International Trade

Meaning

• Trade – it means buying and selling of commodities /

articles for valuable consideration.
• International Trade or Foreign Trade
– it means exchange of capital, goods, and services across
international borders or territories.
- it consists of transaction between residents of different
countries.
• Domestic trade, also known as internal trade or home trade,
is the exchange of domestic goods within the boundaries of
a country. This may be sub-divided into two categories,
wholesale and retail.
 Difference
International Trade Domestic Trade
Exchange of goods and services Exchange of goods and services
across international borders within the country.

It improves the political Does not improve the political

relations among the national relations globally, and
which give rise to cross national
subsequently does not give rise
cooperation and agreements. to cross national cooperation
and agreements.
It provides sharing of latest It does not sharing.
technology
 Basis of International
• Variations in Spatial Distribution of Natural Resources.

• Differences in Economic Development

• Uneven Distribution of Population in the World
• Transportation Facilities
• Nature, Choice and Fashion
• Scientific Progress
• War and Peace
• Trade Policy
• Political Contacts and Trade Alliances
 Benefits of International
• Greater variety of goods available for consumption
• Efficient allocation and better utilisation of Resources
• Promotes Efficiency in Production
• More Employment
• Consumption at Cheaper cost
• Reduces Trade Fluctuations
• Utilisation of Surplus Produce
• Fosters Peace and Goodwill
 Features of International
• Immobility of Factors of Production
• Independent Monetary Systems
• Political Boundaries
• Greater Geographical Distance
• Territorial Specialization
• International Competition
• Separation of Sellers from Buyers
• Long Chain of Middlemen
• Different Countries
• Issue of Balance of Payments
 WTO
• The General Agreement on Tariffs and Trade (GATT) was a
multilateral agreement regulating international trade.
According to its preamble, its purpose was the "substantial
reduction of tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and mutually
advantageous basis.“
• GATT was signed by 23 nations in Geneva on October 30,
1947 and took effect on January 1, 1948. It lasted until the
signature by 123 nations in Marrakesh on April 14, 1994 of
the Uruguay Round Agreements, which established the
World Trade Organization (WTO) on January 1, 1995.
 WTO
• The WTO began life on 1 January 1995, but its trading
system is half a century older. Since 1948, the General
Agreement on Tariffs and Trade (GATT) had provided the
rules for the system.
• The WTO was born out of the General Agreement on
Tariffs and Trade (GATT), which was established in 1947.
A series of trade negotiations, GATT rounds began at the
end of World War II and were aimed at reducing tariffs for
the facilitation of global trade on goods.
 WTO – Who We are
• There are a number of ways of looking at the World Trade
Organization.
• It is an organization for trade opening.
• It is a forum for governments to negotiate trade agreements.
• It is a place for them to settle trade disputes.
• It operates a system of trade rules.
• Essentially, the WTO is a place where member governments
try to sort out the trade problems they face with each other.
 WTO – What We Do
• The WTO is run by its member governments.
• All major decisions are made by the membership as a
whole, either by ministers (who usually meet at least once
every two years) or by their ambassadors or delegates (who
meet regularly in Geneva).
 WTO – What We Stand for
• The WTO agreements are lengthy and complex because
they are legal texts covering a wide range of activities. But a
number of simple, fundamental principles run throughout all
of these documents. These principles are the foundation of
the multilateral trading system.
 WTO – Principles
• Trade without discrimination
• Free trade: gradually, through negotiation
• Predictability: through binding and transparency
• Promoting fair competition
• Encouraging development and economic reform
 WTO - Activities
• — negotiating the reduction or elimination of obstacles to
trade (import tariffs, other barriers to trade) and agreeing on
rules governing the conduct of international trade
(e.g.antidumping, subsidies, product standards, etc.)
• — administering and monitoring the application of the
WTO's agreed rules for trade in goods, trade in services, and
trade-related intellectual property rights
• — monitoring and reviewing the trade policies of our
members, as well as ensuring transparency of regional and
bilateral trade agreements
• — settling disputes among our members regarding the
interpretation and application of the agreements
 WTO - Activities
• — building capacity of developing country government
officials in international trade matters
• — assisting the process of accession of some 30 countries
who are not yet members of the organization
• — conducting economic research and collecting and
disseminating trade data in support of the WTO's other main
activities
• — explaining to and educating the public about the WTO,
its mission and its activities.
 WTO
• Ministerial Conferences
• The topmost decision-making body of the WTO is the
Ministerial Conference, which usually meets every two years. It
brings together all members of the WTO, all of which are
countries or customs unions. The Ministerial Conference can
