Trade between two or more countries is called foreign trade or international trade. This involves the exchange of goods and services between the citizens of two countries. When citizens of one country exchange goods and services with the citizens of another country, it is called foreign trade.
Classification of International Trade:
(a) Import Trade:
It refers to purchase of goods from a foreign country. Countries import goods which are not produced by them either because of cost disadvantage or because of physical difficulties or even those goods which are not produced in sufficient quantities so as to meet their requirements.
(b) Export Trade:
It means the sale of goods to a foreign country. In this trade the goods are sent outside the country.
(c) Entrepot Trade:
When goods are imported from one country and are exported to another country, it is called entrepot trade. Here, the goods are imported not for consumption or sale in the country but for re- exporting to a third country. So importing of foreign goods for export purposes is known as entrepot trade.