Economic Mechanism by Trade

New Economic Mechanism 

 Reform 

The period from 1956–1968 was one of reform in Eastern Europe. The beginning of these transformations was marked by the Hungarian Revolution of 1956 which resulted in János Kádár’s placement as the communist leader of the People's Republic of Hungary and the creation of the Hungarian Socialist Workers' Party (HSWP). For the first ten years of his rule, Kádár’s objective was to create a united Hungary, announcing in December 1961 that "those who are not against us are with us." Having reached social peace, Kádár turned his attention to economic improvement.

On May 7, 1966, the Central Committee of the HSWP announced Kádár’s plans for the reform of the economy, known as the New Economic Mechanism (NEM). The reform is considered as "the most radical postwar change" of any Comecon country. The plan, which became official January 1, 1968, was a major shift to decentralization in an attempt to overcome the inefficiencies of central planning. The NEM represented a move away from the Stalin economic system of compulsory plan indicators in favor of a policy that states profits as the enterprises main goal. The new economic policy was a "comprehensive reform of the economic system", creating market relationships among firms, using prices as allocative functions and firms responding to prices to maximize profits, and using profits to budget new investments^.

 Prices

The New Economic Mechanism also aimed to create a more active role for prices. A system of free prices reflecting market conditions was implemented. The government wanted flexibility, but also to combat inflation. To do so, they introduced a new practice of price controls declaring an item’s price as fixed, limited or free.

Fixed prices were classified as material and basic intermediate goods. The price was fixed because of the good’s impact on the economy and the overall need to ensure stability. The price was determined by ministries.

Limited prices referred to particular products or products in some product group for which there were no substitutes, such as bread. It was applied on the average price over a period or a window within which prices were free to fluctuate.

Free prices were assigned to goods that formed small parts of individual expenditures or were regarded as luxuries.

The price reform allowed for prices better to reflect the cost of production and the valuation by the market, and to correspond more closely to "some measure of socially necessary inputs" helping reach market equilibrium.

Enterprises

The Central Committee’s document on May 7 details changes in the firm’s role under the new economic policy. The reform gave producers the freedom to decide what and how much they produce and offer for sale and to establish commercial or co-operative relationships. Buyers were also given the freedom to choose between domestic goods and imports. Additionally, firms were given greater autonomy in carrying out investments and hiring labor. As dictated by the Central Committee, success is to be measured by a firm’s profitability. The decentralized structure of the New Economic Mechanism marked an improvement in the decision making process, allowing for basic decisions to be made at the local level without information having to be transmitted upward for a more centralized decision. The Hungarian government made 50.5%(enterprises 49.5%) of the investment decisions for the 68 billion Forint invested in 1968, while in 1974 enterprises accounted for 53.1% of the decisions for the 128 billion Forint invested^.

trade finance

Foreign Trade

The goal of the New Economic Mechanism was consisted in improving Hungary’s economy to make Hungary a serious contributor to the international economy. In 1966 the Soviet Union accounted for 32% of Hungary’s exports and 29% of its imports. Of Hungary’s exports to Western Developed Countries, 42.7% was Food and Live Animals, 43.5% Manufactured Goods. Meanwhile trade with Socialist Countries consisted largely of Manufactured Goods(81.3%). Alternatively, Hungary’s imports from the West were primarily Manufactured Goods(70.6% of Western imports). Because of the pre-existing quota system which placed an emphasis on quantity, not quality, Hungarian goods were inferior and did not meet Western technological standards.

Decentralization provided enterprises with the opportunity to better align with the world market by giving them more freedom in deciding which products and technologies to invest in and manufacture. Additionally, firms were paid for exports in the Hungarian currency equivalent of the foreign currency they earned, as the government aimed to involve enterprises in foreign markets and in improving the quality of goods produced. The new plan established direct connections between the foreign and domestic markets on the basis of an appropriate exchange rate.The primary concern of the New Economic Mechanism was in improving foreign trade and establishing a relationship between success in exportation and a firm’s profitability.

    

Trade is the transfer of ownership of goods and services from one person or entity to another by getting something in exchange from the buyer. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.

Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Wholesale trade is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.

