a. Long Distance:- International trade is spread over the world and therefore, goods are to be transported over a considerable distance. During transportation goods are exposed to risk and uncertainties of transportation and perils of sea.
b. High Risks and Uncertainties:- International trade is subject to political as well as commercial risks. Political risks arise due to the political actions of the government(s). For example, war and internal aggression. Commercial risks arise due to insolvency of buyer or buyer’s failure to accept goods.
c. Customs Formalities: - Customs formalities are different in different countries. Again, these formalities are very lengthy, time consuming and trade between countries of the world.
d. Trade Barriers: - Trade barriers are the artificial restrictions on the free movement of goods from one country to other. These barriers are of two types, tariff and non-tariff barriers are in the form of taxes and customs duties. Nontariff barriers are in the form of taxes and customs duties.
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e. Three-faced Competition :- An exporter faces competition from three angles:-
• Exporters from his own country
• Exporters from other countries.
• Local suppliers in importing country.
However, an exporter can sustain international competition by upgrading the quality of product, innovations and inventions and cost reduction.
f Payment Difficulties: -Different countries have different currencies and conversion rates. These rates are subject of fluctuations. Thus, an exporter may suffer a loss if there is a change in the exchange rate after entering into a contract with a foreign buyer.
lydiajane74 answered the question on May 9, 2018 at 19:49
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