take decisions on all matters under any of the multilateral trade
agreements.
• The WTO General Council
• The General Council is the WTO’s highest-level decision-
making body in Geneva, meeting regularly to carry out the
functions of the WTO. It has representatives (usually
ambassadors or equivalent) from all member governments and
has the authority to act on behalf of the ministerial conference
which only meets about every two years.
 WTO
• The WTO General Council
• The General Council also meets, under different rules, as
the Dispute Settlement Body and as the Trade Policy
Review Body.
• WTO Director-General: Roberto Azevêdo
• Roberto Azevêdo is the sixth Director-General of the WTO.
His appointment took effect on 1 September 2013 for a
four-year term.
 WTO
• The Deputy Directors-General
• The four Deputy Directors-General are Yonov Frederick
Agah of Nigeria, Karl Brauner of Germany, David Shark of
the United States and Yi Xiaozhun of China. Their
appointment took effect on 1 October 2013.
• Members and Observers
•  members since 14 July 2016 , with dates of WTO
membership
 Balance of Payment
• The Balance Of Payments of a country is a systematic
record of all economic transactions between the ‘residents’
of a country and the rest of the world”.
• Importance of BoP
• The BoP is an important indicator of pressure on a country’s
foreign exchange rate .
• The BOP helps to forecast a country’s market potential,
especially in the short run.
• Changes in a country’s BOP may signal the imposition or
removal of controls over payment of dividends and interest,
license fees, royalty fees, or other cash disbursements to
foreign firms or investors.
 Balance of Payment - Contents
• Contents of BoP
• The Current account - includes the export and import of
goods and services
• The Capital account – all purchases and sales of assets
such as stocks, bonds, bank accounts, real estate, and
businesses.
• The Official reserve account – covers all purchases and
sales of international reserve assets such as dollars, foreign
exchanges, gold and special drawings rights (SDRs).
 Balance of Payment - Contents
Credits Debits
Current Account
1 Exports 1420.00
1.1 Merchandise 725.00
1.2 Services 355.00
1.3 Factor Income 340.00
2 Imports -2110.00
2.1 Merchandise - 1550.00
2.2 Services -255.00
2.3 Factor Income -305.00
3 Unilateral transfer 25.00 -65.00
Balance of Current account [(1)+(2)+(3)] -730.00
Capital Account 110.00 -225.00
4 Direct Investment 790.00 -90.00
5 Portfolio Investment 55.00 -95.00
5.1 Equity securities 745.00 5.00
5.2 Debt securities 520.00 -480.00
6Other Investment 1075.00
Balance on Capital account [(4)+(5)+(6)] 50.00
7Statistics discrepancies 345.00
Overall balance 2.0
 Balance of Payment – Current A/c
• The Current a/c is divided into four categories:
merchandise, trade, services, factor income, and unilateral
transfer.
• Merchandise trade represents exports and imports of
tangible goods – oil, wheat, clothes, automobiles, computers
and so on.
• Services includes payments and receipts for legal,
consulting, and engineering services, royalties for patents
and intellectual properties, insurance premiums, shipping
fees and tourist expenditures.
 Balance of Payment – Current A/c
• Factor income consists largely of payments and receipts of
interest, dividends, and other income on foreign investments
that were previously made.
• Unilateral transfers includes unrequited payments – foreign
aid, reparations, official and private grants, and gifts.
• Net transfers (sums sent home by migrants and permanent
workers aboard, gifts, grants and pensions)
• Current a/c Balance
• Visible net + Invisible net – Current a/c balance
• Credit > Debit Current a/c Surplus
• Credit < Debit Current a/c Surplus
 Balance of Payment – Capital A/c
• Capital transfers related to the purchase and sale of fixed
assets such as real estate.
• It measures the difference between sales of assets to
foreigners and purchases of foreign assets.
• The Capital a/c can be divided into three categories: direct
investment, portfolio investment and other investment.
• Foreign direct investment (FDI) is an investment made
by a company or individual in one country in business
interests in another country, in the form of either
establishing business operations or acquiring business assets
in the other country, such as ownership or controlling
interest in a foreign company.
 Balance of Payment – Capital A/c
• A portfolio investment is an investment made by an investor
who is not involved in the management of a company.
• Other investment includes transactions in currency, bank
deposits, trade credits, and so forth.
• Short term capital movements include
- Purchase of short-term securities
- Speculative purchase of foreign currency
- Cash balance held with foreign countries
- Commercial borrowings
- IMF borrowings
- Non-residents deposits
- External assistance
 Balance of Payment – Statistical Discrepancy
• It representing omitted and mis-recorded transactions.
• Recordings of payments and receipts arising from
international transactions are done at different times and
places possibly using different methods.
 Balance of Payment – official Reserve A/c
• Changes in official monetary reserves including gold,
foreign exchange, and IMF position.
 Balance of Payment
A. Current Account
A. Net exports/imports goods&services (Balance of Trade)
B. Net Income (investment income from direct portfolio investment plus employee
compensation
C. Net transfers (sums sent home by migrant abroad)

