In most countries, suchtrade represents a significant share ofgross domestic product (GDP). While international trade has existed throughout history (for exampleUttarapatha,Silk Road,Amber Road,salt roads), its economic, social, and political importance has been on the rise in recent centuries.
Carrying out trade at an international level is a complex process when compared todomestic trade. When trade takes place between two or morestates, factors likecurrency, government policies, economy,judicial system, laws, and markets influence trade.
To ease and justify the process of trade between countries of different economic standing in the modern era, some international economic organizations were formed, such as theWorld Trade Organization. These organizations work towards the facilitation and growth of international trade. Statistical services of intergovernmental and supranational organizations and governmental statistical agencies publishofficial statistics on international trade.
Aproduct that is transferred or sold from a party in one country to a party in another country is anexport from the originating country, and animport to the country receiving that product. Imports and exports are accounted for in a country's current account in thebalance of payments.[3]
Trading globally may giveconsumers and countries the opportunity to be exposed to newmarkets and products. Almost every kind of product can be found in theinternational market, for example: food, clothes, spare parts, oil, jewellery, wine, stocks, currencies, and water. Services are also traded, such as intourism,banking,consulting, andtransportation.
International trade is, in principle, not different fromdomestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.
However, in practical terms, carrying out trade at an international level is typically a more complex process than domestic trade. The main difference is that international trade is typically more costly than domestic trade. This is due to the fact that cross-border trade typically incurs additional costs such as explicittariffs as well as explicit or implicitnon-tariff barriers such as time costs (due to border delays), language and cultural differences, product safety, the legal system, and so on.
Another difference between domestic and international trade is thatfactors of production such as capital andlabor are often more mobile within a country than across countries. Thus, international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labour, or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States fromChina. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010, suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when theimmigrants became assimilated into their new country.[4]
In the US, starting in 1935, the various U.S. presidents have held "World Trade Week" observances to promote large and small companies to be more involved with the export and import of goods and services. This tradition was preceded by a local observance of "Foreign Trade Week" by theLos Angeles Area Chamber of Commerce that originated in 1927 as an expansion ofUnited States National Maritime Day.
Every year the President declares the third week of May to be World Trade Week.[8][9]
PresidentGeorge W. Bush observed World Trade Week on May 18, 2001 and May 17, 2002.[10][11]
On May 13, 2016, PresidentBarack Obama proclaimed May 15–21, 2016 as World Trade Week.[12]
On May 19, 2017, PresidentDonald Trump proclaimed May 21–27, 2017 as World Trade Week.[13][14]
The trade-offs betweenlocal food production and distant food production are controversial, with limited studies comparing environmental impact and scientists cautioning that regionally specific environmental impacts should be considered.[15] A 2020 study indicated that local food crop production alone cannot meet the demand for most food crops with "current production and consumption patterns" and the locations of food production at the time of the study for 72–89% of the global population and 100 km radiuses as of early 2020.[clarification needed][16][17][18] Studies found thatfood miles are a relatively minor factor for carbon emissions, albeit increased food localization may also enable additional, more significant, environmental benefits such as recycling of energy, water, and nutrients.[19] For specific foods regional differences in harvest seasons may make it more environmentally friendly to import from distant regions than more local production and storage or local production in greenhouses.[20]
Qualitative differences between substitutive products of different production regions may exist due to different legal requirements and quality standards or different levels of controllability by local production- andgovernance-systems which may have aspects ofsecurity beyond resource security,environmental protection,product quality andproduct design andhealth. The process of transforming supply as well aslabor rights may differ as well.
Local production has been reported to increase local employment in many cases. A 2018 study claimed that international trade can increase local employment.[21] A 2016 study found that local employment and total labor income in both manufacturing and nonmanufacturing were negatively affected by rising exposure to imports.[22]
Local production in high-income countries, rather than distant regions may require higher wages for workers. Higher wages incentivizeautomation[23] which could allow for automated workers' time to be reallocated by society and its economic mechanisms or be converted into leisure-like time.
