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International Trade · Gujarat Board (GSEB) STD 11 Commerce (GSEB - English Medium). 11 questions.

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11 questions · timed · auto-graded

Question 13 Marks
Explain : 'World- a Global Village'.
Answer
  • Because of trade auxiliary services like Insurance, Banking, Communication through modern technology, transportation, producers, distributors, customers and people in any corner of the world came into contact.
  • As a result, now the obstacles of time and place have been removed, people of the world have come closer to one another. Consequently they are able to satisfy their needs.
  • Because of this, international market is developed most of the countries of the world entered international market and they became familiar with one another just like a people of small village.
  • so we can truly say that world become a 'global village'.
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Question 23 Marks
"Sometimes the captain of the ship issues foul receipt." - Explain the statement.
Answer
  • When the exporter pays the amount of transportation of goods, dock charges, loading expense etc. it is called 'carting order'.
  • Then after the captain of the ship or his representative who is known as 'mate', checks whether the goods are according to the shipping bill.
  • Then he issues the receipt of acceptance of goods. It is called 'mate receipt'.
  • If the packing of the goods for transportation is not up to the instruction given then he remarks on the receipt. "Goods are not proper for transportation".
  • This receipt with such note is called 'Foul Receipt' or 'Dirty Chit'. The meaning of this foul chit is very clear that the packing of the goods transported through ship is not as per order.
  • The shipping company will not be held responsible for the damage to goods during marine transportation.
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Question 33 Marks
Write a note on General Agreement of Trade and Tariff $(GAAT)$ in International Trade.
Answer
  • Many countries of the world were economically destroyed due to the second world war.
  • $GAAT$ was formed in $1948$ to support these countries through trade and commerce.
  • Its head office is in 'Geneva'. This trade agreement was made among $23$ nations.
  • Government of India has made agreements with various countries to connect the trend of trade and commerce with foreign countries is called $GAAT$.
  • The main objective of this agreement is to lead international trade in the direction of free trade and to encourage regional division of labour by increasing 'international trade'.
  • $GAAT$ is a free trade policy adopted by government according to globalization.
  • As a result, trade physical facilities are advancing rapidly all over the world. Various innovations are found in the trend of the trade of India.
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Question 43 Marks
Explain the role of World Trade Organization $(WTO)$ in international trade.
Answer
  • World Trade Organization $(WTO)$ started functioning on $15'$ January $1995$. Total $104$ countries of the world have declared their support to the organization by singing.
  • The main function of this organization is to manage international trade relations properly and to accelerate the globalization. India holds membership of this organization right from the beginning.
  • Due to World Trade Organization, service sectors like insurance, banking, transport have developed very fast. As a result, world has become a market and various countries have come closer to one another.
  • World has turned into a Global Village. The possibility of export of agriculture produce, industrial production, have increase. Health related facilities have been increased.
  • Foreign universities have gained opportunities to enter India in education sector.
  • The universities of Canada, America, Australia and many other countries have organized camp in many states of India including Gujarat, and are affiliated to the universities of India, regarding education.
  • World Trade Organization is very active in solving problem emerged in international trade.
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Question 53 Marks
Explain briefly the different incentives for export trade.
Answer
Incentives for export trade:
$1.$ Trade agreements:
  • State or central government enters into trade agreements with various countries. Under these agreements they agree to trade several products/services with each other.
  • Such trade agreements boost exporters to increase their export business.
$2.$ Financial and economic encouragement reward:
  • Exporters are provided several financial and economic benefits to encourage them for producing and/or exporting. These encouragements include:
  • Give some pre-decided reward directly to the exporter.
  • Give exemption or collect very less sales tax and income tax on exported products.
  • Give partial or full exemption of income-tax for income earned through export. Provide land, raw material, electricity, equipment, etc. at cheaper rates for producing goods/services for export.
$3.$ Collective and systematic economic encouragement:
  • Under this system if an exporter is able to export a pre-decided quantity of products than he is allowed to import products equivalent to the foreign exchange earned from export.
  • The exporter who guarantees to export the said quantity is given several benefits as a form of encouragement. These benefits are:
  • Provide land at subsidized rates for producing such items that can be exported.
  • Assistance in setting up factories for producing products that can be exported. Encouragement to establish factories in free trade zones i.e. trade zones (areas) which are exempted from taxes and regulations. Oblige to export total production or as per pre-decided ratio.
$4.$ Financial facilities and services:
  • Several financial facilities and services are provided to exporters that encourage them. They are:
  • Make arrangement so that the exporters receive export-bill (a document needed by customs department) on the same day of export.
  • Provide ways to protect exporters against fluctuations that occurs in exchange rate of foreign currency.
  • Making arrangements so that the importer or importing country can easily import goods exported to them.
  • Provide services as guarantor of the importer after assessing the financial soundness of the importer.
$5.$ Non-financial facilities:
  • Exporters are also provided several non-financial facilities and services for motivation. They are:
  • Provide information on export opportunities, procedures and benefits.
  • Train people for producing products that can be worth exporting.
