Managerial

Accounting
TRADE
Group Members

Naveed Muhammad (SP07-

BB-0122)
Syed Owais Ali (SP07-
BB-0135)
Syed Ashar Ali (SP07-
BB-0156)
Nabeel Hussain (SP07-
BB-0124)
Syed Muhammad Hassan
What is Trade?
Trade is what we call it when people buy and sell
things. A producer might sell items or provide a
service, and a customer pays them for it. This is
trade.
Trade is the voluntary exchange of goods, services,
or both. Trade is also called commerce. A
mechanism that allows trade is called a market.
Example;
Imagine a brother and sister called Tom and
Yasmin. Yasmin’s bike has a flat tire but she’s
desperate to go on a weekend cycling trip with her
friends. Her brother Tom has just been given a
new bike for his birthday. Yasmin asks Tom if she
borrow his bike and, in return, she promises to buy
Tom a CD. Tom agrees to the deal.
This is an example of trade.
History
Trade originated with the start of communication of
prehistoric time.

Trading was the main facility of prehistoric people,

who bartered goods and services from each other
before the innovation of the modern day currency.

Materials used for creating jewelry were

traded with Egypt since 3000 BC.
Continued
In the 16th century, Holland was the centre of free
trade, imposing no exchange controls, and
advocating the free movement of goods.

In 1799, the Dutch East India Company, formerly the

world's largest company, became bankrupt, partly
due to the rise of competitive free trade.

In 1817, David Ricardo, James Mill and Robert

Torrens showed that free trade would benefit the
industrially weak as well as the strong, in the famous
theory of comparative advantage.
Continued
In 1947, 23 countries agreed to the General
Agreement on Tariffs and Trade to promote free
trade.

EC was transformed into the European Union,

which accomplished the Economic and Monetary
Union (EMU) in 2002, through introducing the
Euro , and creating this way a real single market
between 13 member states as of January 1, 2007.
Types of Trade
Retail trade
Fair trade
Free trade
Silent trade
Electronic trade
Commodity trade
International
Trade
International trade is the exchange of goods and
services across national borders.

It is probably the increasing prevalence of

international trade that is usually meant by the
term "globalization".

Although there are usually few trade restrictions

within countries, international trade is usually
regulated by governmental quotas and
restrictions, and often taxed by tariffs.
Continued
Tariffs are usually on imports, but sometimes countries
may impose export tariffs or subsidies.

All of these are called trade barriers. If a government

removes all trade barriers, a condition of free trade
exists.

A government that implements aprotectionist policy

establishes trade barriers.
Organization of Trade
Patterns of organizing and administering trade include:

State control - trade centrally controlled by

government planning.

Guild control - trade controlled by private business

associations holding government-granted power to
exclude new entrants.
Free enterprise - trade without significant central
controls; market participants engage in trade based
on their own individual assessments of risk and
reward, and may enter or exit a given market
relatively unimpeded.

Infrastructure in support of trade, such

as banking, stock market, etc.

Technology in support of trade such as electronic

commerce, vending machines.
 International organizations
European Common Market
G8
General Agreement on Tariffs and Trade (GATT), World Trade
Organization (WTO)
International Monetary Fund (IMF)
OPEC = Organization of the Petroleum Exporting Countries

Free trade areas

Free trade organizations or free trade areas
European Free Trade Association
Free Trade Area of the Americas (FTAA)
North American Free Trade Agreement (NAFTA)
Union of South American Nations
South Asian Free Trade Association (SAFTA)
The End