1. November 1st 2010
Presentation by
Harprit(Harry) Pal S
Marahrh
ELT Program for Accounting and Finance Professionals

2. OVERVIEW
 Important terms
 Reason of International trade
 Export Documents
 Process of International Trade
 Protectionism
 How Protectionism works
 Free Trade Areas & Associations
 Position of Canada in World’s Trade

3. IMPORTANT TERMS
 Economy of Scale: Reduction in cost per unit resulting from
increased production, operational efficiencies
 Factors of Production- Labour & Capital
 Balance of Trade: Trade Surplus- Exports>Imports
Trade Deficit- Exports<Imports
 Balance of Payment: Visible Trade + Factors of Production
 Demurrage & Gurantee of payment- a charge
required as compensation for the delay of a ship or freight car or
other cargo beyond its scheduled time of departure
 Quotas, Tariffs, Bans: Restrictions on imports as a measure
of protection for specific goods, or industries, or domestic producers,
or due to government policies

4. TRADE TRANSACTIONS
GOODS
PAYMENT
S BINFORMATION

5. DATA EXCHANGE IN INTERNATIONAL TRADE
Arrival Notice
Instruction
Invoice, PO
Importer’s
Bank
Ocean Carrier
Customs House
Broker
LineofCredit
PerformaInvoice
Shipping
& funding detail
Vessel Booking Request
Cargo
Status
Shipping & Funding Detail
Exporter’s
Bank
Importer Exporter
Vessel Booking Confirmation
Bill of Lading
Rated Bill of Lading
Dock Receipt
Freight Forwarder
Purchase Order
LCConfirmation
Dockreceipt
Delivery Order
Vessel Manifest
Dock receipt
Release/Approval
Demurrage
guarantee&
payment
Inland
Carrier
Manifest
Pick-up &
Delivery
Order
Importer Notice
Converted Vessel
Manifest
Customs (Export)
Port
Customs
( Import )
OriginalB/L,InvoicePO
Inland
Carrier
Marine
Insurance
Company
Fund Transfer
Confirmed Line of Credit
Release/Hold
Notice
Purchase Exportation Importation
Import
Terminal
Operator
Proforma
Invoice
Export Declaration
Export Declaration
Bill of lading, Documentation
Import
Docs
Export
Terminal
Operator

6. MAIN EXPORT DOCUMENTS
 Commercial Invoice: bill for the goods from the seller to the buyer
 Bill of Lading (B/L): Document signed by a transportation company (carrier) to
show receipt of goods for transportation from and to the points indicated.
 Insurance Certificate
 Certificate of Origin
 Quality and Weight Certificates
 Export Licence
 Letter of Credit - A letter on the part of a bank and at the request of one of the
bank’s customers, to pay a named beneficiary a specified amount of money (or to
deliver an item of value) if the beneficiary presents documents in accordance with
the terms and conditions specified in the letter of credit
 Vessel's manifest - International carrier is obligated to make declarations of the
ship's crew and contents at both the port of departure and arrival. The vessel
manifest lists various details about each shipment by B/L number


7. LIST OF DOCUMENTS
 Enquiry
 Order
 Payment order
 Forwarding instructions
 Forwarder's invoice
 Goods receipt
 Air waybill
 Road consignment note
 Rail consignment note
 Cargo manifest
 Bill of lading
 Freight invoice
 Export licence
 Exchange control doc.
 Certificate of origin
 Dangerous goods
declaration
 Import licence
 Customs delivery note
 Documentary credit

8. WHY INTERNATIONAL TRADE
Food Cars
USA 2 8
Japan 3 6
Principle of Absolute Cost Advantage
According to Adam Smith, both countries can gain from
international trade through specialization (USA
producing more food and Japan producing more cars):
Suppose the USA produces 1 car less, this frees up 8
labourers
Labour Per Unit
These 8 labourers can now produce 8/2 = 4 units of food
To keep the production level of cars constant, Japan
should make 1 car more. This requires 6 labourers
These 6 labourers could have made 6/3 = 2 units of
food
Conclusion: USA Japan change world prod.
production of cars: -1 +1 0
production of food: +4 -2 +2

9. PROTECTIONISM
 Restriction of imports into a country by government measures
 Reasons for Protectionism
 Protects businesses from extra competition
 Helps new businesses to develop before they face competition
 Helps protect jobs
 Prevents imports of harmful goods
 Methods
 Quotas: Limits on the quantity of a product that can be imported into a
country e.g. 100,000 cars
 Regulations: Laws and safety guidelines (embargoes are considered
strong diplomatic measures to prohibit commerce and trade with a
particular country)
 Teriffs or Import Duties: Taxes on imported goods. They raise the price to
customers and make them less attractive

10. HOW PROTECTIONISM WORKS
PY
QYO
S
D
P w
P t
F
A
G
a b c d
Pw-Price in international market
Pt-Price of imports after tax
①price increase
Q1 Q2Q3 Q4
Import before tax
②imports decrease after tax
e
B
C
H
③loss of consumer is a+b+c+d
④producer surplus e increased by a
⑤government tariff income is c
Benefit：a+b+d（producer）
+c（government）
Supply
Demand
P
r
i
c
e
Quantity
Sw

11. FREE TRADE AREAS & ASSOCIATIONS
 Trade without any protectionism / trade barriers
between countries
 Examples of free trade areas/organizations
 North American Free Trade Agreement (NAFTA)
 Free Trade Area of Americas (FTAA)
 European Free Trade Association (EFTA)
 European Union (EU)
 Association of Southeast Asian Nations (Asean)
 World Trade Organization (WTO/GATT before 1995)
 Asia-Pacific Economic Corporation (APEC)
 MERCOSER (Mercado Comun del Sur-Southern Common
Market)

12. INTERNATIONAL TRADING PARTNERS
Percentage of World, 1996

13. CANADA IN INTERNATIONAL TRADE
0
50
100
150
200
250
US EU JAPAN UK
Exports in
billion
Imports in
billion
0
200
400
600
800
1000
1200
1400
China
Germany
US
Japan
Neitherlands
France
Italy
Belgium
RepofKorea
UK
HongKong
Canada
* All Data is in Billion $ (US)
Major Partners of Canada Top 13 Trading Countries

14. POSITION OF CANADA IN WORLD’S TRADE
0
200
400
600
800
1000
1200
1400
Billion $ (US)

15. WE HAVE DISCUSSED
 Important terms in International Trade
 Benefit of International trade
 Documents used in International Trade
 Process of International Trade
 Protectionism & how it works
 International Free Trade areas & Associations
 Canada’s position in International Trade

16. THANK YOU !
Harprit(Harry) Pal S Marahrh
Program of Accounting and Finance Professionals
Costi, Brampton, ON, Canada
Tel.: (647)867-1325, e-mail: harpritpal@live.com