Analyze the major elements of international trade to determine why there is more risk here than in domestic trade.

Analyze the major elements of international trade to determine why there is more risk here than in domestic trade.

Analyze the major elements of international trade to determine why there is more risk here than in domestic trade. Describe some of the risks you identified. Make at least one recommendation for mitigating the risk(s) you have identified. Provide arguments to support your response. Cite your sources.

click here for more information on this paper
The major elements of international trade are balance of payments that is made up of invisibles, visibles, and current accounts for the purpose of recording all financial dealings with foreigners, correcting a deficit, and exchange rates. Balance of payments is used to monitor international monetary transactions for a specific period and tracks the money going in and out of a country. The BOP is divided into current, capital, and financial accounts. The current account captures credits and debits related to the trade of merchandise that are bought, sold, or donated in the form of aid. The capital account consists of monetary flows from debt forgiveness, the transfer of goods, and financial assets by migrants leaving or entering a country, and other fixed assets. The financial account relates to monetary flows on business investments, real estate, bonds, and stocks. Government assets such as foreign reserves, gold, and special drawing rights are also included. Within the elements of international trade, there are country risk, foreign exchange risk, and fraud. The political and economic stability of a country, and exchange controls all play into country risk. If a country experiences civil war or sudden changes in government, they may not keep the terms of trade contracts and may default on foreign debt commitments as a result of these political issues. According to Boland, (2015), most banks have specialized units dealing with country risk and they control the level of exposure that bank will assume for each country. Foreign exchange risk as another factor that is a big part of international trade as the trader is always at the mercy of exchange rate fluctuations due to various economic, and political changes amongst other speculative reasons. Traders must stay connected to trading rooms in banks to keep abreast of the exchange market and enter into forward foreign exchange contracts to guard their profit margin. Fraud is another risk associated with international trade such as documentation, counterpart, and insurance fraud in addition to cargo theft. For mitigating risks associated with international trade, buyers should ensure sufficient insurance coverage is in place to guard against risk such as transit risk. Buyers and sellers should also conduct business in the same currency to minimize foreign exchange risk in addition to entering into a forward or option foreign exchange contract with a bank. The seller should also ensure that sales contracts or documentary credits do not contain ambiguous or erroneous terms and conditions that are subject to dispute.

Reference:

Boland, J. (2015), Risks Involved in International Trade: A Banker’s Perspective. Retrieved from http://fita.org/aotm/0399.html

Question 3=

Please respond to the following:

Discuss how investors in international assets can leverage information about the international tax environment to maximize their investments. Provide examples to support your response. Cite your sources.

Question 4=

click here for more information on this paper
Please respond to the following:

Discuss how investors in international assets can leverage information about the international tax environment to maximize their investments. Provide examples to support your response. Cite your sources.

Today’s world brings about an environment where tax authorities pursue the maximization of revenue, in addition to tax decisions of organizations coming under scrutiny based on regulatory and legislative mandate. In the global environment, corporate assets tend to move around the global marketplace very rapidly and the events of the world have great influence on large and small organizations alike. To leverage information about the international tax environment for the purpose of increasing assets, organizations must think beyond the present and give thought to long and short term consequences of their actions and must implement decisions that can deliver real value to their business. As we know, taxes are a crucial component of a country’s international competitiveness and in today’s globalized economy, the structure of a country’s tax code is an important factor for businesses when they decide where to invest. Investors of international assets can leverage information about international tax environments by researching countries that have competitive tax codes via the International Tax Competitiveness Index Rankings. According to Pomerleau & Lundeen, (2014), the ITCI seeks to measure the business competitiveness of national tax systems by looking over 40 tax policy variables, including corporate, income, individual, consumption, and property taxes in addition to the treatment of foreign earnings. Investors can use this valuable information to identify countries that provide competitive tax codes across several factors and more specifically whether a country has a territorial system resulting in a competitive tax code. Pomerleau & Lundeen, (2014), confirms that the Tax Foundation’s International Tax Competitiveness Index measures the degree to which the 34 OECD countries’ tax systems promote competitiveness through low tax burdens on business investment and neutrality through a well-structured tax code and further displays not only countries that provide the best environment for investment but also the best environment to start and grow a business. Gathering information from this valuable tool is a great way for investors in international assets to leverage information about the international tax environment to maximize their investments.

Is this the question you were looking for? If so, place your order here to get started!