Difference Between International Trade and Foreign Trade

The difference between international trade and foreign trade lies in the breadth of the concept. International trade refers to the trade of all goods and services worldwide. Meanwhile, the concept of foreign trade is often used to mention the transactions of a country with the rest of the world.

It is common to confuse the concept of international trade with that of foreign trade. Many people use them as synonyms when they really are not. Although it is true that they are similar concepts with many things in common, they are not identical.

The main difference between international trade and foreign trade

The main difference, as we have said before, is based on the breadth of the term. International trade is something global of which all open economies are a part . It is usually used to name a part of the economy. For example: "International trade offers many business opportunities." o “International trade encourages competition.”

On the other hand, foreign trade is a much more limited concept. It is normally used to mention the transactions of a country with the rest of the world. Said with the words that are part of the concept, to name the trade of a country with the outside. For example: "If country X wants to grow, the government must change foreign trade policy." o “The depreciation of the exchange rate of country X has boosted foreign trade.”

An easy way to see the difference between international trade and foreign trade is to swap the words. That is, where you put international trade, put foreign trade and vice versa.

"Foreign trade offers many business opportunities." and “Foreign trade encourages competition.”

"If country X wants to grow, the government must change international trade policy." and “The depreciation of the exchange rate of country X has boosted international trade.”

In the first case, the sentences could be true. That is, replacing the word does not compromise the coherence of the sentence. However, in the second case, the sentences lose some relationship.

In the first place, because it doesn't make much sense for a government to change its international trade policy. International trade occurs between all countries and each area or country has its own policy. Regarding the second sentence, when we talk about the exchange rate, normally, we talk about one country or area against others. For example the euro (euro zone) against the dollar (united states). The depreciation of a currency can increase international trade, however, it is something that is often cited in reference to a country or area.