外贸英语词汇(广东外语外贸大学 )

授 课 教 案

系（部）: 姓

名:

课程名称:

外语系 _侯雁慧______ 外贸实务英语

辽宁对外经贸学院

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辽宁对外经贸学院教案 课程名称 课程编号 课程类型

外贸实务英语 Z010452[0]

授课 专业

外语 系

年级 班级

2007 级 1-4 班

必修课 公 共 基 础 课 （ ） ； 专 业 基 础 课 （ ） ； 专 业 课 （√） 选修课 限选课（ ）；任选课（ ）

授课方式

课堂讲授（√）；实践课 （√）

考核方式

课程教学 总学时数 学时分配

64

学分数

课堂讲授 32 学时； 实践课 32 学时

教材名称

外贸英语实务

作者

侯雁慧

考试（ √）；考查 （） 4

出版社 及 出版时 间

大连理工大学出版 社 2008 年

使用参考书 国际贸易实务 国际贸易英语 教程（上、下 册） 外贸英语实务

作者

王沅沅 许葵花

出版社 及 出版时 间

曹菱 张亚芬

国际贸易实务 与案例 商务英语情景 会话模板 商务贸易行话 连篇 International Business International Trade

授课教师 授课学期

侯雁慧

浩瀚 厉秀仁 Donald Ball.

Brenton Paul.

高等教育出版社 2004 西安交通大学出版 社 2004 外语教学与研究出 版社 2000 高等教育出版社 2002 国防工业出版社 2007 大连理工大学出版 社 2002 McGraw-Hill.

2004 Oxford University Press.1991

职称 讲师 单位 外语系 2008-2009 （二）； 2009-2010（一）

Unit One International Trade Teaching Objectives (1) To let the students know such general knowledge as the relevant concept, reasons and benefits of international trade.

(2) To master such useful words and expressions as tariff, invisible trade and quota.

Warming Up (1) Do you buy something or sell something in your daily life?

(2) What problems will you meet when you buy something?

Lead-in If we Chinese buy something within China, we call this kind of trade domestic trade. But if we Chinese buy something from foreign countries, then it is called international trade. Of course, international trade differs from domestic trade. And special problems may arise in international trade. In order to do business successfully, we should have a general view of international trade including the reasons, benefits, basic concept and relevant regulations.

Now, let’s first look at what international trade is. After reading Part II, try to answer the following questions: 1. How would you define international trade?

2. What are the reasons for international trade? Can you list some of them?

3. What is economies of scale? Why does it influence international trade?

4. How do countries benefit from the international trade?

5. What are the differences between visible trade and invisible trade? Give a few examples of invisible trade.

6. What do you think of the trade of balance?

7. What do trade barriers mean? List some example of trade barriers in international trade.

8. How is international trade regulated now?

Contents of Part II International Trade i. Definition of international trade International trade= the exchange of goods and services between countries. world trade, foreign trade or overseas trade. ii. Reasons for international trade * Uneven distribution of natural resources * Specialization * Patterns of demand * Economies of scale (the cost advantages of large-scale production) * Innovation or variety of style iii. Benefits in international trade *Cheaper goods or services *Greater variety *Wider markets *Economic growth iv. Special problems in international trade

Business might have to be done in foreign languages and under foreign laws, customs and regulations. Information of a foreign firm may be difficult to obtain. Foreign currency transactions will be necessary and exchange rate may be different greatly. Numerous cultural differences may have to be taken into account when dealing with other nations.

Risk level may be higher in foreign markets. The risks include political risk, commercial risks, financial risks and transportation risks. It is more difficult to observe and monitor trends and activities in foreign countries. v. Concept in international trade *Visible and invisible trade Visible trade: exports and imports of goods, Invisible trade: an exchange of services or assets between countries, for example, transportation service across national borders, insurance and tourism. *Balance of trade Balance of trade: a statement of a country’s trade in goods and services; the difference between the value of the goods and services that a country exports and the value of the goods and services that it imports.

Trade surplus and positive trade balance: a country’s exports exceed its imports.

Trade deficit and negative trade balance: imports exceed exports. *Trade restrictions The restriction measures taken by governments are also barriers to trade which can be divided into tariff barriers and non-tariff barriers.

(1) Tariff barriers Tariff: a tax levied on a commodity when it crosses the boundary of a customs area which usually coincides with the area of a country.

Kinds of tariff: According to the purpose: revenue tariff: collected mainly for income purpose, protection tariff: collected in order to protect the domestic market.

According to the flow of goods: import duties: levied on goods entering a country export duties: levied on goods leaving a country The former is more common than the latter as most nations want to expand export and increase their foreign exchange earnings.

Import surtax: additional to import duty, and it is temporary in coping with international payment difficulties, maintaining balance of trade and preventing dumping, and is discriminatory against a particular country, e.g.: countervailing duty and anti-dumping duty.

According to the methods in which tariffs are collected: Specific duty is collected per physical quantity.

Ad valorem duty is collected according to value, i.e., at the percentage of the price.

Mixed or compound duty is collected according to whether specific duty or ad valorem duty first, then the other.

An alternative duty is collected whichever the higher between specific duty and ad valorem duty.

(2) Non-tariff barriers Quota: limits the imports or exports of a commodity during a given period of time; may be in quantity or value terms, and may be on a country basis or a global basis.

Import license: a permit for import, which can be independent or combined with quotas.

Foreign exchange control: intends to control imports by limiting the access to foreign money that is needed for imports. technical barriers State monopoly of imports and exports, government procurement policy vi. Regulations of international trade WTO at the global level; Regional arrangements like MERCOSUR in South America, NAFTA between the United States, Canada and Mexico, and FTAA

Suggested answer to the Questions: 1. International trade is the exchange of goods and services between countries. It is also known as world trade, foreign trade or overseas trade.

2. Uneven distribution of natural resources, specialization, patterns of demand, economies of scale, innovation or variety of style 3. (Open). Economies of scale is the cost advantages of large-scale production. A country may specialize completely in the production of one product in order to achieve economies of scale and then import other products.

4. Countries can get cheaper and greater variety goods or services for consumers.

International trade can expand markets and promotes economic growth.

5. Visible trade refers to exports and imports of goods, while invisible trade refers to an exchange of services or assets between countries. Transportation service across national borders, insurance to international goods and tourism are all examples of invisible trade.

6. The balance of trade is the difference between the value of the goods and services that a

country exports and the value of the goods and services that it imports.

7. Trade barriers mean the restriction measures taken by governments. Tariff, quotas, import license and foreign exchange control are all examples of trade barriers.

8. The international trade is regulated by WTO at the global level and several other regional arrangements like MERCOSUR.

Notes for Part Two Reading 1. trade (1) n. the business of buying and selling goods for money free trade 自由贸易; barter trade 易货贸易; bilateral trade 双边贸易 (2) v. buy and sell trading company 贸易公司 They trade mainly in textile products.

