Dumping & anti-dumping measures (subsidiaries provided by government to local companies to be more competitive abroad) – International property rights: protection of knowledge – Agriculture: reduce the subventions Z] MO (World Trade Organization): created in 1994 II Reducing obstacles to free trade Help governments to settle trade disagreements (Dispute Settlement Body) Assist exporters, importers & producers in their activities Economic integration degrees: I.
Preferential trade area (PTA): give preferential access to certain products from the participating countries . Free trade area (FAT): eliminate tariffs among countries 0 Ex: NONFAT (North America Free Trade Agreement. 1995): LISA * Canada + Mexico Impossible for other countries to enjoy this agreement C you have to demonstrate that 60% or more of the value has been produced in Mexico or you will have to pay tariffs (then, you cannot import goods in USA via Mexico to avoid tariffs) 3.
Customs Union (CUE): creation of a common custom C] if you import goods to Mexico or LISA, it will be the same tariffs 4. Common Market (CM): promote duty free trade and free movement of labor ND capital among its members / impose common external tariff (GET) on imports from non-member countries C Ex: European community (as a legal entity within the framework of European Union) 5. Monetary Union (MO): common currency Ex: European Monetary Union (MIX) 6. Economic Union Ex: European union 7.
Political Union Z] Ex: European union Should the EX. sign up a US free trade agreement? Positive: Would increase trade, economic growth & jobs Scale economies (opportunity to reduce average costs) CIA More competition (reduction of prices) Negative: Would destroy the MO because CSS & EX. represent 30 – 50% of the world economy 2. The company in International Trade Establishment of trade areas with the most competitive country Trade creation: redirection of the flow of goods and services to a country that replaces local production.
Trade creation usually results in reduced costs for consumers located in the importing region, although this can also put local producers out of business C] Trade deviation: if you trade with France you are substituting the most efficient suppliers to less efficient one Theories to justify international trade I _ Absolute advantage: Product per workers Absolute advantage: For country A for corns / for country B for machines Each country specializes in the product in Which they have absolute advantage Considering 1000 workers by country, no trade: Z] Country A: of workers produce corns C] 500. 00 units of corn 50% of workers produce machines D 10. 000 units of machines Country B: 50% of workers produce corns D 100. 000 units tot corn of workers produce machines I:] 50. 000 units of machines CLC Total: 600. 000 units of corn ; 60. 000 units of machines Considering 1000 workers by country, trading: Z] Country A: will specialize in corn њ 1. 000. 00 units of corn 0 Country B: will specialize in machines 100000 units of machines CIA Gains from trade: 400. 000 units Of corn & 40. 000 units Of machines 2.
Comparative advantage: Country A got advantage in both products Opportunity cost: Z] Corn (machines/corn): to produce one more unit of corn it will cost: 0 Country A: 0, 1 machines per units of corn Country B: 0,05 machines per units of corn 0 CHEAPER Machines (corn/machines): to produce one more machine it will cost: [l Country A: 10 Limits of corn per machines Z] CHEAPER [II Country B: 20 units of corn per machines Without trade: Country A: 500. 000 units of corn + 50. 000 machines Country B’ 100. 000 units of corn S 000 machines Total: 600. 000 units of corn + 55. 00 machines With trade: Country A: 450 workers x 1000 units of corn: 450. 000 units of corn 550 workers x 100 machines: 55. 000 machines Sol Country 8: 800 workers x 200 units Of corn: 160. 000 units Of corn 200 workers x 10 machines: 2. 000 machines Total: 610. 000 units of corn 57. 000 machines 0 shows the advantage 3. Factors endowment: If a country has an abundant resource of something, it will be specialized in the reduce that needs that intensively to be produced D China: abundant unskilled labor 0 clothing & textiles CIA LISA: abundant free surfaces O corn 4.
Intra Industry Trade (ITT after ass’s) Exchange of similar products belonging to the same industry – the same types of goods or services are both imported and exported Ex: Europe both imports & exports motor vehicles Foreign trade in Spain: I. Historical background: 1960: starting joining international institutions (COED, MIFF, GAIT etc. ) њ Degree of openness: (X M) / GAP 1975: end of dictatorship 1977: first democratic elections Z] 1986: joining the EH D degree of openness: 40% C] 2012: degree of openness: 60% (like France or Germany) 2.
Business cycles & trade balance: 80-85: poor GAP growth (80-81: second oil price shock CLC exports increased imports) C 86-91: before Olympic games & after adhesion to ELI, companies come to invest C strong growth Of GAP (but imports increases lower than exports trade balance is deteriorated) 0 92-96: poor GOP growth 96-2008: strong economic growth – exports increase less than imports [l trade deficit grows: 10% of the GAP (Spain become more dependent) 2009-2013: poor economic growth
Conclusion: since 80 we can observe: GAP growth is positive: foreign sector contributing in a negative way 0 GAP growth is poor: domestic demand is poor but foreign sector is positively contributing * Consummation, misstatement, dpenises appliqués assurances, imports, exports 3. Methods of payment Anxieties: Z] Exporters: – Receiving the payment – Avoiding cancellations Importers: – Receiving the right goods in the quantity and quality announced in the contract – Timing (out of control – need an insurance to cover the risks) Letter of credit cover these anxieties (impossible to cancel ensure the moment) Methods of payment: 1.