B. Capital Account
Capital transfers related to purchase and sale of fixed assets such as real estate

C. Financial Account
A. Net foreign direct investment Basic Balance = A+B+C
B. Net portfolio investment
C. Other financial items

D. Net Errors and Omissions Overall Balance = A+B+C+D

Missing data such as illegal transfers
E. Reserves and Related Items
Changes in official monetary reserves including gold and foreign exchange reserves

Σ (A:E) = Overall Balance

 EXIM Policy
• Exim Policy or Foreign Trade Policy is a set of guidelines
and instructions established by the DGFT in matters related
to the import and export of goods in India.
• The Foreign Trade Policy of India is guided by the Export
Import in known as in short EXIM Policy of the Indian
Government and is regulated by the Foreign Trade
Development and Regulation Act, 1992.
• DGFT (Directorate General of Foreign Trade) is the main
governing body in matters related to Exim Policy.
• The main objective of the Foreign Trade (Development and
Regulation) Act is to provide the development and
regulation of foreign trade by facilitating imports into, and
augmenting exports from India.
 EXIM Policy - DGFT
• DGFT - Directorate General of Foreign Trade
• It is the agency of the Ministry of Commerce and Industry
of the Government of India responsible for administering
laws regarding foreign trade and foreign investment in India.
• DGFT provides a complete searchable database of all
exporters and importers of India. The search can be completed
only if full IEC code and first three letters of company name
are entered.
• It’s headquartered in Udyog Bhavan, New Delhi.
• Under its jurisdiction – 04 - Zonal Offices at Delhi, Mumbai,
Kolkata and Chennai headed by Zonal Joint Director General
of Foreign Trade. There are 35 Regional Authorities all over
the country.
 EXIM Policy - Objectives
• Foreign Trade Act has replaced the earlier law known as the
imports and Exports (Control) Act 1947.
• To accelerate the economy from low level of economic
activities to high level of economic activities by making it a
globally oriented vibrant economy and to derive maximum
benefits from expanding global market opportunities.
• To stimulate sustained economic growth by providing
access to essential raw materials, intermediates,
components,' consumables and capital goods required for
augmenting production.
• To enhance the techno local strength and efficiency of
Indian agriculture, industry and services, thereby,
improving their competitiveness.
 EXIM Policy - Objectives
• To generate new employment.
• Opportunities and encourage the attainment of
internationally accepted standards of quality.
• To provide quality consumer products at reasonable prices.
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
• B. BOOST TO "MAKE IN INDIA"
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• D. Other new Initiatives
• Annexure-1
• Annexure-2
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 1. Merchandise Exports from India Scheme (MEIS)
• 2. Service Exports from India Scheme (SEIS)
• 3. Incentives (MEIS & SEIS) to be available for SEZs
• 4. Duty credit scrips to be freely transferable and usable for
payment of custom duty, excise duty and service tax.
• 5. Status Holders
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 1. Merchandise Exports from India Scheme (MEIS)
- Earlier there were 5 different schemes - Focus Product Scheme,
Market Linked Focus Product Scheme, Focus Market Scheme,
Agri. Infrastructure Incentive Scrip, VKGUY for rewarding
merchandise exports with different kinds of duty.
- Now all these schemes have been merged into a single scheme,
namely Merchandise Export from India Scheme (MEIS).
- Rewards shall be payable as percentage of realized FOB value.
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 2. Service Exports from India Scheme (SEIS)
- Served From India Scheme (SFIS) has been replaced with
Service Exports from India Scheme (SEIS).
- SEIS shall apply to ‘Service Providers located in India’ instead
of ‘Indian Service Providers’.
- The rate of reward under SEIS would be based on net foreign
exchange earned.
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 3. Incentives (MEIS & SEIS) to be available for SEZs
• 4. Duty credit scrips to be freely transferable and usable for
payment of custom duty, excise duty and service tax.
- All scrips issued under MEIS and SEIS and the goods imported
