Global & Regional Trade, Pandemic Shocks, Gig Economy & Cancel Culture – Comprehensive Exam Notes

The Push Toward Free Trade

  • Pro-free-trade argument: ▪ promises higher standards of living\text{higher standards of living} for all participants inside a free-trade zone
  • Anti-free-trade argument: ▪ fear of local industry shutdowns\text{local industry shutdowns} (e.g., farms & steel mills under an FTAA scenario)
  • Illustrative FTAA debate:
    • Calls for cutting back farm subsidies\text{farm subsidies}
    • Allows cheaper steel imports\text{steel imports}, triggering resistance from U.S. producers

Three Levels of Trade Agreements

  • Global: GATT\text{GATT}, WTO\text{WTO}
  • Regional: NAFTA\text{NAFTA}, ASEAN\text{ASEAN}, FTAA\text{FTAA}
  • Bilateral: e.g., U.S.–Chile\text{U.S.–Chile} FTA
  • Core objective: ▪ "progressive dismantling of trade barriers" to foster cross-border trade\text{cross-border trade}
  • Political resistance drivers: ▪ national sovereignty, ▪ employment fears, ▪ uneven income distribution

GATT (General Agreement on Tariffs & Trade)

  • Multilateral treaty (post-WWII) designed to reduce tariffs
  • Provided a forum to settle disputes but lacked enforcement power
  • Superseded by the WTO in 19951995

WTO (World Trade Organization)

  • 147147 member states (initially) headquartered in Geneva
  • Functions: ▪ negotiation forum ▪ dispute mediation ▪ binding enforcement (sanctions for non-compliance)
  • Dispute example set (recent):
    • 20022002 →\rightarrow U.S. 30%30\% steel tariff →\rightarrow ruled illegal →\rightarrow tariff lifted
    • 20022002 EU 24%24\% tuna tariff against Philippines & Thailand →\rightarrow quota compromise 20032003
    • 19991999 U.S. retaliatory tariffs vs. EU banana preference →\rightarrow EU scheme revised 20012001

Spectrum of Regional Economic Integration

Free-Trade Area (FTA)

  • Members abolish internal tariffs; retain independent external trade policies
  • Requires clear Country-of-Origin\text{Country-of-Origin} rules
  • Examples: ▪ Canada–Chile FTA ▪ Singapore–South Korea FTA ▪ Hong Kong–China CEPA

Customs Union

  • FTA plus a common external tariff (CET) schedule
  • Examples: ▪ European Union (pre-1992 phase) ▪ MERCOSUR ▪ CARICOM

Common Market

  • Customs union plus free movement of labor, capital, information
  • Historical example: European Common Market (pre-EU)

Economic Union

  • Common market plus harmonized economic & social policies
  • Full evolution entails:
    • unified central bank
    • single currency
    • common policies (tax, agri-culture, etc.)
  • EU illustration: one professional license valid union-wide

Marketing Implications of Integration

  • Cheaper imports/exports\text{Cheaper imports/exports} due to tariff removal
  • Guaranteed demand via preferential procurement
  • Soft loans, tax holidays, subsidies for firms inside bloc
  • Push toward standardized marketing mix; simultane­ous spike in competition
  • Absent an FTA: expect bans, tariffs, quotas; info sourced from Commerce Depts.

Major Regional Blocs & Metrics

North America – NAFTA

  • Members: Canada, U.S., Mexico
  • Characteristics: no CET; labor migration restrictions remain; selective protectionism (avocados, apples, chicken)
  • Economic-integration test: per-capita GNP convergence toward bloc mean

Latin America

  1. SICA (Central American Integration System) – 5%5\%–20%20\% CET; mean GNP $1,882\$1{,}882 vs. Nicaragua $427\$427
  2. Andean Community – customs union; mean GNP $2,551\$2{,}551 vs. Venezuela $5,247\$5{,}247
  3. MERCOSUR – CET up to 20%20\%; mean GNP $4,198\$4{,}198; volatility & 1994 merger with Andean bloc
  4. CARICOM – moving toward economic union; mean GNP $2,113\$2{,}113; Bahamas $15,327\$15{,}327

Asia–Pacific

  • Japan: 14%14\% of world GNP; dense population & cultural rigidity; recent stagnation
  • NIEs ("4 Tigers"): S. Korea, Taiwan, Singapore, Hong Kong; foreign-investment & export-driven
  • ASEAN →\rightarrow goal = common market; mean GNP $1,180\$1{,}180; Cambodia $283\$283 vs. Singapore $26,562\$26{,}562

Europe

  • EU: 2525 members (slide era); Maastricht 19911991 →\rightarrow economic union & Euro; mean GNP $21,941\$21{,}941
  • CEFTA: Hungary, Poland, CZ & SK; cooperation on infra, telecom, tourism
  • Marketing: standardized packaging, minimized currency risk, but cultural micro-differences remain

Middle East

  • 95%95\% Muslim; blocs: GCC, Arab Maghreb Union, Arab Co-op Council
  • Business customs: haggling, trust, male-dominated scene, verbal over written agreements

Africa

  • ECOWAS: free-trade + aspiring monetary union; mean GNP $306\$306; Guinea $2,606\$2{,}606 vs. Sierra Leone $128\$128
  • East African Cooperation: Kenya, Uganda, Tanzania – free-trade, eyeing customs union
  • SADC: aims single currency by 20162016 (road-map); 85%85\% tariff cut (Sept 20002000); mean GNP $895\$895
  • Constraints: literacy, political risk, bureaucracy, corruption, poor infra

Malaysia–China Trade Snapshot (Pre-Covid)

