Section Ⅰ Internation al Trade Theory and Policy 3
CHAPTER 1 INTRODUCTION TO INTERNATIONAL TRADE 3
1 The Reasons for International Trade 3
1．Resources reasons 4
2．Economic reasons 4
3．Other reasons 4
2 The Differences between International Trade and Domestic Trade 5
1．More complex context 5
2．More difficult and risky 5
3．Higher skills required 5
3 Basic Concepts Concerning International Trade 6
1．Visible trade and invisible trade 6
2．International trade value and intemational trade volume 9
3．Favorable balance of trade and unfavorable balance of trade 11
4．General trade system and special trade system 15
5．Commodity composition of international trade 16
6．Geographical composition of international trade 17
7．Ratio of merchandise trade to GDP 21
8．Trade invalue-added 22
CHAPTER 2 CLASSICAL TRADE THEORIES 25
1 Mercantilism 26
1．The development of mercantilist thought 26
2．The mercantilist economic system 27
3．Economic policies pursued by the mercantilists 27
4．Discussions 28
2 DavidHume's Challenge to Mercantilism 28
1．Assumptions of price-specie-flow mechanism 28
2．The price-specie-flow mechanism 29
3 Adam Smith's Theory of Absolute Advantage 29
1．Assumptions of Adam Smith's theory of absolute advantage 30
2．Challenge to Mercantilism 31
3．Example 31
4 David Ricardo's Theory of Comparative Advantage 32
1．The concept of comparative advantage 32
2．Example 34
3．Analysis of the theory of comparative advantage by using modern tools 36
CHAPTER 3 NEOCLASSICAL TRADE THEORIES 41
1 Gains from Trade in Neoclassical Trade Theory 41
1．Increasing opportunity costs on the PPF 41
2．General equilibrium and gains in autarky 42
3．General equilibrium and gains after the introduction of international trade 43
2 Reciprocal Demand Theory 44
1．A country's offer curve 45
2．Trading equilibrium 46
3．Measurement of terms of trade 47
3 Factor Endowment Theory 49
1．Factor intensity in production 49
2．Factor endowments,factor prices,and comparative advantage 50
3．Assumptions of the factor proportions theory 51
4．The Heckscher-Ohlin theorem 52
5．An example to illustrate H-O theorem 53
6．The factor price equalization theorem 54
7．The Stolper-Samuelson theorem 55
4 The Leontief Paradox—An Empirical Test of the Factor Proportions Theory 55
1．The Leontief paradox 55
2．Suggested explanations for the Leontief Paradox and related theories 57
CHAPTER 4 POST-HECKSHER-OHLIN THEORIES OF TRADE 59
1 The Product Cycle Theory 60
1．The imitation lag hypothesis 60
2．The product cycle theory 61
2 The Linder Theory 64
1．Assumptions of the Linder theory 64
2．Trade comes in the overlapping ranges of product sophistication 65
3 Intra-Industry Trade Theory 66
1．Explanations of intra-industry trade 67
2．Measurement of intra-industry trade 68
CHAPTER 5 IMPORT PROTECTION POLICY:TARIFFS 71
1 Types of Import Tariffs 71
1．In terms of the means of collection 72
2．Interms of the different tariff rates applied 73
3．In terms of special purposes for collection 78
2 The Effects of Import Tariffs 84
1．Concepts of consumer surplus andproducer surplus 84
2．The welfare effects of import tariffs 85
3 Measurement of Import Tariffs 86
1．The“height”of import tariffs 86
2．Nominal versus effective tariff rates 87
CHAPTER 6 IMPORT PROTECTION POLICY:NON-TARIFF BARRIERS 91
1 Forms of Non-tariff Barriers 91
1．Quantity control measures 92
2．Price control measures 94
3．Para-tariff measures 94
4．Finance measures 95
5．Anti-competitive measures 96
6．Miscellaneous measures 96
2 Effects of Non-tariff Barriers 99
1．The effects of an import quota 100
2．The effects of a subsidy to an import-competing industry 101
CHAPTER 7 EXPORT PROMOTION AND OTHER POLICIES 103
1 Export Subsidy and Production Subsidy 103
1．Export subsidy and its effects 103
2．Production subsidy and its effects 105