Trading can also refer to the action performed by traders and other market agents in the financial markets.

islamic finance

The European Free Trade Association (EFTA) was founded in 1960 to promote free trade as a means of achieving growth and prosperity among its Member States, closer economic co-operation between the Western European countries, and the expansion of global trade. Today the EFTA members are Iceland, Liechtenstein, Norway and Switzerland.

In order to continue a close co-operation between European countries in trade area the European Economic Area (EEA) was established. The EEA Agreement entered into force on 1 January 1994. The EEA 18 became the EEA 28 on 1 May 2004, when 10 new countries became members of the EU. The two financial mechanisms were created as part of the EEA Enlargement Agreement.

Under the EEA Enlargement Agreement two new financial instruments will be available for several EU countries, including Latvia: EEA Financial Mechanism and Norwegian Financial Mechanism.

Although the two Mechanisms are closely coordinated, decisions on the granting of assistance are taken separately with each entity being responsible for the management of its own decisions. Decisions on the granting of assistance by the EEA Financial Mechanism are taken by the EEA Financial Mechanism Committee (the FMC) in Brussels. Decisions on the granting of assistance by the Norwegian Financial Mechanism are taken by the Norwegian Ministry of Foreign Affairs. To unify the implementation of both Financial Mechanisms EFTA secretariat has established Financial Mechanism office (FMO) in Brussels, which administrates both Financial Mechanisms.

To ensure the implementation of the Norwegian Financial Mechanism and the EEA Financial Mechanism two Memorandums of Understanding - between the Kingdom of Norway and the Republic of Latvia (on the subject of the Norwegian Financial Mechanism) and between the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Republic of Latvia (on the subject of the EEA Financial Mechanism) have been signed.

National Focal Point (NFP) has the overall responsibility for the management of the EEA Financial Mechanisms’ activities in the Republic of Latvia, as described in this Memorandum of Understanding (MoU) and the Rules and Procedures adopted by the Financial Mechanism Committee, including overall responsibility for the use of funds, financial control and audit.

Certain tasks of NFP are entrusted (in form of agreement) to the Central Finance and Contracting Agency (CFCA). The CFCA is a state agency under supervision of the Ministry of Finance. Its main functions are to:

Agree to set up a payment mechanism to facilitate bilateral trade 

In a significant development indicating a breakthrough in resolving the India-Iran payment crisis for import of oil as well as exports, both countries have agreed to set up a payment mechanism to facilitate bilateral trade.

According to the Finance Ministry, both sides agreed on the mechanism to be put in place for the purpose, including for the payment to Indian exporters and project exporters. Although the statement did not indicate but this would also include payments made by India for buying Iranian crude oil. The issue of payment for oil had been hanging in fire for the last nine months with the Indian side grappling for a solution on the issue.

The agreement follows a meeting between Department of Economic Affairs (DEA) Secretary R. Gopalan with Iranian delegation led by Vice-Governor of Central Bank of Iran Seyed Kamal Seyed Ali. The Finance Ministry statement said both sides agreed to continue their engagement in the matter.

The problem over payment to Iran arose after the Reserve Bank of India on December 23 last scrapped the Asian Clearing Union (ACU), winning appreciation from the U.S., which is using sanctions to force Tehran to halt its nuclear programme. 

Laos Economic Situation

Laos is among the least developed group of countries (LDC) and relies heavily on donor assistance. Social indicators are among the poorest in the region and 34% of the population are living below the poverty line. Estimated average life expectancy in 2008 is 63.2 years. A large proportion (around 80%) of the population relies on subsistence agriculture (largely peasant farming) and agricultural development is constrained by a lack of modern skills, inadequate infrastructure and capital. Laos has no railways, a basic roading system, limited telecommunications and electricity is only available in urban and some rural areas. The government is sponsoring major improvements in the road system with support from Japan and China.

In 1986 the government of Laos began decentralising control and encouraging private enterprise. The New Economic Mechanism, aimed to expose the economy to market forces, opening trade and foreign investment opportunities, strengthening the role of the private sector and improving macro-economic management. The results, starting from an extremely low base, were striking- growth averaged 6% per year in 1988-2007, except by the short-lived drop caused by the Asian financial crisis beginning in 1997.

Remittances from migrant workers in Thailand are an important source of revenue, particularly in southern Laos where thousands cross the Mekong annually to find work. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam, as will foreign investment in hydropower and mining.

