Planning To Engage Your Business In International Trade?

As your business expands, you think of branching out from different countries in the world

. In other words, you will be engaging in international trade. To further know how to engage your business in the international market, you must know at least the basics, the types, and the means of involving yourself in this type of trading experience.

Importing. In the United States, imports are subject to more than just the requirements of the U.S Customs Tariff. They must also meet the same standards as domestic products, such as those imposed by the Food and Drug Administration. If these standards are met, most products can be imported without prior approval of the government. Only special items such as alcoholic beverages and drugs like opium require such approval. So, if you would like to trade your bookmarks internationally for instance, you wont need the approval of that sector anymore.

With the new international trade agreements such as NAFTA and GATT, some imported products are subject to reduced duties while others are not. Knowing all the nuances of importing is always difficult. Thats why U.S. businesses usually hire custom brokers and specialists who are licensed by the U.S. Treasury Department. Custom brokers know the different laws, procedures, and tariffs. Over 90 percent of all imports are handled by custom brokers because of the complex procedures that must be followed. So with the new law applied in international trading, if you would like some machines for your bookmark printing company, you need to study first the cost it will charge you than buying at your own country.

Exporting. Other nations have similar means of controlling and documenting imports. So, U.S. businesses must follow special procedures when exporting their goods. They must know the laws and procedures for each country from which they are dealing with. Most businesses therefore, hire international forwarding companies to handle export details. These companies are licensed by the U. S Maritime Commission for ocean shipments.

You can imagine the risks involved in transporting goods from one country to another. The costs of transportation and insurance needed for these shipments vary greatly depending on the type of merchandise. Shipping items like bookmarks for example, would require different handling from shipping steel. To insure that these international shipments reach their destination, most businesses purchase special insurance (called marine insurance, although it may apply to air shipments as well as vessel shipments.)

Credit risks are also greater than when dealing with domestic businesses. Each country has different laws, languages, and currencies. Arranging payment for goods shipped to a foreign country can be accomplished in different ways, depending on past experiences with a foreign customer and the degree of risks a business is willing to take.

Setting up shop in a foreign country. Multinationals are large corporations that have operations in several countries. According to International Business, about 1/3 of the assets of the worlds private sector are owned by some 37,000 transnational corporations with over 170,000 foreign affiliates.

One key characteristic set multinationals and mini-nationals apart from domestic businesses their foreign investments. Such businesses invest in factories, offices, and other facilities abroad that they use for their operations. These investments are referred to as foreign direct investments (FDI). Some countries attract more FDI than others.

These are the three types of international trade in which you can engage in depending on the type of business you run.

by: Robert Johnston

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