Theory question 105
Foreign TradeCommerce 2 (essay)
(a) Explain the following:
(i) counter trade;
(ii) entrepôt trade;
(iii) import trade
(iv) invisible trade.
(b) State four barriers to international trade.
Show the model answer
(a)(i) Counter trade – international trade in which goods are exchanged for goods instead of money.
(ii) Entrepôt trade – importing goods in order to re-export them.
(iii) Import trade – buying goods and services from other countries for use at home.
(iv) Invisible trade – trade in services such as shipping, banking, insurance and tourism.
(b) Any four: different currencies/exchange problems; language differences; different laws and customs; tariffs, quotas and other restrictions; long distances and high transport costs; many documents and formalities; political instability; risks of goods in transit.
Barriers are the problems that make foreign trade harder than home trade.