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THE EVOLUTION OF TRADE AND TRADE

THEORY

Since ancient times, nations and other organized societies have relied on importing and

exporting goods to meet their needs. Because certain regions could not produce

certain goods or could not produce enough of them, they had to import them from

outside regions.

European countries attempted to gain as muchwealthprecious metals in particular

as possible from their colonies and trading partners as inexpensively as possible. This

method of international trade, referred to as mercantilism, remained in place from

the 16th through the 18th centuries. The mercantilist philosophy typically held that one

country's gain through international trade was another country's loss. Hence,

mercantilists commonly believed that international commerce always had a loser.

European empires of this period attempted to increase and maintain tain their power by

amassing gold and silver coins. Simultaneously, these empires imposed numerous trade

restrictions and protectionist policies to ensure that they exported more than they

importedi.e., to maintain a positivebalance of trade.

With the development of nation-states in the 17th and 18th centuries, international

trade continued to evolve towards its present state. Leaders of the nationstates realized

they could increase not only their wealth but also their power by promoting and

facilitating trade, thereby solidifying the power and stability of their respective nations.

English economists Robert Torrens (1780-1864) and David Ricardo (1772-1823)modified this theory in 1815, proposing that countries import and export goodsaccording to the principle of "comparative advantage." This principle stipulates that acountry can still produce and export a product even though it cannot produce theproduct as cheaply as some of its trading partners, if this more expensively producedproduct can gamer stronger revenues in a foreign market than in the domestic market.

Conversely, a country may choose to import a product, even if it costs more than itsdomestic counterpart, if the country can earn greater profits importing the product thanselling it in the country's own home market.

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Import Procedures

e-filing of documents Goods should arrive at customs port/airport only. Most of customsprocedures are computerised. E-filing of documents is required.

Import manifest orImport Report

Person in charge of conveyance is required to submit Import Manifest orImport Report.

Entry Inwards Goods can be unloaded only after grant of Entry Inwards. Risk ManagementSystem

Self Assessment on basis of Risk Management System (RMS) has beenintroduced in respect of specified goods and importers.

Bill of Entry for homeconsumption onpayment of customsduty

Importer has to submit Bill of Entry giving details of goods being imported,along with required documents. Electronic submission of documents isdone in major ports.

White Bill of Entry is for home consumption. Imported goods are clearedon payment of customs duty.

Bill of Entry for

warehousing

Yellow Bill of Entry is for warehousing. It is also termed as into

bond Bill of Entry as bond is executed. Duty is not paid and

imported goods are transferred to warehouse where these are stored.

Green Bill of Entry is for clearance from warehouse on payment ofcustoms duty. It is for ex-bond clearance.

Noting, examinationand assessment

Bill of Entry is noted, Goods are assessed to duty, examined and pre-audit is carried out. Customs duty is paid after assessment.

Bond Bond is executed if required if assessment is provisional (PD bond) orconcessional rate of customs duty is subject to certain post importconditions.

Out of customs chargeorder

Goods can be cleared outside port after Out of Customs Charge order isissued by customs officer. After that, port dues, demurrage and othercharges are paid and goods are cleared.

Demurrage if clearancefrom port delayed

Demurrage is payable if goods are not cleared from port/airport withinthree days. Goods can be disposed of if not cleared from port within 30days.