ASB4405: International Finance Management Report on FTAs and RCEP

This report delves into the realm of international finance management, focusing on free trade agreements (FTAs) and the Regional Comprehensive Economic Partnership (RCEP). The report begins by defining FTAs and then critically analyzes Dani Rodrik's arguments regarding their potential outcomes, including mutually beneficial trade, global regulation upgrades, and redistributive outcomes. The main body of the report discusses the RCEP, detailing its formation, objectives, and a comprehensive history of its eight-year negotiation process, starting from its inception in 2011 and concluding with its signing in November 2020. The report examines key milestones and meetings that shaped the RCEP, providing a timeline of the agreement's development. Finally, the report provides a conclusion summarizing the key findings and implications of FTAs and the RCEP in international finance.

International Finance
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Free Trade Agreement.................................................................................................................1
Critical Analysis of Outcome of Free Trade Agreement.............................................................1
Regional Comprehensive Economic Partnership (RCEP)...........................................................2
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
International finance management refer to management of finance across geographical
boundaries which include interchange of foreign currency. Internation finance allow a firm to do
business overseas and helps to connect them with new customer, lender, business partners,
supplier etc. It also allow a firm to access different financial sources at cheaper rate and also
helps to expand their business (Timsina and Culas, 2020). It provide business with an
opportunity to maximize their profit but at the same time it include various risk like political risk,
social risk, technological risk and many more. This project report include free trade agreement
and critical analysis of outcome of free trade. It also include RCEP and its history of
negotiations.
MAIN BODY
Free Trade Agreement
Free trade agreement is an agreement between two or more Countries that allow free
trade between them with any restriction. Under this agreement, countries are free to sold and
bought goods among them with no barrier from government. It include bilateral and multilateral
agreement, bilateral agreements include agreement between two countries to reduce restriction
and expand business whereas multilateral agreement is between three or more countries with the
intention to promote free trade with them. Free trade policy between countries include
elimination of restriction in order to expand business opportunities (South, 2016).
Free trade provide opportunity for business in order to expand their business in different
countries. It helps them to access different financial resources which helps them to increase
profit and reducing cost. It also provide them with economic of scale as firm is doing business on
big scale. It not only help the business but also provide benefits to economy of country. As free
trade allow to increase employment opportunity in the country. It also allow the nation to access
with different new technology which provide economic growth to them. It provide opportunity to
increase the exports and earn foreign currency.
Critical Analysis of Outcome of Free Trade Agreement
Free trade agreements helps the countries and organisations exist within company as it
allow free trade without restriction. The result of this agreement provide benefit to the country as
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well as provide disadvantage to them (Lim and Breuer, 2019). Outcome for free trade are
mentioned underneath:
Mutually Beneficial trade: It is a mutually beneficial trade for both countries as it
provide benefit to economy of both nations. It provide goods and service at low price, increase
employment opportunities, increase exports of both country. It also helps them to increase their
foreign exchange. It provide access to technology, labour skills, raw material of other country. It
provide economic welfare to both countries and push their growth (Jagdambe and Kannan,
2020).
Competitive Advantage: The result of free trade agreement is that it provide competitive
advantage to organisation of both countries as they are producing goods and service at big scale.
It assist them to reduce the cost by providing access to different technology and financial
resources. Firm can get competitive advantage by having skilled labour, effective technology,
expanding their markets and business operations.
Global Upgrading of Regulation and Standards: As a result of Free trade policy,
regulation for companies has increased as they have to follow regulation of both countries. But at
the same time, it also increase the standards of organisations (Akeyewale, 2018). For instance,
labour law create regulation for firm but same time it increase the skills of employees which as a
result increase the quality of work.
Produce Poorly Disruptive Outcome: The outcome of free trade is that firm are
producing poor outcome as it increase the competition for the firm in the market. It also shift the
focus of firm to producing quality product to increase their production. As it decrease their level
of quality and this will lead them to weaker in terms of competition.
Less Tax revenue: The result of free trade agreement for nations is that they have to
remove trade restriction including decreasing import tax. As they not getting enough import tax
their tax revenue are decreasing and they need to find different way to get revenue. It also create
problem for business as they have to pay high duties and fees while exporting their goods and
service to other countries (Giumelli and van Roozendaal, 2017).
Outcome of Rodrik’s Statement: Outcome of statement made by Rodrik’s is that
exports of products produced in a nation are enhanced. Moreover, it is also determined that It
allow country to sale their products in another country which helps country to share technology,
resources. It create employment opportunity in country which helps in decreasing unemployment
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rate in country. It also create opportunity for development in underdeveloped countries. It
increase currency exchange rate of countries, allow countries to share technology and attract
foreign direct investment in countries. It not only help nations but also companies established in
those countries. As it allow them to grow their business in other countries and also allow them
using their resources.
Regional Comprehensive Economic Partnership (RCEP)
Regional comprehensive economic partnership refer to a free trade agreement between 15
countries. The nation which include in this agreement are China, Japan, Singapore, Australia,
Malaysia, Thailand, New Zealand, Brunei, Laos, Cambodia, Philippines, South Korea, Vietnam.
These countries have contributed about 30% in world's GDP and is biggest intergovernmental
agreement in which trade barriers have reduced in agreed countries. This agreement is introduced
in November 2011 at nineteenth Asian meet. The objective of this agreement is to create as anti
discriminated market where these countries can trade their product and service. This agreement
is signed by its member countries at 15 November 2020 (Ebell, 2016).
2011: In 19th Asian meet RCEP was first introduced at Bali, Indonesia.
