What is foreign trade?

When commercial operations are carried out between people or companies from different countries, we are dealing with foreign trade. That is, from a point of view macroeconomic, different nations exchange, among themselves, goods and / or services or their price, to cover their internal needs. When we talk about foreign trade, we are usually also talking about the need to pay duty, except in the case of trade between countries that are part of a common tariff area, as is the case of the EU.

Since foreign trade operations are not part of the jurisdiction of a single country, without prejudice to the existence of treaties, agreements and conventions, whether bilateral or international, it is necessary that the parties specify in the corresponding contracts, the Regulations governing operations and applicable legislation in case of conflict. Although, on many occasions, foreign trade is also international trade, they are not absolutely interchangeable terms.

The reason is that the term foreign trade takes into account the relations of a country with the rest of the world, while international trade takes into account the commercial relations that occur between countries. Foreign trade ultimately includes both imports like exports. In general, States restrict imports on the basis of tariffs, while promoting exports, for example, establishing tax exemptions for products to be exported.

Likewise, there are institutions to help companies run the risks involved in exporting or selling to other countries. In the case of Spain, ICEX, formerly the Spanish Institute for Foreign Trade, and now Spain Export and Investment, constitutes a public business entity, at a state level, whose mission is precisely to promote the internalization of companies.

Business internationalization

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