International Trade

International Trade is the Trade between different countries. Purchase from and sale of goods and services outside the country is called international Trade/foreign Trade. Foreign Trade plays an important role in accelerating the process of economic growth of a country. Foreign Trade can be divided in to the following three categories: Import Trade-when goods are purchased from a foreign country, Export Trade-when goods are sold to other countries and Enter port Trade-when goods are imported from one country with the purpose of exporting them to some other countries (Krugnan, 1997).

Import Trade is Important for the acquisition of goods and services, reduction of cost of production, increasing of income and employment, learning about advanced technical methods used abroad and security of raw materials are significant advantages of Import Trade (Robert, 2004).

Today, Customs administration around the world are responsible for the inbound and outbound movement of international Trade together with other government policies in areas as diverse as:-border security; Revenue collection, Trade facilitation; protection of society; cultural heritage; intellectual property; collection of Trade data and environmental protection (ECG, 2017).

Customs has been described for a century starting from human civilization as “gatekeeper”, a government service with Customs authorities are barrier of international Trade flow and the only route through which international Trade must pass to protect social and economic interests of the country (Widdowson, 2006).

The World Customs Organization (WCO) defines Customs as “the government service which is responsible for the administration of Customs law and the collection of Import and export duties and taxes and which also has responsibility for the application of other laws and regulations relating, inter alia, to the Importation, transit and exportation of goods (ECG, 2017).

Revised Kyoto convention also defined Customs as “the government service which is responsible for implementation and administration of national and international laws, conventions and agreements related to Importation and exportation that the country is signed”. Additionally the roles and responsibilities of Customs administration in most developing and least developed countries primarily focused on Revenue collection to fill government budgetary requirements.

In a number of countries, Customs administration plays a leading role and regarded as a key border agency responsible for all transactions related to issues arising from border crossings. In the process of executing prominent responsibilities at the border, Customs mostly encounter challenges to ensure appropriate Trade facilitation. When examining the issue of Trade facilitation, it is Important to recognize the difference in needs and expectations of Customs administration and trading community. On one hand Traders are looking for the simplest, quickest, and most reliable way of getting goods into and out of the county.

This simply shows that they are looking for certainty, clarity, flexibility, and timeliness in their dealing with Customs procedures. In short Traders are looking for the most effective ways of doing business and they are driven by commercial imperatives. On the other hand Customs authorities are seeking to ensure regulatory control of the border related to Importation, exportation and movements of people and they are driven by law (Widdowson, 2005).

The term “Trade facilitation” has emerged as a focus of studies aimed at reducing transaction costs imposed through international Trade. The World Trade Organization (WTO) defines Trade facilitation as “the simplification and harmonization of international Trade procedures covering the activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international Trade” (OECD, 2005).

Hence, Trade facilitation has been recognized worldwide as a significant means of reducing trading costs. It has been strongly promoted by international organizations and the trading community since it is expected that Trade facilitation can increase international Trade volume and reduce the cost of business at the same time. It is clear that Customs administrations form a Significant part of the supply chain.

The simplification and harmonization of Customs procedures is, therefore, Important in contributing to the increase in the volume of international Trade, the development of economies and the prosperity of the international trading community. It is expected that improvement in Customs systems and processes can also lead to a decrease in the time and the cost of international Trade transactions (Puengpradit, 2010).

Conscious of this imperative, in June 1999 the Council of the World Customs Organization (WCO) approved the revised International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention), which was developed in the face of mounting pressure from the international trading community to minimize the level of Customs intervention in cargo movements and to maximize the level of Trade facilitation through transparent and predictable Customs procedures (Grainger, 2007).

The Revised Kyoto Convention (RKC) defines Customs clearance as “the accomplishment of the Customs formalities necessary to allow goods to enter home use, to be exported or to be placed under another Customs procedure” and release as “the action by the Customs to permit goods undergoing clearance to be placed at the disposal of the persons concerned.”

Although African countries have acknowledged the Importance of Trade facilitation through transparent and predictable Customs procedures, sub-Sahara African countries’ Customs administrations are characterized by, complex Customs Laws; lack of automation and insignificant use of information technology; lack of proper implementation of Risk management Techniques; lack of transparency and consistency; lack of cooperation with other government and non-government agencies; lack of professional man power; lack of customer education ; as well as corruption. This results in the waste of enormous amount of time and money (ECA, 2004).

