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What are the problems of foreign trade?

Problems of foreign trade.

Foreign trade has a number of complications. These are:

i. Payment between nations involved in foreign trade takes place through national currency of their own. This sorts of payment create a number of complications on exchange of currency.

What does ROG mean in payment terms

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ii. High import duties are levied to give protection to certain home industries. Similarly high export duties are levied to restrict export of certain commodities. The levying of high duties on export and import create obstacles in the way of foreign trade.

iii. The goods are exposed to greater risks because these are to be transported over a long distance.

iv. The payment of goods are delayed because there is a wide gap between the time of dispatch of goods and its receipts.

v. This type of trade takes place without any personal contact between the seller and the buyer. So the creditworthiness of the buyer can not be judged by the seller.

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