1.
International trade
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International trade is the exchange of capital, goods, and services across international borders or territories. It is the exchange of goods and services among nations of the world, in most countries, such trade represents a significant share of gross domestic product. While international trade has existed throughout history, its economic, social, trading globally gives consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found on the market, food, clothes, spare parts, oil, jewellery, wine, stocks, currencies. Services are also traded, tourism, banking, consulting and transportation, a product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a current account in the balance of payments. Industrialization, advanced technology, including transportation, globalization, multinational corporations, increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods, the main difference is that international trade is typically more costly than domestic trade. Another difference between domestic and international trade is that factors of such as capital and labor are typically more mobile within a country than across countries. Thus international trade is restricted to trade in goods and services. Trade in goods and services can serve as a substitute for trade in factors of production, instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example is the import of goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor, International trade is also a branch of economics, which, together with international finance, forms the larger branch called international economics. The history of international trade chronicles notable events that have affected the trade between various economies, there are several models which seek to explain the factors behind international trade, the welfare consequences of trade and the pattern of trade. </ref></ref>==Largest countries by total international trade== Source, International Trade Centre President George W. Bush observed World Trade Week on May 18,2001, mcKenzie, Lionel W. Specialization and Efficiency in World Production. A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods, the definitions and methodological concepts applied for the various statistical collections on international trade often differ in terms of definition and coverage. Metadata providing information on definitions and methods are published along with the data. Ptas. mcgill. ca Historical documents on international trade available on FRASER
2.
Commercial policy
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A commercial policy is a governmental policy governing economic transactions across international borders. These are sometimes agreed by treaty within a customs union, in the case of the European Union, commercial policy has been governed in common since the EU was created in 1957. A common commercial policy is also an aim of Mercosur, commerce minister European Commissioner for Trade Free trade Protectionism Trade policy of Japan Trade policy of the United States
3.
Balance of trade
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The balance of trade, commercial balance, or net exports, is the difference between the monetary value of a nations exports and imports over a certain period. Sometimes a distinction is made between a balance of trade for goods versus one for services, generally trade surplus is seen as positive economic indicator, however in exceptional circumstances a trade deficit is due to government forex policy to achieve other macroeconomic goals. The balance of trade part of the current account, which includes other transactions such as income from the net international investment position as well as international aid. If the current account is in surplus, the net international asset position increases correspondingly. Equally, a deficit decreases the net asset position. The trade balance is identical to the difference between a countrys output and its domestic demand, measuring the balance of trade can be problematic because of problems with recording and collecting data. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation, the discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. Especially for developing countries, the statistics are likely to be inaccurate. In export-led growth, the balance of trade will shift towards exports during an economic expansion, however, with domestic demand led growth the trade balance will shift towards imports at the same stage in the business cycle. Monetary balance of trade is different from physical balance of trade, developed countries usually import a lot of raw materials from developing countries. Typically, these materials are transformed into finished products. Financial trade balance statistics conceal material flow, most developed countries have a large physical trade deficit, because they consume more raw materials than they produce. Many civil society organisations claim this imbalance is predatory and campaign for ecological debt repayment. S debt that has funded the consumption, the U. S. has a trade surplus with nations such as Australia. The issue of trade deficits can be complex, Trade deficits generated in tradeable goods such as manufactured goods or software may impact domestic employment to different degrees than trade deficits in raw materials. Economies such as Japan and Germany which have savings surpluses, typically run trade surpluses, china, a high-growth economy, has tended to run trade surpluses. A higher savings rate generally corresponds to a trade surplus, correspondingly, the U. S. with its lower savings rate has tended to run high trade deficits, especially with Asian nations. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile. In 2010, economist Ian Fletcher wrote Free Trade Doesnt Work, What Should Replace It and Why, small trade deficits are generally not considered to be harmful to either the importing or exporting economy
4.
Trade bloc
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Surges of trade bloc formation were seen in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all commerce was conducted within regional trade blocs. Economist Jeffrey J. Advocates of worldwide free trade are generally opposed to trading blocs, scholars and economists continue to debate whether regional trade blocs are leading to a more fragmented world economy or encouraging the extension of the existing global multilateral trading system. Trade blocs can be stand-alone agreements between states or part of a regional organization. There are five major advantages of trade agreements, foreign direct investment, economies of scale, competition, trade effects. Foreign Direct Investment, An increase in direct investment results from trade blocs. Larger markets are created, resulting in costs to manufacture products locally. Economies of Scale, The larger markets created via trading blocs permit economies of scale, the average cost of production is decreased because mass production is allowed. Competition, Trade blocs bring manufacturers in countries closer together. Accordingly, the increased competition promotes greater efficiency within firms, Trade Effects Trade blocs eliminate tariffs, thus driving the cost of imports down. As a result, demand changes and consumers make purchases based on the lowest prices, market Efficiency, The increased consumption experienced with changes in demand combines with a greater amount of products being manufactured to result in an efficient market. The disadvantages, on the hand, include, regionalism vs. multinationalism, loss of sovereignty, concessions. Regionalism vs. Multinationalism, Trading blocs bear an inherent bias in favor of their participating countries, for example, NAFTA, a free trade agreement between the United States, Canada and Mexico, has contributed to an increased flow of trade among these three countries. Trade among NAFTA partners has risen to more than 80 percent of Mexican and Canadian trade and more than a third of U. S. trade, according to a 2009 report by the Council on Foreign Relations. However, regional economies establish tariffs and quotas that protect intra-regional trade from outside forces, loss of Sovereignty, A trading bloc, particularly when it is coupled with a political union, is likely to lead to at least partial loss of sovereignty for its participants. Concessions, No country wants to let foreign firms gain domestic market share at the expense of local companies without getting something in return, any country that wants to join a trading bloc must be prepared to make concessions. Interdependence, Because trading blocs increase trade among participating countries, the countries become increasingly dependent on each other, regional integration Continental organization Continental union
5.
Trade creation
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Trade creation is an economic term related to international economics in which trade flows are redirected due to the formation of a free trade area or a customs union. The issue was brought into discussion by Jacob Viner, together with the trade diversion effect. In the former case after the formation of union, the cost of the goods considered is decreased. In practice, both creation and diversion effects take place due to formation of economic union. When a customs union is formed, the member nations establish a trade area amongst themselves. The result is an increase in trade among nations in the good or service of each nations comparative advantage. In other words, increase in trade causes greater revenues, the creation of trade is important to the nation entering the customs union in that increased specialization may hurt other industries. Arguments for protectionism, such as the infant industry argument, national defense, outsourcing, however, customs unions are typically formed with friendly nations, eliminating the national defense argument. Trade diversion Regional Integration and Cooperation in Sub-Saharan Africa, Are Formal Trade Agreements the Right Strategy, - this Harvard Institute for International Development discussion paper from 1997 argues that here is little reason to expect significant economic gains from formal trade agreements at this time. Such agreements, in and of themselves, are unlikely to yield appreciable benefits unless they are preceded by decisions within member countries to more general open trade strategies. It summarizes the conclusion of empirical research that there has been little, if any, many possible reasons are listed for the lack of trade creation evidence, given that developed nation customs unions do seem to have stimulated increased trade and economic growth. The dynamics of trade creation and diversion effects under international economic integration, current Research Journal of Economic Theory,2009, vol. - An article proposes to use similarity between dynamics of gas and liquid moving under pressure difference, and the dynamics of trade flows moved under price difference and this allowed to use Navier-Stokes equation applied for the dynamics of gas and liquid towards the dynamics of inter-regional trade flows. An input of the method to analysis of the trade flows lies in direct linking of price and output dynamics, while Jacob Viners analysis was classically static consideration
6.