Several policy changes since 2004 may help spur growth. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos based producers to face lower taxes on exports. Laos is seeking to join the World Trade Organisation in the next few years; the resulting trade policy reforms will improve the business environment. On the fiscal side, a budget law passed in February 2007 was designed to centralise and rationalise taxation. A value-added tax regime should help streamline the government's inefficient tax system. Public debt has fallen steadily from 89% of GDP in 2003 to a projected 49.3% in 2008.

Laos is increasingly open to international trade, and is prepared to begin reducing tariffs. However, the regime lacks transparency, and in practice trade and investment are more heavily regulated- including through import and export licensing.

The Government's objective of removing Laos from the list of LDC by 2020 implies that the country will remain dependent on aid from the International Monetary Fund (IMF) and other international donors for some time. In the long term however, Laos has many advantages. It shares border and common interests with Thailand, Viet Nam, Cambodia and China and is starting to exploit its natural resources base; including energy production and mining.

economicbalance

Exporting to Bangladesh

President Obama announced the National Export Initiative (NEI)  in 2010, with the goal of doubling exports by 2014. The U.S. Embassy in Dhaka is committed to supporting U.S. companies to start exporting or grow their exports to Bangladesh. In this section, you’ll find a quick description of Bangladesh as an export market and some suggestions for getting started.

Cardno Builds an Enabling Economic Environment in Bangladesh

  Cardno promoted sound economic policies to enable the Bangladesh Ministry of Commerce to implement WTO agreements (in particular those deriving from the Doha Development Agenda), particularly in terms of increasing capacity. Cardno strengthened human resources and institutional capacity of relevant government agencies and private sector and introduced trade reforms to remove technical barriers to trade, since the links between trade, development and poverty alleviation are well documented. 

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Trade sector in Bangladesh

Bangladesh: Trade Policy and Integration

Trade Openness and Integration

Bangladesh launched a deep and wide-ranging trade reform strategy in the early 1990s. This included substantial reduction and rationalization of tariffs, removal of quantitative restrictions, move from multiple to a unified exchange rate system, convertible current account and an overall outward orientation of trade policy regime. As a result, the country’s trade integration, measured by the trade-GDP ratio, rose from 18% in 1990 to 43% in 2008.

Despite apprehensions that Bangladesh might lose out to exporters from China and India following the phase-out of the MFA quotas, its share in global apparel and textile exports has remained stable and export volumes have continued their robust growth. The country’s main markets are the EU and the United States and its imports are dominated in general by machinery and textiles, with China and India being the most important sources of imports. Bangladesh also has substantial unrecorded trade with its neighbor India. Labor exports are also important, with remittance inflows at about 9% of GDP.

The role of private sector driven export growth and diversification has been emphasized in Bangladesh’s PRSP, making export-led growth a key thrust of its poverty reduction and growth strategies.

trade graps

Economy of Bangladesh

The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power parity). According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in 2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N-11 of Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP terms and US$104.9 billion in nominal terms. The economy has grown at the rate of 6-7% per annum over the past few years. More than half of the GDP is generated by the service sector; while nearly half of Bangladeshis are employed in the agriculture sector. Other goods produced are textiles, jute, fish, vegetables, fruit, leather and leather goods, ceramics, ready-made goods.
Remittances from Bangladeshis working overseas, mainly in the Middle East, is the major source of foreign exchange earnings; exports of garments and textiles are the other main sources of foreign exchange earnings. Ship building and cane cultivation have become a major force of growth. GDP's rapid growth due to sound financial control and regulations have also contributed to its growth; however, foreign direct investment is yet to rise significantly. Bangladesh has made major strides in its human development index.^[5]
The land is devoted mainly to rice and jute cultivation as well as fruits and other produce, although wheat production has increased in recent years; the country is largely self-sufficient in rice production.^[5][5] Bangladesh's growth of its agricultural industries is due to its fertile deltaic land that depend on its six seasons and multiple harvests.^[5]
Transportation, communication, water distribution, and energy infrastructure are rapidly developing.^[5] Bangladesh is limited in its reserves of oil, but recently there has been huge development in gas and coal mining. The service sector has expanded rapidly during last two decades and the country's industrial base remains very positive.^[5] The country's main endowments include its vast human resource base, rich agricultural land, relatively abundant water, and substantial reserves of natural gas, with the blessing of possessing the worlds only natural sea ports in Mongla and Chittagong, in addition to being the only central port linking two large burgeoning economic hub groups SAARC and ASEAN.

