The definition of International trade is not at all unlike how we would normally define domestic trade. The only difference is that the presence of trading crosses geographical boundaries. A country would consider trading Internationally in an attempt to give their GDP a big boost very quickly. International trading is not new to the business world. We have been trading across boundaries ever since we found ways to move past borders in the latest modes of transportations but the way trading is done these days is a much more complicated and lucrative than it used to be. Industrialization, globalization and the training of many multinational corporations have all changed the way nations deal with each other.
International trade was equally important to the value of one’s lives today; imagine if our choices were limited to what we can produce locally. Without the goods and services provided from other countries, we would be life in a world confined to what we’re given…this is against the principle of growth of humankind.
Let’s Go Further
Import: The other type of world trade is the import, when a country buys goods and services abroad. In the above example, India is the importing country, as it has purchased of shoes from Japan.
Trading Internationally involves heavy costs because on top of the cost of the product or service, the nation’s government will usually impose time costs, tariffs, and the many other costs involved in moving (normally) the goods across into another country where language, system, culture and rules are seen as a big hindrance.
The cost of trading is the first point that comes to our mind when we speak of business at the border and within the country’s borders. The cost involved in international trading is substantially higher as compared to local trading. Factors that make international trading expensive and difficult may include time required to transport goods across the borders, pricey tariffs that needs to be paid, time wasted at the borders, burdensome custom inspections, and so on.
One of the largest movers in the International trading world that we have at present is China where labor is plentiful and cheap. Many labor-intensive products designed and produced by United States and other European countries are assembled or manufactured in China where labor is cheap. This is typical because it is a move that can save the original country a lot of time and money. Furthermore, with the opening of door of China, citizens now have more income opportunities to make life better.
However, when a country deals a lot with International trade, although it creates exponential income possibilities for the locals, by importing or exporting too much of something can cause injury to the local scene. Countries suffer local pressure to change laws governing International trade to protect the local industries during recession. The most painful and memorable of such incident is the Great Depression. Each country dealing with International trade have their very own laws and bylaws which governs their trading policies but on a global level, trading activities are monitored and done through the World Trade Organization.
The role of WTO is to assure that there is peaceful and mutually benefiting business atmosphere. Trading amongst each other can cause minor unwanted rifts between parties concerned and if left to sizzle can cause major problems on the International front. In the event such problems are detected or voiced, the WTO can step in and take priority over the disputes by holding talks, discussions and finding ways of solving the International trading problems amicably. One of the ways to achieve this is to sign agreements or multilateral agreements not unlike the FTAA between the Buenos Aires on the Free Trade Area of the Americans.
The General Agreement on Trade in Services (GATS) is the first multilateral agreement on trade in services.
Don’t be surprised but the people who profit from all these International trading activities are the small enterprises and medium-sized organizations who’ve good products or services to offer. So, if you are thinking about going this way, if you hit it right, you’d be riding a long successful wave of business deals.