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Summary International Trade
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Evi Bekooij – 2IBMInternational Trade – 2021/2022
semester 2
Table of Contents
Introduction.......................................................................................................................2
Chapter 1 – introduction to international trade..................................................................3
Why international trade?.............................................................................................................3
World trade..................................................................................................................................3
Belgium’s status...........................................................................................................................3
Chapter 2 – globalization...................................................................................................4
What is globalization?..................................................................................................................4
Drivers of globalization.................................................................................................................5
Trade policies & agreements........................................................................................................5
The emergence of global institutions............................................................................................7
Chapter 3 – strategy of international business...................................................................7
Strategy and the firm...................................................................................................................7
Global expansion..........................................................................................................................9
Cost pressures and pressures for local responsiveness...............................................................10
Choosing a strategy....................................................................................................................11
Chapter 4 – entry strategy and strategic alliances............................................................13
Entry strategy decisions..............................................................................................................13
Basic entry decisions..................................................................................................................13
Entry modes...............................................................................................................................14
Select an entry mode..................................................................................................................17
Greenfield or acquisition?..........................................................................................................18
Strategic alliances.......................................................................................................................18
Chapter 5 – transport modes............................................................................................19
Modes of transport.....................................................................................................................19
Multimodal/intermodal transport..............................................................................................23
Containers..................................................................................................................................23
Other uniform dimensions..........................................................................................................24
Transport intermediaries............................................................................................................25
Chapter 6 – transport documents.....................................................................................27
,Evi Bekooij – 2IBM
Introduction...............................................................................................................................27
Bill of lading (B/L).......................................................................................................................28
Inland waterway Bill of Lading....................................................................................................30
CMR-Consignment note..............................................................................................................30
CIM-Consignment note...............................................................................................................31
Air Way Bill (AWB)......................................................................................................................31
Chapter 7- incoterms........................................................................................................33
Introduction...............................................................................................................................33
What are incoterms?..................................................................................................................33
Incoterms – group 1....................................................................................................................33
Incoterms – group 2....................................................................................................................36
Chapter 8 – international payment techniques.................................................................38
Introduction...............................................................................................................................38
Cash in advance..........................................................................................................................38
Letter of credit............................................................................................................................39
Documentary collection..............................................................................................................40
Open account.............................................................................................................................41
Chapter 9 – risks in international trade............................................................................42
Risk of non-payment..................................................................................................................42
Political risk................................................................................................................................43
Currency exchange rate risk........................................................................................................43
Transport & logistical risk...........................................................................................................44
Administrative risk.....................................................................................................................44
Economical risk...........................................................................................................................44
Legal risk.....................................................................................................................................45
Introduction
Trade = central way to end global poverty
- trade is central to ending global poverty. Countries that are open to international trade
tend to grow faster, innovate, improve productivity, and provide higher income and more
opportunities to their people
- open trade also benefits lower-income households by offering consumers more affordable
goods and services
- integrating with the world economy through trade and global value chains helps drive
economic growth and reduce poverty – locally and globally
,Evi Bekooij – 2IBM
There are different critiques on globalization, there are links with UN SDGs. However always
take the triple bottom line into account! People, planet & profit (3P)
Chapter 1 – introduction to international trade
Why international trade?
In the last few centuries
- greater openness and liberalized trade
- however, protectionism has always immersed, sometimes protecting your country is good!
- advanced nations are realizing that economic and growth and stability depend on a
strategic mix of trade policies: both free trade and protectionism
World trade
WTO = world trade organization -> getting together of countries to make agreements
- world trade volumes today are 42 times the level of 1950
- world trade values today are over 302 times the level of 1950
- growth acceleration since establishment of WTO in 1995
Important conclusions!
global trade concentrated in a few countries
leading exporters = leading importers
leaders are often Western industrialized countries!
- US: large import value (trade deficit)
- China and Far East: growing
Japan, South Korea, Hong Kong
Vietnam, the Philippines grow rapidly!
China circumventing Trade War
- South America: only Mexico and Brazil in top 30
- Africa: not in top 30
- Belgium: decreased, but still high
Belgium’s status
In 2019 Belgium’s has the 18th position on the list of world merchandise exporters (in
millions of $)
In 2019 Belgium was the 13th world merchandise importer
, Evi Bekooij – 2IBM
Reasons why Belgium has an open economy
- central location
- high population density
- scarcity of natural resources
- Centre of Belgian economy = processing foreign goods and export them
A country’s trade balance (or balance of trade) is the difference between exports and
imports of goods and services in that country.
Disbalance:
- Trade surplus: export -> import
- Trade deficit: import -> export
More export than import = processing goods and exporting them
Belgium’s balance of trade = primarily positive
Import/export by sector
Import/export by sector (2019)
• Large variety
• Almost 30% of exports are chemicals and pharmaceuticals – main export products
• Transport equipment + machinery and equipment > 22%
• Import: 11.2% mineral oils
(Belgium no producer of crude oil but processes the oils into other high value
products!)
• Foodstuff: 5.5% export, 3.9% import
• Textile sector is also important, although strong competition abroad. Decreased over
the last few years
- Especially carpets and fabric for furniture and floor coverings
Chapter 2 – globalization
What is globalization?
- the transformation of national economies into an interdependent integrated global
economic system
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