Like other sub-Sahara African Countries, the Ethiopian Customs administration has similar features and characterized by complex Customs Laws; lack of automation and insignificant use of information technology; lack of proper implementation of Risk management Techniques; lack of transparency and consistency; lack of cooperation with other government and non-government agencies; lack of professional man power; as well as lack of customer education.

Now they don’t want to have the same freedom they enjoyed in the initial stages of development. Trying to maintain diplomatic relations or else waging war is the strategy followed by them on those days. In the ninth century, in the name of free trade European companies exploited colonies. They maintained not have more than 5% import duty if the goods come from their countries. With the low import duties in their colonies they exploited the local trade and destroyed it almost. With the WTO became the perfect place of action.

If Swiss formula is implemented then industrial development of development countries will get be slow down. The income of the governments will gradually get declined. The developing countries will have to depend on the export of raw materials, agricultural products. And developed countries are saying that unless developing countries agree the Doha Round will not be successful. When the issue regarding agriculture is coming they are asking about the import duties. With the guarantee given by the developed countries saying that they will give relaxations from though rules developing countries WTO signed agreements.

And accepted the TRIPS agreement which is no where concerned with the trade. To implement those terms developed countries are asking to get ready to sacrifice developing countries. In view of these the walk out of developing countries from discussions is not a big mistake. As Indian minister Nath said “there is no need to shy in saying that Doha Round is traveling towards failure. Developed countries are saying that the success of Doha Round is depended on developing countries. ” “I must express disappointment,” Nath told a news conference.

“The (Falconer) paper suffers from serious imbalances … They are not paying enough attention to the livelihoods of farmers … in developing countries,” he said. Nath said that Falconer had not been demanding enough on the need for rich WTO members, notably the United States and the European Union, to slash farm subsidies which India and others say distort world markets. “Subsidies by developed countries cause a serious challenge to the successful completion of these talks,” he said. There is some more issues other than agriculture like subsides, seeds, medicines, patents, prices etc.

Developed countries want to make use of WTO as a platform to influence others. The developed countries already got patented the seeds. Therefore, developing countries have no right to use their own seeds for agriculture produce. “The right of consumers to say no to Geniotically Engineered (GE) food is under threat from the US, heavily influenced by its GE industry. The US is trying to use the WTO to challenge the European Union’s ban on genetically modified organisms (GMOs). The EU has also recently adopted the strictest GMO regulations in the world.

The WTO is an inappropriate and incompetent body to deal with environmental issues such as GMOs, that can have a major impact on the environment and public health. ” Conclusion Implementation of the goals and objectives is important for any organization”. If we look at the practice of implementation we see that it is an intensely political process—the timing, sequencing, and content of developing country efforts to implement their WTO commitments are deeply influenced by external actors—donors, the WTO Secretariat and developed country trade representatives, among others. ”

International business involve transaction across national boundaries; i. e. business dealings involving partners or transactions from different countries. The globalize start of contemporary business world have the need for creating an atmosphere for international trade. This is adduced to the increase rate of information dissemination and improvement of technology such the internet and means of transportation. According to Grimwad (2000) “A major cause of the growth in output has been the rapid growth of world trade.

Throughout this period, world trade consistently grew faster than world output. This, in turn, was the result of a major increase in the degree of international specialization between countries. An increase in the degree of specialization would result in an increase in world trade even with no increase in world output”. International trade can take three dimension: 1. through activities multinational corporations 2. through global financial institutions 3. through the exportation and importation of goods

The activities of multinational corporations expands across their parents home country to other countries which host them. In the course of expansion of business as result of increase capital outlay, some business organization transform to Multinational Corporation, where they invest in other countries and establish a new outlay of their business. Such transaction involves the maximization of profits from the subsidiaries organization and repatriating it to the parents country where the main establishment is situated.

Example of organizations operating as multinational corporations include: Shell BP; with many organization branches in oil producing nations like Saudi Arabia, Nigeria, Libya etc. McDonalds company; it have many eatery organizational branches in over 100 countries. Hilton International; having hotels pning across many countries. These are few among many multinational corporations Another form of engagement in international trade is through the utilization of services of global financial institutions.

