Write down any six problems of international trade.

1. Obstacles in free movement of goods :

Full advantage of foreign trade can only be secured when there are no obstacles in the movement of commodities between countries. Such obstacles may be of two types : natural and man-made. Manmade obstacles are customs barriers raised by government to restrict or prohibit free flow of trade between countries etc.

2. Monopolistic competition : Foreign trade can produce benefits only under conditions of perfect competition.

But in real life, there are conditions of monopolistic competition, where a few economically advanced nations with their powerful multinational concerns have clearly divided the world market among themselves.

3. Dissimilar economies of trade : Trade between any two nations can flourish only when they have similar internal and external economies of scale. Only a country, with particular line, may secure enough cost advantage to neutralize high labour and costs. In reality, only economically advanced countries can achieve high levels of economies so that the world market has come to be monopolistically dominated.

4. Language Barriers : Each country has its own language and also often its own script. This creates problems of communication between countries.

5. Greater exposure to risk : People undertaking international trade transactions are separated by long geographical distances. This creates problems of transportation of goods from one country to another, yet, another problem is that goods transported from one country to another are subject to several risks, because they remain in transit for long period.

6. Blocking capital for long periods : Due

to long interval between the time, when the goods are dispatched and when they are received and paid for by the foreign importer, the exporter have to invest a large capital in his business to provide for slow turnover.