2 Other Export Promotion Policies 107
1．Devaluation of home currency 108
2．Commodity dumping 108
3．Bonded warehouse 109
4．Special trade zone 110
5．Export promotion programs 112
3 Export Restrictions and Import Promotion Policies 116
1．Export restrictions policies 116
2．Import promotion policies 118
4 Trade Sanctions 119
1．Introduction to trade sanctions 119
2．Effectiveness of trade sanctions 121
CHAPTER 8 ARGUMENTS AGAINST FREE TRADE 123
1 Traditional Arguments against Free Trade 123
1．Infant industry argument 123
2．Terms of trade argument 125
3．Balance of trade argument 126
4．Tariff to reduce aggregate unemployment argument 127
5．Fair competition argument 128
6．National security argument 128
2 New Protectionism 129
1．Tariff to extract foreign monopoly profit 129
2．Export subsidy induopoly 131
3 The Political Economy of Trade Policy 133
1．Median voter model 133
2．Collective action theory 134
3．Contribution in political campaigns 135
CHAPTER 9 REGIONAL ECONOMIC INTEGRATION 137
1 Types of Regional Economic Integration 137
1．Preferential tariff arrangement 138
2．Freetrade area 138
3．Customs union 138
4．Common market 139
5．Economic union 139
2 The Static and Dynamic Effects of Regional Economic Integration 140
1．Static effects of regional economic integration 140
2．Dynamic effects of regional economic integration 142
3 Economic Integration in Europe,North America and Asia 143
1．Economic integration in Europe 143
2．Economic integration in North America 148
3．Economic Integration in Asia and Asia-Pacific region 152
CHAPTER 10 GATT and WTO 159
1 GATT 159
1．The origination of the GATT 159
2．The GATT's activities:eight trade negotiation“Rounds” 160
3．The Uruguay Round of trade negotiations 162
4．Two GATTs 165
5．WTO vs.GATT:main differences 166
2 WTO 167
1．An overview 167
2．The fundamental principles of the WTO 167
3．The structure of the WTO 170
4．WTO agreements 172
5．Ministerial conferences 176
3 China and the WTO 178
1．China's accession to the WTO 178
2．Opportunities and challenges to China 179
Section Ⅱ International Trade Practice 185
CHAPTER 11 INTERNATIONAL TRADE TERMS 185
1 INCOTERMS 2010 185
1．The role of trade terms 185
2．INCOTERMS 2010 186
2 FOB,CFR and CIF 188
1．FOB—Free on Board（...named port of shipment） 188
2．CFR—Cost and Freight（...named port of destination） 191
3．CIF—Cost,Insurance and Freight（...named port of destination） 192
3 FCA,CPT and CIP 193
1．FCA—Free Carrier （...named place of delivery） 193
2．CPT—Carriage paid to （...named place of destination） 194
3．CIP—Carriage and Insurance Paid to （...named place of destination） 195
4 Other Trade Terms 195
1．EXW—Ex Works （...named place） 195
2．FAS—Free Alongside Ship （...named port of shipment） 196
3．DAT—Delivered at Terminal（...named terminal at port or place of destination） 196
4．DAP—Delivered at Place（...named place of destination） 197
5．DDP—Delivered Duty Paid （...named place of destination） 198
5 Shipment Contract and Choice of Trade Terms 199
1．Shipment contract 199
2．Choice of trade terms 200
CHAPTER 12 QUALITY,QUANTITY,PACKING AND PRICING 201
1 Quality 201
1．Name of commodity 201
2．Methods of expressing quality of commodity in the contract 202
3．Quality clause in the contract 204
2 Quantity 205
1．The systems of weights and measures 205
2．Quantity units 206
3．Methods for calculating weight 206
4．Quantity clause in the contract 207
3 Packing 208
1．Types of transport packing 208
2．Marks on transport packing 209
3．Neutral packing 211
4．Bar codes 211
5．Packing clause in the contract 213
4 Pricing 213
1．Factors to be considered in pricing 213
2．Choice of currency for accounting and payment 214
3．Commission and discount 215
4．Cost accounting in export 216
5．Price clause in the contract 217