Trade diversion
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When a country applies the same tariff to all nations, it will always import from the most efficient producer, since the more efficient nation will provide the goods at a lower price. With the establishment of a bilateral or regional trade agreement. In other words, this would cause a trade diversion, the term was coined by Jacob Viner in The Customs Union Issue in 1950. In its literal meaning the term was however incomplete, as it failed to capture all welfare effects of discriminatory tariff liberalization, economists have however dealt with this incompleteness in two ways. Either they stretched the meaning to cover all welfare effects. Viners article became and still is the foundation of the theory of economic integration. It considered only two states comparing their trade flows with the rest of the world after they abolish customs tariffs on inner border of their union, opposite to economically efficient trade creation effect, the trade diversion flow is cost-inefficient compared with the rest of the world. Balance between trade creation and trade diversion effects due to the creation of economic union makes the union either economically efficient or inefficient. It is based on the fact that unification of states usually applies mergers of more than 1 sector in economy leading to the creation of trade creation or diversion effects. Diverted trade may hurt the non-member nation economically and politically, and it is widely believed by economists that trade diversion is harmful to consumers. The dynamics of trade diversion was described by Ravshanbek Dalimov in 2009 and he used similarity of trade flows to the flux of gas or liquid stimulated by the pressure difference, while the flows of trade flows are stimulated by the price difference. This allowed use of Navier-Stokes equations for the dynamics of trade flows. An example of trade diversion is the UKs import of lamb, before Britain joined the EU, most lamb imports came from New Zealand, the cheapest lamb producer. Trade was diverted from New Zealand and created between France and the UK, current Research Journal of Economic Theory,2009, vol. An article proposes to use similarity between dynamics of gas and liquid moving under pressure difference, and the dynamics of trade flows moved under price difference and this allowed to use Navier-Stoxes equation applied for the dynamics of gas and liquid towards the dynamics of trade flows
7.
Import substitution industrialization
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Import substitution industrialization is a trade and economic policy which advocates replacing foreign imports with domestic production. ISI is based on the premise that a country should attempt to reduce its foreign dependency through the production of industrialized products. The term primarily refers to 20th-century development economics policies, although it has been advocated since the 18th century by such as Friedrich List. ISI policies were enacted by countries in the Global South with the intention of producing development, ISI works by having the state lead economic development through nationalization, subsidization of vital industries, increased taxation, and highly protectionist trade policies. Import substitution was heavily practiced during the century as a form of developmental theory that advocated increased productivity. This was an economic theory practiced by developing nations after WW2. Many economists at the time considered the ISI approach as a remedy to mass poverty, mercantilist economic theory and practices of the 16th, 17th, and 18th centuries frequently advocated building up domestic manufacturing and import substitution. This formed the basis of the American School in economics, which was a force in the United States during its 19th-century industrialization. As a set of development policies, ISI policies are theoretically grounded on the Singer-Prebisch thesis, on the infant industry argument, in many cases, however, these assertions did not apply. Volkswagen, Ford, GM, and Mercedes all established production facilities in Brazil in the 1950s and 1960s, import substitution policies were adopted by most nations in Latin America from the 1930s until the late 1980s. This served as an incentive for the production of the goods they needed. Positivist thinking, which sought a government to modernize society. Among the officials, many of whom rose to power, like Perón and Vargas, ISI gained a theoretical foundation only in the 1950s, when Argentine economist and UNECLAC head Raúl Prebisch was a visible proponent of the idea, as well as Brazilian economist Celso Furtado. Prebisch had experience running his country’s central bank and started to question the model of export-led growth and these unequal powers were taking the wealth from third world countries leaving them with no way to prosper. He believed that developing countries needed to create local vertical linkages, the tariffs were designed to allow domestic infant industries to prosper. ISI was most successful in countries with populations and income levels which allowed for the consumption of locally produced products. Latin American countries such as Argentina, Brazil, Mexico, and Chile, Uruguay, thus, smaller and poorer countries, such as Ecuador, Honduras, and the Dominican Republic, could implement ISI only to a limited extent. Peru implemented ISI in 1961, and the policy lasted through to the end of the decade in some form, in Latin American countries in which ISI was most successful, it was accompanied by structural changes to the government
8.
Trade finance
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Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer, various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade. While a seller can require the purchaser to prepay for goods shipped, Banks may assist by providing various forms of support. For example, the bank may provide a letter of credit to the exporter providing for payment upon presentation of certain documents. The exporters bank may make a loan to the exporter on the basis of the export contract, other forms of trade finance can include Documentary Collection, Trade Credit Insurance, Finetrading, Factoring or forfaiting. Some forms are designed to supplement traditional financing. Secure trade finance depends on verifiable and secure tracking of physical risks, the advent of new information and communication technologies allows the development of risk mitigation models which have developed into advance finance models. This allows very low risk of advance payment given to the Exporter, while preserving the Importers normal payment credit terms, as trade transactions become more flexible and increase in volume, demand for these technologies has grown. Banks and financial institutions offer the products and services in their trade finance branches. Bank guarantee, It is a given by a Bank on behalf of the Applicant. Bank guarantee has various types like 1, labour Export Import Collection and discounting of bills, It is a major trade service offered by the Banks. Popular methods of payment used in international trade include, cash with order-the buyers pay cash when he places an order, cash on delivery-the buyer pays cash when the goods are delivered. Documentary credit-a Letter of credit is used, gives the seller two guarantees that the payment will be made by the buyer, one guarantee from the buyers bank and another from the sellers bank. Open account-this method can be used by business partners who trust each other, exporters, International Trade Administration, U. S. Department of Commerce Federation of International Trade Associations AplonTrade, Free sample tool for trade financing with SWIFT messages. The Complete Guide to Trade Finance for Export Businesses
9.