Bangladesh - An investment destination in South Asia ~

 Bangladesh is virtually located as a bridge between the emerging markets of South Asia and fastest growing markets of South East Asia and ASEAN countries. With the proposed concept of a "Bay of Bengal Growth Triangle" with its apex Chittagong port extending south-west to Calcutta, Madras and Colombo and the south-eastern arm extends through Yangon, to Thailand, to Penang with the third arm to Colombo, this region should have growing attention of the investment world. Bangladesh has the potential to be an entry port to the region, a potential small scale Singapore, for the region covering Bangladesh, Nepal, Bhutan, eight north-east Indian states (of Assam, Meghalaya, Monipur, Imphal, Arunachal, Nagaland, Mizoram and Tripura) and resource-rich northern Myanmar, a land locked region. Bangladesh is poised to become a regional hub where activities relating to assembling, manufacturing, trading and services, would be some of the areas that are picking up over the years. This geopolitico-economic location of Bangladesh indicates its history of being a nation of sea-farers, traders and suppliers.

Bangladesh is a developing democratic polity on the Westminister model; secular, but not a theocratic state. Bangladesh is a moderating influence in a consistently volatile and often mutually hostile South Asian scenario.

The current macroeconomic situation in the country is, by and large, stable, characterized by a manageable fiscal deficit and a quite low current account deficit. The stable macroeconomic situation is an outcome of a mixture of prudent monetary and fiscal policies that are being pursued. The external current account deficit has also been low. This reflects the continued high growth of exports, increased flows of remittances, moderate growth in money supply as well as that of imports.

Manufacturing & Industry
Many new jobs - mostly for women - have been created by the country's dynamic private ready-made garment industry, which grew at double-digit rates through most of the 1990s. By the late 1990s, about 1.5 million people, mostly women, were employed in the garments sector as well as Leather products specially Footwear (Shoe manufacturing unit). During 2001-2002, export earnings from ready-made garments reached $3,125 million, representing 52% of Bangladesh's total exports. Bangladesh has overtaken India in apparel exports in 2009, its exports stood at 2.66 billion US dollar, ahead of India's 2.27 billion US dollar.
Eastern Bengal was known for its fine muslin and silk fabric before the British period. The dyes, yarn, and cloth were the envy of much of the premodern world. Bengali muslin, silk, and brocade were worn by the aristocracy of Asia and Europe. The introduction of machine-made textiles from England in the late eighteenth century spelled doom for the costly and time-consuming hand loom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived.
Other industries which have shown very strong growth include the chemical industry, steel industry, mining industry and the paper and pulp industry.

world trade

Textile sector
Bangladesh's textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation's number one export earner, accounting for 80% of Bangladesh's exports of $15.56 billion in 2009. Bangladesh is 2nd in world textile exports, and China which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5 million workers. Current exports have doubled since 2004. Wages in Bangladesh's textile industry were the lowest in the world as of 2010. The country was considered the most formidable rival to China where wages were rapidly rising and currency was appreciating. 

After massive labor unrest in 2006 the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010, a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30 On July 28, 2010 it was announced that the minimum entry level wage would be increased to 3,000 taka, about $43.
The government also seems to believe some change is necessary. On September 21, 2006 then ex-Prime Minister Khaleda Zia called on textile firms to ensure the safety of workers by complying with international labor law at a speech inaugurating the Bangladesh Apparel & Textile Exposition (BATEXPO).

