Import and export trade affects almost every person

Import and
export trade affects almost every person in the world. It enables all countries
to make the best use of its most abundant resources. By exporting its surplus,
a country earns the money to import another nation’s surplus. According to the
U.S. Chamber of Commerce, Import and export industry secures about 38 million
jobs, or one-fifth of persons in private employment, are engaged in activities
related to import or export,. Every type of import or export arrangement necessitates
numerous jobs to organize, maintain, and develop the deal.

The total dollar value of all the goods and services that America
imports outweighs the value of what it exports .In 2015 the United States
imported over 2 billion dollars’ worth of goods from around the world. 29% in
capital goods, and 26% consumer goods. The US trade deficit has been above $100
billion since 1996.  In earlier eras, the
US policy was to reduce imports by setting quotas and imposing tariffs, but
that policy has been replaced by the free trade principle, which allows goods
and services to flow freely between nations.

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Even if the free trade policy opens opportunities in the
import-export industry it does not guarantee security for professions in this
field. The industry is sensitive to fluctuations in the economies of importing
and exporting trade partners, and to changes in government trade policy.

The
United States and Morocco made the Free Trade Agreement on January 1, 2006; this
agreement eliminates duties on more than 95% of all goods and services. In
addition to key U.S. export sectors gaining immediate duty-free access to the
Moroccan market, the Agreement includes commitments by Morocco for increased
regulatory transparency and the protection of intellectual property rights.
Morocco is currently the 69th largest goods trading partner of the USA with
$3.3 billion in total (two way) goods trade during 2013. The US goods trade
surplus with Morocco was $1.3 billion in 2013. Goods exports totaled $2.3
billion; Goods imports totaled $977 million.

 

In
2013, Morocco was classified the 80th largest supplier of goods imports to the
USA. Goods imports from Morocco totaled $977 million in 2013, a 4.8% increase
($45 million) from 2012, and up 154% from 2003. U.S. imports from Morocco are
up 119% from 2005. The U.S. goods trade surplus with Morocco was $1.3 billion
in 2013, a 6.8% increase ($85 million) over 2012.

 

According
to statista.com, the top trading partners of the United States for trade goods
in 2016, by import value are: China with a value of $462.8 billion, Canada
$278.1 billion, Mexico $29.2 billion, Japan $132.2 billion, Germany $114.2
billion, Korea south $69.9 billion, United Kingdom $54.3 billion, France $46.8
billion, India $46 billion, Taiwan $39.3 billion, Italy $45.2 billion, and
Brazil $26.2 billion. Those partners are considered as competitors of Morocco
in its trade with the USA.

 

The
United States imports clothing, electronics, and machinery from China. A lot of
U.S manufacturers send raw materials to China for low-cost assembly. Once
shipped back to the U.S, they are considered imports. Most economists approve
that the lower standard of living in China is the cause of its competitive
pricing, which allows companies in China to pay lower wages to workers. China
must buy so many U.S. Treasury notes that it is the largest lender to the U.S. government.
As of October 2017, the U.S. debt to China was $1.2 trillion. It is 19% of the
total public debt owned by foreign countries. Many are worried about what would
happen if it threatened to call in its loan.

 

U.S.
companies that can’t compete with cheap Chinese goods must either lower their
costs which means give low wages to their workers (which is impossible in
America), or leave the business field. So, businesses thought to reduce their
costs by outsourcing jobs to China or India, which increased the U.S.
unemployment.

1.     
Key Success Factors:

According
to a U.S. Department of Commerce report, over 185,000 U.S. companies imported
foreign goods in 2012, an increase of more than 10% from 2009.  The majority of these businesses were small
or medium-sized companies that may, in fact, lack the necessary resources to be
a successful importer. But they worked smart, and they knew their key success
factors. Before launching a business, we have to analyze the market, and we
have to know the needs of our customers.

 

High
quality and low price is the main key
success factor that an importer should consider. More and more, costumers are
aware that inexpensive does not mean poor quality. Providing cheap goods with a
good quality is the key to dominate a market place. And it is the first step to
be known in the market.

Reasonable
Regulations: before starting
a business, people should learn the regulations for importing goods,
researching both the country from which they are exporting and the country into
which they are importing their goods. People should learn the regulations covering
product requirements, inspections, licenses, shipping methods, and any other
requirements needed to be followed.

 

Proper
Market Research: after creating a
list of potential import markets, importers have to research those markets more
thoroughly, they might have a competitor with a very strong brand presence and
customer loyalty base. They might have limited distribution opportunities,
based on the fact that a competitor has already negotiated exclusive agreements
with many retailers and wholesalers. People have to look for places where
consumers are willing to buy their imported products. They have to determine
price points for the same products sold to determine at what price they will
have to sell their product.

 

Efficient
Shipping and Distribution: importers must contact
shippers to their targeted markets and distributors who can move their products
at a reasonable price. They have to find shippers that have experience shipping,
and those that have a track record of successfully shipping to the market. People
must look for distributors with the ability to get them into retail outlets, conduct
marketing efforts on their behalf and take payment on terms acceptable to for
both sides.

 

 Research Import Quota Requirements: These refer to quotas that limit the amount of imported commodities
into the United States within a specified amount of time. Some quotas allow
goods to continue entering the United States after the limit has been reached
but at a higher rate of duty.

 

Establish
Good Relationships: every party
that is doing business with has a small part in the importers’ success. Product
suppliers, Freight forwarders, Distribution centers, every channel is very
important for a successful business.

 

2.     
Industry Trends:

Importers
and exporters are the matchmakers of international trade. Import and export are
high-risk businesses that are vulnerable to sudden changes. There are many
external forces that impact import/export industry. These include trade
barrier, shipping costs, natural disasters, goods in transit, domestic costs
and infrastructure availability, exchange rates, inflation, political stability,
and demographic factors.

