...6.0 INTERNATIONAL TRADE FINANCE Learning Objectives: At the end of the subject coverage learners should be able to: • Explain the ways in which international trade is undertaken, settled and financed; • Identify the types of customers engaged in international trade and their needs; • Explain the features and benefits of services provided by banks and other financial institutions in facilitating international trade; • Explain international payment systems and regulations that are in place and the procedures adopted. CONTENTS 1. Introduction to International Trade Finance • The meaning of international trade. • Major parties in international trade. • Reasons for international trade. • Advantages of international trade. • International trade barriers. • The role of banks and financial institutions in international trade. 2. The Foreign Exchange Market • The meaning of foreign exchange market. • Participants in the foreign exchange market. • Functions of foreign exchange market. • The mechanism of foreign exchange transfer. • Relationship between foreign exchange market and money market. • Systems and procedures for inter bank foreign exchange trading. 3. Exchange Rates • Definition of exchange rate. ...
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...Vidit Shah OVER VIEW Composition & Direction of Foreign Trade Foreign Trade Policy India’s Foreign Trade Policy Foreign Trade Policy 2015 – 2020 3 05/01/2016 Composition Of Foreign Trade • Composition of foreign trade means major commodity or sectors in which India is doing export and import. India is a very old participant in world trade. Its participation have been promoted by the opening of Suez Canal and speedy development of the ship building industry supplemented by the spread of industrial revolution in Europe and fast expansion of Indian railways. Composition Export Fuels, Capital Goods, Chemicals, Food Grains, Petroleum Products, Capital Goods, Pearls and Precious Gems, Iron and Steel Fertilizers, Edible Oil 05/01/2016 Import Manufactured goods textiles , Gems and Jewellery, Handicraft, Light machinery etc. 4 IMPORTS It refers to goods that we buy from other countries. At times of independence India was an agrarian economy. Partition of our country has brought food shortage because wheat growing regions vested with Pakistan. Hence India need to import in large quantities, food , cotton jute. Etc With development of economy over these days, there occurred changes in composition of imports. The development required setting up of industries, modernization of agriculture etc. Capital goods like machinery, chemicals, fertilizers ,metals, minerals petroleum products etc. are imported . ...
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...Free Trade Agreements in Australia’s economy Name: Institution: School: Date: Free Trade Agreement (FTA) Free trade agreement (FTA) is described as a treaty between two or more countries so as to create a free trade area. The free trade involves commerce in goods and services being carried out across the borders without any hindrances. The FTA always involve around the playing around with the tariffs. In an FTA agreement between two countries or more the tariffs are made common, that is, uniform tariffs among them and with other non-member countries. In FTA, the labor and capital may not move freely. Baykitch and Sladojevic (2015) explains that when an FTA agreement is made the countries or the companies involved the deal may not be welcomed by either the parties involved but when they both work towards it the realization of the agreement it becomes easy. It is also beneficial to both the countries because it enables the citizens to move freely for the betterment of the economy (Baykitch and Sladojevic 2015). China – Australia Free Trade Agreement An example of FTA agreement is the recent china-Australian agreement. The FTA agreement is considered to be beneficial to Australia in very many ways. Ball says that given that China has a population of above 13 million it opens the market for the Australian products. China is also the second-largest economy in the world's considering that is also an important manufacturing hub for the world products. It was important...
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...CHAPTER - 7 Export procedure and documentation Export business occurs between two independent nations for expanding business there are some rules that have to follow. Accepting orders from abroad the sellers send their products with a traditional system under this rule. In this case the sellers are treated as exporter. There are various persons, government or non government organizations are involved with export business at present. These persons or organizations are divided into two criteria based on their nature and functions. Such as direct and indirect export. The direct exporters send their manufacturing products abroad themselves. Some companies run their export management system by setting dealers in abroad. In export business the intermediaries are treated as indirect exporters. These classes of exporters do not manufacture any product but export. Most of them complete the direct export exporting by buying products from home market after receiving orders. They are known as export merchant. Again many exporters work as a percent agent. Many intermediaries export product by making contract with manufacturers. They seek for foreign buyer on behalf of the exporters and take orders. They are known as manufacturers export agent. These kinds of exporters also take commission from buyers if they get chance. It is not the matter the exporters are treated in which name they have to do business of course under the international rule and regulations....
