We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are the Different Aspects of International Trade?

By Peter Hann
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

International trade is conducted by businesses that are efficient enough to be competitive on the international market. Businesses in different countries tend to specialize in different sectors; for example, industrialized countries may have companies that specialize in high-tech manufacturing or financial services, while developing countries may export mainly agricultural products. Governments impose tariffs or quotas to protect some domestic industries from foreign imports, and these are a barrier to international trade. International agreements and organizations have aimed to increase trade by reducing tariff barriers and providing dispute resolution procedures. World trade also has benefited from improved means of transport, containerization and harmonized terms for international contracts.

Trading internationally has been facilitated by international agreements and organizations such as the World Trade Organization (WTO). Negotiations have led to reductions in tariffs and quotas that had been a brake on international trade. When disputes arise over the imposition of tariffs, there is a procedure for dispute resolution that includes the imposition of penalties on countries found to have broken the rules. Although international agreements are often hard to reach, negotiations in the WTO ensure that international trade issues are thoroughly considered. Issues remaining for world trade as of 2011 include reducing subsidies to farmers in industrialized countries and consideration of the need for protection for agriculture and other sectors in poorer developing countries.

The introduction of containerization has made the logistics of international freight much more straightforward. The development of large container seaports and inland dry ports, as well as rapid docking, loading and unloading have spurred international trade. Larger ships are guided to port by radar and carry larger loads. The ports have expanded in size to accommodate the freight and have developed infrastructure to move it on quickly.

International contract terms have been harmonized by the work of organizations such as the International Chamber of Commerce (ICC). Standard contracts reduce the possibility of misunderstanding between buyers and sellers with respect to the allocation of freight and insurance costs. The increased use of electronic means of payment has reduced concerns about payment, and letters of credit have been adapted accordingly to ensure that financial matters are expedited as quickly and smoothly as possible.

International trade disputes may be resolved more easily as a result of the introduction of mechanisms for dispute resolution through agencies such as the United Nations Commission on International Trade Law (UNCITRAL). Countries have facilitated international trade for businesses by signing bilateral investment protection agreements that make certain guarantees for investors and provide for dispute resolution. Similarly, bilateral double taxation agreements between countries aim to eliminate the possibility of double taxation on businesses trading internationally and provide a mechanism for resolution of tax disputes.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By ysmina — On Nov 11, 2013

@SarahGen-- Th EU is an economic union as well as a political one. So they have a common trade policy and free trade among EU members.

By turquoise — On Nov 11, 2013

@SarahGen-- Countries in the same region, such as US and Canada, may have special trade agreements to encourage trade between them.

There can be various reasons for this. It could be to take advantage of the geographic proximity (goods are easier to ship because of a closer distance). It could be to strengthen the regional economy and become more competitive in the global market against other economies. It could also be a political decision, to strengthen the ties between these countries.

Politics and economics are more inter-related than people realize. Sometimes countries can place international trade barriers against other countries simply to make a political statement. This could be something like an economic embargo, or higher trade tariffs for that country. It's like a punishment that governments impose when they don't get what they want politically. An example could be the embargoes placed against Iran after the American Embassy hostage crisis.

By SarahGen — On Nov 11, 2013

Why do governments in the same region often have low-tariff or no-tariff trade agreements? Don't they need to protect any industries?

And how does trade in regional unions work? For example, what is EU international trade like? Do EU countries do individual trading or do they trade as union?

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.