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NCERT Class 12 Geography Chapter 9 International Trade
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International Trade
Chapter: 9
PART – I FUNDAMENTALS OF HUMAN GEOGRAPHY
Very Short Type Questions Answer
1. What is the exchange of goods and services among different countries of the world known as?
Ans: Foreign trade.
2. What is a port?
Ans: A port is a docking place for ships on the coast of the ocean, a river, or a lake.
3. What is harbour?
Ans: A harbour is a body of water sheltered by natural or artificial barriers.
4. When was the organisation of petroleum exporting countries formed?
Ans: January 1961.
5. When and where was GATT established?
Ans: On 30 October 1947, the General Agreement on Tariffs and Trade (GATT) was signed by 23 nations at the Palais des Nations in Geneva.
6. When did India become a member of WTO?
Ans: 1 January 1995.
7. What is bilateral trade?
Ans: The exchange of goods between two nations promoting trade and investment.
8. What is TNC?
Ans: Transnational corporations.
9. What is dumping?
Ans: Depositing all the waste materials from factories and industries, tankers and ships and sewerage waste materials into the oceans and seas.
10. What are the aspects of international trade?
Ans: Volume, sectoral composition, and Direction of Trade.
Short Type Questions Answer
1. Distinguish between trade debtor and trade creditor nations.
Ans:
| Basis | Trade debtor | Trade creditor nations |
| Meaning | Trade debtors are invoices owed to you by customers. They’re also sometimes called debtors or accounts receivable. Trade debtors may additionally refer to those customers who owe you money. | Creditor nations are those that lend more money to the world than they borrow from it. Being a creditor nation grants a country some power and influence, particularly when negotiating trade agreements with debtor nations. |
| Objective | General trade policy objectives have focused on reduced protection, achieving a more outward-oriented trade regime, increased market access for exports, and greater global integration, aimed at increasing economic efficiency, competitiveness, and export-led growth. | Trade is important as it maintains a competitive global economy keeping the price of goods low. It is also an important factor in raising living standards in developing countries. Further, in developing countries, trade provides employment opportunities and can spur the development of the home-grown industry. |
| Benefits | In the short run, trade deficits can help nations to avoid shortages of goods and other economic problems. In some countries, trade deficits correct themselves over time. A trade deficit creates downward pressure on a country’s currency under a floating exchange rate regime. | Trade is important as it maintains a competitive global economy keeping the price of goods low. It is also an important factor in raising living standards in developing countries. Further, in developing countries, trade provides employment opportunities and can spur the development of the home-grown industry. |
| Causes | Trade deficits occur when a country imports more goods and services than it exports, resulting in a negative balance of trade. They can affect domestic industries, employment, and economic growth, and are influenced by factors such as exchange rates, trade policies, and global economic conditions. | The main cause of trade from a geographic perspective is something called comparative advantage. Comparative advantage is the ability of a country or company to carry out a particular economic activity more efficiently than another country or company. |
2. Distinguish between our Port and entrepot.
Ans:
| Basis | Our Port | Entrepot |
| Meaning | An outport is any port considered secondary to a main port (including a provincial one as opposed to a capital one), and often (especially) a small port built to support the commercial operations of a large port. | Entrepot is mainly used to refer to duty-free ports with the high volume or re-export. At entrepot, goods do not face any import or export duties upon shipment from the port. Singapore and Middle East countries are the best examples for entrepot trade. |
| Objective | A port is a docking place for ships on the coast of the ocean, a river, or a lake. Ships dock at ports to load and unload their cargo and passengers. Ports play a crucial role in transporting goods and raw materials. | In the past, entrepots enabled merchants to utilize part of a trade route to sell their goods without having to bear the risks and costs associated with long-distance travel over the entire route. |
| Benefits | Ports facilitate the movement of goods and services between markets, reducing transport costs and enhancing efficiency. Port expansion can also enable the diversification of export products, the attraction of foreign direct investment, and the integration into regional and global value chains. | Entrepots, often referred to as trading hubs or transit countries, play a crucial role in facilitating international trade and driving economic growth. These countries act as intermediaries, connecting various regions and enabling the smooth flow of goods and services. |
| Aim/uses | Ports are gateways of international trade. They promote international trade. Ports provide facilities of docking, loading, unloading and storage facilities for cargo. Large amounts of goods can be taken in by ships. | Entrepot Trade is where goods are imported into a country and then re-exported out, without being distributed within the importing country. For example, if metal is imported from India to Singapore, processed and then re-exported to China, it is entrepot trade. |
