DIFFERENCES BETWEEN
GENERAL TRADE SYSTEM AND SPECIAL TRADE
SYSTEM IN INTERNATIONAL TRADE
While creating foreign trade statistics in the world,
trade systems are used., named Trading Systems. 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. 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.
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 general trade
system is more common than the special trade system. 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, Japan, Russia, South Korea 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. Turkey is also one of the
countries that uses special trade system in foreign trade.
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.
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