Module:

Presentation about:

Supervised by: Prepared by:

M. ABDELAZIZ EL NADA KADRI

BOUZAINI
ASMAE MADDAH
KARIM LAAMECH
YOUSSEF SAMLALI

Academic year: 2020/2021

 INTRODUCTION

Trade is the exchange of goods and services between countries. The type
of trade gives rise to a world economy, in which prices, or supply and
demand, affect and are affected by global events.

Trading globally gives consumers and countries the opportunity to be

exposed to goods and services not available in their own countries. Almost
every kind of product can be found on the international Market: food, clothes,
spare parts, oil, jewellery, wine, stocks, currencies and water. Services are
also traded: tourism, banking, consulting and transportation. A product that
is sold to the Global Market is an export, and a product that is bought from
the global market is an import.

Global trade allows wealthy countries to use their resources whether

labour, technology or capital more efficiently because countries may produce
the same good more efficiently and therefore sell it more cheaply than other
countries.

Let’s take an example: Country A produces 10 sweaters and 6 bottles of

wine a year, while country B produces 6 sweaters and 10 bottles of wine a
year. Both can produce a total of 16 units. Country A, however, takes three
hours to produce the 10 sweaters and two hours to produce the six bottles
of wine (total of 5 hours). Country B, on the other hand, takes an hour to
produce 10 sweaters and 6 hours to produce six bottles of wine (total of four
hours).

But these countries realize that they could produce more by focusing on
those products with which they have a comparative advantage.

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 Country A then begins to produce only wine and country B produces
only cotton sweaters. We can see then that for both countries, the
opportunity cost of producing both products are greater than the coast of
specializing.

Not that in the example above, country B produce both wine and cotton
more efficiently than country A (less time), this is called an absolute
advantage and country B may have it because of a higher level of technology.

➢ Other possible benefits of trading globally:

International trade not only results in increased efficiency but also

allows countries to participate in global economy, encouraging the

opportunity of foreign direct investment (FDA), which is the amount of

money that individuals invest into foreign companies and other assets.

In theory, economies can therefore grow more efficiently and can more

easily become competitive economic participants.

In our project and as international law students we are going to discuss

the different types of trade (I), and its theories (II), first and second his

advantages and disadvantages (III), and finally the Moroccan legal

Environment (IV).

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 SECTION I: TYPES OF TRADE

Trade is a basic economic concept involving the buying and selling of

goods and services, with compensation paid by a buyer to a seller, or the
exchange of goods or services between parties. Trade can take place within
an economy between producers and consumers.

So, in general, trade can be divided into following two types:

• Internal or home or domestic trade;

• External or foreign or international trade.

Paragraph 1: INTERNAL TRADE.

Internal trade is also known as domestic trade, and as the name suggests
it is the trade of domestic goods within the confines of the geographical
boundaries of a nation. So, the buying and selling of either goods or services
done within a country is the internal trade. In such cases of internal trade,
there is no levying of import/export taxes or customs duties. Only local
government taxes will apply. These are goods domestically produced for
domestic consumption only. Internal trade is also known as home trade. It is
conducted within the political and geographical boundaries of a country. It
can be at local level, regional level or national level.

So, there are two broad categories of internal trade, namely wholesale

trade (A) and retail trade (B);

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A. Wholesale trade:

Wholesale trade is one of the main categories of domestic trade. In this

form of trade goods are generally bought in huge quantities from the

manufacturer. These goods are then warehoused and finally sold to retailers,

middlemen, merchants etc. The goods in wholesale trade are not sold to the

final consume directly. So, all the customers of a wholesaler are commercial

users or other intermediaries, not the ultimate customers.

➢ Functions of wholesale trade:

The functions that wholesalers perform actually benefit both the

manufacturer and the retailer. They undertake various activities to lessen the

burden of them both. A wholesaler occupies a very important place in the

chain of distribution and also performs several important functions as

follows:

• Selling and Promoting: Wholesalers facilitate the manufacturers in

the selling and promotion of their products by using the contacts at a

low cost. These buyers are more influenced by the famous

wholesalers than by the distant manufacturers.

• Buying and Assortment Building: The wholesalers purchase the

bulk of different types of products from different manufacturers and

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 prepare proper assortments of these products. In this way customers

are conveniently facilitated by the saving time and effort.

• Bulk Breaking: Wholesalers purchases in large quantities and sell in

smaller units and hence break the bulk for the convenience of the

customers.

