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 ?
This new encouragement was a fall out from the stakeholders' engagement on changing Nigeria's crude oil affreightment trade term from FOI to CIF which was organised by Nigerian National Petroleum Corporation (NNPC) and the Nigerian Maritime Administration and Safety (NIMASA) held on Tuesday at the NNPC Towers in Abuja.
By negotiating as part of the world's biggest single market bloc, we're able to secure much more favourable trade terms for UK businesses than we could if we went our own way.
Ideally, formal trade terms for the sale of goods should be checked and updated and, where possible, the value of the business should be underpinned by entering into formal agreements with key customers ".
Iran was extending seven months' credit to Sri Lanka to buy crude oil and trade terms were favourable to the tropical resort nation, he said.
In trade terms it is an important market in both directions and this needs to continue.
For example the new trade terms for the new products that have been launched over the past few years; it all helps independent practitioners to grow and maintain their business.
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.
Many small-business owners turn to the classic tool of trade terms to improve their cash flow.
Unfortunately, while many small-business owners already rely on this proven tool, just as many don't take advantage of what trade terms offer, either because they're not aware of the benefits, or because they don't -- or think they don't -- have access to trade terms or other useful alternatives.
However, it is not really so difficult to make effective change to the status quo to overcome this as I would expect any regulator or ombudsman to specifically define what constitutes "reasonable" trade terms as between food suppliers and supermarkets.
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.