 

·        
Trade
barrier: the degree to which a government
establishes or eliminates trade barriers has a huge impact on importing
and exporting. For example, the decision of the United States to open
its markets significantly after World War II helped to allow Japan build its
“economic miracle” on exports to the USA.  Policies that restrict imports or promote
exports change the relative prices of those goods, making it more or less
attractive to import or export. Nations that have restrictive trade policies
such as high import tariffs and duties may have larger trade deficits than
countries with open trade policies.

 

·        
Shipping
costs: importing or exporting involves
generally the movement of large amount of materials. The costs of this movement
have a major impact on whether importing or exporting can be profitable.
Business owners should choose the best way to move their goods to the desired
markets; they usually use road, rail, sea, or air. Using roads is actually low
cost and extensive road networks are available. But it has some downsides such
as breakdowns, traffic, borders, and fuel charges. Shipping freight by sea has
the benefit of allowing importers/exporters to ship high volumes of goods and
using shipping containers that can be easily be forwarded by roads from the
docks. However, it can be slow, tracking goods can be difficult, bad weather
can delay scheduling, and insurance costs can easily get out of control.
Shipping freight by air is the quickest, safest, and the most expensive method
of shipping imported goods. Additional costs might include airport taxes, fuel
and currency surcharges and additional transport from the receiving airport.

 

·        
Natural
disasters: natural disasters such as
hurricanes and tsunamis can unexpectedly affect the transportation of imports
and exports. Forest fires, for example, may wipe out trees that can be used in
exported products. In March 2011 North Japan earthquake and tsunami destroyed
ports on Japan’s Honshu coast and blocked imports. Californian computer chip
exporters were severely hit as a result. In 2010 a volcanic eruption in Iceland
disrupted both trade and air travel in Europe and beyond for up to a month.
International importers/exporters can insure themselves to a limited degree
against the consequences of natural disasters.

 

·        
Goods
in Transit: Goods in
transit may be damaged or lost by accidents, negligence, theft, or natural
disasters. Delivery dates may be delayed. Import or export goods should carry
insurance that covers the goods from the company’s factory gate to the time they
are on the buyers hands. Importers in countries with highly regulated insurance
industries can negotiate cheaper insurance rates at home and follow more
transparent claims processes after a loss.

 

·        
Domestic
costs and infrastructure availability: one
reason that importing and exporting has increased is that it has become cheaper
and more practical to produce things in poorer countries and ship them to
richer ones. This is because of the high costs of things like labor in rich
countries. Furthermore, poor countries gained infrastructure that allow them to
produce things for export with low price and good quality.

 

·        
Exchange
rates: Exchange rate becomes a very vital
driver of performance in import and export industry. It is more gainful to
export when the currency of the exporting country is weaker than the currency
of the importing country. But this advantage is reversed if the imported
materials are from a country whose currency is stronger. A company will run its
most profitable operations when it imports materials from a country whose
currency is weaker, and exports its product to a country whose currency is
stronger.

 

·        
Inflation:
inflation refers to an increase in prices without an equivalent
increase in wages, resulting lower purchasing power of consumers. When the
costs of producing goods and services are low, they will be sold at lower
prices, and vice versa. Inflation rate is higher when costs of producing goods
or services are high or when there is too much money purchasing too few
supplies, prompting suppliers to increase prices and earn higher profits. High
inflation rate decreases real wages, for example, the customer can buy few
products with his income because the products have become more expensive. In
inflationary times, customers stock items to save themselves from more increase
in prices and leave their favorite brands to buy more economical brands.

 

·        
Political
stability: a stable
government means more chances for internal production, while instability like
wars means that the country will have to depend on imports.

 

·        
Demographic
factors: Demography is the study of people: their
age, race, ethnicity, and location. Demographics are important because people
constitute markets. Demographic characteristics strongly affect buyer behavior.
Fast growth of population accompanied with rising income means growing markets.
Moreover, a longer life span means a growing market for products and services
directed for the elderly.

 

3.     
Long Term Prospect:

There
are so many positive things happening in the import/export industry that
provide long term success. According to Joshua Meltzer, a senior fellow in
Global Economy and Development, and Foreign Policy Senior Fellow Mireya Solís international
trade has had a positive impact on overall U.S. job growth, and that the TPP
(Transpacific Partnership Agreement) could continue that trend. The TPP
specifically, notes Solís, is estimated to result in a net positive effect on
job creation and wages: 128,000 jobs, and increases in real wages 0.19% by
2032. Furthermore, Solís points out that under the TPP, annual increases in real
income for Americans, like the expansion in their purchasing power, are
estimated to range from $57 billion to $131 billion by 2032, compared to the baseline
scenario without the TPP.

 

U.S has 14 free trade agreements with 20 countries; and they all have
a common goal. Actually, they all exist as a way to decrease trade barriers and
create a more transparent and stable trading and investment environment. This
would allow for American companies to export their goods and services to the 20
trading partners with cheap trade barriers, making American exporters
competitive in those markets. According to International Trade Administration’s
website, nearly half (47%) of U.S. goods exports went to the 20 free trade
agreement countries. U.S. merchandise exports to the partner countries totaled
$710 billion,

 

 Kimberly Ann Elliott mentioned that the US
economy is 44 times larger than that of the average country with which it has a
free trade agreement and more than 200 times larger than half of them. International
trade can bring prosperity and success, as barriers to trade are lowered, a
rising tide of goods, services and money flows around the nation, which results
a raising living standards for a lot of Americans.

 

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