4. A cash grant is called an INVESTMENT INCENTIVE, whose purpose is to
ATTRACT FOREIGN INVESTMENT.
5. Prior to making a foreign direct investment, exporters can make a contract
with a DISTRIBUTOR or with a foreign manufacturer, who will be
AUTHORIZED to manufacture their products. For this, the foreign
manufacturer pays ROYALTY PAYMENTS
foreign investment

VIẾT 1 ĐOẠN NGẮN 150 TỪ VỀ NHỮNG YẾU TỐ MÀ 2 CTY CẦN PHẢI CÂN NHẮC TRC KHI ĐẦU
TƯ VÀO TT NƯỚC NGOÀI
Before investing in a foreign market, companies must carefully consider several factors to avoid potential
risks. Legal and regulatory issues are crucial, as seen in the case of Thomson Electronics, which faced
unexpected restrictions due to the Buy American Act. This highlights the importance of understanding
local laws, including antitrust regulations, which British Oxygen encountered when it was sued for
violating U.S. competition laws. Additionally, labor laws and government intervention should be
examined, as government policies may impact business operations. Companies must also assess financial
viability, ensuring sufficient access to funding and a positive return on investment. By analyzing these
factors, businesses can make informed decisions and mitigate risks in foreign markets.

UNIT 3

PART 2:

b. What advantages does Susan offer to Marvel?

She's well-known in Asia, she's got an excellent reputation in the industry. She's got a modern
factory and a large customer base. She's good at marketing and hard-working.
c. According to Barbara, what is the disadvantage of offering a license to Susan Li?
All her products sell at the lower end of the market. They're in the cheaper price ranges. But the
Luc Fontaine range is exclusive so it is not a good match for what she's selling.
d. What suggestion does Barbara make to her colleagues?
She suggests they contact Hiroshi Takahashi, based in Nagoya. He has a health-care company
that is doing really well. He makes various skin products and sells them under well-know
European labels.
UNIT 4
PART 1:
a. Motor transportation refers to the movement of goods or passengers using motorized
vehicles such as trucks, buses, cars, or motorcycles on roadways.
b. A trailer refers to a non-motorized vehicle designed to be towed by a motorized vehicle,
such as a truck or tractor