INTERNATIONAL

TRADE:
EXPORT TRADING
EXPORT: DEFINITION
• Exports are the goods and services produced in one country and
purchased by residents of another country. It doesn't matter what the
good or service is. It doesn't matter how it is sent.
• It can be shipped, sent by email, or carried in personal luggage on a
plane.
• If it is produced domestically and sold to someone in a foreign country,
it is an Export.
What Countries Export
• Businesses export goods and services where they have a competitive
advantage. That means they are better than any other companies at
providing that product.

• A competitive advantage is what makes an entity's goods or

services superior to all of a customer's other choices. The term is
commonly used for businesses. The strategies work for any organization,
country, or individual in a competitive environment.
Three Determinants to determine competitive
advantage

Benefit.
What is the real benefit your product provides? It must be something that your
customerstruly need. it must also offerreal value. You must know your product's features, its
advantages, and how they benefit your customers.

Competition.
Have you identified your real competitors? They aren't just similar companies or products.
They also include anything else your customer could do to meet the need you can fulfill.

Target Market.
Who are your customers? What are their needs? You've got to know exactly who buys from
you and how you can make their life better.
Comparative advantage is when a country produces a good or
service for a lower Opportunity cost than other countries.

Opportunity cost measures a trade-off. A nation with a comparative advantage makes

the trade-off worth it. The benefits of buying its good or service outweigh the
disadvantages.

The country may not be the best at producing something. But the good or service has a
low opportunity cost for other countries to import.
How Exports Affect the Economy

• Most countries want to increase their exports.

Their companies want to sell more. If they've
sold all they can to their own country's
population, then they want to sell overseas as
well.

• The more they export, the greater

their competitive advantage. They gain expertise
in producing the goods and services.

• They also gain knowledge about how to sell to

foreign markets.
How Exports Affect the Economy

• Governments encourage exports. Exports

increase jobs, bring in higher wages, and raise
the standard of living for residents. As such,
people become happier and more likely to
support their national leaders.

• Exports also increase the foreign exchange

reserves held in the nation's central bank.
Foreigners pay for exports either in their own
currency or the U.S. dollar. A country with large
reserves can use it to manage their own
currency's value. They have enough foreign
currency to flood the market with their own
currency. That lowers the cost of their
exports in other countries.
Three Ways Countries Boost Exports

• Trade protectionism is a policy that protects

domestic industries from unfair competition from
foreign ones.
The four primary tools
1. Tariffs,
2. Subsidies
3. Quotas
4. Currency manipulation.

• Protectionism is a politically motivated defensive

measure. In the short run, it works. But it is very
destructive in the long term. It makes the
country and its industries less competitive
in international trade.
• The third way countries boost exports is to lower the value of their
currencies. This makes their export prices comparatively lower in the
receiving country. Central banks do this by lowering interest rates.

• A government can also print more currency or buy up foreign

currency to make its value higher. Countries that try to compete by
devaluing their currencies are accused of being in currency wars
Export Sales.
- The term “Export sales" means:

(1) The sale and actual shipment

of goods from the Philippines to a
foreign country, irrespective of
any shipping arrangement that
may be agreed upon which may
influence or determine the
transfer of ownership of the goods
so exported and paid for in
acceptable foreign currency or its
equivalent in goods or services,
and accounted for in accordance
with the rules and regulations of
the Bangko Sentral ng Pilipinas
(BSP);
(2) Sale of raw materials or packaging
materials to a nonresident buyer for
delivery to a resident local export-oriented
enterprise to be used in manufacturing,
processing, packing or repacking in the
Philippines of the said buyer's goods and
paid for in acceptable foreign currency and
accounted for in accordance with the rules
and regulations of the Bangko Sentral ng
Pilipinas (BSP);
(3) Sale of raw materials or packaging materials to export-oriented enterprise
whose export sales exceed seventy percent (70%) of total annual production;

(4) Sale of gold to the Bangko Sentral ng Pilipinas (BSP); and

(5) Those considered export sales under Executive Order NO. 226, otherwise
known as the Omnibus Investment Code of 1987, and other special laws.