CHAPTER I

INTRODUCTION

International trade can be defined as either the buying (importing) or selling (exporting) of goods

or services on a global basis. International trade is the exchange of goods and services between

countries. This type of trade gives rise to a world economy, in which prices, or supply and

demand, affect and are affected by global events. A decrease in the cost of labor, on the other

hand, would result in you having to pay less for your new shoes.

Trading globally gives consumers and countries the opportunity to be exposed to goods and

services not available in their own countries. Almost every kind of product can be found on the

international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water.

Services are also traded: tourism, banking, consulting and transportation. A product that is sold

to the global market is an export, and a product that is bought from the global market is an

import. Imports and exports are accounted for in a country's current account in the balance of

payments.

Advantages and Disadvantages of International Trade

Advantages to consider:

Enhance your domestic competitiveness

Increase sales and profits

Gain your global market share

Reduce dependence on existing markets

Exploit international trade technology

Extend sales potential of existing products

Stabilize seasonal market fluctuations

Enhance potential for expansion of your business

Sell excess production capacity

Maintain cost competitiveness in your domestic market

1

Disadvantages to keep in mind:

You may need to wait for long-term gains

Hire staff to launch international trading

Modifying of product or packaging

Develop new promotional material

Incur added administrative costs

Dedicate personnel for traveling

Wait long for payments

Apply for additional financing

Deal with special licenses and regulations

RISKS OF INTERNATIONAL TRADE

Risk Management in international trade involves reducing the cost of funds and managing the risks in

international exposure. Apart from foreign exchange currency risk, exporters are facing commercial risk

on probable default of the unknown buyers in new markets. Identifying the risks in international trade,

quantifying and managing such risks with appropriate facilities / products / instruments are becoming

professional functions of a corporate.

Types of Risks

Customer Risk:

You will need an assessment of the credit worthiness of your customer. This should include

checking the following:

The identity of your customer.

The usual period of credit offered in your customer's country;

The credit limit you are prepared to offer your customer;

Insolvency. Remember that a customer's insolvency can involve you in a pre credit risk,

where losses can occur if your customer becomes insolvent during the manufacturing

process or at any time before or after the dispatch of the export consignment.

2

You can obtain the information needed to carry out these checks either yourself or through a

reputable credit agency or credit insurer.

Country Risk:

As well as your customer, their country can pose separate risks that you will need to manage.

Country risks traditionally fall into five areas:

Sovereign: The willingness or ability of the government to pay its debts. This is affected by the

political climate within the country (the legislature, judiciary and government institutions);

internal and external threats to the country; international trading performance including balance

of payments record; the level of national debt and the amount of foreign exchange reserves.

Other political decisions can also frustrate your export sales; these include the imposition of

embargoes, tariff or other quotas, and import or export restrictions.

Private: The ability of the private sector to pay for its imports. This situation is affected by the

state of the domestic economy, the commercial institutions in the country, and the competence of

banking and financial services sector.

Natural: Some regions of the world suffer from regular climactic catastrophes (for example

annual flooding, drought, earthquakes and other disasters). When these occur they can severely

disrupt the operations of both the business sector and the government.

Fashion and Finance: International trading patterns often create a fashionable region or country

as an export market. In these circumstances trade finance is often readily available, allowing you

to offer good credit terms to your export customers. However, fashions change and countries can

quickly go out of favour for both exports and trade finance.

Other: These include transfer risks such as the inconvertibility of the local currency; transaction

risks such as late or non-payment, and transition risks for emerging markets where the threats are

the effectiveness of the liberalization programme, failure to complete economic structural

reforms and any possible destabilising influences.

Credit Risk:

To decide how much credit you are prepared to advance you must consider:

3

the amount of credit outstanding in your trading accounts, both overseas and domestic;

what do you know about your customer and what is the maximum amount of credit you

should NOT exceed;

can you carry any financial shortfall? What will be the impact on your business if your

customer delays payment or does not pay at all?

how will you finance the credit period you offer? This means do you have sufficient

money to allow you to offer credit terms in export sales contracts as part of your business

cycle.

Foreign Exchange Risk:

When you trade internationally you will most likely be dealing in more than one currency. This

means you are exposed to fluctuations in the foreign exchange market.

Other risks:

If you manufacture goods to order you must include in your export strategy a contingency that

will help you manage the risk of a frustrated export - this is when your customer refuses the

goods. You should have a plan to either resell the product to another market or realise a salvage

value for your goods.