Trade route
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A trade route is a logistical network identified as a of pathways and stoppages used for the commercial transport of cargo. The term can also be used to refer to trade over bodies of water, among notable trade routes was the Amber Road, which served as a dependable network for long-distance trade. Maritime trade along the Spice Route became prominent during the Middle Ages, during the Middle Ages, organizations such as the Hanseatic League, aimed at protecting interests of the merchants, and trade became increasingly prominent. In modern times, commercial activity shifted from the trade routes of the Old World to newer routes between modern nation-states. Innovative transportation of modern times includes pipeline transport and the relatively well-known trade involving rail routes, automobiles, one of the vital instruments which facilitated long distance trade was portage and the domestication of beasts of burden. Organized caravans, visible by the 2nd millennium BCE, could carry goods across a distance as fodder was mostly available along the way. The domestication of camels allowed Arabian nomads to control the long distance trade in spices, caravans were useful in long-distance trade largely for carrying luxury goods, the transportation of cheaper goods across large distances was not profitable for caravan operators. With productive developments in iron and bronze technologies, newer trade routes—dispensing innovations of civilizations—began to rise, evidence of maritime trade between civilizations dates back at least 90 millennia. Navigation was known in Sumer between the 4th and the 3rd millennium BCE, and was known by the Indians. The Egyptians had trade routes through the Red Sea, importing spices from the Land of Punt, maritime trade began with safer coastal trade and evolved with the manipulation of the monsoon winds, soon resulting in trade crossing boundaries such as the Arabian Sea and the Bay of Bengal. South Asia had multiple maritime trade routes which connected it to Southeast Asia, Indian connections to various Southeast Asian states buffered it from blockages on other routes. By making use of the trade routes, bulk commodity trade became possible for the Romans in the 2nd century BCE. A Roman trading vessel could span the Mediterranean in a month at one-sixtieth the cost of over-land routes, the peninsula of Anatolia lay on the commercial land routes to Europe from Asia as well as the sea route from the Mediterranean to the Black Sea. Records from the 19th century BCE attest to the existence of an Assyrian merchant colony at Kanesh in Cappadocia, trading networks of the Old World included the Grand Trunk Road of India and the Incense Road of Arabia. Parts of the Mediterranean world, Roman Britain, Tigris-Euphrates river system, beyond this was a margin which included not only temperate areas such as Europe, but the dry steppe corridor of central Asia. This was truly a world system, even though it occupied only a portion of the western Old World. Whilst each civilization emphasized its ideological autonomy, all were part of a common world of interacting components. These routes - spreading religion, trade and technology - have historically been vital to the growth of urban civilization
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Domestic trade
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Domestic trade, also known as internal trade or home trade, is the exchange of domestic goods within the boundaries of a country. This may be sub-divided into two categories, wholesale and retail, wholesale trade is concerned with buying goods from manufacturers or dealers or producers in large quantities and selling them in smaller quantities to others who may be retailers or even consumers. Wholesale trade is undertaken by wholesale merchants or wholesale commission agents, retail trade is concerned with the sale of goods in small quantities to consumers. This type of trade is taken care of by retailers, in actual practice, however, manufacturers and wholesalers may also undertake retail distribution of goods to bypass the intermediary retailer, by which they earn higher profits. The importance of trade in a country is that it facilitates exchange of goods within the country. By doing this it makes sure that factors of production reach to the right places so that the economy of the country can grow. And it helps the growth of an industry by ensuring the availability of raw materials, traders from outside the country will have to come in contact with internal traders, because it is not easy to come directly into another country and get the required products. Wholesalers play a role in working of domestic trade. One could even say that it is the backbone of the domestic market, a wholesaler is one is directly in contact with the manufacturers but in indirect contact with the consumers. A wholesaler generally deals with one type of industry, a wholesaler is not only into selling of products as it is also involved in packaging, advertising, grading, and market research. They have their own go downs which saves the manufacturers from bothering about storage and they normally make cash payments from retailers and sometimes consumers themselves and give advance payments which benefits the manufacturers. They sell in smaller quantities to retailers, which refrains the retailers from requiring storage space and they do allow credit facilities to retailers at times. A retailer is normally the final seller of a product and it makes its purchases made from Wholesalers and sales are made to the customers directly. Retailers do not particularly have to be from one industry i. e. they can trade in a variety of products at the same time and it generally has purchases made by credit and sales made in cash. Sales as compared to wholesalers are made in small quantities
11.
Tax
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A tax is a financial charge or other levy imposed upon a taxpayer by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent, the legal definition and the economic definition of taxes differ in that economists do not regard many transfers to governments as taxes. For example, some transfers to the sector are comparable to prices. Examples include tuition at public universities and fees for utilities provided by local governments, governments also obtain resources by creating money and coins, through voluntary gifts, by imposing penalties, by borrowing, and by confiscating wealth. In modern taxation systems, governments levy taxes in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states, the method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as the Canada Revenue Agency, when taxes are not fully paid, the state may impose civil penalties or criminal penalties on the non-paying entity or individual. The levying of taxes aims to raise revenue to fund governing and/or to alter prices in order to affect demand, States and their functional equivalents throughout history have used money provided by taxation to carry out many functions. A governments ability to raise taxes is called its fiscal capacity, when expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may be used to service past debts, governments also use taxes to fund welfare and public services. These services can include education systems, pensions for the elderly, unemployment benefits, energy, water and waste management systems are also common public utilities. A tax effectively changes relative prices of products and they have therefore sought to identify the kind of tax system that would minimize this distortion. Governments use different kinds of taxes and vary the tax rates, historically, taxes on the poor supported the nobility, modern social-security systems aim to support the poor, the disabled, or the retired by taxes on those who are still working. A states tax system often reflects its communal values and the values of those in current political power. To create a system of taxation, a state must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing or administering the tax system, in countries where the public does not have a significant amount of influence over the system of taxation, that system may reflect more closely the values of those in power. All large businesses incur administrative costs in the process of delivering revenue collected from customers to the suppliers of the goods or services being purchased. Taxation is no different, the resource collected from the public through taxation is always greater than the amount which can be used by the government, the difference is called the compliance cost and includes the labour cost and other expenses incurred in complying with tax laws and rules
12.
Trade restriction
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A trade restriction is an artificial restriction on the trade of goods and/or services between two countries. It is the byproduct of protectionism, however, the term is controversial because what one part may see as a trade restriction another may see as a way to protect consumers from inferior, harmful or dangerous products. For instance Germany required the production of beer to adhere to its purity law, the law, originally implemented in Bavaria in 1516 and eventually becoming law for newly unified Germany in 1871, made many foreign beers unable to be sold in Germany as beer. This law was struck down in 1987 by the European Court of Justice, rectangular headlamps were promoted in the United States where round lamps were required until 1975. By 1979, the majority of new cars now had the rectangular headlamps, in 1968, the US Department of Transportation outlawed any decorative or protective element in front of the headlamps if the headlamps are switched on. The change meant that vehicles designed for aerodynamic performance could not achieve it for the US market. In 1984, the Department changed the rule to allow replaceable-bulb headlamps of nonstandard shapes, however, some automaker could equip a vehicle with the same type of headlamps in the US as in the rest of the world. US headlamp standards are governed by Federal Motor Vehicle Safety Standard 108, canada has its own headlamp standards that are similar to the US standard but allows UNECE-compliant headlamps. Headlamps were used in cars but also for traffic violation stops
13.
Trade barrier
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Trade barriers are government-induced restrictions on international trade. If two or more nations repeatedly use trade barriers against each other, then a trade war results, economists generally agree that trade barriers are detrimental and decrease overall economic efficiency, this can be explained by the theory of comparative advantage. In theory, free trade involves the removal of all such barriers, in practice, however, even those countries promoting free trade heavily subsidize certain industries, such as agriculture and steel. High income countries tend to have less trade barriers than middle income countries which, in turn, small states tend to have lower trade barriers than large states. The most common trade barriers are on agricultural goods, textiles, apparel and footwear are the manufactured goods which are most commonly protected by trade barriers. Tariffs have been declining in the last twenty years but states have increased their non-tariff barriers, according to Chad Bown and Meredith Crowley, world trade is probably vastly more liberal in current times than was the case historically. According to Ronald Findlay and Kevin H. O’Rourke, for the nineteenth and twentieth centuries trade barriers and transport costs were the most important barriers to trade. They also write, during the mercantilist era price gaps were as likely to be due to trade monopolies, pirates, and wars as to costs and tariffs. Due to steadily decreasing tariff barriers since WWII, countries have become increasingly likely to trade barriers in the form of non-tariff barriers. National firms often lobby their own governments to enact regulations that are designed to keep out foreign firms, trade barriers are often criticized for the effect they have on the developing world. Because rich-country players call most of the shots and set trade policies, tariffs also tend to be anti-poor, with low rates for raw commodities and high rates for labor-intensive processed goods. The Commitment to Development Index measures the effect that rich country trade policies actually have on the developing world, trade barriers are mostly a combination of conformity and per-shipment requirements requested abroad, and weak inspection or certification procedures at home. The impact of trade barriers on companies and countries is highly uneven, one particular study showed that small firms are most affected. Another negative aspect of trade barriers is that they result in a choice of products and would therefore force customers to pay higher prices. Before exporting or importing to other countries, firstly, they must be aware of restrictions that the government imposes on the trade, sometimes the situation becomes even more complicated with the changing of policy and restrictions of a country
14.
