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On Development of International Trade Terms

By Mildred Henderson,2014-09-10 14:44
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On Development of International Trade Terms

    On Development of International Trade Terms

    Abstract: International trade terms are also called price terms. It is an important part to make up the unit price item in international trade. They are indispensable when we often quotation price, sign the contract in business. It is Incoterms (developed by the

    International chamber commerce) that most widely used by exporters throughout the world. The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in international trade. International trade terms play a decisive role in international trade. At the same time, the international trade terms also have made great contributions to international trade .It is a very important part of International trade. The international trade terms is used widely by the businessman. They use trade terms such as FOB, FAS, CFR, and CIF. They not only specify the exports

    responsibility and liability end (and the buyers responsibility and liability begin), but also

    they determine the costs which the exporter will bear. Thus,it is customary in the calculation of a price quotation to add the appropriate costs to the basic price.

     Key words: international trade terms, development, Interpretation of trade terms

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     要;国际贸易术语又称价格术语(它是国际贸易中构成单价条款的重要组成部分。在对外报价和签订合同时(涉及到价格问题(它都是不可缺少内容(这一系列贸易术语被世界范围内的出口商所用的是《国际贸易术语解释通则》。《国际贸易术语解释通则》的目的旨在为国际贸易提供一系列共同的贸易准则。国际贸易术语在国际贸易中发挥着举足轻重的作用。同时(国际贸易术语也为国际贸易做出了重大的贡献。它成为国际贸易的重要组成部分。在商人中广泛应用。他们不仅用贸易术语例如FOB,FAS, CFR, CIF作为划分进口商的责任(而且决定出口商所承担的费用。因此(国际贸易术语是构成价格因素的基本条件。

     关键词;国际贸易术语,发展,国际贸易术语解释通则

    Contents

    Abstract……………………………………………………………………i Contents……………………………………………………………………iii Introduction………………………………………………………………1 1. The creation of the international trade terms…………………………1 1.1 The Creation of unify rules……………………………………………1 1.2 The revision of unify rules ……………………………………………1 2. Development of international trade terms…………………………2

     2.1 Incoterms …………………………………………………………2

     2.2 Warsaw Oxford Rules ……………………………………………2

     2.3 Revised American Foreign Trade Definition 1941 ………………3

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     2.4 Revised Incoterms ………………………………………………3

     2.5 Development of Incoterms 2000 …………………………………7 3. The future of international trade terms………………………………9 3.1 The influence of international trade terms……………………………9 3.2 The function of international trade terms……………………………10 Conclusion………………………………………………………………10 Bibliography………………………………………………………………11 Acknowledgement………………………………………………………12

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Introduction

     Frequently parties to a contract are unaware of the different trading practices in their respective countries. This can give rise to misunderstandings, disputes and litigation with all the waste of time and money that this entails. In order to solve these problems, the International Chamber of Commerce first published in 1936 a set of international rules for the interpretation of trade. These rules were known as Incoterms 1936. Amendments and

    additions were later made in 1953, 1967, 1980, 1990 and presently 2000 in order to bring the rules in line with current international trade practices.

1. The creation of the international trade terms

    International trade terms have developed in the process of Economic Globalization. In the long period of International trade intercourse, international trade terms contribute to development of worlds trade and other

    economic activities.

    1.1 The creation of unify rules

    In order to simplify the trade process, and make them quick and convenience in international trade. The businessmen made a long-term research to accumulate and sum up their experience, and established a series of trade practices and trade terms. Gradually, they used brief form to express the trade custom. This is the creation of international trade terms. 1.2 The revision of unify rules

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     In the International trade practice, every country has its own law systems and trade practices, and it has different comprehension and operation in international trade. In over a long period of practice, in order to keep away from the controversy of different opinions about the international trade terms, many International organizations had formulated many unity rules such as International Rules for the Interpretation of Trade Terms. Thus, the

    uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree. And they revised the rules continuously to make the Incoterms more prefects.

2. Development of international trade terms

    Although there are unity rules, they are not complete. In order to perform the contract reasonability and use the trade practice correctly, and make the employee in international trade lines understand every kind of trade terms and trade practices easily, the international organization and International Chamber of Commerce had established and revised many rules in different time.

    2.1 Incoterms

    With the development of trade, the new rules was produced.In1936,

    International Chamber of Commerce had established International Rules for

    [1]Interpretation of Trade Term “and revised in 1953.

    2.2 War sawoxford Rules

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     International Law Association had formulated War sawoxford Rules.

    War sawoxford Rules was revised many times, International Law

    Association had formulated unify rules about CIF.

    2.3Revised American Foreign Trade Definition 1941

     In the United States, many commercial groups had draw up Revised

    American Foreign Trade Definition 1941”. On account of these regulations of

    trade terms are handling widely in International trade consequently, they came into being a generic trade, practice. This international practice explained that the trade terms play an important role in every history period of international trade.

    2.4 Revised Incoterms

     International Chamber of Commerce had established Incoterms and

    revised it continuously, it contributed to the development of international practice effectively. Incoterms has three major editions: Incoterms 1980,

    Incoterms 1990, Incoterms 2000.