You must also have procedures in place for the collection of your invoice amount. Under your

contract you may have to collect your money in your customer's country. This does have its risks

as collection maybe more uncertain or expensive, so you will have to consider the legal system

in their country. Your contract may, however, allow you to take legal steps to recover your debt

in another country, including your own.

4

CHAPTER II

INTERNATIONAL TRADE

International trade is exchange of capital, goods, and services across international borders or

territories. In most countries, it represents a significant share of gross domestic product (GDP).

While international trade has been present throughout much of history, it’s economic, social, and

political importance has been on the rise in recent centuries.

Industrialization, advanced transportation, globalization, multinational corporations, and

outsourcing are all having a major impact on the international trade system. Increasing

international trade is crucial to the continuance of globalization. Without international trade,

nations would be limited to the goods and services produced within their own borders.

International trade is in principle not different from domestic trade as the motivation and the

behavior of parties involved in a trade do not change fundamentally regardless of whether trade

is across a border or not. The main difference is that international trade is typically more costly

than domestic trade. The reason is that a border typically imposes additional costs such as tariffs,

time costs due to border delays and costs associated with country differences such as language,

the legal system or culture.

Another difference between domestic and international trade is that factors of production such as

capital and labour are typically more mobile within a country than across countries. Thus

international trade is mostly restricted to trade in goods and services, and only to a lesser extent

to trade in capital, labor or other factors of production. Then trade in goods and services can

serve as a substitute for trade in factors of production.

Instead of importing a factor of production, a country can import goods that make intensive use

of the factor of production and are thus embodying the respective factor. An example is the

import of labor-intensive goods by the United States from China. Instead of importing Chinese

labor the United States is importing goods from China that were produced with Chinese labor1.

1 Available at < http://en.wikipedia.org/wiki/International_trade>, visited on 22.12.2010.

5

International trade is also a branch of economics, which, together with international finance,

forms the larger branch of international economics. Trade Theory tries to explain empirical

elements of trade that comparative advantage-based models above have difficulty with these

include the fact that most trade is between countries with similar factor endowment and

productivity levels, and the large amount of multinational production (i.e. foreign direct

investment) which exists. New Trade theories are often based on assumptions like monopolistic

competition and increasing returns to scale. One result of these theories is the home-market

effect, which asserts that, if an industry tends to cluster in one location because of returns to

scale and if that industry has high transportation costs, the industry will be located in the country

with most of its demand to minimize2.

REGULATION OF INTERNATIONAL TRADE

Traditionally trade was regulated through bilateral treaties between two nations. For centuries

under the belief in mercantilism most nations had high tariffs and many restrictions on

international trade. In the 19th century, especially in the United Kingdom, a belief in free trade

became paramount. This belief became the dominant thinking among western nations since then.

In the years since the Second World War, controversial multilateral treaties like the General

Agreement on Tariffs and Trade (GATT) and World Trade Organization have attempted to

promote free trade while creating a globally regulated trade structure. These trade agreements

have often resulted in discontent and protest with claims of unfair trade that is not beneficial to

developing countries3.

Free trade is usually most strongly supported by the most economically powerful nations, though

they often engage in selective protectionism for those industries which are strategically important

such as the protective tariffs applied to agriculture by the United States and Europe. The

Netherlands and the United Kingdom were both strong advocates of free trade when they were

economically dominant, today the United States, the United Kingdom, Australia and Japan are its

greatest proponents. However, many other countries (such as India, China and Russia) are

increasingly becoming advocates of free trade as they become more economically powerful

themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff

2 Ibid3 Id

6

measures, including foreign direct investment, procurement and trade facilitation. The latter

looks at the transaction cost associated with meeting trade and customs procedures4.

Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors

often support protectionism. This has changed somewhat in recent years, however. In fact,

agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible

for particular rules in the major international trade treaties which allow for more protectionist

measures in agriculture than for most other goods and services.

During recessions there is often strong domestic pressure to increase tariffs to protect domestic

industries. This occurred around the world during the Great Depression. Many economists have

attempted to portray tariffs as the underlining reason behind the collapse in world trade that

many believe seriously deepened the depression.

The regulation of international trade is done through the World Trade Organization at the global

level, and through several other regional arrangements such as MERCOSUR in South America,

the North American Free Trade Agreement (NAFTA) between the United States, Canada and

Mexico, and the European Union between 27 independent states. The 2005 Buenos Aires talks

on the planned establishment of the Free Trade Area of the Americas (FTAA) failed largely

because of opposition from the populations of Latin American nations. Similar agreements such

as the Multilateral Agreement on Investment (MAI) have also failed in recent years5.

WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is the most powerful body for controlling the dynamics of

global trade. It was established in 1st January 1995. It has the power to enforce its rules through

sanctions and helps in the formulation of trade agreements between various countries. It also

oversees that agreement terms are adhered to by the participating countries and resolves

disputes6.

World Trade Organization (WTO) is the only international organization dealing with the global

rules of trade between nations. Its main function is to ensure that trade flows as smoothly,

4 Id5 Id6 Available at < http://www.economywatch.com/international-trade/>, visited on 23.12.2010

7

predictably and freely as possible. Consumers and producers know that they can enjoy secure

supplies and greater choice of the finished products, components, raw materials and services that

they use. Producers and exporters know that foreign markets will remain open to them7.

The result is also a more prosperous, peaceful and accountable economic world. Virtually all

decisions in the WTO are taken by consensus among all member countries and they are ratified

by members' parliaments. Trade friction is channelled into the WTO's dispute settlement process

where the focus is on interpreting agreements and commitments, and how to ensure that

countries' trade policies conform with them. That way, the risk of disputes spilling over into

political or military conflict is reduced.

By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples

and nations. At the heart of the system known as the multilateral trading system — are the

WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and

ratified in their parliaments. These agreements are the legal ground-rules for international

commerce. Essentially, they are contracts, guaranteeing member countries important trade rights.

They also bind governments to keep their trade policies within agreed limits to everybody’s

benefit. The agreements were negotiated and signed by governments. But their purpose is to help

producers of goods and services, exporters, and importers conduct their business. The goal is to

improve the welfare of the peoples of the member countries8.

FUNCTIONS:

• Administering WTO trade agreements.

• Forum for trade negotiations.

• Handling trade disputes.

• Monitoring national trade policies.

• Technical assistance and training for developing countries.

• Cooperation with other international organizations9.

7 Available at <http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr00_e.htm>, visited on 23.12.2010.8 Ibid9 Id

8

CHAPTER III

RISK MANAGEMENT

Trade financing had been widely used in many business transactions both at the domestic and

international level. However, the traders and bankers fully aware of the risks they are exposed to.

This risk exposed via Letter of Credit, Standby Letter of Credit, (Banker's) Guarantees, Bank-to-

Bank Reimbursements and Trust Receipts. It will also help understand the legal aspects and

grasp the crucial key concepts of risk management. This would assist to evaluate, monitor and

review bank’s customers more effectively.

Exposure:

Risk exposed to bankers in LC, SBLC, Letter of Indemnity (LOI), and banker's

guarantees operations.

Risk associated with bank-to-bank reimbursements and trust receipts.

Understand a banker's obligations under the law.

Contemporary trade frauds and scams.

The conflicts in different law systems and other jurisdiction risk.

The risk exposed to bankers' customers for better monitoring of their customers'

businesses.

The impact of certain discrepancies and make better decision for waivers.

Effective risk management skills and tools10.

10Available at <http://www.tolee.com/html/col290.htm>, visited on 09.01.2011

9

RISK IN INTERNATIONAL TRADE

Companies doing business across international borders face many of the same risks as would

normally be evident in strictly domestic transactions. For example,

Buyer insolvency (purchaser cannot pay);

Non-acceptance (buyer rejects goods as different from the agreed upon specifications);

Credit risk (allowing the buyer to take possession of goods prior to payment);

Regulatory risk (e.g., a change in rules that prevents the transaction);

Intervention (governmental action to prevent a transaction being completed);

Political risk (change in leadership interfering with transactions or prices); and

War and other uncontrollable events.

In addition, international trade also faces the risk of unfavorable exchange rate movements (and,

the potential benefit of favorable movements)11.

The other factors are also important which are bank uses to face in their normal course of

business like the foreign exchange risk. Commercial banks take "safety, liquidity and

profitability" as their main business objective, in which "security" goes first. Trade financing has

a short period, it also occupied fewer funds than other forms of financing, it is also a financing of

high-income, and therefore, trade financing accords with commercial bank’s operating targets in

liquidity” and “profitability”. Consequently, the "security" of the trade financing has become the

primary objective of innovation. The process of trade financing innovation also creates new risks

along with the new business.

