(a) Explain the following:
(i) counter trade
(ii) entrepot trade
(iii) import trade
(iv) invisible trade
(b) State four barriers to international trade.
Explanation
(i) Counter Trade: This is a system of international trade where countries instead of paying cash for the goods they purchase from other countries will pay with their own goods so that the seller is forced to buy their owns goods. (This is the exchange of goods for goods in international trade).
(ii) Entrepot Trade: This is a system of trade where goods imported into a country are re-exported while the goods are still in the same form as they were received.
(iii) Import Trade: This is a system of trade where goods produced in one country are brought into another country for sale.
(iv) Invisible Trade: This is a type of international trade involving intangible products such as services or banking, shipping services which require payment of money.
(b) Barriers to International Trade:
(i) Difference in currencies pose a barrier to international trade.
(ii) Language problems in the negotiation and hiring of interpreter.
(iii) Difference in Business laws and regulations among countries.
(iv) Trade restrictions by countries being created by trading partners when they discover they have adverse balance of trade or payment such as embargoes, duties, quota, cartel.
(v) Religious/cultural problems could also act as impediments to trade.
(vi) Problems of distance also affect international trade because of the additional cost and delay in delivery.
(vii) Differences in weight and measures in different countries affect international trade.
(viii) It requires a lot of documentation.
(ix) Government policies/political differences can affect trade between two countries.