In order to partake in international business transaction the support of International financial institutions are required to ease the mode of transacting business. International Financial institutions like World Bank And International Monetary Fund (IMF), have greatly supported international Business and encouraged governments of different countries to adopt free trade and open economy to allow the growth of international trade. So utilizing the services of these International financial institutions are an avenue of dealing in international trade and transactions.

The third form of engaging in international business is through the importation and exportation of goods and services. Many business organizations import raw materials from other countries and finished goods and even services of specialized form. And also some organization engage in the exportation of finished goods or raw material, and some times services to consumers and buyers in other countries this has promoted the activities of business transaction especially at the global level.

REFRENCE Grimwade, Nigel (2000), international Trade: New Patterns of Trade, Production & Investment. London: Routledge p1.

The relationship between openness to international trade and development Introduction: Openness to International trade Is the popular choice among different countries for their own development, especially after the establishment of the World Trade Organization (WTFO) in 1995, globalization is a trend for different districts, and a country is difficult to develop its economy in a closed circumstance.

According to Razor and Reface (2013, IPPP), International trades will benefit the people and institutions of the countries, because the specialization of the production of goods ND services will increase the productivity and lead to higher Income and better living standards. The competition and cooperation between countries also will allocate the resources in a more efficient way, so the whole world would have a higher level of welfare from the international trades.

Kickball (2013, IPPP) also states that openness to international trade leads to the human development, for the technology, ideas and cultures are exchanged when the countries are exchanging goods and services. The globalization make the views competed and the cultures fused, providing a better choice for the world population. If the border of the nation Is open to trade, economic freedom will lead to the economic growth. Liberalizing promotes specialization and division, thus increasing the productivity and income and bringing greater efficiency.

The communication between different countries not only provides the advanced technology and ideas, but also creates the chance to develop the knowledge and cultures. This essay focuses on the positive development outcomes of the openness to International trade from the aspects of economic growth, Institutional progress and Industry structural optimization, and It also explores the negative aspects through the Income Inequality and Inflation. Benefit 1 : openness generates economic growth Openness to the international trade means the whole economic activities of the countries are related with each other under the globalization.

Most of the countries which have an openness policy are experiencing a rapid development, especially China which creates an economic “miracle” In the last 30 years. What Is shown In the figure 1 is the contrast of GAP per capita between China and India, with a result of more rapid increase of China than India. It is demonstrated in the figure 2 that the agree of openness increased from 12% to 40% in India and started from 15% too much higher level of 60% in China, where the “degree of openness” (O) is defined as the index that dividing the sum of exports (X) and Imports (Q) by GAP: O = (X+Q)/Y (Marcella and Signore, 2011, IPPP).

What Is exhibited in the contrast of the two countries Is that the higher degree of openness will lead to a more significant growth of GAP per capita. Although there are differences of culture and politic circumstances in the two countries, the similar geography, large population and openness policy in tooth countries make them a successful contrast to show the importance of openness for the economic growth in a country. Source: processing of MIFF statistics.

The openness also plays a crucial role in promoting the development of developed countries. Since the taking effect of the North American Free Trade Agreement (NONFAT) in 1993, the trade among America with Canada and Mexico has increased to nearly double from $299 billion in 1993 to more than $550 billion in 1999. Particularly, after the establishment of WTFO, the exports of America risen to $2,350 billion in 1999, accounting nearly 25 percent of its whole GAP and more than 15 recent of all global trade. Forging, 2000) The international trade makes the cheap products easier to enter to the market of Canada and Mexico, in exchanging for the abundant nature resources, so the developed countries also will a large of the benefit from the openness to the international trade. It is generally believed that as openness will lead to economic growth through the optimal allocation of resources, technological innovation and productivity improvement. Trade liberation’s among the world would provide specialization and more efficient allocation of resources.

A country has a comparative advantage of productivity of different goods, the production with lowest opportunity cost is what it can specialize in. The Hecklers- Olin theorem also states that the labor intensive goods is relatively cheaper in the poor countries and rich countries may focus on exporting the capital intensive goods. Openness provides an environment for the exchange of the technology and views which would lead to technical progress, and innovation.