L-12 to 14-JUL-12
CEMS-Global's TEXTECH series of Exhibition now also being organized in Sri Lanka and Indonesia along with the Bangladesh edition, has been serving the Textile & Apparel sector of Bangladeshfor over a decade, is the Oldest & Biggest Textile Garment Technology & Machinery Expo of Bangladesh. CEMS- Global presents its 13th edition - 13th Textech Bangladesh 2012 International Expo. Textech will be agreat B2B platform and a unique networking opportunity to further promote your Company / Product / Machinery & Technology in Bangladesh. For the past 12 years, Textech has been providing a perfect one-of-akind and one-stop solution to the visitors and platform for the exhibitors to interact directly with the buyers / importers for a perfect buyer - seller meet and a strong under-one-roof market place for the entire Textile & Garment industry of Bangladesh, which is seeing investments of US$ 2 Billion in the sector, and exports of Textile & Apparel surpassing US$ 14 Billion to over 100 countries of the World.
Venue: Bangladesh-China Friendship Conference Centre, Dhaka, Bangladesh

Visitor Registration Dhaka International Yarn & Fabric Show
Date: 11-JUL-12 to 14-JUL-12
Dhaka International Yarn & Fabric Show will be a marketplace for textile business as well as presenting the latest fabrics and trends. The DIFS will be fully equipped with all ranges of textile products enhanced with the latest technology, will set a new definition of smart fabrics in order to satisfy the growing demand of the buyers. This exhibition will be held four days from 11 to 14 Jul, 2012 at Bangabandhu International Conference Centre in the Bangladesh.
Venue: Bangabandhu International Conference Centre, Dhaka, Bangladesh

Visitor Registration International Fabrics & Accessories Sourcing Fair Dhaka
Date: 16-JAN-13 to 19-JAN-13
International Fabrics & Accessories Sourcing Fair 2013 (IFA Sourcing Fair)Being held concurrently with the largest apparel technology tradeshow of Bangladesh, Garmentech Bangladesh 2012, International Fabrics & Accessories Sourcing Fair- Dhaka is a platform conceived to address the apparel fabrics and garment accessories sourcing needs of the Bangladesh clothing and knitwear manufacturers and exporters. International Fabrics & Accessories Sourcing Fair- Dhaka will have on display latest fabric collections from domestic and overseas fabric manufacturers and distributors along with the hot collections of trimmings and embellishments.
Venue: Bangabandhu International Conference Centre, Dhaka, Bangladesh

Visitor Registration Yarn & Fabrics Sourcing Fair
Date: 16-JAN-13 to 19-JAN-13
Yarn Fabrics & Accessories Sourcing Fair is going to be a vibrant expo dealing with niche items. It will be organized by dual organizers namely, ASK Trade & Exhibitions Pvt Ltd and Zakaria Trade & Fair International is a division of Zakaria Enterprises of Bangladesh. This outstanding garment and textile expo will be a 3days event, which will be expecting a lot of exhibitors and visitors. The expo is an annual exhibition of Bangladesh.
Yarn Fabrics & Accessories Sourcing Fair will be exhibiting trendy and modern fabric collections, by eminent national manufacturers. The Yarn fabrics will be literally aiming to invite, fabric manufacturers and distributors both national and international to come and showcase their all new red hot collections of trimmings and embellishments.
Venue: Bangabandhu International Conference Centre, Dhaka, Bangladesh

Visitor Registration Dhaka Textile & Garment Machinery Exhibition
Date: 31-JAN-13 to 03-FEB-13
Dhaka Textile & Garment Machinery Exhibition is a unique opportunity to further promote your company in Bangladesh and with National & International Garment, Textile Machinery / Accessories Manufacturers / Suppliers & Related service under one roof. The Exhibition will be held at Bangabandhu International Conference Centre.
Venue: Bangabandhu International Conference Centre, Dhaka, Bangladesh

trade sector

 Bangladesh trade makes WRAP commitment

DAKHA – Worldwide Responsible Apparel Production (WRAP) has signed a memorandum of understanding with a trade body in Bangladesh as part of a plan to improve labour standards and lawful and ethical manufacturing in the country.
THE second Showcase Bangladesh will be held at Exchange Trade Centre International at Dataran Merdeka for three days beginning July 13.
The showcase, featuring 70 exhibitors, is expected to be the largest, if not the most important exhibition, to be held there since the centre  opened in April.

Bangladesh will be bringing its main players in the banking and finance sector, garment manufacturers, tour and hotel operators as well as suppliers of food and agricultural produce.

Former Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI)  president and chairman of the fair organising committee Syed Moazzam Hossain said the nation had lots to offer Malaysia since both share a long history of trade ties.

Among others, it is the second largest garment exporter in the world after China and sends large consignments to Europe, the United States and India.

