Chapter 13. Balance strategy in foreign trade.

1. This chapter's goals.

This chapter deals with the balance strategy in foreign trade, completing what has been said in chapter 10 concerning domestic market.

The main idea is that the balance of payments equilibrium must be granted, and to this end the introduction of the telematic cheque-invoice can become the unreplaceable tool as it provides a complete information on the situation at any given time. In this way an appropriate customs policy can be fixed in order to stop the imbalance between import and exports.

On the other hand, the use of foreign trade cheque-invoices forbids international capitals speculation activated by present day systems of currency markets, as every operation will be made in domestic money units and only the treasury will hold foreign currency. Every day the equivalence of the domestic money unit with foreign currencies will be fixed through an arbitrary «gold standard» related to the international market of gold metal.

Finally, as we said in chapter 10 with respect to domestic market, we will apply a similar strategy to invent communal money for foreign trade, according to production surpluses.

2. The equilibrium of balances of payment.

The main strategy of any foreign trade is that the whole exported goods (producing and produced) must be equilibrated with the whole of the imported goods (producing and produced), that is import and export of goods must be equilibrated.

If this equilibrium is not present, in the long run foreign trade will have to stop as the country in deficit (importing more than it exports) finds itself in an interior situation of unsustainable insolvency which harms also its creditors.

This equilibrium is rather easy to be fixed with the use of the telematic cheque-invoice, as it supplies a deep knowledge of the situation of the balance of payments at any time and with every country (bilateral treaty) or group of countries (multilateral treaty). According to this situation, variable «customs duties» can be introduced: if the balance with every foreign country is equilibrated, customs duties will be nil; import duties will increase in the case of balances in deficit, and export duties will increase in the case of superavit balances.

Customs duties, automatically fixed according to well known legal scale, will be transmitted for the asking to any domestic or foreign company, with no consideration to the goods to be imported or exported: the only point to be kept in mind is the existing equilibrium of balances with the country of origin or destination under consideration. These customs duties will be held to the interested company for a prudential period if it promises to effect the operation according to a submitted proforma invoice within the fixed period.

By this system a dynamibc and continuous equilibrium of balances is obtained, which is the best guarantee for the good working of international free trade according to the law being in force in the geo political society, but above all according to all the private solvent and free enterprises.

Foreign trade and customs authority will also consider that in every proforma invoice, submitted to know customs duties, the invoiced prices should agree with the minimal sales prices, wholesale and retail, fixed in the domestic general duty book. Should foreign prices be lower than the minimal prices fixed by the corresponding guilds, (or by specialized economic justice), the anti-dumping customs duties will be the difference between the original price of every imported merchandise and the listed domestic price.

With respect to the export of services (freights, insurance, etc...), salaries, interests, dividends, royalties, capital repatriations, etc., concerning investments, companies or foreign inventions in the country, and export of capitals to any foreign country, the Foreign trade and customs authority will have to respect not only general legislation mentioned before, but also the contracts signed within specialized law with any private person or public institution (individual or collective).

3. The problem of currency.

As we have seen in chapter 4, foreign trade implies international monetary relations which at present are distinguished by «currency floatation»: there are no fixed exchange rates, as they float and evolve according to the price of every currency in the «exchange market».

Price rate of every currency should float in principle according to the productive and monetary situation of every geo-political society; reality demonstrates that the irrationality of the present money system allows normal fluctuations to be increased, troubled and even inverted, because of the so-called «speculative capital movements» or hot money. In this case, fixed rates do not correspond to any mercantile reality, as they correspond to a speculative will, and instead of being used for a greater and better development of domestic and foreign markets, they only trouble them and sink them into disorder and contradiction.

The first condition to be fulfilled by any rational money system, as we have seen, is that «there can be no money movement without the corresponding and correlative inverse movement of real goods (whether producing or produced goods)». The same rule must be applied to foreign trade, and therefore it is clear that the «currency market» is totally suppressed in any geo-political society introducing the telematic cheque-invoice as the only legal monetary instrument. The exchange of one currency for another will be instrumentally and completely impossible, without an actual operation with abroad. Currency exchange for trade will have to be solved by the central government, which manages all the geo-political society, as follows: any commercial operation with abroad, whether import or export of producing goods (capitals, work, inventions, staff) will imply the production of a foreign trade cheque-invoice.

Two cases may present themselves:

Case a)

Case b)

4. Invention of foreign money.

The same strategy for the invention of communal money which we have seen in the domestic market can apply if necessary to foreign trade with respect to existing surpluses.

When all the production cannot be absorbed by the domestic market -in spite of the granted credits and distributed finances- then «credits and finances» can be granted to foreign countries interested in the goods.

Foreign trade becomes therefore the third outgoing channel of the domestic market.

In the same way, any foreign country (bilateral treaties), group of foreign countries (multilateral treaties), any company or group of foreign companies can grant to their own country investment credits or consumption finances, within the legal contractual exercise of comparing its interests with those of the national geo-political society.

The formula for the equilibrium of foreign trade balances is therefore the following, much simplified:

                 Ip + Ie + idp
Foreign trade = --------------- = 1
                 Ep + EE + ide

Ip = private imports
Ie = imports through credit and finances granted by a foreign country
idp = interests and devolutions of capitals, credits and finances, which of course come from abroad.
Ep = private exports
EE = exports through credit and finances granted to a foreign country
ide = interests and devolutions of capitals, credits and finances granted from abroad.

Note:

¹The price of gold metal as fixed in London is accepted by all the countries, which allows to establish this equivalence with respect to foreign market and avoids going back to concrete money whether intrinsic or extrinsic.