INTERNATIONAL TRADE

Definitions
Balance of payments · Current account (Balance of trade) · Capital account · Foreign exchange reserves · Sovereign wealth fund · Net Capital Outflow · Comparative advantage · Absolute advantage · Import substitution · International trade
Organizations and policies
World Trade Organization · International Monetary Fund · World Bank Group · International Trade Centre · Trade bloc · Free trade zone · Trade barrier · Import quota · Tariff
Schools of thought
Free trade · Balanced trade · Mercantilism · Protectionism
Related issues
Globalization · Outsourcing · Trade justice · Fair trade
Definitions
Balance of payments · Current account (Balance of trade) · Capital account · Foreign exchange reserves · Sovereign wealth fund · Net Capital Outflow · Comparative advantage · Absolute advantage · Import substitution · International trade
Organizations and policies
World Trade Organization · International Monetary Fund · World Bank Group · International Trade Centre · Trade bloc · Free trade zone · Trade barrier · Import quota · Tariff
Schools of thought
Free trade · Balanced trade · Mercantilism · Protectionism
Related issues
Globalization · Outsourcing · Trade justice · Fair trade

International trade theory
Several different models have been proposed to predict patterns of trade and to analyze the effects of trade policies such as tariffs.

Ricardian model
The Ricardian model focuses on comparative advantage and is perhaps the most important concept in international trade theory. In a Ricardian model, countries specialize in producing what they produce best. Unlike other models, the Ricardian framework predicts that countries will fully specialize instead of producing a broad array of goods. Also, the Ricardian model does not directly consider factor endowments, such as the relative amounts of labor and capital within a country.

Heckscher-Ohlin model
The Heckscher-Ohlin model was produced as an alternative to the Ricardian model of basic comparative advantage. Despite its greater complexity it did not prove much more accurate in its predictions. However from a theoretical point of view it did provide an elegant solution by incorporating the neoclassical price mechanism into international trade theory.
The theory argues that the pattern of international trade is determined by differences in factor endowments. It predicts that countries will export those goods that make intensive use of locally abundant factors and will import goods that make intensive use of factors that are locally scarce. Empirical problems with the H-O model, known as the Leontief paradox, were exposed in empirical tests by Wassily Leontief who found that the United States tended to export labor intensive goods despite having a capital abundance.

Specific Factors
In this model, labour mobility between industries is possible while capital is immobile between industries in the short-run. The specific factors name refers to the given that in the short-run specific factors of production, such as physical capital, are not easily transferable between industries. The theory suggests that if there is an increase in the price of a good, the owners of the factor of production specific to that good will profit in real terms. Additionally, owners of opposing specific factors of production (i.e. labour and capital) are likely to have opposing agendas when lobbying for controls over immigration of labour. Conversely, both owners of capital and labour profit in real terms from an increase in the capital endowment. This model is ideal for particular industries. This model is ideal for understanding income distribution but awkward for discussing the pattern of trade.

Gravity model
The Gravity model of trade presents a more empirical analysis of trading patterns rather than the more theoretical models discussed above. The gravity model, in its basic form, predicts trade based on the distance between countries and the interaction of the countries' economic sizes. The model mimics the Newtonian law of gravity which also considers distance and physical size between two objects. The model has been proven to be empirically strong through econometric analysis. Other factors such as income level, diplomatic relationships between countries, and trade policies are also included in expanded versions of the model.

Regulation of international trade
Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure.
Free trade is usually most strongly supported by the most economically powerful nations in the world, though they often engage in selective protectionism for those industries which are politically important domestically, such as the protective tariffs applied to agriculture and textiles by the United States and Europe. The Netherlands and the United Kingdom were both strong advocates of free trade when they were economically dominant, today the United States, the United Kingdom, Australia and Japan are its greatest proponents. However, many other countries (such as India, China and Russia) are increasingly becoming advocates of free trade as they become more economically powerful themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff measures, including foreign direct investment, procurement and trade facilitation. The latter looks at the transaction cost associated with meeting trade and customs procedures.
Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services.
During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression.
The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, NAFTA between the United States, Canada and Mexico, and the European Union between 27 independent states. The 2005 Buenos Aires talks on the planned establishment of the Free Trade Area of the Americas (FTAA) failed largely due to opposition from the populations of Latin American nations. Similar agreements such as the MAI (Multilateral Agreement on Investment) have also failed in recent years.