Tariff
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A tariff is a tax on imports or exports. In other languages and very occasionally in English, tariff or its equivalent may also be used to any list of prices. A customs duty or due is the tax levied on the import or export of goods in international trade. In economic sense, a duty is also a kind of consumption tax, a duty levied on goods being imported is referred to as an import duty. Similarly, a duty levied on exports is called an export duty, a tariff, which is actually a list of commodities along with the leviable rate of customs duty, is popularly referred to as a customs duty. This is no longer the case, Customs duty is calculated on the determination of the assessable value in case of those items for which the duty is levied ad valorem. This is often the transaction value unless a customs officer determines assessable value in accordance with the Harmonized System, However, for certain items like petroleum and alcohol, customs duty is realized at a specific rate applied to the volume of the import or export consignments. For the purpose of assessment of duty, products are given an identification code that has come to be known as the Harmonized System code. This code was developed by the World Customs Organization based in Brussels, a Harmonized System code may be from four to ten digits. For example,17.03 is the HS code for molasses from the extraction or refining of sugar, However, within 17.03, the number 17.03.90 stands for Molasses. Introduction of Harmonized System code in 1990s has largely replaced the Standard International Trade Classification, in drawing up the national tariff, the revenue departments often specifies the rate of customs duty with reference to the HS code of the product. A Customs authority in each country is responsible for collecting taxes on the import into or export of goods out of the country, Evasion of customs duties takes place mainly in two ways. In one, the trader under-declares the value so that the value is lower than actual. In a similar vein, a trader can evade customs duty by understatement of quantity or volume of the product of trade, a trader may also evade duty by misrepresenting traded goods, categorizing goods as items which attract lower customs duties. The Evasion of customs duty may take place with or without the collaboration of customs officials, Evasion of customs duty does not necessarily constitute smuggling. Many countries allow a traveler to bring goods into the country duty-free and these goods may be bought at ports and airports or sometimes within one country without attracting the usual government taxes and then brought into another country duty-free. Some countries impose allowances which limit the number or value of items that one person can bring into the country. These restrictions often apply to tobacco, wine, spirits, cosmetics, gifts, often foreign diplomats and UN officials are entitled to duty-free goods
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Duty (economics)
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In economics, a duty is a kind of tax levied by a state. It is often associated with customs, in context they are also known as tariffs or dues. The term is used to describe a tax on certain items purchased abroad. Properly, a duty differs from a tax in being levied on specific commodities, financial transactions, estates, duties may be import duties, excise duties, stamp duties, death or succession duties, etc. but not such direct impositions as personal income taxes. An estate duty is a tax levied on the estate of a person in many jurisdictions or on the inheritance of a person. The tax is sometimes referred to, formally or informally, as a death duty, often, the rate of the duty is similar to a gift duty. Tariff Free economic zone Free port Duty-free shop Smuggling Tax Evasion Likin, tax collected on transportation of goods in Qing China
16.
Export subsidy
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An export subsidy reduces the price paid by foreign importers, which means domestic consumers pay more than foreign consumers. The World Trade Organization prohibits most subsidies directly linked to the volume of exports, Export subsidies are also generated when internal price supports, as in a guaranteed minimum price for a commodity, create more production than can be consumed internally in the country. Instead of letting the commodity rot or destroying it, the government exports it, saudi Arabia is a net exporter of wheat, Japan often is a net exporter of rice. Export subsidies can cause inflation, the government subsidises the industry based on costs, some countries provide indirect export subsidies in the form of tax reductions. In the United States closely held exporters of U. S. made goods may get a reduction of tax using an Interest Charge Domestic International Sales Corporation, International Trade Theory and Policy, Export Subsidies by Steven M. Suranovicby
17.
Technical barriers to trade
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Here, technical barriers to trade refer to measures such as labelling requirements, standards on technical specifications and quality standards, and other measures protecting the environment. Chapter B also includes all conformity-assessment measures related to requirements, such as certification, testing. Other examples of TBTs are rules for product weight, size, or packaging, ingredient or identity standards, shelf-life restrictions, the Agreement on Technical Barriers to Trade gives rules for the use of such barriers. However, trade experts widely view TBTs as having potential for being misused by importing countries as nontransparent obstacles to trade. The OECD has been working to make common standardization easier with the ISTR Template allowing common standards to aid in the implementation of the WTO Agreement, sanitary and phytosanitary measures and agreements ITCs Market Access Map, interactive portal providing information on customs tariffs and market requirements. ITCs Non-Tariff Measures Business Survey database, including regulatory and procedural obstacles that trading companies face both at home and abroad, uNCTADs Classification of Non-Tariff Measures report
18.
Bribery
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Bribery is the act of giving money, goods or other forms of recompense to a recipient in exchange for an alteration of their behavior that the recipient would otherwise not alter. Gifts of money or other items of value which are available to everyone on an equivalent basis. Offering a discount or a refund to all purchasers is a rebate and is not bribery. Giving the rebate to influence them to look favorably on the utilitys rate increase applications, however. The bribe is the gift bestowed to influence the recipients conduct, in economics, the bribe has been described as rent. Bribery in bureaucracy has been viewed as a reason for the higher cost of production of goods, one must be careful of differing social and cultural norms when examining bribery. Expectations of when a transaction is appropriate can differ from place to place. Tipping, for example, is considered bribery in some societies, in some Spanish-speaking countries, bribes are referred to as mordida. In Arab countries, bribes may be called baksheesh or shay, french-speaking countries often use the expressions dessous-de-table, pot-de-vin, or commission occulte. While the last two expressions contain inherently a negative connotation, the expression dessous-de-table can be understood as a commonly accepted business practice. In German, the term is Schmiergeld. The forms that bribery take are numerous, for example, a motorist might bribe a police officer not to issue a ticket for speeding, a citizen seeking paperwork or utility line connections might bribe a functionary for faster service. Bribery may also take the form of a commission, a profit made by an agent, in the course of his employment. Euphemisms abound for this Bribers and recipients of bribery are likewise numerous although bribers have one common denominator, Bribery around the world is estimated at about $1 trillion. The reason for this dissociation is to make the steps of a corrupt deal already an offence and, thus. Besides, such a dissociation makes the prosecution of bribery offences easier since it can be difficult to prove that two parties have formally agreed upon a corrupt deal. A grey area may exist when payments to smooth transactions are made, in some countries, this practice is the norm, often resulting from a developing nation not having the tax structure to pay civil servants an adequate salary. Nevertheless, most economists regard bribery as a bad thing because it encourages rent seeking behaviour, a state where bribery has become a way of life is a kleptocracy
19.
