Foreign trade

'Trade' means buying and the selling of goods or services. "Foreign trade" means trading with countries other than the native one. Foreign trade is an important tool for developed as well as for developing nations. It plays a significant role in the development of the nation's economy. Foreign trade is done to earn foreign exchange. "Foreign exchange" means exchanging of the currencies of various countries. It is a key economic indicator. Foreign trade can be done by individuals, companies or by the government of the country.

Foreign trade Basic means of foreign trade include 3 types:

Import - Import means the bringing in of goods and services in a country from another.

Export - Export means the sending of goods and services from one country to another.

Re-export - Re-export means importing from a country and exporting the same to some other country.

Foreign trade can be broadly classified as -

Long term trading: This type of foreign trade is usually a long term contract with foreign companies or nations.

Compensation matters: The charges levied on the value of the import and export of goods and services between two or more nations.

Mediation in foreign trade: This type of foreign trade involves the buying of goods and services from one country and then selling them off to another country.

Local border trade: This type of foreign trading is done with countries sharing the common border. It involves very nominal taxes on the transactions.

In countries like United States, there are many zones for foreign trade. These zones are allotted to particular areas, where there is a lot of foreign trade activities being carried out or areas which may have a lot of scope for foreign trade. The foreign trade zones have special customs procedures. There are two types of foreign trade zone-

General purpose zones.

General purpose zone also known as "GPZ". It is a foreign trade zone which comes under public sector. It can be used by anyone who wishes to carry out foreign trade. In a single zone, there may be many sites for various trade purposes and trade types. A GPZ may have sites like international airport, warehouses, commercial buildings, manufacturing plants, etc. For manufacturing goods, one needs to take special permission from the zone authorities.

Sub zones.

Foreign sub zone is a zone which comes under the private sector. Any company or an individual can operate a sub zone for its trade purposes. The activities carried out may involve manufacturing, storing, distribution, packing of goods, trading of services, etc. Overview Foreign trade plays is a vital part for any country's economic status. It can simply buying or selling of goods and services between two or more nations. It may also involve trade activities of multinational companies. Nowdays overseas investments are opened to international stock market and international real estate market. Various companies and individuals are taking advantage of such global opportunities. These activities not only help them to grow, but also economically prospers the nations involved.

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