2. absolute advantage: by Adam Smiths in The Wealth of Nations (1776).

3. world market 国外市场 类似说法有：overseas market, external market, foreign market 试比较国内市场：home market, domestic market, internal market 4. countervailing duty: collected against bounty or grant during production, transport and export, etc.

5. anti-dumping duty: collected when importing country believes that there is a dumping (a not universally defined concept that can mean the selling price in a foreign country is below domestic selling price, world market price or production cost).

6. GATT: 全称为 General Agreement On Tariffs and Trade，关税与贸易总协定。它是美、 英、法、中等 23 个国家于 1947 年 10 月 30 日在瑞士日内瓦签订并于 1948 年 1 月 1 日正式生效的，调整缔约方对外贸易政策和国际贸易关系方面的相互权利、义务 的一项多边国际协定。GATT 已不存在，取而代之的是 WTO。 7. WTO: 全称为 World Trade Organization，世界贸易组织，是一个独立于 联合国的 永久性国际组织。1995 年 1 月 1 日正式开始运作，负责管理世界经济和贸易秩序， 总部设在瑞士日内瓦莱蒙湖畔。1996 年 1 月 1 日，它正式取代关贸总协定临时机 构。世界贸易组织是具有法人地位的国际组织，在调解成员争端方面具有更高的 权威性。与关贸总协定相比，世界贸易组织涵盖货物贸易、服务贸易以及知识产权 贸易，而关贸总协定只适用于商品货物贸易。 8. MERCOSUR: 南方共同市场，是拉美地区举足轻重的区域性经济合作组织，由巴 西、阿根廷、乌拉圭和巴拉圭等 4 个成员国以及智利和玻利维亚两个联系国组成， 共有 2.2 亿人口，年产值超过 1 万亿美元，贸易额达 2000 亿美元。其建立于 1991

年，于 1995 年 1 月 1 日正式运行，其成员国间绝大部分商品实行无关税自由贸易， 共同对外关税则为 23%。 9. NAFTA:全称是 North American Free Trade Area，北美自由贸易区。1994 年 1 月 1 日，由美国、加拿大、墨西哥 3 国共同签署的北美自由贸易协定正式生效，北美自 由贸易区宣告诞生。北美自由贸易区是世界上第一个由发达国家和发展中国家联 合组成的贸易集团，成员国之间经济上既有较大互补性和相互依存性，又有明显 的不对称性，对北美、拉美，以致对冷战结束后新的世界经济格局的形成，产生 了重大而深远的影响。 10. FTAA: 全称为 Free Trade Area of the Americas，美洲自由贸易区。其设想是在 1994 年美国迈阿密西半球首脑会议上提出的，目的是于 2005 年初在西半球建立一个 世界上面积最大、年 GDP 总值达 14 万亿美元、拥有 8 亿人口的自由贸易区。建成后 的美洲自由贸易区包括 34 个美洲国家，涵盖 8 亿多人口，与欧盟和亚太经合组 织一道构成全球贸易和投资基本格局。 11. regulations of international trade: 除课文介绍的条约外，国际贸易惯例、国内法也是 调整国际贸易关系的规章。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

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international trade world trade foreign trade overseas trade economies of scale economic growth foreign currency/exchange exchange rate foreign/overseas/external/world market visible trade invisible trade balance of trade trade surplus/positive balance of trade trade deficit/negative balance of trade trade barrier non-tariff barrier revenue tariff

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国际贸易 世界贸易 对外贸易 海外贸易 规模经济 经济增长 外汇 汇率 国外市场 有形贸易 无形贸易 贸易差额 贸易顺差 贸易逆差 贸易壁垒 非关税壁垒 财政关税

18. protection tariff 19. quota 20. free trade

18. 保护关税 19. 配额 20. 自由贸易

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. International trade is only the exchange of goods between nations.

2. Countries trade with each other partly because there is a cost advantage.

3. Trade means countries can provide a wider variety of products for their consumers.

4. International trade can greatly expend the market, which enables the suppliers to take advantage of economies of scale.

5. Exchange rate fluctuations may create many problems for international trade.

6. Still in some cases, political reasons can outweigh economic considerations between countries.

7. When we provide shipping insurance service for foreigners, it can be seen as an example of invisible trade.

8. Trade surplus means that a country’s imports exceed its exports.

9. Tariff and quotas are the examples of trade barriers.

10. Countries can do business freely without regulations in international trade.

(Answer: 1F 2T 3T 4T 5T 6T 7T 8F 9T 10F)

Unit Two Trade Forms Teaching Objectives (1) To let students know different trade forms in international trade including agency, distribution and so on.

(2) To let students master the specialized words and expressions.

Warming Up (1) Besides paying money to buy something, by what other ways can you do business with

others?

Lead-in Besides direct negotiations between buyers and sellers, international trade is also handled by some indirect means such as agency, distribution, countertrade, consignment and bidding. Different trade terms are applicable to different situations. Today we will look them one by one. After reading Part II, try to answer the following questions: 1. What do trade forms refer to? List some examples of trade forms.

2. What can agents be divided into according to the scope of their rights?

3. What are the differences between agency and distribution?

4. What is the basic characteristic of countertrade? What are the common reasons for countertrade?

5. Explain compensation trade.

6. What are the differences between compensation trade and counterpurchase?

7. What are the differences between exportation and consignment?

8. How is the price decided in bidding?

Contents of Part II Trade Forms i. Definition and types of trade forms Definition: the common practices and channels between countries for the flow of goods or services.

Types: direct trade forms: importation and exportation indirect trade forms: agency, distribution, countertrade, consignment and bidding ii. Agency Definition of agent: a middleman who can act on behalf of a principal in specific matters., for example, forwarding agents, clearing agents and selling agents.

Selling agent Characteristics: 1. An agent can only operate within the marketing area authorized by the principal.

2. It does not need to carry stock.

3. The principal sets the retail price, retains title and controls the goods 4. The profits and risks of losses remain with the principal unless the agent is a del credere one.

5. Generally speaking, agents are usually paid by commission.

Types: (According to the scope of their rights) Indenting agent: the agent (exclusive or non-exclusive) appointed by a principal for marketing and promoting the products to potential customers within an area.

Factor is appointed with the power to negotiate and conclude contracts in the area on behalf of his principal.

A del credere agent is the agent who takes responsibility for credit risks, that is, if the buyer he introduces fails to pay the principal or breaks the contract, it is his responsibility to cover the loss. iii. Distribution Distributors: buy from the principals on their own account and take title to them and resell them to their customers in their area.

Characteristics: 1. There is no contractual relationship between the principal and the customers. Instead there are separate sets of contracts: those between the principal and the distributor, and those between the distributor and the customers.

2. The distributor makes profits from the differences between the prices at which he buys the products and the prices at which he sells them to the customers.