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...This Foreign Corrupt Practices Act was established in 1977. This act is a United States federal law; it is widely known primarily for two of its main requirements. The first one called Trade Act, addresses accounting transparency requirements that were under the Act of Securities Exchange of 1934. The other one concerns bribery of foreign officials. The Trade Act intended for the Attorney General to give guidance concerning the branch of justice's enforcement guidelines with respect to the Act to possible exporters and small businesses that are not able to obtain specialized counsel on facts related to the foreign corrupt practices. The United States of American firms in search of doing business in foreign markets must be conversant with the Foreign Corrupt Process Act since it tackles corrupt paying of money to foreign officials for the principle of obtaining or keeping business. Adding up, other statutes such as, the wire fraud and mail statutes accept the federal prosecution of infringement of state commercial bribery statutes. As a result of Security and Exchange Commission investigations in the early 1970's, over 300 United States of American companies accepted doing doubtful or unlawful paying in excess of millions of United States dollars to foreign government officials, political...
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...advantage | Balance of payments | Balance of trade | Ethnocentrism | Euro | Exchange rate | Exporting | Foreign direct investment | Fair trade | Devaluation | Comparative advantage | Free trade | Importing | Joint venture | Licensing | Protectionism | Multinational corporation | Dumping | Embargo | Economies of scale | Embargo | Quota | Stereotyping | Strategic alliance | Tariff | Trade deficit | Trade surplus | Trading blocs | | | Case Study Whirlpool Summary Nations trade to obtain raw materials and goods that are either unavailable in their own country or too expensive to produce. Trade increases a country’s total output, and offers greater variety and lower prices to consumers. Nations restrict international trade to help their own economies and to protect their domestic companies from competition with foreign rivals. They do this by imposing taxes, surcharges, tariffs, quotas, embargoes, and sanctions on the goods of foreign companies. Groups of nations form trading blocs to protect their own trade interests (EU, ASEAN, NAFTA, and Mercosur). International business activities can include importing, exporting, licensing, franchising, strategic alliances, joint ventures, and foreign direct investment (FDI). Outline I. Fundamentals of International Trade Companies in different countries compete for customers with companies in other countries in our global marketplace. II. Why Nations Trade A. Economies of scale – By producing...
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...International business comprises all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.[1] It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc 1. The exchange of goods and services among individuals and businesses in multiple countries. 2. A specific entity, such as a multinational corporation or international business company that engages in business among multiple countries. Export policies Bangladesh’s exports are dominated by ready made garments, most of which are exported to the US and the EU. Nearly all garment exports are from firms operating in export processing zones or as bonded warehouses. In both cases they can import their textile and other inputs free of Customs duties and all other import taxes (including the 3% advance income tax) with the use of “back-to-back LCs” i.e. letters of credit based on LCs issued for their exports. As noted previously, machinery used by exporters is also exempt from all import taxes...
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...OVERVIEW OF FOREIGN EXCHANGE OPERATION (IMPORT PROCEDURE) OF FIRST SECURITY ISLAMI BANK LTD. & A COMPARATIVE ANALYSIS WITH OTHER BANKS by Taslima Akter ID# 0931048 An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration INDEPENDENT UNIVERSITY, BANGLADESH May, 2013 Comparative study of Foreign Exchange Operations of FSIBL 1 AN OVERVIEW OF FOREIGN EXCHANGE OPERATION (IMPORT PROCEDURE) OF FIRST SECURITY ISLAMI BANK LTD. & A COMPARATIVE ANALYSIS WITH OTHER BANKS by Taslima Akter ID# 0931048 has been approved 9th May 2013 ______________________________ Abul Khair Jyote Lecturer, Marketing School of Business Independent University, Bangladesh Comparative study of Foreign Exchange Operations of FSIBL 2 Table of Contents Particulars Page No. Letter of Transmittal 01 Acknowledgement Executive Summary 02 04 Chapter-01 Introduction Overview of First Security Islami Bank Ltd Vision 06 07 08 Mission Strategies Financial Highlights Corporate Information 08 09 10 11 Board of Directors Products And Services Organizational Structure My job Responsibilities Branch Network 12 13 14 15 15 Findings Recommendations 15 16 Chapter-02 Introduction Background of the Report Scope of the Study: Objective of the Study Benefit of the report Limitations of the Study 17 17 18 18 19 19 Chapter-03 Literature Review 21 Chapter-04 Methodology 23 Chapter-5 Foreign Exchange (Import Procedure) Foreign Exchange ...
