Foreign trade is the exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. The World Trade Organization (WTO) is the global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The WTO’s goal is to ensure that trade flows as smoothly, predictably and freely as possible. Amongst the WTO’s roles are: to operate as a global system of trade rules, to act as a forum for negotiating trade agreements, to settle trade disputes between its members and to support the needs of developing countries. In essence, the primary purpose of the WTO is to open trade for the benefit of all. It has over 160 members representing 98 per cent of world trade. To join the WTO, a government has to bring its economic and trade policies in line with WTO rules and negotiate its terms of entry with the WTO membership.Globally, the top exported items are: crude and processed oil, cars and phone systems, auto parts and pharmaceuticals and medical devices. The world’s top trading entities are: the EU, US, China, Germany, UK, Japan, France, Netherlands, HK, Korea and Italy. India does not figure in the top ten foreign traders despite global trade around 950 billion USD. India’s trade to gdp ratio is about 40%.India’s overall foreign trade stands at about a 1000 billion USD. Merchandise exports are about 291 billion USD and service exports are about 203 billion USD. India exports approximately 7500 commodities to about 190 countries, and imports around 6000 commodities from 140 countries.Foreign trade is critical to the Indian economy keeping in view the fact that India is a huge consuming power with diverse needs. India exports vast number of products and also imports an equal amount of other products. In recent years, the government’s stand on trade and investment policy has displayed a marked shift from protecting ‘producers’ to benefiting ‘consumers’.A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.Trade blocs can be stand-alone agreements between several states (such as NAFTA, the North American Free Trade Agreement between the US, Canada and Mexico) or part of a regional organization (such as the EU, the European Union). Depending on the level of economic integration, trade blocs can be classified as preferential trading areas, free-trade areas, customs unions, common markets, or economic and monetary unions. The WTO’s World Trade Report 2020 shows that international cooperation can play a significant role in making the pursuit of digital development and technological innovation more effective, while minimizing negative spill-overs from national policies. The WTO agreements, reached a quarter of a century ago, have proved to be remarkably forward-looking in providing a framework that has favored the development of ICT-enabled economies across all levels of development. Further international cooperation at the WTO and elsewhere would enable continued innovation and reduce trade tensions, helping international markets function more predictably.The COVID-19 pandemic has affected global trade adversely. Output has plummeted, while job losses have piled up. Trade has been severely disrupted by supply and demand shocks. In 2019, even before the pandemic, world merchandise trade declined in volume terms by 0.1 per cent, weighed down by political tensions and protectionist measures. In value terms, which reflect commodity price fluctuations, merchandise trade fell by 3 per cent. For comparison, merchandise trade volumes grew by 2.9 per cent in 2018. World trade in commercial services increased by 2.1 per cent in 2019, slowing from its 8.4 per cent rise in 2018. All services sectors were affected, with exports of transport services declining by 0.8 per cent as merchandise trade faltered, and travel exports growing by only 1 per cent. The only sector to record more positive growth – of 3.3 per cent – was “other commercial services”, reflecting growth in telecommunications, computer and information services. World trade continues to be concentrated among major traders: the top ten traders in both merchandise trade and commercial services accounting for slightly more than half of world trade. Among the least developed countries, merchandise trade fell by 2 per cent but trade in commercial services increased by 10 per cent, boosted in particular by diversification from merchandise to the travel sector – which has now been badly hit by the pandemic. The COVID-19 pandemic has underlined the growing importance of the services sector, in particular the distribution sector, in keeping trade flowing. The crisis has also underlined the importance of digital trade. Improvements in bandwidth and technological innovation have been the main factors for the increase in e-commerce and digital trade. These advances make vital services such as telemedicine possible. In addition, the services sector represents more than one-third of the value-added in pharmaceutical supply chains. Disruptions to supply chains due to the COVID-19 crisis have had a major impact on the supply of medical products and other vital goods. Another significant trend is the growth in ESG awareness amongst corporates and companies, influenced by changing consumer preferences to reduce the use of products that have a damaging impact on the environment, such as plastics. Demand for renewable energy goods, such as wind turbines, solar panels and electric cars, has also increased significantly in the last few years. Finally, the COVID-19 pandemic has highlighted the limitations of existing tools for measuring trade. Some countries have struggled to report trade data on a regular basis, and the system used to classify traded goods has proved to be insufficient to measure the full range of goods traded to tackle COVID-19.Sources- Various, Britannica, Wikipedia..


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