Risks in international trade
The risks that exist in international trade can be divided into two major groups:

Economic risks
Risk of insolvency of the buyer,
Risk of protracted default - the failure of the buyer to pay the amount due within six months after the due date
Risk of non-acceptance
Surrendering economic sovereignty

Political risks
Risk of cancellation or non-renewal of export or import licences
War risks
Risk of expropriation or confiscation of the importer's company
Risk of the imposition of an import ban after the shipment of the goods
Transfer risk - imposition of exchange controls by the importer's country or foreign currency shortages
Surrendering political sovereignty

GOL D TRADE


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Precious Metals Guide

Gold Gold Quality Gold's purity is measured in karats. The term "karat" harks back to the ancient bazaars where "carob" beans were used to weigh precious metals. 24 karat is pure gold, but its purity means it is more expensive and less durable than gold that is alloyed with other metals. Different alloys are used in jewelry for greater strength, durability and color range.

The karatage of the jewelry will tell you what percentage of gold it contains: 24 karat is 100 percent, 18 karat is 75 percent, and 14 karat is 58 percent gold. When comparing gold jewelry, the higher the number of karats, the greater the value.

Europeans have long embraced 18-karat gold as their metal of choice, and with good reason. Its rich yellow color, luxurious look and feel have an extraordinarily sensual appeal; many

European women treat 18-karat gold like a second skin, even wearing it to the beach!
Today, women in the U.S. and around the globe are "trading up" and treating themselves to the beauty and opulence of 18-karat gold.

Karat Marks When buying gold jewelry, always look for the karat mark. All other things being equal, the higher the karat, the more expensive the piece. In the United States, 14-karat gold, or 583 parts pure gold, is the most common degree of fineness. Nothing less than 10 karats can legally be marked or sold as gold jewelry in the U.S. However, lower karatages, such as 8-karat gold and 9-karat gold, are popular in other countries.
18-karat gold is 18/24ths, or three-quarters pure gold, and jewelry of this fineness is marked 18k or 750, the European designation meaning 75% gold.

Always look for the karat mark or "k" that appears on the back of the piece. By U.S. law, if a karat mark appears you should also see the manufacturer's trademark to assure you that the karat marking is accurate. The country of origin should also appear.

In addition to the karat mark, every piece of gold jewelry should be stamped with a hallmark or trademark of its maker, and sometimes its country of origin. These designations assure you that you are buying genuine karat gold jewelry. Heavier pieces contain more gold.

Gold Types Gold Filled, also called Gold Overlay, refers to a layer of at least 10-karat gold that has been permanently bonded by heat and pressure to one or more surfaces of the support metal, then rolled or drawn to a prescribed thickness. The karat gold must be at least 1/ 10 of the total weight.

Gold Plate means that a layer of plating of 10-karat gold or better has been bonded to a base metal. The karat gold content may be less than 1/20, but it must be properly identified by weight in terms of total metal content.

Gold Leaf is just gold plating that's been pounded and applied by hand.

Gold Colors Yellow gold is alloyed with silver and copper. It is the most frequently used type of gold there is. Malleable, ductile, and generally non-corrosive, it has a high melting point and is not susceptible to compression.

White gold is alloyed with a large percentage of silver, or a selection of other white metals. The percentage of gold naturally varies, according to the amount of other metal used. White gold is highly reflective and not subject to tarnish. The ancient term for it was Electrum. Its use predates that of Palladium and Platinum.

Rose gold is alloyed with copper, and perhaps silver. The proportions are about one part of copper to three parts of 24-karat gold.

Gold Pricing Gold pricing is based on a number of factors, including karatage, gram weight, design and craftsmanship. The karatage and gram weight tell you how much gold is in a piece, but don't rely on these alone to determine price. Remember, a price based solely on gram weight does not reflect the work that has gone into the piece.

Other important factors to consider are the jewelry's construction and design. The techniques of construction can make a piece more durable and flexible for added comfort. A well-made piece in a classic design will give you years of wear and enjoyment and, if cared for properly, will last a lifetime. Unique design, intricate details, gemstones or a special clasp may add to the price.

Gold jewelry is mainly produced by machine. Any additional hand finishing or textural interest raises the cost. Similar looking pieces may have vastly different price tags. This is because different pieces may have specific characteristics that make them unique. So look carefully to notice any differences and similarities. Often, it's these small details that give you pleasure through the years that you enjoy a piece of jewelry, and ensure that your children will also enjoy it.

Gold Care Gold is durable, sturdy, dependable, and makes an ideal setting for your precious diamond jewelry. However, to get a lifetime of enjoyment from your jewelry, be sure to keep it clean and safe.
Do not wear jewelry during rough work or when handling harsh chemicals.
Store it in a fabric-lined box away from other pieces to preserve it from getting scratched.

Finally, check the diamond settings periodically for any damage to the gold prongs or bezels. If you see a loose prong, or if the setting looks out of line, bring it to a professional jeweler for repair at once.