Exports: Wandering Goods

Have you ever wondered why we see a lot of foreign goods as you walk along the aisles of the supermarket? You see herbal tea from South Korea, oranges from China, wine from France and pasta from Italy. This is international trade at work. International trade is the cycle of imports and exports, which allows us to have access to goods coming from another country. It also allows us to make our products available to the foreign consumers.

Export is any commodity or good shipped from one country to another in a legal fashion. Today, products and services that are used to be only available domestically can transcend boundaries to reach foreign and international markets. If you are exporting commercial amounts of goods, the Customs authorities of both countries are usually involved to make sure that they are safe, legal and declared. However, some exports are not inspected by Customs including small trades done over the Internet such as online auctions.

Exporting is not as easy as it may seem. Aside from the pile of paperworks you need to complete, there are also several trade barriers that you will face. A trade barrier is any law, policy or regulation of the government enforced to protect goods produced domestically from foreign competition or to stimulate exports of a specific domestic product artificially. Each country enforces its trade barriers.

Tariffs are taxes placed on a particular good or set of goods exported from another country. When a ship or a plane arrives in a port, a customs officer inspects the goods and charges a tax. The goods are not allowed to land until the tax is paid. Smuggling is when traders sneak products into a country to avoid paying tariffs.

Tariffs are sometimes used when the domestic output of the good in your country is falling and the imports from foreign competitors are increasing. It sometimes creates tension between or among countries.

A subsidy is a financial support from the government to a company or industry to manipulate the price of the goods below market value. It is usually used for failing industries needing a boost in domestic spending. It encourages greater demand for a product or service because of the reduced price. Subsidies affect exports directly because they deter other countries producing the same product or service at a cheaper and more efficient rate. With the reduced price, exports cannot compete.