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d. All of the above.

d. All of the above.

International business arises because of geographical specialization among countries. Different countries of the world are endowed with different natural resources due to geographical factors like physical features, climatic conditions, socials, etc.

c. Promote import activity.

d. the Japanese firm will report less revenue (in terms of Yen) than if the US dollar had remained stable.

d. Afghanistan.

a. Countervailing.

How many Commodity Boards are there in India Seven.

Shipping bill is the main document on the basis of which the customs office gives the permission for export. Shipping bill contains particulars of the goods being exported, the name of the vessel, the port at which goods are to be discharged, country of final destination, exporters name and address, etc. Exporter prepares the shipping bill for obtaining customs clearance. Thus, we can say shipping bill is the bill which is prepared by exporter and required for the customs clearance.

Shipping Bill contains information about the goods that are exported. That is, it contains particulars such as’the name of the vessel, port at which the goods are to be discharged, country of final destination and exporter’s name and address. A Shipping Bill is essential for an export transaction as it is on the basis of this document that the customs grants clearance to the export.

A bill of entry is a form supplied by the customs office to the importer it is to be filled in by the importer at the time of receiving the goods. It is prepared in triplicate and is submitted to the customs office.

When the ship arrives at the port, the dock authorities will arrange for the loading of the goods on board the ship. When goods are loaded on board the ship, the mate will issue a receipt know as mate’s Receipt to the Dock Authorities.

(d) Performa invoice

(b) Mate receipt 

d. Refund of income dock charges at the port of shipment

A small business should consider following factors in selecting mode of entering into international business. 

1. Ease of entry: First and foremost factor that determines the choice of mode of entry into international business is ease of entry. A businessman wants to adopt such mode of entry into international business which is easy and less formalities requiring. Exporting, importing, licensing and franchising are better ways from this perspective. 

2. Cost: Second determining factor is cost involved. For example, very less cost is involved in exporting, importing, licensing, franchising and contract manufacturing as compared to joint ventures and setting wholly owned subsidiaries. 

3. Control over production: If the foreign company or producer wants full control over production activities in local country, he will prefer franchising, wholly owned subsidiary or joint venture with majority share holding. If it is not so important, he will prefer exporting, importing, contract manufacturing licensing etc. 

4. Sharing of Technology: If the company has no problem in sharing of technology then it may choose joint venture or franchising. But if it does not want to share its technology and trade secrets, it will prefer wholly owned subsidiary or exporting. 

5. Risk Involved: If a firm is ready to take risk, it may choose wholly owned subsidiary or joint ventures but if it is willing to minimise its loss then it should choose exporting, licensing, franchising or contract manufacturing. In my opinion, being a small businessman he will prefer exporting or licensing,franchising to other modes of business as it is easy, less costly, gives greater control over production and involves lesser risk.

b. Export licence

b. Mate receipt

a. More than half a unit of grain per unit of cloth.

(b) Letter of credit 

c. Bill of entry

Many documents are used in import business. The important documents used in import business are:

1. Trade Enquiry: A letter of enquiry or a trade enquiry is a letter written by an importer to an exporter requesting him to provide information regarding the price and various terms and conditions on which the exporter is willing to export the goods required by the importer.

2. Proforma Invoice: A proforma invoice is a document sent by the exporter to the importer stating the details as to the quality, grade, design, size, weight and price of the export goods and the terms and conditions on which those goods will be exported. It is similar to a quotation give by the exporter to the importer.

3. Indent or Import Order: An import order or indent is a document which the importer sends to the exporter in which he orders the supply of required goods.

4. Letter of Credit: In shot, a letter of credit is a document that contains guarantees from the importers bank to hour the payment upto a specified amount of the bill of exchanged drawn by exporter fro importer goods to the importer.

5. Shipment Advice: Shipment advice is a document sent by the importer to the importer stating that the shipment of goods has been made.

6. Bill of Lading: As explained in the context of export documents, a bill of lading is a documents, a bill of lading is a document prepared and signed by the master of the ship, acknowledging the receipt of goods on board the ship. The also contain the terms and conditions in which the goods are to be taken to the port of destination.