Compared with the traditional business, trade financing innovations have different characteristics

in risk identification and evaluation. Trade financing innovations not only improve the

competitiveness of commercial banks, but also brought new risks—the risks in banks’ judgment

and ability to prevent potential risks. Therefore, the composition of a scientific and accurate

method for risk identification and evaluation for trade financing innovation has become the key

to success12.

11Available at <http://en.wikipedia.org/wiki/International_trade>, visited on 09.01.201112Available at < http://www.ccsenet.org/journal/index.php/ijbm/article/view/1254/1217>, visited on 09.01.2011

10

FOREIGN EXCHANGE RISK MANAGEMENT

Foreign Currency Exposure

Exchange risk is logical sequence when a conversion of currencies takes place i.e. switching over

from one currency to another. From a Corporate entity point of view, currency exposure is the

extent of vulnerability which will affect its profit and loss figures and Balance sheet resulting

purely from the exchange rate movements. Hence in a corporate business strategy, foreign

exchange risk management assumes great significance.

Foreign Currency Exposure can be divided in to three parts :

Transaction Exposure

Translation Exposure

Economic Exposure

Transaction Exposure: Whenever there is a commitment to pay currency at a future date , any

movement in the exchange rates will determine the domestic currency value of the transactions .

Importers are subjected to transactions exposure. With liberalization process set in the country ,

the exchange market have been subjected to full interplay of market forces. The transaction

exposure would still increase if a long term trade agreement with a country has been entered in to

and therefore the corporate would be not in the position to switch over its trade flow.

Translation Exposure: In case of domestic corporate with global operations they have to pay or

receive money. Any large movement in exchange rate in either case would have its impact on

domestic currency value of these transactions and if the exchange movements are wide and

transactions are large it would have a serious impact on the financial position of the company.

Between two Balance sheets dates, it may alter the net asset value and gearing ratio. In case of

multinationals, the reported profits of overseas subsidiaries can be affected by the change in the

exchange rate at which profit figures are translated in to domestic currency13.

Economic Exposure: In cross border trade, the strength of currency of competitors, relative

cost and prices in each country which have a bearing on exchange rate and the structure of the

13 Available at <http://tradejunction.apeda.com/ready%20reckoner/how_to_avoid_exchange.aspx>, visited on 09.01.2011

11

business itself gives rise to economic exposure which may put the companies at a competitive

disadvantage. Though this is not a direct foreign exchange risk exposure but the underlying

economic factors may become a risk factor14.

PAYMENT RELATED RISK MANAGEMENT

It is impossible to be in international trade without involving your bank for all the services they

provide such as advice on financial issues and the potential risks involved. It is true that one

critical hurdle for SMEs is the lack of information on international trade processes,

documentation and banking procedures necessary to carry on with business abroad. For result

oriented and cost effective international trade, you will very definitely need access to accurate

and timely information and a sound knowledge of banking.

Payment Options in International Trade

Quite obviously all payments in an international trade are made through bank either by way of

wire transfer or check with the latter not being preferred for not being the quickest. The

following are some of the common ways of payment modes in international trade.

Banker's Draft is a cheaper option and easier to obtain but there is a risk of loss in transit.

The only advantage it has against check is quicker credit that the exporter gets.

Letter of Credit. This international trade instrument is mutually convenient for both the

parties. The exporter gets paid once he produces the copy of BoL (bill of lading) which

he receives from the shipping company and the LoC, to the bank, regardless of whether

the consignment as arrived at destination or not.

Wire transfer is by far the fastest and the cheapest option in which the importer will

instruct his bank to transfer the amount to the exporter’s bank account. The first time, the

transfer happens in about 10-15 days depending on the destination country and the

routing bank. International wire transfers are made through intermediary

banks/correspondent banks.

14 Ibid

12

Although not in a big way, some China manufacturers accept Paypal for smaller amounts such as

US$5,000 but require 3% extra to compensate for the charges. Paypal is the quickest and easiest

mode of payment in international trade.

Banks that are serving international trade, understand the crucial role they are required to play.

Many large banks maintain worldwide correspondents to provide quick delivery of actual

currency, wired money or drafts. You may choose your bank for international trade account on

the basis of whether the bank can extend advances against the account receivables. Banks also let

you enter into forward exchange contract with your bank and fix the amount of the foreign

exchange you receive when you are dealing in convertible currencies15.

