International Trade — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMInternational Trade5 Marks
Question
Describe the problems of international Trade.
✓
Answer
Introduction :
Most of the nations of the world are connected with international trade.
Such country forms import-export policy according to its requirement.
One cannot import from any country anything any time as he wishes.
Nor he can export anything. Settlement of transaction is in Foreign Currency.
It creates many problems.
Problems of International Trade : They are as below:
Problem of Currency :
The settlement of transaction requires foreign exchange. It is in foreign currency.
The exporter should have sufficient information regarding exchange rate.
As the rate of foreign exchange are changing very often parties have to suffer.
Language Problems :
The language of every country of the world is different.
It is difficult to understand business dealings when languages poses as barrier.
English language has been little bit useful to remove difficulties.
Problem of weight and measurement :
Weight and measurements are different in many countries. It is difficult to fix the price in context of quantity.
Difficulty in Distance :
Most of the international business is carried out through marine route.
When the distance between two countries is quite long, it is difficult to transport goods in time.
More Risk :
There are many risks while transporting goods through marine route.
The risk include sea robbery, sinking of goods, damage due to weather etc.
Political Ban:
The laws are not the same in all countries.
Each country has formed rules and regulations and policy regarding import-export.
One cannot breach it and import or export as he desires.
Difference in Laws :
Mercantile laws are different in all countries. Knowledge of legal aspects of business is required before commencing trade.
Advisors are to be appointed in this context.
Lack of Direct Contact :
In international trade mostly two parties do not come in contact with each other.
So the importer doubts whether he will get the goods as per order placed and the exporter also has doubts regarding payment of goods sent.
That is why most of the transactions are carried out through bank
Conclusion :
World Trade Organization $(WTO)$ and International Trade Agreement have played vital role in solving the problems of international trade. $EXIM$ (Import-Export) banks also have been helpful.
Government of every country has made arrangement to guide importers and exporters.
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