3. The distributor bears much more risks and obligations than an agent does: bad debts, advertising expenses, maintenance, etc.

4. The distributors generally enjoy more freedom and higher returns.

Types: sole or exclusive distributor and non-exclusive distributor. iv. Countertrade Definition: an umbrella term that includes all forms of the exchange of goods for goods. It means that “if I buy from you, you must buy from me.�

Reasons for countertrade: 1. to create new export markets or promote export products.

2. to acquire new technology or attract foreign investment.

3. to balance trade for economic or political reasons. *Compensation trade A special trade arrangement including two transactions between two parties. One party agrees to supply technology or equipment that enables the other party to produce goods mainly by which the price of the supplied technology or equipment is repaid.

(1) Full compensation

Figure2.1: Full Compensation Notes: 1. The goods exported are “paid for” by a countersupply of goods.

2. The value of the countertrade goods should be equal to that of the export goods.

3. The exporter does not want to risk by dispatching his goods to the buyer just against a promise by the buyer to provide countertrade goods at some time in the future.

4. Full compensation transactions are always included in one single contract.

(2) Partial compensation

Figure 2.2: Partial Compensation Notes: The same basic principles of full compensation are applied to partial compensation, with an exception that part of the export is paid by cash. *Counterpurchase

Figure 2.3: Counterpurchase Notes: 1. In signing a counterpurchase contract, the exporter is required to undertake the purchase of goods from the importer’s side.

2. This undertaking is discharged separately.

3. The value of countertrade goods does not have to equal that of the export. Its demand is often expressed as a percentage of the export contract.

4. Separate contracts are singed for each side of the transaction. Each side of the transaction is settled separately in foreign exchange.

5. The timing for discharge of each transaction could differ within the agreed time limit.

6. It is also called parallel trade. *Switch trade

Figure 2.4: Switch Trade Notes: 1. Switch trade involves at least three parties.

2. It is closely linked with the bilateral clearing agreements, a kind of basis for barter transactions between governments.

The clearing arrangements establish two-way flows of goods of agreed types between two countries. “Clearing units” rather than foreign exchanges are used in the accounting of this kind of trade. In this way, the two countries can exchange their products without using their limited reserve of foreign exchanges. An overall limit is placed on the value of trade in a period. As it is quite difficult to exchange goods of exactly same value, at the end of the period covered by the agreement, one country will be a creditor and the other will be debtor. Generally, a limit is placed on the imbalance on accounts. Each limit is often referred to as “the swing”. If trade ceases because the swing is reached, the countries may look for other ways to balance the books. One such way to balance the books would be through a mechanism called “switch”, i.e., “selling” the imbalance to a third party for hard currency. This is the role of a switch dealer.

3. The switch dealer will buy the imbalance “clearing units” at a discount.

4. These clearing units are available only for the purchase of goods from the debtor country.

5. Then he will arrange for the resale of these goods in a third country, where payment will be made in hard currency.

*Offset Notes: 1. The seller has to undertake some sort of activity favorable to the importer in addition to the supply of the capital goods.

2. To lessen the heavy foreign exchange expenses involved in purchases of this kind of goods, the buyer usually insists that offset be applied. v. Consignment Notes: 1. The consignor sends the goods to a foreign consignee who will sell the goods for the consignor according to the agreed terms.

2. The goods exported on the consignment remain the title to the exporter.

3. The exporter is not paid until the goods are sold in the overseas market.

4. When the exporter wants to introduce goods to a foreign market, or control the foreign market price of his product, he can do so under a consignment contract. vi. Bidding Notes: 1. Be used especially for government construction projects and purchase of goods in large quantity.

2.The price of goods or services is not quoted by the seller, but decided by choosing the most advantageous one from the offers of bidders.

Invitation for bids and submission of bids are the two different aspects of process.

Kinds: Open bids or unlimited bids: the invitation for bids is publicized through proper media (newspaper, magazine, etc.) to inform all prospective bidders. All those who are willing to participate in the bids are welcome to submit their bids.

Selected bids or limited competitive bids: The invitation for bids is only distributed to a limited or selected number of prospective bidders. Usually, a pre-qualification is involved to determine those potential bidders.

Suggested answer to the Questions: 1. Trade forms refer to the common practices and channels between countries for the flow of goods or services. The examples are importation and exportation, agency, distribution, countertrade, consignment, bidding and so on.

2. According to the scope of their rights, agents can be divided into several kinds, for example, indenting agent, factor and del credere agent.

3. (Open) 4. The exchange of goods for goods is the basic characteristic of countertrade. The common reasons for countertrade are to create new export markets or promote export products, to acquire new technology or attract foreign investment, or to balance trade for economic or political reasons.

5. (Open) 6. (Open)Two separate contracts are singed for each side of the transaction in countertrade, while only one contract is involved in a compensation trade.

7. The goods exported on the consignment remain the title to the exporter.

8. In bidding, the price of goods or services is not quoted by the seller, but decided by choosing the most advantageous one from the offers of bidders.

Notes for Part Two Reading 1. Commission n. 佣金，手续费。指卖方给中间商或代理人的酬金。通常计算在货价 上，说成含佣百分之几。如： “CIFC3” 表示 “CIF including 3% commission”。 Do you sell goods on commission? 你们售货抽取佣金吗？ The bank charges commission for exchanging foreign currency. 银行兑换外币要收取手续费。 The above price is inclusive of your 2% commission. 以上价格含你方 2%佣金。 Commission 的常用搭配有： Give (allow, grant, pay) commission on … (goods) 对…商品给佣金 如： We could allow you 2% commission on Article 5. 对 5 号商品可给你 2%佣金。 2. “指定…为代理人”常常表述为：“appoint sb. a agent”或“entrust sb. with agency”， 有时也说“to grant sb. a sole agency/to offer sb. an appoint as sole agent”等。 We have decided to appoint you as our sole agent for Australia. 我们已经决定委派你方为我们在澳大利亚的独家代理。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1. trade form

1. 贸易形式

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agency distribution countertrade consignment bidding principal indenting agent factor del credere agent sole/exclusive distributor non-exclusive distributor compensation trade full compensation partial compensation counterpurchase parallel trade switch trade offset open/unlimited bids

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代理 经销 对销贸易 寄售 投标 委托人 订购代理 独立代理 保付代理 包销商 一般经销商 补偿贸易 全部补偿 部分补偿 互购 平行贸易 转手贸易 抵消贸易 公开招标

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Trade forms include both direct ones like exportation and importation and indirect ones like agency and distribution.

2. An agent needs to carry stock as a distributor does.

3. Under the trade form of agency, the principal sets the retail price, retains title and controls the goods.

4. There is no contractual relationship between the principal and the customers under trade form of agent.

5. The distributor gains profits from the price difference at which he buys and resells the goods.

6. Countertrade means the exchange of goods for goods.

7. Under partial compensation, the export is paid both by goods and by cash.

8. In counterpurchase, the value of countertrade goods has to equal that of the export.

9. The goods exported on the consignment remain the title to the exporter.

10. The clearing units are available for the purchase of goods from both the creditor country and the debtor country in switch trade.

