What is international trade importance Multilateral Trading System

What Is International Trade?

International trade is the set of operations for the exchange of goods and services that involve different countries .

International trade can involve manufactured goods, commodities, services, labor and even the movement of capital .

For trade to be characterized, reciprocity is necessary: ​​if you give something, you receive something in return (usually money).

Both the company that exports and the one that imports are involved in international trade.

Operations of this type must respect a series of rules established by international bodies, such as the World Trade Organization (WTO), in addition to bilateral agreements that the governments of the different countries involved can sign.

At the same time, they need to obey the specific domestic laws of each country , what we call foreign trade, a term often confused with international trade.

To better understand the difference: when it comes to international rules, we are talking about international trade.

When they are internal rules of a particular country that is importing or exporting, it is foreign trade.

What Are International Operations?

When goods or services are exchanged , either for other goods or services or for money, we call it a commercial transaction.

If this occurs between organizations from different countries, a commercial operation is characterized.

So what’s the difference between international trade and operations?

Trade is the generic term referring to the set of operations .

When he closes the sale of a certain number of bags of beans to an Italian coffee brand, that is an international operation.

When executing the transaction, the two parties will have to follow international trade rules established by regulatory bodies and agreements between the two countries.

How Does The Management Of International Operations In Companies Work?

A company that sells products or services with another country needs managers with good knowledge in the area.

This is because international trade and operations are a complex subject , whose management requires different types of care.

Starting with the set of rules to be respected, which, in some cases, impose restrictions that must be considered when evaluating the viability of the business.

In addition, cultural barriers – related to language, customs, religion and/or behavior – often impact communication and strategy definition.

Another aspect to be observed is the current political, social and economic situation of the country where the possible partner is located – when there is instability in these aspects, the challenge is greater.

From all this, the administrator will still need good negotiation skills so that the operations have the desired result, and provide a good product or service , at the risk of having their reputation affected on a global scale.

For Prof. Dr. Celso Grisi , coordinator of the MBA in Business Management, Commerce and International Operations , professional preparation is essential.

“International trade now requires professionals whose qualifications present a multicultural vision, with an understanding of different cultures, values ​​and languages. Imagine yourself as a professional with a high degree of tolerance, free from prejudice, capable of accepting local behaviors and habits, different from your own”, said Celso Grisi.

“This professional is seen as someone capable of developing business activities in diversified markets, giving impetus to products and services, as well as being instrumental in representing companies internationally, at the highest standard of quality. Professionals with the skills to negotiate and communicate in other languages ​​will be valued and sought after ”, concluded the coordinator.

When international operations are successful, the company has great chances of entering a virtuous circle, as new partnerships with other foreign companies are opened .

How Important Is International Trade?

Some countries have an abundance of skilled labor in a particular segment, while others have a deficit.

Certain regions of the planet have an abundance of certain natural resources, or better climate and soil conditions to cultivate certain species, while others do not.

In other wordsno country on the globe is self-sufficient in everything , so it exports its main goods and services while importing those whose domestic production is insufficient or non-existent.

Underdeveloped or developing countries, tend to export many products with little added value .

In addition to the aforementioned pau-brasil, sugarcane and coffee play an important role in our history.

Meanwhile, developed countries such as the United States, Japan and Germany export highly technological products with a lot of added value.

Although our trade balance is positive (in 2018, the surplus was US$ 58.3 billion), we have the potential to generate much more wealth with investments in technology and innovation.

For companies, international trade is important not only to expand their market (and, consequently, their revenue), but also to stimulate an increase in the efficiency of processes .

What Is The Purpose Of Studying International Economics?

We can say that the world only really knew about globalization after the Europeans explored the four oceans and discovered America and Oceania.

After all, it was only then that the globe, the root of the word globalization, was fully explored.

The term is used, however, to refer to the deepening of international trade and operations, mainly from the 1990s , when information technology began to take over companies and homes.

Today, the world is more connected than ever, and technologies increasingly expand production and distribution capabilities.

Which brings us to a scenario of dominance of financial markets on a global scale and reduction of the functions and roles of national states.

It is a context that redefines the forms and methods of competition in the world market .

In other words, the universe of international trade and operations has expanded and companies need professionals with good knowledge in this area.

This is where higher education institutions in Administration come in , offering courses that enable students to work in the international market.