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...(David W. Conklin, page no.574 EXIMPOLICIES Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT - Directorate General of Foreign Trade , in matters related to the import and export of goods in India. The Foreign Trade Policy of India is guided by the Ex port Im port in known as in short EXIM Policy of the Indian Goernment and is regulated by the Foreign Trade Development and Regulation Act, !!" . DGFT #Directorate General of Foreign Trade$ is the main goerning body in matters related to !xim "olicy. The main ob#ectie of the Foreign Trade $Deelopment and %egulation& 'ct is to proide the deelopment and regulation of foreign trade by facilitating imports into, and expand exports from India. Foreign Trade 'ct has replaced the earlier law known as the imports and !xports $(ontrol& 'ct )*+. EXIM Policy Indian EXIM Policy contains arious policy related decisions taken by the goernment in the sphere of Foreign Trade, i.e., with respect to imports and exports from the country and more especially export promotion mea%ure% , policies and procedures related thereto. Trade "olicy is prepared and announced by the (entral Goernment $inistry of (ommerce&. Indias !xport Import "olicy also know as Foreign Trade "olicy, in general, aims at deeloping export potential, improing export performance, encouraging foreign trade and creating faorable balance of payments position. &i%tory...
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...strategy of today's European and U.S. based global corporations. (4)Global commodity prices Answer: The world trading system would clearly be affected by such a development. Currently China enjoys a somewhat privileged status within the World Trade Organization as a ―developing country. Such a rise to eminence, however, would clearly force it to become a full and equal member, with all the rights and responsibilities. China would also be in a position to actively affect the terms of trade between many countries. On the monetary front, one would expect that China would have to have fully convertible and trading currency, and it could become one of the ―benchmark currencies of the world. From the perspective of Western global firms, China would represent both a huge market, and potentially the home base of some very capable competitors. Finally, commodity prices would probably fall. 2. The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export. They have no capital; their land is of poor quality; they often have too many people given available work opportunities; and they are poorly educated. Free trade cannot possibly be in the interests of such nations! Discuss. Poor countries have no. of barriers for their national growth. Surrounding conditions make them more dependable upon other countries for their common needs. Characteristics of Poor...
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...[pic] 01.01Introduction: The word ‘Bank” refers to the financial institution that deals with money transaction. Banks collect deposit at lowest possible cost and provide loans and advances at highest Cost. The spread between the two is the profit for the bank. There are two different types of banking. One is commercial banking and investment banking. The commercial bank is types of bank which is engaged in banking activities, like; deposit and making loans and other fee based services. It also byes corporate markets activities. In today’s world, technological and financial advancement is influencing every human activity. Commercial banks have been playing a vital role in the world economy. Bank is not only a financial institution, but also a helping hand for the common people, different organization and also for the government country’s prospect and future economic conditions largely depends on the commercial banks. In today’s business world, few financial organizations have made a strong place in the market and “Bank Asia” is one of those names. The year 2014 has been a significant year for the economy of Bangladesh in terms of steady growth followed by price stability. Despite the political turbulence in the last half of 2013 and its impact in the early 2014, GDP increased from 6.01% in 2013 to 6.12% in 2014. This is mainly due to the rise in public investment from 6.6% of GDP in FY2013 to 7.3% in FY2014 and decline in private consumption by 1.5% due to...
