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Kinds of Foreign Trade


Published 01 Sep 2020

Kinds of Foreign Trade

Kinds of Foreign Trade

Foreign trade variations consist of three concepts. These are: import, export and transit trade.


Import: Is the name given to the process of purchasing goods and services from a foreign country. It is called external purchase. It is the process of purchasing goods, which were produced in other countries, by buyers in the country. Together with export, it creates a country's foreign trade balance. It can be done by private and legal persons. In addition, it can be done by public economic institutions and the state. Looking at the trade picture of a country, the lower the import the more positive for that country. Countries with high import levels face a trade deficit. Thanks to import, quality products can be obtained at low prices. In this way, they can be sold with a high profit rate. Besides this advantage, there are also disadvantages. With imports, domestic industry may decline, the country's economic growth will decrease, and a "Goods and Services" tax must be paid. Licenses and documents must be obtained to carry out your transactions.

 

Export: Is the sale to abroad of goods or services which were produced within the borders of a country. It is called foreign trade. It is the sale of a good or service to a foreign country for foreign currency. It has an important role in a country's trade balance. It is divided into two as indirect and direct exports. A country's gross production increases with the sale of exported goods. Thanks to export, you can have the advantage of expanding your business worldwide. It increases employment rates, strengthens the domestic competition environment and the communication between countries. In addition to these, there are disadvantages such as high transportation costs, need for basic investment and loss of profit. In order to export, licenses and documents must be obtained.

 

Transit Trade: It is the transit of goods that are bought by a company or warehouse operating abroad or in free zones and transported through our country to another company or warehouse operating abroad. When conducting transit trade, requests are made to banks by arranging a "Transit Trade Form". Transit trade cannot be made with goods that are prohibited for trade specified in international agreements and goods that are not suitable for transit trade determined by policies. It is not possible to conduct transit trade with countries where import and export are prohibited. These three concepts, which are kinds of foreign trade, are kept under supervision and control with the legal regulations issued.