International Trade

Definitions

Comparative Advantage • A central concept in international trade

theory which holds that a country or region should specialize in the production and export of those goods and services that it can produce relatively more efficiently than other goods or services, and import those goods and services in which it has a comparative disadvantage.

Freight Forwarder• A person acting as an agent in the

shipping of freight to or from foreign countries which includes the clearing of freight through customs, preparation of documents, arranging for shipping, warehousing, delivery, and export clearance.

Letter of Credit

• Is a document issued by a bank stating its commitment to pay the exporter/seller a stated amount of money on behalf of an importer/buyer so long as the exporter meets the importer’s terms and conditions of the sale.

Tariff A schedule of duties or

taxes assessed by a government on goods as they enter or leave a country.

Trade• TRADE –” is the business of buying

and selling or bartering commodities. An act of trading or other transactions involving an exchange of property.”

• Webster’s II New College Dictionary

Trade Surplus• A nation’s excess of exports

over imports during a specified period of time.

Value - Added• The process of adding value

to a raw product through processing, packaging, transportation, etc.