Balance of Payment:

In 1998, both China and South Korea ran large trade surpluses of about $40 billion each. In China’s
case, the trade surplus was not out of the ordinary—the country had been running large surpluses
for several years, prompting complaints from other countries, including the United States, that China
was not playing by the rules. So is it good to run a trade surplus and bad to run a trade deficit? Not
according to the South Koreans: Their trade surplus was forced on them by an economic and
financial crisis, and they bitterly resented the necessity of running that surplus. This comparison
highlights the fact that a country’s balance of payments must be placed in the context of an
economic analysis to understand what it means.
A country’s balance of payments is a national accounting system that records all receipts coming
into the nation and all payments to entities in other countries. International transactions that result
in inflows from other nations add to the balance of payments accounts. International transactions
that result in outflows to other nations reduce the balance of payments accounts. Many
governments see intervention as the only way to keep their balance of payments under control.
First, because FDI inflows are recorded as additions to the balance of payments, a nation gets a
balance-of-payments boost from an initial FDI inflow. Second, countries can impose local content
requirements on investors from other nations for the purpose of local production. This gives local
companies the chance to become suppliers to the production operation, which can help the nation
to reduce imports and improve its balance of payments. Third, exports (if any) generated by the new
production operation can have a favorable impact on the host country’s balance of payments. When
companies repatriate profits back to their home countries, however, they deplete the foreign
exchange reserves of their host countries. These capital outflows decrease the balance of payments
of the host country. To shore up its balance of payments, the host nation may prohibit or restrict the
nondomestic company from removing profits to its home country. Alternatively, host countries
conserve their foreign exchange reserves when international companies reinvest their earnings.
Reinvesting in local manufacturing facilities can also improve the competitiveness of local producers
and boost a host nation’s exports—thus improving its balance-of-payments position.
Balance of trade is the difference between the value of a country's imports and exports for a given
period and is the largest component of a country's balance of payments .

A country that imports more goods and services than it exports in terms of value has a trade deficit
while a country that exports more goods and services than it imports has a trade surplus.

In 2019, Germany had the largest trade surplus followed by Japan and China while the United States
had the largest trade deficit, even with the ongoing trade war with China, beating out the United
Kingdom and Brazil.

Everybody knows that some international trade is beneficial—for example, nobody thinks that
Norway should grow its own oranges. Many people are skeptical, however, about the benefits of
trading for goods that a country could produce for itself. Shouldn’t Americans buy American goods
whenever possible to help create jobs in the United States?
Probably the most important single insight in all of international economics is that there are gains
from trade—that is, when countries sell goods and services to each other, this exchange is almost
always to their mutual benefit. The range of circumstances under which international trade is
beneficial is much wider than most people imagine. For example, it is a common misconception that
trade is harmful if large disparities exist between countries in productivity or wages. On one side,
businesspeople in less technologically advanced countries, such as India, often worry that opening
their economies to international trade will lead to disaster because their industries won’t be able to
compete. On the other side, people in technologically advanced nations where workers earn high
wages often fear that trading with less advanced, lower-wage countries will drag their standard of
living down—one presidential candidate memorably warned of a “giant sucking sound” if the United
States were to conclude a free trade agreement with Mexico.

Import and Export affect trade?

Import and export are the two major forms of international trade. It is the only way by
which you can easily become a major part of the international marketplace and serve the
buyers perfectly. People who have an interest in establishing an international business
should choose one of these options. Along with it, the interested ones have to focus on the
country’s economy and financial conditions as well.
Both types of business are leading to some different impacts on the economy.
Before getting into deep details, we should understand both terms first.
The international business activities where two companies from different countries are
making a deal. In such a consideration, the buyer plays the role of an importer. In simple
words, you can say the activity of buying goods and bringing them to your country is known
as an import.

In the internation trade considerations, the seller will be the exporter. Selling and sending
goods to companies outside the country can be considered an export and the most
preferable mode of international business.
These things can help you in understanding the terms. As you can sense in the definitions,
both things are completely opposite to each other. Similarly, the functionings of both things
are also opposite. In case a country is highly dependent on imports, then it becomes difficult
for them to maintain their stronghold for exports. Here, they need to face several barriers
by which they may not establish themselves as a good export player in the international
marketplace.
It is the biggest reason that’s why all countries and governments are trying to make sure
they maintain a proper balance in exports and imports. Lack of balance can create lots of
issues, such as - trade deficit. The most important thing is the exchange rate. Mainly it
depends on the currency rate and its value in the internation market.
In the case of the trade deficit, the currency exchange rate starts declining. Due to it, the
countries may not be able to maintain the GDP.
EU:
While recent debates about European integration focus mainly on the losses from dissolutions, a
remarkable rise in foreign direct investment (FDI) in the accession countries has become increasingly
evident as a benefit of the European Union (EU) membership, which makes EU membership a key FDI
determinant.By applying an augmented gravity model (rather than standard gravity variables), covering
39 host and home countries over 1991-2017, we investigated specific factors in explaining FDI inflows,
with a focus on the new member EU states. The EU is in prime position when it comes to global trade.
The openness of EU trade arrangements have made it the biggest player on the global trading scene and
it remains a good region to do business with.