Foreign exchange controls
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Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents. Such controls used to be common in most countries, particularly poorer ones, until the 1990s when free trade, today, countries which still impose exchange controls are the exception rather than the rule. Often, foreign exchange controls can result in the creation of markets to exchange the weaker currency for stronger currencies. This leads to a situation where the rate for the foreign currency is much higher than the rate set by the government. As such, it is unclear whether governments have the ability to enact effective exchange controls, note that this list is very incomplete. Currency transaction tax Financial transaction tax Spahn tax Sterling Area Tobin tax
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Economic sanctions
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An embargo is the partial or complete prohibition of commerce and trade with a particular country or a group of countries. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, embargoes are similar to economic sanctions and are generally considered legal barriers to trade, not to be confused with blockades, which are often considered to be acts of war. In response to embargoes, an independent economy or autarky often develops in an area subjected to heavy embargo, effectiveness of embargoes is thus in proportion to the extent and degree of international participation. Companies must be aware of embargoes that apply to the export destination. Embargo check is difficult for both importers and exporters to follow, before exporting or importing to other countries, firstly, they must be aware of embargoes. Sometimes the situation even more complicated with the changing of politics of a country. If an embargo situation exists, the blocks the transaction for further processing. The Embargo of 1807 was a series of laws passed by the U. S. Congress 1806–1808, during the second term of President Thomas Jefferson. Britain and France were engaged in a war, the U. S. wanted to remain neutral. The American national-interest goal was to use the new laws to avoid war, one of the most comprehensive attempts at an embargo happened during the Napoleonic Wars. In an attempt to cripple the United Kingdom economically, the Continental System – which forbade European nations from trading with the UK – was created, in practice it was not completely enforceable and was as harmful if not more so to the nations involved than to the British. The United States imposed an embargo on Cuba on February 7,1962, referred to by Cuba as el bloqueo, the US embargo on Cuba remains one of the longest-standing embargoes. The embargo was embraced by few of the United States allies, in 1973–1974, Arab nations imposed an oil embargo against the United States and other industrialized nations that supported Israel in the Yom Kippur War. China, arms embargo, enacted in response to the Tiananmen Square protests of 1989, enacted 1979, increased through the following years and reached its tightest point in 2010. North Korea, luxury goods, enacted 2006 Turkish Republic of Northern Cyprus, consumer goods, Indonesia, live cattle because of cruel slaughter methods in Indonesia. Gaza Strip by Israel since 2001, under blockade since 2007 due to the large number of illicit arms traffic used to wage war. Syria, arms and imports of oil, EU, US, Australia, Canada and Norway since August 2014, beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy. On August 13,2015, the embargo was expanded to Albania, Montenegro, Switzerland, Japan, Iceland, federal Republic of Yugoslavia North Vietnam and later Vietnam, trade embargo by the US Republic of Macedonia, complete trade embargo
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Safeguard
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A safeguard, in international law, is a restraint on international trade or economic development to protect communities from development aggression or home industries from foreign competition. The WTO and UNFCCC concepts are related within international law, with UNFCC processes, safeguards became of concern in the 2010 United Nations Climate Change Conference. Within the WTO, safeguard measures were available under the General Agreement on Tariffs, however, they were infrequently used, and some governments preferred to protect their industries by grey area measures. As part of the WTO deal, members gave up the area measures. Safeguards are usually seen as responses to economic development and trade processes that align with international law, as opposed to negative practices, in the context of world trade, they are supposed to be used only in very specific circumstances, with compensation, and on a universal basis. For example, a member restricting imports for safeguard purposes would have to restrict imports from all other countries, however, exceptions to the nondiscriminatory rule are provided for in the Agreement on Safeguards itself as well as in some ad hoc agreements. In the last respect, it is worthwhile to note that the Peoples Republic of China accepted that discriminatory safeguards may be imposed on its exports to other WTO members until 2013, regional trading arrangements have their own rules relating to safeguards. Some safeguard measures can be resorted to in the area of services, paolo Farah Five Years of China’s WTO Membership
22.
Timeline of international trade
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The history of international trade chronicles notable events that have affected the trade between various countries. In the 21st century, China, the European Union and the United States are the three largest trading markets in the world, records from the 19th century BCE attest to the existence of an Assyrian merchant colony at Kanesh in Cappadocia. The domestication of camel allows Arabian nomads to control long distance trade in spices, the Egyptians trade in the Red sea, importing spices from the Land of Punt and from Arabia. Indian goods are brought in Arabian vessels to Aden, the ships of Tarshish, a Tyrian fleet equipped at Ezion Geber, make several trading voyages to the East bringing back gold, silver, ivory and precious stones. Tiglath-Pileser III attacks Gaza in order to trade along the Incense Route. The Greek Ptolemaic dynasty exploits trading opportunities with India prior to the Roman involvement, the cargo from the India and Egypt trade is shipped to Aden. With the establishment of Roman Egypt, the Romans initiate trade with India, the goods from the East African trade are landed at one of the three main Roman ports, Arsinoe, Berenice or Myos Hormos. Myos Hormos and Berencie appear to have been important ancient trading ports, gerrha controls the Incense trade routes across Arabia to the Mediterranean and exercises control over the trading of aromatics to Babylon in the 1st century BC. Additionally, it served as a port of entry for goods shipped from India to the East, due to its prominent position in the incense trade, Yemen attracts settlers from the fertile crescent. Pre-Islamic Meccans use the old Incense Route to benefit from the heavy Roman demand for luxury goods, in Java and Borneo, the introduction of Indian culture creates a demand for aromatics. These trading outposts later serve the Chinese and Arab markets, following the demise of the incense trade Yemen takes to the export of coffee via the Red Sea port of al-Mocha. The Abbasids use Alexandria, Damietta, Aden and Siraf as entry ports to India, at the eastern terminus of the Silk Road, the Tang Dynasty Chinese capital at Changan becomes a major metropolitan center for foreign trade, travel, and residence. This role would be assumed by Kaifeng and Hangzhou during the Song Dynasty, guangzhou was Chinas greatest international seaport during the Tang Dynasty, but its importance was eclipsed by the international seaport of Quanzhou during the Song Dynasty. Merchants arriving from India in the city of Aden pay tribute in form of musk, camphor, ambergris and sandalwood to Ibn Ziyad. Indian exports of spices find mention in the works of Ibn Khurdadhbeh, al-Ghafiqi, Ishak bin Imaran, the Hanseatic League secures trading privileges and market rights in England for goods from the Leagues trading cities in 1157. Due to the Turkish hold on the Levant during the half of the 15th century the traditional Spice Route shifts from the Persian Gulf to the Red Sea. In 1492 a Spanish expedition commanded by Christopher Columbus arrive in America, Portuguese diplomat Pero da Covilha undertakes a mission to explore the trade routes of the Near East and the adjoining regions of Asia and Africa. The exploration commenced from Santarém to Barcelona, Naples, Alexandria, Cairo, Portuguese explorer and adventurer Vasco da Gama is credited with establishing another sea route from Europe to India
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Mercantilism
