What is International or Foreign Trade?

Exceptions of the term ‘International trade’

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As its name suggests, international trade is any exchange of goods that takes place between two different economic states or regions .

International trade is the main engine of the world economy. In general, each country specializes in a type of activities that may be conditioned by aspects such as the climate, geology or culture of a particular place.

As an example, it is much more logical that a country like Colombia grows coffee because this plant needs a lot of water and a high temperature to develop. In this case, the tropical climate of Colombia is optimal for the cultivation of this plant. On the contrary, it would be very difficult to grow coffee in Iceland , although, the seas of the Arctic Ocean of which the island is surrounded are suitable for fishing for cod due to its low temperatures.

When Iceland needs coffee, it probably imports the product from other countries, such as Colombia. The same will happen with Icelandic cod in Colombia.
In terms of the sector, the exchange of goods that occurs within the same economic region is not considered foreign trade (or exports) . This is the case, for example, of commercial operations that occur within the European Union or the Eurasian Customs Union.

Let’s take the case that our company, based in Barcelona, ​​is selling skateboards to several stores in Portugal. Upon commercial exchange within the European Union, this commercial operation would qualify as “intra-community sale” and not as export. In this case, no Customs Companies service is required.

Spain in numbers: data on foreign trade

When a country exports more than it imports, it is said that this country has a positive or favorable trade balance. A favorable trade balance is considered in economic terms as a good indicator in a country’s economy. After three decades of international trade defícit, in 2013 Spain managed to have a positive trade balance again. Specifically, the positive balance of the country was 7,130 million euros, a figure equivalent to 0.7% of GDP .

Data on the countries that most buy from Spain

The countries that imported the largest volume of Spanish products in the first half of 2012 are the following (in millions of euros):

– France 18,947.5 (-1.6%)

– Germany 11,822.7 (+ 7.4%)

– Italy 8,123.4 (-6.9%)

– Portugal 7,448.1 (-9.3%)

– United Kingdom 6,669.4 (-2.3%)

– US 4,284.9 (+ 1%)

In Spain, the body responsible for promoting the internationalization of Spanish companies is the ICEX Spain Export and Investment , a public entity under the Ministry of Economy and Competitiveness.

International trade: free trade or protectionism?

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As for international trade , countries can adopt 2 antagonistic positions : free trade , which promotes the free movement of goods between countries without the need to tax new taxes because they are foreign goods, or protectionism , which imposes trade barriers with so to protect sectors of the internal economy of a country.

The EFTA, example of free trade in Europe

The EFTA (European Free Trade Association or European Free Trade Agreement) is an agreement that came into force in 1960 and whose current members are Iceland, Liechtenstein, Norway and Switzerland.

The CAP of the European Union, an example of protectionism

The CAP (Common Agricultural Policy) is a clear example of protectionism within the framework of internal trade of the European Union. The CAP favors the cultivation and commercialization of agricultural products within the EU. For this, the CAP imposes high taxes on all agricultural products that come from outside the EU market and lowers the price of domestic products through public subsidy to farmers.

Agents participating in a foreign trade process

1) The exporting company.

2) The Freight Forwarder.

3) The Customs Agency:

4) The transport company:

5) Customs administrations of the respective countries:

Where to study Foreign Trade in Spain? The best schools

Due to the boom in international trade, at present there are many universities and faculties that offer to study international trade in Spain.

Among the best universities that:

ESADE : This business school in Barcelona is an institution in the framework of economic studies and therefore one of the best options when it comes to training in international trade.

IESE : This Barcelona school also enjoys great prestige when it comes to international trade.