International Trade was historically conducted when merchants travelled with their goods from one part of the world to the other. The merchants now referred to as Traders would sell product in hand for currency on location. They would often spend part of their proceeds to purchase good indigenous to the area of travel to return with the for sale in their own lands. And so on and and so on went on the business of international trade. Off course the mechanics of the trade evolved with pay instruments and chartered vessels. Nonetheless, business was done with active mobility. Traders still got on ship, trains and planes to meet their counterparts to conclude “the deal”. There was an eye to eye meeting, and firm handshake. Business got done this way – this was the norm. Today a meeting is referred to as a Table Top Closing,as though it is something unusual. Without the fundamental of what makes a reliable and profitable traded result how can their be an expectation of success?
Today deals are thought conclude exclusively without the use of an eye to eye and a firm handshake. The Internet and all its virtues to enhance and quicken communication still cannot replace the firm handshake. The Internet does not afford physical presence, hence it is virtual and not real. It is by far one of man´s best inventions the Internet that is. It can start the process of negotiations, provide communications be the recipient of documents related to a transaction, transfer funds without delay and even close a deal. Yet it also lends to the transmission of “fake¨documents corrupted or altered, time wasters and fraudsters can start negotiations with any proffering of veracity be it product or money, and by transmission becomes a tool to unsuspecting victims as payment can transmit on the submission of documents without the verification process of those documents being confirmed. This all lends to the preparation of international scams.
Hence 2 distinct and material effects result. We now need a mechanism to pursue the collection process for the scams resulting and not is any lesser a priority require a verification process to prevent the scams from happening in the first place. The first is an enforcement and prosecutable action, and is therefore reactive. We can revert to the reactive aspect later on. The more important is to be preventive and proactive to deter from the scam so one does not have to down the path of enforcement and re-activeness.
The proactive steps fundamentally require the creation of a new service industry in support of physical international trade . That service design effectively is the surrogate functionary of the “handshake”. Services then need to be provided to verify the legitimacy of the parties at the onset. Product and purchase capability need to be confirmed. Sampling for quality and verification of quantity require oversight. Banking or pay instrument draft approval before parties spend their money. Contract formatted to the specific nature of the agreement. Logistics form warehousing to ground and final lift services. Fundamentally, the need arises for a complete field based transactional management service. The development of such a service is warranted. The utilization of the service is a risk mitigating component given the increase of fraud in international trade today. It becomes a cost saving and surety mechanism that is proactive and preventive. Hence it makes good business sense to prevail on the securitization of a process that saves money and protects the deal.
We will certainly explore in future articles the mechanics and cost saving delineation of the proactive process as well peering into the workings of the reactive enforcement component of international trade.