• Warehousing: Wholesalers also provide warehousing facilities to

reduce the Inventory costs and risks of manufacturers and customers.

• Transportation: The wholesalers are much closer to the customers

as compared to the manufacturers, so they can provide quick

transportation services.

• Financing: Wholesalers also provide financing to its buyers by

allowing them credit. They also make immediate orders and quick bill

payments to the manufacturers.

• Risk Bearing: The damaging, theft and spoilage costs are taken by the

wholesaler by absorbing the relative risks associated with products.

• Market Information: Information about New Products, competitors

and price developments are given by the wholesalers to customers

and manufacturers.

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B. Retail trade:

Retail trade is the business activity associated with the sale of goods to

the final consumer, the ultimate customer. It is the link between wholesalers

or manufacturers and the customers of the product. Typically, retailers sell

goods in small quantities to consumers for personal use, not for resale or

business use.

Retail is the final step of the distribution channel. the retailer will buy

the goods from the wholesaler, or sometimes directly from the producer, in

bulk (large quantities) at a discounted price. And then it sells the goods to the

final consumers of the goods, in small units or quantities, at retail price

enjoying the benefits in the process. All goods go through a distribution

channel to make the Journey from the manufacturer to the final consumer.

Paragraph 2: EXTERNAL TRADE.

Trade between two or more nations is called foreign trade or

international trade. This involves the exchange of goods and services
between the citizens of two nations. When the citizens of one nation
exchange goods and services with the citizen of another nation is called
foreign trade. Example India’s trade with USA, France with Morocco.

Foreign trade transactions are classified into 3 categories: Import trade

(A), Export trade (B), and Entrepot trade (C);

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A. Import trade:

The import trade is referred to goods and services purchased into one
nation from another. The word “import” originates from the word “port”
considering the fact that the products are frequently transported via ship to
foreign countries. Similar to exports, imports are also the backbone of
international trade. Here, if the expense of a country’s imports is more than
the value of its exports than the country has a negative balance of trade,
which is also known as a trade deficit. Import trade is when a trader in home
country obtains or purchase goods from a trader located in another country.

B. Export trade:

Exports are explained as the goods and services manufactured in one

country and acquired by citizens of another country. The export of good or

service can be anything. This trade can be done through shipping, e-mail,

transmitted in private luggage on a plane. Basically, if the product is

manufactured domestically and traded in a foreign country, it is known as an

export. In International trade, exports are one of the components. The other

component is imported which means the goods and services purchased by a

country’s citizens that are manufactured in a foreign country. Both the export

and import combined contribute to the country’s trade balance. Whenever

the country’s export is more than the import, it is called a trade surplus.

However, when the import is more than the export, it is known as a trade

deficit.

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C. Entrepôt trade:

Basically, entrepôt trade is the process of re-exporting goods that have

been imported into a country without the package having undergone any

repackaging or additional processing. When translated, the term means

entry port trade, and it avoids the payment of any import or export duties

when the package is sent out from that port. In other words, entrepôt trade

is a process in which goods are imported in one country with the express

purpose of having them end up in a different country. In a case like this, a

trader becomes both the importer and the exporter of these goods. For

example, if a South African company were to import wool from Australia and

export it immediately to Zimbabwe, this would be called entrepôt trade for

South Africa.

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 SECTION II: INTERNATIONAL TRADE
THEORIES

International trade theories are simply different theories to explain

international trade. Trade is the concept of exchanging goods and services
between two people or entities. People or entities trade because they believe
that they benefit from the exchange. They may need or want the goods or
services. While at the surface, this many sounds very simple, there is a great
deal of theory, that constitutes international trade; like Mercantilism,
Absolute advantage, and Comparative advantage.

Paragraph 1: MERCANTILISM.

Mercantilism was popular in the 16th and 18th Century, and during
that time the wealth of the nation only consisted of gold or other kinds of
precious metals, so the theorists suggested that the countries should start
accumulating gold and other kinds of metals more and more. Because gold
was important as a basis for national power (it’s used to pay for armies or
build up national institutions…).

So, Mercantilism is the trade theory that states that nations should
accumulate financial wealth, usually in the form of gold, by encouraging
export and discouraging imports. This approach is called “Protectionism”
and it is still used today, in order to produce the favourable balance of
trade.

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Paragraph 2: ABSOLUTE ADVANTAGE.