(Answer: 1T 2F 3T 4F 5T 6T 7T 8F 9T 10F)

Unit Three International Trade Terms Teaching Objectives (1) To let the students know the role and concept of the trade terms (2) To make student know the obligations and responsibilities of seller and buyer for each trade term

Warming Up (1) What are the activities in trade? Is it easy to describe all the responsibilities and obligations of both the seller and the buyer in a contract for every business? Then what do we do?

(2) Have you ever heard CIF or FOB?

Lead-in In international trade, several activities such as packing, insurance and shipping must be completed by either the exporter or the importer. The exporter or the importer shall make clear what responsibilities and risks each party wants to take. Therefore, it is important to establish a cut-off point to show where the exporter’s responsibilities and risks end and where the importer’s begin. Trade terms just play such an important role in this aspect. This unit we will look at the trade terms deeply. Let’s first find out what is trade term. After reading Part II, try to answer the following questions: 1. How can you define trade terms? What are the functions of trade terms?

2. What are the trade terms under Incoterms 2000?

3. What are the main differences between CFR and CIF? 4. Why are “C”-terms different from all other terms?

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What are the characteristics of “D�-terms under Incoterms2000?

Which trade terms under Incoterms 2000 can be applied to water transport?

Try to compare the differences between FOB, CFR, CIF and FCA, CPT, CIP. How can we choose a proper trade term?

Contents of Part II International Trade Terms i. Definition of trade term (!) also called price terms or delivery terms (2) an important part of a unit price in international trade (3) standing for specific responsibilities and obligations of both the buyer and the seller (4) usually indicate the place where the goods are delivered and the mode of transport used (5) name the exact point at which the ownership of the goods is transferred from the seller to the buyer (6) the use of trade terms greatly simplifies contract negotiations, saves time and cost ii. International rules and practices on trade terms * Warsaw-Oxford Rules 1932 (1) by the Association of International Law in 1932.

(2) contains 21 clauses, only stipulate the nature of CIF contract, and the costs, risks and responsibilities which should be borne by both seller and buyer.

(3) its application is limited very much. More and more merchants discarded it. * Revised American Foreign Trade Definitions 1941 (1) by nine American commercial organizations in 1941.

(2) a set of practices used frequently in US trade at that time and still be used in North America (3) contains six sorts of trade terms like EX, FOB, FAS, C&F, CIF and Ex Dock. * Incoterms 2000 (1) most commonly used in international sales contracts (2) revised and published by International Chamber of Commerce (ICC) (3) at the heart of world trade today (4) a set of uniform rules or the interpretation of international commercial terms defining the costs, risks, and obligations of buyers and sellers iii. Trade terms in Incoterms 2000 *Group E EXW (Ex Works‌named place): (1)the seller delivers when he places the goods at the disposal of the buyer, not cleared for

export and not loaded on any collecting vehicle, at the seller’s premises or another named place (i. e. factory, warehouse, etc.).

(2) means the minimum responsibilities and obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises to the destination.

(3) if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear in the sales contract.

(4) should not be used when the buyer cannot clear for export directly or indirectly. *Group F FCA (Free Carrier…named place) (1) the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place on the agreed date.

(2) the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place: If delivery occurs at the seller’s premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for unloading from his carrying vehicles.

FAS (Free Alongside Ship…named port of shipment) (1) the seller delivers when the goods are placed alongside the vessel named by the buyer at the named port of shipment.

(2) the buyer has to bear all costs and risks of loss of or damage to the goods from that moment.

(3) requires the seller to clear the goods for export.

FOB (Free on Board…named port of shipment) (1) the seller delivers when the goods pass the ship’s rail nominated by the buyer at the named port of shipment.

(2) the buyer has to bear all costs and risks of loss of or damage to the goods from that point. (3) requires the seller to clear the goods for export. *Group C CFR (Cost and Freight…named port of destination) CIF (Cost, Insurance and Freight…named port of destination) CPT (Carriage Paid to…named place of destination) CIP (Carriage and Insurance Paid to…named place of destination) (1) requires the seller to contract for carriage on usual terms at his own expense.

(2) a point up to which he would have to pay transport costs must be indicated after “C”terms.

CFR and CIF: the seller delivers when the goods pass the ship’s rail in the port of shipment;

CPT and CIP: the seller delivers the goods to the carrier nominated by him.

(3) the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.

(4) Under CIF and CIP terms, the seller also has to take out insurance and bear the insurance cost.

(5) of the same nature as “F” terms because the seller fulfills the contract in the country of shipment.

(6) two “key” points: one indicating the point to which the seller is bound to arrange and bear the costs of carriage and another one for the allocation of risk. *Group D DAF (Delivered at Frontier…named place) DES (Delivered Ex Ship…named port of destination) DEQ (Delivered Ex Quay…named port of destination) DDU (Delivered Duty Unpaid…named place of destination) DDP (Delivered Duty Paid…named place of destination) (1) seller is responsible for the arrival of the goods at the agreed destination at the border or within the importing country.

(2) seller must bear all risks and costs in bringing the goods thereto.

(3) Under the “D”-terms except DDP the seller does not have to clear the goods for import. iv. Some points of Incoterms 2000 (1) relates to only sales contract rather than contract of carriage.

(2) a great number of problems which may occur in implementing a contract are not dealt with at all, like transfer of other property rights, settlements of breaches of contract, freedom from liability in certain situation, etc.

(3) some parties may seek further precision about the terms by adding words in the contract, but Incoterms 2000 give no guidance to whatever for such additions.

(4) only CIF and CIP deal with insurance: the seller should arrange insurance for the benefits of the buyer only on minimum cover. v. How to select a trade term *Mode of transport *Term of payment *Other factors such as the wills of the parties, the price acceptable, the time of shipment, the customs formalities in both countries, and possible risks of losses and damages to the goods during the transportation.

Suggested answer to the Questions: 1. Trade terms, also called price terms or delivery terms, are an important part of a unit price in international trade, standing for specific responsibilities and obligations of both the buyer and the seller.

2. EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAF, DES, DEQ, DDU and DDP. 3. Besides the responsibilities under CFR, the seller also has to take out insurance and bear the insurance cost under CIF 4. Because they contain two “key” points, one indicating the point to which the seller is bound to arrange and bear the costs of carriage and another one for the allocation of risk.

5. The “D”-terms mean arrival contracts.

6. FAS, FOB, CFR, CIF, DES and DEQ. 7. (Open) 8. (Open). Factors such as modes of transport, terms of payment, the wills of the parties, the price acceptable, the time of shipment, the customs formalities in both countries, and possible risks of losses and damages to the goods during the transportation should be considered when selecting a trade term.

