Trade relationship

Under a trading relationship (also: foreign trade relationship ; English trade relation ) are understood in foreign trade to trade between two countries or the business relationship between exporters and importers .

General

Foreign trade forms the basis of the international division of labor . It arises from the fact that domestic economic agents - mostly long-term - maintain trade relations with foreign economic agents. It is determined by the diversity of the framework conditions between national and international business . These are expressed through different political, economic, legal and cultural framework conditions. The entirety of all trade relations crossing national borders is called world trade .

Trade relations are necessary because, or when the national markets certain goods or services does not provide more expensive or of poor quality, so the domestic supply to meet the demand is not sufficient. Trade relationships exist between states and between exporters and importers on the basis of business-to-business , business-to-consumer , business-to-administration (for trade relationships between companies and states) or administration-to-administration (for trade relationships between states).

species

According to the number of contractual partners

There are bilateral and multilateral trade relations:

• Bilateral trade relations take place between two countries or two exporters / importers. You agree on mutual trade agreements ( English trade agreements ; states) and delivery and payment conditions (( English terms of delivery and payment , Incoterms ; companies).
• Multilateral trade relations exist between at least three countries or exporters / importers on the basis of trade agreements such as the Peoples ' Trade Treaty , NAFTA or the ASEAN-China Free Trade Agreement .

All trade relationships are based on a contractual basis, with international law mostly applicable.

According to the depth of integration

There are a number of very different trade agreements with very different degrees of integration. These range from relatively loose trade contracts and agreements to very extensive agreements ( European Union ).

1. Types of contracts
   • Trade agreement
   • Investment protection agreement
     • Free trade agreement for the establishment of a free trade area: Abolition of all tariffs or tariff trade barriers on almost all goods enable free movement of goods. Possibly further agreements to remove barriers to investment, free movement of capital or free movement of services.
       • Internal market (common market): Free trade agreement enables free movement of all means of production, including free movement of persons and freedom of establishment for companies. Joint economic policy coordination.
         • Monetary union
2. Combinations
   • Customs union
     • Customs and Monetary Union
       • Economic union
         • Economic and Monetary Union
           • Fiscal Union - Joint coordination (in full or in part) of fiscal policy

Trade relations between the EU member states

In December 1969 the EEC decided to gradually unify the agreements on trade relations between the Member States and third countries and on the negotiation of Community agreements. After that, new trade agreements with third countries could in principle only be concluded by the Community. Today's trade relations between EU member states and their exporters / importers are subject to the following conditions:

• Transaction costs : The euro eliminates the spreads between the bid and ask rates of individual foreign currencies , which results in lower transaction costs for exporters and importers.
• Exchange rate risk : The exchange rate risk of fluctuating exchange rates does not apply, so that exchange rate hedging (such as forward exchange transactions ) is no longer necessary.
• Trade facilitation: Pre- and post-calculation no longer requires currency conversion, there are no foreign currency accounts and thus foreign currency loans or debts .
• Market transparency : The uniform specification of the euro in price lists increases the market transparency of market participants and reduces cross-border price differentiations and rough calculations .

In this way, intra-European trade relations grant exporters and importers significant competitive advantages that do not exist between the EU and third countries .

Trade relations and foreign trade instruments

Trade relations are the subject of state foreign trade instruments . With their help, trade relations are facilitated through free trade , export credit insurance or foreign trade financing , restricted by trade barriers or trade sanctions and prohibited by embargo . The ECJ has interpreted extensively the competence assigned to the Community exclusively in accordance with Art. 207 TFEU to organize its external trade relations and in the so-called "Natural Rubber Report" not limited this competence to the use of classic foreign trade instruments, but also measures in the course of a " new world economic order ”. According to the concept of "managed trade" ( English managed trade ), however, are not "free" but to seek "fair" trade. However, this does not mean fair trade , but bilaterally largely symmetrical trade relations that ensure equivalent economic effects. The states should then organize and structure their trade relations according to "desired aspects"

Trade Relations and Foreign Economic Theory

The trade relations are the object of knowledge of the foreign trade theory . It examines the exchange of goods and services in the real economy and initially disregards the financial sector . In a second step, international payment transactions and international credit transactions are analyzed. According to recent findings, the reason for the establishment of international trade relations is increasing economies of scale . The Heckscher-Ohlin model for depicting trade relations is based on two countries, two goods and two production factors. As a result, this leads to the assumption that those countries export goods whose production is only possible and usable due to a particularly large number of national factors. The Heckscher-Ohlin model of trade relations between states (except the USA) is considered verified.

Individual evidence

1. ↑ Clemens Büter, Foreign Trade: Basics of International Trade Relations , 2017, p. 1
2. ^ Eddie Gonzalez: Why do countries seek Regional Trade Agreements . In: The Regionalization of the World Economy 1998, ISBN 0-226-25995-1 , p. 64 (accessed July 21, 2008).
3. ↑ OJ. No. L326 of December 29, 1961, p. 39
4. ↑ Clemens Büter, Foreign Trade: Basics of International Trade Relations , 2017, p. 31 f.
5. ↑ ECJ, Opinion of October 4, 1990 , Ref .: 1-78 (2)
6. ↑ Katja Gelbrich / Stefan Müller, Handbuch Internationales Management , 2011, p. 928
7. ↑ Wim Kösters, Free Trade versus Industrial Policy, in: Wirtschaftsdienst 1992 / I, 1992, p. 51
8. ^ Paul Krugman / Maurice Melitz / Marc Obstfeld, Internationale Wirtschaft , 2015, pp. 131 ff.
9. ↑ Peter Zweifel / Robert H. Heller, Internationaler Handel (theory and empiricism) , 1992, p. 127