foreign trade

Examples of foreign trade in the following topics:

• Introduction to Foreign Trade and Global Economic Policies

  • U.S. foreign trade and global economic policies have changed direction dramatically during the more than two centuries that the United States has been a country.
  • What's more, oil price shocks, worldwide recession, and increases in the foreign exchange value of the dollar all combined during the 1970s to hurt the U.S. trade balance.
  • U.S. trade deficits grew larger still in the 1980s and 1990s as the American appetite for foreign goods consistently outstripped demand for American goods in other countries.
  • Congress for trade liberalization in the 1980s and 1990s.
  • Officially, the nation remained committed to free trade as it pursued a new round of multilateral trade negotiations; worked to develop regional trade liberalization agreements involving Europe, Latin America, and Asia; and sought to resolve bilateral trade disputes with various other nations.

• Technological Barriers

  • Standards-related trade measures, known in WTO parlance as technical barriers to trade play a critical role in shaping global trade.
  • As tariff barriers to industrial and agricultural trade have fallen, standards-related measures of this kind have emerged as a key concern.
  • Significant foreign trade barriers in the form of product standards, technical regulations and testing, certification, and other procedures are involved in determining whether or not products conform to standards and technical regulations.
  • These standards-related trade measures, known in World Trade Organization (WTO) parlance as "technical barriers to trade," play a critical role in shaping the flow of global trade.
  • Most countries are now part of the World Trade Organization.

• International Exchange of Money

  • Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers where currency trading is continuous (24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday).
  • The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date .
  • The foreign exchange market (forex, FX, or currency market) is a form of exchange for the global decentralized trading of international currencies.
  • The foreign exchange market determines the relative values of different currencies.
  • The foreign exchange market assists international trade and investment by enabling currency conversion.

• Foreign Policy

  • Modern foreign policy has become quite complex.
  • Currently, foreign policy encompasses trade, finance, human rights, environmental, and cultural issues.
  • Usually, creating foreign policy is designated to the head of government and the foreign minister (or equivalent).
  • The foreign policy of the United States is the way in which it interacts with foreign nations.
  • Others issues include economic upheavals, the rise of China to world economic and political power, relations with Russia, AIDS in Africa, dependence on oil from non-democratic states, the importation of illegal drugs, and the annual U.S. trade deficit of around $800 billion .

• Costs of Trade

  • There are few or no restrictions on trade and markets are open to both foreign and domestic supply and demand.
  • Economic inefficiency can be created through trade diversion.
  • When free trade is applied to only the high cost producer it can lead to trade diversion to not the most efficient producer, but the one facing the lowest trade barriers, and a net economic loss.
  • The nature of industries and trade increases economic inequality.
  • Economists have studied free trade extensively and although it creates winners and losers, the main consensus is that free trade generates a large net gain for society.

• Promoting Free Trade

  • A country can set high quality standards for a product, knowing that not all foreign producers will be able to meet the standard.
  • Countries can force foreign exporters to fill out arduous paperwork over the course of months, and perhaps in a language the foreign producer does not speak.
  • Unilateral promotion of free trade is when a country decides to reduce its own trade barriers without any promise of action from its trading partners.
  • This solves the problem of one country giving the benefit of reduced barriers to foreign exporters without any promise of similar benefits in return.
  • Describe the effects of free trade and trade barriers on long run growth

• Political and Regulatory Environment

  • Political stability, trade blocs, tariffs, and expropriation are risks that should be evaluated prior to marketing in foreign countries.
  • For example, foreign governments can intervene in marketing programs in the following ways:
  • One of the potentially interesting results of trade agreements like ASEAN or NAFTA is that many products previously restricted by dumping laws, which are laws designed to keep out foreign products, would be allowed for sale.
  • Free trade areas and customs unions eliminate trade barriers between member countries while maintaining trade barriers with non-member countries.
  • That is, the foreign government takes ownership of plants, sometimes without compensating the owners.

• Other Barriers

  • Barriers to trade include specific limitations to trade, customs procedures, governmental participation, and technical barriers to trade.
  • This category of trade barriers stems from regulations on international trade.
  • Because government procurement often represent a significant portion of a country's GDP, foreign suppliers are at a disadvantage to domestic ones when it comes to these programs.
  • With export subsidies, domestic producers can sell their commodities in foreign markets below cost, which makes them more competitive.
  • If a country discovers that a foreign country subsidizes its exports, and domestic producers are injured as a result, a countervailing duty can be imposed in order to reduce the export subsidy advantage.

• Balance of Trade

  • A positive balance is known as a "trade surplus," if it consists of exporting more than is imported; a negative balance is referred to as a "trade deficit" or, informally, a "trade gap."
  • The balance of trade is sometimes divided into a goods and a services balance.
  • The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stock, nor does it factor in the concept of importing goods to produce for the domestic market).
  • Factors that can affect the balance of trade include:
  • The availability of adequate foreign exchange with which to pay for imports

• From Protectionism to Liberalized Trade

  • The United States has not always been a forceful advocate of free trade.
  • At times in its history, the country has had a strong impulse toward economic protectionism (the practice of using tariffs or quotas to limit imports of foreign goods in order to protect native industry).
  • The act, which quickly led to foreign retaliation, contributed significantly to the economic crisis that gripped the United States and much of the world during the 1930s.
  • The United States supported trade liberalization and was instrumental in the creation of the General Agreement on Tariffs and Trade (GATT), an international code of tariff and trade rules that was signed by 23 countries in 1947.
  • In addition to setting codes of conduct for international trade, GATT sponsored several rounds of multilateral trade negotiations, and the United States participated actively in each of them, often taking a leadership role.