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1.Lecture

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4 views

1.Lecture

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959flash959
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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I.

LECTURE
Introduction
 Foreign Trade concept
 The parties and their functions
Commerce
 Commerce refers to the exchange of
goods, services between businesses
or entities.
Law on the Protection of
Turkish Currency
 Law No. 1567 “Law on the Protection
of Turkish Currency” was into force
on 25.03.1930.
 The source of the exchange control
system in our country is based on
protectionist policies implemented
after great depression in US in 1929.
After great depression balance of
payment started to deteriorate due
to the dependence of the economy
on importation.
Balance of Payments
 The balance of payments is the
record of all economic transactions
between the residents of the country
and the rest of the world in a
particular period (over a quarter of a
year or more commonly over a year).
 Also known as balance of
international payments and
abbreviated BoP
Items of the Balance of
Payments

 Current account
 Capital and Financal account
 Reserve asset
Current Account
 Merchandise Transactions or Visible
Trade
 Invisible Items
Capital and Financal
account
 Direct
investments, portfolio
Investments
Reserve Asset
 Gold and foreign currencies
Open Balance Measures
 Devaluation
 Exchange control, customs duties,
incentives, subsidies
 Quotas, import restrictions
 Borrowing
IMF
 Formed in 1944 at the Bretton
Woods Conference, it came into
formal existence in 1945 with 29
member countries and the goal of
reconstructing the international
payment system.
The World Bank
 TheWorld Bank is an international
financial institution that provides
loans to developing countries for
capital programs.
GATT
 General Agreement on Tariffs and
Trade (GATT) was a multilateral
agreement regulating international
trade. Its purpose was the
substantial reduction of tariffs and
other trade barriers on a reciprocal
and mutually advantageous basis.
Customs Union
 Customs union is a type of trade bloc
which is composed of a free trade
area with a common external tariff.
The participant countries set up
common external trade policy, but in
some cases they use different import
quotas.
World Trade Organization
 The World Trade Organization (WTO) is
an intergovernmental organization
which regulates international trade. The
WTO officially commenced in 1995
under the Marrakesh Agreement, signed
in 1994, replacing the General
Agreement on Tariffs and Trade (GATT).
The WTO deals with regulation of trade
between participating countries.
EFTA
 The European Free Trade Association
(EFTA) is a regional trade organisation and
free trade area consisting of four European
states: Iceland, Liechtenstein, Norway, and
Switzerland.
 The EFTA was established on 3 May 1960
as an alternative trade bloc for European
states who were unable or unwilling to join
the then European Economic Community.
BRICS
 BRICS is an intergovernmental organization
comprising Brazil, Russia, India, China, South
Africa, Iran, Egypt, Ethiopia, and the United Arab
Emirates. BRICS was originally identified to
highlight investment opportunities. The grouping
evolved into a geopolitical bloc, with their
governments meeting annually at formal summits
and coordinating multilateral policies since 2009.
Relations among BRICS are conducted mainly
based on non-interference, equality, and mutual
benefit
Effective rate of exchange
 Paper money exchange rate
Convertibility
 Convertibilityis the quality that
allows money or other financial
instruments to be converted into
other liquid stores of value.
Convertibility is an important factor
in international trade, where
instruments valued in different
currencies must be exchanged.
Credit
 Themoney lent or borrowed under a
credit arrangement (non-cash loans
or cash loans).
Free-Trade Zone
A free-trade zone (FTZ) is a special
economic zone. They are a
geographic area where goods may
be landed, handled, manufactured or
reconfigured, and reexported without
the intervention of the customs
authorities.
Risks in International Trade
 Country risk
 Exchange risk
 Commercial Risk
 Transport Risk
Country risk

 Sudden canges in the economic,


politic conditions of the country we
trade and Cultural differences
between two countries.
Exchange risk

 Foreign exchange risk (also known as


FX risk, exchange rate risk or
currency risk) is a financial risk that
exists when a financial transaction is
denominated in a currency other
than that of the base currency of the
company.
Commercial Risk

 Financial difficulty of buyer


 Fraud
Transport Risk

 Theft and pilferage


 Deterioration
 Putrefaction
 Late delivery
 Lost
 etc.

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