International Trading Essay Sample
Filipino International Trading Corporation ( PITC ) . a line corporation under the Department of Trade and Industry ( DTI ) . is a self-sufficient authorities corporation runing under its Revised Charter. Presidential Decree ( PD ) 1071 ( 1077 ) as amended. Since its constitution in 1973 as the government’s merely international trading corporation. Filipino International Trading Corporation ( PITC ) . has been in the head of the Government’s economic docket on market enlargement. planetary fight and improved trade chances for the Philippines. PITC promotes and undertakes exports of Philippine merchandises sourced from preponderantly little and average endeavors ( SME’s ) and provides a scope of trade-related services – including bonded warehousing for duty-free importing of natural stuffs used in the industry of goods for re-export every bit good as quality confidence. order consolidation and imposts facilitation. In maintaining with its authorization to guarantee better footings of trade for the state. PITC engages in a assortment of particular minutess including countertrade and industrial beginnings to leverage authorities importings with trade and investings from foreign providers.
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and is an active participant in government-to-government dialogues which aim to derive increased entree of Philippine merchandises and services to new or non-traditional markets. including the Middle East. Eastern Europe. and other socialist economic system provinces.
As a line corporation under the DTI. PITC plays a strategic function in the price-supply stabilisation attempts of the Government through bulk importing of strategic indispensable trade goods and natural stuffs in order to stabilise monetary values and guarantee supply in the domestic market. such as pharmaceuticals. rice. sugar. fertilisers. cement. engines. to call a few. Pulling from its huge experience and expertness in contract gross revenues. merchandise sourcing and supply. every bit good as quality confidence. PITC has similarly ventured into Government Procurement Services in conformance with Republic Act ( RA ) 9184 and its Revised Implementing Rules and Regulations. supplying authorities clients with efficient. transparent and timely procurance services under Agency-Agency agreements or as Procurement Agents of authorities bureaus and offices. PITC’s cardinal concerns are: International Trading ( Imports. Exports. Countertrade ) . Trade-Related Services ( Bonded Warehousing and related EXIM Services ) . Government Procurement Services ( as Procurement Agents or under Agency-Agency agreements ) . hypertext transfer protocol: //www. pitc. gov. ph/
The Bureau of Customs ( Filipino: Kawanihan ng Adwana. abbreviated as BOC ) is the gross sweetening agency under the Department of Finance responsible for international trade facilitation and ordinance and aggregation of import/export responsibilities at all Philippine ports. It is presently under the leading of Commissioner Rozzano Rufino B. Biazon. Historical records show that the Philippine Customs Service started many centuries back long before the Philippines was discovered by the eastern and western expeditionaries. The Philippines had already a booming trade with states of Southeast Asia. but since money at that clip was non yet the medium of exchange. people so resorted to the swap system of trade goods. The swayers of the barangays were known as the “datus” or “rajahs” collected testimonials from the people before they were allowed to prosecute in their trade. The pattern of roll uping testimonials became portion of their civilization and was so observed and followed as the Customs Law of the Land. hypertext transfer protocol: //en. wikipedia. org/wiki/Bureau_of_Customs_ ( Philippines ) At independency in 1946. the Philippines was an agricultural state tied closely to its former coloniser. the United States.
This was most clearly observed in trade dealingss between the two states. In 1950 the value of the Philippines’ 10 chief exports–all but one being agricultural or mineral merchandises in natural or minimally processed form–added up to 85 per centum of the country’s exports. For the first 25 old ages of independency. the construction of export trade remained comparatively changeless. The way of trade. nevertheless. did non stay changeless. In 1949. 80 per centum of entire Philippine trade was with the United States. Thereafter. the United States part declined as that of Japan rose. In 1970 the two countries’ portion was about 40 percent each. the United States somewhat more. and Japan somewhat less. The form of import trade was similar. if non as concentrated. The United States portion of Philippine imports declined more quickly than Japan’s portion rose. so that by 1970 the two states accounted for about 60 per centum of entire Philippine imports.