3. Distinguish between vertical and horizontal trade?
Ans:
| Basis | Vertical | Horizontal trade |
| Meaning | Vertical position or vertical location is a position along a vertical direction (the plumb line direction) above or below a given vertical datum (a reference level surface, such as mean sea level). Vertical distance or vertical separation is the distance between two vertical positions. | Examples of Horizontal Integration If a company acquires or merges with another company and both firms are in a very similar industry, it is most likely an example of horizontal integration. Specific examples include: JetBlue’s 2022 merger with Spirit Airlines. Marriott’s 2016 acquisition of Starwood Hotel & Resorts6. |
| Objective | The main objective of vertical farming is to maximise yield against minimal usage of natural resources. | The foremost objective of any trade is to earn profits by selling as much as possible products and services to collect the maximum revenue. |
| Benefits | Vertical farming refers to the system of cultivating crops in vertically stacked layers, instead of a single surface, like a greenhouse or field. | A more efficient allocation of resources. A higher level of material well-being. |
| Causes | A direction or plane passing by a given point is said to be vertical if it contains the local gravity direction at that point. | The main cause of trade from a geographic perspective is something called comparative advantage. Comparative advantage is the ability of a country or company to carry out a particular economic activity more efficiently than another country or company. |
4. Give the full forms of OPEC, EEC, EFTA, GATT.
Ans: (i) The full form of OPEC is the Organization of the Petroleum Exporting Countries.
(ii) The full form of EEC is the European Economic Community.
(iii) The full form of EFTA is the The European Free Trade Association.
(iv) The full form of GATT is the General Agreement on Tariffs and Trade.
5. Explain the international Trade.
Ans: International trade is nothing but the trade that occurs across international borders. The exchanges can be imports or exports. An import refers to a good or service brought into the domestic country.
6. Which are the two types of ports based on location? Write any two features of each type of port.
Ans: There are five major types of natural or artificial ports: Inland port, fishing port, dry port, warm water port and seaport. Among all these types of ports, seaports are the largest and busiest type of ports. This is due to the reason that the seaport serves both cargoes as well as passengers.There are several styles of port, but the 2 major styles of Port include a red Port with more berry and chocolate flavours (and slightly less sweetness), and a tawny-coloured Port with more caramel and nut flavours (and more sweetness).
Long Type Questions Answer
1. Discuss the basis of international trade.
Ans: Here are the key principles that form the basis of international trade:
(i) Comparative Advantage: A country has a comparative advantage when its opportunity cost of producing a particular good or service is lower than that of other countries. The same rule applies to individuals and companies. Think of Country A that has managed to crack the production of computers.
(ii) Specialisation: Physical geography has a strong natural science emphasis and focuses on physical and ecological systems at or close to the earth’s surface, and the interaction of these systems with people. The major substantive specialisations are biogeography, climatology, GIS and remote sensing, geomorphology, and hydrology.
(iii) Trade Barriers: A trade barrier refers to any regulation or policy that restricts international trade, especially tariffs, quotas, licences etc.
(iv) Trade Agreements: Trade agreements do not normally take account of the biogeographical regions among trading partners, so introductions of unwanted species are almost inevitable. Often, a population of a harmful species is further spread by trading and thereby has the ability to compromise the production of useful species.
(v) Globalisation: In geography, globalisation is defined as the set of processes (economic, social, cultural, technological, institutional) that contribute to the relationship between societies and individuals around the world. It is a progressive process by which exchanges and flows between different parts of the world are intensified.
(vi) Factor Endowments: Factor endowments are the land, labour, capital, and resources that a country has access to, which will give it an economic comparative advantage over other countries.
(vii) Transportation and Communication: Transport generally involves the movement of people or goods from one place to another via a means of transport. On the other hand, communication is the passing of information or data from one source to another. Transport usually involves means of transport such as roadways, railways, air travel etc.
(viii) Market Access and Demand: Market access refers to the ability of a company or country to sell goods and services across borders. Market access can be used to refer to domestic trade as well as international trade, although the latter is the most common context.
2. What are the main trends in international Trade? Discuss.
Ans: Several key trends are shaping international trade in the contemporary global economy:
(i) Globalisation: In geography, globalisation is defined as the set of processes (economic, social, cultural, technological, institutional) that contribute to the relationship between societies and individuals around the world. It is a progressive process by which exchanges and flows between different parts of the world are intensified.