Specialization, production efficiency and regional differences
Local production may requireknowledge transfer,technology transfer and may not be able to compete in efficiency initially withspecialized, established industries and businesses, or in consumer demand without policy measures such aseco-tariffs. Regional differences may cause specific regions to be more suitable for a specific production, thereby increasing the advantages of specific trade over specific local production. Forms of local products that are highly localized may not be able to meet the efficiency of more large-scale, highly consolidated production in terms of efficiency, including environmental impact.[citation needed]
A video explaining findings of the study "Water, energy and land insecurity in global supply chains"
A systematic, and possibly first large-scale, cross-sectoral analysis ofwater,energy andland insecurity in 189 countries that links total and sectorial consumption to sources showed that countries and sectors are highly exposed to over-exploited, insecure, and degraded such resources witheconomic globalization having decreased security ofglobal supply chains. The 2020 study finds that most countries exhibit greater exposure to resourcerisks via international trade – mainly from remoteproduction sources – and that diversifying trading partners is unlikely to help countries and sectors to reduce these or to improve their resourceself-sufficiency.[24][25][26][27]
A number of people inAfrica, including children, were using informal or "artisanal" methods to producegold. While millions were making a livelihood through this small-scale mining, governments ofGhana,Tanzania andZambia complained about the increase in illegal production and goldsmuggling. Sometimes the procedure involved criminal operations and even human and environmental cost. Investigative reports based on Africa's export data revealed that gold in large quantities is smuggled out of the country[clarification needed] through theUnited Arab Emirates, without any taxes being paid to the producing states. Analysis also reflected discrepancies in the amount exported from Africa and the total gold imported into the UAE.[28]
In July 2020, a report by Swissaid highlighted that the Dubai-based precious metal refining firms, including Kaloti Jewellery International Group and Trust One Financial Services (T1FS), received most of their gold from poor African states likeSudan. The gold mines in Sudan were seldom under the militias[clarification needed] involved inwar crimes andhuman rights abuses. The Swissaid report also highlighted that the illicit gold coming intoDubai from Africa is imported in large quantities by the world's largest refinery inSwitzerland,Valcambi.[29][30]
Another report in March 2022 revealed the contradiction between the lucrative gold trade of West African countries and the illicit dealings. LikeSudan,Democratic Republic of Congo (DRC),Ghana and other states, discrepancies were recorded between the gold production inMali and its trade with Dubai, UAE. The third largest gold exporter in Africa, Mali imposed taxes only on the first 50 kg (110 lb) of gold exports per month, which allowed several small-scale miners to enjoy tax exemptions and smuggle gold worth millions. In 2014, Mali's gold production was 45.8 tonnes, while the UAE's gold imports were 59.9 tonnes.[31][32]
^Kusum Mundra (October 18, 2010). "Immigrant Networks and U.S. Bilateral Trade: The Role of Immigrant Income". Department of Economics, Rutgers University.SSRN1693334.
^"WTO Stats". World Trade Organization.Archived from the original on 9 November 2022. Retrieved15 April 2023.
^"WTO Stats". World Trade Organization.Archived from the original on 15 April 2023. Retrieved15 April 2023.
^"How Artificial Intelligence Could Widen the Gap Between Rich and Poor Nations".IMF Blog. 2 December 2020.Archived from the original on 3 December 2020. Retrieved4 December 2020.Higher wages Advanced economies have higher wages because total factor productivity is higher. These higher wages induce firms in advanced economies to use robots more intensively, to begin with, especially when robots easily substitute for workers. Then, when robot productivity rises, the advanced economy will benefit more in the long run. This divergence grows larger, the more robots substitute for workers.
Jones, Ronald W. (1961). "Comparative Advantage and the Theory of Tariffs".The Review of Economic Studies.28 (3):161–175.doi:10.2307/2295945.JSTOR2295945.
McKenzie, Lionel W. (1954). "Specialization and Efficiency in World Production".The Review of Economic Studies.21 (3):165–180.doi:10.2307/2295770.JSTOR2295770.
Samuelson, Paul (2001). "A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods".Journal of Economic Literature.39 (4):1204–1214.doi:10.1257/jel.39.4.1204.
Data on the value of exports and imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes. The definitions and methodological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services). Metadata providing information on definitions and methods are often published along with the data.
The McGill Faculty of Law runs a Regional Trade Agreements Database that contains the text of almost all preferential and regional trade agreements in the world.ptas.mcgill.ca
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