After 1970 Filipino exporters began to happen new markets. and on the import side the dramatic additions in crude oil monetary values shifted portions in value footings. if non in volume. In 1988 the United States accounted for 27 per centum of entire Philippine trade. Japan for 19 per centum. At the clip of independency and as a demand for having war Reconstruction aid from the United States. the Filipino authorities agreed to a figure of points that. in consequence. maintain the Philippines closely linked to the United States economic system and protected American concern involvements in the Philippines. Manila promised non to alter its ( overvalued ) exchange rate from the prewar para of P2 to the dollar. or to enforce duties on imports from the United States without the consent of the president of the United States. By 1949 the state of affairs had become indefensible. Imports greatly surpassed the amount of exports and the influx of dollar assistance. and a government of import and foreign-exchange controls was initiated. which remained in topographic point until the early sixtiess.
The controls ab initio reduced the influx of goods dramatically. Between 1949 and 1950. imports fell by about 40 per centum to US $ 342 million and surpassed the 1949 degree in merely one twelvemonth during the 1950s. Bing constrained. imports of goods and nonfactor services as a proportion of GNP declined during the 1950s. stoping the decennary at 10. 6 per centum. about the same per centum as that of exports. By the late fiftiess. nevertheless. exchange controls had begun to lose their effectivity as most available foreign exchange was committed for needed imports. A duty jurisprudence was passed in 1957. and. from 1960 to early 1962. import and exchange controls were phased out. Exports and imports increased quickly. By 1965 the import to GNP ratio was more than 17 per centum. Another acceleration of imports occurred in the early 1970s. this clip raising the import to GNP ratio to around 25 per centum. the degree at which it remained into the 1990s. Imports in the seventiess were progressively being financed by external debt instead than by exports.
The composing of imports evolved after independency as industrial development occurred and commercial policy was modified. In 1949. about 37 per centum of imports were consumer goods. This proportion declined to around 20 per centum during the exchange-and-import control period of the fiftiess. By the late sixtiess. consumer imports had been mostly replaced by domestic production. Imports of machinery and equipment increased. nevertheless. as the state engaged in industrialisation. from around 10 per centum in the early 1950s to duplicate that by the mid-1960s. As a consequence of the rush in crude oil monetary values in the seventiess. the import portion of both consumer and capital goods fell slightly. but their comparative magnitudes remained the same. No affair the trade government. the Philippines had trouble in bring forthing sufficient exports to pay for its imports. In the 40 old ages from 1950 through 1990. the trade balance was positive in merely two old ages: 1963 and 1973. For a few old ages after major devaluations in 1962 and 1970. the current history was in excess. but so it excessively turned negative. Excessive imports remained a job in the late eightiess.
Between 1986 and 1989. the negative trade balance increased tenfold from US $ 202 million to US $ 2. 6 billion ( see table 13. Appendix ) . In 1990 weaker universe monetary values for Filipino exports. higher production costs. and a lag in the economic systems of the Philippines’ major merchandising spouses restrained export growing to merely somewhat more than 4 per centum. Increasing crude oil monetary values and heavy importing of capital goods. including power-generating equipment. helped push imports up about 17 per centum. ensuing in a 50 per centum leap in the trade shortage to more than US $ 4 billion. Reducing the drain on foreign exchange has became a major authorities precedence. A figure of factors contributed to the instead blue trade history of the Philippines. The country’s footings of trade ( see Glossary ) have fallen for most of the period since 1950. so that in the late eightiess. a given measure of exports could purchase merely 55 per centum of the volume of imports that it could purchase in the early 1950s. A 2nd factor was the relentless overestimate of the exchange rate. The peso was devalued a figure of times falling from a pre-independence value of P2 to the dollar to P28 in May 1990. The accommodations. nevertheless. had non stimulated exports or curtailed imports sufficiently to convey the two in line with one another.
