Question

What is Foreign Trade? What are Import Trade, Export Trade and Entrepot Trade? Discuss its importance and the related problems in Foreign Trade.

Answer 1

Foreign trade implies the trade that one country does with other countries and the payment for the goods is made in a currency that is mutually acceptable between the buyer and the seller. Import trade is one in which goods are procured by a country into its geographical territory from other countries. Export trade is just the opposite of import trade; it is one in which a country sends its goods to another country or countries for a consideration.

The classic example of entrepot trade is the one done by Hong Kong and Singapore. These are intermediate destinations or transhipment points, where goods are brought for import and export or for collection and distribution. Entrepot trade, therefore, is a trade practice in which imported goods are re-exported with or without any processing or re-packaging. Such trade normally is done in duty-free ports; in any case, goods for re-export do not attract any duty at these places.