Terms of trade
From Supply Chain Management Encyclopedia
There are a huge lot of discouraging definitions for the terms of trade in Internet resources (e.g., Not the contractual conditions of sale between a buyer and a seller, but the quantity of foreign goods and services (imports) that a country can purchase from the proceeds of the sale of its goods and services (exports) of a given quantity. It is a measure of a country's trading clout and is expressed as the ratio of an index of export prices to an index of import prices. Terms of trade of a country improve when the prices of its exports rise in comparison with the prices of its imports, vice versa[1] or In international economics and international trade, terms of trade or TOT is (Price Exports)/(Price Imports).[2] However, from the viewpoint of international logistics, but not of macroeconomics, the "terms of trade" term is sometimes used as a synonym to the trade terms, defined as: key elements of international contracts of sale, since they mainly explain to the buyer, seller and other parties what to do with respect to (1) shipment of the goods from the seller to the buyer, (2) customs clearance, (3) payment for the costs of loading and unloading the goods, (4) allocation of seller's and buyer's responsibilities for the risk of loss or damage to the goods and who should take out insurance as a protection against these risks.[3] The same understanding the Incoterms as one part of terms of trade is found in more or less official sources.[4] The same understanding of "Incoterms" as terms of trade is found in text-books on international logistics.[5]
See also: Incoterms 2010
References
- ↑ http://www.businessdictionary.com/definition/terms-of-trade.html
- ↑ http://en.wikipedia.org/wiki/Terms_of_trade
- ↑ http://www.creditmanagementworld.com/letterofcredit/lcinternationalterms.html
- ↑ Export Basics: Terms of Trade: Incoterms - http://export.gov/exportbasics/eg_main_017485.asp
- ↑ David, P., Stewart, R. International Logistics: The Management of International Trade Operations - Thomson: Mason, Ohio. 2007. - Ch.6.
