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What is Export?
In economics, an export is any good or commodity, shipped or otherwise transported out of a country, province, town to another part of the world in a legitimate fashion, typically for use in trade or sale. Export products or services are provided to foreign consumers by domestic producers. How an item is transported outside of the United States does not matter in determining export license requirements.
Regardless of the method for the transfer of an item the transaction is considerred an export. Methods of transfer include a product or good being mailed, hand-delivered, downloaded from an internet site. It can be sent in the form of a facsimile, email or during a telephone conversation.
History
The theory of international trade and commercial policy is one of the oldest branches of economic thought starting with the ancient Greeks up to the present era. Exporting is a major component of international trade, and thus is argued constantly and consistenly throughout the ages. Two dual views concerning trade present themselves. The first, recognizes the benefits of international exchange. The other concerns itself with the possibly that certain domestic industries (or laborers, or culture) could be harmed by foreign competition.
For free trade
The theory of Comparative Advantage materialized during the first quarter of the 19th century in the writings of 'classical economists'. While David Ricardo is most credited with the development of the theory (in Chapter in full chapter 7 of his Principles of Political Economy, 1817), James Mills and Robert Torrens produced similar ideas. The idea stems from a country that is able to produce a commodity at the lowest of all countries, should be encouraged by removing competition. However, the process doesn't work if one country is able to produce more than one commodity more efficiently and able to offer it at lower prices. The single commodity with the greatest difference in terms of low prices is encouraged to increase production, while the second and subsequent commodities should either be decreased in levels of production, or removed altogether.
Against free trade
Mercantilism, the first systematic body of thought devoted to international trade, emerged during the 17th and 18th centuries in Europe, especially England. While most views surfacing from this school of thought differed, a commonly argued key objective of trade was to promote a "favorable" balance of trade, referring to a time when the value of domestic goods exported exceeds the value of foreign goods imported. The "favorable" balance in turn created a balance of trade surplus.
Mercantilists advocated that government policy directly arrange the flow of commerce to conform to their beliefs. They sought a highly interventionist agenda, using taxes on trade to manipulate the balance of trade or commodity composition of trade in favor of the home country.
 PROCESS (Example)
United States
The Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and reexport of most commercial items. Some commodities require certification in order to export. There are different qualifications for what need to be done in order to export a good.
Dependent on the category the 'item' falls under, the company may need to attain a license as a requisite to exportation. Some restrictions vary from country to country. The most restricted destinations are the embargoed countries and those countries designated as supporting terrorist activities, including Cuba, Iran, Libya, North Korea, Sudan, and Syria. Some products obtained worldwide restrictions.
Barriers
Trade barriers are generally defined as government laws, regulations, policy, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. While restrictive business practices sometimes have a similar effect, they are not usually regarded as trade barriers. The most common foreign trade barriers are government-imposed measures and policies that restrict, prevent, or impede the international exchange of goods and services.
Tariffs
A tariff is a tax placed on a specific good or set of goods imported from the country. Usually the tactic is utilized when a country's domestic output of the good is failing protecting domestic industries from foreign competitors. Some failing industries receive a protection with an effect similar to a subsidies in that by placing the tariff on the industry, the industry is less enticed to produce goods in a quicker, cheaper, and more productive fashion. The third reason for a tariff involves skirting of what is called dumping. Dumping curtails a country producing highly excessive amounts of goods and dumping the goods on another foreign country, producing the effect of prices that are "too low". Too low can refer to either the price of the good on from the foreign market being lower than the domestic market. The other reference refers to the producer selling the product at a price in which there is no profit or a loss. The purpose (and expected outcome) of the tariff is to encourage spending on domestic goods and services.
Protective tariffs protect what are known as infant industries that are in the phase of expansive growth. A tariff is used temporarily to allow the industry to freely grow without the level of competition usually garnered. However, this line of debate is only valid if the resources are more productive in their new use than they would be if the industry had not been started. Also, the industry eventually must incorporate itself into a market without the protection of government subsidies.
Tariffs create tension between countries. Examples include the United States steel tariff of 2002 and when China placed a 14% tariff on imported autoparts. Such tariffs usually lead to filing a complaint with the World Trade Organization (WTO) and, if that fails, could eventually head toward the country placing a tariff against the other nation in spite, to impress pressure to remove the tariff.
Subsidies
To subsidize an industry or company refers to, in this instance, a governmental providing supplemental financial support to manipulate the price below market value. Subsidies are generally used for failing industries that need a boost in domestic spending. Subsidizing encourages greater demand for a good or service because of the slashed price.
The effect of subsidies deters other countries that are able to produce a specific product or service at a faster, cheaper, and more productive rate. With the lowered price, these efficient producers cannot compete. The life of a subsidy is generally short-lived, but sometimes can be implemented on a more permanent basis.
The agricultural industry is commonly subsidized, both in the United States, and in other countries including Japan and nations located in the European Union (EU).
Critics argue such subsidies cost developing nations $24 billion annually in lost income according to a study by the International Food Policy Research Institute, a D.C. group funded partly by the World Bank. However, other nations are not the only economic 'losers'. Subsidies in the U.S. heavily depend upon taxpayer dollars. In 2000, the U.S. spent an all-time record $32.3 billion for the agricultural industry. The EU annually spends about $50 billion annually, nearly half its annual budget on its common agricultural policy and rural development.
INTERNATIONAL TRADE
Summary of Export-Import Procedure
EXPORT-IMPORT PROCEDURE
- Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit).
- Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary).
- Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advise, and usually to confirm, the credit.
- Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit.
- If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier.
- Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit.
- Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate.
- Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.
- Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. Documents release to Buyer after payment, or on other terms agreed between the bank and Buyer.
- Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.
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