Muhammad Nadeem Bhatti
International trade is the exchange of capital, goods and services across international borders or territories. In most countries, such trade represents a significant share of Gross Domestic Product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road, Salt Road), it’s economic, social and political importance has been on the rise in recent centuries. It is the presupposition of international trade that a sufficient level of geopolitical peace and stability are prevailing in order to allow for the peaceful exchange of trade and commerce to take place between nations. Trading globally gives consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewellery, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in the balance of payments.
Industrialisation, advanced technology, including transportation, globalisation, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalisation. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behaviour of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labour are typically 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 is the import of labor-intensive goods by the United States from China.
International trade is also a branch of economics, which, together with international finance, forms the larger branch called international economics. Trading is a value-added function: it is the economic process by which a product finds its market, in which specific risks are to be borne by the trader.
Instability: The very first salient feature of our export trade is the instability of our foreign exchange earnings, showing our export receipts from sea-borne trade which comprise about 90pc of our total export earnings: The most obvious weakness of our ‘export trade’ is that it is confined overwhelmingly to two agricultural raw materials for foreign country. This fact contains the three-fold weakness: (I) Export of industrial raw materials as compared with the export of consumer and producers’ finished goods is more vulnerable and subject to greater fluctuations in demand. This hypothesis is proved by empirical evidence and may be explained by the fact that while prices of the exports of raw material producing countries depend entirely upon world market (they have virtually no home market), the prices of exports of industrial countries depend upon their domestic market and not on the export market in agricultural countries which for marginal market. Moreover, while the agricultural countries’ demand for manufactured goods for consumption or production is fairly irreducible, the industrial countries’ demand for imported raw materials, insofar as they are required for processing for the home market, fluctuates frequently with the pace of productive activity at home. For this reason, the exports of raw material producing countries fluctuate in economic activity in the industrial countries.
Other reasons for the instability and insufficiency of our export earnings refer to the marketing of our actual or potential exports. Marketing problems include both the lack and limitation of our commercial contacts with foreign markets and the indifferent quality of our exports. The magnitude of our export earnings is a function of our marketing genius and if the former has to be maintained at a high level in the interest of both the private exporter and the country, the two parties concerned must be prepared to put in the required amount of effort and imagination in the cause of boosting up the export trade.
Quality of our exports mostly not very high in order to attract the consumers of the foreign countries which are usually far more advanced than we are. This requires serious thought and planning. We must try to improve the quality of our exports — whether agricultural raw materials or finished goods — and carefully grade and differentiate goods of various qualities and types. There must be no dishonest or irresponsible adulteration in our exports. This is a matter of reputation on which very largely depends the export trade of any country. We must labour hard to attain high standards for our produce and jealously guard their purity and reputation. Successful accomplishment of this task involves a good deal of effort on a national scale and relates ultimately to the whole technique of production. For example, we must discover and popularise improved seeds for our agricultural products, improve the technique and quality of their processing or package; we must introduce improved designs for the finished products of our large and small scale (cottage) industries, and inspire the producers, all over the country, with a desire to raise the standard of whatever they bring to the market. All this is a question of education and tradition. It will, therefore, take a correspondingly long period of time. Meanwhile the implementation of the Agricultural Produce (Grading and Marketing) Act of 1937 and utilisation of the services of the Pakistan Standards Institute seem to hold an answer, 2. Almost as important as quality of the publicity of goods — which doesn’t, however, necessarily mean exaggeration because ultimately the consumer is sure to find you out. One important function of the entrepreneur-producer is an effective marketing of his produce, whatever be its quality. What we need, in order to increase our export earnings, is to explore the possible profitable markets for all our actual and potential exports. It is the duty of our Trade Commissioners abroad to furnish the Exporting Agencies of the country through the Department of Trade Promotion and Commercial Intelligence with full information as to cover all possible items of exports. Private export agencies should then be helped by the Department of Trade Promotion to establish trade contacts with the foreign markets and to help carry out the transaction. This requires diligent exploration in foreign markets by our Trade Commissioners and trade delegations and a full realisation by the Government of the fact that Export Promotion is in many ways directly helpful not only to the private exporters but to the Government themselves. This also involves appropriate education and training of the Trade Commissioners as well as a proper understanding by them of the purpose of their functions. In the absence of such understanding the Trade Commissioners tend unconsciously to become Sales Agents of the foreign producer rather than of the home producer, supplying the home country with information as to what they can get from a certain country rather than what they can sell to them.
Accordingly, country industrialisation is far better than every kind of export moment. If excess production is available then make it export. Otherwise utilise it into the country for the development for better nation. Even this should be the part of trade law. Local developments made by local labour, with this object the production growth rate of country could be enhanced. Country level can stay on a standard and that is the only way to be modern nation by using fully equipped modern things made by in its own country.