International trade

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International trade is the exchange of capital, goods, and services across international borders or territories[1] because there is a need or want of goods or services.[2]

In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has existed throughout history (for example Uttarapatha, Silk Road, Amber Road, salt roads), its economic, social, and political importance has been on the rise in recent centuries.

Carrying out trade at an international level is a complex process when compared to domestic trade. When trade takes place between two or more states, factors like currency, government policies, economy, judicial system, laws, and markets influence trade.

To ease and justify the process of trade between countries of different economic standing in the modern era, some international economic organizations were formed, such as the World Trade Organization. These organizations work towards the facilitation and growth of international trade. Statistical services of intergovernmental and supranational organizations and governmental statistical agencies publish official statistics on international trade.

Characteristics of global trade

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Trading globally may give consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found in the international market, for example: food, clothes, spare parts, oil, jewellery, wine, stocks, currencies, and water. Services are also traded, such as in tourism, banking, consulting, and transportation.

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The ancient Silk Road trade routes across Eurasia

Advanced technology (including transportation), globalization, industrialization, outsourcing and multinational corporations have major impacts on the international trade systems.

Differences from domestic trade

File:Flight to Newark Liberty International Airport (EWR) with view to Newark Bay - panoramio.jpg
Ports play an important role in facilitating international trade. The Port of New York and New Jersey grew from the original harbor at the convergence of the Hudson River and the East River at the Upper New York Bay.

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.

However, in practical terms, carrying out trade at an international level is typically a more complex process than domestic trade. The main difference is that international trade is typically more costly than domestic trade. This is due to the fact that cross-border trade typically incurs additional costs such as explicit tariffs as well as explicit or implicit non-tariff barriers such as time costs (due to border delays), language and cultural differences, product safety, the legal system, and so on.

Another difference between domestic and international trade is that factors of production such as capital and labor are often more mobile within a country than across countries. Thus, international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labour, or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010, suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[4]

History

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The history of international trade chronicles notable events that have affected trading among various economies.

Theories and models

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Most traded export products

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Largest countries or regions by total international trade

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Volume of world merchandise exports

The following table is a list of the 30 largest trading states according to the World Trade Organization in 2024.[5][6]

International trade (millions of USD)
Rank State Goods Services Goods and
services
– World 49,177,769 16,930,782 66,108,551
– Template:Country data European Union 5,429,683 3,156,243 8,585,926
1 Template:Country data United States 5,424,499 1,993,624 7,418,123
2 Template:Country data China 6,163,999 1,056,457 7,220,456
3 Template:Country data Germany 3,107,433 1,023,755 4,131,188
4 Template:Country data United Kingdom 1,328,813 1,050,548 2,379,361
5 Template:Country data Netherlands 1,732,989 640,644 2,373,633
6 Template:Country data France 1,390,477 740,560 2,131,037
7 Template:Country data Japan 1,449,636 474,705 1,924,341
8 Template:Country data India 1,144,196 644,197 1,788,393
9 Template:Country data Singapore 964,344 746,688 1,711,032
10 Template:Country data South Korea 1,315,376 301,607 1,616,983
11 Template:Country data Italy 1,289,671 318,022 1,607,693
12 Template:Country data Hong Kong 1,349,678 199,642 1,549,320
13 Template:Country data Canada 1,141,276 319,173 1,460,449
14 Template:Country data United Arab Emirates 1,142,066 283,962 1,426,028
15 Template:Country data Mexico 1,261,074 125,087 1,386,161
16 Template:Country data Ireland 383,054 986,640 1,369,694
17 Template:Country data Belgium 1,048,406 307,233 1,355,639
18 Template:Country data Spain 896,146 331,898 1,228,044
19 Template:Country data Switzerland 816,072 394,410 1,210,482
20 Template:Country data Taiwan 875,482 129,912 1,005,394
21 Template:Country data Poland 759,378 193,934 953,312
22 Template:Country data Vietnam 782,268 60,044 842,312
23 Template:Country data Russia 711,706 121,512 833,218
24 Template:Country data Australia 637,759 192,015 829,744
25 Template:Country data Turkey 605,875 168,506 774,381
26 Template:Country data Brazil 615,000 151,513 766,513
27 Template:Country data Thailand 607,339 145,786 753,125
28 Template:Country data Malaysia 630,781 109,773 740,554
29 Template:Country data Saudi Arabia 537,338 156,942 694,280
30 Template:Country data Sweden 382,556 241,841 624,397

Top traded commodities by value (exports)

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Traded commodities in 2022
Rank Commodity Value in US$
(millions)		 Date of
information
1 Mineral fuels, oils, distillation products 3,988,389 2022
2 Electrical, electronic equipment 3,493,553 2022
3 Machinery, nuclear reactors, boilers, etc. 2,573,572 2022
4 Vehicles (excluding railway) 1,621,658 2022
5 Pharmaceutical products 875,345 2022
6 Pearls, precious stones, metals, coins, etc. 866,839 2022
7 Plastics and articles thereof 815,554 2022
8 Optical, photo, technical, medical, etc. apparatus 669,128 2022
9 Iron and steel 564,547 2022
10 Organic chemicals 537,854 2022

Source: International Trade Centre[7]

Observances

In the US, starting in 1935, the various U.S. presidents have held "World Trade Week" observances to promote large and small companies to be more involved with the export and import of goods and services. This tradition was preceded by a local observance of "Foreign Trade Week" by the Los Angeles Area Chamber of Commerce that originated in 1927 as an expansion of United States National Maritime Day.