"We grow cotton, have the skilled workers, and manufacture products with low prices but of high quality," said Syed.

Food products made there are also  halal, making its exports of beef and fish an attractive option for  Malaysian halal importers.

"We have signed free trade agreements with almost all developed countries making our exports duty-free. Currently Malaysian exports to Bangladesh stands at  US$1.8 billion (RM5.76 billion)  while our exports to Malaysia is US$43 million. This   trade exhibition is to bridge the disparity between the export value," he said.

Present at the press briefing to launch the showcase were Bangladesh High Commissioner A.K.M Atiqur Rahman and  BMCCI president Syed Nurul Islam.

The exhibition is organised by the governments of both countries and  the Malaysia South-South Corporation Berhad, which was represented at the briefing by its general manager Ng Su Fan.

Deputy Prime Minister Tan Sri Muhyiddin Yassin and International Trade and Industry Minister Datuk Seri Mustapa Mohamed are expected to attend the opening which will also be attended by Bangladesh'

The Union Finance Minister, Mr Pranab Mukherjee, said on Saturday that trade relations with Bangladesh are improving and India will take adequate measures to correct the imbalance, if any.

“The overall relation, including trade, is improving with Bangladesh and there is a need to improve trade relations as India exports more than it imports from that country,” Mr Mukherjee said, inaugurating a car pass project between India and Bangladesh at the land customs station at Petrapole in North 24 Parganas in West Bengal. The bilateral trade between India and Bangladesh grew by 45 per cent to $5.099 billion in 2010-2011 (July-June period), against $3.507 billion corresponding period in 2009-10.

In 2010-11, India's exports to Bangladesh stood at $4.586 billion, while its imports from that country were just about $ 0.512 billion.

India's move to allow a large number of items to enter from Bangladesh at zero duty taken last November will help correct the trade imbalance between the two countries to some extent, Mr Mukherjee said. 

world trade

 

What is trade

An economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. Investopedia explains 'Trade Deficit' Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large quantities of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.

What is trade practices law?

trade cycle

Trade practices law impacts on your transactions in the marketplace, whether you are a provider of goods and services or a consumer of these goods or services.

The introduction of the Trade Practices Act in 1974 (now the Competition and Consumer Act 2010) heralded the decline of the reign of the maxim, caveat emptor - let the buyer beware. The regulation of trade practices by both Federal and State governments has witnessed not only the consolidation of the protection of consumer rights, but also the promotion of competition and fair trading in markets.

Trade Balance Definition. A Trade Balance, or Balance of Trade, is the difference between the monetary value of exports and imports of a specific country's economic output over a certain period of time. It is one of many economic fundamentals that affect the relative value of a country's currency. A positive or favorable balance of trade is known as a trade surplus when exports exceed imports. Conversely, a negative or unfavorable balance is referred to as a trade deficit or trade gap. The balance of trade is also part of a nation's current account, which includes income from the international investment positions, as well as international aid and other cross-border transactions. Factors that can affect the balance of trade include exchange rate movements, relative production costs between trading partners, the availability of raw materials, various taxes or restrictions on trade, the availability of adequate foreign exchange or reserves to pay for imports, and the domestic prices of goods that are exported. Small trade deficits are not viewed as harmful, but large trade deficits are seen as problematic for a country's domestic economy.

What is trade finance?

Trade Finance has been reviewing the global trade market since 1983. The remit of what we cover is somewhat broad, and as the market evolves to meet the requirements of financing global trade, so our content has changed.

The following is a guide for those of you new to the market, those looking for clarification, and those of you who have bluffed your way through up to this point.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. 

What is trade finance?

There are various definitions to be found online as to what trade finance is, and the choice of words used is interesting. It is described both as a ‘science’ and as ‘an imprecise term covering a number of different activities’. As is the nature of these things, both are accurate. In one form it is quite a precise science managing the capital required for international trade to flow. Yet within this science there are a wide range of tools at the financiers’ disposal, all of which determine how cash, credit, investments and other assets can be utilised for trade.
In its simplest form, an exporter requires an importer to prepay for goods shipped. The importer naturally wants to reduce risk by asking the exporter to document that the goods have been shipped. The importer’s bank assists by providing a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading. The exporter's bank may make a loan to the exporter on the basis of the export contract.
Below I have outlined the various ways in which trade is financed by banks beyond the basic financial transaction described above – which I would refer to as traditional trade finance. I have divided this extended definition into the sectors which Trade Finance as a channel for the latest news and analysis for this market strives to cover.

trade finance

What is trade liberalisation and isn't it a good thing?

