International trade involves the exchange of goods and services between countries. It represents a significant share of GDP for most countries. The main terms related to international trade are exports, which are goods and services sold to other countries, and imports, which are goods and services purchased from other countries. International trade brings several benefits, including enabling fuller utilization of resources, providing consumers with a larger variety of goods at cheaper costs, and fostering cooperation between trading partners.

1. WHAT IS INTERNATIONAL TRADE?
THE EXCHANGE
OF GOODS &
SERVICES
BETWEEN
COUNTRIES.

2. International trade
International trade is the exchange of capital, goods, and
services across international borders or territories, which
could involve the activities of the government and individual.
In most countries, such trade represents a significant share of
gross domestic product (GDP).
Other word,
The buying and selling of goods and services across national
borders is known as international trade.

3. EXPORTS – goods or merchandise that are sold
to other countries in order to earn dollars
IMPORTS – goods or merchandise bought
from foreign countries
Some terms…

4. Here are some Importance of International Trade :
1) International Trade enables the fuller utilization of resources.
Underdeveloped countries are not in a position to use their mineral
resources, so they export their raw materials to developed countries where
the same are needed the most.
2) Because of International Trade the trading partners gets goods cheaper
than otherwise. Because every country produce those goods in the
production of which it has to occur less comparative cost.
3) By virtue of International Trade consumers gets an opportunity to
consume a large variety of goods produced by different countries. This
improves the quality of life.
4) International trade enables every country to dispose off their surplus
production. Some countries produce more than their own requirement.
They sell this surplus production in other countries and avoid the
occurrence of deflationary pressures in the domestic economy.

5. 5) International Trade encourages countries to compete with each
other in the production of different kinds of goods at low cost of
production. Competitiveness stimulates productivity.
6) It widens the extent of market. Every country makes an attempt to
produce different goods in large quantity. This induces production on
large scale and thereby generates economies of scale.
7) International Trade stimulates the spirit of competition among the
entrepreneurs. Novel techniques of production are devised to produce
quality goods at low cost. Advancement of technology is the key to
economic development.
8) International Trade promotes mutual cooperation among different
countries. It creates an atmosphere of goodwill and friendship among
the trading countries.

6. FACTOR DOMESTIC TRADE INTERNATIONAL
TRADE
1. Mobility in
factors of
production
(land, labor,
capital and
entrepreneur)
Free to move from
one state to another
within the same
country
Quite
restricted

7. FACTOR DOMESTIC TRADE INTERNATIONAL
TRADE
2. Movement of
goods
Easier to move
goods without
much restrictions
Restricted
due to
complicated
custom
procedures and
trade buyers like
tariffs, quotas, or
embargo

8. FACTORS DOMESTIC
TRADE
INTERNATIONA
L TRADE
3. Currency Same Different
4. Markets Limited market
due to limit in
population
Broader markets
5. Language and
Culture
Barriers
Speaks and
practice same
culture
Communication
challenges due to
language and
cultural barriers

9. Some important benefits of International Trade
Enhances the domestic competitiveness
Takes advantage of international trade technology
Increase sales and profits
Extend sales potential of the existing products
Maintain cost competitiveness in your domestic market
Enhance potential for expansion of your business
Gains a global market share
Reduce dependence on existing markets
Stabilize seasonal market fluctuations
Identifying suitable markets
Secure trading:-
Catering for all of these differences can involve greater risk. Some markets
may suffer from political and economic instability. In others, distribution
channels may make it difficult to get products onto the shelves.
Import and export finance
Arranging payment to the satisfaction of both importer and exporter can be
a problem. HSBC assists both import and export customers by acting as a
trusted third party.

10. Other Several benefits of international trade
1) Greater Variety of Goods Available for Consumption:
International trade brings in different varieties of a particular product from different
destinations. This gives consumers a wider array of choices which will not only
improve their quality of life but as a whole it will help the country grow.
2) Efficient Allocation and Better Utilization of Resources:
Efficient allocation and better utilization of resources since countries tend to
produce goods in which they have a comparative advantage. When countries
produce through comparative advantage, wasteful duplication of resources is
prevented. It helps save the environment from harmful gases being leaked into the
atmosphere and also provides countries with a better marketing power.
3) Promotes Efficiency in Production:
International trade promotes efficiency in production as countries will try to adopt better
methods of production to keep costs down in order to remain competitive. Countries that
can produce a product at me lowest possible cost will be able to gain larger share in the
market.
4) More Employment:
More employment could be generated as the market for the countries’ goods widens
through trade. International trade helps generate more employment through the
establishment of newer industries to cater to the demands of various countries. This will
help countries to bring-down their unemployment rates.

