International Trade Definition for the Freight Industry presented by Apparel Search | ||
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International trade
is the exchange of goods
and services across international
borders. In most countries,
it represents a significant
share of
GDP. While international
trade has been present throughout
much of history (see
Silk Road,
Amber Road), its economic,
social, and political importance
have been on the rise in
recent centuries, mainly
because of
Industrialization, advanced
transportation,
Globalization,
Multinational corporations,
and
outsourcing. In fact,
it is probably the increasing
prevalence of international
trade that is usually meant
by the term "globalization".
International
trade is
also a branch
of
economics,
which together
with International
finance,
forms the
larger branch
of
International
economics.
Regulation of international tradeTraditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the nineteenth century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure. Communist and socialist nations often believe in autarchy, a complete lack of international trade. Fascist and other authoritarian governments have also placed great emphasis on self-sufficiency. No nation can meet all of its people's needs, however, and every state engages in at least some trade. Free trade is usually most strongly supported by the most economically powerful nation in the world. The Netherlands and the United Kingdom were both strong advocates of free trade when they were on top, today the United States, the European Union and Japan are its greatest proponents. However, many other countries - including several rapidly developing nations such as India, China and Russia - are also becoming advocates of free trade. Traditionally agricultural interests are usually in favor of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services. During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression. The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, NAFTA between the United States, Canada and Mexico, and the European Union between twenty five independant states. There is also the newly established Free Trade Area of the Americas (FTAA), which provides common standards for almost all countries in the American continent. Risks in international tradeThe risks that exist in international trade can be divided into two major groups: Economic risks
Political risks
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