Cash Disadvantages: Possible to lose it Z] Implies a higher cost 2. Personal check C] Importer: issues the check Bank: pays the check Not very common in international trade unless for some professional services (ex: teachers with foreign universities) Advantages / Disadvantages: Importer: – Cheap & fast – Doesn’t implies advancing funds [I Exporter: – Lack of security (lack of funds & if you receive a check without funds you need to go to the court in the other country) – Formal mistakes – High cost (basic commission 5 per 1000 when he deposits it) 3.
Check issued by the bank Banks will issue these checks only after payment from the purchaser is received Z] Importer: – High cost (basic commission 5 per 1000 when he deposits it) – Implies anticipation of funds CIA Exporter: – Easy & simple – No risk of default 4.
Transfer or money order TTL Transfer made by the importer’s bank to the exporter’s one (implies close relationship) 0 No documents (interbrain communication) Most used mean in international trade High cost (basic commission 5 per 1000) Exporter: – Simple & fast (no documents) – No risk of loss Communication means: – Core (mail) Tleg (used in some less developed countries) – SWIFT: society worldwide international financial telecommunications (more than 300 banks) / the system verifies codes & safety 5.
Transfer faith documents The importer provides instructions to his bank to make the transfer but previously the exporter has to prove that the merchandise has been shipped with documents Commercial documents: invoices, transport documents, others related to information. 6. Documentary collections (simple remittance) L] The exporter asks for financial documents only (bill of exchange, checks, etc. ) Only method of payment started by the exporter 7.
Documentary collections (Financial and commercial documents) C] The exporter receives payment from the importer in exchange for the shipping documents, with the funds and documents channeled through their respective banks C] Commercial documents: invoices, transport documents, others related to information. Z] Shipment takes place before the payment or acceptation of the financial documents CIA Advantage to the exporter: Documents are submitted to the buyer only when the conditions of payment stipulated by your company are strictly met 8.
Letter of Credit L] Engagement gnrelevant airevocable (crosscut par Ii banqueter De lampoonery’s) De payer lee vender is celli-CIA LU prsent, pendant la perode De validity De get engagement, less documents conformer ; exec SPCIFSs Dana lee cardid documentary et quiz soon cents attester De la Boone execution par lee vender De sees obligations – Confirm the solvency – Wished terms of delivery – Juridical protection – Guarantee that experts examine documents – Solvency of the buyer – Bank obligation of payment (facilitates the funding & reduces commercial risk) Modalities:
According to the degree of guarantee provided by the bank: Revocable: the importer can cancel the L/C before the shipment (merchandises are considered loaded when they are in the main transport – ex: boat for maritime transport) [I Irrevocable (Of nothing is said) Informed / Confirmed: UN cardid notify est. complement transmit AU bnbackfire par la banquet notification, sell lee risqué commercial est. covert par la banquet metrics D bnbackfire nest pas protog centre lee risqué De dfilename De la banquet metrics o lee risqué De non transfers des founds (risqué “pays”).
Cardid SST confirm 0 banquet notification signage par as confirmation rglee lee bntackier centre prsensation De documents conformer (y comprises en sacs De dfat De la banquet o du pays mutter) CLC Transferable or non transferable: is UN cardid est. transrabble, tout o partier du Montana du cardid put tree transferr UN o pleurisy seconds bnbackfires, sans queue locator du downer dodder en soot requires Ex: lee vender Nest pas lee fabricate des merchandises et IL faith appeal UN sours-transit CA pavement Put tree solicit par nun tauter sociot queue lee bnbackfire figuring ; liverwurst
According to the form of liquidation or payment: ; Of execution Of payment (at sight Or deferred): When the bank has checked that documents that’s it. ; Of execution for acceptance (the bank acceptor promises to agree and pay later the turned effects) ; Of execution for negotiation: the negotiating bank promises to discount the effects turned to his cargo or at the expense Of the adviser. If the bank in addition were a conformer the discount would be without resource.
Other types: According to it specialty: Z] “Back-to-back”: miss pour lee compete De laughter dune merchandise quiz teen dj; nun letter De cardid en as fever O en fever du furnishers De la merchandise fain De souvenir Leonia still Dana la L/C dj; dtenure par laughter D Red Clause: clause SPscale tutorials la banquet notification o confirmation effecter des avenues AU bnbackfire centre lengthening critic De CE dernier De propdeer lee’sedition des merchandises et De prcenter less documents Dana la validity du cardid Green Clause: pavements advance en sermon effectss queue centre prsensation De documents printout licensee’s des merchandises [l Revolving (renegotiable) Z] Stand by: en constituent pas UN money De pavement, mass est. nun granite demitting en sacs De non-exauction du contract par Exportation Documentation Z] Invoice: factual commercial (description des merchandises o De la presentation, Ii Montana rglee, Ia devise et Loincloth’s) Documents of transports – Maritime transport [I Bill of Lading – Air transport 0 Airway Bill – Road transport CA Consignment letter such as CM Insurance documents Other: L] Certificates of origins: to prove that the merchandise comes from a country, which has a free trade agreement C Certificate of weight, sanitary certificate, analysis, hall, casher etc.