• The special features and aspects of trade which gives international trade a unique identity as compared to other activities is referred to as nature of international trade.
• The nature of international trade is determined by the circumstances affecting trade, policies and faws governing trade.

These are discussed below.

1. The geographical and occupational mobility of factors of production is lesser in international trade:

• Due to social and other reasons, the mobility of labour is lesser in international trade. .
• Same is the case with certain type of bulky and huge capital such as machinery.
• Also, there are certain policy restrictions on mobility of some other types of capital. Entrepreneurs are also less mobile for the same reasons as labourers but in present times entrepreneurship has become more mobile.
• The geographical mobility of land is nil.
• Thus, due to the lower or no mobility of factors of production, the size of international trade gets restricted to some extent.

2. Trade in many varieties of goods:

• The world produces countless goods and services. Need of each country is different and so the countries come together for trading “out of such a large varieties of goods and services. The need of goods and services are different for people belonging to different living standards.
• ‘Variety’ that one gets through international trade becomes the base for success and prosperity of international trade.
• For example, in countries where there is scarcity of electricity, there will be greater demand for manually operated machines while in countries with abundant supply of electricity there will be greater demand for automatic machines.

3. More challenging in nature:

• International trade is more challenging for traders because there occurs large change in the environment, language, culture, customs, preferences, habits, tastes, etc. from country to country.
• Traders have to overcome these barriers in order to trade.

4. Diplomatic efforts are needed:

• Traders alone cannot set-up and develop international trade.
• The government of every nation has to make diplomatic efforts such as hold informal meetings with other nations, organize international trade fairs, etc. so that countries can develop relations among themselves, know about the opportunities and enter into trade.
• For example, in order to promote international trade in Gujarat, the state . government organizes the ‘Vibrant Gujarat Summit’. In this summit, representatives of governments and businesses/industries of various countries participate to exchange business information as well as to get an idea about the policies of the state, culture of people, etc.

5. Knowledge and forecast regarding the value of different currencies:

• Payments in international trade are to be made in internationally acceptable currencies. Moreover, every trading country has to convert its national currency in internationally acceptable currency such as dollars or pounds.
• Traders need to have proper knowledge about the value of various currencies and the changes in their values that take place on a daily basis.
• For this the traders have to consult experts who can guide in matters of exchange rates.

6. Joint effort of nations and international organizations:

• International trade can develop only with the joint efforts of governments of various countries of the world as well as of international organizations like World Trade Organization.
• The countries must have the will to trade. For international trade, the countries will have to make policies that favour trade.
• Moreover, the social and cultural groups must be open to trade, the industry – associations must co-operate to enter into trade and enhance trade and so on.

7. Impact of political and social ideologies:

• The size and direction of international trade is greatly influenced by the political and social events taking place in the world. For example, trade relations between nations get distributed owing to events like world war, global depression, etc.
• On the other hand if world leaders promote international trade then the countries rather than getting involved in wars would start focusing on trade and the world trade would flourish.
• The size and direction of a particular nation’s trade is determined much by the ideology of that nation, social structure, historical events, etc.

8. Vast scale:

The scale of international trade is vast as it involves several countries, several varieties of goods, several rules, international organizations, etc.

9. Involves more permissions and taxes:

For international trade the traders need to take several permissions and licenses from their respective countries.

• They need to clear procedures regarding tradable goods and quality of goods, clear the custom procedures, fulfill the requirements of international freight and transport procedures, the quality tests for different countries (food and drug quality tests for different countries are different), etc.
• Moreover, the quality standards vary among countries. So, traders need to have information regarding methods of production, packing, taxes, etc. that prevails in different countries.

10. Involves higher degree of competition:

• A product may be produced and sold by several countries in the world market and so there is heavy competition among the sellers.
• Similarly, a product may be demanded by consumers of several countries and so the degree of competition among buyers is also very high.
• Moreover, the risk of creating a market and generating demand for a product is very is high in international trade.
• High quality standards have to be maintained, huge promotional expenses as well as costs have to be incurred and greater efforts have to be made to satisfy customers of a foreign country.
• Even after putting so many efforts if the producer or trader is not able to achieve a sizeable amount of market share then he may have to incur heavy losses.

Conclusion:

Thus, international trade is multi-faceted, highly dynamic and volatile. It involves support and effort of people and diplomats of various countries. Also, it is very risky and tough. But, on the other hand it opens avenues of trade across the world. For trader, the entire world market opens up and he can make huge profits and span his business at world level.