against these scrips would be fully transferable.
- Payment of customs duty for import of inputs / goods including
capital goods, except items listed in Appendix 3A.
- Payment of excise duty on domestic procurement of inputs or
goods, including capital goods as per DoR notification.
 Duty credit scrips
• The duty credit scrip is a pass that allows the holder to
import commodities by not paying a specified amount in
import duties.
• Following are the main features of duty credit scrip:
- They are issued to exporters.
- The scrip allows duty deduction (non-payment of taxes) of
a specified amount in the scrip. The scrip value or the
amount of tax deduction will be specified in the scrip.
- The scrip value or tax reduction is expressed as a
percentage of export turnover of the exporter.
- The scrip value usually varies between 3 per cent to 5 per
cent under Foreign Trade Policy 2015.
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 5. Status Holders
- Business leaders who have excelled in international trade and
have successfully contributed to country’s foreign trade are
proposed to be recognized as Status Holders and given special
treatment and privileges to facilitate their trade transactions, in
order to reduce their transaction costs and time.
- The nomenclature of Export House, Star Export House, Trading
House, Star Trading House, Premier Trading House certificate has
been changed to One, Two, Three, Four, Five Star Export House.
 EXIM Policy – 2015 – 2020 – Highlights
• A. SIMPLIFICATION & MERGER OF REWARD
SCHEMES
Export from India Schemes:
• 5. Status Holders
Export Performance FOB / FOR
(as Status category converted) Value
Status Category (in US $ million) during current
and previous two years
 One Star Export House 3 
Two Star Export House 25 
Three Star Export House 100
Four Star Export House 500
Five Star Export House 2000
 EXIM Policy – 2015 – 2020 – Highlights
• B. BOOST TO "MAKE IN INDIA"
Specific Export Obligation under EPCG scheme, in case capital
goods are procured from indigenous manufacturers, which is
currently 90% of the normal export obligation (6 times at the duty
saved amount) has been reduced to 75%, in order to promote
domestic capital goods manufacturing industry.
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 1. Online filing of documents/ applications and Paperless
trade in 24x7 environment:
• 2. Online inter-ministerial consultations:
• 3. Simplification of procedures/processes, digitisation and
e-governance
• 4. Forthcoming e-Governance Initiatives
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 1. Online filing of documents/ applications and Paperless
trade in 24x7 environment
- DGFT already provides facility of Online filing of various
applications under FTP by the exporters/importers.
- However, documents like Certificates issued by Chartered
Accountants/ Company Secretary / Cost Accountant etc. have to be
filed in physical forms only.
- it has been decided to develop an online procedure to upload
digitally signed documents by Chartered Accountant / Company
Secretary / Cost Accountant.
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 1. Online filing of documents/ applications and Paperless
trade in 24x7 environment
- As a measure of ease of doing business, landing documents of
export consignment as proofs for notified market can be digitally
uploaded in the following manner:-
* Any exporter may upload the scanned copy of Bill of Entry
under his digital signature.
* Status holders falling in the category of Three Star, Four Star
or Five Star Export House may upload scanned copies of
documents.
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 2. Online inter-ministerial consultations:
- It is proposed to have Online inter-ministerial consultations for
approval of export of SCOMET (Special Chemicals, Organisms,
Materials, Equipment and Technologies) items, Norms fixation,
Import Authorisations, Export Authorisation, in a phased manner,
with the objective to reduce time for approval.
- As a result, there would not be any need to submit hard copies of
documents for these purposes by the exporters.
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 3. Simplification of procedures/processes, digitisation and
e-governance
- At present, the EPCG Authorisation holders are required to
maintain records for 3 years. Now the EPCG Authorization Holders
shall be required to maintain records for a period of two years only.