  • Arranging competitions among exporters and rewarding highest exporter.
  • Provide information about export market i.e. international market.
  • To lock-out or create strike in factories that produce export items illegally.
$6.$ Special economic zone $(SEZ):$
  • A special economic zone $(SEZ)$ refers to certain fix area of a country which enjoys special economic regulations and liberal economic laws compared to other parts of the country.
  • In $2005$, government of India passed law for $SEZ$ in the parliament and brought it in force from $10th$ February, $2006.$
  • Special economic zones contain several types of zones like:
    $(a)$ Export processing zone
    $(b)$ Free trade zone $(FTZ)$
    $(c)$ Free ports
    $(d)$ Industrial zone
  • $SEZ$ is set-up with the aim of attracting direct local and foreign capital investment.
  • Under $SEZ$ the government provides part or full exemption of custom duty, central excise, service tax, central sales tax, security transaction tax, etc. on products produced in $SEZ$.
$7.$ Export processing zone:
Indian government has established export processing zones or say free processing zones to encourage export trade. In such zones exporters can import goods, re¬process them if needed, manufacture goods and export them without interference of custom authorities. This helps in bringing more foreign earnings to our country.
  • Excise duties, financial transaction regulations and some labour laws are liberal in these zones.
  • Government assures people that it will provide all basic facilities such as roads, electricity, water, communication, transportation, facility to procure high quality raw material, etc. to industries set-up in such zones.
  • Government also provides information on export procedures, international market, demand of products for export, political conditions favorable export, etc. to people interested in export business.
  • Under its economic policy India has developed various free trade zones $(FTZ)$ in places like Kandla, Santa Cruz (Mumbai), Falta (West Bengal), Noida, (Cochin, Chennai, Vishakhapattannam, Kosindra, (Near Dwarka) and Dahej (near Bharuch), etc.
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Question 63 Marks
How bonded go downs are blessing for re-export trade $2$
Answer
  • Bonded go down has important place in foreign trade. This type of go downs are made by government on the port. It holds important place in re-export business.
  • Re-export means to import goods from other country and without getting it discharged; it is re-exported to another country.
  • In the trade of re-export the goods remain in the go down till the ship of the country where goods is to be sent arrives. These are special go downs with special facilities.
  • Goods do not get spoiled and quality of goods is maintained. As goods are not discharged no custom duty is paid. Thus, from the view point of quality and expense bonded go downs are blessing.
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Question 73 Marks
Why the exporter does not accept foul mate receipt ?
Answer
  • The exporter does not accept foul mate receipt when the goods are placed on the ship, the packing of the goods is not proper as per requirement or it is faulty, then the captain of the ship who issues the receipt writes a special note that the goods are not packed properly.
  • This note is written in the bill of lading too. If the goods are damaged during voyage, it is quite difficult for exporter to obtain claim from insurance company.
  • So the exporters do not prefer foul mate receipt.
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Question 83 Marks
How is bill of lading a useful document for foreign trade?
Answer
  • Bill of lading is an authorized receipt of goods received by shipping company from the exporter. It is a proof that payment is made to shipping company.
  • It is a proof of paid freight, primate and other all expense. It includes the conditions on which shipping company has accepted goods for transportation.
  • After obtaining bill of lading, it is the responsibility of shipping company to transport the goods to the destination of importer. Bill of lading is a transferable document It can be sold to another person by endorsing it.
  • From this view point, it is an important document.
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Question 93 Marks
Why does exporter becomes tension-free after receiving 'mate-receipt' for export?
Answer
  • Port authority issues carting order to load goods on ship. Before loading of goods the authority checks each detail of shipping bill and verifies whether all expenses are paid such as payment of custom, insurance premium etc.
  • All documents are thoroughly checked before issuing carting order. On the basis of this order, the goods reach the ship where the captain of the ship or the 'mate' once again checks all details and transportability of goods.
  • Then he issues the receipt which is known as 'mate receipt'. This receipt is a proof that indicates that the goods are in possession of the captain and it will reach the importer's destination.
  • When the exporter receives mate-receipt lie feels assured that importer will definite receive the goods at fixed destination sent by the exporter.
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Question 103 Marks
'Economy of a nation is handicap without foreign trade' - Explain.
Answer
  • Various types of natural resources are found in every country due to its climate minerals, vegetation, agriculture produce, water, oil etc. are of various types in every country.
  • To create wealth, human labour with skill and technology, and support products are required. These products every country has to import from other countries.
  • No country can utilize its resources to maximum extent if there has not been foreign trade. Industrial progress becomes slow, employment opportunities decrease, and entire economy of the country becomes weak.
  • Foreign trade is required for economic development of the nation.
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Question 113 Marks
Why it is necessary to take insurance in foreign trade ?
Answer
  • Foreign trade is carried out between two countries. The distance between two countries is quite long.
  • During long distance transportation goods may get damaged because of climate, heat, cold, rain, moisture, cyclone, tempest, accident, sea-robbery etc.
  • These types of risks are in air transport as well as road transport.
  • Against these risks, to obtain compensation it is advisable to take insurance.
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