Trade – The buying and selling of goods and services between countries

To remember the meaning of the term Trade, use the following mnemonic:

My tray (trade) has these goods and services you can buy.

Goods that come into one country from another are called imports. Goods that a country sends out to another one are called exports.

International trading between nations allows consumers to choose goods and services not available in their own countries, or to buy alternative, foreign-produced items instead of home-made or home-grown ones.

Practically every kind of product can be found on the international market, including food, clothes, spare parts, oil, jewellery, wine and even water. Services are also traded. These include tourism, banking and business consulting.

A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in its balance of payments.

A trade deficit is when a country spends more on imports than it earns from its exports. A trade surplus is when a country earns more from exports than it spends on imports.