- Exporter Importer Profile: Facility has been created to upload

documents in Exporter/Importer Profile. There will be no need to
submit copies of permanent records/ documents repeatedly with
each application, once uploaded.
- Online filing of application for refund of TED is being
introduced
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 3. Simplification of procedures/processes, digitisation and
e-governance
- Communication with Exporters/Importers: Certain information,
like mobile number, e-mail address etc. has been added as
mandatory fields, in IEC data base. This information once provided
by exporters, would help in better communication with exporters.
SMS/ email would be sent to exporters to inform them about
issuance of authorizations or status of their applications.
- For faster and paperless communication with various committees
of DGFT, dedicated e- mail addresses have been provided to each
Norms Committee, Import Committee and Pre-Shipment
Inspection Agency for faster communication.
 EXIM Policy – 2015 – 2020 – Highlights
• C. TRADE FACILITATION & EASE OF DOING
BUSINESS
• 4. Forthcoming e-Governance Initiatives
- Message exchange for transmission of export reward scrips from
DGFT to Customs.
- Message exchange for transmission of Bills of Entry (import details)
from Customs to DGFT.  
- Online issuance of Export Obligation Discharge Certificate (EODC).

- Message exchange with Ministry of Corporate Affairs for CIN &

DIN.  
- Message exchange with CBDT for PAN.  
- Facility to pay application fee using debit card / credit card.
- Open API for submission of IEC application.  
- Mobile applications for FTP
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 1. New initiatives for EOUs, EHTPs and STPs
• 2. Facilitating & Encouraging Export of dual use items
(SCOMET).
• 3. Facilitating & Encouraging Export of Defence Exports
• 4. e-Commerce Exports
• 5. Duty Exemption
• 6. Additional Ports allowed for Export and import  
• 7. Duty Free Tariff Preference (DFTP) Scheme
• 8. Quality complaints and Trade Disputes
• 9. Vishakhapatnam and Bhimavaram added as Towns of
Export Excellence
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 1. New initiatives for EOUs, EHTPs and STPs
- EOUs, EHTPs, STPs have been allowed to share infrastructural
facilities among themselves.
- Inter unit transfer of goods and services have been allowed
among EOUs, EHTPs, STPs, and BTPs.
- EOUs have been allowed facility to set up Warehouses near the
port of export.
- STP units, EHTP units, software EOUs have been allowed the
facility to use all duty free equipment/goods for training purposes.
- 100% EOU units have been allowed facility of supply of spares/
components up to 2% of the value of the manufactured articles to a
buyer in domestic market for the purpose of after sale services.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 1. New initiatives for EOUs, EHTPs and STPs
- At present, EOUs/EHTP/STPI units are permitted to transfer
capital goods to other EOUs, EHTPs, STPs, SEZ units. Now a
facility has been provided that if such transferred capital goods are
rejected by the recipient, then the same can be returned to the
supplying unit, without payment of duty.
- EOUs having physical export turnover of Rs.10 crore and
above, have been allowed the facility of fast track clearances of
import and domestic procurement. They will be allowed fast tract
clearances of goods, for export production, on the basis of pre-
authenticated procurement certificate, issued by customs / central
excise authorities. They will not have to seek procurement
permission for every import consignment.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 2. Facilitating & Encouraging Export of dual use items
(SCOMET).
- Validity of SCOMET export authorisation has been extended from