A 3rd consideration was the country’s trade and industrial policies. including duty protection and investing inducements. Many economic experts have argued that these policies favourably affected import-substitution industries to the hurt of export industries. In the seventiess. the execution of an export- inducements plan and the gap of an export-processing zone at Mariveles on the Bataan Peninsula reduced the prejudices slightly. The export of industries ( e. g. . electronic constituents. garments. handcrafts. chemicals. furniture. and footwear ) increased quickly. Extra export-processing zones were constructed in Baguio City and on Mactan Island near Cebu City. During the 1970s and early 1980s. untraditional exports ( i. e. . trade goods non among the 10 largest traditional exports ) grew at a rate twice that of entire exports. Their portion of entire exports increased from 8. 3 per centum in 1970 to 61. 7 per centum in 1985.
At the same clip that untraditional exports were dining. falling natural stuff monetary values adversely affected the value of traditional exports. In 1988 the value of untraditional exports was US $ 5. 4 billion. 75 per centum of the sum. The most of import. electrical and electronic equipment and garments. earned US $ 1. 5 billion and US $ 1. 3 billion. severally. Both of these merchandise groups. nevertheless. had high import content. Domestic value added was no more than 20 per centum of the export value of electronic constituents and likely no more than twice that in the garment industry. Another quickly turning export point was seafood. peculiarly shrimps and shrimps. which earned US $ 307 million in 1988. The World Bank and the IMF every bit good as many Philippine economic experts had long advocated decrease of the degree of duty protection and riddance of import controls. Those in the concern community who were engaged in import-substitution fabrication activities. nevertheless. opposed decreases. They feared that they could non successfully vie if tariff barriers were lowered.
In the early 1980s. the Filipino authorities reached understanding with the World Bank to cut down duties by about one-third and to raise import limitations on some 3. 000 points over a five- to six-year period. The bank. in bend. provided the Philippines with a fiscal sector loan of US $ 150 million and a structural accommodation loan for US $ 200 million. to supply balance-of-payments alleviation while the duty wall was reduced. Approximately two-thirds of the alterations had been enacted when the plan land to a arrest in the aftermath of the economic and political crisis that followed the August 1983 blackwash of former Senator Benigno Aquino. In an October 1986 agreement with the IMF. the Aquino authorities agreed to liberalise import controls and to extinguish quantitative barriers on 1. 232 merchandises by the terminal of 1986. The mark was accomplished for all but 303 merchandises. of which 180 were intermediate and capital goods. Agreement was reached to widen the deadline until May 1988 on those merchandises.
The liberalizing impact was reduced in some instances. nevertheless. by duties being erected as quantitative controls came down. A tariff alteration strategy was put away once more in June 1990 by Secretary of Finance Jesus Estanislao. After an intracabinet battle. Aquino signed Executive Order 413 on July 19. 1990. implementing the policy. The duty construction was to be simplified by cut downing the figure of rates to four. runing from 3 per centum to 30 per centum. However. in August 1990. concern groups successfully persuaded Aquino to detain the duty reform bundle for six months. hypertext transfer protocol: //www. Photius. com/countries/philippines/geography/philippines_geography_international_trade. hypertext markup language
International Trade Missions the PSIA represents the Philippines in assorted one-year international events such as SODEC Tokyo. CEBIT Australia. CommunicAsia Singapore. Microsoft WPC USA. JavaOne USA. and Oracle Openworld USA. every bit good as local events like the International Outsourcing Summit. Cebu Business Month Celebration and the CICT-BPAP Talent Caravan that visited the alleged following moving ridge metropoliss of the state. hypertext transfer protocol: //www. psia. org. ph/PROGRAMS/InternationalTradeMissions. aspx
Main Industry Sectors
The agricultural sector employs about 40 % of the labour force but contributes to less than 15 % of the GDP. The Philippines is one of the world’s chief manufacturers of rice and coconut. However. the agricultural sector suffers from low productiveness. weak economic systems of graduated table and unequal substructures. Fishing contributes to 3 % of the GDP. The Philippines is one of the richest states of the universe in footings of minerals with an undeveloped mineral wealth estimated at more than USD 840 billion. The Philippines militias of Cu. gold and Zn are among the largest of the universe. The fabrication sector contributes to around 30 % of the GDP. Industrial nutrient processing is one of the Philippines’ chief fabrication activities. The large industries are dominated by the production of cement. glass. chemicals merchandises and fertilisers. Fe. steel. and refined oil merchandises. The third sector. which represents more than 50 % of the GDP. has developed well particularly in the Fieldss of telecommunications. naming centres. and finance.