2012: For this purpose, meeting of economic ministers were held in Cambodia from
August to September 2012. In November 2012, structure of RCEP has introduced and also
announce negotiation in Cambodia.
2013:
 In May 2013, first meeting for RCEP negotiation was carried in Brunei.
 The second meeting of negotiation conducted in Australia in September, 2013.
2014:
 In January 2014, third meeting of RCEP negotiation was conducted in Malaysia.
 Fourth meeting of RCEP negotiation was conducted at China in March to April 2014.
 In Singapore, fifth meeting of RCEP negotiation was conducted in June, 2014
 RCEP negotiation's sixth round was conducted in India in December, 2014.
2015:
 In Thailand, experts of electric commerce also included in the meeting of RCEP
negotiation which was conducted in February, 2015. This meeting also included
presentation of electric commerce.
 Eighth meeting of RCEP negotiation was conducted in Japan in June. 2015.
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 Ninth meeting was conducted in Myanmar in August, 2015 for RCEP negotiation.
 Tenth round was conducted in South Korea at BOXCO in October, 2015 for RCEP
negotiation along with stakeholders meeting which also included government official for
informal meeting that aim at benefits of RCEP to E-commerce businesses.
2016:
 11th meeting was conducted in February, 2016 in Brunei for RCEP negotiation.
 12th meeting was conducted for RCEP negotiation in April, 2016 in Australia.
 13th meeting was conducted in June, 2016 in New Zealand for RCEP negotiation.
 14th meeting was conducted for RCEP negotiation in August, 2016 in Vietnam.
 In October 2016, fifteenth meeting of RCEP negotiation was conducted in China.
 In December 2016, Sixteenth meeting of RCEP negotiation was conducted in Indonesia.
2017:
 17th meeting was conducted in February, 2017 in Japan for RCEP negotiation.
 18th meeting was conducted for RCEP negotiation in May, 2017 in Philippines.
 In July 2017, nineteenth meeting of RCEP negotiation was conducted in India.
 In October 2017, twentieth meeting of RCEP negotiation was conducted in Korea.
 In Philippines, first RCEP summit was conducted in November, 2017.
2018:
 21st meeting was conducted in February, 2018 in Indonesia for RCEP negotiation.
 22nd meeting was conducted for RCEP negotiation between April to May 2018 in
Singapore.
 In July 2017, twenty-third meeting of RCEP negotiation was conducted in Thailand.
 Between August to October an additional meeting of ministers was conducted in
Singapore and Auckland.
 24th meeting was conducted in New Zealand in October, 2018 for RCEP negotiation.
 Government Summit was conducted in Singapore in November 2018.
2019:
 25th meeting was conducted for RCEP negotiation in February, 2019 in Indonesia. In
march meeting of ministers were also held in Cambodia. Intersectional round of Senior
officers were also conducted in Bangkok.
 26th meeting was conducted for RCEP negotiation in July, 2019 in Australia.
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 27th meeting was conducted for RCEP negotiation in July, 2019 in China. A meeting of
trade ministers also conducted in August, 2019 in China.
 28th meeting was conducted for RCEP negotiation in September, 2019 in Vietnam. India
choose to out from RCEP in November, 2019 because it would affect the business of
local citizens.
2020:
 29th meeting was conducted through video conference in April 2020 due to Covid-19. In
April 2020, Statement of 29th meeting was issued to its member countries.
 30th meeting of RCEP negotiation was conducted through video conference due to Covid-
19 situation.
 10th intersectional meeting of ministers were conducted in June 2020 through video
conference.
 31st meeting of RCEP negotiation was held in July, 2020 through video conference.
 8th ministerial meeting conducted in August, 2020 through video conference.
 Final step in this agreement was conducted in November,2020 where 15 member
countries has signed this agreement.
CONCLUSION
From the above project report this can be concluded that international finance
management allow a company to access finance across national boundaries which reduce the
cost of business. Free trade agreement is held between two or more countries in order to promote
trade between them. It allow the company to access different resources, technology, labour to
make their product and service more efficient. It also assist them to access market of different
countries. This agreement provide benefit to countries as well as organisation belong to those
company. The result of these agreement is that it provide benefit to both countries, upgrade
regulation between countries.
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REFERENCES
Books and Journals
Akeyewale, R., 2018. Winners and losers in Africa's Continental Free Trade area.
In International Trade Forum (No. 4, pp. 14-15). International Trade Centre.
Ebell, M., 2016. Assessing the impact of trade agreements on trade. National Institute Economic
Review. 238(1). pp.R31-R42.
Giumelli, F. and van Roozendaal, G., 2017. Trade agreements and labour standards clauses:
Explaining labour standards developments through a qualitative comparative analysis of
US free trade agreements. Global Social Policy. 17(1). pp.38-61.
Jagdambe, S. and Kannan, E., 2020. Effects of ASEAN-India Free Trade Agreement on
agricultural trade: The gravity model approach. World Development Perspectives. 19.
p.100212.
Lim, E. S. and Breuer, J. B., 2019. Free trade agreements and market integration: Evidence from
South Korea. Journal of International Money and Finance. 90. pp.241-256.
South, N., 2016. Free trade agreements, private courts and environmental exploitation:
Disconnected policies, denials and moral disengagement. International Journal for
Crime, Justice and Social Democracy. 5(4). p.45.
Timsina, K.P. and Culas, R.J., 2020. Do free trade agreements increase Australian trade: An
application of Poisson pseudo maximum likelihood estimator?. Journal of East-West
Business. 26(1). pp.56-80.
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