International Trade Terms – INCOTERMS
Globalization has given impetus of international trade which is increasing by the day. International trade involves multiple agencies, transportation agents, carriers as well as Customs and Banks etc of the two countries involved in trade. Any Export or Import transaction involves transportation of goods predominantly via sea or air and in some cases over the […]
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Every organization that is engaged in production, sale or trading of Products holds inventory in one or the other form. While production and manufacturing organizations hold raw material inventories, finished goods and spare parts inventories, trading companies might hold only finished goods inventories depending upon the business model. When in case of raw material inventory […]
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Any student or professional wanting to understand more about Imports and Exports would have to understand the history and economic principles that have chartered the course of international trade to its current regime.
In the backdrop of the countries economic policies and financial conditions such as its balance of payments situation, the governments formulate rules and regulations that govern the countries trade with other countries.
World Trade Organization or WTO as it is called is the International Organization that deals with the global rules of trade between nations.
Its primary function and goal is to facilitate smooth and free flow of trade between countries.
WTO came into being on 1st January 1995 and is Head Quartered in Geneva, Switzerland. The Organization was created at the Uruguay Round Negotiations and consists of 153 member countries.
A Director General and functions with a Secretariat Staff of 637 heads WTO.
WTO functions primarily as the Forum for trade negotiations between countries. Its main functions include Administering WTO Trade Agreements, Handling Disputes, Monitoring National Trade policies of member countries, Technical assistance to Member Countries.
Considered to be one of the youngest of International Organizations, the WTO is regarded as a Successor to the GATT agreement that came into being in the after warmth of Second World War.
Historically treaties have been the agreements that ruled between two countries.
Post Second World War and creation of WTO and other organizations have paved way for more and more of international co-operations in the field of politico economic environment, with the result there have come to existence many regional, intra regional and global super nations groups engaging in regional trade agreements.
Creation of The European Union is one of the most important events in the History of our Civilization. EU, known as European Union was formed by Masstricht Treaty in 1991 and laid foundation for an economic and monetary union that included creation of one single currency across member nations.
The European Free Trade Association was setup in 1960 with one of the main aims to establish multilateral associations between the member countries to abolish customs barriers and creating a single free market across European Union.
Some of the other associations and agreements that have come into being are The North American Free Trade Agreement (NAFTA) signed by Canada, Mexico and US in 1994.The Association of Southeast Asian Nations (ASEAN)
Complexities arise in International Trade due to the nature of economies of the countries all over the world. Less Developed Countries and Developing Countries economies are agriculture based and seasonal and their reliance on export markets is very high.
They in turn import manufactured goods from developed countries where in the cost of imports is fairly stabilized.
With the variation in export earnings and high or stabilized imports, the countries stand to face huge fluctuations in terms of international trade which in turn effects their domestic economy.
However amongst the developed countries the international trade has always been beneficial. In fact most of the EU member countries have managed to increase their incomes due to the removal of trade barriers within the EU.
But the trade relations between developed and under developed countries have always been the bone of contention and controversies.
The business orientations of the Multi National Companies who establish manufacturing as well as selling in countries where labor and resources are cheaper is seen as a form of exploitation.
WTO meetings and conferences are used as a platform by various interest groups to bring to the table various issues concerning public health and safety, environmental impact and other evils arising out of international trade.
We are slowly seeing the new shades of moral and ethical values as well as other issues that impact our environment and global concerns featuring in and affecting the international trade.
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