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Note: The length of time between the shipment of goods by the seller and the payment by the buyer depends on the credit terms previously negotiated. The purchase order issued by the buyer or the contract of sale represents the terms and conditions of the negotiation. Seller’s advantages and risks v01/20/99 p02/12/99 n May not have to borrow and can use available cash on receipt of the merchandise n May incur foreign exchange risk if the imported goods are priced in the seller’s currency. The buyer may be unable to pay if its currency weakens sharply against the seller’s currency.

Trade Agreements / Organizations Two multinational trade agreements / organizations that promote international trade are General Agreement on Tariffs and Trade (GATT) and Asociación Latino-Americana de Integración (ALADI). They encourage orderly international financial conditions and provide advice on capital and economic development. 1 v01/20/99 p02/12/99 THE TRADE ENVIRONMENT 1-11 General Agreement on Tariffs and Trade (GATT) Abolishes quotas and reduces tariffs The General Agreement on Tariffs and Trade (GATT) is an organization with a set of trade agreements created to abolish quotas and reduce tariffs among participating nations.

Provides funding or assistance in locating funding for building infrastructures and private businesses in emerging market countries 3. Affiliate of the World Bank that promotes private sector growth in emerging market countries through direct investing and attracting foreign and domestic investors 4. 1 v01/20/99 p02/12/99 THE TRADE ENVIRONMENT 1-31 þ PROGRESS CHECK 1 (Continued) Question 16: Quotas are an example of ___________ issues which affect the global trade environment. 1 1-32 THE TRADE ENVIRONMENT ANSWER KEY Question 16: Quotas are an example of ___________ issues which affect the global trade environment.

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