The competition from the openness also will make the companies invest more on the research to produce utter commodity to satisfy the consumers, and the average cost will decrease due to the economies of scales. Intellectual properties are protected and economic crimes are defended, which will build a suitable circumstance for the competition and cooperation among the international trade. Benefit 2: openness promotes institutional progress Openness to international trade makes a contribution to improve the quality of institutions and the progressed institutions will further strengthen the openness to international trade.

According to Johnson, Story and Submarine (2007, up), greater openness will make contribution to institutional quality through reducing rents, providing the conditions for reform, and specializing the goods to meet different demands. Openness will challenge the institutions from all kinds of aspects, and they are pushed to reform to adapt to the new circumstance, so the property rights are identified, investors are protected and contracts are enforced to meet the requirement of the specialization and cooperation among the international trade.

After trade opening, better institutions will obtain the rents by producing the institutionally intensive good, while inferior institutions will lose the rents, thus there s a “race to the top” in institutional quality which means the institutions will improve the better institutions who can capture the rents rather than their inferior trading partner in the international trade, so the competition are fostered, spurring the innovation among the companies to provide better products and services.

It is the progress of technology and administration that will make the companies retain and increase their market share and obtain the rents. Improved institutions will further promote the openness and economic development in the international trade. The rise of Western Europe since 1500 is not only due to he substantial trade with Africa and Asia but also due to the institutional progress that meets the requirements of modern economy.

Atlantic trade creates huge commercial profits due to institutional progress which makes it easier to access the Africa and Asia (Guacamole, Johnson, and Robinson 2005, IPPP). Specially, the building of Joint stock company disperse the risks of international trade by innovation, which promotes the world trade to a higher level. The foundation of the financial systems in New York allocates the capitals in a more efficient way, which unites the whole international trades and flourishes the world economy. Institutional progress is associated with the improvement of economic environment.

Greater openness requires the reform of institution to satisfy the challenge of intense competition. Intense competition will lead to increasing innovation such as the improvement of computer ability and the optimization of internet, which simplifies the institution and expands the market among the world. Optimal institutions are the sources of comparative advantage for a country, which will create the special rents. Opening trade makes the rents become harder to earn, and further promote the institution progress to obtain comparative advantage.

Eventually, the technologies and knowledge are advanced, the prices of goods are lower, and the living standards of people are improved due to the complementation of openness and institutional progress. Benefit 3: openness optimize the economic structure The optimization of economic structure is the basic requirement for the developing countries to faster their economic growth under the openness of international trade. The differences of change rates of different industries in a country will lead to the change of economic structure, and the openness will lead to the industry structure progressed to meet its comparative advantages.

The comparative advantages are changeable among different countries and the imbalance of advantages from regions will lead to the change of economic structure. Chinese economy is relied on the international market, on the one hand, its total value of import and export is increased at 26% every year from 2002 to 2008. On the other hand, primary products share less proportions of its export and the share of manufactured goods is rising constantly.

Further, the advantageous goods are transferring from labor intensive products into capital and technology intensive products in China (Gene and Shah, 2013, up). Openness to international trade is a determinant for the industrialization of a country. Optimization of economic structure comes from the reasonable utility of comparative advantages, technological progress and product specialization. Advantageous industries, and the technology and management progress will afford the factories ability to provide the products which are technology intensive.

Structure progress depends on the liberalizing of trade, which adjust the world market and promote technology improvement. Openness also promote the financial integration among the countries in the last several decades. The foundation and completion of financial system is an innovation inside the economic structure. International capital markets aggregate the capitals around the world and allocate them efficiently, which will increase economic development through improving the access of companies and strengthening the supervision.

Fischer, and Valuable (2013, IPPP) points out that cheaper international funds will active the competition of the financial systems, as it provide lower interest rates and allow borrowers have more access to loans, while shortage of competition from the international market will fail to afford enough funding. Globalization is characterized by the integration of financial systems, for funding is the most liquid capital and is the easiest to transport in the global, so financial integration will optimism the market structure by effectively allocating the capitals.

Moreover, the formulation of financial systems is specialized from the economic structure due to the enhancement of international trade, aiming at serving the modernization of the global, so openness will intensify the financial integration and improve the economic development. Openness will adjust the economic structure, tend to introduce industrialization and deterioration to the country. The countries who once exports mainly primary and agricultural products are gradually changing to export manufactured goods.

