Our Articles

Enjoy,comment and share

RSS World Trade Organization — Latest news

  • Items proposed for consideration at the next meeting of Dispute Settlement Body December 18, 2019
    The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 18 December 2019, 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”.
    WTO
  • Report shows trade restrictions by WTO members at historically high levels December 12, 2019
    The Director-General’s annual overview of trade-related developments discussed on 12 December at a meeting of the Trade Policy Review Body shows that trade restrictions by WTO members continue at historically high levels. Between mid-October 2018 and mid-October 2019, the trade coverage of import-restrictive measures implemented by members was estimated at USD 747 billion. This is […]
    WTO
  • Ukraine launches safeguard investigation on syringes December 11, 2019
    On 11 December 2019, Ukraine notified the WTO’s Committee on Safeguards that it initiated on 2 December 2019 a safeguard investigation on syringes.
    WTO
  • Appellate Body issues report regarding Moroccan duties on Turkish steel December 10, 2019
    On 10 December the Appellate Body issued its report in the case brought by Turkey in “Morocco — Anti-Dumping Measures on Certain Hot Rolled Steel from Turkey” (DS513). On 4 December Morocco notified the Appellate Body that it had withdrawn its appeal in this dispute.
    WTO

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