What Is The Foreign Trade Course For?

The professional trained in Foreign Trade is qualified to work in commercial operations with companies and governments of other countries .

It is an area that requires constant updating.

The professional must keep informed about customary trends and international economic and political events.

Graduates in this area can work in importing or exporting companies , financial institutions, consultancies, government agencies, exchange operators and logistics companies.

At Fundação Instituto de Administração (FIA) , one of the best-evaluated institutions in national and international education rankings, you will find course options along this line.

See some of them:

  • MBA Business Management, Commerce and International Operations : Master of Business Administration program aimed at training professionals who want to discuss in depth the world of international trade
  • Postgraduate International Trade : trains students with professional content on marketing, logistics and finance, with an approach aimed at introducing the professional to the world of international trade and operations
  • International Executive MBA : trains business leaders with a global business vision, updated and trained for strategic management in a global context.

What Is Multilateral Trading System?

After the end of the brutal Second World War in 1945, the planet was organized to promote peace and collaboration between countries.

One of the results was the creation of the UN, the United Nations.

Another was the General Agreement on Tariffs and Trade , signed in 1947 to boost free trade between countries around the globe.

Known by the acronym GATT ( General Agreement on Tariffs and Trade ), the agreement remained in force until 1994, when the World Trade Organization (WTO) was created and a new Multilateral Trade System (SMC) was established.

It is a system developed internationally to regulate the exchange of goods and services between different countries.

It is the role of the WTO to oversee the implementation and enforcement of the rules on international trade and operations contained in the Multilateral Trading System.

What Is The Difference Between Domestic Trade And Foreign Trade?

The terms themselves are self-explanatory: the set of transactions that occur between companies and consumers in the same country is called internal trade , while foreign trade is what we have been talking about so far: international operations.

But whoever thinks that, in order to work in the area of ​​international trade and operations, whatever the organization, is wrong, it is not necessary to know anything about the domestic market.

On the contrary.

As we explained earlier, each country has both abundances and shortages in certain types of products and services.

An entrepreneur can identify, for example, that the internal production of a certain product cannot completely meet the demand of the consuming public and, from there, enter into an import partnership with an external supplier.

And to export?

Of course, the most important thing is to have a good knowledge of the country you are selling to.

If the domestic market is not fully served in a certain sector, it may be that the smartest and safest step is, before internationalizing the company , to dedicate yourself to conquering a larger share of the domestic market.

What Are Economic Blocs?

There are the international rules of the WTO, which all countries must comply with, under penalty of suffering international sanctions.

But there are also specific partnerships between some countries that have a mutual interest or are in the same region of the planet.

These are the so-called economic blocs, associations that countries form with the aim of strengthening their trade relations , aiming at economic growth.

The blocks can be of the following types (in order of intensity of relations): free trade area, customs union, common market or economic and monetary union.

The countries that make up a bloc sign agreements that provide special conditions for international trade and operations between them.

Main Economic Blocks

Next, see which are the main economic blocks that impact international trade and operations in the world.

  • Mercosur: formed in 1995, the Southern Common Market is made up of Brazil, Argentina, Uruguay and Paraguay. Since 2016, Venezuela has been suspended from the bloc for alleged “disruption of democratic order”
  • European Union: the main economic bloc in the world, the European Union emerged in 1957, with the name of European Economic Community (EEC), acquiring its current name after the Maastricht Treaty, in 1993. It is currently composed of 28 countries
  • NAFTA: the North American Free Trade Agreement was created in 1991, uniting Canada, Mexico and the United States
  • ASEA: The Association of Southeast Asian Nations is an organization formed in 1967, comprising 12 Asian nations.

There are also groups such as the Asia-Pacific Economic Cooperation, a forum made up of 21 countries that aims to become a free trade area .

As for the BRICS, a group made up of Brazil, Russia, India, China and South Africa, it is not considered an economic bloc, as it does not have a statute or formal registration.

International Trade And Imports

A company that has skilled professionals in logistics and negotiation is able to import products with good demand in the country under favorable conditions.

Another option for tapping the demand for value-added products does not involve international trade and operations.

We are talking about investing in technology, innovation and qualified labor to develop our own production.

It’s a much more arduous path.

With good planning and responsible management, however, it is capable of generating excellent profits.

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