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Introduction to Foreign Trade - Coggle Diagram
Introduction to Foreign Trade
Introduction to Foreign Trade
• International trade as an economic activity:
It allows the economic growth of countries.
It reduces poverty.
It generates employment.
It is based on the principle of comparative advantage.
• Customs territory:
Space where customs legislation is applied.
It is divided into primary zone (docks, customs, borders) and secondary (rest of the country under customs control).
• Export and import:
Export: Departure of goods from the country (permanent or temporary).
Import: Entry of goods (also permanent or temporary).
• Free Trade Zones:
Special areas outside the common customs regime.
They promote production, exports, and international services.
Customs and its functions
• Customs:
It is the authority that applies the laws on imports and exports.
Collect customs taxes.
• Customs Code:
It defines procedures, rights and obligations.
It regulates transit, import, export, free zones, etc.
• Foreign trade operators
Customs brokers: They represent companies before customs.
Transport agents: They manage the entry/exit of loads and means of transport
• Requirements to import/export
Commercial Registry, NIT, RIF, sanitary permits, commercial invoice, power of attorney, etc.
• Tariff nomenclature:
They classify products to apply taxes.
They use the Harmonized System (codes of 6 digits or more).
Trade restrictions
• Trade Restrictions:
They are applied for health, safety, environmental protection, or domestic industry reasons.
• Tariff measures:
Ad-Valorem Duties: percentage of the value of the product.
Specific duties: fixed amount per unit of goods.
• Non-tariff measures:
Internal levies, surcharges, excise duties, administrative prices.
• Dumping:
Selling abroad below the local market value.
It damages competition and can be sanctioned.
• Subsidies:
Financial support from the State to producers/exporters.
If detected, countervailing duties are applied.
• Fees and contributions: o Taxes that finance public services (such as port taxes, health taxes, etc.).
Economic Integration and Cooperation
• Economic cooperation:
Support from international organizations such as: World Bank, International Monetary Fund, CFI, OMIGI, IDA, among others.
• Stages of economic integration: Customs preference area, Free Trade Area, Customs Union, Common Market, Economic Community, Total integration (with supranational authority).
• Most important agreements: MERCOSUR (Treaty of Asunción), NAFTA, European Union.
• Objective: to improve infrastructure, reduce poverty, provide loans and technical assistance.
Foreign Trade Policies
• Trade policy:
It facilitates the country's international trade.
Improves access to markets.
Protects sensitive sectors.
• Monetary subpolicy:
It regulates the exchange rate, foreign exchange entry/exit, international loans, etc.
• Trade sub-policy:
It establishes restrictive regimes: Prohibitions, Suspensions, Prior Authorizations, Quotas, Tariff Regime.
• Promotional Sub-Policy:
Support exports with direct, financial, or fiscal incentives.
International Contributions and Means of Payment
• INCOTERMS:
International rules that define the responsibilities of the buyer and seller in the international sale.
Examples: EXW: The seller delivers to his factory, FOB: The seller delivers when the cargo is loaded onto the ship, CIF: The seller pays cost, insurance and freight, DDP: The seller delivers to destination with all costs paid.
• International payment methods:
Letter of credit, Bank transfer, Documentary collections, Currency checks, Bank draft.
• Function:
ensure the collection or payment of the international operation, reducing commercial and financial risks.