11. 5) Consumption at Cheaper Cost:
International trade enables a country to consume things which either cannot
be produced within its borders or production may cost very high. Therefore it
becomes cost cheaper to import from other countries through foreign trade.
6) Reduces Trade Fluctuations:
By making the size of the market large with large supplies and extensive
demand international trade reduces trade fluctuations. The prices of goods
tend to remain more stable.
7) Utilization of Surplus Produce:
International trade enables different countries to sell their surplus products
to other countries and earn foreign exchange.
8) Fosters Peace and Goodwill:
International trade fosters peace, goodwill, and mutual understanding among
nations. Economic interdependence of countries often leads to close cultural
relationship and thus avoid war between them.

12. e-filing of documents Goods should arrive at customs port/airport
only. Most of customs procedures are
computerised. E-filing of documents is
required.
Import manifest or Import Report ‘Person in charge of conveyance’ is required
to submit Import Manifest or Import Report.
Entry Inwards Goods can be unloaded only after grant of
‘Entry Inwards’.
Risk Management System Self Assessment on basis of ‘Risk
Management System’ (RMS) has been
introduced in respect of specified goods and
importers.
Bill of Entry for home consumption on
payment of customs duty
Importer has to submit Bill of Entry giving
details of goods being imported, along with
required documents. Electronic submission
of documents is done in major ports.
White Bill of Entry is for home consumption.
Imported goods are cleared on payment of
customs duty.
Import Procedures

13. Bill of Entry for warehousing Yellow Bill of Entry is for warehousing. It is also termed as
‘into bond Bill of Entry’ as bond is executed. Duty is not
paid and imported goods are transferred to warehouse
where these are stored. Green Bill of Entry is for
clearance from warehouse on payment of customs duty.
It is for ex-bond clearance.
Noting, examination and
assessment
Bill of Entry is noted, Goods are assessed to duty,
examined and pre-audit is carried out. Customs duty is
paid after assessment.
Bond Bond is executed if required if assessment is provisional
(PD bond) or concessional rate of customs duty is subject
to certain post import conditions.
Out of customs charge order Goods can be cleared outside port after ‘Out of Customs
Charge’ order is issued by customs officer. After that,
port dues, demurrage and other charges are paid and
goods are cleared.
Demurrage if clearance from
port delayed
Demurrage is payable if goods are not cleared from
port/airport within three days. Goods can be disposed of
if not cleared from port within 30 days.

14. Entry Outward Loading in conveyance can start after ‘Entry
Outward’ is given by customs officer.
Export manifest/Export report Person in charge of conveyance is required to submit
‘Export Manifest’ or ‘Export Report’.
Registration with DGFT and EPC Exporter has to be obtain IEC number from DGFT is
advance. He should be registered with Export
Promotion Council if he intends to claim export
benefits.
Third party exports Export can be by manufacturer himself or third party
(i.e. by exporter on behalf of another). Merchant
exporter means a person engaged in trading activity
and exporting or intending to export goods [para
9.40 of FTP]
Registration of documents under
Export Promotion Scheme
Advance authorization, DEPB etc. should be
registered if exports are under Export Promotion
Scheme.
Export Procedures

15. Shipping Mill Export is required to submit Shipping Bill with required
documents for obtaining permission to export. There are
five forms : (a) Shipping Bill for export of goods under
claim for duty drawback – these should be in Green colour
(b) Shipping Bill for export of dutiable goods – this should
be yellow colour (c) Shipping bill for export of duty free
goods – it should be white colour (d) shipping bill for
export of duty free goods ex-bond – i.e. from bonded store
room – it should be pink colour (e) Shipping Bill for export
under DEPB scheme – Blue colour.
FEMA formalities GR/SDF/Softex form (under FEMA) is required to be
submitted.
Noting, assessment,
examination
The shipping bill is noted, goods are assessed and
examined. Export duty is paid, if applicable.
Certification of documents
for export incentives
If export is under export incentives, relevant documents
are checked and certified. Then proof of export is obtained
on ARE-1.
Let export order Conveyance can leave only after ‘Let Export’ order is
issued.