Internati onal Trade Practice
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International Trade
Practice
• What is the International Trade?
• Why do Nations Trade with each other?
• What can we benefit from International Trade?
• How much do you know about International Trade Procedures?
What is the International Trade?
International trade, also called “world trade”, generally refers to the exchange of goods and services among different countries. It is the aggregate of the import and export of all the nations.
Foreign trade refers to the exchange of goods and services of one country (region) with another country (region). It comprises two parts - import and export
Why do Nations Trade with each other?
Resource Reasons
Economic Reasons
Other Reasons
Benefit from International TradeRapid Economic Growth
Goods or Services at Lower Prices
Greater Variety of Goods or Services
How much do you know aboutInternational Trade Procedures?
Preparation of a Transaction
Negotiation of a Sales Contract
Performance of the Contract
Settlement of Disputes
Getting goods readyPacking
Commodity inspection
Pressing for L/CExamining L/CAmending L/C
BookingShipping
space
CoveringInsurance
Goods DeliveryCustoms clearance
Presenting DocumentsFor bank
negotiation
Preparation of a transaction
Market research Credit investigation Export/Import License
Negotiation of a contract
Enquiry Offer Counter-offer Acceptance
The signing of the contract
Performance of the contract
Settlement of Disputes
Teaching ObjectivesCourse ContentTeaching MethodEssentials of our courseRecommended ReadingsRecommended WebsitesEvaluation ModeContact Information
Introduction
Providing some information on fundamental principles and theories which are closely associated with the international trade practice.
Familiarizing the students with the procedures in International Trade Practices.
Teaching Objectives
TradeTerms
Price
quantity
ContractNegotiation &Implementationinsurance
transport
quality
package
payment
inspection
force majeure
arbitration
claims & adjustments
Trade Forms … …
Four Parts: 1.Trade Terms; 2. Contract Provisions; 3.Negotiation & Implementation; 4.Trade Forms
Teaching Method
Lecturing
Case Study
Class Discussion
Literature Reading
Essentials of our course
• Price: International Rules for the Interpretation of Trade Terms( INCOTERMS 2010)
国际贸易术语解释通则 2010
• Payment: Uniform Customs and Practice for Documentary Credits(UCP 600)
跟单信用证统一惯例 600
• Negotiation: United Nations Convention on Contracts for International Sale of Goods(CISG)
联合国国际货物销售合同公约
Recommended Readings 1) Carl A. Nelson, Import /Export --- How to Get Started in
International Trade, McGraw-Hill, 2000. 2) Thomas E Johnson, Import/Export Procedures &
Documentation (4th edition), 2002.• 黎孝先，《国际贸易实务》（第五版），对外经济贸易大
学出版社， 2011 年。 • 帅建林，《国际贸易实务》（英文第二版），对外经贸大
学出版社， 2012 年• 相关案例选编 • 杂志：《对外经贸实务》 • 报纸：《国际商报》
Recommended Websites1. 部分网络资源 （国内）：• （ 1 ）中国国际贸易网 http://www.guomaoren.com• （ 2 ）中华人民共和国商务部 www.mofcom.gov.cn• （ 3 ）中国外经贸 www.chinamarket.com.cn• （ 4 ）中国贸促网 www.ccpit.org• （ 5 ）中国国际贸易发展网 www.itdn.com.cn
2. 部分国际经贸组织及网址• （ 1 ） ICC ( International Chamber of Commerce) http://www.iccwbo.org• （ 2 ） OECD ( Organization for Economic Co-operation and Development )
http://www.oecd.org/• （ 3 ） WTO ( World Trade Organization ) http://www.wto.org• （ 4 ） UNCTAD (United Nations Conference on Trade and Development )
http://www.unctad.org/
Evaluation Mode
Regular Grades （ 50% ）： The regular grades are determined by
attendance rate, in-class exercises, team work, group discussion as well as performance in questioning
Final Exam （ 50% ） Mode of Final Exam: close-book exam or term
paper
Chapter 2 Trade TermsLearning Outcomes:• Understand the trade terms in international trade• Outline the major rules regulating the use of trade
terms• Provide a simple explanation of the 11 terms under
the INCOTERMS 2010• Compare and contrast the use of FOB,CFR and CIF• Identify the application issues under the INCOTERMS• List the determining factors when choosing
INCOTERMS
Obligations of the Seller/Buyer
1.What kind of goods should the seller deliver to the buyer? when, where and how?
