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terms of trade

BREAKING DOWN 'Terms of Trade - TOT'

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What are 'Terms of Trade - TOT'?

A computer program, for example, is considered a literary work in the United States and some other countries. The seller quotes a price for the goods shipped by ocean including insurance , all transportation costs, and miscellaneous charges to the point of debarkation from the vessel. Countertrade General expression meaning the sale or barter of goods on a reciprocal basis.

There may also be multilateral transactions involved. Countervailing Duties Additional duties imposed by an importing country to offset government subsidies in an exporting country when the subsidized imports provide a measurable benefit to a specific enterprise or industry and cause material injury to domestic industry in the importing country. Customs-Bonded Warehouse Building or other secured area in which dutiable goods may be stored, may be manipulated, or may undergo manufacturing operations without payment of duty.

Customs Declaration Document that traditionally accompanies exported goods bearing such information as the nature of the goods, their value, the consignee, and their ultimate destination. Required for statistical purposes, it accompanies all controlled goods being exported under the appropriate permit. Customs Invoice Document used to clear goods through customs in the importing country by providing evidence of the value of goods.

In some cases, the commercial invoice may be used for this purpose. Date Draft Document used when the exporter extends credit to the buyer. It specifies a date on which payment is due, rather than a time period as with the time draft. The statement is added to the commercial invoice. Direct Exporting Sale by an exporter directly to an importer located in another country. Distributor A merchant in the foreign country who purchases goods from the U.

The foreign distributor generally provides support and service for the product, relieving the U. A letter of credit requires that payment be made on the basis of the presentation of documents to a lender conveying the title and indicating that specific steps have been taken.

Letters of credit and drafts may be paid immediately or at a later date. Drafts that are paid on presentation are called sight drafts. Drafts that are to be paid at a later date, often after the buyer receives the goods, are called time drafts or date drafts. Dumping Sale of an imported commodity at a lower price in one market than in another—i.

Dumping is considered an actionable trade practice when it disrupts markets and injures producers of competitive products in the importing country. Article VI of the General Agreement on Tariffs and Trade World Trade Organization permits the imposition of special antidumping duties on goods equal to the difference between their export price and their normal value.

E-Commerce Buying and selling over the Internet. EEI must be prepared and submitted, regardless of value, for all shipments requiring an export license or destined for countries restricted by the Export Administration Regulations. Export License Government document that authorizes the export of specific items including technology , in specific quantities, to a specific destination.

May be required for most or all exports to some countries, or for other countries only under special circumstances. Export Management Company EMC Company that performs the functions that would be typically performed by the export department or the international sales department of manufacturers and suppliers. They solicit and transact business in the names of the producers they represent or in their own name for a commission, salary, or retainer plus commission.

EMCs usually specialize either by product or by foreign market. Because of their specialization, the best EMCs know their products and the markets they serve very well and usually have well-established networks of foreign distributors already in place. This immediate access to foreign markets is one of the principal reasons for using an EMC, because establishing a productive relationship with a foreign representative may be a costly and lengthy process.

Export Packing List List that itemizes the exported material in each package and indicates the type of package, such as a box, crate, drum, or carton. An export packing list is considerably more detailed and informative than a standard domestic packing list. It also shows the individual net, tare, and gross weights and measurements for each package in both U.

EPZs include free trade zones, special economic zones, bonded warehouses, free ports, and customs zones. EPZs have evolved from initial assembly and simple processing activities to include high-tech and science parks, finance zones, logistics centers, and even tourist resorts.

Export Quotas Specific restrictions or ceilings imposed by an exporting country on the value or volume of certain exports designed, for example, to protect domestic producers and consumers from temporary shortages of the goods affected or to bolster their prices in world markets. Export Subsidies Government payments or other financially quantifiable benefits provided to domestic producers or exporters contingent on the export of their goods and services.

Export Trading Company ETC Company that acts as an independent distributor, creating transactions by linking domestic producers and foreign buyers. As opposed to representing a given manufacturer in a foreign market, the ETC determines what U.

ETCs can perform a sourcing function, searching for U. Ex Works EXW The buyer is responsible for all export procedures, including vehicle loading, transportation, and costs arising after collection of the goods. Department of Agriculture bureau with programs related to market development, international trade agreements and negotiations, and the collection of statistics and market information.

It is also unlawful to make a payment to any person while knowing that all or a portion of the payment will be offered, given, or promised, directly or indirectly, to any foreign official for the purposes of assisting the company in obtaining or retaining business.

