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  • Items proposed for consideration at the next meeting of Dispute Settlement Body January 25, 2022
    The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 25 January 2022, of the Dispute Settlement Body, which consists of all WTO members and oversees legal disputes among them. The meeting notice is circulated in the form of a document officially called an “airgram”.
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  • Deadline extended to submit Aid-for-Trade questionnaires for 2022 Global Review January 21, 2022
    As part of the Aid-for-Trade Monitoring and Evaluation exercise, WTO members, observers and their development partners are invited to submit their self-assessment questionnaires by 31 January 2022. Their responses will be analysed by the WTO Secretariat and presented at the upcoming Aid for Trade Global Review later in the year.
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  • DG Okonjo-Iweala calls on ministers to step up negotiating efforts, harvest outcomes January 21, 2022
    Director-General Ngozi Okonjo-Iweala on 21 January called on ministers from a cross-section of WTO members to push ahead in all ongoing negotiations, and work with “pragmatism, creativity, and flexibility” to harvest agreements as and when they are within reach. Ministers broadly accepted her suggestion to accelerate work, both in Geneva and in capitals, so WTO […]
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  • Tenth China Round Table looks at impact of 10 years of China Programme on LDC accessions January 20, 2022
    The Tenth China Round Table on WTO Accessions, held virtually on 18-20 January, celebrated 10 years of the China Programme, with participants reflecting on its impact on the accession of least-developed countries (LDCs) and discussing the future direction of this initiative. The event also provided an opportunity for trade experts to present a study reviewing […]
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International trade Payment Methods



 

 

International trade transactions tend to be characterised by a higher level of risk and complexity. While, the risks resulting from the transport of the goods could be managed by relying on the Incoterms rules, the risks associated with the payment requires a specific approach.

Indeed, the risk of non-payment is probably one of the most sensitive aspects of cross-border trading, and as such, it requires a central attention.

Whereas for domestic trade the buyer and the seller have to comply with their respective national laws, things are quite different for cross-border transactions since there is no supranational jurisdiction.

From this perspective, adopting an open account method, where the buyer can pay between 30 to 90 days after the reception of the goods, might be risky especially with new buyers with whom no relationships has been built. Needless to say that in case of non-payment issues, the procedure is likely to be costly and time consuming.

Conversely adopting an upfront payment or cash in advance method, could be a risk-free option for the Seller. However, this could impact adversely the Exporters’ competitiveness since it increases cash-flow needs for Importers who will be more likely to look for other suppliers with better conditions. Furthermore, importers are usually reluctant to make upfront payments in foreign countries, by fear of not receiving the ordered goods.

Fortunately, overtime many tools have been developed to address those shortcomings, which enabled the international trade to experience an unprecedented growth.

It is of paramount importance to have a broad perspective of the international trade payment methods available in order choose the best option.

Indeed, there is no one size fit all way of organising payment in international trade, which is why most of the methods developed below have their own advantages, drawbacks and limits.

Now let’s see each International trade payment method in more details