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Introduction To International Trade Essay

1456 words - 6 pages

Introduction to International trade

International trade is the exchange of capital, goods, and services across international borders or territories or in other words is the process of import and export. international trade has been present throughout much of history its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced in technology transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. While In most countries, such trade represents a significant share of gross domestic product (GDP). Increasing international trade is crucial to the continuance of globalization this is because without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events.

Issue in international trade

I. The difference between international and domestic trade

According to Malcolm (2014) there are several significant differences between domestic and international trade. These differences often have to do is the imposition of tariffs and other charges, how the goods are moved between the buyer and seller, how the buyer goes about paying for the goods and shipping , and even the type of insurance that must be secured as part of the business deal. By knowing these differences can allow buyers and sellers to participate in the global trade of goods and services, a situation that provides additional opportunities for both parties.

The difference between international and domestic trade is the fact that for both countries that involved in an international transaction would have to conduct in a manner that is in compliance with the trade regulations. This requires that both the buyer and the seller be aware of those regulations and make sure the goods, the documentation prepared is in line with those regulations and the shipping mode. Failure to do so can lead to delays in delivery, and possibly lead to refusal by the receiving port to allow the goods to be unloaded. By contrast, domestic purchases and sales are not affected by the location of the buyer and seller to the degree that is true with international transactions. When the buyer and seller are located in the same nation, only trade regulations related to that one country will apply
Another key difference between international and domestic trade is that the type of fees and charges associated with the shipping process will also be different. Various tariffs and other fees are typically applied to shipments between countries, regardless of whether the mode of shipping is by travel...

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