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    Thread: What are the constraints of international trade?

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      Default What are the constraints of international trade?

      International trade faces certain challenges. What are these constraints?
      Last edited by deathstar; 07-28-2018 at 07:31 AM.


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      The situation is not conducive in the country as a result they move to a safe country Conversely, if the security conditions of a State is good, then many countries are encouraged to make trade transactions.
      Each country has different economic policies. Sometimes the implemented policies hinder the process of international trade. An example is the limitation of import quantities. Countries that restrict imports will make exporters lose little chance of making a profit. In addition, high import / export tax fees, intricate licensing letters will hinder the process of international trade.
      Importing countries will have difficulty in making payments when conducting international trade activities. If the payment model is made in cash, the importing country requires additional fees to make payments in the destination country. In addition, the risks received are also quite large, such as robbery, piracy, and so forth. Therefore, most exporting countries prefer to make payments through telegraphic transfer, international clearing.
      The free entry of goods, making the State products threatened. This is because imported goods have better quality and lower prices, so many consumers are more interested in using imported goods. Therefore, the State must protect its own products by establishing policies to protect domestic production. One of them is by setting a high import tariff.


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      There are constraints of international trade which are;
      a. Politics- politics has a very great influence on international trade and this could happen between two countries or more in terms of policies which might invariably affect the micro and macro economies of the countries involved
      b. Ethnicity/language- this also has a very strong influence because this has to do with the culture of the people involved
      c. Foreign exchange- This seemingly unpredictable factor can serve as a very strong constraints to the international trade due to its fluctuations as long as one cannot easily conclude on what the rate can be or become


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      what are the constraints of international trade?
      It's normal to face problems while trading in international market. International trading seems very difficult to many peoples. This is because the rules and regulations of every business is not same. Variation in international business is damn high. There are mainly seven types of constraints of international trade. These are mentioned below-

      1. Every countries have their own and unique trading pattern which is different to comfort.
      2. Regulatory measures are difficult for many countries. Govt regulations, customs regulation, joint commissions etc.
      3. Loop sided development of developing countries.
      4. Different groups of economic unions.
      5. Unique national policy of developments.
      6. Procedural difficulties.
      7. Others problems such as-
      a) Inflation.
      b) Business communications.
      c) Poor internal economy.
      d) Poor business ethics.


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      There are several different challenges that can affect international trade.

      2. Political risk : when it comes to international trade, sometimes its important a trader/business access the stability of the country and how often their laws concerning trade are change and how it affect trades.
      It's said that a country is as good as the government, an unstable government also can affect international trade.

      2. Economy : this also very important, when in am inter trade business, a business person must know that whatever happens over their on an economy, either good or bad must also affect the business financially in a good way or bad way.
      A bad economy is not good for business.


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      There are some constraints of international trade between the countries such as :

      1- The importing rules : every country has rules for importing any product from any other country as defined specifications ,expiry date, quality ... etc and there are differences between these rules from country to country .
      2- The customs : every country also has its customs rules and you can't import any product from any country to your country without paying these customs fees to your government .
      3- International agreements : There are also international agreements make facilities in importing specific product or importing or raw materials with lowest restraints .
      4- The decisions : there are some countries take decision against other countries as stopping the importing from it because political problems or any reason else .
      5- The economic situation : there are some countries make hard restraints on the importing to encourage the exporting for supporting their currency value and for improving their economics .

      So every country has its rules and its decision based on its economic situation .


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      What are the constraints of international trade?
      international trade is important to every country, as this help in good important and exportation system, to further improve the livelihood of the citizen, but this doesn't just happen without challenges

      1. Difficulty in transportation and communication:transportation is very important ass well as communication, there are some countries around the world that sea transportation most especially is very difficult, sometimes its very costly and sometimes due to high rate of exportation it could take a long time before such trade is finalized.
      2. Lack of information about foreign businessmen:
      3. Frequent market changes:It is difficult to anticipate changes in demand and supply conditions abroad. Prices in international markets may change frequently


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      International trade face so many problem. There are so many reason for this . in bellow I am telling this:
      1. Political problem is one of the best reason to hamper international trade. When one currency pair country face so many political problem then international market face problem. Beside this world political problem also responsible for this problem.
      2. Business communication gap is on of the main reason for facing problem in international trade. Various parties who are co related for quarrel and they are create problem for international trade.
      3. There are huge country their economic policy effect forex market. Poor economy decrease value of currency and good economy effect higher value of currency.

      International market is a big platform. All over the people join here for trading. There are huge factor are create problem here. But if we can control it effectively then success is possible here.


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      What are the constraints of international trade? There are many constraints facing international trades and this varies from country to country . I will only highlight some of this challenges ; [a] Political constraints ; International trade is exchange of goods and services between countries through bilateral relationship. Political instability in any country affect this trade, may be, change in government which may necessitate change in economic policy . [b]Government economic policies ; This may affect bilateral trade relationship between countries directly or indirectly. This policy may intend to protect home production or to prevent certain products from entering the country . [c] Bilateral trade agreement between countries may favor importation and exportation of some products .International trade resulting from bilateral relationship suppose to facilitate economic development but not without regulations from member countries .


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      International trade grant countries, states, variety of some businesses ownership to buy and sell in foreign markets. As well to lower domestic markets by sacrifice cheaper, but impartial valuable goods.
      Depletion of Resources :
      Country may has enormous and to proceed in exportation of essential raw materials and minerals may get depleted, unless new resources are cut or developed, the near exhausting oil resources of the oil may affect the producing countries.
      Foreign competitors may advertisely affect new and developing noble industries at home.
      A high attraction to import may cause reaction in the savings of a country's, this may announce affect the rate of capital structure and the process of growth.
      Foreign trade reduce self-sufficiency and self reliance in an economy. This is where countries tend to be interdependence is threaten.
      The very instantly benefits of international trade is lower costs to consumers.
      Resale price maintenance laws been ensure that the prices charged to attach companies for goods and services surface their true value. This view of pricing receives a moderate a bit of interest among exporters because of the income tax reduction effects of transfer pricing.
      Exporters may determine the higher cost of different tax distribution channels is contrary to efficacious increase in sales that may result from extensive and more successful distribution of its products.


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