Trade systems, known as Trading Systems,
are used when creating foreign trade statistics worldwide. They are closely related to
customs procedures. These concepts are very helpful in determining in which
category the goods are and in defining some obligations and requirements
applied to the goods. In the world, there are two approaches that are commonly
used, and the country's foreign trade statistics data are created within the
framework of these systems. These are the general trade system and
special trade system. In this article, we will attempt to explain
the differences between general trade and special trade. When we closely look at these two
approaches, even though they are similar to each other, we can see that there
are certain differences between them. For example, in the general trade system,
Free Trade Zones (FTZ) and customs areas in the country are important elements
of the statistical territory. However, the special trade agreement only takes
into consideration the customs border.
When it comes to analyzing trade
flows, it’s important to understand the difference between General trade vs.
Special trade.
What is General Trade System and Its Scope?
In the general trade system, statistical
territory includes customs areas, which is the area within the borders of the
country that consist of the land, internal area and airspace of the country,
and customs processing areas, bonded warehouses, oil fields, and Free Trade
Zones (FTZ).
Free Trade Zones are the regions within the
borders of a country where some privileges are obtained in foreign trade in
line with the agreements made with the countries. For example, certain
obligations in foreign trade such as taxes, foreign trade legislation, etc. are
excluded from trade agreements for contracted countries during the trade
process. In accordance with this special agreement, when goods are sold from
free zone areas to the third country, or when goods are imported from third
countries to these regions, these are considered export-import operations, and
all the data according to these operations are collected to publish foreign
trade reports of the countries accordingly.
What is Special Trade System and Its Scope?
On the other hand, the special trade agreement
is a narrow concept. It takes into consideration the customs border of the
country. Bonded warehouses, all types of free zones, and premises for inward
processing are excluded from the statistical territory. While goods that enter
free circulation within the border of the country and are sent to free zone
areas and customs warehouses can be registered in the statistical territory,
goods that are transferred from abroad to the country’s free zones and warehouses
or exit from the country couldn’t be issued in the statistical data.
In other words, while trade flow between free
zones within the borders of the country is included in the statistical
territory, the trade flow between the home country and third country, outside
the borders, is not considered in this scope. For example, while selling abroad
from free zones is not considered an export, if this happens between two free
zones within the country, it is considered an export and registered. When
calculating foreign trade statistics according to the special trading system;
* Transit
trade
* Passenger
goods (suitcase goods)
* Leased
goods (excluding financial leasing)
* Repaired
goods
*
Coin-based gold
* Goods
that do not cross the border
* Temporary
import and export
are not included when generating data.
Distribution of the use of the general and special trade system in the world
When foreign trade statistics data are
generated, countries use two approaches which are special trade system and
general trade system. While the general trade system is a wider concept, the
special trade system is a narrower approach. When we examine these two concepts
closely and look at the prevalence of these concepts on the globe, we can
easily realize that the difference general trade & special trade
lies in their scope and statistical territory. In the world, the foreign trade process is
issued according to the general trade system in 117 countries. Also, 12 of the
20 largest economies in the world establish their foreign trade data by using
the general trade system. For example, the UK, USA, China, Canada are some
countries that use the general trade system. On the other hand, the special
trade system is used by 74 countries in the world. Especially, most of the
European countries prefer the special trade system. For example, France and
Italy publish foreign trade reports on the basis of special trade concepts.
In addition, as globalization increases in the
world, countries prefer to use both general trade systems and special trade
system in their foreign trade operations. This situation ensures that the
statistical data is understood more accurately and that the countries have more
accurate information about the country they will trade with.
Turkey is one of the countries that uses both
systems. Although previously statistical data were published according to the
special trade system only, as of 2019, Turkey's foreign trade statistics are
collected and published according to both the special and general trade system.
For example, the Central Bank of Turkey uses both in balance of payments
accounts.
TradeAtlas: Your Guide to Global Trade Systems
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For detailed information on the subject of export-import
ratio, you can review the content “What
is Export-Import Ratio?”.