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Mercantilism was an economic theory and practice that was dominant in Western Europe during the 15th to the mid-18th centuries. Mercantilism is a form of economic nationalism and its goal is to enrich and empower the nation and state to the maximum degree, by acquiring and retaining as much economic activity as possible within the nations borders. Manufacturing and industry, particularly of goods with military applications, were prioritized, Mercantilism sought to ensure the nation produced as much volume and variety of output as possible, so as to limit its dependence upon foreign suppliers. Economic autarky was an element of mercantilism. These aims were primarily accomplished by, Imposing high tariffs on the importation of finished goods, Imposing low, or no taxes on the export of finished goods, and imposing high taxes on the exportation of raw materials. Seeking new markets for manufactured products, so as to artificially increase the demand for domestic production. These policies generally resulted in a balance of trade, which led to the accumulation of precious metals. Historically, such policies sometimes led to war and may have motivated colonial expansion, high tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Mercantilism has been linked to bullionism ever since Adam Smith made the accusation, however, due to the fact that no author self-consciously used the label to refer to their own thoughts mercantilist authors can only be identified retrospectively. It is the supply of things necessary for life and suitable for clothing, the core of mercantile policy was a coherent national industrial policy, which was aimed at generating as much material wealth within the nation as possible. Doing so, it was thought, was the best way to increase the states military, the term mercantile system was used by its foremost critic, Adam Smith, but mercantilism had been used earlier by Mirabeau. Many nations applied the theory, one example being France which was the most important state economically in Europe at the time. King Louis XIV followed the guidance of Jean Baptiste Colbert, his general of finances. Mercantilism was the dominant school of thought in Europe throughout the late Renaissance. Evidence of mercantilistic practices appeared in early modern Venice, Genoa, however, as a codified school of economic theories, mercantilisms real birth was marked by the empiricism of the Renaissance, which first began to quantify large-scale trade accurately. England began the first large-scale and integrative approach to mercantilism during the Elizabethan Era, queen Elizabeth promoted the Trade and Navigation Acts in Parliament and issued orders to her navy for the protection and promotion of English shipping. It was written in the 1620s and published in 1664, numerous French authors helped cement French policy around mercantilism in the 17th century. This French mercantilism was best articulated by Jean-Baptiste Colbert, though policy liberalised greatly under Napoleon, in Europe, academic belief in mercantilism began to fade in the late 18th century, especially in Britain, in light of the arguments of Adam Smith and the classical economists
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Protectionism
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Protectionist policies protect the producers, businesses and workers of the import-competing sector in a country from foreign competitors. According to proponents, these policies can counteract unfair trade practices, protectionists may favor the policy in order to decrease the trade deficit, maintain employment in certain sectors, or favor the growth of certain industries. In recent years, protectionism has become closely aligned with the anti-globalization movement, There is a broad consensus among economists that the impact of protectionism on economic growth is largely negative, although the impact on specific industries and groups of people may be positive. The doctrine of protectionism contrasts with the doctrine of free trade, a variety of policies have been used to achieve protectionist goals. Tariff rates usually vary according to the type of goods imported, import tariffs will increase the cost to importers, and increase the price of imported goods in the local markets, thus lowering the quantity of goods imported, to favour local producers. Tariffs may also be imposed on exports, and in an economy with floating exchange rates, however, since export tariffs are often perceived as hurting local industries, while import tariffs are perceived as helping local industries, export tariffs are seldom implemented. Import quotas, To reduce the quantity and therefore increase the price of imported goods. The economic effects of a quota is similar to that of a tariff. Economists often suggest that import licenses be auctioned to the highest bidder, administrative barriers, Countries are sometimes accused of using their various administrative rules as a way to introduce barriers to imports. Anti-dumping legislation, Supporters of anti-dumping laws argue that they prevent dumping of cheaper foreign goods that would cause local firms to close down, however, in practice, anti-dumping laws are usually used to impose trade tariffs on foreign exporters. Direct subsidies, Government subsidies are given to local firms that cannot compete well against imports. These subsidies are purported to protect jobs, and to help local firms adjust to the world markets. Export subsidies, Export subsidies are often used by governments to increase exports, Export subsidies have the opposite effect of export tariffs because exporters get payment, which is a percentage or proportion of the value of exported. Export subsidies increase the amount of trade, and in a country with floating exchange rates, have similar to import subsidies. Exchange rate control, A government may intervene in the exchange market to lower the value of its currency by selling its currency in the foreign exchange market. Doing so will raise the cost of imports and lower the cost of exports, international patent systems, There is an argument for viewing national patent systems as a cloak for protectionist trade policies at a national level. Peter Drahos explains that States realized that patent systems could be used to cloak protectionist strategies, There were also reputational advantages for states to be seen to be sticking to intellectual property systems. In the modern trade arena many other initiatives besides tariffs have been called protectionist, for example, some commentators, such as Jagdish Bhagwati, see developed countries efforts in imposing their own labor or environmental standards as protectionism
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Free trade
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Free trade is one of the most debated topics in economics of the 19th, 20th, and 21st century. Arguments over free trade can be divided into economic, moral, the World Trade Organization was created to open up markets and promote international trade based on the Free Trade paradigm. The WTO creates and monitors agreements to reduce trade barriers, and arbitrates in disputes over foreign market access and its definition of Free Trade is trade on a level playing field, so that the unlimited exchange of goods between countries is not necessarily Free. Therefore, any import restriction makes the domestic society as a whole worse off than it would be with unlimited imports, the artificial handicap of a foreign subsidy seems much less just to local production than advantages deriving from geography, natural resources, or native skill. Electorates often prefer fairplay to Utilitarian considerations, if trade barriers are already low, the threat of a trade war of tit-for-tat tariff increases may reduce the temptation for either partner in bilateral trade to raise import barriers. It would tend to decrease the power and revenue flowing to government bureaucrats. In the history of trade, two types of arguments have been advanced in favor of allowing purchases from abroad, and free trade in the broader sense. One set of arguments for free trade could be classified as moral arguments listed below, another set of arguments is essentially economic, that free trade will make society more prosperous. These are mostly technical arguments from the discipline of economics, starting especially with Smiths The Wealth of Nations, the 18th and 19th century intellectuals who backed free trade rarely did so under the rubric of increasing material wealth. In many cases this was given as the least important reason for free trade, rather, they argued that international society would be improved by increased commerce. Some of these, and later, sociopolitical arguments are listed here, adam Smith thought that protectionism against free trade was a scam on the public on behalf of producers, carried out in the name of nationalism. Even if overall economic interests had not been harmed by tariffs, classical economic analysis shows that free trade increases the global level of output because free trade permits specialization among countries. Specialization allows nations to devote their resources to the production of the particular goods. The benefits of specialization, coupled with economies of scale, increase the production possibility frontier. An increase in the production possibility frontier indicates that the absolute quantity of goods. Not only are the quantity of goods and services higher. Free trade policies are often associated with general laissez-faire economic politics and parties, voluntary exchange, by virtue of its voluntary nature, is assumed to be beneficial to the parties involved—why else would they engage in the exchange. Thus, the restriction of voluntary exchange restricts commerce and ultimately the accumulation of wealth in the absence of real-world externalities such as infant industry protection, here is the production possibilities frontier for a fictional country, Country A
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Economic nationalism
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Economic nationalism is an umbrella term that includes economic policies and theories designed to improve the domestic economy relative to foreign economies. It therefore subsumes theories such as patriotism, protectionism, and mercantilism. Economic nationalists oppose globalization, or at least question the benefits of unrestricted free trade and this was especially true when warfare was endemic in the early-modern period, a strong economy often meant the difference between political independence, and conquest by a foreign power. This resulted in the system generally known as mercantilism. The Italian City State of Venice designed its whole economy around expanding its national power, for example, Venice mandated that all trade carried on Venetian ships must stop in Venice, regardless of its origin and destination. This guaranteed Venice a bigger share of any made in the spice trade. Although this was less efficient, the cost was passed onto consumers. Venice also only imported raw materials, leaving the refining and processing to be done by Venetian craftsmen, great Britain pursued economically nationalistic policies during the seventeenth and eighteenth centuries. The two pillars of its economic strategy were, high rates and acquiring new markets for its products. In the mid-1700s, the tariff rate in Britain was 30%. This shut out foreign manufactured goods from British markets, and was one of the conditions enabling the Industrial Revolution. The US also practiced economic nationalism during the nineteenth and early twentieth century and this was done primarily through the imposition of high tariffs and the acquisition of markets in Central and South America. High tariffs were the norm in Americas economic life, and were the policies of Presidents Washington, Lincoln, Grant. French governmental listing of Danone as an industry to pre-empt a potential takeover bid by PepsiCo. Blocked takeover of Autostrade, an Italian toll-road operator by the Spanish company Abertis, proposed takeover of Endesa by E. ON, and the counter-bid by Gas Natural. Proposed takeover of Suez by Enel, and the counter-bid by Gaz de France, United States Congressional opposition to the takeover bid for Unocal by CNOOC, and the subsequent takeover by Chevron. Political opposition in 2006 to sell port management businesses in six major U. S, the New Zealand Government veto of the Canada Pension Plan Investment Boards bid for a majority stake in Auckland Airport in 2008. The cases of French Suez and Spanish Endesa involved the desire for respective European governments to create a national champion capable of competing at both a European and global level