2.Who is responsible for customs clearance, transportation and insurance ？3. When will the risks be passed from the sellers to the buyers?
4.When should the buyer pay money to the seller? How?
5. ……
Trade Terms, also called Price Terms, are animportant component of a unit price in international trade, standing for specific obligations of the buyer and the seller.
The Definition of Trade Terms
USD300.00 per M/T FOB Shanghai
Currency of price
Unit price
Unit of measurement
Trade term
• The trade terms also define the responsibilities, expenses and risks borne by two parties as well as the time of the passing of the property in the goods.
The Definition of Trade Terms
EXW
CIF
DDP
Seller’s Warehouse
Buyer’s Warehouse
Export License
Transportation
Insurance
Customs Clearance
Shipping On Board
Unloading
Import License, Customs Clearance
International Trade Usages
Warsaw-Oxford Rules 1932 《 1932年华沙－牛津规则》Revised American Foreign Trade
Definitions 1941 《 1941年美国对外贸易定义修订本》International Rules for the
Interpretation of Trade Terms 2010《国际贸易术语解释通则 2010》
23
1. Group E: (EXW) Departure from factory---all carriage paid by the buyer. The seller delivers the goods at the seller’s own premises;
2. Group F: (FCA FAS FOB ) Main carriage unpaid by the seller. The seller is not responsible for carriage and do not bear the risks of loss or of damage .
3. Group C: (CFR CIF CPT CIP) Main carriage paid by the seller. The seller is responsible for carriage, but do not bear the risks of loss or of damage.
4. Group D: (DAT DAP DDP) arrival---Carriage to the delivered place paid by the seller. The seller has to bear all costs and risks to the place (or port) of destination.
Structure of INCOTERMS 2010
24
E 组departure
EXW Ex Work---named place 工厂交货
Any mode Actual delivery
F 组Main carriage unpaid
FCA Free Carrier---named place 货交承运人FAS Free Alongside ship---named port of shipment
装运港船边交货FOB Free on Board---named port of shipment 装运港船上交货
Any mode
Sea or inland waterway
Sea or inland waterway
Shipment contract term/symbolic delivery
C 组Main carriage paid
CFR Cost and Freight---named port of destination 成本＋运费CIF Cost,Insurance and Freight---same as above 成本 + 运费 + 保险费CPT Carriage Paid To…named place of destination 成本＋运费付至…CIP Carriage, Insurance Paid to...
成本＋运费 + 保险费付至 …
Sea or inland waterwaySea or inland waterwayAny mode Any mode
Shipment contract term/symbolic delivery
D 组Arrival
DATDelivered At Terminal 运输终端交货； DDP Delivered Duty Paid 完税后交货 DAP Delivered At Place 指定的目的地交货
Any mode Any mode Any mode
Arrival contract term/actual delivery
INCOTERMS 2010
25
Trade terms can also be divided by modes of transport.
Any mode of transport can be used: EXW FCA CPT CIP DAT DAP DDP.
Only be used for sea and inland waterway transport : FAS FOB CFR CIF
●Actual Delivery ------EXW 、 DAT 、 DAP 、 DDP
●Symbolic Delivery—FOB 、 FAS 、 CFR 、 CIF 、 FCA 、 CPT 、 CIP
象征性交货：卖方凭单据履行交货义务，买方凭单据付款。只要卖方按照合同的规定将货物装船并提交齐全的、正确的单据，买方就必须支付货款，即使货物在运输途中遭受灭失，买方也不能拒收单据和拒收货款。
Trade Terms in Common Use
FOB Free On Board （… named port of shipment ）装运港船上交货
CFR Cost and Freight （… named port of destination ）成本 + 运费 指定目的港
CIF Cost Insurance and Freight （… named port of destination ）成本 + 运费 + 保险费 指定目的港
Free On Board (…named port of shipment)
“Free On Board” means that the seller delivers when the goods pass the ship’s rail at the named port of shipment.
The buyer has to bear all costs and risks of loss of or damage to the goods from that point.