7. Bill of Entry: A bill of entry is form supplied by the customs office to the importer it is to be filled in by the importer at the time of receiving the goods. It is prepared and is submitted to the customs office.

8. Bill of exchange: In the context of export trade, a bill of exchange to drawn by the exporter on the importer asking him to pay a certain amount to a certain person or the bearer of the instrument.

9. Import general Manifest: Import general manifest is a document that contains the details of the imported goods is the document on the basis of which unloading of cargo takes place.

10. Dock Challan: Dock charges are required to be paid when all the formalities of customs are completed. So, the importer or his clearing agent pays the dock dues or charges.

c. The factor endowment theory.

Correct Answer is: d. B.

A number of documents are used in export bunnies. The various documents used in export business can be broadly classified into three categories. They are:

I. Documents related to goods. 

The various documents related to goods are:

1. Letter of Enquiry: Receipt of an enquiry from the prospective importer is the first step in export procedure. 

2. Quotation: After receiving the letter of enquiry from the importer, the exporter sends his reply to the importer through a Quotation referred to as proforma invoice. 

3. Indent or order: If the importer is satisfies with the quotation, he accepts the quotation and sends to the exporter and order directly or an indent though an intermediary like indent house, export house etc. 

4. Invoice or Foreign Invoice: The exporter has to prepare and send to the importer an invoice known as Export Invoice. 

5. Packing List: A pacing list is a statement which states the number of cases or packs and the details of the goods contained in the packs. 

6. Certificate of Origin: The Certificate of origin will be sent by the exporter to the importer along with the other shipping documents. 

7. Consular invoice: The exporter has to get a Consular Invoice form the consul of the Importing Country residing in the exporting county.

8. Certificate of Inspection: The authorized agency carries out the inspection of goods and issues a certificate called the certificate of inspection.

II. Documents related to shipment.

The various documents related to shipment are:

1. Shipping order: If the shipping company is willing to carry’ the goods, it will issue to the forwarding agent a document called shipping Order. 

2. Charter Party: The contract entered into by the exporter with the owner of the ship for hiring or a part of the ship is known as Charter party. 

3. Shipping bill: A shipping bill is a document prepared by an exporter or his forwarding agent, stating there in the various details of the goods exported. 

4. Dock Receipt: After getting the Customs Export pass, the forwarding agent has to arrange for carrying the goods to the dock. 

5. Mate’s Receipt: When the ship arrives at the port, the dock authorities will arrange for the loading of the goods on board the ship. When goods are loaded on board the ship, the mate will issue a receipt known as mate’s Receipt to the Dock Authorities.

6. Bill of lading: A bill of lading is an official receipt issued by the shipping company for the receipt of goods on board the ship. 

7. Cart Ticket: cart ticket, car chit or gate pass is prepared by the exporter. 

8. Marine Insurance Policy: After the shipment of the goods, the forwarding agent will arrange for the insurance of the good s with a marine insurance company.

III. Document related to payment.

The various documents related to payment are:

1. Letter of Credit: A letter of credit is a letter issued by a bank of the importer and a validity date by which the goods must be dispatched by the exporter upto a specified amount in respect of the goods.

2. Foreign Bill of Exchange: Foreign bill of exchange is one of the methods of obtaining payment for the exports.

3. Bank certificate of Payment: Bank certificate of payment is a certificate which states that the necessary documents including the bill of exchange relating to the particular export consignment have been negotiated and the payment has been received in accordance with the exchange control regulations.

The countries have unequal distribution of natural resources among them or have differences in their productivity levels because of which they cannot produce all that they need equally well or at equal costs. Availability of various factors of production such as labour, capital and raw materials that are required for producing different goods and services differ among nations.

Moreover, labour productivity and production costs differ among nations due to. various socio-economic, geographical and political reasons. Due to these differences each country finds it advantageous to produce those select goods and services that it can produce more efficiently at home, and procuring the rest through trade with other countries which the other countries can produce at lower costs. This is precisely the reason as to why countries trade with others.

a. Neo-mercantilism.

Export possessing zones are industrial estates which form enclaves form the domestic tariff area. These are usually situated near sea ports or air ports. They are intended to provide and internationally competitive duty-free environment for export production at low cost.