For export operations, the zones provide accelerated export status for purposes of excise tax rebates. For reexport activities, no customs duties, federal excise taxes, or state or local ad valorem taxes are charged on foreign goods moved into zones unless and until the goods or products made from them are moved into customs territory. Thus, the use of zones can be profitable for operations involving foreign dutiable materials and components being assembled or produced in the United States for reexport.

The seller handles the cost of wharfage, while the buyer is accountable for the costs of loading, ocean transportation, and insurance. Free In Pricing term that indicates that the charterer of a vessel is responsible for the cost of loading goods onto the vessel.

Free In and Out Pricing term that indicates that the charterer of the vessel is responsible for the cost of loading and unloading goods from the vessel. Free on Board FOB An international commercial term Incoterm that means free on board and is used in international sales contracts. The buyer assumes the costs and risks from the FOB point, including inland transportation costs and risks in the exporting country, as well as all subsequent transportation costs, including the costs of loading the merchandise on a vessel.

Free Out Pricing term that indicates that the charterer of the vessel is responsible for the cost of unloading goods from the vessel. Freight Forwarder Agent for moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U. Indirect Exporting ale by the exporter to the buyer through a domestically located intermediary, such as an export management company or an export trading company.

Inspection Certificate Document required by some purchasers and countries to attest to the specifications of the goods shipped. The inspection is usually performed by a third party. Insurance Certificate Document prepared by the exporter or freight forwarder to provide evidence that insurance against loss or damage has been obtained for the goods.

Intellectual Property IP Collective term used to refer to new ideas, inventions, designs, writings, films, and so on that are protected by a copyright, patent, or trademark. Department of Commerce program that matches U. Department of Commerce bureau responsible for export promotion programs. Joint Venture Independent business formed cooperatively by two or more parent companies. This type of partnership is often used to avoid restrictions on foreign ownership and for longer term arrangements that require joint product development, manufacturing, and marketing.

Letter of Credit Instrument issued by a bank on behalf of an importer that guarantees an exporter payment for goods or services, provided that the terms of the credit are met. A letter of credit issued by a foreign bank is sometimes confirmed by a U.

This confirmation means that the U. A letter of credit may be either irrevocable, in which case it cannot be changed unless both parties agree, or revocable, in which case either party may unilaterally make changes. We assume that, holding its local price fixed, each government achieves higher welfare when its terms of trade improve: The first term reflects the fact that an increase in the tax rate by the rival exporting nation B, results in an improved terms of trade for nation A. Foreign investment in the exporting sector - welfare enhancing or welfare reducing?

Priority for identifying the relative strength of each country's demand for the other's product as the determinant of the terms of trade goes to James Pennington, Robert Torrens, and, above all, John Stuart Mill. Relative price changes and terms of trade movements Long-run trends in the relative price of primary commodities and in the terms of trade of developing countries. An analysis of import expansion policies.

From to labour's terms of trade improved slightly, helping to offset the effect of the fall in labour share on the growth in consumption wages. Table 16 Terms of Trade Annual percentage change Manufactured goods 0.

Terms of trade, current account and gross national income. Cheong and D'Silva have computed the terms of trade indices by using the estimates of GDP at factor costs in current prices originating in agricultural and manufacturing sectors and their corresponding estimates at constant prices.

Agricultural terms of trade in Pakistan: This article compares fluctuations in New Zealand's terms of trade since to those of a group of advanced economies.

Terms of trade

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Terms of trade represent the ratio between a country's export prices and its import prices. The ratio is calculated by dividing the price of the exports by the price of the imports and multiplying the result by

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Terms of trade definition is - the ratio between the prices of two countries participating in international trade.

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pl n. economics, British the ratio of export prices to import prices. It measures a nation's trading position, which improves when export prices rise faster or fall slower than import prices. terms of trade a PRICE INDEX that shows a country's EXPORT prices relative to its IMPORT prices. It is constructed by taking an index of prices received for exports, on the one hand, and an index of prices paid for imports, on the other, and then dividing the first by the second (see Fig. ).

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Terms of Trade: Definition/Meaning and Explanation: By terms of trade, is meant terms or rates at which the products of one country are exchanged for the products of the other. It is known to us that every country has got its own money. The currency of one country is not legal tender in the other country. Definition of terms of trade: Not the contractual conditions of sale between a buyer and a seller, but the quantity of foreign goods and services (imports) that a country can purchase from the proceeds of the sale of its goods and.