OVERVIEW ON INTERNATIONAL TRADE

HOME ASSIGNMENT

Submitted By –
Subir Kumar Jaiswal

Submitted To –
 Prof. Manpreet Kaur Uppal

Contents
ABSTRACT OF THE CASE-.......................................................................................................................2
QUESTIONS............................................................................................................................................2
Q1. What are the major problems faced by developing countries in promoting their exports?.......3
Overview...............................................................................................................................................3
Q2. What are global trade imbalances? Explain the role of Global Trade Compliance Policy?..........5
Understanding of trade imbalance....................................................................................................5
Research............................................................................................................................................5
Role of Global Trade Compliance Policy............................................................................................5
Q3. What is international trade policy and what international organisations play a role in its
formation & execution?.....................................................................................................................6
References.............................................................................................................................................7
ABSTRACT OF THE CASE-
The liberalization of international trade in services will put them at a more significant
disadvantage in terms of government sovereignty and their national service industries'
development. However, just as the development levels of third-world countries (especially
India) vary widely, there are also different opinions on the cost of freeing up trade in services
and the scale of these costs. For example, India led several developing countries to oppose
discussing trade in services in the Uruguay Round. In general terms, both developed and
developing countries will benefit from the liberalization of trade in services in terms of
efficiency and competitiveness. Industrial countries will derive many trade benefits from
further liberalization of trade in services because it accounts for a large part of their total
exports. This article emphasizes that modern international trade began with the industrial
revolution and the decline of mercantilism. As industrialized countries, they became more
prosperous due to their control over manufactured goods and trade and began to demand and
produce more complicated and expensive products. They found that the only viable source of
goods they wanted was from other countries, and countries were the only country that had the
money to buy the new products they produced. Therefore, when the effects of India's
independent economic policies begin to emerge, India faces significant challenges in the
replacing composition of imports and exports.

QUESTIONS

Q1. What are the major problems faced by developing countries in promoting their exports?
Q2. What are global trade imbalances? Explain the role of Global Trade Compliance Policy
Q3. What is international trade policy, and what international organizations play a role in its
formation & execution?
Q1. What are the major problems faced by developing countries in promoting
their exports?

Overview
Today's import and export trade affects almost everyone. Imports and exports allow each
country to make the most of its most abundant resources. By exporting its surplus, whether it
be products such as computers, a country can earn money and use it to import the surplus
from another country. The import and export trade includes a stable expert of products to the
international market.
Ten major problems are faced by developing countries in promoting their export trade.
1. Primary Exporting:

In the early stages of growth, most developed countries exported mainly primary products,
which prevented them from obtaining high-priced products on the international market.
Without export diversification, developed countries cannot increase their export earnings.

2. Un-Favourable Terms of Trade:

Another trade problem these developing countries face is that trade has always been anti-
trade. In the absence of adequate infrastructure and quality improvement plans, the terms of
trade in these countries have gradually deteriorated, ultimately violating the country's general
interests.

3. Mounting Developmental and Maintenance Imports:

Developing countries face increased imports for development, including considerable

increases in imports of various types of machinery and equipment used to develop various
types of industries, and maintenance imports used to collect intermediate products and raw
materials required by these industries. The import volume is so large that it has caused severe
problems in international trade's general management.

4. Higher Import Intensity:

Another particular problem faced by developing countries is the high import intensity of their
industrial development due to the intensive industrialization process of imports from these
countries to satisfy elite consumption (i.e., colour televisions, video recorders, refrigerators,
motorcycles, cars.) This growing trend in elite consumption has led to a heavy burden of
rapidly growing imports from these developing countries, leading to a severe balance of
payments during the crisis.

5. BOP Crisis:

Developing countries face rapid import growth problems and slow export growth, leading to
increasing deficits in their balance of payments. In some countries, this deficit has reached a
certain level at a certain point in time, ultimately leading to a crisis in their international
trade.
6. Lack of Coordination:

Developing countries have not maintained good coordination in promoting integrated

economic groups, establishing trade unions. Therefore, in the absence of such coordination,
developing countries will not obtain the possible benefits of foreign trade for the following
reasons: such economic groupings.

7. Depleting Foreign Exchange Reserve and Import Cover:

Due to increased imports and the continuing balance of payments crisis, developing countries
sometimes face foreign exchange reserves' depletion. This reduction in foreign exchange
reserves has reduced the country's import guarantee period.

8. Steep Depreciation:

Compared to developing countries, the sharp depreciation of this currency against the US
dollar and other currencies has caused a significant increase in the value of its imports, which
ultimately led to a massive deficit in its trade balance.

9. Higher Prices of POL imports:

The worsening of the current account deficits of the developing countries' balance of
payments is partly due to the increase in the import prices of POL charged by the oil-
producing countries, especially since the Gulf War.

10. International Liquidity Problem:

Most developing countries have faced more international severe liquidity problems.
Therefore, due to their heavy dependence on scarce resources in developed countries, these
countries suffer from chronic capital and technology shortages.
Therefore, these countries need resources to pay their balance of payments and resources in
the short term and meet the long-term capital needs of economic growth. Therefore, they see
that developing countries have faced some serious problems related to their foreign trade.
They are also making serious efforts to solve these problems, whether bilateral or
multilateral.
Q2. What are global trade imbalances? Explain the role of Global Trade
Compliance Policy?