Notes for Part Two Reading 1. Warsaw-Oxford Rules 1932: 《华沙一牛津规则》是国际法协会专门为解释 CIF 合同 而制定的。这一规则对于 CIF 的性质、买卖双方所承担的风险、责任和费用的划分 2.

3.

4.

5.

以及所有权转移的方式等问题都作了比较详细的解释。 Association of International Law: 国际法协会总部设在伦敦，其宗旨是研究、诠释和 促进国际公法和国际私法，研究比较法律，提出解决法律冲突的办法，统一法律 并促进国际理解和善意。 Revised American Foreign Trade Definitions 1941: 《1941 年美国对外贸易定义修订 本》是由美国几个商业团体制定并经美国全国对外贸易会议修改的贸易术语定义。 该定义把 FOB 分为六种类型。其中只有第五种，即指定的装运港船上交货（FOB Vessel）才同国际贸易中一般通用的 FOB 的含义大体相同，而其余五种 FOB 的含 义则完全不同。 Incoterms 2000:《2000 年国际贸易术语解释通则》由国际商会修订并发布，是一套 统一规则或对国际商业术语的解释。在销售合同中引用可以明确界定当事方各自 的义务并可减少法律纠纷的风险。 ICC: 国际商会成立于 1919 年，其制定的用以规范国际商业合作的规章，如：《托 收统一规则》、 《跟单信用证统一惯例》、 《2000 年国际贸易术语解释通则》等被广泛

地应用于国际贸易中，并成为国际贸易不可缺少的一部分，国际商会属下的国际 仲裁法庭是全球最高的仲裁机构，它为解决国际贸易争议起着重大的作用。 6. freight n. 运费，货物（特指装载于车、船、飞机上的） freight charges 运费 freight tariff 运费表 freight rate 运费率 freight service 货运 7. delivery n. make delivery 交货 The parcel was in perfect condition when we made delivery. 交货时，该货情况良好。 take delivery 提货 They took delivery as soon as the goods were unloaded at the port of destination. 货物在目的港一卸下就被他们提走了。 8. carrier: 承运人。 Any person by whom, or in whose name, a contract of carriage by road, rail, air, sea or combination of transport modes has been made, and who undertakes the conveyance of the goods to the destination.

9. FOB: in order to make clear the party who will bear the loading expenses, there are some variants for FOB. FOB Liner terms FOB 班轮条件 FOB Under Tackle FOB 吊钩下交货 FOB Stowed FOB 含理舱费 FOB Trimmed FOB 含平舱费 10. CFR: in order to make clear the party who will bear the unloading expenses, there are some variants for CFR. CFR Liner Terms CFR 班轮条件 CFR Landed CFR 含着陆费 CFR Ex-ship’s Hold CFR 舱底交货 11. Therefore, the “D”-terms mean arrival contracts, while the “F” and “C”-terms mean shipment contracts and the “E”-terms mean departure contracts. 一般称 E 组为启运价合同，F、C 组为装运价合同，D 组为到货价合同。

Fill in the following graph.

Group

Trade Full name Chinese Place ofMode ofShipment Insurance term delivery transport arrangement arrangement

E Terms EXW Ex Works 工 厂 交Named place 货

All modes buyer

buyer

F Terms FCA Free (main Carrier freight unpaid) FAS Free Alongside Ship

All modes buyer

buyer

buyer 装 运 港Named portWater of shipment transport 船边交 货

buyer

FOB Free On装 运 港Named portWater buyer Board 船 上 交of shipment transport 货

buyer

C Terms CFR Cost and成 本 加Named portWater seller (main Freight of shipment transport 运费 freight paid) CIF Cost, seller 成 本 保Named portWater Insurance 险 费 加of shipment transport and 运费 Freight

buyer

CPT Carriage Paid To

货 交 承Named place 运人

seller

运 费 付Named place 至…

All modes seller

buyer

Carriage 运费、保Named and 险 费 付place Insurance 至…

Paid To

All modes seller

seller

D Terms DAF Delivered 边 境 交Named at Frontier 货 place （arrival

All modes seller

seller

CIP

）

DES Delivered 目 的 港Named portWater seller Ex Ship 船 上 交of transport destination 货

seller

DEQ Delivered 目 的 港Named portWater seller Ex Quay码 头 交of transport (Duty destination 货 Paid)

seller

DDU Delivered 未 完 税Named All modes seller Duty place of 交货 Unpaid destination

seller

DDP Delivered 完 税 后Named All modes seller Duty Paid 交货 place of destination

seller

(Notes: The answers have been given in the graphs.)

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. All international business transactions are done under Incoterms 2000.

2. Trade terms can be called price terms because they stand for the price component.

3. EXW in Incoterms 2000 is the trade term under which the obligations and costs borne by and risks of the seller are minimum.

4. Under FCA in Incoterms 2000, the risk of loss of or damage to the goods is transferred from the seller to the buyer at the time the buyer accepts the goods.

5. Generally speaking, under FOB in Incoterms 2000, it is the seller’s responsibility to apply for the export license and pay the export duty.

6. Under FOB San Francisco, San Francisco is the port of destination.

7. Under CIF, cargo insurance is to be effected by the buyer.

8. The buyer has more responsibilities, costs and risks when using FOB than using CIF. 9. The “D”-terms mean arrival contracts, while the “C”-terms evidence departure (shipment) contracts.

10. The DDP should not be used if the seller is unable to obtain import license directly or indirectly.

(Answers: 1F 2T 3T 4F 5T 6F 7F 8T 9T 10T)

Unit Four Description of Commodities Teaching Objectives (1) To let students know the contents of the description of goods: name, quantity, quality and packing of the commodities.

(2) To let students master specialized words and expression about the description of commodities.

Warming Up (1) When you want to buy something, what aspects about goods shall you consider first?

(2) Then how can you decide the goods’ quantity, quality and packing?

Lead-in When doing business with foreigners, we also first decide what we will buy or sell, and then perhaps find out what quantity and quality we want. At last, we will also pay attention to the packing. All these factors belong to description of commodities. In international trade, as different countries may have different interpretations about the same name, quality, quantity or packing, to avoid possible disputes, every effort should be made to describe the goods in the sales contract clearly. In this unit, we will study how to describe goods in a contract.

Let’s first look at the something about the name of commodity. After reading Part II, try to answer the following questions: 1. Why shall we stipulate the name of commodity in a contract clearly?

2. What are the ways of showing quality of commodity in a contract?

3. How can we stipulate “sale by sample” in a contract?

4. What are FAQ and GMQ? 5. What are the ways of measurement for goods in international trade?

6. Why shall we include a “more or less clause” in a contract? How to stipulate it in a contract?

7. What are the functions of packing in international trade?

8. How can we decide which type of packing should be used in a business transaction?

Contents of Part II Description of Commodities i. Name of commodity Name of commodity is a main part of the description of commodity.

