Foreign Trade Procedure
Foreign trade procedure or international trade is the exchange of goods between countries. It deals with the documents of various procedure related to the Import and Export.
Terms in Foreign Trade Procedure:
EXPORTS – goods or merchandise that are sold to other countries in order to earn dollars
IMPORTS – goods or merchandise bought from foreign countries.
TRADE DEFICIT – occurs when a value of a nation’s export is less than the value of its imports.
TRADE SURPLUS – occurs when a value of nation’s export is greater than the value of its imports.
Factors which affects foreign Trade Procedure
- Movement of goods Easier to move goods without much restrictions Restricted due to complicated custom procedures and trade buyers like tariffs.
- Mobility in factors of production (land, labor, capital and entrepreneur)
- Free to move from one state to another within the same country Quite restricted.
Importance of Foreign Trade Procedure
Provides goods and services: Some of the goods and services we are provided comes from outside the country.
- Create jobs
- International trade also motivates workers to produce the goods or services better.
Dictates of goods/services: Demand and supply affects the global events. Examples are: oil and political conditions.
Domestic vs. International Trade
- It is free to move from one state to another within the same country.
- Easier to move goods without restrictions.
- Limited market due to limit in population.
- Speaks and practice same culture
- International trade is quite restricted.
- It is restricted due to custom procedures and trade buyers like tariffs and quotas.
- Communication challenges due to language and cultural barriers.