(ii) Trade Liberalisation: Trade liberalisation is the removal or reduction of restrictions or barriers on the free exchange of goods between nations. These barriers include tariffs, such as duties and surcharges, and nontariff barriers, such as licensing rules and quotas.
(iii) Rise of Global Value Chains (GVCs): Global value chains (GVCs) can provide an opportunity for countries to integrate into the global economy at lower costs by producing only certain components or tasks rather than complete final products. More than half of developing country exports in value-added terms involve GVCs.
(iv) Shift towards Services Trade: On the basis of World Bank income groups, the shift towards services has been most prominent for upper middle-income and high-income economies, whose shares of services of GDP grew from 40 per cent to 56 per cent and from 59 per cent to 75 percent, respectively, between 1970 and 2021.
(v) Rise of Emerging Markets: The most salient feature of this reconfiguration has been the rise of emerging markets (EMs), such as China and Mexico, both in global production and in global trade flows. Thus, EMs may be particularly vulnerable to both direct trade shocks and the spillovers of indirect trade shocks through supply chain linkages.
(vi) Digital Trade and E-commerce: Digital trade refers to commerce enabled by electronic means-by telecommunications and/or ICT services-and covers trade in both goods and services. It affects all sectors of the economy and is highly important for European industry, Trade topics, Digital trade.
(vii) Sustainability and Responsible Trade: Sustainable trade occurs when the commercial exchanges of goods and services generate social, economic and environmental benefits in accordance with the fundamental principles of sustainable development: Creation of economic value; Reduction of poverty and inequality; Preservation and reuse of environmental resources.
(viii) Geopolitical Tensions and Trade Disputes: As the imperial countries direct their control over the third world nations, the trade routes linking the third world with their resource capital becomes a major spot for the naked play of the contradictions among the imperialistic power.
3. Describe the role of W.T.O. in international Trade.
Ans: (i) Setting Rules for International Trade: Imported and locally-produced goods should be treated equally-at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.
(ii) Facilitating Trade Negotiations: Trade facilitation refers to the simplification, standardisation and harmonisation of procedures and associated information flows required to move goods from seller to buyer and to make payment. While traditionally trade agreements have dealt primarily with discussions over tariffs and quotas on imports, trade negotiations today encompass a much broader range of actions and government regulations, from the environment and climate, to the digital domain.
(iii) Dispute Settlement: The aim of the dispute settlement mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to the parties to a dispute and consistent with the covered agreements is clearly to be preferred.
(iv) Monitoring Trade Policies: Monitoring trade policies/measures is an important function of the WTO alongside improvement of trade rules and market access through multilateral negotiations and resolution of trade disputes through dispute settlement proceedings.
(v) Providing Technical Assistance and Capacity Building: Capacity building allows all to be engaged in a process of inquiry, critical thinking, relationship-building, reflection, and creative problem-solving. Capacity building is “doing with”, not “doing for”. TA is a direct application of expertise to solve an identified challenge.
(vi) Promoting Development and Economic Growth: The geography of growth and development refers to the local growth and decline of economic activity and the overall distribution of these local changes within and across countries. The pattern of growth in space can vary substantially across regions, countries, and industries.
(vii) Ensuring Non-Discrimination: Non-discrimination is an integral part of the principle of equality. It ensures that no one is denied their rights because of factors such as race, colour, sex, language, religion, political or other opinion, national or social origin, property or birth.
4. Describe the regional trading blocs.
Ans: Here are some common types:
(i) Free Trade Area (FTA):
(a) A free trade area is a group of countries that have agreed to mutually lower or eliminate trade barriers for trade within the area.
(b) This allows participating countries to benefit from reduced tariffs, while maintaining their existing protections for trade with countries outside of the area.
(ii) Customs Union:
(a) Customs unions are groups of countries that apply one common system of procedures, rules and tariffs for all or almost all their imports, exports and transiting goods.
(b) Usually, countries participating in customs unions share common trade and competition policies.
(iii) Common Market:
(a) A Common Market is an agreement between two or more countries removing all trade barriers between themselves, establishing common tariff and non-tariff barriers for importers, and also allowing for the free movement of labour, capital and services between themselves.
(iv) Single Market:
(a) A single market allows for people, goods, services and capital to move around a union as freely as they do within a single country-instead of being obstructed by national borders and barriers as they were in the past. Citizens can study, live, shop, work and retire in any member state.
(v) Economic Union:
(a) It refers to an agreement between countries that allows products, services, and workers to cross borders freely.
(b) The union is aimed at eliminating internal trade barriers between the member countries, with the goal of economically benefiting all the member countries.
