Académique Documents
Professionnel Documents
Culture Documents
International Trade 83
Important Aspects of International Billion $ Goods Billion $
Trade 12000 Services 12000
10500 10500
International trade has three very important 9000 9000
aspects. These are volume, sectoral composition 7500 7500
and direction of trade. 6000 6000
4500 4500
Volume of Trade 3000 3000
1500 1500
The actual tonnage of goods traded makes up
0 0
the volume. However, services traded cannot be
84
86
88
90
92
94
96
98
00
82
80
measured in tonnage. Therefore, the total value
20
19
of goods and services traded is considered to
be the volume of trade. Table 9.1 shows that Source: WTO, Trade Statistics, 2002.
the total volume of world trade has been steadily Fig. 9.3: Exports of Goods and Services, 1980-2000
rising over the past decades.
The share of different commodities in total
global trade can be seen in the graph below.
Machinery and
Why do you think that the volume of trade has increased Transport Equipment
over the decades? Can these figures be compared? Fuels & Mining Road
Office/Telecome Equipment
What has been the growth in the year 2005 over the Chemicals
year 1955? Automotive Products
Agriculture Products
Other Manufactures
Composition of Trade Other Semi–manufactures
Iron & Steel
The nature of goods and services imported and Clothing
exported by countries have undergone changes Textiles
0 5 10 15 20
during the last century. Percentage to total value
Trade of primary products was dominant
Source: WTO, Trade Statistics, 2005
in the beginning of the last century. Later
manufactured goods gained prominence and Fig. 9.4: World Merchandise Exports By
Products, 2004
currently, though the manufacturing sector
commands the bulk of the global trade, service Looking at the graph above, we find that
sector which includes travel, transportation and machinery and transport equipment, fuel and
other commercial services have been showing mining products, office and telecom equipment,
an upward trend. chemicals, automobile parts, agricultural
International Trade 85
countries to keep their own markets protected countries to set up a permanent institution for
from foreign products. looking after the promotion of free and fair trade
Countries also need to be cautious about amongst nation and the GATT was transformed
dumped goods; as along with free trade into the World Trade Organisation from 1st
dumped goods of cheaper prices can harm the January 1995.
domestic producers. WTO is the only international organisation
dealing with the global rules of trade between
nations. It sets the rules for the global trading
Dumping system and resolves disputes between its
member nations. WTO also covers trade in
The practice of selling a commodity in two services, such as telecommunication and
countries at a price that differs for reasons banking, and others issues such as intellectual
not related to costs is called dumping.
rights.
The WTO has however been criticised and
opposed by those who are worried about the
effects of free trade and economic globalisation.
It is argued that free trade does not make
ordinary people’s lives more prosperous. It is
actually widening the gulf between rich and
poor by making rich countries more rich. This
is because the influential nations in the WTO
focus on their own commercial interests.
Moreover, many developed countries have not
fully opened their markets to products from
developing countries. It is also argued that
issues of health, worker’s rights, child labour
and environment are ignored.
International Trade 87
Concerns Related to International Trade
Undertaking international trade is mutually
beneficial to nations if it leads to regional
specialisation, higher level of production, better
standard of living, worldwide availability of
goods and services, equalisation of prices and
wages and diffusion of knowledge and culture.
International trade can prove to be
detrimental to nations of it leads to dependence
on other countries, uneven levels of
development, exploitation, and commercial
rivalry leading to wars. Global trade affects
many aspects of life; it can impact everything
from the environment to health and well-being
of the people around the world. As countries Fig. 9.5: San Francisco, the largest land-locked
compete to trade more, production and the use harbour in the world
of natural resources spiral up, resources get
used up faster than they can be replenished.
As a result, marine life is also depleting fast, Types of Port
forests are being cut down and river basins sold Generally, ports are classified according to the
off to private drinking water companies. Multi- types of traffic which they handle.
national corporations trading in oil, gas mining, Types of port according to cargo handled:
pharmaceuticals and agri-business keep (i) Industrial Ports: These ports specialise in
expanding their operations at all costs creating bulk cargo-like grain, sugar, ore, oil,
more pollution – their mode of work does not chemicals and similar materials.
follow the norms of sustainable development. (ii) Commercial Ports: These ports handle
If organisations are geared only towards profit general cargo-packaged products and
making, and environmental and health manufactured good. These ports also
concerns are not addressed, then it could lead handle passenger traffic.
to serious implications in the future.
EXERCISES
1. Choose the right answer from the four alternatives given below.
(i) Most of the world’s great ports are classified as:
(a) Naval Ports (c) Comprehensive Ports
(b) Oil Ports (d) Industrial Ports
(ii) Which one of the following continents has the maximum flow of global
trade?
(a) Asia (c) Europe
(b) North America (d) Africa
International Trade 89
(iii) Which one of the following South American nation, is a part of OPEC?
(a) Brazil (c) Venezuela
(b) Chile (d) Peru
(iv) In which of the following trade blocs, is India an associate member?
(a) SAFTA (c) ASEAN
(b) OECD (d) OPEC
2. Answer the following questions in about 30 words:
(i) What is the basic function of the World Trade Organisation?
(ii) Why is it detrimental for a nation to have negative balance of payments?
(iii) What benefits do nations get by forming trading blocs?
3. Answer the following questions in not more than 150 words:
(i) How are ports helpful for trade? Give a classification of ports on the basis
of their location.
(ii) How do nations gain from International Trade?