International trade is an exchange involving a good or service conducted between at least two different countries. The exchanges can be imports or exports. An import refers to a good or service brought into the domestic country. An export refers to a good or service sold to a foreign country.
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DIVISIONS OF INTERNATIONAL TRADE
International trade can be divided into three, import, export and entrepot trades.
Import Trade
Definition: Import trade is defined as the act of buying goods and services from other countries. It is sometimes restricted to control a country’s balance of payment. The goods are imported either in response to direct orders or on consignment. Import trade is divided into: Visible and invisible trade.
Export Trade
Definition: Export trade may be defined as the act of selling goods and services to other countries. It is the selling of a country’s product abroad. Some governments frequently attempt to encourage exporters by introducing export subsidy. Export can equally be divided into visible and invisible exports.
Entrepot
Entrepot is a form of foreign trade in which goods shipped to one port are subsequently re-exported to another port. If customs duty had been paid on imported goods which are later re-exported, the duty can be claimed back. Simply put, entrepot is the reexporting of goods imported from other countries.
Problems of Foreign Trade
Distance:
Due to long distance between different countries, it is difficult to establish quick and close trade contacts between traders. Buyers and sellers rarely meet one another and personal contact is rarely possible.
Different languages:
Different languages are spoken and written in different countries. Price lists and catalogs are prepared in foreign languages.
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3. Difficulty in transportation and communication:
Dispatch and receipt of goods takes a longer time and involves considerable expenses. During the war and natural calamities, transportation of goods becomes even more difficult. Similarly, the costs of sending or receiving information are very high.
4. Risk in transit:
Foreign trade involves much greater risk than home trade. Goods have to be transported over long distances and they are exposed to perils of the sea. Many of these risks can be covered through marine insurance but increases the cost of goods.
5. Lack of information about foreign businessmen:
In the absence of direct and close relationship between buyers and sellers, special steps are necessary to verify the creditworthiness of foreign buyers. It is difficult to obtain reliable information concerning the financial position and business standing of the foreign traders. Therefore, credit risk is high.
6. Import and export restrictions:
Every country charges customs duties on imports to protect its home industries. Similarly, tariff rates are put on exports of raw materials. Importers and exporters have to face tariff restrictions.
7. Documentation:
Both exporters and importers have to prepare several documents which involve expenditure of time and money.
8. Study of foreign markets:
Every foreign market has its own characteristics. It has requirements, customs, weights and measures, marketing methods, etc., of its own.
Problems in payments:
Every country has its own currency and the rate at which one currency can be exchanged for another (called exchange rate) keeps on fluctuating change in exchange rate create additional risk.
10. Frequent market changes:
It is difficult to anticipate changes in demand and supply conditions abroad. Prices in international markets may change frequently. Such changes are due to entry of new competitors, changes in buyers’ preferences, changes in import duties and freight rates, fluctuations in exchange rates, etc.
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Functions of Nigeria Customs Service
1. The Nigeria customs service helps to reduce the rate of smuggling
2. It performs National Security functions
3. It works to ensure standardization and consumer safety
4. Nigerian customs services work to promote Unity between Nigeria and other Nations
5. Generation of revenue is one of the Functions of the Nigeria Customs Service
6. The Nigeria customs service also assists in the Processing of Manifest for ease of either imports or exports
7. It also plays a role of working towards ensuring the availability of statistics for planning and Budgetary purposes
8. It engages in Research, Planning, and Enforcement of Fiscal Policies of Government
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