2. International trade: Concept
Traditionally – exchange of goods between countries. Exchange of tangible goods
Concept of international trade has grown over the years
It also includes services like international travel and tourism, transportation, communication, banking, warehousing, advertising etc
It expands the markets for both goods and services
International trade brings in greater competition and therefore competitive prices
There is a difference between International trade and International business

3. International Business
International Business includes the following:
International Trade
Export and import of services
Licensing & Franchising
Foreign Investments

4. Why do Nations Trade? Unequal Distribution of Natural Resources
Availability of Factors of Production differ from Country to Country
Cost of Production Varies
Countries Specializes in Production of Different Goods and Services

5. Characteristics of International Trade
Two or more countries
Foreign currency
Legal obligations
Involves risks
Law of comparative cost advantage
Facilitates
Specialization
Reciprocal of technical assistance
Documentation

6. Advantages of IT Earning of foreign exchange
Optimum utilization of resources
Accelerates economic growth
Increases employment opportunities
Increases standard of living
Higher profits for business enterprises
Prospects for growth
Promotes division of labour and specialization
Desire to excel and expand
Alternative to intense domestic competition

7. Limitations / Problems of IT
Different currencies involved
Nationality of buyers, sellers and other stakeholders
Mobility of factors of production
Customer heterogeneity across markets
Difference in business systems and practices
Political system and risks
Business regulations and policies

8. Internal Trade VS External Trade
Basis of Difference:
Concept
Nationality of buyers & sellers
Currency for payments
Mobility of factors of production
Business rules & regulations
Mode of transport
Nature of customers
Business systems & trade practices
Cost of transportation
No. of documents used
Government registrations
Political systems and risks

9. Modes of entry into International Business
Exporting and Importing
Contract Manufacturing
Licensing and Franchising
Joint Ventures
Wholly Owned subsidiaries

10. Export Trade Procedure
Receipt of enquiry and sending quotations
Receipt of order of indent
Assessing importer’s creditworthiness and securing a guarantee for payments – Letter of Credit
Obtaining export licence: (DGFT)
Open a bank account
Apply for import export code number
Registering with app. export promotion council (RCMC)
Registering with Export Credit & Guarantee Corporation

11. Export Trade Procedure
Obtaining pre shipment finance
Production or procurement of goods
Pre shipment inspection
Excise clearance
Obtaining certificate of origin
Reservation of shipping space
Packing and forwarding
Insurance of goods

12. Export Trade Procedure
13. Customs clearance – shipping bill – carting order
14. Obtaining Mate’s Receipt
15. Payment of freight and issuance bill of lading
16. Preparation of invoice
17. Securing payment:
Bills of Exchange
Documents against sight / Sight Draft
Documents against acceptance / Usance Draft
Letter of indemnity

13. Summary of documentation related to export
Product
Shipment
Payment
Indent
Mate’s receipt
Letter of credit
Commercial invoice
Shipping Bill
Bills of exchange (Sight of Usance)
Packing list
Bill of Lading/ Airway Bill
Bank certificate against payment received
Certificate of origin
Insurance Policy
Certificate of inspection

14. Import Trade Procedure
Trade enquiry – information, proforma invoice
Procurement of import licence
Obtaining foreign exchange
Placing order or indent
Obtaining letter of credit
Arranging for finance
Receipt of shipment advice
Retirement of import documents

15. Import Trade Procedure
9. Arrival of goods
10. Customs clearance and release of goods
Receiving the delivery order
Payment of freight
Payment of dock charges
11. Bill of entry
12. Payment of custom duty and delivery of goods

16. Summary of documentation related to Import
Product sold
Shipment
Payment
Trade enquiry
Import general manifest
Application to secure sanction of foreign exchange
Indent/ import order
Shipping advice
Letter of credit
Commercial invoice
Bill of entry
Bills of exchange (Sight or Usance)
Packing list
Insurance policy
Certificate of origin
Bill of lading / Airway bill
Certificate of inspection

17. World Trade Organisation
WTO was formed as a consequence of the decision of GATT in 1994
As an institution to look after the promotion of free trade amongst nations
All decisions are taken by member governments on the basis of general consensus
It governs trade not only in goods but also in services and intellectual property rights
It is a place for governments to settle trade disputes
It is a place where the member governments try to sort out the trade problems they face with each other

18. Objectives of WTO Ensure reduction of tariffs & other trade barriers
Engage in activities that improve standard of living, create employment, increase income and demand, facilitate higher production and trade
Facilitate optimal use of world’s resources
Promote an integrated, more viable and durable trading system
Sustainable development to ensure preservation and protection of the environment

19. Functions of WTO
Promotes an environment for member countries to mitigate their grievances at WTO
Formulate a code of conduct that is acceptable to all
Act as a dispute settlement body
To consult IMF and IBRD and other affiliated agencies to create better understanding and cooperation in global economic policy making
Supervise on a regular basis the operations of the revised agreements and ministerial declarations relating to goods, services and trade related intellectual property rights

20. Benefits of WTO
Promotes international peace and facilitate international business
Disputes are settled with mutual consultations
Rules make international trade smooth and predictable
Free trade improves the living standard
Variety of quality products are available
Fast economic growth
Encourages good government
Helps fostering growth of developing countries by providing them with special and preferential treatment in trade related matters

21. Four Agreements of WTO Agreement on textile and clothing (ATC)
Agreement on agriculture (AoA)
General agreement on trade in services (GATS)
Agreement on trade related aspects of intellectual property rights (TRIPS)

22. Thank You For Listening Patiently