International agricultural trade questions.

A forward exchange rate is a rate of exchange that is fixed now but delivery is made at a future date.

Direct quotation is when the dealer (bank) quotes a customer by giving fixed amount of foreign currencies interms of variable amounts of the local (domestic) currency.

Briefly describe the following based on the international trade theory

1. Ricardian model of comparative advantage
2. Hekscher OHlin model of factor endowment
3. Porters competitive theory

Both exporting and importing country will gain from free trade . Illustrate this based on consumer surplus and producer surplus concepts, using partial equilibrium analyses for importing and exporting country of a traded commodity.

Several policies influence patterns of trade. These include import tariff, export subsidy, import quota, regional integration but also food safety and phytosanitary regulations. The first three are barriers to trade, while the last two are not barriers to trade but can be used as barriers to entry to countries applying them. Explain.

Write short but elaborative notes on the following terms

1. “Cash against documents”
2. Differentiate Franchising and Licensing
3. Standby Letter of Credit
4. Differentiate DDP and DAP
5. Purpose of Incoterms

Answer the following questions Based on your knowledge of International transactions

1. What are the main functions of the Bill of landing?

There are aometimes when a transaction has to involve more than two countries . For example , a supplier in France may wish to be paid by the importer, who is located in another country, say Tanzania, in US dollar the currency involved is not of the supplier`s own country. In such circumstances the transfer must take place in a country that uses US $ (i.e United States of America). The payment may be made in one of the three ways; Mail Transfer(MT), telegraphic transfer (TT) or Bank draft. In transfer of MT and TT the procedurre is for the Tanzania bank to instruct its US correspondent bank to make a payment to the French beneficially, by debiting the Tanzania banks US$ account (if he has one) or instruct their French correspondent bank to make a payment to him of the Euro equivalent, by the French banks US$ nostro account.

2. What are the bookkeeping entries in the books?

1. Describe the following policy instruments

1. Fixed import tariff
2. Ad-valorem import tariff
3. Fixed export subsidy
4. Voluntary export restraint
5. Import Quota

2. Using a graph illustrate the welfare impact of quota to an importing country: then explain how the impact of quota is different  or similar to the impact of fixed tariff and which policy instrument is preferable to developing countries and why.

Answer the following question based on seminars on international trade.

1. Food safety and phytosanitary, regulations in international trade are some of the regulations that are very important but they are sometimes misused by countries and they become barrier to trade. However, WTO has agreements designed to reduce such barriers. Give a thorough but precise explanation on this statement.
2. Bilateral agreements and regional integrations are important  instruments that influence pattern of trade. Some can lead trade diversion but other can lead to trade creation. Explain.