Export–Import Theory, Practices, and Procedures

Belay Seyoum

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9780367896812
• eBook ISBN: 9781000395983
• Edition: 4
• Topic: Economics
• Subtopic: Business General
• Index: Economics

This book remains the sole export–import textbook aimed squarely at the academic audience. Discussing theoretical issues in depth, while maintaining a practical approach, it offers a comprehensive exploration of import procedures and export regulations.

In addition to updated cases, this new edition includes:

• New major developments in bilateral and regional trade agreements
• Changes to INCOTERMS 2010
• Coverage of the role of e-commerce

• Expanded updates on methods of payment, export pricing, and government export finance

This clearly written and comprehensive textbook will ground students in theory and prepare them for the realities of a career in this fast-moving field. Suitable for upper-level undergraduates and postgraduates of international trade, the book stands alone in its blend of conceptual frameworks and cogent analysis. A related website, filled with export–import resources, opinion pieces, cases, and the latest news is located at: www.export-importtradecenter.com.

Part I

Overview of International Trade

CHAPTER 1

Growth and Direction of International Trade

Learning Objectives:

1.1Describe international trade

1.2Learn about the growth of world trade in goods and services

1.3Learn about the importance of trade to the global economy

1.4Understand the major determinants of trade

1.5Learn about the volume and direction of world trade

1.6Describe important developments in trade

International Trade in Practice

Covid-19 and Its Effects on International Trade

The Covid-19 pandemic has had a devastating human toll in many parts of the world where it has killed thousands of people. It has also brought the world economy into a depression with serious adverse effects on trade worse than the global financial crisis. Efforts to contain the pandemic resulted in lockdowns and other restrictions that impacted trade.

• Seaports such as Rotterdam and Shanghai witnessed a significant drop in container throughput volumes.
• Cargo volumes declined as many countries began to change port protocols ranging from port closure and quarantine measures to additional documentation requirements.
• Lockdowns also impacted the availability of labor to unload ships. It also raised costs due to increased protective equipment for workers. Additional costs were incurred by firms due to the introduction of health and safety measures for participants.
• The additional measures implemented to prevent transmission resulted in higher transaction costs for firms engaged in international trade.

The economic contraction in China was smaller than the global average as the country managed to control the outbreak relatively quickly and reopened its economy. The economic effects of the pandemic were particularly severe in the USA, Japan, and the European Union. Latin America and the Caribbean was the most affected developing region. The effects of the virus were transmitted through global supply chains. For example, when China implemented a lockdown on the affected region and its national borders, exports of intermediate goods for autos, electronics, and medical supplies were suspended, forcing importing firms in other countries to shut down for several months. The initial supply shock was compounded by a demand shock which occurred as a result of measures adopted in North America, Europe, and other countries. It also resulted in increased automation, e-commerce, and teleworking.

One of the major casualties of the pandemic was trade in services. Tourism, for example, which generally accounts for a quarter of global exports of services, registered a steep decline. In many countries, arrivals dropped by 60–80 percent.

Viable measures to alleviate adverse effects include:

• Maintenance of open supply chains for essentials
• Avoidance of export restrictions that would exacerbate the problem.
• Rejection of protectionist policies that distort trade.

Opportunities include:

• Pursuance of paperless trade
• Preparation of advance measures to reduce vulnerability to external shocks
• Promotion of regional value chains to take advantage of economies of scale.

International trade is the exchange of goods and services across national boundaries. It is the most traditional form of international business activity and has played a major role in shaping world history. It is also the first type of foreign business operation undertaken by most companies because importing or exporting requires the least commitment of, and risk to, the company’s resources. For example, a company could produce for export by using its excess production capacity. This is an inexpensive way of testing a product’s acceptance in the market before investing in foreign production facilities. A company could also use intermediaries, who will take on import–export functions for a fee, thus eliminating the need to commit additional resources to hire personnel or maintain a department to carry out foreign sales or purchases (Daniels, Radebaugh, and Sullivan, 2017).

World merchandise trade volume declined by 0.1 percent in 2019 (compared to 2.9 percent growth in 2018), the first contraction since the global financial crisis in 2008–2009. This is well below the average annual growth rate of (by volume) 2.3 percent since the financial crisis. In US dollar value terms, world merchandise exports fell by 3 percent to 19 trillion in 2019. Global service exports also declined to 5.89 trillion (2019) showing a mere growth of 2 percent from the 9 percent recorded in 2018 (WTO, 2020). During the past few years (2014, 2015, 2019), the growth of world trade has lagged behind global GDP. The overall decline in the growth of world trade can be attributed to persistent trade tensions as well as weaker global GDP growth. Furthermore, the Covid-19 pandemic has contributed to a significant contraction in trade and economic growth in 2020. Table 1.1 presents a breakdown of global trade figures alongside GDP growth, while Table 1.2 shows world export values in 2019.

TABLE 1.1 GDP and Trade (Goods and Services) by Value, 2016–2019 (Annual % change)

		GDP growth								Export (import) growth*
		2016		2017		2018		2019		2016		2017		2018		2019
World		2.59		3.26		3.04		2.48		2.68 (2.28)		5.09 (6.02)		4.27 (4.19)		1.46 (1.61)
North America		1.51		2.31		2.84		2.27		0.28 (1.67)		3.05 (4.63)		3.03 (4.08)		2.92 (1.70)
USA		1.57		2.22		2.93		2.33		-0.01 (1.99)		3.48 (4.71)		3.02 (4.37)		-1.1 (-1.7)
Canada		1.00		3.17		2.01		1.66		1.41 (0.05)		1.41 (4.24)		3.08 (2.60)		1.28 (0.56)
Latin America & Caribbean		-0.34		1.77		1.57		0.83		2.43 (-1.17)		3.79 (6.31)		4.09 (5.04)		0.67 (-0.82)
European Union		2.05		2.73		2.15		1.52		3.39 (4.38)		5.72 (5.43)		3.68 (3.56)		2.65 (3.78)
Central Europe & Baltics		3.05		4.79		4.42		3.69		7.00 (6.32)		7.60 (8.17)		5.42 (6.86)		3.93 (3.92)
Middle East & N. Africa		4.96		1.72		2.38		1.81		5.41 (-3.08)		2.45 (6.83)		6.29 (6.10)		7.2 (5.5)
East Asia & Pacific		4.09		4.76		4.17		3.76		2.04 (1.47)		6.41 (6.72)		4.69 (5.04)		-2.5 (3.5)
South Asia		7.78		6.83		6.10		4.83		4.35 (4.38)		4.12 ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction A Brief History of International Trade
• Part I Overview of International Trade
• Part II Export Planning and Strategy
• Part III Executing the Transactions
• Part IV Payment Terms and Procedures
• Part V Financing Techniques and Vehicles
• Part VI Export Regulations and Tax Incentives
• Part VII Import Procedures and Techniques
• Chapter 17 Selecting Import Products and Suppliers
• Chapter 18 The Entry Process for Imports
• Chapter 19 Import Relief to Domestic Industry
• Chapter 20 Intellectual Property Rights
• Appendices
• Index