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In earlier eras, the US policy was to reduce imports by setting quotas and imposing tariffs, but that policy has been replaced by the free trade principle, which allows goods and services to flow freely between nations.Even if the free trade policy opens opportunities in the import-export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.