《 INCOTERMS 2010 》
Delivery place of FOB
Delivery place of FOB
Seller
Buyer2
Buyer1
Free On Board (…named port of shipment)INCOTERMS
2010
Be used only for sea or inland waterway transport
FOB （… named port of shipment ）Seller’s Obligation
1. ResponsibilitiesA. Deliver the goods
B. Clear the goods for export
C. Load the goods on the ship arranged for and named by the buyer
D. Send shipping advice immediately
E. Deliver related documents or equivalent electronic data
2. Expenses
All the expenses before the goods’ passing the rail of the vessel .
3. Risks
All the risks before the goods’ passing the rail of the vessel.
Buyer’s Obligations
1. Responsibilities
A. Designate the ship and notify the seller
B. Make insurance
C. Pay the price
D. Clear the goods for importing
E. Take delivery of the goods
2. Expenses
All the expenses after the goods’ passing the rail of the vessel .
3. Risks
Risks after the goods’ passing the rail of the vessel .
Case Study An FOB contract stipulated “The shipment will be effected in March 2011.” When the goods were ready on 10 March 2011, the seller contacted the buyer for shipment details. The buyer faxed “Please send the goods to the port for loading on 21 March. The vessel will depart on 22 March.” The seller sent the goods to the port accordingly. However the nominated vessel did not turn up and the goods had to be stored in the warehouse at the port. On the night of 21 March a fire happened in the warehouse area and part of the goods was damaged. When the vessel arrived two days later the seller and the buyer had an argument about the settlement of the loss. The seller required the buyer to bear the loss caused by the fire, but the buyer believed that the vessel arrived within the shipment period and the loss occurred before the seller delivered the goods therefore the seller should bear the loss. Please provide your solution.
Arrangement of goods and ship( 关于船货衔接）
Advice of goods ready （备妥货物）
Advice of arranging the ship （租船订舱）
Advice of shipment （装船通知）
Variants of FOB Trade termFOB Liner Terms 班轮条件 买方负担装船费FOB Under Tackle 吊钩下交货 买方负担装船费
FOB Stowed (FOBS)
船上交货并理舱
卖方负担装船费、理舱费
FOB Trimmed (FOBT)
船上交货并平舱
卖方负担装船费、平舱费
FOB Stowed & Trimmed (FOBST)
船上交货并理舱和平舱
卖方负担装船费、平舱费和理舱费注：小额零星交易一般租用班轮运输，不会有装船费用负担的
争议；而大宗交易使用租船运输时，合同中应当注明装船费用的划分（可以采用 FOB 的变形，但是使用时应当注明变形只是用来划分装船费用的，并不改变风险的转移界限）。
Case Study
我国某外贸公司从美国进口特种异型钢材 200 吨，每吨按900 美元 FOB vessel New York 成交，支付方式为即期信用证并应于 2 月 28 日前开到卖方，装运期为 3 月份。 我方于 2 月 20 日通过中国银行向美商开出一张 18 万美元的信用证。 2 月 28 日美商来电称：“ L/C 已收到，但金额不足，应增加 1 万美元备用。否则，有关出口税捐及各种签证费用由你方另行电汇”。我方接电后认为这是美方的无理要求，随即回电指出：“按 FOB Vessel 条件成交，卖方应自负风险和费用做出口报关，这在《 2010 通则》中已有规定”。美方回电称：“合同并未明确规定按《 2010 通则》办，根据我们的商业习惯和《 1941 年美国对外贸易定义修正本》的规定，前电所述的费用应由进口方承担，我方歉难按《 2010 通则》办理，速复”。这时恰巧国际市场上钢材价格上扬，我方又急需这批钢材，只好通过开证行将信用证金额增至 19 万美元。
FOB Risk Export formalities
Revised American Foreign Trade Definitions 1941
FOB Vessel
（ 5th ）
On board
Buyer ， or for buyer’s account
《 INCOTERMS
2000 》FOB Ship’s
RailSeller
《 INCOTERMS
2010 》FOB On
boardSeller
Different definition of FOB
“Cost and Freight” means that the seller delivers when the goods pass the ship’s rail in the port of shipment.
The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.
