The statement : "State trading is resorted to for a number of
reasons," is true.
With an increase in liberalization and a movement
towards a free market creation in which all nations can compete on equal terms. most import and
export of goods is now being done directly by private companies or the manufacturers. Though the
reliance on state trading enterprises has reduced they continue to exist and play an important
role in the trade of many commodities.
The WTO defines state trading
enterprises as
Governmental and non-governmental enterprises, including
marketing boards, which have been granted exclusive or special rights or privileges, including
statutory or constitutional powers, in the exercise of which they influence through their
purchases or sales the level or direction of imports or
exports.
These enterprises are present
in almost all nations and are created by the government to make it easier for smaller companies
to be able to export their products or procure raw materials from other nations without having to
spend too much of their own resources.
As state trading enterprises
represent a large number of buyers and sellers it increases their negotiating powers and they are
also more efficient in shipping products and carrying out other tasks essential during
import-export.
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