International trade has existed since ancient times, with benefits and consequences. It increases national GDP and economic opportunities, but can create a cycle of dependency between producing and consuming nations. Trade in goods, services, and capital on the FOREX market are all aspects of foreign trade. Fair trade, free trade, and profits are important for global economic well-being.
Also known as foreign trade, international trade has been maintained since the dawn of time. The trade in goods was carried on the backs of traders across tribal boundaries, and bartered and sold among neighboring and hopefully accommodating tribes. The Silk Road between Europe and Asia is an example of the sometimes beneficial, sometimes troubling essentials of international trade. Asian silks and spices were traded for European technology and weaponry, with various benefits and consequences.
Domestic trade is the buying and selling of goods and services within a given nation’s borders and is inherently limiting to a modern national economy. International trade, in contrast, increases national gross domestic product (GDP) providing vastly expanded economic opportunities. Therefore, it is up to the global business community to promote fair trade between nations. Furthermore, the ability of nations to trade freely with all others is also vital to profits. Free trade, fair trade and profits are the cornerstones of global economic well-being.
There is a somewhat cyclical nature to international trade. Poorer nations, able to provide cheap labor and lower production costs, are enslaved by richer, more consumer-oriented nations. While productive nations gain wealth through their productivity, consuming nations are forced to become productive themselves through the transfer of their capital to the productive nation. Therefore, the process is reversed. The growing trade imbalance between the United States and China is one example of the cycle in which the consuming nation is becoming economically tied to the producing nation.
International trade is most commonly recognized in the exchange of goods or products. However, trade services, such as expertise in a particular industry or the ability to facilitate the trade of goods, are another common form of foreign trade.
Trade capital on the foreign exchange market (FOREX) represents a third aspect of international trade. Capital, or currency, held for foreign trade fluctuates in value every hour due to political, economic, weather and other conditions and from country to country. Currency trading in the international market attempts to profit from the increase in value of one nation’s currency by selling the lower value of another nation’s capital. Trade capital is also the amount of money designated by a trader to pay for foreign trade costs, such as tariffs, subsidies, transportation, etc.
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