International trade

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

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

See also: OPEC, World Trade Organisation, Business, Economics, Trade bloc, List of international trade topics