terms of trade

(redirected from Trade Terms)
Also found in: Dictionary, Encyclopedia.
Related to Trade Terms: Incoterms

Terms of trade

The weighted average of a nation's export prices relative to its import prices.

Terms of Trade

1. The conditions the parties agree to follow in the trade of a security. Necessary terms of trade include the price and the number of shares or bonds traded. The terms of trade may also include special conditions.

2. In international trade, the difference between price indices on imports and exports.

3. See: Balance of trade.
Terms of tradeclick for a larger image
Fig. 183 Terms of trade. See entry. Source: Office for National Statistics, 2004.

terms of trade

a PRICE INDEX that shows a country's EXPORT prices relative to its IMPORT prices. It is constructed by taking an index of prices received for exports, on the one hand, and an index of prices paid for imports, on the other, and then dividing the first by the second (see Fig. 183 ). An improvement in a country's terms of trade occurs if its export prices rise at a faster rate than import prices over time and a worsening of the terms of trade if export prices rise more slowly than import prices; or, vice-versa, if export prices fall at a slower rate than import prices (as in Fig. 183), then the terms of trade are improved.

Superficially, an improvement in a country's terms of trade may be considered to be beneficial: in foreign-exchange terms, a given amount of exports will now finance the purchase of a greater amount of imports, or, put another way, a given amount of imports can now be purchased for a smaller amount of exports. A critical factor in this regard, however, is the PRICE- ELASTICITY OF DEMAND for exports and imports. If, for example, export demand is price-elastic, then price rises (which make the country's exports less competitive in world markets) will result in a more than proportionate fall in export volume, thus lowering foreign-exchange receipts and adversely affecting domestic output and employment. See also BALANCE OF PAYMENTS EQUILIBRIUM, DEVALUATION, REVALUATION.

References in periodicals archive ?
Once the trade terms are finalized, the next step is that the supplier gives the Commercial Invoice to the buyer via the PMS.
INCOTERMS are international trade terms that are not legally mandatory.
The essays address new challenges in representing Chapter 11 debtors and creditors, the impact of recent judicial decisions in Chapter 11 cases, leveraging critical vendor status and assumption of contracts to obtain more favorable commercial trade terms in supply contracts, and "out of the box" solutions for real estate developer Chapter 11 clients.
High Street, which can be found in many towns, including Porth, Rhondda Cynon Taf, and in Abergwili, Carmarthen, is said to represent the archaic use of the word "high", meaning chief, while using trade terms like Commercial - as used in Commercial Street, Mountain Ash, and Caerphilly's Ystrad Mynach - represents Wales' ties with the world of business.
Over a quarter of Uniq revenues come from Marks & Spencer, which toughened trade terms with many suppliers as part of Project Genesis.
Trade2O provides a simple and fast way for traders to negotiate and agree trade terms for global Equities and Fixed Income securities, and to process them straight through to a proprietary system.
Under a 'yarn forward' section of the deal South Korea-made clothing will qualify for preferential trade terms under the agreement if they use US or South Korean fabric and yarn, "thereby supporting US fabric and yarn exports and jobs", said a USTR note.
But unfair trade terms and international debt make Haiti the poorest country in the western hemisphere with 82% of the rural population below the poverty line and 70% jobless.
It said the new trade terms will provide greater flexibility for independent producers and increase access to programmes for audiences.
Monomoy has reached agreement in principle with SMW, Sanden, GM, Metaldyne, TRW and Opel to continue and expand CTC's current component contracts and has concluded discussions with the company's largest suppliers to provide trade terms.
The plant is now up and running, and all of its exports go to the United States under favorable trade terms.