The Paramounted Importance of Critical Analysis in International Trade Policies

International trade is largely based on the constant fluctuations in the world-wide economy, this resulting in constant changes with regards to tariffs, trade subsidies and unending amendments of regulations with regards to international trade. “Trade policy and economic Growth”, a paper by Keith Maskus, PhD, focuses on the relationship between trade policies and the growth of the economy or lack thereof, the main point of interest of the paper was to establish whether the variance of trade policies will affect the economic growth of any country. The conclusion reached was that open economies tend to grow faster than closed economies, ceteris paribus. therefore concluding that open competition is good in the sense that it improves resource distribution and the country gains in Investment and innovation.

An organisation that is involved in international trade has to pay special attention to such information. There might not be any countries with closed economies however there are countries that have low imports to the point that they are regarded as closed economies for instance Brazil. In 2011 Brazil recorded 13% as its import percentage which was quite low for a country of its stature. Is it not then imperative to constantly be up to date with changes in the trade policies of countries one is interested in pursuing trade relations with? since there is a proven positive relationship between the openness of an economy to competition (thus meaning the country is greatly involved in trade) and the growth of that country`s economy, this serves as an indication of how lucrative and profitable a business venture would be under such circumstances. The Critical analysis aspect then comes into play by determining how much gain or loss would result from substantial changes to the policies, which are measures and instruments that can influence export and imports, the objective being the policies influence the trade sector to the result of profit for the business venture. one might feel a degree in commercial management is then needed in order to fully understand all the kinks and edges of the international business, and they would be right, but the eventuality is that it will always boil down to intelligence and efficiency in the analysis of trends, calculation of potential profit/loss, predictions of future stability or fluctuations in the world economy prompting changes to prices in the trade sector.

There is one other important factor that can alter potential business plans, and that is the politics of the country in question, policies are easily influenced by the politics of the nation, and it is thus advisable that critical analysis be also engaged, this results in better understanding of the country and its stability thus reducing the chances of incurring a bad business eventuality. Nations are not governed by robots, unfortunately, but are governed by people with interests and human nature desires to differ from individual to individual making it difficult to maintain a constant effective system. if politicians are elected they tend to focus on altering policies for their own benefit, and the benefit of those they promised (if there are still honest politician available) from that point it is important that international business consider such factors before pursuing business. Prime examples being, whenever there are strikes in South Africa investors tend to shy away, and most of the strikes are birthed from political influence, thus deeming South Africa an Unstable nation to invest in, or Zimbabwe a nation sanctioned, due to political infringements, making the country undesirable for investment irregardless of the profitability of the business idea. It is thus an excellent idea to firstly research in-depth to the politics of the country before hand and invest with,much-needed information, guiding the innovative decision made.

4 Benefits of Importing Goods From Overseas 4 Benefits of Importing Goods From Overseas

Any business involved in supplying goods or materials needs to constantly look at ways to increase the efficiency of the supply chain, while also managing costs. A practical solution to improve profit margins is to look to the overseas market for the raw materials. Importing goods can offer a variety of worthwhile benefits, such as high-quality goods, lower prices and a wider range of suppliers. While the opportunity to import goods is great for a lot of businesses, it is still essential to conduct the necessary research to avoid making a costly mistake.

Here are a few benefits related to importing from overseas:

Comparative advantage

A major reason to import relates to comparative advantage and the potential to benefit from the more attractively priced goods. Comparative advantage relates to finding the overseas market with the more favorable production costs, such as lower tax schemes, low labor costs, cheaper raw materials, etc. By cutting the initial investment in materials or products, it makes it that much easier to increase future profits once the items are shipped back and sold in your own country. This makes importing one of the easiest and quickest ways to boost your profit margins and cut costs.

High quality products

Importing goods from countries across the world still mean it is possible to source high-quality products. There are plenty of countries that have their own specialties and strengths. For the business that is looking to buy raw materials or goods from a country that specializes in a particular item, it often pays to buy direct from the source. This means it is possible to get access to the finest materials right at the start of the supply chain which should help to improve all-round quality and hopefully make the end product that much more marketable.

Trade relations

There are plenty of countries that attempt to promote trade relations to make it that much easier to import the desired goods or products necessary for your business. Government agencies may even be set up to help make the entire importing process as straightforward as possible. With the guidance of an official agency in place, the risks of trading with an overseas company are likely to be significantly reduced.

Regional resources

A further benefit is the ability to expand the potential market pool with the choice to buy resources that may only be found in specific regions of the world. This may relate to special technologies or raw materials.

The Effects Of The Global Trade Agreement

We live in a world that is increasingly getting connected. In such a world, trade agreements are bound to expand internationally, and to think and act otherwise would be downright stupid.

These global trade agreements, as such, are either bilateral or multilateral understanding between two or multiple countries and govern the trade policies between them. These agreements have a massive impact on worldwide trade and investments and are one of the major causes responsible for shaping business relationships across the globe. And while such agreements might not affect directly affect the place where you live or operate, being aware of the current trade agreements can definitely uncover numerous opportunities.

Forming up opinions is up to you; we do not intend to initiate an argument over how good or how bad these global trade agreements are. This article aims to get you familiarized with such agreements and tell if your supply chain could be affected or not.

While a few countries have settled upon free trade agreements and are in the process of widening them, a number of other nations have formed common markets and unions; this form of development can a have a thorough effect on small-scale businesses.

Two of the most common agreements are the Trans-Pacific Partnership (TPP) between Australia, New Zealand, Singapore, Canada, Brunei, Peru, Mexico, Chile, Malaysia and Japan, and the North American Free Trade Agreement (NAFTA) between Canada, United States and Mexico.

Now, how such agreements impact your local business’s supply chain depends on a simple fact; whether your business is an importer, exporter or neither.

Scenario 1: You neither import nor export

It’s fairly easy to decide whether you are an importer or not, right? I understand that you do not directly source products from a foreign supplier, and technically speaking, that doesn’t make you an importer. However, trade agreements can still impact you. Your suppliers are directly affected by such regulations, and this vulnerability can affect your supply chain.

Keep the distinction in mind.

Scenario 2: You identify yourself as an importer

Owing to the low cost manufacturing in some countries, many small scale suppliers are able to compete with global giants.

With a trade agreement between two countries, most of the times, the country with lower labour costs benefits when the trade tariffs are lowered or eliminated. With trade agreements, importers usually get to source low-cost goods and it allows for the unrestricted movement of such low-cost goods through higher cost partner nation.

In case, such an agreement is dissolved, an importer would inevitably face a higher cost of goods and thus look for cheaper sourcing options, decrease their operational costs, and ultimately increase the prices, which would be borne by the customers, of course.

Scenario 3: You are an exporter

This even counts if you sell products that another firm exports because at some point or other, taxes would be levied on your sold goods. So how does it affect you? Your customers end up paying higher amounts for your products.

With a trade agreement in place between the country where the product originates and the receiving country, the very same products would move through the receiving nation freely. In such cases, you’d definitely want to keep such an agreement intact and leverage this competitive advantage you have in this particular country bound by trade regulations.

As a small or a medium sized business, it is therefore important for you to identify where your business lies with respect to global trade agreements.