Understanding of trade imbalance

When the international trade account's net value is negative, or the balance is negative, there
will be a trade deficit. The balance of payments (international transaction account) records all
economic transactions between residents and non-residents whose ownership changes.
We can calculate trade deficits or networks in different categories in international trade
accounts. These include goods, services, goods and services, current accounts, and the sum of
current and capital account balances.
The sum of the remaining amount in the checking account and the capital account equals the
loan/loan amount.

Research
The global gap is the situation in which individual countries own properties. In principle,
when the current account reaches equilibrium, its value is zero: capital inflows and outflows
are suppressed. Therefore, while the current account continues to function for a certain
period, some deficits are called a surplus. Assuming that the world's countries' current
accounts and total foreign exchange reserves must be negative, other countries must be in
debt to other countries. In recent years, global imbalances in other parts of the world have
been a problem. Like many emerging economies, the United States has been in debt for some
time.
Global imbalances are defined as "the external position of a systemically important economy
that reflects distortions or risks in the world economy."
 External position: This extends not only to the current account flows but also to the
countries' net foreign exchange
reserves (if the price changes of these
assets and liabilities are zero, it is the
accumulated sum of the net account
flows past current).
 Systemically important economies:
For example, these imbalances are
significant to global business
operations. China, Eurozone, or
America.
 Reflect distortion or risk: The cause (disruption) and potential effects (risk) of the
mismatch are involved in this section. This means that even if a particular market
manipulation does not create an external imbalance, it will fall in line with the
concepts of a global imbalance if it creates substantial risk.
The Department of Trade Enforcement wants to be made aware of many reasons in today's
global marketplace. Countries have a right and responsibility to prevent other countries from
getting into the hands of critical goods, technology, and information. It is also essential to
maintain a competitive edge in the world market. Prevent the unintended effects of breaches,
and businesses must strictly comply with laws and regulations.

Role of Global Trade Compliance Policy

Trade enforcement defines the terms and conditions of all trade with two or more countries,
including preparation, loans, classification, determination of the terms and conditions of all
trade between two or more countries, and including training, loans, classification, description
of all terms and conditions with all the other countries. As a result, the number of possible
trade deals will be equal to all potential countries matched in one region and the following
organizations.
Supply chain problems are more critical than complying with business regulations, which
ensures that any person or organization engaged in international logistics must be
professional in any area of business compliance.
Importance of trade compliance
Compliance of the company assures the stability and ethics of all business practices
worldwide. The current trade agreement sets stringent import and export requirements, and
the regulatory body determines the effect of each exchange that is in dispute with the trade
agreement.
For example, the United States stipulates which countries can accept US exports and vice
versa.
The Harvard Law School Corporate Governance and Financial Oversight Forum reported that
the idea of controlling exports was initially to prevent national security problems, such as
selling weapons to people "to harm the United States." In other words, business compliance
can be used to describe all processes and regulations that assist the general welfare, safety,
and vitality of the global economy.

Q3. What is international trade policy, and what international organizations play
a role in its formation & execution?

To recognize the importance and effect of foreign trade policies, domestic and bilateral trade
policies must first be considered. Trade policy typically describes trade agreements between
countries' customs, goals and rules and regulations. These strategies are national and region-
specific and are defined in that country and region by elected authorities. In some instances,
they are used for the defence and promotion of local companies. They may also be set up to
support importing some goods, while an embargo on other products is imposed.
A commercial strategy is designed for each country in the national trade policy. These
activities are introduced to satisfy the needs of the people living in the region. These policies
may also represent relationships and other trade barriers that exist. Regulate trade and
commercial relations between the two countries, the two countries formulated a bilateral
trade strategy. Of necessity, the strategy must be mutually beneficial if the most successful
outcomes are to be obtained. The strategy is perceived to have sought a golden midfield,
favourable for both sides, in the national policies of trade between the two nations.
International foreign policy is a transboundary trade policy. Through its foreign trading
agenda, the Government has formulated steps to secure the best interests of its residents and
enterprises.
Open trade or tariff policies are three of the critical steps the Government takes. Open trade
policies facilitate trade in individual nations. An example that offers the United States,
Mexico, and Canada a great deal of freedom of trade is the North American Free Trade
Agreement, which allows for free trade. Tariffs are often levied on other countries to the
degree that it is possible to penalize undesirable conduct or discourage industries in these
countries from causing the harm to similar domestic industries.
International trade policies are dictated by international bodies such as the International
Monetary Fund (IMF) and the "Organisation for Economic Cooperation and Development
"(OECD). In the interests of economic and financial stability in emerging and developed
nations, these institutions have formulated an international trade agenda. These initiatives,
therefore, aim at improving cross-border and international trade.

References
https://en.wikipedia.org/wiki/Global_imbalances

https://flashglobal.com/blog/what-is-trade-compliance/#:~:text=Trade%20compliance%20ensures
%20stability%20and,defined%20by%20the%20governing%20institution.