It concerns the rights and obligations of the buyer and the seller.

It should be clearly stipulated in a contract. ii.Quality of commodity Different ways of showing quality: * Sale by sample Kinds: a. Sale by seller’s sample: samples could be offered either by the seller b. Sale by buyer’s sample: samples could be offered either by the buyer. c. Sale by counter sample: When the sample is offered by the buyer, the seller may not be very sure whether he could supply the goods in conformity with it. In order to make sure of this, he may first provide a sample produced according to the buyer’s original sample and send it to the buyer for confirmation. If the counter sample is confirmed by the buyer, it will be the basis of the seller’s delivery.

Note: a. The quality of the commodities should be strictly the same as the sample. b. Otherwise, it should be stipulated clearly in the contract as “quality be similar to sample submitted by the seller on … (date)” or “the goods to be delivered shall be about equal to seller’s sample No…..” * Sale by specifications Be expressed by some indexes. e.g.: the specification of iron ore may be expressed as “the content of iron >80%” * Sale by grade a. Some products are usually classified into different grades b. e.g.: fresh eggs weighed 55-60g Grade A 50-55g Grade B 45-50g Grade C c. The grade of the same product may be different in different countries. * Sale by standard a. The quality could be described in the contract by the international standard, or the national standard either of the seller’s or the buyer’s country

b. FAQ: a quantity of a product that is offered not on a particular quality specification but on the basis that is equal to the average quality of the current group or recent shipment.

GMQ: the sound quality that is free from defects and is good enough to satisfy the purpose for which the buyer intends to use the goods or for which the seller intends that they should be used. * Sale by brand or trade mark Products with high reputation like Coca-Cola. * Sale by name of origin Some countries and places are famous of certain products and the quality of these products may be described by their origin countries or places, e.g., Chinese porcelain, Jinhua bam, etc. * Sale by description and illustration Terms like “quality and technical data to be strictly in conformity with the description submitted by the seller” can be used for this standard.

Notes for the quality of commodities: About “Quality to be considered and being equal about to the sample” or a “Quality tolerance” iii. Quantity of commodity *Ways of measurement and units of measurement The Metric System, British System, U.S. System and International System of Units are generally used in international trade nowadays.

By weight (gross weight, net weight, conditioned weight, theoretical weight, legal weight, net net weight and “gross for net”): kilogram, ton, metric ton, gram, pound, ounce, long ton, short ton, etc.

By number: piece, package, pair, set, dozen, gross, ream, roll, head, case, bale, barrel, bag, etc.

By capacity: liter, gallon, bushel, etc.

By length By area: square yard, square meter, square foot, square inch, etc By volume: cubic yards, cubic meter, cubic foot, cubic inch, etc.

By length: yard, meter, foot, centimeter, etc. *More or less clause a. also called “plus or minus clause” b. the wording: “XXX with X% more or less at seller/buyer/shipper’s option”. c. “about” or “approximately”: a difference not exceeding 10% more or 10% less is allowed.

d. Generally speaking, unless there is a stipulation that the quantity of the goods must not be exceeded or reduced, a tolerance of 5% more or 5% less will be permissible. e. normally used for bulk goods and not applicable to the number of packed units or individual items. iv. Packing * Factors influencing types of packing a. the need of the cargo. b. factors in relation to transport like the nature of transit c. the dimension and the weight limit d. customs or statutory requirements. e. insurance acceptance conditions f. be economical while being sufficient. *Types of packing: Bale: a heap of material pressed together and tied with rope or metal wire, suitable for paper, wool, cotton, carpets, etc.

Bag: made of cotton, plastic, paper or jute, ideal for cement, fertilizer, chemicals, etc.

Barrel/Drum: made of wood, plastic or metal used for liquid or greasy cargoes.

Box/Case: wooden in structure and various sizes, and some are airtight, providing strong protection for cargoes as equipment and car accessories.

Glass container: used for dangerous liquid cargoes such as acids, and it needs careful handling.

Carton: a very common form of packing particularly for consumer-type of products. It also aids marketing as words can be printed on them.

Crate/Skeleton case: wooden structure between a bale and a case used for light weight goods of large cubic as machinery.

Suggested answer to the Questions: 1. Because as a basis of a transaction and a main condition of sale, the name of commodity concerns the rights and obligations of the buyer and the seller.

2. There are different ways of showing quality such as sale by sample, sale by specifications, sale by grade, sale by standard, sale by brand or trade mark and sale by name of origin.

3. (Open). For example, “sale by seller’s sample”, “sale by buyer’s sample” or “sale by counter sample” can be used. “Quality be similar to sample submitted by the seller on … (date)” or “the goods to be delivered shall be about equal to seller’s sample

4.

5.

6.

7.

8.

No…..”can also be used.

FAQ means a quantity of a product that is offered not on a particular quality specification but on the basis that is equal to the average quality of the current group or recent shipment. While GMQ refers to the sound quality that is free from defects and is good enough to satisfy the purpose for which the buyer intends to use the goods or for which the seller intends that they should be used.

Ways of calculation include weight, length, area, volume and capacity.

It is sometimes difficult to ship the exact quantity of the commodity, so a “more or less clause” may be used to allow some tolerance in the quantity. The wording of such a clause might be “XXX with X% more or less at seller/buyer/shipper’s option”.

First, packing protects cargoes and reduces losses. Second, packing aids transport and reduces transport cost. Third, packing facilitates stowage and transportation and promotes sales.

(Open) The need of the cargo, factors in relation to transport, the dimension and the weight limit, the customs or statutory requirements, the insurance acceptance conditions, economy and sufficiency and other factors should be considered.

Notes for Part Two Reading 1. ISO: 国际标准化组织(International Organization for Standardization)简称 ISO，是一 个全球性的非政府组织，其成员由来自世界上 100 多个国家的国家标准化团体组 成。ISO 的主要功能是为人们制订国际标准达成一致意见提供一种机制。目前 ISO 已经发布了 9000 多个国际标准，如 ISO 的集装箱系列(目前世界上 95%的海运集 装箱都符合 ISO 标准)和 ISO9000 质量管理系列标准等。 2. Methods of naming the goods: by use: weaving machine by materials: cotton, wool coat, wool blanket by component: pearl cream by appearance: green bean by craft and manufacturing technology: refined oil by person’s name: Du Kang, Kong Fu Wine 3. If the goods delivered by the seller are not in accordance with the agreed name of commodity, the buyer has the right to lodge a claim, refuse the goods or even cancel the contract. in accordance with 按照。外贸英语里常见的表达方式还有： in compliance with 和 in conformity with 如：

In compliance with your request, we’ve sent you our samples. 应你方要求我们已经将样品寄出。 The L/C stipulations are in strict conformity with the contract terms.

4.

5.

6.

7.

8.

