Trere is a difference between the terms trade and commerce.
Commerce is a term used for general areas, while trade is a term used for
specific areas.
Trade is divided into home trade and international trade. Home trade is
the buying and selling of goods and services inside a country and it is
composed by wholesale and retail. Wholesale is the buying and selling of
goods and services at large quantity, while retail is the buying and selling
of goods and services at small quantity.
International trade is the buying and selling of goods and services
between different countries.
It is composed by imports and export. Import is the buy from other countries,
while the export is the sell to other countries.
The factors that make international trade more risk than home trade
are:
1) language difficulties because the supplies and the customer have to
find a way of communicating and documents may need to be translated.
2) Exchange rates because changes can make international trade difficult
for exporters to price their goods.
3) Legal system because national legal system can be very different.
4) Political or economic instability.
Government controls international trade by the protectionism to:
?to protect domestic industries;
?to safeguard employment;
?to raise revenues through tariff;
?to remove a balance of payments deficit;
?to restrict dumping;
The main methods of protectionism are:
• Tariff are taxes imposed an imported goods to make them less competitive.
• Quotas are limits on the quantity of foreign goods that can be admitted
into a country.
• Subsidies are grants that the government give to domestic
• Embargo is a limit on trade with a particular country and is used for
political reasons.
International trade was introduced by the Maastricht treaty in 1993 which
proposed free circulation of :
- goods
- services
- capitol
- persons
Steps towards the realisation of this principles have been:
- the elimination of border controls on goods;
- the harmonisation of taxation;
- the ability of VAT
- the harmonisation of standards and certification system;
- the creation of a union tariff and the application of the CCT
The CCT is common to all members of the union, but the rates of differ
from one Kind of import to another depending on what they are and where
they are and where they come from. The Community is constantly adapting
the CCT to the World Trade Organisation (WTO) rules. This was set up
in 1995 and its members are countries from all over the world. Its objective
is not simply making international trade freer, it is also about developing
a framework of rules designed to limit unfair trading practices and therefore
protect the interests of all its members.
The WTO includes three agreements covering:
1) trade in goods (GATT, the General Agreement on Tariff and Trade)
2) services(GATS, the General Agreement on trade in Services)
3) intellectual properties (Trips, the Trade- related aspects of intellectual
property rights.
The documents of trade are:
- Commercial invoice included :it may be an advice note and proforma
invoice.
- Consular invoice contains this document –issued by the importing
consulate of the importing country –certifies that the prices are
the real market prices.
- Certificate of origin this states the country of origin of the goods
being exported is issued by the exporter and receved by the importer.
- Delivery note It gives details of the goods, but does not specify the
prices is issued by the carrier by the importer.
- Packing list This is issued by the exporter and gives precise details
of packages such as :
· number of packages:
type of packages;
weight size and cubic metres of packages;
marks on the packages.