Foreign Trade

• Important part of economy

=    Exchange of raw materials, goods, services and capital between countries

• Imports = goods bought from other countries
• Exports = goods sold to other countries

Main reasons:

1. Some products can be only produced in one particular place (Skotch, French champaigne)
2. Some products are cheaper to produce in some countries than others because of various factors – climate, natural resources. (bananas)
3. Some foreign firms can produce higher quality products at more competitive prices

Benefits of FT:

1. International division of labour
2. Wider choice to the customer
3. Lower production costs
4. Increase in technical parameters of the production and productivity of labour
5. Possibility of modernizing machinery and equipment
6. Increase in the size of the market
7. Resources can be used more efficiently and world´s produce can be more effectively distributed

Forms:

1. Visible Trade – concerns raw materials, finished goods and foodstuff
2. Invisible Trade – concerns banking, insurance, shipping services, roayalties

Subject:

• 3 % – movements of goods and services
• 97% – flows of capital, money and securities

Government:

• support FT by negotiating agreements
• Nowadays exists common market and custom unions along countries – they can trade without artificial restrictions

Agreements:

1. Bilateral agreements (2 countries)
2. Multilateral agreements (important international agreements)

NAFTA – Canada, USA, Mexico -> free trade zone

CEFTA – free trade zone in central Europe

WTO – over 120 member countries, reduce trade barriers, solving trade wars

OECD – 19 European countries + 5 Un European (USA, Japan, Australia, New Zealand)

Structure of Foreign Trade in Czech Republic:

1. Commodity – according to the goods

• Czech Import:
  • Oil
  • Natural gas
  • Machines and equipment
  • Means of transport
  • Consumer goods
  • Food produce
• Czech Export:
  • Machines and equipment
  • Instruments
  • Glass
  • Textiles
  • Food produce
  • Cars
  • Sugar
  • Beer

1. Teritorial – according to countries

• Our biggest trade partners:
  • 60% EU countries – > 40% to Germany
  • 25% to east of Europe
  • the rest -> USA, developing countries