信用证的规定与合同条款是严格一致的。 conditional weight 公量: this is usually used for high value goods, such as cotton, wool and silk theoretical weight 理论重量: some goods are produced by the same specification, so the weight of every piece is almost the same. The total weight can be calculated by all the pieces time the unit weight. legal weight: the total weight of the goods. net net weight: usually used for the precious metal, e.g.: silver and gold. packing n. 包装 inner packing 内包装；outer packing 外包装 其他部分常用的出口包装容器名称： bundle 捆 gunny bag 麻袋 wooden case 木箱 drum 铁皮圆桶 tin 听，罐 sack 袋 basket 小箱子 paper bag 纸袋 poly-bag 塑料袋 3-ply paper bag 三层纸袋 外贸英语有关包装的常用句型为： (be) packed in …（包装器皿）of (单位重量或数量) 如： “花生用塑料袋装，每袋一公斤。”可译为： Groundnuts are to be packed in poly-bags of 1 kilogram each.

若要表示更大的外包装，则可以在原句后加“…（小包装数量）+to a (大包装）” 如： Groundnuts are to be packed in poly-bags of 1 kilogram, 10 bags to a carton.

9. shipment: 装运的货物，和 consignment 同义。Shipment 还有“装运”和“装运的期限” 等意。如： Please arrange shipment immediately. 请立即安排装运。 Please extend shipment 30 days. 请延长装运期 30 天。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

description of commodity name of commodity sale by sample counter sample original sample reference sample sale by specifications FAQ GMQ brand trade mark quality tolerance gross weight net weight metric ton more or less clause plus or minus clause packing bulk cargos general merchandises

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

商品描述 品名 凭样品买卖 对等样品 原样 参考样品 凭规格买卖 良好平均品质 上好适销品质 品牌 商标 品质公差 毛重 净重 公吨 溢短装条款 增减条款 包装 散装货 大路货

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Different commodities have different qualities, but the same commodity must have the same quality.

2. A term for defining one particular degree of quality in one country may have quite a different meaning in another country.

3. Whether sale by buyer’s sample or by seller’s sample, the quality of the commodities should be strictly same as sample. Otherwise, it should be stipulated in the contract clearly.

4. The grade of the same product is always the same in different countries.

5. Different ways of measurement such as by weight, by length, by area, by volume and by capacity may be used for different products.

6. In reality, the quantity of goods shipped must be exactly the same with that stipulated in the contract.

7. Packing can only serve as a form of protection.

8. Packing should be designed according to the need of the cargo.

9. Generally speaking, more packing is required for containerized consignments.

10. Bulk cargoes require little packing.

(Answers: 1F 2T 3T 4F 5T 6F 7F 8T 9F 10T)

Unit Five International Cargo Transport Teaching Objectives (1) To make clear about the advantages and disadvantages of each mode of transport (2) To know how to fix the shipping clauses including the time of shipment, the port of shipment/destination and so on.

Warming Up (1) If you sell something to the customer in another city, for example, Shenzhen, there is a long distance, will you go to Shenzhen and give the goods to him/her?

(2) Then how do you send the goods to the customer?

Lead-in There is a long distance between the buyer and the seller, and the goods must be transported form from one place to another. Without transport, international trade would not be possible. Generally speaking, we can transport goods by sea, rail, air, road and other means.

Besides the means, the buyer and the seller should also decide when, where and other aspects of transport. So in this unit, we will look deep into the details of transport. How can goods made in America enter into China? After reading Part II, try to answer the following

questions: 1. What modes of transport are usually used in international trade?

2. Why is container transport popular in international trade?

3. What is international multimodal transport?

4. How can we stipulate time of shipment in a contract?

5. If different ports of destination are stipulated in a CFR contract, what shall the seller pay more attention to?

6. What shall be included in a shipping notice?

7. How can we stipulate partial shipment clause for the advantages of the exporter?

8. If there is no direct sail to port of destination, how should we stipulate the shipping clause?

Contents of Part II International Cargo Transport i. Mode of transport *Sea, rail, road, air and pipeline transport a. different kinds of vessels: According to the use: General cargo vessels: to carry various types of cargoes.

Oil tankers: responsible for the movement of the world’s oil.

Container vessels: to carry from 200 to over 4,000 standard containers of 20 feet in length.

Oil/bulk/ore (OBO) vessels: multi-purpose ships designed for switching between bulk shipments of oil and bulk grain, fertilizer and ore.

RO/Ro vessels: for loaded trailers or any vehicles to be driven onto the vessel to facilitate faster loading and unloading.

Lighter aboard ship (LASH): to carry lighters on which cargoes are loaded, ideal for shallow waterways.

Refrigerated ship: for carrying perishable cargoes.

Timber ship: with spacious holds and heavy lifts for carrying timber or wood logs.

According to the ways of operation: Liner: a regular route, stops at fixed ports according to an advertised schedule. Its freight is relatively fixed with loading and unloading charges included.

Tramp: not follow regular routes or fixed schedule, but travels when cargoes are available, ideal for cargo of a complete shipload. Its freight is determined by the market.

Tramps can be divided into voyage charter and time charter. b. other modes of transport

Road transport: mostly used to transport cargoes in small quantities, and offers a door-to door service Air transport: when speed is taken into consideration, will be more effective Pipelines: often used for transporting gasoline, crude oil, and natural gas. *Container transport a. highly efficient in terms of reliability, cost, quality of service, advanced technology b. 20-foot and 40-foot containers c. offers a door to door service under FCL/FCL, door to cfs service under FCL/LCL, cfs to cfs service under LCL/LCL, cfs to door service under LCL/FCL d. can be handled quickly and easily by standardized equipment e. less packing f. the low risks of cargo damage and pilferage, favorable cargo premiums * Multimodal transport a. the carriage of cargos by at least two modes of transport b. on the basis of a multimodal transport contract c. only one multimodal transport operator (MTO) responsible for transport d. a multimodal transport contract ii. Time of shipment a. Definition: the deadline by which the seller makes shipment of the contracted goods. b. Two ways to set the time of shipment: 1. to clearly specify a period of time: “shipment not later than May 2nd, 2007” 2. to create a link between the time of shipment and the deadline by which the relevant L/C must reach the seller: “shipment is to be effected xxx days after the seller receives the L/C”. c. Consideration for negotiating the time of shipment: 1. Whether the goods and shipping space are available if the seller is responsible for transport.

2. The use of unclear terms such as “shipment as soon as possible”, “immediate shipment” and “prompt shipment” shall be avoided.

3. Whether the nature of the cargo shall influence the shipment. iii. Port of shipment and port of destination a. Port of shipment: 1. the place where goods are shipped and depart.

2. Under a FOB, CFR or CIF contract, port of shipment is usually proposed by the exporter and is stipulated in the contract when confirmed by the importer. b. Port of destination: 1. the port at which goods are ultimately discharged.

2. often proposed by the importer and is stipulated in the contract when confirmed by the exporter.

