BUSINESS STUDIES MASTER

Unit 10: International Trade

1. Concept & Benefits

International Trade is the exchange of goods and services across Geographical Boundaries of nations. It involves two or more countries and requires foreign currency.

💡 Benefits Mnemonic: "F-S-G" (For Nations)

• Foreign Exchange: Earning "Hard Currency" like Dollars/Euros.
• Standard of Living: Access to goods not produced locally.
• Growth & Employment: Boosting GDP and creating jobs.

🚀 Benefits Mnemonic: "P-U-M" (For Business Firms)

• Profits: International prices are often higher than domestic.
• Utilization: Using surplus production capacity.
• Market Expansion: Not being dependent on just one country.

2. Export Trade: Procedure

Exporting is the sale of domestic goods to a foreign country to earn Foreign Exchange.

📋 Steps to Export: "R-I-L-P-P-S-C-M-B-I"

Don't panic! Remember the flow:

1. Receipt of Inquiry & Sending Quotation (Proforma Invoice).
2. Indent (Receipt of Order).
3. Letter of Credit (Assurance of payment).
4. Procuring/Manufacturing goods.
5. Pre-shipment Inspection (Quality check).
6. Shipping Space reservation.
7. Customs Clearance.
8. Mate's Receipt (Issued by the ship's captain).
9. Bill of Lading (The final title to goods).
10. Invoicing & Secure Payment.

3. Import Trade: Procedure

Buying goods from a foreign country. The objective is often to fulfill Domestic Scarcity or obtain advanced technology.

"I check the Trade Inquiry first,
To quench the nation's product thirst.
With Import License and LC in hand,
I bring the goods to my home land!"

Key Steps: Trade Inquiry → Procurement of Import License → Obtaining Foreign Exchange → Placing Order (Indent) → Obtaining Letter of Credit → Arranging Finance → Receipt of Shipment Advice → Retirement of Documents → Customs Clearance.

4. Critical Documents

Document	Meaning / Magic Word	Importance
Indent	The Purchase Order	Contains details of quantity, price, and packing.
Letter of Credit (LC)	The Guarantee	Bank's guarantee that payment will be made.
Shipping Order	Space Confirmation	Issued by shipping co. to receive the goods.
Mate's Receipt	Captain’s Acknowledgment	Issued by ship's mate when goods are loaded.
Shipping Bill	Customs Permission	Main document for customs clearance to export.

📦 DA vs. DP (Payment Terms)

• DA (Documents Against Acceptance): Importer gets documents by signing a promise to pay later.
• DP (Documents Against Payment): Importer gets documents ONLY after paying immediately.

5. World Trade Organization (WTO)

Established on January 1, 1995, replacing GATT (General Agreement on Tariffs and Trade).

⚖️ WTO Objectives: "L-F-P"

• Liberalization: Reducing tariffs and trade barriers.
• Fair Competition: Discouraging unfair practices like subsidies.
• Predictability: Ensuring trade rules are stable and transparent globally.

Role: WTO acts as a Watchdog of international trade, settling disputes between member nations and ensuring rules are followed.

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GLOBAL TRADE • GLOBAL SUCCESS 🚢✈️