Foreign trade is the exchange of goods and services between two or more countries.
Foreign trade is the purchase or sale of goods and services that are carried out outside the geographical borders of a country (abroad). That is, the parties interested in trading products are located in different countries or regions.
Foreign trade is generally subject to various regulations for both product control (health, safety, etc.), as well as procedures (bureaucratic procedures, records, etc.) and taxation (taxes, tariffs, etc.).
The main objective of foreign trade is to satisfy consumer demand by taking advantage of the comparative advantages that each country has. The concept that encompasses the foreign trade of all countries is that of international trade.
It is important to mention that the development of foreign trade occurs thanks to the existence of trade liberalization, in addition to the elimination of prohibitions and tariff barriers. In turn, customs and freight policy, as well as that of foreign trade taxes, must be rational and prudent. It should try to promote competition for the good or service abroad and allow the country to receive other different currencies. All this, so that it can import goods or services without any type of protectionist policy.
Foreign trade characteristics
Foreign trade has the following basic characteristics:
There are certain exemptions on the import duties levied on the import of products somehow related to the products that will be exported.
One such scheme is the Advance Authorisation Scheme (AAS) under which if you are the manufacturer of any export product and you require any input or raw material to be imported in its process of manufacturing then these goods will be duty-free import.
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