International trade

Encyclopedia of Political Information.

International trade is defined as trade between two or more partners from different countries (an exporter and an importer). Early international trade consisted mostly of barter transactions.

International trade is also a branch of economics. Traditionally, international trade is justified in economics by comparative advantage theory. New developments include in patterns of international trade: the integration of countries into trade blocs (e.g., European Union, NAFTA, EFTA, CEFTA) and globalisation.

Table of contents

1 Trade related concepts

2 Risks in international trade

2.1 Commercial risks
2.2 Political risks

3 See also

Trade related concepts

Comparative advantage
Balance of trade
Most favoured nation clause
Tariff
Free trade area
Customs union

Risks in international trade

The risks that exist in international trade can be divided into two major groups:

Commercial risks

Risk of insolvency of the buyer
Risk of protracted default - the failure of the buyer to pay the amount due within six months after the due date
Risk of non-acceptance

Political risks

Risk of cancellation or non-renewal of export or import licences
War risks
Risk of expropriation or confiscation of the importer's company
Risk of the imposition of an import ban after the shipment of the goods
Transfer risk - imposition of exchange controls by the importer's country or foreign currency shortages