Advantages

* Optimum use of Resources: Foreign trade helps in the optimum use of natural resources and avoid wastage of resources.

* Stable Price: It ensures the presence of stable price by avoiding wide fluctuations in prices. It tries to equalize the world price.

* Availability of all types of goods: It enables a country to import those goods which it cannot produce.

* Increased Standard of living: It ensures more production to meet the demand of the people of different countries.

* Large Scale production: It ensures large production because the production is carried on to meet the demand of its people as well as world market.

Disadvantages

* It could lead to a more rapid depletion of exhaustible natural resources.

* It is a long distance trade and as such it becomes difficult to maintain close relationship between the buyer and the seller.

* Each country has its own language. As foreign trade involves trade between two or more countries, there is diversity of languages. This difference in language creates problem in foreign trade.

* Foreign trade involves preparation of a number of documents which also creates difficulties in the way of foreign trade.

* Some restrictions are imposed on export and import of commodities. These restrictions stands on the progress of foreign trade.

* Foreign trade involves a great deal of risks because trade takes place over a long distance. Though the risks are covered through insurance, it involves extra cost of production becuase insurance cost is added to cost.