This theory was developed by Adam Smith (the father of Modern

Economics) at the end of the 18th century in 1776. It came out as a strong
reaction against the mercantilism views on international trade, by specified
that a country's prosperity should not be premeditated by how much gold
and other precious metals it has, but rather by the living standards of its
citizens.

Absolute advantage believed that a nation should specialize in

producing those goods that it can produce at a cheaper cost than that of other
nations. These goods should be exchanged with other goods that are being
cheaply produced by the other nations, and this means that a country should
export a product in which it has a cost advantage.

Paragraph 3: COMPARATIVE ADVANTAGE.

The theory of Absolute Advantage was not able to answer all the problems
of International Trade. As trade started increasing between the nations, it
became more complex too. Also, there were countries that did not have
Absolute Advantage in any kind of goods. Absolute Advantage was not a solution
for them. That’s why in 1817, the famous Economist, David Ricardo introduced
his theory of Comparative Advantage.

Comparative advantage suggests that each country should concentrate in

the production of those products in which it has the most advantage. Hence, a
state will export those supplies in which it has the most benefit and import
those supplies in which it has the least disadvantage. In other words,
Comparative Advantage exists when a country is able to produce a commodity
better and more efficiently than it does other commodities.

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 SECTION III: ADVANTAGES AND
DISADVANTAGES OF TRADE

Paragraph 1: ADVANTAGES.

Trade brings a number of valuable benefits to a country, including:

• The exploitation of a country's comparative advantage, which means

that trade encourages a country to specialize in producing only those
goods and services which it can produce more effectively and
efficiently, and at the lowest opportunity.
• Producing a narrow range of goods and services for the domestic and
export market means that a country can produce in at higher volumes,
which provides further cost benefits in terms of economies of scale.
• Trade develops sympathies and creates common interests between
trading country. It also exchanges the ideas traditions, customs. This
promotes international understanding and peace among the people.
• When more brands come in the market competitions increase that
gives more options and quality to the consumers at a low price and
remove monopoly.
• Trade also breaks down domestic monopolies, which face
competition from more efficient foreign firms.
• The quality of goods and services is likely to increases as competition
encourages innovation, design and the application of new
technologies. Trade will also encourage the transfer of technology
between countries.

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 • Trade helps each country to utilize their natural resources in effective
ways to produces high-quality products at the cheapest rate. Wastage
of resources reduced automatically because once trade starts it brings
high skilled employees.
• Trade facilitates export diversification by allowing developing
countries to access new markets and new materials which open up
new production possibilities.
• Trade encourages innovation by facilitating exchange of know-how,
technology and investment in research and development, including
through foreign direct investment.
• Trade plays a role in the improvement of quality, labour and
environmental standards through increased competition and the
exchange of best practices between trade partners, building capacity
in industry and product standards.

Paragraph 2: DISADVANTAGES.

• Economic dependence on developed economies; The developing

economies have to depends on the developed economies because

developed economies provide funds, technologies machines etc. to

developing nations for trades, most of the undeveloped economy in

Asia and Africa are directly depend on European countries.

• Political dependence; Most of the time trade encourages slavery.

trade affects the political decisions of the country because they become

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 a big pillar of country of their financial support. So, it starts occupying

the country’s decisions. Basically, it happens in backward economies.

• Creates monopoly; When big companies come in developing nations,

they invest money and manpower in huge quantity. So, it affects local

business and creates a monopoly in the industry. Example, when

Amazon came to India it has affect a lot of local business.

• Fear of losing jobs; Losing jobs is also a big fear for local skilled and

educated employees. Because when a big company leaves the country

its red employees in huge quantity. which creates crisis in economy.

• Impact of small local producers; Who may supply a unique product

tailored to meet the needs of the domestic market, may suffer because

cheaper imports, may destroy their market. Over time, the diversity of

output in an economy may diminish as local producers leave the

market.

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 SECTION IV: MOROCCAN LEGAL
TRADE ENVIRONMENT

Moroccan legal environment can be indicated as following:

• Business contract;
• Intellectual property;
• International dispute resolution.

Paragraph 1: BUSINESS CONTRACT.

General observation: in the event of litigation, the obligations are not

always executed and the penalty rarely used. Thus, it is advisable to give
special attention in the choice of one’s partners.

