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Sunday, January 24, 2010

International Trade part 2

  • Types of International Trade: International trade may be categorized into two types:
  1. Bilateral trade: Bilateral trade is done by two countries with each other. They enter into agreement to trade specified commodities amongst them
  2. Multi-lateral trade: multi-lateral trade is conducted with many trading countries the same country can trade with a number of other countries. The country may also grant the status of the "Most Favored Nation" (MFN) on some of the trading partners.


     


     

    Case for Free Trade the act of opening up economies for trading is known as free trade or trade liberalization. is done by bringing down trade barriers . Allows goods and services from everywhere to compete with domestic products and services.
    Globalization along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavorable. Free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products. Countries also need to be cautious about
    dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.


     

    Dumping: The practice of selling a commodity in two countries at a price that differs for reasons not related to costs is called dumping.


     

    World Trade Organisation: In1948, to liberalise the world from high customs tariffs and various other types of restrictions, General Agreement for Tariffs and Trade (GATT) was formed by some countries In 1994, it was decided by the member countries to set up a permanent institution for looking after the promotion of free and fair trade amongst nation and the GATT was transformed into the World Trade Organisation from 1ST JAN 1995.


     

    WTO is the only international Organisation dealing with the global rules of trade between nations.

    It sets the rules for the global trading system and resolves disputes between its member nations

    WTO also covers trade in services, such as telecommunication and

    Banking and others issues such as intellectual rights.


     


     


     

    WTO Headquarters are located in Geneva, Switzerland

    India has been one of the founder members of WTO.

    149 countries were members of WTO as on December 2005.

    Regional Trade Blocs: Regional Trade Blocs have come up in order to encourage trade between countries with geographical proximity, similarity and complementarities in trading items and to curb restrictions on trade of the developing world.


     

    Today, 120 regional trade blocs generate 52 percent of the world trade. These trading blocs developed as a response to the failure of the global

    Organisations to speed up intra-regional trade. These regional blocs remove trade tariffs within the member nations and encourage free trade, in the future it could get increasingly difficult for free trade to take place between different trading blocs


     

    Major Regional Trade

Regional

Blocs

Head

Quarter

Member

nations

Origin

Commodities

Other Areas

of

Cooperation

ASEAN

(Association of

South East Asian

Nations)

Jakarta,

Indonesia

Brunei,

Indonesia,

Malaysia,

Singapore,

Thailand,

Vietnam

Aug, 1967

Agro products,

rubber, palm oil,

rice, copra,

coffee, minerals –

copper, coal,

nickel and

tungsten. Energy

– petroleum and

natural gas and

Software

products

Accelerate

economic

growth,

cultural

development,

peace and

regional

stability

CIS

(Commonwealth

of Independent

States)

Minsk,

Belarus

Armenia,

Azerbaijan,

Belarus, Georgia,

Kazakhstan,

Kyrgyzstan,

Moldova, Russia,

Tajikistan,

Turkmenistan,

Ukraine and

Uzbekistan.

 

Crude oil, natural

gas, gold, cotton,

fiber, aluminum

Integration

and

cooperation on

matters of

economics,

defense and

foreign policy

EU

(European Union

Brussels,

Belgium

Austria, Belgium,

Denmark,

France, Finland,

Ireland, Italy, the

Netherlands,

Luxemburg,

Portugal, Spain,

Sweden and U.K.

EECMarch

1957

EU - Feb. 1992

Agro products,

minerals,

chemicals, wood,

paper, transport

vehicles, optical

instruments,

clocks - works of

art, antiques

Single market

with single

currency

LAIA

(Latin American

Integration

Association)

Montevideo,

Uruguay

Argentina, Bolivia,

Brazil, Columbia,

Ecuador, Mexico,

Paraguay, Peru,

Uruguay and

Venezuela

1960

  

NAFTA

(North American

Free Trade

Association)

 

U.S.A., Canada

and Mexico

1994

Agro products,

motor vehicles,

automotive parts,

computers,

textiles

 

OPEC

(Organisation of

Petroleum

Exporting

Countries)

Vienna,

Austria

Algeria,

Indonesia, Iran,

Iraq, Kuwait,

Libya, Nigeria,

Qatar, Saudi

Arabia, U.A.E.

and Venezuela

1949

Crude petroleum

Coordinate

and unify

petroleum

Policies.

SAFTA

(South Asian

Free Trade

Agreement)

 

Bangladesh,

Maldives, Bhutan,

Nepal, India,

Pakistan and Sri

Lanka

Jan-2006

 

Reduce tariffs

on interregional

trade


 

Concerns Related to International Trade: Undertaking international trade is mutually beneficial to nations if it leads to

  • Regional specialization
  • higher level of production
  • better standard of living
  • worldwide availability of goods and services
  • equalization of prices and wages
  • diffusion of knowledge and culture

    Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world

International trade can prove to be detrimental to nations of it leads to

  • dependence on other countries
  • uneven levels of development,
  • exploitation
  • commercial rivalry leading to wars

GATEWAYS OF INTERNATIONAL TRADE

Ports: The chief gateways of the world of international trade are the harbors and ports.
The ports provide facilities of docking loading, unloading and the storage facilities for cargo.

In order to provide these facilities, port authorities make arrangements for

  • maintaining navigable channels
  • arranging tugs and barges
  • providing labour
  • managerial services

The importance of a port is judged by the size of cargo and the number of ships handled. The quantity of cargo handled by a port is an indicator of the level of development of its hinterland.

Types of Port:

Generally, ports are classified according to the types of traffic which they handle.

Types of port according to cargo handled:

  1. Industrial Ports: These ports specialise in bulk cargo-like grain, sugar, ore, oil, chemicals and similar materials.
  2. Commercial Ports: These ports handle general cargo-packaged products and manufactured good. These ports also handle passenger traffic.
  3. Comprehensive Ports: Such ports handle bulk and general cargo in large volumes. Most of the world's great ports are classified as comprehensive ports.

Types of port on the basis of location:

  1. Inland Ports: are located away from the sea coast. Linked to the sea through a river or a canal. Such ports are accessible to flat bottom ships or barges
    Manchester is linked with a canal
    Memphis is located on the river Mississippi
    Rhine has several ports like Mannheim and Duisburg
    Kolkata is located on the river Hoogli,
  2. Out Ports: These are deep water ports built away from the actual ports These serve the parent ports by receiving those ships which are unable to approach them due to their large size
    Athens and its out port Piraeus in Greece

Types of port on the basis of specialized functions:

  1. Oil Ports: deal in the processing and shipping of oil Some of these are tanker ports and some are refinery ports
    Maracaibo in Venezuela
    Esskhira in Tunisia
    Tripoli in Lebanon
    Abadan on the Gulf of Persia is a refinery port.
  2. Ports of Call: These are the ports which originally developed as calling points on main sea routes where ships used to anchor for refueling, watering and taking food items they developed into commercial ports,
    Aden, Honolulu and Singapore are good examples.

  3. Packet Station: These are also known as ferry ports. These packet stations are exclusively concerned with the transportation of passengers and mail across water bodies covering short distances. These stations occur in pairs located in such a way that they face each other across the water body
    Dover in England and Calais in France across the English Channel.

  4. Entrepot Ports: These are collection centers where the goods are brought from different countries for export.
    Singapore is an entrepot for Asia. Rotterdam for Europe. Copenhagen for the Baltic region

  5. Naval Ports: These are ports which have only strategic importance These ports serve warships and have repair workshops for them.
    Kochi and Karwar are examples of such ports in India.


 


 

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