Every year the President declares the third week of May to be World Trade Week.[8][9]

International trade vs local production

Food security

Script error: No such module "Labelled list hatnote". The trade-offs between local food production and distant food production are controversial, with limited studies comparing environmental impact and scientists cautioning that regionally specific environmental impacts should be considered.[15] A 2020 study indicated that local food crop production alone cannot meet the demand for most food crops with "current production and consumption patterns" and the locations of food production at the time of the study for 72–89% of the global population and 100 km radiuses as of early 2020.Template:Clarify[16][17][18] Studies found that food miles are a relatively minor factor for carbon emissions, albeit increased food localization may also enable additional, more significant, environmental benefits such as recycling of energy, water, and nutrients.[19] For specific foods regional differences in harvest seasons may make it more environmentally friendly to import from distant regions than more local production and storage or local production in greenhouses.[20]

Qualitative differences and economic aspects

Qualitative differences between substitutive products of different production regions may exist due to different legal requirements and quality standards or different levels of controllability by local production- and governance-systems which may have aspects of security beyond resource security, environmental protection, product quality and product design and health. The process of transforming supply as well as labor rights may differ as well.

Local production has been reported to increase local employment in many cases. A 2018 study claimed that international trade can increase local employment.[21] A 2016 study found that local employment and total labor income in both manufacturing and nonmanufacturing were negatively affected by rising exposure to imports.[22]

Local production in high-income countries, rather than distant regions may require higher wages for workers. Higher wages incentivize automation[23] which could allow for automated workers' time to be reallocated by society and its economic mechanisms or be converted into leisure-like time.

Specialization, production efficiency and regional differences

Local production may require knowledge transfer, technology transfer and may not be able to compete in efficiency initially with specialized, established industries and businesses, or in consumer demand without policy measures such as eco-tariffs. Regional differences may cause specific regions to be more suitable for a specific production, thereby increasing the advantages of specific trade over specific local production. Forms of local products that are highly localized may not be able to meet the efficiency of more large-scale, highly consolidated production in terms of efficiency, including environmental impact.Script error: No such module "Unsubst".

Resource security

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A video explaining findings of the study "Water, energy and land insecurity in global supply chains"

A systematic, and possibly first large-scale, cross-sectoral analysis of water, energy and land in security in 189 countries that links total and sectorial consumption to sources showed that countries and sectors are highly exposed to over-exploited, insecure, and degraded such resources with economic globalization having decreased security of global supply chains. The 2020 study finds that most countries exhibit greater exposure to resource risks via international trade – mainly from remote production sources – and that diversifying trading partners is unlikely to help countries and sectors to reduce these or to improve their resource self-sufficiency.[24][25][26][27]

Illicit trade

Illegal gold trade

A number of people in Africa, including children, were using informal or "artisanal" methods to produce gold. While millions were making a livelihood through this small-scale mining, governments of Ghana, Tanzania and Zambia complained about the increase in illegal production and gold smuggling. Sometimes the procedure involved criminal operations and even human and environmental cost. Investigative reports based on Africa's export data revealed that gold in large quantities is smuggled out of the countryTemplate:Clarify through the United Arab Emirates, without any taxes being paid to the producing states. Analysis also reflected discrepancies in the amount exported from Africa and the total gold imported into the UAE.[28]

In July 2020, a report by Swissaid highlighted that the Dubai-based precious metal refining firms, including Kaloti Jewellery International Group and Trust One Financial Services (T1FS), received most of their gold from poor African states like Sudan. The gold mines in Sudan were seldom under the militiasTemplate:Clarify involved in war crimes and human rights abuses. The Swissaid report also highlighted that the illicit gold coming into Dubai from Africa is imported in large quantities by the world's largest refinery in Switzerland, Valcambi.[29][30]

Another report in March 2022 revealed the contradiction between the lucrative gold trade of West African countries and the illicit dealings. Like Sudan, Democratic Republic of Congo (DRC), Ghana and other states, discrepancies were recorded between the gold production in Mali and its trade with Dubai, UAE. The third largest gold exporter in Africa, Mali imposed taxes only on the first Template:Convert of gold exports per month, which allowed several small-scale miners to enjoy tax exemptions and smuggle gold worth millions. In 2014, Mali's gold production was 45.8 tonnes, while the UAE's gold imports were 59.9 tonnes.[31][32]

Statistics

See also

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References

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Further reading

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Sources

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External links

Data

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Statistics from intergovernmental sources

Data on the value of exports and imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes. The definitions and methodological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services). Metadata providing information on definitions and methods are often published along with the data.

Other external links

Template:Trade Template:Authority control

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