• Law applicable to the contract: book 5 of Moroccan commercial law of

1995.
• Advisable Incoterms: FOB / CIF;
- FOB: it’s to say in French, sans frais à bord or Franco à bord, it’s
an incoterm, relating to all rights and duties in the context of
international negotiations. It designates the commercial
agreements according to which the price of a commodity excludes
its transport coats. When you buy free on board, you must then
add to the initial price transport, export taxes, but also the various
insurance related to shipping and export.
- CIF: conversely, the CIF price (coast, insurance and freight)
designating the cost, the insurance and the cargo, includes the
transport of goods until their delivery to the seller.

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 • Language of domestic contract: French in general / Arabic and rarely
English.
• Other laws which can be used in domestic contracts: the contracting
parties can choose to be governed by the law of any country.

Paragraph 2: INTELLECTUAL PROPERTY.

There are different types of property and law which can be indicated as
follows:

• Patent: Law number 17/95 relating to the protection of industrial

property; validity ⇨ 20 years.
• Trademark: Law number 17/95 relating to the protection of
industrial property; validity ⇨ 10 years.
• Design: Law number 17/95 relating to the protection of industrial
property; validity ⇨ 5 years from the date of registration renewable
indefinitely for two new consecutive periods of 5 years.
• Copy right: Law number 2/ 00 relating to copyrights and performing
rights.
• Industrial models: Law number 17/97 relating to the protection of
industrial property.

Paragraph 3: INTERNATIONAL DISPUTE RESOLUTION.

• Arbitration;
• Arbitration Law;
• Conformity to international commercial arbitration rules;
• Appointment of arbitrators;
• Arbitration procedure;
• Permanent arbitration trades.

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 CONCLUSION

As a conclusion, today, the nations must always strive to create the next

best thing that consumers will want because consumers continue to desire

their products and services.

That’s why trade play a big role in development of countries, in

providing better livelihoods and well-being, and also in opening societies to

socioeconomic and political change.

So, trade can be an important way of financing imports of capital

equipment. It facilitates export diversification by allowing developing

countries to access new markets and new materials which open up new

production possibilities.

On another side, trade provide growth to the economy because when it

started in any country it brings new opportunities to people, which also

brings money in public. So, trade is the most important pilar for growth of

any economy.

Also, trade helps in civilizations, by improving personal growth of the

people because it runs in systematic. So, when trade starts it doesn’t only give

to the people, it also teaches them administrations.

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 REFERENCES

❖ https://www.toppr.com/guides/business-studies/internal-trade/internal-
trade-and-wholesale-trade/
❖ https://www.toppr.com/guides/business-studies/internal-trade/retail-
trade/
❖ https://www.toppr.com/guides/business-studies/internal-trade/internal-
trade-and-wholesale-trade/
❖ http://www.desikanoon.co.in/2014/12/theories-of-international-
trade.html
❖ http://www.desikanoon.co.in/2014/12/theories-of-international-trade-
theory.html
❖ http://www.desikanoon.co.in/2014/12/theories-of-international-trade-
comparative-advantage.html
❖ http://www.legalserviceindia.com/legal/article-2758-international-trade-
law-theories.ht
❖ https://www.britannica.com/topic/international-trade/The-new-
mercantilism
❖ https://www.yourarticlelibrary.com/international-trade/advantages-
and-disadvantages-of-international-trade/42100
❖ https://www.americanexpress.com/en-us/business/trends-and-
insights/articles/advantages-international-trade/
❖ https://rbcglobalconnect.rbc.com/en/resources/explore-new-
markets/country-profiles/morocco/business-legal-environment

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 TABLE OF CONTENTS

INTRODUCTION……………………………………………………………………………02

TYPES OF TRADE………………………………………………………………………....04

INTERNAL TRADE………………………….……………………………………….04

EXTERNAL TRADE ………………………………………………………………….07

INTERNATIONAL TRADE THEORIES..……………………………….……………10

MERCANTILISM……………………………………………………………………..10

ABSOLUTE ADVANTAGE………………………………………………………..11

COMPARATIVE ADVANTAGE………………………………………………….11

ADVANTAGES AND DISADVANTAGES OF TRADE…………………………..12

ADVANTAGES………………………………………………………………………..12

DISADVANTAGES…………………………………………………………………..13

MOROCCAN LEGAL TRADE ENVIRONMENT.…………………………………15

BUSINESS CONTRACT…………………………………………………………….15

INTTELECTUAL PROPERTY………………………………………………………16

INTERNATIONAL DISPUTE RESOLUTION…………………………………16

CONCLUSION……………………………………………………………………………….17

REFERENCES…………………………………………………………………………………18

TABLE OF CONTENTS……………………………………………………………………19

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