COMMERCE 101

DIFFERENCE BETWEEN BALANCE OF PAYMENT AND TRADE

Hey Guyz, Happy New Week to Everyone, Hope your weekend was great and restful. Mine was indeed restful, don't you just love the weekend???. lolz. well its Monday again but not to worry God is here to make it has blessed as possible for us. May the rest of your day and week be awesome and full of love. So Let's get straight to the Point...

Balance of Trade is the relationship between the values of a country's import and export of visible items within a particular period of time. If visible Exports are more than Visible Imports, the balance of trade is said to be favourable. On the other hand, if the visible import exceeds the visible exports, the country is said to have unfavourable balance of Trade.

Balance of Payment is a statement/record showing the relation between a country's total payment to other countries and its total receipt from other countries in a year. In other words, It is the comparism of the sum total of a country's receipt from export and the total payment made for import. The Balance of Payment of a Country shows yearly statement of income and expenditure from visible and invisible export, and visible and invisible import respectively.

A Country's Balance of Payment can be divided into three parts:

#Current Account- are the expenditure and incomes of a country on both visible and

invisible imports and exports.

#Capital Account- is concerned with the inflow and outflow of capital both long and short terms.

# Monetary Movement Account- shows how the Balance of both the current account and capital accounts are settled.

Favourable Balance of Payment occurs when the payments from visible and invisible export trade is greater than the payments to other countries on invisible and visible import trade.

Unfavourable Balance of Payment is when the payments on visible and invisible imports is greater than receipts on visible and invisible exports. It can be referred to DEFICIT BALANCE.

Tariffs are taxes imposed on imported goods either as a percentage of value or a unit. It is referred to as IMPORT DUTIES.

REASONS FOR IMPOSITION OF TARIFFS:

1. To protect infant industries from foreign firms.

2. To raise revenue through import duties.

3. To correct unfavourable balance of payments of a country by imposing tariffs on importation of goods which will discourage importation.

TOOLS FOR TRADE RESTRICTIONS:

1. Imposing Tax on imported goods.

2. By lowering the value of a country's currency with respect to others, import becomes costly while export will be cheaper.

3. Restricting on the Quantity of goods that can be imported from a particular country.

MAIN DOCUMENTS USED IN FOREIGN TRADE

There are various documents which facilitate international trade and they include:

1. Certificate of Origin is a document that shows where goods come from or where it is manufactured. This document also enables the custom and excise authorities to determine the duties the importer should pay on the goods because it attracts preferential duties. It must be signed by custom officers in the exporting country.

2. Airways Bill is used when goods are been transported by air. It shows the Name of the consignor or exporter, Airport of loading, Destination etc. It shows the Nature, Weight, Value of Goods and the Fright Charged.

3. Shipping Note is a document sent to the shipping agent, by the exporter instructing the shipping company to transport the goods to a named destination at a particular time.

4. Shipping Manifest is a document to be completed by the captain of a ship and lodged with the custom authorities, before the ship can leave the port. It shows particulars of the ship, passenger and cargoes. The shipping manifest must be left with the custom before the ship leaves the port and a copy is sent to the ship agent at the port of destination.

5. Mate Receipt is usually signed by an authorized officer of the ship, stating that the goods are received in good condition.

6. Ship Report is a document which must be supplied by the master of a ship to the customer authorities on arrival at a port. It gives report of the particulars of the ship, passenger, cargo and the port of departure. The goods cannot be off-loaded until this report is received.

7. Dock Warrant is a receipt for goods delivered and stored in the warehouse. It enables the holder of the receipt to take possession of the goods.

8. Bills of Sight is a document used in import trade which is submitted to the custom authorities if a full description of the imported goods cannot be produced.

9. Bills of Entries is a document which provides the custom authorities the particulars of goods imported which must be presented at the seaport on arrival before they (goods) are allowed into the country.

10. Calling Forward Note is a document sent by the shipping company to the forward agent stating the date which goods must arrive at the port for loading.

This brings us to the end of today's session. Hope this was very helpful to you, leave a comment of what you think of this tutorial and of your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.