Today, there are seven export processing zones in the country. They are:

1. Kandla Export Processing Zone at Kandla in Gujarat. 

2. Santa Cruz Electronic Export Processing Zone at Santa Cruz in Mumbai. 

3. Noida Export Processing Zone at Noida in Uttar Pradesh. 

4. Madras Export Processing Zone at Chennai in Tamil Nadu. 

5. Cochin Export Processing Zone at Kochi in Kerala. 

6. Falta Export Processing Zone at Falta in West Bengal. 

7. Vishakhapatnam Export processing Zone at Vishakhapatnam in Andhra Pradesh.

In the export processing zones, raw materials, intermediate products, equipments and machinery are allowed to be imported without payment of customs duty. The products of the units located in these zones are generally exported.

It may be noted that recently the export processing zones have been converted into special economic zones which are more advanced from of export processing zones.

Foreign trade is not free from difficulties. 

The following are some of the important difficulties of foreign trade: 

1. It is a long distance trade and as such it becomes difficult to maintain close relationship between the buyer and the seller. 

2. Each country has its own language. As foreign trade involves trade between two or more countries, there is diversity of languages. This difference in language creates problem in foreign trade, 

3. Foreign trade involves preparation of a number of documents which also creates difficulties in the way of foreign trade. 

4. Some restrictions are imposed on export and import of commodities. These restrictions stand on the progress of foreign trade. 

5. Foreign trade involves a great deal of risks because trade takes place over a long distance. Though the risks are covered through insurance, it involves extra cost of production because insurance cost is added to cost.

Special economic zones are those zones which are specially designed duty free enclaves deemed as foreign territory for the purpose of trade operations, duties and tariff. They are free from import-export regulations except those relating to banking and labour. They are give incentives and facilities for their establishment and development.

A special economic zone may be set up for the manufacture of goods and rendering of services, processing, assembling, trading, repair, remaking, reconditioning, re¬engineering including making of gold, silver or platinum jewellery or articles thereof in connection there with.

The important features of special economic zones are:

1. Setting up a manufacturing, trading or service unit is allowed. 

2. Creation of designated duty-free enclave treated as a foreign territory for trade operations, duties and tariffs. 

3. No license is required for setting up these units.

4. Domestic sales are subject to customs duty and import duty policy in force. 

5. 100% foreign direct investment is permitted through automatic route in the manufacturing sector.

a. preservation of national identity

GATT was transformed into World Trade Organisation (WTO) with effect from 1 st January 1995. The headquarters of WTO are situated at Geneva, Switzerland.

Features of WTO

1. WTO is a permanent organization created by an international treaty ratified by the governments and legislatures of member states. 

2. It governs trade not only in goods, but also in services and intellectual property rights. 

3. It is a member driven rule-based organization in the sense that all the decisions are taken by the member governments on the basis of a general consensus. 

4. It is the principal international body concerned with solving trade problems between countries and providing a forum for multilateral trade negotiations. 

5. It has a global status similar to that of the IMF and the World Bank. 

6. As on 11th December 2005, there were 149 members in WTO.

Structure of WTO

(i) WTO comprises of The Ministerial Conference, which is composed of international trade ministers from all member countries and is responsible for setting the strategic direction of the organization and making all final decisions on agreements under its wings. The Ministerial Conference meets at least once ever two years.

(ii) The General Council is composed of senior representatives of all members responsible for overseeing the day-to-day business and management of the WTO.

(iii) The Trade Policy Review Body is also composed of all the WTO members. It periodically reviews the trade policies and practices of all member states.

(iv) The Dispute Settlement Body is also composed of all the WTO members and oversees the implementation and effectiveness of the dispute resolution process for all WTO agreements.

(v) The Councils on Trade in Goods and Trade in Services operate under the mandate of the General Council and are composed of all members. They provide a mechanism to oversee the details of the general and specific agreements on trade in goods and services.

(vi) The Secretariat and Director General undertakes the administrative functions of running all aspects of the organization. The Secretariat has no legal decision making powers but provides vital services, and often advice, to those who do. The Secretariat is headed by the Director General, who is elected by the members.

(vii) The Committee on Trade and Development and Committee on Trade and Environment have specific mandates to focus on these relationships, which are especially relevant to how the WTO deals with sustainable development issues.