The investment will produce more profit when the inputs transfer into high rewording economic departments, which is the curial reason to optimize the industrial structure. Especially after the building of the financial system, the price becomes a more significant sign to adjust the international supply and demand, allocating the resources more efficiently. Openness will progress the economic structure, which is tryingly related to the specialization of international trade and it will improve the efficiency and develop the technology and of promote the development eventually.

Disadvantages of openness to international trade In recent decades, trade openness and reforms are becoming a basic method to develop in the developing countries. The resources are reallocated more efficiently and the innovation is stimulated, but the disadvantages are also obvious associated with the development such as the wide income gap and inflation. China, with a success in its openness and reforms, is suffering from increasing income gap. The Gin coefficient of urban residents is estimated 0. 33 in 1980, while it arrives at the critical point of 0. In 1994, and the coefficient rises to 0. 49 in 2007 (Lu and CIA 2011, IPPP). The income equality is seriously increasing in the last 30 years in China, where has experienced a successful reform to open to the international trade. This is mainly due to the skilled labors are preferred by the foreign direct investment, obtaining a progress of technology. The optimization of economic structure also will make the workers lose their Jobs in the disadvantaged industries, to make sure the most efficient allocation of resources.

Openness to international trade improves the availability of choices and increases the economic growth, but it also enhances the inflation. Inflation has always created economic uncertainty, caused market imperfections and unequal distribution of welfare. An evidence of inflation positively associated with trade openness comes from 8 small open economies in Caribbean during the period 1980 to 2009. It suggested that when the output increases by IIS$I million, the price will rise by 0. 4% to 0. 5%, and the inflation rates of Caribbean countries is nearly 4. 3 percent between 980 and 2009 (Thomas, 2012, IPPP).

Cheaper imports will decrease the domestic price level, if the country is opened to the international trade. The domestic producers can accept cheaper inputs and experience more intense competition, so the price of product is turned down, leading to the inflation. When openness brings the rapid economic growth, what is accompanied is the financial inflation, and the solution of it relay on the further openness to the international financial market. The liberalizing of trade is the basic requirement of the economic development, but the negative outcomes can not be ignored.

The distribution of income is increasingly unequal as the market rewards all the inputs whatever it belongs, so the income distance is enlarged due to the market efficiency. The inflation is accompanied with the economic growth, what can not be avoided, and the suitable management of inflation will further promote the development of economy. Free trade focus on the optimization of exports and imports to gain the most benefit, but the balance of payments should be in attention in case of the trade conflict.

The specialization also should not concentrate on a narrow range of products, the market imperfection will easily lead to the economic crisis. The openness to international trade generates the significant increase of the economic growth, while the globalization will enlarge the risk and create the conflicts, so when the market is used to maximize the utility, the cooperation between governments is extremely important to control the risk and solve the economic crisis.

Conclusion: Since the foundation of the WTFO in 1995, the world has integrated into a global market, and the development of a country can not ignore the openness to the international trade. This article focus on the positive outcomes from the economic Roth, institution progress and the optimization of economic structure. Specialization of the production due to the comparative advantages will advance the productivity, boost up technical capacities, fully utilize the employed resources and bring the economic welfare to the population.

Greater openness also will improve institutional quality through the more active competition, providing the conditions for reform and strengthen the comparative advantages. The more efficient allocation of the resources further optimize the economic structure, the effective utility of the Especially the building of global financial system promotes the integration of the capital market and allocates the capitals efficiently. However, the disadvantages are also obvious accompanied with the development.

Skilled labors tend to obtain higher wages, while the unskilled labors may lose their Jobs due to the progress of technology. The inflation from economic growth would lead to economic uncertainty, unequal distribution of welfare and distort the role of the global market. What should be done is that the government should be introduced to promote the imports and sports, it is the complementary of market of government what can adjust the income inequality and control the inflation.

Further, the cooperation among the countries is needed to regulate the investment risk and solve the trade conflicts, the market failure relies on the adjustment from the global cooperation. Openness to international trade promotes the development of the economy from all aspects, and the ideas and knowledge are expended through the exchange with each other. The human development depends on the technology progress and specialization of produce, which is contributed from the greater of openness to international trade.