FOREIGN TRADE

Prepared by:

HOPE EVAN D. AMANTILLOMEG ALLEN CHRISNA BARONFOREIGN TRADEDEFINITIONForeign Trade - is the exchange of capital, goods, and services across international boarders or territories.HISTORY OF FOREIGN TRADEHistory of international trade in ancient times:

According to Periplus Maris Erythraei, which is a Greek travel manuscript, written in the 1st century CE, there used to be extensive trade between Romans and the Indians.The Arabian nomads carried out long distance trading activities with the help of camels. They traded silk and spices in Far East.The Tyrian fleet of ships known as Ships of Tarshish, sailed back with ivory, silver, gold and precious stones from the east.The Egyptians carried out extensive trading activities in the Red Sea. They imported spices from Arabia and from the Land of Punt.

History of international trade in the middle ages:The Song Dynasty created the first paper printed money. Aden, Siraf, Damietta and Alexandria were used as ports through, which the Abassids entered China and India.Industrial manufacturing, processing and distribution of wine, tea, salt was nationalized by Wang Anshi of China.Market rights as well as trading privileges were secured by Hanseatic League in England for goods in the year 1157.Brocade workshops as well as silk mills were supported by the Song Dynasty in Kafeing and eastern province.

History of international trade in modern times:

Foreign trade licenses were introduced by Japan to prevent piracy and smuggling in the year 1592.Dutch convoys sails back in the year 1599 with products from East India. The convoy also brings in spices.(600,000 pounds).Dutch East India Company is established in the year 1602. The company declares bankruptcy in 1799 because of a rise in competition in free trade.The French constructed military forts during the eighteenth century. These forts acted as trading and communication ports for trade of fur.

History of international trade in later modern era:

During the reign of Napoleon III, the Free Trade Agreement(year-1860) was struck between France and Britain.In the year 1815, first nutmeg shipment sailed back from Europe.In 1868, Japanese Meiji Restoration opened its doors for industrialization by means of free trade.In the year 1946, the Bretton Woods System was introduced. This international economic model was introduced to stop wars and depressions.In 1947, as many as 23 nations give their consent to the implementation of GATT (General Agreement On Tariffs And Trade).NAFTA was formed on 1st January, 1994.On 1st January, 1995, the World Trade Organization or the WTO came into being to promote free trade between various nationsWhy do Nations Trade?Nations trade because an exchange of goods and services is mutually beneficial.Trade enables nations to produce more efficiently and to exchange more effectively for what they need.Needs and Importance of Foreign TradeDivision of Labor and SpecializationOptimum allocation and utilization of resourcesEquality of PricesAvailability of multiple choicesEnsures quality and standard goodsRaises standard of living of the peopleGenerate employment opportunitiesFacilitate economic developmentAssistance during natural calamitiesMaintains balance of payment positionBrings reputation and helps earn goodwillPromotes world peaceADVANTAGES OF FOREIGN TRADE Meeting our needs Job Creation Attracting InvestmentNew Technology & Materials Diverse Products and Services DISADVANTAGES OF FOREIGN TRADESupport of Non-Democratic Systems Cultural Identity Issues Social Welfare Issues Environmental Issues Political Issues Foreign Trade and Economic DevelopmentForeign exchange earningMarket expansionIncrease in investmentImproves quality of local goodsAgricultural DevelopmentRemove monopoliesOBSTACLES TO THE FLOW OF TRADETARIFFS- A Tax on imported commodities.

QUOTAS- A Quantitative restriction on the amount of a good that may be imported during a year.

Types of Foreign TradeEXPORTS and IMPORTS DEFINEDMerchandise shipped out of the country are called Exports, while those shipped into the country are called Imports.VALUE OF TOP 10 PHILIPPINE EXPORTS TO ALL COUNTRIES

COMMODITY20142015FY(US$B)Jan-July(US$B)Jan-July(US$B)1. Electronic Products26.77314.92816.2902.Other Manufactures4.6213.0442.4203. Machinery and Transport Equipment3.7652.4792.1924.Woodcrafts and Furniture3.0372.1181.6765. Chemicals2.4581.2361.218COMMODITY20142015FY(US$B)Jan-July(US$B)Jan-July(US$B)6.Ignition Wiring Set and other Wiring Sets Used in Vehicles, Aircrafts and Ships1.9541.1241.1187.Articles of Apparel and Clothing Accessories1.7001.0901..0238.Other Mineral Products2.5531.7161.0109.Metal Components1.2860.7530.74610.Coconut Oil1.1280.6320.685

VALUE OF TOP 10 PHILIPPINE IMPORTS FROM ALL COUNTRIES

COMMODITY20142015FY(US$B)Jan-July(US$B)Jan-July(US$B)1. Electronic Products15.2978.2710.532.Mineral Fuels, Lubricants and Related Materials13.1898.044.533. Transport Equipment6.2383.813.294.Industrial Machinery and Equipment3.2431.792.175.Other Food and Live Equipment2.2371.161.42COMMODITY20142015FY(US$B)Jan-July(US$B)Jan-July(US$B)6.Miscellaneous Manufactured articles1.7090.901.157.Cereals and Cereal Preparations1.7020.841.088.Iron and Steel1.8091.031.069.Plastics in Primary and Non-Primary Forms2.0761.141.0210.Telecommunication Equipment and Electrical Machinery1.3880.800.86

FOREIGN TRADE STATISTICS

Source: https://psa.gov.ph/content/foreign-trade-statistics-philippines-2014Balance of Payments- Is a summary statement of all the transactions of a nation with the rest of the world during a year. It includes the current capital and official reserve accounts.

MAJOR TRADE ORGANIZATIONSWORLD TRADE ORGANIZATION (WTO)- Designed to create economic world order in international trade- Adoption of a set of rules governing international trade barriers.- Provides the mechanism for monitoring and providing surveillance of issues affecting international trade.

ASIA-PACIFIC ECONOMIC COOPERATION (APEC)- To develop wider consultations among countries in the Asia Pacific region on international economic issues affecting investment, trade and commerce and other forms of cooperation.ASEAN FREE TRADE AREA (AFTA)- To reduce trade barriers among member countries.- To foster ASEAN free trade agreements with other large economies.- Envisioned to be a free trade area and to achieve a common Effective Preferential Tarrif with tariff rates ranging from zero to five percent.Export Development ActRepublic Act No. 7844, or the Export Development Act, aims to develop the countrys export sector and meet the countrys export goals. The law puts into focus a national strategy for a sustainable agri-industrial development to push the Philippines image as a newly-industrialized country.