Major Objectives of WTO

1. To ensure reduction of tariffs and other trade barriers imposed by different countries. 

2. To engage in such activities which improve the standards of living, create employment, increase income and effective demand and facilitate higher production and trade. 

3. To facilitate the optimal use of the world’s resources for sustainable development. 

4. To promote an integrated, more viable and durable trading system.

Functions of WTO

1. Promoting an environment that is encouraging to its member countries to come forward to WTO in mitigating their grievances. 

2. Laying down a commonly accepted code of conduct with a view to reducing trade barriers including tariffs and eliminating discriminations in international trade relations. 

3. Acting as a dispute settlement body. 

4. Ensuring that all the rules and regulations prescribed in the Act are duly followed by the member countries for the settlement of their disputes. 

5. Holding consultations with IMF and IBRD and its affiliated agencies so as to bring better understanding and cooperation in global economic policy making. 

6. Supervising on a regular basis the operations of the revised Agreements and Ministerial declarations relating to goods, services and Trade Related Intellectual Property Rights (TRIPS).

Features of the WTO (World Trade Organisation):

1. It governs trade in goods, services and intellectual property rights among the member countries.

2. It is a body created by an international treaty with the approval of the governments and legislatures of the member states.

3. The decisions of the WTO are made by the governments of the member nations on the basis of consensus.

Structure of the WTO

On January 1, 1995, the General Agreement on Tariffs and Trade (GATT) was transformed into the WTO to facilitate international trade among the member countries. The WTO was made much more powerful than GATT, by removing tariff and non-tariff barriers between the member nations. It is a permanent body created by an international treaty and represents the implementation of the original proposal of the ITO.

Objectives of the WTO

1. Reducing tariff and other non-trade barriers imposed by different nations;

2. Ensuring sustainable development by optimally using the world resources;

3. Developing a more integrated, feasible and stable trading system.

Functions of the WTO

1. Providing an environment to the member countries such that they can put forward their grievances before the WTO without any hesitation;

2. Resolving trade disputes among member nations;

3. Eliminating discriminations in trade relations by laying down a commonly accepted code of conduct;

4. Creating better understanding between member countries by consulting with the IMF, the World Bank and other affiliates.

(d) None of these

Letter of Credit is issued by the bank of an importer guaranteeing to honour a draft of a certain amount drawn on it by the exporter. It is an important document because, in international transactions, there is always a risk of the importer defaulting on payment once the goods are received. Thus, to minimise the risk of such defaults, the exporter often demands a letter of credit. A letter of credit enables the exporter to assess the credit worthiness of the importer. It is the most appropriate and secure method of payment for settling an international transaction.

A letter of credit is a guarantee issued by the importer’s bank that it will honor up to a certain amount of export bills to the bank of the exporter. Letter of credit is the most appropriate and secure method of payment adopted to settle international transactions. The exporter needs this letter to Insure against the non-payment of dues by the importer in the foreign country as there is always a risk in the collection of payment from the importers. Thus, in order to protect the exporter from financial loss “Letter of credit” is needed.

(b) Letter of credit 

Indent is a document which the importer sends to the exporter in which he orders the supply of required goods.

(i) UNCTAD: The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The organization’s goals are to “maximize the trade, investment and development opportunities of and developing countries and assist them in their efforts to integrate into the world economy on an equitable basis”. UNCTAD was created to address the concerns of developing countries over the international market, multi-national corporations, and the disparity between developed nations and developing nations.

The primary objective of the UNCTAD is to formulate policies relating to all aspects of development including trade, aid, transport, finance and technology. The conference ordinarily meets once in four years. UNCTAD has 194 member States and has its permanent secretariat in Geneva. One of the principal achievements of UNCTAD has been to conceive and implement the Generalized System of Preferences (GSP). Under the GSP Scheme, manufactured goods exports and some agricultural goods from the developing countries enter duty-free or at reduced rates in the developed countries. This was done in order to promote exports of manufactured goods from developing countries.