The Philippines’ economic system has strengthened in the recent old ages. a fact that protected it from the direct impacts of the planetary fiscal crisis and the recession. but without saving it wholly. After holding attained in 2009 its lowest degree since the Asiatic crisis ( 1. 1 % ) . the growing of the Philippines’ GDP has revived in 2010. increasing to 7 % harmonizing to the appraisals. On the path of the dynamic resurgence that the state has experienced. supported by the augmentation of exports in the fabrication sector. the Philippines’ economic system has besides profited. in a peculiar sense. from the presidential elections.
The program of the “economic resilience” launched at the beginning of 2009. gives precedence to the “post-crisis” direction through a budgetary shortage control in order to excite the economic system and counterbalance the effects of the crisis. The nonsubjective at mid-term is to convey the budget shortage to 2 % of the GDP from now until 2013. The new president. Benigno Aquino. has presented on his docket 16 points in the “Social Contract with the Filipino People” . they emphasize the demand to see a long-run growing and cut down poorness. On a societal degree. the state faces several challenges: the population populating under the poorness threshold has increased in these recent old ages ( 33 % of the population ) . the crisis has aggravated the unemployment rate ( 8 % of the active population ) . there is a important demographic growing and the inequality in wealth distribution persists.
FDI in Figures
Foreign direct investing ( FDI ) had clearly decreased since 2008 due to the unfavourable international economic environment ; nevertheless. it has started to bounce once more in 2010. Sing the comparative advantages of the Philippines. such as: English speech production and well-skilled work force. a strong cultural propinquity to the United States. its geographical location in a dynamic country. the FDI flow in the Philippines is instead weak. This can be partly explained by the fact that the state is germinating into a service society. with a low capital strength. which means a demand of minimum equipment. In add-on. the authorities favours farm outing understandings between foreign companies and local endeavors instead than FDI in the rigorous sense of the term. Last. corruptness. instability. unequal substructures and non plenty juridical security discourages investing.
FDI Government Measures
Laws liberalising concern patterns have opened up more Fieldss to foreign investings and have provided foreign investors with the same inducements as ASEAN members. every bit good as simplified processs.
State Strong Points
The country’s chief strong points are:
– A skilled English-speaking work force ;
– A big domestic market ;
– Its rank to ASEAN ;
– A favourable investing policy ;
– A really advanced legal system ;
– A strategic location at the Asiatic gateway ; and
– Considerable natural wealth.
Country Weak Points
The country’s weak points lie in its political instability. the bad quality of its substructures. judicial precariousness and deficiency of transparence.
Foreign Trade Overview
During these two last decennaries. the Philippines’ economic system. which was comparatively closed. has obviously opened up. partially due to its ASEAN ( Association of South-East Asian Nations ) rank. Its three chief export spouses are the United States. Japan and China. The chief export trade goods are electronic and electrical equipment. atomic reactors and boilers. vehicles and vesture. Its three chief import spouses are the United States. Japan and Singapore. The chief import trade goods are electronics and electrical equipment. mineral fuels and oil. atomic reactors and boilers. Fe. steel and vehicles. Traditionally. the Philippines has a shortage trade balance ; nevertheless. under the effects of the planetary crisis. its trade balance shortage was reduced ( and even transformed into a positive balance during a few months ) due to the fact of a high autumn on imports followed by a fast resurgence of exports. hypertext transfer protocol: //www. globaltrade. net/m/c/Philippines. hypertext markup language
