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Wednesday, June 13, 2012

What is International Trade

Of late, the phrase international trade is used interchangeably with e-commerce. International trade is an area of economics, which forms the larger part of global sourcing through import and export. Simply put, e-commerce is the domestic/international exchange of services and goods over the internet unlike global sourcing or import/export. Thanks to technological developments, international trade, aided by e-commerce is not a complex process anymore. Import/export is a major indicator of how good an economy is doing.

-Import and Export
Selling in an international trade is export and buying bought is import. Import and export affect a country's current account balance of payments. For developing countries, agricultural products represent about 8% of international trade and import/export, a petty part of global sourcing. Most of them are in Latin America and the Caribbean or sub-Saharan Africa, and depend on international trade with skewed import/export of farm products.

International trade isn't without its share of controversies with regard to import/export barriers and stiff tariffs. The common complaint by global sourcing poor countries is that they face as much as 4 times the tariffs when exporting to rich countries. It is also said that prosperous countries have exploited import/export potential of smaller countries that are demanding increased access for international trade and import/export and end the subsidized agricultural over-production and expo rt dumping.
It is true that import and export subsidies alter competition on international trade and subvert world import/export; thereby, incomes. This calls for greater understanding of conformity requirements in order to operate in an international trade scene. No wonder, import and export of manufactured items are considered beneficial. No wonder global sourcing and international trade are dominated by manufacturing and import & export.

-Global Sourcing
Global sourcing provides importers and consumers the opportunity to avail what is not available locally and cheaper costs. International trade simply means cross border selling and buying. International trade with global sourcing is growing at about twice as fast as GDP for the past decade.

Global sourcing has a major impact on corporations' performances too. The World Trade Organization, WTO, is an international trade monitoring body which at global level, through arrangements attempts to stabi lize the international trade imbalances which at present favors developed countries. Controversial treaties including the GATT and WTO have attempted at creating regulated international trade structures for skewed import/export increases.

There is still a long way before barriers free global sourcing is reduced as global sourcing absolutely requires the collaboration of all involved.

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