International Trade

And
Trade Policy

International trade
is the exchange of goods and services between countries. Trading globally gives consumers and
countries the opportunity to be exposed to goods and services not available in their own countries, or
more expensive domestically.

International trade and the accompanying financial transactions are generally conducted for the
purpose of providing a nation with commodities it lacks in exchange for those that it produces in
abundance; such transactions, functioning with other economic policies, tend to improve a nation’s
standard of living.

What Is Trade Policy?

Trade policy is the set of agreements, regulations, and practices by a
government that affect trade with foreign countries.

Trade policy refers to a nation’s formal set of practices, laws,

regulations, and agreements that govern international trade practices,
or imports and exports to foreign countries. Trade policies aim to
strengthen the domestic economy.

What are the two main reasons why states trade with each other?
1.Economic reasons
Trade increases competition and lowers world prices, which provides
benefits to consumers by raising the purchasing power of their own
income, and leads a rise in consumer surplus.

Absolute advantage
- A country enjoys an absolute advantage over another country in
the production of a product if it uses fewer resources to produce
that product than the other country does
Comparative advantage
- A country enjoys comparative advantage in the production of a
good if that good can be produced at a lower cost in terms of
other goods.

Quotes kamo pare ni pareng adam smith

The tailor does not attempt to make his own
shoes, but buys them of the shoemaker. The
shoemaker does not attempt to make his
own clothes, but employs a tailor.
Openness to trade and investment promotes growth in many ways:
 Encourage economies to specialize and produce in areas where
they can gain comparative advantage
 Trade expands the market to where domestic industries can
access
 Trade diffuses new technology and ideas
 Increasing workers and managers productivity
 Eliminating tariffs on imports gives consumer access to cheaper
products
 Increase the purchasing power and living standards
 Give producers access to cheaper inputs
 Reducing the production cost and boost the competitiveness of
industries

Political reasons
-Some governments use trade as a retaliatory measure if another
country is politically or economically unfair

Protectionism
-Protectionism refers to government policies that restrict
international trade to help domestic industries. Protectionist policies
are usually implemented with the goal to improve economic activity
within a domestic economy but can also be implemented for safety or
quality concerns.
- policy of protecting domestic industries against foreign
competition by means of tariffs, subsidies, import quotas, or other
restrictions or handicaps placed on the imports of foreign competitors.

Why do states restrict International Trade?

-Trade restrictions are typically undertaken in an effort to protect
companies and workers in the home economy from competition by
foreign firms. A protectionist policy is one in which a country restricts
the importation of goods and services produced in foreign countries.

What is International Trade law?

generally, international trade law includes the rules and customs
governing trade between countries. International trade lawyers may
focus on applying domestic laws to international trade, and applying
treaty-based international law governing trade.

International trade is referring to international relations at the

trade policy level, such as the tariff and non-tariff policy, offensive or
defensive trade policy, or the economic integration policy, of a state.

International Trade Rules

 International trade rules provide the ‘rule of the game’ for the
international trade ‘game’. It is a wide range of rules that are
 international and relate to trade or economics having legal or
regulatory nature.
 International trade rules are the expression of trade policy, it is
linked more closely to economics than almost any other area of
law. International trade rules focus on the legal instruments
that govern international trade flows.

 Bilateral Treaties
o -an agreement between two states establishing mutual
rights and obligations between them.
 Regional Trade Agreement
o -a treaty between two or more governments that define
the rules of trade for all signatories

Why there is a need for International Trade Laws?

 Firstly, international trade rules restrain countries from taking
trade restrictive measure and help to avoid an escalation of trade-
restrictive measures taken by stats.
 -Secondly, theses rules satisfy the need of traders and investors
for a degree of security and predictability which will encourage
trade and investment.
 Thirdly, these rules help states to cope with the challenges
presented by economic globalization, such as public health, clean
environment, cultural identity and minimum labor standards, etc.
 -Fourtly, it is the need to achieve a greater measure of equity in
international economic relations.
 1.6
INTERNATIONAL BUSINESS TRANSACTIONS

Why does a business expand abroad?

Pre solo muna to sa slide kunwari mag tawag ako wahahaha

5 benefits of international expansion

1. New markets
2. Diversification
3. Access to talent
4. Competitive advantage
5. Foreign investment opportunities

What is international business law

It is the law governing international business transactions. The
understanding of international business law is not far from that of
“international commercial law”.

A business may decide to produce

its products abroad instead of
producing these in its home country
then exporting to foreign countries.