    2.4.1 The reason of revised the Incoterms 1980

     1) It is the demand of adapting the in-exchange with electronic information frequently.

     2) It is demand of acclimatizing to accommodate the development of transport technical and the reform of transport terms.

    2.4.2 The major transformation of Incoterms 1990

     Incoterms 1990 was revised on the basis of Incoterms 1980.

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Compared with Incoterrms 1980, the Incoterms 1990 have prodigious

    changes. In Incoterms 1980 the species, the classification of international trade term, the international code, the scope of useness, the standard of division by the two parties and the use of the certification are changed obliviously. So Incoterms 1990 means that the significant development in

    International trade practice. There are three major changes:

     1) Adopt the new classification for every trade term.

     In 1990, for easy understanding, the terms were grouped in four basically different categories: namely starting with the term whereby the seller only makes the goods available to the buyer at the sellers own premises

    (the E term Ex work); followed by the second group whereby the seller is called upon to deliver the goods to a carrier appointed by the buyer (the F

    terms FCA, FAS and FOB); continuing with the C- terms where the seller

    has to contract for carriage, but without assuming the risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch (CFR, CIF, CPT and CIP); and finally, the D-terms

    whereby the seller has to bear all costs and risks needed to bring the goods to the place of destination(DAF, DES, DEQ, DOU and DDP). The following chart sets out this classification of the trade terms.

     Group E: This term means that the seller delivers when he places the goods at the disposal the buyer at the sellers premises or another named place

    not cleared for export and not leaded on any collecting vehicle. The buyer has

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    to bear all cost and risks involved in taking the goods from the seller premise.

     Group F: (main carriage unpaid) This group involved three trade terms: FCA (Free carrier) FAS (Free alongside Ship) FOB (Free on Board). This group adopt delivery the goods at the shipment place or named port, but the major freight unpaid. If asked the seller delivery the goods to the buyer named carrier, it can this trade term.

     Group C: (major carriage paid) This group involved four terms. CFR(Cost and Freight) CIFCost Insurance and FreightCPT(Carriage Paid

    to) CIP(Carriage and Insurance paid to). This term adopt the main carriage paid to the shipment place or shipment port. In accordance with the term to close a bargain, the seller should draw up the transport contract, but the losses of goods and the risk of damage is not the sellers duty.

     Group D: This group involved DAF (Delivered at Frontier) DES (Delivered Ex ship) DEQ (Duty Paid). This term asked delivery the goods at the named port of destination or place of destination. The seller must undertake all the expense and all the expense and all risks to the destination country. In Incoterms 1990, International chamber of commerce adopt the

    new classify and arrange way for every kind of trade terms. It is more reasonable and scientific. The new classify way have obvious advantage, it is easy to remember and understand.

    2) Adopt the corresponding standardize and for the both parties obligation

    In Incoterms 1990, a standardand mutual provision stipulation was

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made, the both business parties should undertake ten items for their duty. This

    stipulation is extremely facilitating the two parties person concerned. Particularly, make the two parties of business are easy to compare and check.

    The SELLER and the BUYER MUST (The mutual contrast ways are adopted to express the obligation of the seller and buyer as follows:.)

    A. Provision of goods in comfortmity with the contract. 1

     B. Payment of the price. 1

     A. Licences, authorizations and formalities 2

    B. Licences, authorizations and formalities 2

    A. Contract of carriage and insurance 3

    B. Contract of carriage 3

    A. Delivery 4

    B. Taking delivery 4

    A. Transfer of risks 5

    B. Transfer of risks 5

    A. Division of costs 6

    B. Division of costs 6

    A. Notice to the buyer 7

    B. Notice to the seller 7

    A. Prof of delivery, transport document or equivalent electronic message 8

    B. Proof of delivery, transport document or equivalent electronic message 8

    A. Checkingpackagingmarking 9

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    B. Inspection of goods 9

    A. Other obligation 10

     [2] B. Other obligation10

    Through that, the buyer and sellers obligation is very definite, also good

    for them to undertake their own obligation.

    2.4.3 Documents in paper was replaced by EDI

    In Incoterms 1990 if the both parties of buyer and seller agree on using electronic way to liaisons, it can use the corresponding EDI to replace the kinds of documents which the contract person concerned should provide. This is the outstanding feature in Incoterms 1990.

    2.5 The development of Incoterms 2000

    In 1997, International Chamber of Commerce was the sixth time to revise the Incoterms. ICC try their best to revise the Incoterms, and adopt every

    lines opinion and suggestion to perfect the Incoterns. Two years later give

    it rise to the Incoterms 2000.

    2.5.1 The revision of Incoterms 2000

    In essence, the Incoterms 2000 made many changes, and had draw up

    new rules on the basis of Incoterms 1990. At the same time, ICC in order to

    ensure the language of Incotems 2000 clearly and correctly to reflect the

    International trade practice, so they revised again and made them perfect. The rules are suitable for the development of Inter national trade practice. The changes embody two aspects:

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