CHAPTER IV

15 Available at <http://www.articlesbase.com/business-articles/role-of-banks-in-international-trade-209842.html>, visited on 09.01.2011

13

RISK MITIGATION IN INTERNATIONAL TRADE

Markets that facilitate cross-border transactions, including those that hedge and transfer risks

attached to exchange rate movements and payment defaults as well as those for transit insurance

and export finance, can all enhance both trade and FDI. These sophisticated markets are often

largely absent in many countries, and their development can take considerable time. In the

interim, correcting for market failures in host countries may require help from home countries.

For example, in the absence of a developed financial sector, and while being careful to avoid

trade distortions and to ensure a level playing field, trade financing and insurance can often best

be provided by home country firms to users in developing countries.

Trade financing and insurance can create the risk of “moral hazard” where insurance or other

public guarantees distort the behaviour of economic agents, prompting them to take excessive

risks on the basis that any direct losses or negative externalities will be socialised through public

intervention. As a result, the provision of insurance and guarantees from developed country trade

and investment partners might remove some of the urgency to enact policies conducive to a

better investment climate in host developing countries.

Key considerations

The access of the financial institutions in developing countries to guarantees covering payments

risk on trade transactions and the technical assistance that developing countries may require to

help speed up the introduction and implementation of related measures and financial

instruments16.

In this connection, the International Finance Corporation (IFC) of the World Bank Group has set

up the Global Trade Finance Programme (GTFP) to provide partial or full guarantees covering

payments risk on banks in emerging markets for trade-related transactions. These guarantees are

transaction-specific and involve a variety of underlying instruments: letters of credit, trade-

16 Available at <http://www.oecd.org/document/28/0,3746,en_39048427_39049358_41368988_1_1_1_1,00.html> , visited on 09.01.2011

14

related promissory notes, accepted drafts, bills of exchange, guarantees, bid and performance

bonds and advance payment guarantees. Through the GTFP bank network, local financial

institutions can establish working partnerships with the many major international banks

participating in the programme, thus broadening access to finance and reducing cash collateral

requirements. Trade finance training is also offered, and the IFC may place experienced trade

finance bankers with issuing banks to help them develop trade finance and other banking skills17.

The WTO-UNCTAD International Trade Centre (ITC) has set up a technical assistance

programme to strengthen schemes and mechanisms offered by both private and public financial

institutions in the field of export finance, short-term trade credit and credit insurance and

guarantees. The programme also aims to build up the capacity of entrepreneurs and credit

officers in dealing with credit and financial risk management. It is targeted at three distinct levels

where constraints and needs require a different set of activities: (i) public and private

manufacturers and traders; (ii) financial institutions, export-import banks, export credit insurance

and guarantee agencies; and (iii) the financing environment, including organisations that have a

direct impact on the availability and cost of trade finance18.

Many governments provide official export credits through dedicated Export Credit Agencies

(ECAs) in support of national exporters competing for overseas sales. ECAs provide credits to

foreign buyers either directly or via private financial institutions benefiting from their insurance

or guarantee cover. Reflecting differences in financial resources, some countries might provide

officially-supported export credits through their ECA on terms that competing ECAs, especially

in developing countries, are unable to match, thus distorting trade. The OECD has developed

disciplines in this area (the Export Credit Arrangement) and provides a forum for discussion and

coordination of national export credit agencies. The main purpose of the Export Credit

Arrangement is to provide a framework for the orderly use of officially supported export credits.

In practice, this means providing a level playing field where exporters compete on the basis of

the price and quality of their products rather than the financial terms provided and reducing

subsidies and trade distortions related to officially-supported export credits19.

POLICY PRACTICES TO SCRUTINISE

17 Ibid18 Id19 Id

15

The PFI should consider the following measures:

Establish consultations among government, financial institutions and traders on national

practices in export finance and export and import insurance measures in order to identify

potential training needs and legislative updates.

Assess and adapt the guidelines to decision-makers and bankers on setting up credit

insurance schemes and institutions contained in the ITC’s Export Credit Insurance and

Guarantee Schemes: A practical guide for developing and transition economies. The

Guide analyses the needs and constraints related to export credit insurance, outlines the

organisational structure of an export credit agency, the legal infrastructure required for its

activities and the range of policies on offer.

Consider taking up the training opportunities offered under the Global Trade Finance

Programme by the IFC.

Gradually build up national expertise on export credit matters, e.g. official financing

support, maximum repayment terms, minimum risk premiums and trade-related aid for

projects, and goods and services sold on credit terms of two years or more. Set up an

information database on export credit matters for countries that are not parties to the

OECD Export Credit Arrangement20.