CHAPTER 13 INTERNATIONAL CARGO TRANSPORTATION 219
1 Modes of Transport 219
1．Ocean transport 220
2．Rail transport 222
3．Air transport 223
4．Intermodal transport （multimodal transport） 224
2 Major Shipping Documents 226
1．Bill of lading（B/L） 226
2．Other shipping documents 232
3 Shipment Clause 234
1．Time of shipment 234
2．Port of shipment and destination 234
3．Partial shipments and transshipment 235
CHAPTER 14 INTERNATIONAL MARINE CARGO INSURANCE 237
1 Perils and Losses in Marine Transport 238
1．Perils and risks 238
2．Ocean average and charges 238
2 Ocean Marine Cargo Clauses of the CIC 240
1．Basic ocean marine cargo insurance 240
2．W/W clause 241
3．Additional risks 242
3 Institute Cargo Clauses（ICC） 243
1．ICC（A） 243
2．ICC（B） 244
3．ICC（C） 245
4 Export and Import Insurance Practice in China 245
1．Insurance clause in the contract 245
2．Insurance practice in China's export and import 245
CHAPTER 15 INTERNATIONAL PAYMENT 249
1 Instruments of International Payment 249
1．Bills of exchange（draft） 250
2．Promissory note 252
3．Check 253
2 Remittance and Collection 254
1．Remittance 254
2．Collection 257
3 Letter of Credit 260
1．Definition of letter of credit 261
2．Parties to a letter of credit 261
3．Procedure for letter of credit operations 263
4．Content of aletter of credit 265
5．Features of letter of credit business 267
6．UCP600 267
7．Classification of letters of credit 269
4 Banker's Letter of Guarantee 276
1．Parties to banker's letter of guarantee 276
2．Types of banker's letter of guarantee 276
3．Differences between letter of guarantee and letter of credit 278
5 Terms of Payment in the Contract 279
1．Payment by remittance 279
2．Payment by collection 279
3．Payment by letter of credit 279
CHAPTER 16 INSPECTION,CLAIM,FORCE MAJEURE AND ARBITRATION 281
1 Commodity Inspection 281
1．Importance of commodity inspection 282
2．Time and places of commodity inspection 282
3．Commodity inspection body 283
4．Commodity inspection standards 285
5．Commodity inspection clause in the contract 285
2 Claim 286
1．Liabilities of breach of contract 286
2．Claim clause in the contract 287
3 Force Majeure 289
1．The meaning of force majeure 289
2．The consequences of force majeure 289
3．Force majeure clause in the contract 290
4 Arbitration 290
1．The ways of settlement of disputes 290
2．Features of arbitration 291
3．Advantages over court proceedings 291
4．Arbitration agreement 292
5．Enforcement of an award 294
CHAPTER 17 NEGOTIATION AND FORMATION OF CONTRACT 297
1 International Trade Negotiation 297
1．Enquiry 297
2．Offer 298
3．Counter-offer 298
4．Acceptance 298
2 Formation of Contract 298
1．Offer 299
2．Acceptance 302
3．Formation of contract 304
CHAPTER 18 IMPLEMENTATION OF INTERNATIONAL SALES CONTRACT 307
1 Cargo Readiness 308
1．Contractual quantity,quality and packing conformity requirements 308
2．Fitness for ordinary and particular purposes 308
3．To timely fulfil the obligation to deliver 309
4．Ensuring freedom from third party claims 310
2 Examination of and Amendment to the L/C 311
1．Urgingthe opening of L/C 311
2．Examining L/C 311
3．Amendment to L/C 312
3 Shipment,Insurance and Customs Clearance 312
1．Shipment 312
2．Insurance 313
3．Customs clearance 313
4 Documentation 313
1．Quality requirements for documents 313
2．Period of time for presentation of documents 314
3．Types of documents required by the credit 314
5 Settlement of Export Proceeds in Foreign Exchange 318
1．Three ways of settlement of export proceeds in foreign exchange in China 319
2．The ways of handling discrepancies between the documents and the L/C 319
6 Verification and Writing-off of Export Proceeds in Foreign Exchange and Export Tax Rebate 321
1．Verification and writing-off of export proceeds in foreign exchange 321
2．Exporttax rebate declaration 323
REFERENCES 324