(ii) MIGA: The Multinational Investment Guarantee Agency (MIGA) was established in April, 1988 to supplement the functions of the World Bank and IFC with the following objectives:

1. To encourage flow of direct foreign investment into the less developed member countries. 

2. To provide insurance cover to investors against political risks. 

3. To provide guarantee against non-commercial risks (like currency transfer risk, war and civil disturbances and breach of contract). 

4. To insure new investments, expansion of existing investments, privatization and financial restructuring. 

5. To provide promotional and advisory services. 

6. To establish credibility.

(iii) World Bank: The International Bank for Reconstruction and Development (IBRD), commonly known as World Bank, emerged from the Breton Woods Conference. The main objectives of World Bank were to aid the task of reconstruction of the war-affected economies of Europe and assist in the development of the underdeveloped nations of the world. At present, the World Bank is a group of five international organizations responsible for providing finance to different countries. Its headquarters is situated at Washington DC. World Bank is entrusted with the task of economic growth and widening the scope of information trade.

During its initial years of inception, it placed more emphasis on developing infrastructure facilities like energy, transportation and others but the results were not found to be very satisfactory due to poor administrative structure, lack of institutional framework and non-availability of skilled labour in under developed countries. World , Bank also extends assistance to different countries of raising cash crops so that their ’ incomes rise and they may export the same for earning foreign exchange.

The bank has also been providing resources for education, sanitation, health care and scale enterprises. The World Bank is no longer confined to simply providing financial assistance for infrastructure development, agriculture, industry, health and sanitation. It is also involved in areas like removal of rural poverty through raising productivity, increasing income of the rural poor, providing technical support, and initiating research and cooperative ventures.

(iv) ITPO: Indian Trade Promotion Organisation (ITPO) was setup on 1 st January, 1992 under the Companies Act, 1956 by the Ministry of Commerce, Government of India. Its head quarter is at New Delhi. ITPO was formed by merging the two erstwhile agencies viz., Trade Development Authority and Trade Fair Authority of India. ITPO is a service organization and maintains regular and close interaction with trade, industry and government.

It serves the industry by organizing trade fairs and exhibitions within the country as well as abroad, It helps export firms in participating in international trade fairs and exhibitions, developing exports of new items and providing support and updated commercial business information. ITPO has five regional offices at Mumbai, Bengaluru, Kolkata, Kanpur and Chennai and four international offices at Germany, Japan, UAE and USA.

(v) IMF: International Monetary Fund (IMF) came into existence in 1945 and has its headquarters located in Washington DC. In 2005, it had 191 countries as its members. The major idea underlying the setting up of the IMF is to evolve an orderly international monetary system to facilitate the system of international payments and adjustments in exchange ratesamong national currencies.

Some of the important functions of IMF include:

1. Acting as a short-term credit institution.

2. Providing machinery for the orderly adjustment of exchange rates. 

3. Acting as a reservoir of the currencies of all the member countries, from which a borrower nation can borrow the currency of other nations. 

4. Acting as a lending institution of foreign currency and current transaction. 

5. Determining the value of a country’s currency and altering it, if needed, so as to bring about an orderly adjustment of exchange rates of member countries. 

6. Providing machinery for international consultations.

Meaning of Indent House: Import of goods from a foreign country can be affected in two ways. The import of goods can take place directly or through a middleman. The import of goods through an intermediary is called an Indent House. Indent Houses are of two types. They may be representative or agents of foreign producers or exporters or they may be independent firms engaged in foreign trade. At the time of securing order, the indent firm requests the merchant to sign an Indent Form which services as a letter of authority by the merchant to the Indent House to go for order of the specified items stated in the form. 

The Indent House brings the following advantages: 

1. It helps the small dealers to participate in foreign trade. 

2. The bargaining is done by the Indent Forms and therefore helps in getting the goods at a cheaper rate. 

3. The financing of import trade is facilitated by the Indent House.

Dock Challan: When all formalities of customs are completed then dock charges are required to be paid. When he pays these charges, the importer or his clearing agent specifies the amount of dock dues in a challan or in any firm. It is called Dock Challan.

The following are the major affiliated bodies of the World Bank. 

1. IBRD: The International Bank for Reconstruction and Development (IBRD) was established in 1945 to assist in the reconstruction of war affected countries. It mainly aims at facilitating the development of the poor nations of the world. 