the present 12 months to 24 months
- Verification of End User Certificate (EUC) is being simplified
- Outreach programmes will be conducted at different locations to
raise awareness among various stakeholders.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 3. Facilitating & Encouraging Export of Defence Exports
- Normal export obligation period under advance authorization
is 18 months. Export obligation period for export items falling in
the category of defence, military store, aerospace and nuclear
energy shall be 24 months from the date of issue of authorization or
co-terminus with contracted duration of the export order, whichever
is later.
- A list of military stores requiring NOC of Department of
Defence Production has been notified by DGFT recently. A
committee has been formed to create ITC (HS) codes for defence
and security items for which industrial licenses are issued by DIPP.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 4. e-Commerce Exports
- Goods falling in the category of handloom products, books /
periodicals, leather footwear, toys and customized fashion
garments, having FOB value up to Rs.25000 per consignment shall
be eligible for benefits under FTP. Such goods can be exported in
manual mode through Foreign Post Offices at New Delhi, Mumbai
and Chennai.
- Export of such goods under Courier Regulations shall be
allowed manually on pilot basis through Airports at Delhi, Mumbai
and Chennai as per appropriate amendments in regulations to be
made by Department of Revenue.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 5. Duty Exemption
- Imports against Advance Authorization shall also be eligible for
exemption from Transitional Product Specific Safeguard Duty.
- In order to encourage manufacturing of capital goods in India,
import under EPCG Authorisation Scheme shall not be eligible for
exemption from payment of anti-dumping duty, safeguard duty and
transitional product specific safeguard duty.
• 6. Additional Ports allowed for Export and import
- Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been
notified as registered ports for import and export.
• 7. Duty Free Tariff Preference (DFTP) Scheme
- India has already extended duty free tariff preference to 33 Least
Developed Countries (LDCs) across the globe. This is being notified
under FTP.
 EXIM Policy – 2015 – 2020 – Highlights
• D. OTHER NEW INITIATIVES
• 8. Quality complaints and Trade Disputes
- In an endeavour to resolve quality complaints and trade
disputes, between exporters and importers, a new chapter, namely,
Chapter on Quality Complaints and Trade Disputes has been
incorporated in the Foreign Trade Policy.
- For resolving such disputes at a faster pace, a Committee on Quality
Complaints and Trade Disputes (CQCTD) is being constituted in 22
offices and would have members from EPCs/FIEOs/APEDA/EICs.
•  9. Vishakhapatnam and Bhimavaram added as Towns of
Export Excellence
- Government has already recognized 33 towns as export excellence
towns. It has been decided to add Vishakhapatnam and Bhimavaram
in Andhra Pradesh as towns of export excellence (Product Category–
Seafood)
 Trade Barriers
• It refers to the government policies and measures which
obstruct the free flow of goods and services across national
borders.
• It classified into two groups – tariff barriers and non-tariff
barriers.
 Trade Barriers - Objectives
• To protect domestic industries or certain other sectors of the
economy from foreign competition.
• To guard against dumping.
• To promote indigenous research and development.
• To conserve the foreign exchange resources of the country.
• To make the Balance of Payments position more favourable
• To curb conspicuous consumption and mobilize revenue for
the government. 
 Trade Barriers
Trade Barriers

