International trade is defined as all economic activity in which people or companies from different countries carry out an exchange of products or services. This economic activity involves the purchase, sale or exchange of products and services, in different currencies, as well as payment methods. As a consequence of trade liberalization, international exchanges have increased.

Aaron Afilalo is a Professor of Law at Rutgers-Camden School of Law. His teaching and research focus on international trade, international business transactions and E.U. Law. As a respected scholar, professor Aaron Afilalo researches and writes about a number of different topics, including international trade. Bellow, Mr. Afilalo explains what exactly is international trade.

What is International Trade?

When talking about international trade, Professor Afilalo necessarily has to mention the economies that participate in such activity. In fact, these types of economies that are involved in international commercial transactions are known as open economies.

These are basically economies or nations in which trade is totally open to the outside. This means that both companies and individuals can buy products and services from abroad, in what is known as import, as well as sell products and services to other countries, that is, export.

In international trade, open economies are distinguished by the degree of protectionism. In other words, the economies that have lower tariffs are considered as free trade.

The opposite is the case with economies that establish very high tariffs and are known as protectionist economies. And there are also closed economies, which represent the opposite of open economies.

In this type of closed economy, there is no type of commercial exchange with the outside, and therefore there is no international trade as such.

Autarky is an example of a closed economy, since it is an economic system in which the Government is responsible for supplying the country with its own resources. In other words, avoid any type of import as much as possible.