(vi) Political Union:
(a) A political union is a type of political entity.
(b) They are usually made up of smaller polities.
(c) These smaller administrative divisions are usually called federated states and federal territories in a federal government.
(d) In a centralised government, they are often prefectures, regions or provinces.
5. Classify and explain the different types of ports.
Ans: Here are the different types of ports classified based on their primary functions and characteristics:
(i) Cargo Ports: Cargo ports are important commercial centres where water transportation and land transportation meet. Many goods, such as cars, oil, iron, and steel, are too heavy or unwieldy to be transported across long distances by plane, train, or truck. Trains may transport such goods to a port, where they are loaded onto a ship.
(ii) Passenger Ports: Ports are points of convergence between the land and maritime domains of passengers and freight circulation. While the maritime domain can involve substantial geographic coverage related to global trade, the land domain is related to the region and locality of ports.
(iii) Industrial Ports: An industrial port specialises in bulk cargo-grain, sugar, ore, oil, chemicals, and similar materials. A commercial port is one which handles general cargo-packaged products and manufactured goods, for instance-as well as passenger traffic. Comprehensive ports handle bulk and general cargo in large volumes.
(iv) Fishery Ports: A fishing port is a port or harbour for landing and distributing fish. It may be a recreational facility, but it is usually commercial. A fishing port is the only port that depends on an ocean product, and depletion of fish may cause a fishing port to be uneconomical.
(v) Inland Ports: An inland port is a port on an inland waterway, such as a river, lake, or canal, which may or may not be connected to the sea. The term “inland port” is also used to refer to a dry port.
(vi) Oil and Gas Ports: After the crude oil is separated from natural gas, pipelines transport the oil to another carrier or directly to a refinery. Petroleum products then travel from the refinery to market by tanker, truck, railroad tank car, or pipeline.
(vii) Military Ports: A naval base, navy base, or military port is a military base, where warships and naval ships are docked when they have no mission at sea or need to restock. Some naval bases are temporary homes to aircraft that usually stay on ships but are undergoing maintenance while the ship is in port.
6. International Trade is beneficial to both exporting and importing countries. Discuss.
Ans: (i) Benefits for Exporting Countries:
(a) Often allows for greater economic activity leading to higher revenue.
(b) May result in production efficiencies due to scaling manufacturing.
(c) May result in greater innovation and R & D through working with foreign partners.
(d) May reduce operational risk in some areas as revenue streams become more diversified.
(ii) Increased Revenue and Economic Growth:
(a) Economic growth describes how much an entity, such as a country, is increasing and improving the goods and services it produces.
(iii) Diversification of Markets:
(a) Diversification, generally speaking, is the practice of allocating money to a wide variety of investments so as to minimise risk.
(b) It’s the financial equivalent of not putting all your eggs in one basket.
(c) Geographical diversification means holding securities from different regions.
(iv) Utilisation of Comparative Advantage:
(a) In general, countries with an abundant resource have a lower opportunity cost in the industries that use that resource intensively, and thus should specialise in producing and exporting those goods. The comparative advantage principle measures the cost of making a good in terms of other goods.
(v) Access to Resources and Inputs:
(a) Resources, in general, are defined as features which are useful and needed by man. It can also be defined as anything from living and non-living environments to satisfy human needs and wants.
(vi) Technological Transfer and Innovation:
(a) Technical geography is the branch of geography that involves using, studying, and creating tools to obtain, analyse, interpret, understand, and communicate spatial information.
(vii) Foreign Exchange Reserves:
(a) Foreign exchange reserves are assets denominated in a foreign currency that are held by a nation’s central bank.
(b) These may include foreign currencies, bonds, treasury bills, and other government securities.
(viii) Benefits for Importing Countries:
(a) One benefit of allowing imports into a country is it allows businesses and consumers to gain access to materials and goods that are not produced domestically.
(b) Also, imported goods are typically produced more cheaply internationally than domestically.
(ix) Cost Savings and Price Competitiveness:
(a) Competitive pricing is a marketing strategy whereby businesses set prices based on their competitors’ prices.
(b) Also known as competitor-based pricing, this strategy can be used in online and offline markets and is often used to attract more customers and increase market share.
(x) Supply Chain Efficiency:
(a) Supply chain efficiency focuses on delivering quality products to customers at the lowest possible cost by maximising such resources as materials and labour.
(b) Supply chain responsiveness focuses on customers’ expectations and strives to provide a quality product faster.
(xi) Technological Advancement:
(a) The 20th century saw the rapid emergence of technologies such as computers, satellites, and the corresponding software to operate them.