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...• Openness to Foreign Investment Conversion and Transfer Policies Expropriation and Compensation Dispute Settlement Performance Requirements and Incentives Right to Private Ownership and Establishment Protection of Property Rights Transparency of Regulatory System Efficient Capital Markets and Portfolio Investment Competition from State Owned Enterprises Corporate Social Responsibility Political Violence Corruption Bilateral Investment Agreements OPIC and Other Investment Insurance Programs Labor Foreign-Trade Zones/Free Ports Foreign Direct Investment Statistics Web Resources Return to top Openness to Foreign Investment Egypt has experienced profound political changes over the past year. On February 11, 2011, President Hosni Mubarak’s 30-year rule came to an end under intense popular pressure as hundreds of thousands of Egyptians converged on Tahrir Square. Transition to democratic rule has been marked by advances and challenges. Egypt has seen several prime ministers and multiple cabinet changes since the revolution, and many investors have reported that the constant shuffle and interim tenure of government officials have contributed to a difficult business environment. Nonetheless, in January 2012 Egypt seated its first parliament elected in free and fair elections, and many of the members have identified increasing foreign investment as a top priority for the government. Egypt continues to honor its pre-revolution laws, international treaties, and trade agreements. It...
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...Global Financing and Exchange Rate Mechanisms The operations of the global financing in an organization includes all these financial procedures. They are the financial analysis, financial planning, accounting, strategy planning, relationship with the investor, the treasury and the financial compliance. “An exchange rate is simply the rate at which on currency is converted into another” (Hill, 2009, p. 324). This assignment will define the tariff and non-tariff barriers, the impact in the operations of the global financing and the managing risks. Tariff and non-tariff barriers Tariff is a “tax levied on import (or exports)” (Hill, 2009, p. 6). There are different types of tariff. There are specific tariffs where the price never changes, is always the same. The revenue tariff who raise the money for the government The prohibitive tariff is the one that the price is so high that nobody imports or export with that type of tariff. The protective tariff price of the imports goods and keep their domestic industries save from the competition. The environmental tariff is like the protective tariff but is relate to the environmental. The last one is the retaliatory tariff, already have charges against the country. The non-tariff barriers (NTBs) is the one that will have restrictions for any imports. Some examples are packaging and labeling conditions, products standards, quotas (specific) for the product, licenses for import goods, and sanitation conditions. There...
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...International Operations Management The new role of WTO as a World trade court 1957 : GATT General Agreement on Tariff and trade 23 countries only when Gatt was created. A club of countries dominated by US. Major discussions on tariff reductions : KENNEDY ROUND NIXON ROUND Try to reduce the tariff among countries. 1990 : URUGAY ROUND Decision to convert GATT Into a more formal organzation 1995 : creation of WTO = World Trade Organization 125 countries Involved in four new fields : Financial services Telecommunications Shipping Business Services China becomes a member in 2001 Russia becomes a member in 2011 Today 154 countries which report over 97% of world trade Some outsiders : NORTH KOREA WTO : Two groups of countries Faborable to free trade Attracted by protectionism Free trade theory and deregulation * Free trade theory : Countries who think that global production will increase if countries do not interfere directly to affect trade. * Deregulation policy : Removal of government interference Ex : USA air transportation Protectionism and infant-industry policy * Protectionism : Government restrictions on imports that frequently give direct or indirect subsidies to industries to enable them to complete with foreign production * Infant-industry policy : An emerging industry should be guaranteed o large share of the domestic market until it becomes efficient enought to complete against imports...
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...– 1979), China had an autakrick economy i.e. it prohibited foreign investment & restricted foreign trade. * China’s policy also reflected its historical belief that contact with foreigners tended to corrupt its politics and harm its culture. Still, in order to ahead of the other countries economically, China enacted the Law on Joint Ventures using Chinese and Foreign Investment in 1979. * Since then, China has experienced a dramatic rise in FDI. The largest recipient of FDI among all developing countries, and it ranked second to the United States for FDI inflows since 1993. * By mid – 2002, total FDI in China had exceeded $700 billion and was invested in nearly 4, 00,000 ventures. * Japan, Taiwan, US are China’s most important sources of FDI. * China is world’s third largest country in area and largest in population, which makes it attractive to market-seeing FDIs. * It modified their practical aspects on trade by steadily adopting the principles of free trade. * China restricted imports & let foreign investors propose their preferred mode of entry by giving stringent criteria i.e. each foreign investment application should determine whether the investment was in the best interests of China – whether it helped in capital formation, promoted exports, created jobs, or transferred technology. * All FDIs had to go through an extensive process of the Chinese Ministry of Foreign Trade and Economic Cooperation (MOFTEC) or provincial – level authorities...
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