《国际贸易实务》chapter 1 Basics of International Trade

Chapter1

BasicsofInternationalTrade1.Theimportanceofinternationaltrade;2.Thedifferencebetweeninternationaltradeanddomestictrade;3.Themeasurementofinternationaltrade;4.Tradeprotectionismanditsvariousforms.TheImportanceofInternationalTradetoNationalandGlobalEconomyDefinition:

Internationaltradeistheexchangeofcapital,goods,andservicesacrossinternationalbordersorterritories.Itisalsocalledimportandexporttradeastheoperationsofinternationaltradearecomprisedoftwoparts—the

importandtheexport.

TheImportanceofInternationalTradetoNationalandGlobalEconomyInternationaltrade&ForeignTrade

Internationaltradeisamajorformoftheinterconnectionamongcountriesandregionsintheworldonthebasisofinternationallabordivision,reflectingthemutualdependenceofthesecountriesorregionsintheeconomicarea.Incontrasttointernationaltradeasanaggregateconcept,theterm,foreigntrade/overseatrade,isusedtorefertotheexchangeofgoodsandservicesofonespecificcountry(region)withothercountries(regions).Itisalsointernationaltrade,butviewedfromasinglecountryorregion’sperspective.TheImportanceofInternationalTradetoNationalandGlobalEconomyImportanceofInternationaltradetotheworldeconomy:Importandexporttradeareanimportantcomponentoftheworldeconomyaswellastheeconomyofanindividualcountryorregion.

Iernationaltradetightenstherelationsamongtheparticipatingcountriesandregionsandboomstheeconomicdevelopmentofthewholeworldwiththegeneralwelfareforthepeopletobepromotedtocertaindegree.TheImportanceofInternationalTradetoNationalandGlobalEconomyImportanceofInternationaltradetothenationaleconomyofasinglecountryorregion:1.Stimulatingeconomicgrowth.2.Improvingwelfare.3.Enhancingcompetitivenessofthedomesticfirmsintheinternationalmarket.

TheImportanceofInternationalTradetoNationalandGlobalEconomyRankCountryorRegionTotalInternationalTrade

(BillionsofUSD)Dateof

information-

World27,567.02010est.1

UnitedStates3,825.02011est.-

EuropeanUnion(Extra-EU27)3,791.02010est.2

China3,561.02011est.3

Germany2,882.02011est.4

Japan1,595.52011est.5

France1,263.02011est.6

UnitedKingdom1,150.32011est.7

Netherlands1,091.02011est.8

SouthKorea1,084.02011est.9

Italy1,050.12011est.-

HongKong944.82011est.10

Canada910.22011est.Source:

Exports/Imports.TheWorldFactbook.Figure1.1CountriesandRegionsRankingTop10inTotalInternationalTrade(2011)Import,exportandtransittradeTheimporttradereferstotheactivitiesthroughwhichthegoodsproducedorprocessedinothercountriesorregionsaretransportedtothedomesticmarketforsaleorconsumption.Theexporttradegoesinareversedirection.Itreferstothemovementofthegoodsproducedorprocessedindomesticmarkettotheothercountriesorregionsforsale.3.IfthegoodsproducedorprocessedinCountryAaretransportedtoCountryBforsaleviaathirdcountry,thenthetradecanbetakenastransittradeasofthisthirdcountry.ClassificationofInternationalTradeClassificationofInternationalTrade Visibletradeandinvisibletrade

1.Visibletrade,alsocalledtangibletrade,referstotheimportandexportofgoodsthatarephysicallyvisible.Cars,garments,furniture,allkindsofequipmentandthethingsalikeareallvisiblegoods.

