Question

discuss ways the U.S. could apply some lessons learned from other countries to assist private business in the conduct of international trade.

Answer 1

What is International Trade?

International trade is the exchange of Goods, services and capital across boundaries or territories. The trade contributes to the major chunk of gross domestic product (GDP) of the trading country. International trade is a complicated process due to the various factors like Government policies, legal complexities, and different currencies.

The United States is the biggest contributor the international trade across the countries, with total trade value of USD 5 trillion. Though there are various obstacles in conduct of smooth flow of Goods and Services across the boundaries, the role of the government increases in this regards. It is the government which facilitates the proper flow of international trade.

International Trade Assistance by the Australian Government

Australian Trade and Investment commission (Austrade) is the organization established by the Australian government for the smooth conduct of international trade. The Austrade through its various scheme facilitates, assistance for frequent trade by the entities operating in the country.

Austrade facilitates following assistance to the Entities

1. Grants & assistance programs – Find grants, funding and support programs from across government to help grow the business to the eligible businesses. Under the scheme the government provides grant for the facilitating exports to the businesses, also along with that it also provides business advisory services to the entities.
2. Export Finance Australia – Export Finance Australia is the governments export credit agency, which provides financial expertise and solutions to drive sustainable growth through loans, guarantees, bonds and insurance, which enables Corporates and Government to take on export related opportunities.
3. Business Enterprise Centers – Business Enterprise Centers (BEC) provides low cost business advisory services to business intenders and existing small businesses.
4. Australia China Business Council – The Australia china business council (ACBC) business organization dedicated to promoting business and trade between Australia and peoples republic of china
5. TradeStart – The tradestart network is an extension to austrade and is in partnership with state, territory and local governments, industry associations and chamber of commerce. The prime objective of Austrade’s Tradestart network is to assist small and medium sized exporters to achieve long term success in international trade

International Trade Assistance by the German Government      

The German system of promotion of foreign trade and investment is characterized by a division of responsibilities between the state and the private sector. Various institutions, such as German chambers of commerce abroad, foreign missions, and Germany Trade and Invest (GTAI), work closely together to deliver the best possible backing for German firms.

The Economic Affairs Ministry’s export promotion instruments help small and medium-sized enterprises (SMEs) develop new markets abroad.

1. Foreign Trade-fair program – For the purpose of promoting For the purpose of promoting foreign trade, the Federal Republic of Germany participates in selected trade fairs and exhibitions abroad. The ministry works with the Association of the German Trade Fair industry (AUMA) to decide for which particular trade fairs and exhibitions abroad financing will be made available in the following years.
2. Export Credit Guarantees (Hermes Insurance) and investment guarantees - The Federal Government’s export credit guarantees protect exporters and banks against the risks of unpaid claims in foreign transactions due to economic or political reasons. By providing export credit guarantees, which are available in a broad range of different product variants, the Federal Government takes on a large share of the risk of payment default. These credit guarantees are often what makes it possible for companies to carry out exports and to finance them. Companies receiving cover from credit guarantees pay a premium commensurate with the risk.
3. Bilateral chambers of Industry and commerce - Germany’s bilateral chambers, delegations and representative offices have 140 branches in 92 countries to support the activities of German firms on foreign markets. These institutions work in the interest of the economies of both Germany and the host country and provide wide-ranging services to foster business in both directions. They are thus also acting in the public interest by taking responsibility for a major aspect of the promotion of German foreign trade and investment.
4. Germany Trade and Invest (GTAI) - Against the background of increasing global competition to attract investors, it is important to market Germany as a base for business and technology. Germany Trade and Invest is responsible for promoting Germany’s foreign trade and investment and for marketing the country to potential investors. The company provides information about the world’s markets, and its comprehensive information service offers smaller firms in particular a competent and reliable foundation on which to take the right decisions about how to access these markets. It has a network of personnel stationed around the world to research information about foreign markets on the spot.     

International Trade Assistance by the Indian Government

Indian economy is one of the fastest growing economies in the world. As a part of economic reforms, the government has formulated many economic policies which have led to the country’s gradual economic development. Under the changes, there has been an initiative to improve the condition of exports to other countries; the government has taken up a few actions to benefit businesses in the export trade. The primary objective of these benefits is to simplify the whole export process and make it more flexible.

Some of the different types of export incentive schemes and benefits that the government has initiated are:

1. Advance Authorization Scheme - As part of this scheme, businesses are allowed to import input in the country without having to pay duty payment, if this input is for the production of an export item. Moreover, the licensing authority has fixed the value of the additional export products to not below than 15%. The scheme has the validity period of 12 months for imports and 18 months for carrying out the Export Obligation (EO) from the date of issue typically.
2. Advance Authorization for Annual Requirement - Exporters who have a previous export performance for at least two financial years can avail the Advance Authorization for Annual requirement scheme or more benefits.
3. Export Duty Drawback for Customs, Central Excise, and Service Tax - Under these schemes, the duty or tax paid for inputs against the exported products is refunded to the exporters. This refund is carried out in the form of Duty Drawback. In case the duty drawback scheme is not mentioned in the export schedule, exporters can approach the tax authorities for getting a brand rate under the duty drawback scheme.
4. Duty-Free Import Authorization- This is another benefit the government has introduced by combining the DEEC (Advance License) and DFRC to help exporters get free imports on certain products.
5. Zero duty EPCG (Export Promotion Capital Goods) Scheme- In this scheme, which applies to exporters of electronic products, import of capital goods for production, pre-production, and post-production is allowed at zero percent customs duty if the export value is at least six times the duty saved on capital goods imported. The exporter needs to verify this value (Export Obligation) within six years of issuing date.
6. Post Export EPCG Duty Credit Scrip Scheme -Under this export scheme, exporters who aren’t sure about paying the export obligation can obtain an EPCG license and pay the duties to the customs officials. Once they fulfill the export obligation, they can claim a refund of the taxes paid.
7. Towns of Export Excellence (TEE) - Towns that produce and export goods above a particular value in the identified sectors would be known as towns of export status. Towns will be given this status based on their performance and potential in exports to help them reach new markets.
8. Market Access Initiative (MAI) Scheme - An effort to provide financial guidance to eligible agencies for undertaking direct and indirect marketing activities like market research, capacity building, branding, and compliances in importing markets.
9. Marketing Development Assistance (MDA) Scheme - This scheme aims to promote export activities abroad, assist export promotion councils to develop their products and other initiatives to carry out marketing activities abroad.
10. Merchandise Exports from India Scheme (MEIS) - This scheme applies to the export of certain goods to specific markets. Rewards for exports under MEIS will be payable as a percentage of realized FOB value.

These are some measures initiated by the various government mentioned above to improve their International trade.

Though the United States has increased value of international trade, but the recent developments has dented the overall trade of the entities. There are various entities in the United States having huge pile of Cash with them. The business can make seek the route of foreign direct investment (FDI) in the foreign market. The US business may choose to simply partner with a foreign business as a joint venture.

Apart from the foreign investments, the businesses can license or franchise to expand the brand and products or services to international markets without directly selling goods or services in that market.