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Economic integration
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This is meant in turn to lead to lower prices for distributors and consumers with the goal of increasing the level of welfare, while leading to an increase of economic productivity of the states. In the current sense of combining separate economies into larger economic regions, fritz Machlup credits Eli Heckscher, Herbert Gaedicke and Gert von Eyern as the first users of the term economic integration in its current sense. There are economic as well as reasons why nations pursue economic integration. The economic rationale for the increase of trade between states of economic unions that it is meant to lead to higher productivity. Comparative advantage refers to the ability of a person or a country to produce a good or service at a lower marginal. Comparative advantage was first described by David Ricardo who explained it in his 1817 book On the Principles of Political Economy and Taxation in an example involving England and Portugal. In Portugal it is possible to produce wine and cloth with less labour than it would take to produce the same quantities in England. However the relative costs of producing those two goods are different in the two countries, in England it is very hard to produce wine, and only moderately difficult to produce cloth. In Portugal both are easy to produce, therefore, while it is cheaper to produce cloth in Portugal than England, it is cheaper still for Portugal to produce excess wine, and trade that for English cloth. Conversely England benefits from this trade because its cost for producing cloth has not changed but it can now get wine at a lower price, closer to the cost of cloth. The conclusion drawn is that each country can gain by specializing in the good where it has comparative advantage, economies of scale refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased, economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. A lone car maker may be profitable, however, if they export cars to markets in addition to selling to the local market. Besides these economic reasons, the reasons why economic integration has been pursued in practise are largely political. The Zollverein or German Customs Union of 1867 paved the way for partial German unification under Prussian leadership in 1871, imperial free trade was proposed in the late 19th century to strengthen the loosening ties within British Empire. The European Economic Community was created to integrate France and Germanys economies to the point that they would find it impossible to go to war with each other, a free trade area is formed when at least two states partially or fully abolish custom tariffs on their inner border. To exclude regional exploitation of zero tariffs within the FTA there is a rule of certificate of origin for the originating from the territory of a member state of an FTA. A customs union introduces unified tariffs on the borders of the union
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International Monetary Fund
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The International Monetary Fund is an international organization headquartered in Washington, D. C. It now plays a role in the management of balance of payments difficulties. Countries contribute funds to a pool through a system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had SDR477 billion, the rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. The IMF provides alternate sources of financing and this assistance was meant to prevent the spread of international economic crises. The IMF was also intended to help mend the pieces of the economy after the Great Depression. As well, to provide investments for economic growth and projects such as infrastructure. The IMFs role was altered by the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy, the IMF also researched what types of government policy would ensure economic recovery. Rather than maintaining a position of oversight of only exchange rates and their role became a lot more active because the IMF now manages economic policy rather than just exchange rates. In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, nonconcessional loans, which include interest rates, are provided mainly through Stand-By Arrangements, the Flexible Credit Line, the Precautionary and Liquidity Line, and the Extended Fund Facility. The IMF provides emergency assistance via the Rapid Financing Instrument to members facing urgent balance-of-payments needs, the IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries. This activity is known as surveillance and facilitates international cooperation, the responsibilities changed from those of guardian to those of overseer of members’ policies. In 1995 the International Monetary Fund began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The executive board approved the SDDS and GDDS in 1996 and 1997 respectively, the system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals, some countries initially used the GDDS, but later upgraded to SDDS. The IMF does require collateral from countries for loans but also requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform, if the conditions are not met, the funds are withheld. The concept of conditionality was introduced in a 1952 Executive Board decision, conditionality is associated with economic theory as well as an enforcement mechanism for repayment
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International Trade Centre
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The International Trade Centre is a subsidiary organization of the World Trade Organization and the United Nations Conference on Trade and Development and provides trade-related technical assistance. The pure focus on technical assistance is rare within the UN system as most other organizations that provide technical assistance usually engage in multiple areas, ITC has its headquarters in Geneva and one field office in Mexico City. The agreement was reached in 1967 and the International Trade Centre was officially established on 1 January 1968, iTCs service offering is nowhere described in a systematical way. Thus, the following description necessarily contains inaccuracies, ITC offers numerous different services to its beneficiaries. In doing so it differentiates between three groups of beneficiaries, Policymakers trade-support institutions, and enterprises. Some services are designed for one of these groups while others have a universal character. In principle, there is no predefined list of services that ITC is limited to, an interactive online database on international trade statistics. It presents indicators on export performance, international demand, alternative markets, users can choose to see the data either with pre-calculated trade indicators or in times-series from 2001 onward. In 2012, Trade Map, in collaboration with Kompass, included company contact information module to help companies identify trading partners in 64 countries, Trade Map sources yearly data from UN COMTRADE and collect monthly data directly from national statistics bureaus or customs authorities. An analytical web application the serves the Millennium Development Goals efforts the aim of enhancing market access transparency, Market Access Map is used by both economic operators to find information on market requirements and trade policymakers to prepare for trade negotiations. By 2015, Market Access Map includes MFN and preferential tariffs of over 190 countries as well as Non-Tariff Measures data for approximately 70 countries and it recently became available in French and Spanish in response to growing number of active users from Latin America and Africa. ITC had since its creation in 1964 six Executive Directors, twice in its history the position was vacant, in the early Seventies and the early Nineties. ITCs Executive Director is an international civil servant of the United Nations with the level of Assistant Secretary-General. ITCs Executive Director as well as the Deputy-Executive Director are appointed by the heads of its two parent organizations, the Director-General of the WTO and the Secretary-General of the UNCTAD, United Nations Conference on Trade and Development World Trade Organization Trade and development Official website
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World Trade Organization
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The World Trade Organization is an intergovernmental organization which regulates international trade. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade, most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round. The WTO is attempting to complete negotiations on the Doha Development Round, as of June 2012, the future of the Doha Round remained uncertain, the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round, as a result, there have been an increasing number of bilateral free trade agreements between governments. As of July 2012, there were various groups in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate. The WTOs current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, a trade facilitation agreement, part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement in the organizations history. Seven rounds of negotiations occurred under GATT, the first real GATT trade rounds concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought about a GATT anti-dumping Agreement, because these plurilateral agreements were not accepted by the full GATT membership, they were often informally called codes. Several of these codes were amended in the Uruguay Round, only four remained plurilateral, but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two. Well before GATTs 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing world economy. In response to the problems identified in the 1982 Ministerial Declaration, the GATT still exists as the WTOs umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations. GATT1994 is not however the only legally binding agreement included via the Final Act at Marrakesh, the highest decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions, the Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. When agricultural export subsidies were agreed to be phased out and adoption of the European Unions Everything, the WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This was to be an effort to make globalization more inclusive and help the worlds poor, particularly by slashing barriers. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries. Among the various functions of the WTO, these are regarded by analysts as the most important and it provides a forum for negotiations and for settling disputes. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training