2Invisibletradeinvolvestheimportandexportoftheitemsthatarenotphysicallyvisible.Thetransferofthepatentandtechnology,tourism,thefinancialandinsuranceservices,internationaltransportation,andthelaborservicesofferedacrossbordersofcountriesarethemajorformsofintangibletrade.ClassificationofInternationalTrade

Directandindirecttrade1.Directtradeonlyinvolvestwoparties,themanufacturingcountryandtheconsumingcountryservingastheexporterandimporterseparately.2.Indirecttradeoccurswhenthegoodsaretransferredfromthemanufacturingcountrytotheconsumingcountrythroughanintermediatecountry.Inthiskindoftrade,themanufacturingcountryistheindirectexporterwhiletheconsumingcountryistheindirectimporter,nodirecttraderelationsexistingbetweenthem.DifferencesbetweenInternationalTradeandDomesticTradeDifferencesinconditionsoftrade.Differencesinthecomplexityoftransactions.Differencesintheinfluencefromtheeconomicpolicies.Differencesintheflowofcommodityandproductionfactors.

Differencesintheinfluencefrommonetarypolicy.Differencesinrisks:

①Creditrisks.②Foreignexchangerisks.③Transportationrisks.④Politicalrisks.BalanceofTrade

Thebalanceoftradeisthedifferencebetweenthemonetaryvalueofexportsandimportsofoutputinaneconomyoveracertainperiod.Itistherelationshipbetweentheimportsandexportsofacountryoraregion.

Apositivetradebalancewhichisalsoknownasatradesurplusmeansthevalueoftheexportsofacountryismorethanthatofitsimports.

Anegativebalanceisreferredtoasatradedeficitor,informally,atradegap.Itoccurswhenthevalueofacountry’simportsexceedsthatofitsexports.Thebalanceoftradeissometimesdividedintoagoodsandaservicesbalance.MeasurementofInternationalTradeMeasurementofInternationalTrade

Factorsaffectingthebalanceoftrade:Productioncostsuchasland,labor,capital,andtaxesintheexportingeconomyincontrasttothatintheimportingeconomy;Thecostandavailabilityofrawmaterials,intermediategoodsandotherinputs;Fluctuationsofexchangerate;Theavailabilityofadequateforeignexchangewithwhichtopayforimports;Tradeprotectionism.MeasurementofInternationalTrade

2.BalanceofPaymentsBalanceofpayments(BOP)accountsareanaccountingrecordofallmonetarytransactionsbetweenacountryandtherestoftheworld.Thesetransactionsincludepaymentsforthecountry'sexportsandimportsofgoods,services,financialcapital,andfinancialtransfers.TheBOPaccountsareusedtosummarizeinternationaltransactionsforaspecificperiod,usuallyayear,andarepreparedinasinglecurrencysuchasUSdollars.

Whenthefundsflowingintoacountryexceedsthoseflowingoutofit,afavorablebalanceofpaymentsoccurs.Conversely,theunfavorablebalanceofpaymentsreferstothefactthatthefundsflowingoutofacountrygobeyondthoseflowingintoit.MeasurementofInternationalTradeThetwoprincipalpartsoftheBOPaccountsarethecurrentaccountandthecapitalaccount.

Thecurrentaccountisusedtoshowthenetamountofmoneyacountryisearningorspending.Itcoversthebalanceoftrade(netearningsonexportswithpaymentsforimportsdeducted),factorincome(earningsonforeigninvestmentswiththedeductionofpaymentsmadetoforeigninvestors)andcashtransfers.Thecapitalaccountrecordsthenetchangeinownershipofforeignassets.Itincludesthereserveaccount(theforeignexchangemarketoperationsofanation'scentralbank),alongwithloansandinvestmentsbetweenthecountryandtherestofworld.

TradeProtectionism

ReasonsforTradeProtectionism:1.Tokeepeconomicdiversity.2.Toprotectinfantindustries

Infantindustryreferstoemergingdomesticindustriesthatshouldbeprotecteduntiltheybecomestableandmature.Usually,theinfantindustryisprotectedinitsearlystageofdevelopmentbythepreferentialpoliciesissuedbythecountry’sgovernment.3.Toprotectthevitalandstrategicbusinesssectors4.ToreducethehighpressureofunemploymentFormsofTradeProtectionismTariffbarriersTariffbarriersarethemainandtypicalformofprotectionism.Typic