Trade is a very big word. Commonly used to refer to (Import and
Export) Trade of basic items between nations’ producers and consumers. Within a
single country, Trade also refers to the movement of Goods along a Distribution
Channel at wholesale and retail prices. Comprising, in most cases, a
Transportation (Freight over sea, land or by air) cost, which may also attract
custom duties and other taxes into the tradeable price. Protecting the Goods,
via handling cost, and its assigned value via insurance policies along its
journey from producer to consumer. The word ‘TRADE’ hardly enters the
conversation when speaking about the extractive (Drilling and Mining) industry
but in much the same way, the legal rights to operate within a geographic zone
is trade-able.
Imports, consisting of Raw Materials, Machinery, Parts and Other
Inputs, and Finished Products, further categorized as non-consumables and
consumables are granted entry by local legal regulations. Such Goods are
publicly listed by customs, described and constantly updated, for the purpose
of import tariffs (Taxes) to protect local jobs for a short period, while the
local industry develops. Noting, the larger the tariff, the more disincentive
is placed on these imported Goods to compete with the local price. Hence, the local
industry is called to quickly ramp up production and lower its unit price. The immediate
response, from the Country of Origin, is most likely to protect their owe economy
from exports, from this protectionist country, measured by ‘Balance of TRADE’.
Local industry, comprising of manufacturers, wholesalers and
retailers, must therefore prepare for an opening of the market to competition,
where tariffs are reduced to zero. Imports of basic foods and medicines used by
the population, which cannot or are not economically produce locally, are zero
rated for the fairest public access. And along the local Distribution Channel,
many non-essential Goods are imported from international locations, where
competition is on price and quality. Imported and locally produced Goods, hence
compete side by side for local consumers and Export Goods will compete for International
TRADE Markets to earn stronger currencies.
Export Markets, which earns the Goods more profits, in stronger
currencies, are the prime objectives of the producers as it heads to being
number one in the world. Countries with competing industries are very likely to
engage and mount Non-Tariff Barriers to protect themselves from cheaper or
better products. Such barriers may include the banning of particular materials,
the usage of illegal production methods, or restriction on the most
cost-effective transportation routes. The World
Trade Organization (WTO) dealing with the rules of trade between
nations, hears cases on such issues and assist nations in their bilateral and
regional TRADE negotiations.
Regulations and Fees are standard between buyers and sellers and form
the ways Goods are handled by human or equipment as it is transported. And who
is the legal owner of such Goods, and hence must have it insured to its
commercial value, until its legal ownership is transferred at an agreed point
and location. Noting that Goods may have to be transported from points of
extraction, manufacture or loading on the seas, in the air and over land, to
locations of storing, sale and consumption. Passing through numerous nation’s
geographic territories or shipping routes on its journey, requiring legal
permission, via a multinational TRADE Agreement and a fee, to do so.
Legally owned by countries, geographic zones can be lease for
defined operations, for example, Oil and Gas companies would lease land or sea
properties to explore and drill for petroleum products. Such countries charge
for those legal rights, with a royalty on the sale of the extracted products
and other profit-sharing calculations. And the lessees, invest capital and
operating cost to sell product at the best price, to earn profits. The same is
true for geographic Air Space, as nations rent out and TRADE its Rights of
Passage to aircrafts and its radio frequencies to broadcasters and 5G
telecommunication operations.
Rationale
T.A.J &
Associates Company Limited uses this occasion
to comment on topics that have been covered, both academically and by the
mainstream media, to add its opinion and point out investment opportunity, not
to invoke any social action.