Every day, the EU exports hundreds of millions of euros worth of goods and imports hundreds of millions
more. The world's largest exporter of manufactured goods and services, it is also the biggest export
market for around 80 countries.

Together, EU countries account for 16% of world imports and exports.

There are no customs duties between EU member states. Also, imports from developing countries are
duty-free or the duties are lowered. This is one way in which the EU tries to eliminate poverty. The
European Union holds an important position in the World Trade Organisation (WTO). Trade relations are
maintained, in particular, with the Mediterranean countries, Russia, the United States and China. The
European Union seeks to promote the trade relations and interests of its member states every way it can.
Member states may also sign bilateral trade agreements with other countries as long as they are not in
conflict with the EU laws and agreements.

The objective of the European Union’s economic policy is to create a stable and prosperous euro zone. A
common currency improves companies’ competitiveness and increases economic stability. The European
Central Bank regulates the interest rates and is able to control inflation and exchange rates. The
European Union pays members states various subsidies, for example for development projects. The
subsidies are designed to improve the local standard of living and distribute wealth to the poorest areas
in Europe.

( The EU is responsible for the trade policy of the member countries and negotiates
agreements for them. Speaking as one voice, the EU carries more weight in international
trade negotiations than each individual member would. The EU actively engages with
countries or regional groupings to negotiate trade agreements.
The EU is one of the world’s biggest players in global trade: in 2019, it was the second
largest exporter and importer of goods in the world, as extra-EU trade accounted for 15.9 %
of global exports and 14.0 % of global imports.13-Jul-2021
The European Union (EU) consists of a group of countries that acts as one economic unit in
the world economy. Its official currency is the euro; 19 of its 27 members have adopted the
currency.
The EU’s new trade policy is based on a new approach called “Open Strategic Autonomy”.
‘Open’, because it follows global rules, ‘strategic’ because it links better with the objectives
of climate and digital transformation, and ‘autonomous’ by making its own decisions and
following its own interests and rights.19-Feb-2021
The EU needs a unified trade policy because of its customs union, which sets a single
external tariff for the entire bloc, and its single market, which treats all goods and services
that enter the EU the same. Thus, the EU acts as one body in trade negotiations and at the
World Trade Organization.17-Apr-2020
The EU is one of the world’s biggest players in global trade: in 2019, it was the second
largest exporter and importer of goods in the world, as extra-EU trade accounted for 15.9 %
of global exports and 14.0 % of global imports.
The European Union (EU) consists of a group of countries that acts as one economic unit in
the world economy. Its official currency is the euro; 19 of its 27 members have adopted the
currency.
The EU’s new trade policy is based on a new approach called “Open Strategic Autonomy”.
‘Open’, because it follows global rules, ‘strategic’ because it links better with the objectives
of climate and digital transformation, and ‘autonomous’ by making its own decisions and
following its own interests and rights.
The EU needs a unified trade policy because of its customs union, which sets a single
external tariff for the entire bloc, and its single market, which treats all goods and services
that enter the EU the same. Thus, the EU acts as one body in trade negotiations and at the
World Trade Organization.
Trading blocks have become increasingly influential for world trade. They have advantages
in enabling free trade between geographically close countries. This can lead to lower prices,
increased export potential, higher growth, economies of scale and greater competition.
The European Union plays important roles in diplomacy, the promotion of human rights,
trade, development and humanitarian aid and working with multilateral organisations. The
role of the EEAS is to try and bring coherence and coordinating to the European Union’s
international role.
It is essential for the European economy as it affects growth and employment. More than 36
million jobs in the EU depend on exports outside the European Union. … The EU also uses its
trade policy to promote human rights, social and safety standards, respect for the
environment and sustainable development.
When it comes to trade with the rest of the world, the European Union is sometimes
accused of having high barriers and protecting its own producers. … The EU does certainly
have barriers to trade, and they do, one way or another, raise the cost of imported goods.
But every country on the planet has some sort of barriers.
Tariffs on trade within the European Union were abolished decades ago. But research by
Natalie Chen and Dennis Novy finds that significant trade barriers remain, notably “technical
barriers to trade,” such as health and safety requirements as well as packaging and labelling
requirements.
Studies have indicated that the UK exports to the EU could drop by a third as a result of the
new Brexit trade deal. … The study reveals that the services sector accounted for around
one-third of UK-EU trade in 2019 and that the increase in trade costs is likely to be even
larger going forward.