INTRODUCTION

Trade is a basic economic concept involving the buying and selling of goods and services,
with compensation paid by a buyer to a seller, or the exchange of goods or services
between parties. Trade can take place within an economy between producers and
consumers. It is the reason why an American consumer can pick between a Japanese,
German, or American car. As a result of international trade, the market contains greater
competition and therefore, more competitive prices, which brings a cheaper product home to
the consumer1.
Geographically speaking, there are two types of trade:
Internal trade is done within the same country. It is also known as domestic trade.
It can be classified into different categories
- Wholesale trade: involves the purchase and selling of goods in larger quantities.
- Retail trade: is an action of selling goods directly to consumers by retailers 2.
In the other hand, International trade allows countries to expand markets for both goods
and services that otherwise may not have been available. It is the reason why an American
consumer can pick between a Japanese, German, or American car.
As a result of international trade, the market contains greater competition and therefore,
more competitive prices, which brings a cheaper product home to the consumer.
Services are also traded: tourism, banking, consulting and transportation. A product that is
sold to the global market is an export, and a product that is bought from the global market is
an import.
To achieve a very efficient global trade, we must apply it in an environment where there is
legal and professional competition.
That being said, a number of questions arise in our minds about the issue of trade. First,
what are the different types of trade? Second, one should be curious about both the
advantages and disadvantages of trade. and last but not least, does trade has a legal
framework? We will proceed to answer these questions and we’ll start by discussing the
different types of trade3.

1
https://www.investopedia.com/terms/t/trade.asp

2
https://www.vedantu.com/question-answer/trade-what-are-the-types-of-trade-class-10-social-science-cbse-
5fd3039ed6856f7ca9145e80

3
Hanns Ullrich, “The Transatlantic Trade and Investment Partnership (TTIP)”: Extending Trade Policy to
Domestic Markets, De Boeck Supérieur, 2016/4 t. XXX,p.421.
SECTION I: TYPES OF TRADE
As we briefly explained earlier trade can be divided into following two types:
• Internal or home or domestic trade;
• External or foreign or international trade.
Paragraph 1: INTERNAL TRADE.
In such cases of internal trade, there are no import/export taxes or customs duties. Only local
government taxes will apply. These are goods domestically produced for domestic
consumption only. It can be at local level, regional level or national level. So, there are two
broad categories of internal trade, namely wholesale trade (A) and retail trade (B);
A. Wholesale trade:
Goods are generally bought in huge quantities from the manufacturer. These goods are then
warehoused and finally sold to retailers. The goods in wholesale trade are not sold to the
final consumer directly. So, all the customers of a wholesaler are commercial users or other
intermediaries, not the ultimate customers.
A wholesaler occupies a very important place in the chain of distribution and also performs
several important functions like : Selling and Promoting; Buying and Assortment Building;
Bulk Breaking; Warehousing ;Transportation ; Financing ; Risk Bearing and finally Market
Information.

B. Retail trade:
Retail trade is the business activity associated with the sale of goods to the final consumer,
the ultimate customer. It is the link between wholesalers or manufacturers and the customers
of the product. Typically, retailers sell goods in small quantities to consumers for personal
use.

Retail is the final step of the distribution channel. The retailer will buy the goods from
the wholesaler, or sometimes directly from the producer, in bulk (large quantities) at a
discounted price. And then it sells the goods to the final consumers of the goods, in
small units or quantities, at retail price enjoying the benefits in the process. All goods
go through a distribution channel to make the Journey from the manufacturer to the
final consumer4

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4
See M. Trebilcock, R. Howse, A. Eliason, loc. cit., pp. 86 et seq., 95 et seq., with respect to TRIPS
and TRIPS-plus intellectual property rules H. Ullrich, in H. Ullrich et al. (eds.), loc. cit., pp. 91 et
seq., 98 et passim insisting on the legitimacy gap of trade rules determining domestic market regulation
Paragraph 2: EXTERNAL TRADE.
Trade between two or more nations is called foreign trade or international trade. When the
citizens of one nation exchange goods and services with the citizen of another nation is
called foreign trade. Example India’s trade with USA, France with Morocco. Foreign trade
transactions are classified into 3 categories: Import trade (A), Export trade (B), and Entrepot
trade (C).
A. Import trade:
The import trade is referred to goods and services purchased into one nation from another.
The word “import” originates from the word “port” considering the fact that the products are
frequently transported via ship to foreign countries. Similar to exports, imports are also the
backbone of international trade. Here, if the expense of a country’s imports is more than the
value of its exports than the country has a negative balance of trade, which is also known as
a trade deficit. Import trade is when a trader in home country obtains or purchase goods from
a trader located in another country.
B. Export trade:
Basically, if the product is manufactured domestically and traded in a foreign country, it is
known as an export. In International trade, exports are one of the components. The other
component is imported which means the goods and services purchased by a country’s
citizens that are manufactured in a foreign country. Both the export and import combined
contribute to the country’s trade balance. Whenever the country’s export is more than the
import, it is called a trade surplus. However, when the import is more than the export, it is
known as a trade deficit 5.
C. Entrepôt trade:

Basically, entrepôt trade is the process of re-exporting goods that have been
imported into a country without the package having undergone any repackaging or
additional processing. When translated, the term means entry port trade, and it
avoids the payment of any import or export duties when the package is sent out from
that port. In other words, entrepôt trade is a process in which goods are imported in
one country with the express purpose of having them end up in a different country. In
a case like this, a trader becomes both the importer and the exporter of these goods.
For example, if a South African company were to import wool from Australia and
export it immediately to Zimbabwe, this would be called entrepôt trade for South
Africa6 .
2

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https://www.vedantu.com/question-answer/trade-what-are-the-types-of-trade-class-10-social-science-cbse-
5fd3039ed6856f7ca9145e80
6
https://www.investopedia.com/terms/t/trade.asp