(b) These technologies rapidly changed how geographers operated, and significant effort went into considering how best to incorporate them into the discipline.
(xii) Promotion of Competition and Innovation:
(a) Competition can spur innovation by creating incentives and pressures for firms to improve their efficiency, reduce their costs, differentiate their products, and satisfy their customers.
(xiii) Resource Conservation and Environmental Protection:
(a) Resource conservation means safeguarding precious resources such as minerals, wildlife, trees, water, and other natural resources.
(b) Resource conservation also involves judicious use of resources to avoid waste and allow the environment to rejuvenate.
Other Textual Questions & Answers
1. Choose the right answer from the four alternatives given below:
(i) Most of the world’s great ports are classified as:
(a) Naval ports.
(b) Oil ports.
(c) Comprehensive ports.
(d) Industrial ports.
Ans: (c) Comprehensive ports.
(ii) Which one of the following continents has the maximum flow of global trade?
(a) Asia.
(b) North America.
(c) Europe.
(d) Africa.
Ans: (c) Europe.
(iii) Which one of the following South American nations is a part of OPEC?
(a) Brazil.
(b) Chile.
(c) Venezuela.
(d) Peru.
Ans: (c) Venezuela.
(iv) In which of the following trade blocs is India an associate member?
(a) SAFTA.
(b) OECD.
(c) ASEAN.
(d) OPEC.
Ans: (c) ASEAN.
(v) WTO is the successor of:
(a) SAARC.
(b) ASEAN.
(c) OPEC.
(d) GATT.
Ans: (d) GATT.
(vi) Balance of trade favourable when.
(a) Imports exceed exports.
(b) Exports exceed imports.
(c) Exports of capital goods.
(d) Import of petroleum.
Ans: (b) Exports exceed imports.
(vii) Free trade means:
(a) Free exchange of goods.
(b) Absence of trade barriers.
(c) Trade liberalisation.
(d) None.
Ans: (c) Trade liberalisation.
(viii) Barter system means:
(a) Sale and purchase of goods in the marketplace.
(b) Sale and purchase of goods on credit basis.
(c) Direct exchange of goods and services.
(d) None of the above.
Ans: (c) Direct exchange of goods and services.
(ix) WTO was formed in:
(a) 1904
(b) 1924
(c) 1954
(d) 1995
Ans: (d) 1995.
(x) Which is the most important item of trade?
(a) Coal.
(b) Petroleum.
(c) Transport and machinery.
(d) Wheat.
Ans: (c) Transport and Machinery.
(xi) When exports are more than imports trade is:
(a) Favourable.
(b) Unfavourable.
(c) Opposite.
(d) Unbalanced.
Ans: (a) favourable.
(vii) Which country is not in the EU?
(a) Italy.
(b) France.
(c) Germany.
(d) Finland.
Ans: (d) Finland.
(xiii) Which is the port of call?
(a) Aden.
(b) Karachi.
(c) Goa.
(d) Chennai.
Ans: (a) Aden.
(xiv) Silk route was between:
(a) China and Rome.
(b) China and India.
(c) Japan and Sri Lanka.
(d) Africa and China.
Ans: (a) China and Rome.
(xv) The headquarters of EU are at:
(a) Paris.
(b) London.
(c) Berlin.
(d) Brussels.
Ans: (d) Brussels.
(xvi) Slave trade was abolished in USA in:
(a) 1758
(b) 1708
(c) 1808
(d) 1778
Ans: (b) 1708.
2. Complete the statements:
(i) The old silk route was between ______________.
Ans: China and South West Asia.
(ii) Bilateral trade is ______________.
Ans: Exchange of commodities between two countries.
(iii) Favourable balance of trade entails ______________.
Ans: The value of exports are more than imports.
(iv) GATT stands for ______________.
Ans: General Agreement on Tariffs and Trade.
(v) Horizontal trade entails ______________.
Ans: Computing all stages of manufacturing in a single country.
(vi) OPEC is ______________.
Ans: Organisation of Petroleum Exporting Countries.
(vii) SAARC refers to ______________.
Ans: South Asian Association of Regional Cooperation.
(viii) Sea ports are known as ______________.
Ans: Gateways of international trade.
(ix) ______________ is a riverine port.
Ans: Kolkata.
(x) Iceland is a trading partner in ______________.
Ans: EFTA.
(xi) There are ______________ countries in OPEC.
Ans: 13.
(xii) ______________ is not included in SAARC.
Ans: Iran.