2. IFC: The IFC, or the International Finance Corporation, was formed in 1956 as a separate legal entity to provide finance to the private sector in developing nations. The IFC is part of the World Bank Group. It has its own funds and functions. It is managed independently. 

3. MIGA: MIGA refers to the Multinational Investment Guarantee Agency. It was established in April 1988 with the objective of encouraging foreign direct investments in the less developed countries, insuring investors against political and non¬commercial risks, providing advisory services, etc. 

4. IDA: The IDA, or the International Development Association, was established in 1960. Its basic objective is to provide loans and grants at concessional rates to countries whose per-capita income is very low. The loans provided by the IDA have high flexibility.

There has been a phenomenal increase in foreign capital inflow and outflow. Inward foreign investments have increased from 201 crores in 1990-91 to 151406 crores in 2003-04. India’s investment in foreign countries has increased from 19 crores in 1990¬91 to 83616 crores in 2003-04. Inward foreign investments have grown more than 750 times while India’s investment abroad have increased 4927 times. Table showing inflow and outflow of foreign capital in and from India:

1. UNCTAD: The United Nation Conference on Trade and Development, or UNCTAD, was established in 1964 with the objective of integrating the developing countries with the world economy through discussions. It undertakes activities such as collecting research and data for policy making and extending technical assistance to the less developed countries as per their requirements. 

2. MIGA: The Multinational Investment Guarantee Agency, or MIGA, was established in April 1988 with the objective of encouraging foreign direct investment in the less developed countries. It aims at insuring investors against political and non-commercial risks, providing advisory services, etc. 

3. World Bank: The World Bank (the World Bank was known as the International Bank for Reconstruction and Development (IBRD) before its growth and expansion) was set up to assist the reconstruction of war affected countries and to facilitate the development of the under-developed nations of the world. Moreover, apart from investing in infrastructure development, agriculture, health and industry, the World Bank is significantly involved in programmes to remove poverty, increasing the income of the poor and providing technological support. 

4. ITPO: The ITPO, or the Indian Trade Promotion Organisation, was formed on January 1, 1992, under the Companies Act, 1956. Its main objective is to maintain close interactions among traders, industry and the government. In order to fulfil this objective, the ITPO organises trade fairs and exhibitions within and outside the country, thereby helping export firms to interact with international trade bodies. 

5. IMF: The IMF, or the International Monetary Fund, came into existence in 1945 with the objective of creating and ensuring a healthy international monetary system. It aims at facilitating a system of international payments and adjustments in exchange rates among national currencies in order to bring about balanced growth at the international level and increase the levels of employment and income.

Correct Answer is: c. EOU

The general dissatisfaction of the developing countries with the GATT and the need for new international co-operation in the field of trade and aid to reduce the trade gap of developing countries led to the establishment of the United Nation Conference on Trade and Development (UNCTAD) as a subsidiary organ of the United Nation in December, 1964. The first United Nations Conference on Trade and Development (UNCTAD-1) was attended by About 120 member countries. The head-quarters of UNCTAD are in Geneva in Switzerland.

Aim of UNCTAD: The principal aim of UNCTAD is to promote international trade so as to accelerate the economic growth of underdeveloped countries and to bring them in line with the advance countries.

c. Geneva-in 1964

1. Unequal Distribution of Natural Resources. 

2. Uneven Availability of Factors of Production.

Licensing is considered to be the easier way of expanding globally due to following advantages:

(i) Under the licensing system, it is the licensor who sets up the business unit and invests his/her own money in the business and the licensor has to virtually make no investments abroad. Licensing is, therefore, considered a less expensive mode of entering into international business.

(ii) Licensor is paid by the licensee by way of fees fixed in advance as a percentage of production or sales turnover and licensor does not bear risk of losses.

(iii) Since the business in the foreign country is managed by the licensee who is a local person, there are lower risks of business takeovers or government interventions. 

(iv) Licensee being a local person has greater market knowledge and contacts which can prove quite helpful to the licensor in successfully conducting its marketing operations.

Licensing is a contract arrangement in which a firm in a country allows a firm in a foreign country to use its patent or. trademarks or technology for a consideration known as royalty.