Cost and Freight (…named port of destination)
Delivery place of CFR
Delivery place of CFR
Seller
Buyer2
Buyer1
Cost and Freight (…named port of destination)
Be used only for sea or inland waterway transport
CFR （… named port of destination ）
Seller’s Obligations
1. Responsibilities
A. Deliver the goods
B. Clear the goods for export
C. Charter a ship or book shipping space
D. Load the goods
E. Send shipping advice immediately
F. Deliver the documents or equivalent electronic data
2. Expenses
Expenses before the shipment, Loading charges, Regular freight necessary to bring the goods to the named port of destination.
3. Risks
Same as FOB
Case Study
A contract to sell grain used a CFR term. The grain was officially certified as Grade One at the time of being delivered on board at the port of shipment. After making the shipment, the seller gave the buyer timely notice. However, due to the long voyage, some grain went bad. At the destination, the grain could only be sold as “Grade 3”. Consequently, the buyer claimed compensation for the damage. Should the seller pay?
费用的负担问题： A 、运费负担问题：卖方需支付将货物运到目的港的正常运费，对外报价时要注意运费的核算。
B 、卸货费用的负担问题 在大宗交易，租船运输的情况下，必须明确卸货费用
的负担问题（产生 CFR 术语的变形）。用班轮运输时不会涉及该问题。CFR Liner Terms 班轮条件 卖方负担卸货费用CFR Landed 卸至岸上 /码头 卖方负担卸货费用CFR Ex Tackle 吊钩下交接 卖方负担卸货费用CFR Ex Ship’s Hold 舱底交接 买方负担卸货费用
Variants of CFR Trade term
Delivery place of CIF
Delivery place of CIF
Seller
Buyer2
Buyer1
Cost, Insurance and Freight (…named port of destination)
Be used only for sea or inland waterway transport
1. “Cost, Insurance and Freight” means that the seller delivers when the goods pass the ship’s rail in the port of shipment.
The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.
However, in CIF the seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage.
Cost, Insurance and Freight (…named port of destination)
2. The seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as such expressly with the seller or to make his own extra insurance arrangements.
3 The minimum insurance shall cover the price provided in the contract plus ten per cent (i.e. 110%) and shall be provided in the currency of the contract.
Cost, Insurance and Freight (…named port of destination)
Case Study
Under a CIF contract. The goods had been loaded on board the vessel according to the terms of the contract. Then the vessel departed. An hour later, the vessel struck a rock and sank. The next day the seller’s bank presented the shipping documents, insurance policy and invoices to the buyer, and demanded payment.Knowing that he will not receive the goods, should the buyer pay? Which party would have to take the loss?
象征性交货问题： 实际交货 (Actual Delivery): 指卖方在规定的时间和
地点，将符合合同规定的货物提交给买方或其指定的人，而不能以交单代替交货。
象征性交货 (Symbolic Delivery): 指卖方只要按期在约定地点完成装运，并向买方提交合同规定的包括物权凭证在内的有关单证就算完成了交货义务，而无须保证到货。
卖方 买方款
货买方卖方
单
款 CIF 合同是典型的象征性交货合同，卖方凭单交货，买方凭单付款。
费用的负担问题： 1 ）运费的负担（与 CFR 术语相同）
2 ）卸货费用的负担（与 CFR 术语类似） 在大宗交易，租船运输的情况下，应当明确卸货费用
的负担问题（由此产生 CIF 术语的变形形式）
CIF Liner Terms 班轮条件 卖方负担卸货费用CIF Landed 卸至岸上 /码头 卖方负担卸货费用CIF Ex Tackle 吊钩下交接 卖方负担卸货费用CIF Ex Ship’s Hold 舱底交接 买方负担卸货费用
Variants of CIF Trade term
Compare the use of FOB,CFR and CIF
Seller
Carrier
Buyer
Insurer
Seller
Carrier
Seller
Insurer
Buyer
Buyer(1)
(2)
(3)
Carrier
Insurer
(2)
(1)
(3)
(1)
(2)
(3)
FOB
CIF
CFR
1. FOB
2. CFR = FOB + F
3. CIF = CFR + I = FOB + F + I
1. CIF与 CFR比较相同点：①风险划分界限相同；②适用的运输 方式相同；③签运输合同支付运费的 责任划分相同；④进出口报关责任的 划分相同；⑤装船前检验费用的划分 相同。不同点：①签保险合同支付保险费的责任不同 ②卖方的交单义务不同。2. CIF与 FOB比较（略）
Compare the use of FOB,CFR and CIF
Thank You!
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