  • Malaysian FDI stock in China (to Dec 20192019): $7.86 billion\$7.86\ \text{billion} ( 0.9%0.9\% ↑ vs. 20182018 )
  • 508508 Malaysian enterprises established in 20192019 (value $70.13 million\$70.13\ \text{million}, 66.9%66.9\% ↓)
  • Malaysia = 3.61%3.61\% of China’s imports (rank 88); $16.8 billion\$16.8\ \text{billion} goods in Q1 20202020 ( 10.5%10.5\% ↑ YoY)

Covid-19 Timeline & Impact on China

  • Outbreak traced to Wuhan seafood market; WHO informed 3131 Dec 20192019
  • Lockdown measures: extended CNY holiday, WFH, school closures, transit halts, ban on gatherings
  • Medical shortages: China (\approx 50\%) of global mask capacity but idled; China sourcing gloves, PPE from Malaysia
  • Q1 20202020 macro data:
    • Trade value US$943.22 bnUS\$943.22\ \text{bn} ( 8.4%8.4\% ↓ YoY )
    • Exports 13.3%13.3\% ↓; imports 2.9%2.9\% ↓; surplus 82.7%82.7\% ↓
    • GDP 6.8%6.8\% contraction; retail sales 15.8%15.8\% ↓ (Mar)
    • PBOC cut benchmark rate 20 bps20\ \text{bps} to 3.85%3.85\%

Sector Winners vs. Losers (China, Covid Era)

  • Growing: e-commerce, online medical, SaaS/tele-work, online entertainment, ed-tech, telecom, med-waste mgmt.
  • Crisis: retail, F&B, tourism, hotels, events, construction, logistics
  • Data points:
    • Fresh Hema 300%300\% sales jump; JD Daojia 374%374\%; Missfresh 300%300\%
    • Mask retail 1270.1%1270.1\% ↑; sterilizers 788.3%788.3\% ↑
    • Tencent’s "Honor of Kings" revenue ≈RMB2 bn\approx RMB2\ \text{bn} over CNY

SME Challenges & Strategies (China)

  • 14%14\% can’t survive > 11 month on cash; 50%50\% can’t survive > 33 months
  • Upstream firms →\rightarrow labor shortage; downstream →\rightarrow consumer demand collapse
  • Strategy pillars:
    • Digitalization
    • Re-designed risk management (insurance, diverse income streams)
    • Proactive opportunity capture upon rebound

China’s Post-Covid Recovery Policies

  • Infrastructure stimulus: special bonds cap RMB3 trnRMB3\ \text{trn}; bias toward 5G & high-tech
  • "Double-Five" Shanghai festival: online+offline sales > RMB10\ \text{bn} within 2020 hrs
  • May-Day holiday: 115 million115\ \text{million} trips ( 41%41\% ↓ YoY ) producing RMB47.6 bnRMB47.6\ \text{bn} spend
  • Foreign investment sentiment: >70\% of U.S. firms staying; "In China for China" model prevails

Issues & Challenges in Exporting (Malaysia Context)

  • Financing gaps, weak credit, limited tech innovation
  • High cost for global certifications, export promotion, expert talent
  • Digital visibility, compliance, picking the right Chinese partner are critical Key Success Factors
  • Malaysia’s major export categories to China: electronics, F&B, O&G equipment, auto parts, pharma, agri-produce, etc.

Gig Economy Essentials

  • Definition: temporary or project-based digital work\text{temporary or project-based digital work} vs. traditional employment
  • Structural traits: platform-mediated bidding, portfolio careers, tech-enabled matchmaking
  • Global potential: US$2.7 trnUS\$2.7\ \text{trn} by 20252025
  • Malaysia: 26%26\% workforce self-employed; urban own-account workers ↑ 81%81\% since 20102010
  • Age skew: millennials ( 2525–2929 ) drove biggest increase
  • Programme examples: MDEC eRezeki/eUsahawan\text{MDEC eRezeki/eUsahawan}
  • Pros: flexibility, control; Cons: income volatility, lack of benefits; 80%80\% w/o retirement plan

Discussion Prompts (Gig-Economy Slide)

  1. Why do school-leavers favour gig work? 2. Is gig work "future of jobs"? 3. Trade/business implications for Malaysia

Cancel Culture – Concept & Marketing Risks

  • Definition: withdrawing support after perceived objectionable behaviour
  • Arguments:
    • Against – stifles open debate
    • For – grassroots tool for social justice
  • Brand vulnerabilities: insensitive language, problematic influencers, misinterpreted posts
  • No hiding: activism & boycotts mainstream; consumers demand action
  • Survey (Edelman): consumers more forgiving of purpose-driven or willing-to-change brands; see issue-exploitation as marketing ploy
  • Common boycott triggers (U.S. data): animal cruelty 44%44\%, worker mistreatment 41%41\%, racism 40%40\%
  • Case studies:
    • Libresse (vulva imagery backlash)
    • Muji & Uniqlo (Uyghur concerns)
    • Ellen DeGeneres (toxic workplace allegations)
    • Gucci, Prada, Katy Perry (racial-insensitive designs)
    • Balenciaga (BDSM teddy-bear campaign; child-abuse symbolism)
  • Geographic trend graph (slide): rising "cancel" incidents in U.S., China, Indonesia, S. Korea 20172017–20212021

Overarching Ethical & Practical Implications

  • Free-trade vs. protectionism debates echo in pandemic PPE politics and vaccine nationalism
  • Digitalization overlaps: gig economy growth, SME resilience, e-commerce boom, cancel-culture amplification via social media
  • Marketers must balance standardization (scale) with local sensitivity (culture, ethics)
  • Policy makers: design safety nets for gig workers, hedge integration shocks, & adopt transparent governance to withstand cancel-culture scrutiny