1. International Trade Practice
NEW SEMESTER, NEW START
International Trade Practice

2. 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?

3. 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

4. Resource Reasons Economic Reasons Other Reasons
Why do Nations Trade with each other?
Resource Reasons
Economic Reasons
Other Reasons

5. Benefit from International Trade
Rapid Economic Growth
Goods or Services at Lower Prices
Greater Variety of Goods or Services

6. How much do you know about International Trade Procedures?
Preparation of a Transaction
Negotiation of a Sales Contract
Performance of the Contract
Settlement of Disputes

7. Preparation of a transaction
Getting goods ready
Packing
Commodity inspection
Pressing for L/C
Examining L/C
Amending L/C
Booking
Shipping
space
Covering
Insurance
Goods Delivery
Customs clearance
Presenting
Documents
For 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

8. Introduction Teaching Objectives Course Content Teaching Method
Essentials of our course
Recommended Readings
Recommended Websites
Evaluation Mode
Contact Information

9. Teaching Objectives
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.

10. Four Parts: 1.Trade Terms; 2. Contract Provisions;
3.Negotiation & Implementation; 4.Trade Forms
quality
quantity
package
Trade
Terms
Price
payment
Contract
Negotiation &
Implementation
transport
insurance
inspection
claims &
adjustments
arbitration
force majeure
… …
Trade Forms

11. Teaching Method Lecturing Case Study Class Discussion
Literature Reading

12. 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

13. 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》

14. Recommended Websites 1.部分网络资源 （国内）：
（1）中国国际贸易网
（2）中华人民共和国商务部
（3）中国外经贸
（4）中国贸促网
（5）中国国际贸易发展网
2.部分国际经贸组织及网址
（1）ICC ( International Chamber of Commerce)
（2）OECD ( Organization for Economic Co-operation and Development )
（3）WTO ( World Trade Organization )
（4）UNCTAD (United Nations Conference on Trade and Development )

15. Evaluation Mode Regular Grades （50%）： Final Exam （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

16. Contact Information
郭锦 GRACE 1.
2. TEL: (短号)

17. Chapter 2 Trade Terms Learning 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

18. Obligations of the Seller/Buyer
Think
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. ……

19. The Definition of Trade Terms
Trade Terms, also called Price Terms, are an
important component of a unit price in international
trade, standing for specific obligations of the buyer
and the seller.
Unit of measurement
Currency of price
USD per M/T FOB Shanghai
Unit price
Trade term

20. The Definition of Trade Terms
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.

21. Import License, Customs Clearance
Seller’s Warehouse
EXW
Export License
Transportation
Insurance
Customs Clearance
Shipping On Board
CIF
Unloading
Import License, Customs Clearance
DDP
Buyer’s Warehouse

22. 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. Structure of INCOTERMS 2010
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 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.

24. INCOTERMS 2010 E组 F组 Main carriage unpaid C组 Main carriage paid D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
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 … 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
Arrival contract term/actual delivery

25. Trade terms can also be divided by modes of transport
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

26. ●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。

27. 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

28. Free On Board (…named port of shipment)
《INCOTERMS 2010》
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.

29. Free On Board (…named port of shipment)
INCOTERMS
2010
Be used only for sea or inland waterway transport
Buyer2
Buyer1
Seller
Delivery place
of FOB

30. FOB（…named port of shipment）
Seller’s Obligation
1. Responsibilities
A. 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

31. 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.

32. A. Designate the ship and notify the seller
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

33. 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 .

34. 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.

35. 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）

36. Variants of FOB Trade term
FOB Liner Terms
班轮条件
买方负担装船费
FOB Under Tackle
吊钩下交货
FOB Stowed
(FOBS)
船上交货
并理舱
卖方负担
装船费、理舱费
FOB Trimmed
(FOBT)
并平舱
装船费、平舱费
FOB Stowed & Trimmed (FOBST)
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）。

37. 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。

38. Different definition of FOB
Risk
Export formalities
Revised American Foreign Trade Definitions 1941
FOB Vessel
（5th）
On board
Buyer，or for buyer’s account
《INCOTERMS 2000》
Ship’s Rail
Seller
《INCOTERMS 2010》

39. Cost and Freight (…named port of destination)
“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.

40. Cost and Freight (…named port of destination)
Be used only for sea or inland waterway transport
Buyer2
Buyer1
Seller
Delivery place
of CFR

41. 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

42. 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

43. 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?

44. Variants of CFR Trade term
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
CFR Ex Tackle
吊钩下交接
CFR Ex Ship’s Hold
舱底交接
买方负担卸货费用

45. Cost, Insurance and Freight (…named port of destination)
Be used only for sea or inland waterway transport
Buyer2
Buyer1
Seller
Delivery place of CIF

46. Cost, Insurance and Freight (…named port of destination)
“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.

47. 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.

48. 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?

49. 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。 货 单 卖方 买方 卖方 买方 款 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。

50. Variants of CIF Trade term
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
CIF Ex Tackle
吊钩下交接
CIF Ex Ship’s Hold
舱底交接
买方负担卸货费用

51. Compare the use of FOB,CFR and CIF
Carrier
Carrier
(2)
(2)
Buyer
Seller
Buyer
Seller
(1)
(1)
(3)
(3)
Insurer
Insurer
1. FOB
2. CFR = FOB + F
3. CIF = CFR + I
= FOB + F + I
CIF
Carrier
(2)
Seller
Buyer
(1)
(3)
Insurer

52. Compare the use of FOB,CFR and CIF
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）

53. Thank You!