Prices in foreign trade
• features of the formation of world and foreign trade prices;
• structural elements of the price of a foreign trade contract depending on the basic terms of delivery;
be able to
• Analyze the structure of export and import prices;
• justify foreign trade prices taking into account the competitive materials of the world market;
• the methodology for calculating customs payments in the formation of foreign trade prices;
• the basis for analyzing the efficiency of a foreign trade transaction.
The concept of the world price and the features of its formation on various goods
Pricing in foreign trade differs significantly from domestic pricing. However, the sphere of pricing of world commodity markets, for all its specificity, is regulated, like domestic price formation of countries, by the law of value.
However, the price is affected by many other factors that divert them from the value basis. Such factors include fluctuations in demand and supply, monopolization of markets, regulation of prices on a state basis, inflation in the country and others. The basis for determining export and import prices in foreign trade practice is the prices of major commodity markets. They serve as indicators reflecting the world's average conditions for the production, sale and consumption of specific goods. To exchange goods on an equivalent basis, they must be valued in world market prices. Theory of international trade at a world price
understands the monetary expression of the international value of goods sold on the world market.International value - socially necessary labor costs for the production of goods in the world's average socially normal production conditions and the world average level of labor productivity.
It is formed mainly under the influence of production conditions in those countries that are considered the main suppliers of goods to the world market.The development of the international division of labor, the deepening and diversification of economic ties between states and firms, cause the emergence of new features in the process of pricing in world markets, namely: the reduction of spontaneity in the formation and movement of prices, expansion and accessibility of the information base, taking into account territorial and commercial differentiation. The greatest value in the real world price level is the correct consideration of the main pricing factors at the individual stages of price formation and the identification of quantitative parameters of their impact on the levels and dynamics of world trade prices. The need to determine world prices arises due to the fact that not all prices for foreign trade transactions can be considered as world prices. The world market, as the sphere of commodity relations, assumes, in contrast to domestic markets, the appearance of businessmen of different countries on it, and consequently, the world price must satisfy two key requirements: first, to be accessible to any seller or buyer who intends to participate in trade operations in the sphere of international exchange; second, to be reliable and representative for world trade in this commodity.
Based on the practice of international trade, there are five characteristics that characterize the world price:
1. This should be the price of large regular transactions in international trade (not sporadic).
2. Transactions should be commercial, not special (exclude barter transactions).
3. Transactions must be in hard freely convertible currencies.
4. Transactions must be export or import.
5. Export or import operations should be carried out in markets with free regime.
The above requirements mean that as the world can only consider the prices of ordinary trading operations.
To ordinary trading operations are transactions characterized by such features as: separation; mutual disconnection of export and import supplies; regularity of their implementation; payment in freely convertible currency; implementation in a free trade and political regime.
Trading transactions carried out on the conditions listed above can be considered as ordinary for the following reasons: they are typical for world trade practice and extend to a significant part of the world commodity turnover; it is under such conditions of trade operations that their price becomes available to any supplier or buyer acting on the world market. In the presence of these conditions, the price is formed with relatively high competition at the lowest level, and the price leveling is carried out to a greater extent than for operations that are of a special nature. A special type of conventional trading operations are deliveries on the basis of long-term agreements, as well as in the framework of international commodity agreements.
In practice, as the world prices, export or import prices of the main suppliers and buyers of the corresponding goods are used. In international commodity exchange, as well as in domestic trade, the final leveling of prices and, consequently, the formation of the final price for any product is carried out with an orientation toward the buyer. Therefore, in order to assess the acceptability of the price level and its representativeness, it is reasonable to use the price of the largest importers of the commodity in question. However, for a number of products, primarily machines and equipment, in many cases information on world prices is used for information on world prices, since, firstly, information on the prices of suppliers of finished industrial products, including machinery and equipment, is carried usually more regular and broader than information on the prices of consumers of these products. And this is quite understandable, since suppliers are interested in advertising and popularizing the products supplied to the world market with respect to its technical and economic parameters, prices, etc. Secondly, the difference in the prices of producer and consumer of finished industrial products is not significant due to the relatively small the specific weight in its prices of the transport component.
Thus, world prices are the prices of the most important exporters or importers, or the prices of major centers of world trade, related to the usual large regular separate operations carried out in an open trade and political mode with payment in freely convertible currency.
The process of formation and movement of prices in international trade is characterized by the fact that in the world market there are objective conditions for deviating the world price from the domestic prices of individual countries.
This is primarily determined by their different cost bases. The prices of the world market are based on international value and are formed at the expense of the leading exporting countries in the world market. Domestic prices, in contrast, are based on national cost and reflect the costs of domestic producers. International trade prices differ from domestic ones due to different volumes of the world and domestic markets, the conditions of their functioning, as well as other pricing factors. As a rule, the world price is lower than the domestic one due to the presence of a number of instruments (duties, taxes, etc.) affecting the formation of prices inside the country, economically protecting the national market from foreign suppliers and, as a result, mitigating competition. The gap between world and domestic prices can be up to 1/3, while the finished goods it is more significant than raw materials, which is associated with a higher level of tariff and non-tariff barriers for the import of finished products.
The differentiation of world trade prices can be caused by different circumstances: the transport factor (territorial differentiation of prices), the nature of the trade transaction (ordinary, special), commercial conditions of supply (commercial price differentiation), etc.
The world market is characterized by a multiplicity of prices, which is explained by the action of various commercial and trade-political factors. The multiplicity of prices means the existence of a number of prices for the same goods or goods of the same quality in the same sphere of circulation, on the same transport base.
The definition of the world price has its own peculiarities when the question arises about the price of the world market of raw materials or products of the manufacturing industry, primarily machine-made products.
It is easier to decide the question of the world price of raw materials. Their sources are tied to specific geographic regions, while production of a wide range of finished products is established almost everywhere. The market is a large number of countries competitors, so when setting the world price, the main role is played by the ratio of supply and demand. For some types of commodities, prices are set by major exporters, for others - based on stock quotes or auction prices. Of particular importance in the formation of prices for many types of commodities are the relevant associations of countries - exporters or producers, which is not at all characteristic of pricing for manufactured products. The scope of use of raw materials is relatively stable, in contrast to industrial products, the operating conditions of which vary by specific consumers, and its range is very large. Therefore, in the markets for finished products, there is a significant range of prices for products of the same application. It is very difficult to obtain objective price information on the finished goods market. Here it is necessary to take into account the detailed technical and economic, qualitative characteristics of the products being compared, operating conditions, commercial terms of the transaction. The difficulties are exacerbated by the lack of reference materials, which, unlike commodities, do not have a wide range of regularly published publications.
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