Tariff Barriers Non-Tariff Barriers

Import duty, export duty,

transit duty, countervailing Traditional Non-Traditional
duty, anti-Dumping Duties NTBs NTBs

VERs, orderly marketing arrangements,

Import / export quota, licensing,
exchange control, price control,
subsidies/incentives.
health and product standards, technical
barriers, administrative procedures,
phyto-sanitary regulations, environmental
regulations, labour standards.
 Trade Barriers – Tariff
• Tariff barriers refer to duties and taxes imposed by the govt.
on the goods imported from abroad.
• Import duty
- a payment levied on the import of goods.
- Import duty is a tax collected on imports and some exports by the
customs authorities of a country. It is usually based on the value of
the goods that are imported. Import duty may also be referred to as
customs duty, tariff, import tax and import tariff.
• Export duty
- it consist of general or specific taxes on goods or services that
become payable when the goods leave the economic territory or
when the services are delivered to non-residents; profits of export
monopolies and taxes resulting from multiple exchange rates are
excluded.
 Trade Barriers – Tariff
• Transit duty
- A transit duty, or transit tax, is a tax levied on commodities
passing through a customs area en route to another country.
• Countervailing duty (CVD)
- Countervailing duties (CVDs), also known as anti-subsidy duties,
are trade import duties imposed under World Trade Organization
(WTO) rules to neutralize the negative effects of subsidies.
• Anti-dumping duty
- An anti-dumping duty is a protectionist tariff that a domestic
government imposes on foreign imports that it believes are priced
below fair market value. Dumping is a process where a company
exports a product at a price lower than the price it normally charges
on its own home market.
 Trade Barriers – Non-Tariff
• Non tariff barriers are various quantitative and exchange
control restrictions imposed in order to restrict imports.
• Traditional NTBs
• Import / export quota
- A quota is a government-imposed trade restriction that limits the
number, or monetary value, of goods that can be imported or
exported during a particular time period.
- export quota - A restriction imposed by a government on the
amount or number of goods or services that may be exported within
a given period, usually with the intent of keeping prices of those
goods or services low for domestic users.
- An import quota is a type of trade restriction that sets a physical
limit on the quantity of a good that can be imported into a country
in a given period of time.
 Trade Barriers – Non-Tariff
• Traditional NTBs
• Licensing
- Licensing is the process of leasing a legally protected
(trademarked or copyrighted) entity – a name, likeness, logo,
trademark, graphic design, slogan, signature, character, etc. The
entity, known as the property or intellectual property, is then used
in conjunction with a product.
- Import license – it is a document issued by a national
government authorizing the importation of certain goods into its
territory.
- Export license - A government document granting the licensee
the right to export a specific quantity of a commodity to a specified
country.
 Trade Barriers – Non-Tariff
• Exchange Control
- Exchange controls are put in place by governments and central
banks in order to ban or restrict the amount of foreign currency or
local currency that can be traded or purchased. These controls
allow countries a greater degree of economic stability by limiting
the amount of exchange rate volatility due to currency
inflows/outflows.
• Price Control
- Price controls are government-mandated legal minimum or
maximum prices set for specified goods, usually implemented as a
means of direct economic intervention to manage the affordability
of certain goods. Governments most commonly implement price
controls on staples, essential items such as food or energy products.
Price controls that set maximum prices are price ceilings, while
price controls that set minimum prices are price floors.
 Trade Barriers – Non-Tariff
• Subsidy / Incentive
A subsidy is a form of financial aid or support extended to an
economic sector (or institution, business, or individual) generally
with the aim of promoting economic and social policy.
- Production subsidy
- Consumer/consumption subsidy
- Export subsidy
- Employment subsidy
- Tax subsidy
- Transport subsidies
- Environmental externalities
- An incentive is something that motivates an individual to
perform an action.
 Trade Barriers – Non-Tariff
• Non-Traditional NTBs
• VERs
- A voluntary export restraint (VER) or voluntary export
restriction is a government-imposed limit on the quantity of
some category of goods that can be exported to a specified country
during a specified period of time. They are sometimes referred to as
'Export Visas‘.
• Orderly marketing arrangement
- It is a bilateral arrangement whereby an exporting country
(government or industry) agrees to reduce or restrict exports
without the importing country having to make use of quotas, tariffs
or other controls on imports.
 Trade Barriers – Non-Tariff
• Non-Traditional NTBs
• Technical barriers
- Technical barriers to trade (TBTs), a category of nontariff
barriers to trade, are the widely divergent measures that countries
use to regulate markets, protect their consumers, or preserve their
natural resources , but they also can be used to discriminate against
imports in order to protect domestic industries.
- technical barriers to trade refer to measures such as labelling
requirements, standards on technical specifications and quality
standards, and other measures protecting the environment.
 Trade Barriers – Non-Tariff
• Non-Traditional NTBs
• Administrative procedures
- Licenses – permit to do something.
- Quotas – it is a limitation in value or in physical terms,
imposed on import and export of certain goods for a certain
period of time.
- Embargo - Embargo is a specific type of quotas
prohibiting the trade. As well as quotas, embargoes may be
imposed on imports or exports of particular goods,
regardless of destination, in respect of certain goods
supplied to specific countries, or in respect of all goods
shipped to certain countries
 Trade Barriers – Non-Tariff
• Non-Traditional NTBs
• Administrative procedures
- Standards.
- Administrative and bureaucratic delays at the entrance.
- Import deposits.
- Foreign exchange restrictions and foreign exchange
controls.
 Trade Barriers – Non-Tariff
• Non-Traditional NTBs
• Phyto-sanitary regulations
- The Agreement on the Application of Sanitary and Phyto-
sanitary Measures (the "SPS Agreement") entered into force with
the establishment of the World Trade Organization on 1 January
1995. It concerns the application of food safety and animal and
plant health regulations.
- A phyto-sanitary certificate is a certificate stating that a specific
crop was inspected a predetermined number of times and a
specified disease was not found; or a certificate is based on area
surveillance stating that a specific disease, as far as known, does
not occur in the area of production.
- It applies to all sanitary (relating to animals) and phytosanitary
(relating to plants) (SPS) measures that may have a direct or
indirect impact on international trade.
 Heckscher-Ohlin model
• The Heckscher-Ohlin model is a theory in economics
explaining that countries export what can be most
efficiently and plentifully produced.
• This model is used to evaluate trade and, more specifically,
the equilibrium of trade between two countries that have
varying specialties.