EXPORT CREDIT INSURANCE

A receivable insurance product that allows an insured to transform unforeseen commercial

and/or political obstacles into manageable risks.

Risks Covered in Commercial Risk:

Nonpayment by overseas buyer due to insolvency and slow pay. Currency fluctuation due to

government actions are considered commercial risk. Note: Does not cover product dispute.

Political Risk:

20 Id

16

Nonpayment due to war, revolution, cancellation of import/export license, currency

inconvertibility, and other government actions.

Risk Mitigation Tool

Insure selected receivables against non-payment.

Marketing Tool

Extend competitive credit terms to international buyers.

Financing Tool

Arrange attractive financing with the exporter's lender by using insured foreign receivables as

additional collateral21.

CONCLUSIONS

With the advantages of liquid and profitable, trade finance is a business that is actively promoted

by commercial banks. Bankers wish to enlarge the business scope and increase market share

through trade financing innovation. In this process, a large number of circumstances and

21 Available at <www.buyusa.gov/northeastohio/comerica.pdf>, visited on 09.11.2011

17

problems that were not seen before would emerge. The process of business innovation is also a

process of risks creation. New market, new institution, new portfolio are bound to be

accompanied by new risks. Effective identification and evaluation of innovative risks are

essential to the safety of commercial banks.

Market innovation, institution innovation and portfolio innovation are three major sources of

innovative risks. Classification and identification of these risks can establish a framework for

risks evaluation of trade financing innovation. Risk identification framework along with the

establishment of risk evaluation indicator system will enable bankers to have an apprehensive

understanding of the risks involved in trade financing innovation, and provide the bankers with

early risk alert and guidance in the innovation.

The risk mitigation in the international trade can be done through the various ways by hedging,

insurance coverage etc. the risk mitigation is the main and important for this type of trade

finance because otherwise the lender will be in a problem by lending high value to the lender.

Effective mitigation process can bring much better lending process by which the international

trade can be financed in a risk free manner.

RESEARCH METHODOLOGY

Legal phenomena require their own research methodology. Such research methodology may be

applicable to subjects of International or Municipal law, evaluation of Acts of different countries,

implementation and consequences of Codes and Acts of different nations. Many statistical

techniques and methods cannot automatically be considered as useful in legal studies simply

18

because they have proved useful in other disciplines.

The nature of legal issues and the subject matter of law are radically different from other

sciences. Therefore the content of the propositions and explanations is also different. The

methodology of legal studies involves their own rules, interpretations and criteria for admissible

explanations as well as research designs, data-collecting techniques and data-process routines.

Legal studies lack the appropriate methods, tools and techniques suitable for the legal issues. In

most of the legal investigations, qualitative data has to be analyzed. Hence this separate study of

legal methodology is taken up.

Now each and every research is remains incomplete if the methodology has not been mentioned.

There are various methods from which one has to follow a particular method for completion of

the project. A good researcher always mentions the method he/ she apply for his or her project. It

is essential as because to do the project in a systematic way, that the work would contain any

loopholes. And also by mentioning the methodology is the honesty of the researcher will reflects

through the project. There are mainly two types of methodology that is generally adopted and

they are the Doctrinal and Empirical method.

Doctrinal Method: This method is collecting the necessary materials from the

documentary sources. Again documentary sources are of two types’ paper document and

electronic document. Paper document contains all the writings available from the books, articles,

journals, and newspapers. Whereas the electronic documents in this aspect means the documents

available in the World Wide Web.

Empirical Method: In these method the databases are generally been collected trough

field survey, interviews etc. Simply means gathering knowledge through practical experiences.

To complete my project I have followed Doctrinal Research Methodology. In my

research I have taken help from the NALSAR University of Law library and also the World

Wide Web.

19

BIBLIOGRAPHY

WEBSITES

20

http://en.wikipedia.org/wiki/International_trade

http://www.economywatch.com/international-trade/

http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr00_e.htm

http://www.tolee.com/html/col290.htm>, visited on 09.01.2011

http://en.wikipedia.org/wiki/International_trade

http://www.ccsenet.org/journal/index.php/ijbm/article/view/1254/1217

http://tradejunction.apeda.com/ready%20reckoner/how_to_avoid_exchange.aspx

http://www.articlesbase.com/business-articles/role-of-banks-in-international-trade-

209842.html

21