Historically. the Philippines have been an of import Centre for commercialism for centuries for its cultural minority. viz. . the Chinese who were besides its first residents. The archipelago has besides been visited by Arabs and Indians for the intent of trading in the first and early 2nd millenary. As of twenty-first century. the state is member in several international trade organisations including the APEC. ASEAN and WTO Since 1980s. the Philippines have opened their economic system to foreign markets. and established a web of free trade understandings with several states. The United States is one of the Philippines top trading spouse. In 2010. harmonizing to US Department of Commerce pa. trade between the Philippines and US sums to US $ 15. 4 billion. US is besides the Philippines largest foreign investor. with foreign direct investing stopping point to US $ 6 billion at the terminal of 2009. Under the new Aquino disposal. the authorities programs to open up the state to more foreign investing in industries such as concern processing operations. excavation and touristry. However. this move may be hindered by limitations such a prohibition of foreign ownership of land and public public-service corporations. Primary exports – trade goods: semiconducting materials and electronic merchandises. conveyance equipment. garments. Cu merchandises. crude oil merchandises. coconut oil. fruits
Primary exports spouses: US ( 17. 6 per centum of entire exports ) . Japan ( 16. 2 per centum ) . Netherlands ( 9. 8 per centum ) . Hong Kong ( 8. 6 per centum ) . China ( 7. 7 per centum ) . Germany ( 6. 5 per centum ) . Singapore ( 6. 2 per centum ) . South Korea ( 4. 8 per centum ) Total value of imports: US $ 59. 9 billion
Primary imports – trade goods: electronic merchandises. mineral fuels. machinery and conveyance equipment. Fe and steel. fabric cloths. grains. chemicals. fictile Primary imports spouses: Japan ( 12. 5 per centum of entire imports ) . US ( 12 per centum ) . China ( 8. 8 per centum ) . Singapore ( 8. 7 per centum ) . South Korea ( 7. 9 per centum ) . Taiwan ( 7. 1 per centum ) . Thailand ( 5. 7 per centum )
hypertext transfer protocol: //www. economywatch. com/world_economy/philippines/export-import. hypertext markup language ADVANTAGES OF INTERNATIONAL Trade
Assorted advantages are named for the states come ining into trade dealingss on a international graduated table such as:
A state may import things which it can non bring forth
International trade enables a state to devour things which either can non
be produced within its boundary lines or production may be really high. Therefore it becomes cost cheaper to import from other states through foreign trade. Maximum use of resources
International trade helps a state to use its resources to the maximal bound. If a state does non takes up imports and exports so its resources remain unexplorted. Thus it helps to extinguish the wastage of resources. Profit to consumer
Imports and exports of different states provide chances to the consumer to purchase and devour those goods which can non be produced in their ain state. They therefore acquire a diverseness in picks. Reduces trade fluctuations
By doing the size of the market big with big supplies and extended demand international trade reduces trade fluctuations. The monetary values of goods tend to stay more stable. Use of Surplus produce
International trade enables different states to sell their excess merchandises to other states and earn foreign exchange. Fosters International trade
International trade Fosters peace. good will and common apprehension among states. Economic mutuality of states frequently leads to shut cultural relationship and therefore avoid war between them.
DISADVANTAGES OF INTERNATIONAL Trade
International trade does non ever amount to approvals. It has certain drawbacks besides such as: Import of harmful goods
Foreign trade may take to import of harmful goods like coffin nails. drugs etc. Which may run the wellness of the occupants of the state. E. g. the people of China suffered greatly through opium imports. It may wash up resources
Internation trade leads to intensive cultivation of land. Thus it has the operations of jurisprudence of decreasing returns in agricultural states. It besides makes a state hapless by giving excessively much load over the resources. Over
Over Specialization may be disasterous for a state. A replacement may look and destroy the economic lives of 1000000s. Danger of Starvation
A state might depend for her nutrient chiefly on foreign states. In times of war there is a serious danger of famishment for such states. One state may derive at the expensive of Another
One of the serious drawbacks of foreign trade is that one state may derive at the disbursal of other due to certain inadvertent advantages. The Industrial revolution is Great Britain ruined Indian handcrafts during the 19th century. It may take to war
Foreign trade may take to war different states compete with each other in happening out new markets and beginnings of natural stuff for their industries and often come into clang. This was one of the causes of first and 2nd universe war.
hypertext transfer protocol: //www. guesspapers. net/1593/advantages-and-disadvantages-of-international-trade/