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  • DDG Wolff: The future belongs to trade agreements of varying geometries August 11, 2020
    The multilateral trading system, along with regional and bilateral trade agreements, all share the task of regulating global trade, Deputy Director-General Alan Wolff said on 11 August. Speaking at a virtual event organized by the American Association of Exporters and Importers on the question of whether the future of trade is multilateral or bilateral, DDG […]
    WTO
  • Online regional trade policy course for Caribbean countries under way August 10, 2020
    The WTO has launched its first online Regional Trade Policy Course (e-RTPC) to ensure that capacity building continues to be provided to government officials despite the COVID-19 pandemic. Twenty participants from ten Caribbean members are attending the e-RTPC from 10 August to 13 November 2020.
    WTO
  • WTO report draws attention to impact of COVID-19 trade disruptions on women August 5, 2020
    Women are likely to be harder hit than men by trade disruptions caused by the COVID-19 pandemic and the dangers are particularly acute in developing countries according to a new information note from the WTO Secretariat. The paper points to how governments’ policy responses could address gender-specific effects of the crisis.
    WTO
  • WTO issues 2020 edition of its flagship statistical publication July 31, 2020
    The WTO issued today (31 July) the latest edition of its annual publication on international trade statistics, the “World Trade Statistical Review”.
    WTO

Incoterms



 

The International Commercial Terms

 

International Commercial Terms (Incoterms ® 2010) are issued by the International Chamber of Commerce and define the conditions under which international trade transactions take place.

In other words, the Incoterms ® 2010 determine crucial aspects such as the time of the transfer of the risks, which party is liable for cost of transports, insurance costs and custom clearance to name but a few. 

By contrast with domestic transactions, exportation or importation of goods are characterised by a high level of complexity.

Indeed, as you can see in the figure below, an international transaction has to go through several steps likely to be a source of problems.

 

 

Since the Incoterms ®2010 is a standard accepted worldwide, professionals willing to avoid any ambiguity within their International sale contracts, can rely on this strong framework and thereby optimise their risk management processes.

Overall, we can distinguish between two types of Incoterms:

  • – Any mode of transport
  • – Maritime transport applicable for Sea and Inland Waterway

 

 

Incoterms 2010 table

Incoterms 2010 table

 


 

In addition, Incoterms ® rules can be divided 4 groups :

 

Group E: Goods at the buyer’s disposal in the Seller’s premises.

Ex Works (Low commitment)

 

Group F: Main carriage paid by the Buyer

FCA, FOB, FAS (moderate commitment)

 

Group C: Main carriage paid by the Seller

CFR, CPT, CIP, CIP (High commitment)

 

Group D: Seller’s responsible up to agreed delivery address

DAT, DAP, DDP (Very High commitment)

 

 

Attention should be paid to the fact that the transfer of ownership is not determined by the Incoterms rules, but by the terms and conditions of the sales contract.

 

Moreover, it is of paramount importance to clearly specify the Incoterms ®2010 version applicable in the sales contracts. Indeed, since prior versions (such as 2000, 1980 versions for instance) might imply different obligations, by embedding the Incoterms ®2010 version in the sales contract, professionals ensure that business relationships are based on clear-cut set of rules.

In addition, it must pointed out that that electronic documents are considered as an equivalent of paper format provided that the Seller and the buyer agree to use this method of communication. ( must be specified in the contract)