question_answer

"Foreign trade is not free from difficulties." Comment.

Answer:

Ans.     Foreign trade is not free from difficulties. The following are some of the important difficulties of foreign trade:

(i) It is a long distance trade and as such it becomes difficult to maintain close relationship between the buyer and the seller.

(ii) Each country has its own language. As foreign trade involves trade between two or more countries, there is diversity of languages. This difference in language creates problem in foreign trade.

(iii) Foreign trade involves preparation of a number of documents which also creates difficulties in the way of foreign trade.

(iv) Some restrictions are imposed on export and import of commodities. These restrictions stand on the progress of foreign trade.

(v) Foreign trade involves a great deal of risks because trade takes place over a long distance. Though the risks are covered through insurance, it involves extra cost of production because insurance cost is added to cost.