'Trade liberalisation' is the term for the process whereby a country opens up its markets to international trade i.e. reduces the taxes (known as tariffs) and other limits (such as quotas) on goods coming in and out. It also often comes alongside increased rights for investors, pressures to privatize as well as imposed regulatory changes to comply with international standards.

Trade liberalisation can be a good thing in the right circumstances – if it's phased in correctly at the right time in a country's development. However forcing countries to 'liberalise' their economies prematurely (for example through aid conditionality or trade agreements) has led to disastrous economic and social consequences. EPAs are part of the same trend.
Rich countries are denying developing countries the chance to protect their fragile economies and industries (which historically has been the approach followed by the UK and almost every now-rich country during their process of development) and throwing them in to open competition with developed countries before they are ready.
There is now ample evidence which shows that this liberalisation agenda actually increases poverty, especially when imposed from outside and not driven by a country needs and timelines.
Instead, poor countries need the freedom and right to protect and support their industries and farmers until they are strong enough to compete internationally. They need trade justice.

trade industries

What is trade ?

The word trade has always been used in a generic fashion and the attempts of deciphering the meaning of this word has only been done by economists and business people. We have been hearing this word since the time we started to understand the world. So what exactly is trade? Going by the standard definition of the term, it is nothing but a simple activity that involves exchange of goods and services. That’s how simple it is. Such exchanges of goods or services can be between two parties or several parties. Bilateral trade refers to the trade that takes place between two parties whereas multilateral trade occurs when more than two parties are involved in the transaction.

If we look at history books, trade was actually in the form of barter system where commodities were exchanged and not currency. The commodities to be exchanged had equal values and were equally desirable to both parties. In modern world, money is used as medium of exchange and barter system is no longer in existence. The term trade has acquired significant importance in today’s world.

Imagine a life without the concept of trade! Sure, it would not be as fascinating as it is now. The need and importance of trade can only be understood from the fact that trading is in existence since centuries. During initial times, people first started to trade among themselves, and then they started to venture into other villages, towns and even countries. Even many famous discoverers from far away countries found India when they were hunting for new places to trade. This word is also responsible for discovery of many unknown countries and conception of travel. Names like Marco Polo, Columbus, Vasco De Gama etc surely rings a bell in the world of trade and its origin. Trade as a whole is not only complex but exciting as well. One thing is pretty sure; trade is going to be in existence as long as humans are there on the planet. The concept of Trade is centered around the simple activity of the exchange of good and/or services. These exchanges may be the ones that simply take place between two parties.
The simple trade which takes place between two parties is known as bilateral trade. These exchanges may also take place amongst more than two parties.
These exchanges that take place amongst more than two parties is known as Multilateral trade. In its authentic and original form trade perforce used barter and the exchange of goods and services of a recognized equal value that is equally desirable to both parties.
Modern traders generally negotiate through the use of a medium of exchange, i.e.money. The barter system of course has become extinct now.
The invention of money and the subsequent creation of the concepts of credit, paper money and non-physical money have played pivotal roles in simplifying and promoting the development of trade.
Most economists agree and accept the very obvious theory that trade benefits both parties involved in the transaction. Trade is a concept that exists largely due to the differences in the cost of production of some tradable commodity in the various locations.
 



What about unregistered trade marks?There is no available remedy for trade mark infringement if the earlier trade mark is unregistered. Some unregistered trade marks may be protected under Common Law and this is known as Passing off. However, whether or not they are protected will depend on the particular circumstances, in particular:

• Whether, and to what extent, the owner of the unregistered trade mark was trading under the name at the date of commencement of the use of the later mark;
  
• Whether the two marks are sufficiently similar, having regard to their fields of trade, so as to be likely to confuse and deceive (whether or not intentionally) a substantial number of persons into thinking that the junior user’s goods and services are those of the senior user;
  
• The extent of the damage that such confusion would cause to the goodwill in the senior user’s business.
  

trade with bangladesh