Foreign trade and international trade

Foreign trade are all the commercial exchanges of goods and services carried out between a country or block of countries with the rest of the world.

International trade is the commercial exchange of goods and services between countries around the world.

The difference between foreign trade and international trade is the scope, since international trade itself contains all transactions between countries, therefore it encompasses foreign trade.

What is foreign trade?

Foreign trade are all commercial transactions carried out between a country or block of countries with the same customs territory, in relation to the rest of the world.

In this sense, it is worth the example of the commercial exchanges that take place between Argentina and Japan, which allow the export of Argentine beef to the Asian country. In this case, it is a relationship between Argentina in relation to Japan.

In the case of blocks or groups of countries, an example would be transactions carried out within the European Union.

What is international trade?

They are all global commercial transactions that are carried out between countries around the world, using as a regulatory framework the agreements between countries participating in the exchange and the governments of those countries.

In this case, operations are carried out between different customs territories and are carried out in foreign currency, according to prices determined by global markets, such as the price of oil or gold.

Operations can be carried out between countries (Portugal and Mexico), commercial blocks of countries (Mercosur and the European Union) or between countries and commercial blocks (Mexico and the European Union).

In this sense, international trade includes foreign trade, since it houses all commercial transactions between countries.

International trade regulations

International trade has two organizations of different nature and objectives, but which coincide in ensuring the protection and expansion of the exchange of goods and services throughout the world: the International Chamber of Commerce (ICC) and the World Trade Organization. (WTO).

International Chamber of Commerce (ICC)

It is an organization created in France in 1919 to stimulate investment and commercial transactions between companies from different countries, as well as to serve as a spokesperson before intergovernmental organizations and governments. One of his most significant achievements has to do with the creation of the incoterms, or international trade terms, a series of terms of three or four acronyms that describe basic aspects of an international trade contract. In this way, the participants of such a treaty will be on equal footing with respect to understanding the terms and conditions of the agreement, regardless of language or cultural limitations.

The Incoterms were created in 1936 and while not legally binding, have gained recognition due to the recurrent use in international trade. This is an example of a business term:

FCA ( free carrier ): free carrier

“The seller has fulfilled his obligations when he has deposited the merchandise, already cleared from customs for export, at the expense of the carrier appointed by the buyer, at the place or point set for it.”

World Trade Organization (WTO)

It was created in 1995 to ensure compliance with the rules governing trade between countries. At that time, its creation was relevant in the face of the urgent need to regulate the incipient world trade exchange driven by globalization. However, for some experts, the proliferation of bilateral agreements and free trade agreements between countries or trading blocs in recent years has made the organization less relevant.

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