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World Customs Organization
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The World Customs Organization is an intergovernmental organization headquartered in Brussels, Belgium. The WCO maintains the international Harmonized System goods nomenclature, and administers the technical aspects of the World Trade Organization Agreements on Customs Valuation, in 1947, thirteen European countries established a Study Group to examine customs issues identified by the General Agreement on Tariffs and Trade. This work led to the adoption in 1948 of the Convention establishing the Customs Co-operation Council, on January 26,1953, the CCC’s inaugural session took place with the participation of 17 founding members. WCO membership subsequently expanded to all regions of the globe. In 1994, the organization adopted its current name, the World Customs Organization, today, WCO members are responsible for customs controls in 180 countries representing more than 98 per cent of all international trade. The HS multipurpose goods nomenclature is used as the basis for customs tariffs and it comprises about 5,000 commodity groups, each identified by a six digit code arranged in a legal and logical structure with well-defined rules to achieve uniform classification. The WCO revised Kyoto Convention is sometimes confused with the Kyoto Protocol, 3) ATA Convention and the Convention on Temporary Admission. Both the ATA Convention and the Istanbul Convention are WCO instruments governing temporary admission of goods, the ATA system, which is integral to both Conventions, allows the free movement of goods across frontiers and their temporary admission into a customs territory with relief from duties and taxes. The goods are covered by a document known as the ATA carnet that is secured by an international guarantee system. 4) The Arusha Declaration on Customs Integrity was adopted in 1993, the Arusha Declaration is a non-binding instrument which provides a number of basic principles to promote integrity and combat corruption within customs administrations. 5) The SAFE Framework of Standards to Secure and Facilitate Global Trade was adopted in 2005, 6) The Columbus Program is a customs capacity building program works to promote customs modernization and implementation of their standards to secure and facilitate world trade. Because of its complexity, the WCO launched a capacity building program called the Columbus Programme which focuses on needs assessments for WCO Members using the WCO Diagnostic Framework tool. The WCO Secretariat is headed by a Secretary General, who is elected by the WCO membership to a five-year term, the current WCO Secretary General is Kunio Mikuriya from Japan, who took office on 1 January 2009. The WCO is governed by the Council, which brings together all Members of the Organization once a year, additional strategic and management guidance is provided by the Policy Commission and the Finance Committee
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Preferential trading area
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A preferential trade area is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely, a PTA can be established through a trade pact. It is the first stage of economic integration, the line between a PTA and a free trade area may be blurred, as almost any PTA has a main goal of becoming a FTA in accordance with the General Agreement on Tariffs and Trade. A free trade area is basically a preferential trade area with increased depth and scope of tariffs reduction
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Free trade area
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A free-trade area is the region encompassing a trade bloc whose member countries have signed a free-trade agreement. Such agreements involve cooperation between at least two countries to trade barriers – import quotas and tariffs – and to increase trade of goods. If people are free to move between the countries, in addition to a free-trade agreement, it would also be considered an open border. It can be considered the second stage of economic integration, only goods that meet these minimum requirements are entitled to the special treatment envisioned by the free trade area provisions. Cumulation is the relationship between different FTAs regarding the rules of origin – sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs, a free-trade area is a result of a free-trade agreement between two or more countries. Within an industrialized country there are few if any significant barriers to the easy exchange of goods. Between countries, on the hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be duties of one kind or another. The aim of an area is to reduce barriers to exchange so that trade can grow as a result of specialisation, division of labour. The theory of comparative advantage argues that in an unrestricted marketplace each source of production will tend to specialize in that activity where it has comparative advantage. The theory argues that the net result will be an increase in income and ultimately wealth, in principle, the overall gains from trade could be used to compensate for the effects of reduced trade barriers by appropriate inter-party transfers. This is just one example of a qualification for a free-trade agreement, if a certificate of origin is present from a supplier demonstrating that the good originated in a country under the associated free trade agreement, no further calculations are needed. A functional solution should also perform the calculations for the associated FTA during the Bill of Material analysis. Aggressive legalism Free trade zone International trade Free trade debate bilaterals, singapore official FTA site EFTA official site Australias FTAs About. coms Pros & Cons of U. S. The largest multi-product Free trade area in India
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Customs union
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A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external policy, but in some cases they use different import quotas. Common competition policy is also helpful to avoid competition deficiency, purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries. It is the stage of economic integration. Customs unions are established through trade pacts, note, Every Economic union, Customs and monetary union and Economic and monetary union includes a Customs Union. European Customs Information Portal List of international trade topics Trade creation Trade diversion Agreements Notified to the GATT/WTO and in Force
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Single market
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The goal is that the movement of capital, labour, goods, and services between the members is as easy as within them. The physical, technical and fiscal barriers among the states are removed to the maximum extent possible. These barriers obstruct the freedom of movement of the four factors of production, a common market is usually referred to as the first stage towards the creation of a single market. It usually is built upon a trade area with relatively free movement of capital and of services. A unified market is the last stage and ultimate goal of a single market and it requires the total free movement of goods, services, capital and people without regard to national boundaries. A common market allows for the movement of capital and services. It eliminates all quotas and “tariffs” – duties on imported goods – from trade in goods within it, however “non-tariff barriers” remain such as differences between the Member States’ safety, packaging requirements and national administrative procedures. They prevent for example manufacturers from marketing the same goods in all member states, the objective of a common market is most often economic convergence and the creation of an integrated single market. It is sometimes considered as the first stage of a single market, the European Economic Community was the first example of a common market. Citizens can study, live, shop, work and retire in any member state, consumers enjoy a vast array of products from all member states and businesses have unrestricted access to more consumers. A single market is commonly described as frontier-free, however, several barriers remain such as differences in national tax systems, differences in parts of the services sector and different requirements for e-commerce. In addition separate national markets still exist for financial services, energy, laws concerning the recognition of professional qualifications also may not be fully harmonized. The European Union is the economic union whose objective is completing the single market. A completed, unified market usually refers to the removal of barriers. Complete economic integration can be seen many countries, whether in a single unitary state with a single set of economic rules. Movement of people and goods among the states is unrestricted and without tariffs, a single market has many benefits. With full freedom of movement for all the factors of production between the countries, the factors of production become more efficiently allocated, further increasing productivity. For both business within the market and consumers, a market is a very competitive environment
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