Different Types of International Trade
International trade refers to the economic transactions made between countries or economies. Broadly speaking, three types of international trade exist. These are Export Trade, Import Trade and Entrepot Trade.
Export & Import Trade
When one country sells its goods or services to another country, the selling country is engaged in export trade. When a country buys goods or services from another country, it is engaged in import trade. It thus naturally follows that every such trade transaction requires the participation of an exporter and an importer and vice versa.
Both export and import trade can have many advantages for each party. For emerging markets especially, exports can be a way to generate much needed foreign revenue and direct investment. At the same time, more established markets can take advantage of goods or services produced more economically in the exporting country than they would be in the importing country. Healthy import and export trade are thus usually mutually beneficial to the participants.
This is also called re-exportation trade or transhipment. The principle is simple, one country imports goods which are then re-exported to another trade partner. Imported goods or services are not typically processed or enhanced before re-exportation in this type of trade.
In such transactions, the final importing trade partner often benefits from the transaction by avoiding tariffs or accessing more favourable terms as a result of trade agreements or more friendly relations between the final importing trade partner and the middle-man, versus the final importing trade partner and the country of origin. Traders in the entrepot (transhipment port) may also import goods in large quantities to later be re-exported to a variety of trade partners in smaller quantities.
An excellent modern example of such trading is that between India and Pakistan. Trade relations between the two countries are notoriously strained. Thus, traders and merchants will use an entrepot like Dubai, with which both maintain excellent trade relations, to circumvent restrictions