3. If different ports of destination are stipulated in the contract, for instance, CIF London/ Rotterdam/ Hamburg Optional, the seller shall compare respective freight and surcharges to different ports in deciding price or calculating the freight, and the highest ones shall be the contracted freight and surcharges. Besides, the extra freight due to selecting port of destination shall be for the importer’s account. iv. Shipping notice The seller notifies the buyer in a shipping notice the contract number, name of commodity, quantity or weight, invoice value, name of vessel and the date of shipment immediately after the effecting of shipment so that the buyer can make preparation for receiving the goods at the place of destination. v. Partial shipments and transshipment *Partial shipment a. also called shipment on installments b. the goods under one contract are shipped in different terms or by different lots. *Transshipment a. unloading and reloading from one means of transport to another means of transport in different modes of transport during the course of carriage from the place of shipment to the place of destination. b. If a place, to which there is no direct sail, is contracted to be place of destination, the article “transshipment shall be allowed� is necessary in the contract. c. Generally speaking, that transshipment is allowed is advantageous for the seller d. increase the cost of shipment and the possibility of damage and loss and delay in delivery of commodities

Suggested answer to the Questions: 1. The modes of transport usually used in international trade are sea transport, rail transport, road transport, container transport, multimodal transport, air transport and pipeline transport.

2. (Open. Answer this question from the aspect of advantages of container transport.)

3. International multimodal transport means the carriage of cargos by at least two modes of transport on the basis of a multimodal transport contract and only one multimodal transport operator is responsible for taking the cargo from the consignor and delivering them to the consignee.

4. There are basically two ways to set the time of shipment. One is to clearly specify a period of time such as “shipment not later than May 2nd, 2007”, and the other is to create a link between the time of shipment and the deadline by which the relevant L/C must reach the seller. For example, “shipment is to be effected xxx days after the seller receives the L/C”.

5. The seller shall compare respective freight and surcharges to different ports in deciding price or calculating the freight, and the highest ones shall be the contracted freight and surcharges. Besides, the extra freight due to selecting port of destination shall be for the importer’s account.

6. The contract number, name of commodity, quantity or weight, invoice value, name of vessel and the date of shipment or other useful information shall be included in the shipping notice.

7. To stipulate partial shipment in principle with the terms of shipments, lots and quantity or weight not detailed.

8. We should stipulate a transshipment clause like “transshipment shall be allowed”

Notes for Part Two Reading 1. Air Transport Kinds: a. scheduled airlines 班机运输 A scheduled service 定期的服务 A fixed airline 固定航线 A fixed airport 固定始发点 b. Chartered carriers 包机 *the hire of an aircraft by a shipper or several shippers to deliver cargoes. *cargoes of large quantity *cargoes of different shippers to the same destination c. Consolidated consignment 集中托运 It means that the air freight forward usually assembles a number of individual shipments into one consignment and dispatches them on one air waybill. d. Air express service 航空急件传递方式 *We call it “Desk to Desk Service”. *Emergent goods such as medicine, medical apparatus and instruments, samples of goods, documents and precious goods 2. Two ways of setting the time of shipment a. to specify clearly a period of time

This method is widely used. e.g. Shipment during July. 七月份装运。 Shipment during July/Aug./ Sep.7/8/9 月份装运。 Shipment not later than July 31st. 装运期不迟于 7 月 31 日。 Shipment at or before the end of Sept.9 月底或以前装运。 b. to set a time of period between the shipment and the deadline by which the relevant L/C must reach the seller e.g. Shipment is to be made xx days after the seller receives the L/C 收到信用证 后 30 天内装运。 3. Installment n. 分批装运，分期付款 Goods are requested to be shipped in three equal monthly installments. 货物要按照要求在三个月内分 3 等批装运。 How many installments did it take to pay off the loan? 贷款分几次付清？

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

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mode of transport sea transport liner tramp rail transport road transport air transport container transport FCL/full container load LCL/less than container load cfs/container freight station multimodal transport consignor consignee time of shipment port of shipment port of destination shipping notice/advice

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运输方式 海洋运输 班轮 不定期轮 铁路运输 公路运输 航空运输 集装箱运输 整箱货 拼箱货 集装箱站 多式联运 托运人 收货人 装运时间 装运港 目的港 装运通知

19. partial shipment 20. transshipment

39. 分批装运 40. 转运

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Sea transport is the most important mode of transport in international trade now.

2. The freight of liners is relatively fixed, while the freight of tramps is mainly determined by the market.

3. Multimodal transport means the goods are carried by at least two modes of transport under at least two multimodal transport operators.

4. Time of shipment in a contract can only be a fixed period of time.

5. If optional ports of destination are stipulated in the contract, the extra freight due to selecting port of destination must be paid by the importer.

6. The notice of shipment under CFR is very important, because the buyer will take out insurance upon receipt of the notice.

7. Partial shipment means that the goods under one contract are shipped in different terms or by different lots.

8. In case it was stipulated in the contract that “shipment is made during July and August”, one lot the goods must be shipped in July while another in August.

9. If there is no direct sail to the destination, that “transshipment shall be allowed” shall be stipulated in the contract.

10. Transshipment may increase the cost of shipment and the possibility of delay in delivery of commodities.

(Answers: 1T 2T 3F 4F 5F 6T 7T 8F 9T 10T)

Unit Six International Cargo Transport Insurance Teaching Objectives (1) To let students know the types of risks, losses and expenses covered.

(2) To make students master the main types of insurance for different modes of transport

and the different kinds of insurance documents.

Warming Up (1) Have your parents ever buy insurance for you or other properties like house? What kinds of the insurance?

(2) Why do we need to do that?

(3) Then what risks will goods in international meet? What insurance is suitable to the goods?

Lead-in In international trade, the transportation of goods from the seller to the buyer is over a long distance and has to go through different activities. These goods are subject to damage or loss. So traders need to insure the goods against certain risks. In order to choose a proper insurance coverage, the exporter or the importer should consider the mode of transport and possible losses. Today, we are going to have a general view about cargo insurance. After reading Part II, try to answer the following questions: 1. What are the differences of General Average and Particular Average?

2. What is the coverage of marine insurance under CIC? 3. What is All Risks under CIC? 4. How do we take out additional coverage?

5. How do we choose proper insurance coverage?

6. Is the same coverage of ocean marine insurance used for land transport? If not, what insurance coverage is for land transport?

7. What are the differences between insurance policy and insurance certificate?

8. What are the characteristics of an open policy?

Contents of Part II International Cargo Transport Insurance i. Marine cargo insurance *Risks, losses and expenses (1) Risks a. perils of the sea: natural calamities: the perils under force majeure such as heavy weather, lightening, tsunami and volcanic eruption.

unexpected accidents: such risks as fire, explosion, vessel being stranded, grounded or sunk and collision. b. extraneous risks: general risks: thefts and pilferage, contamination, leakage, sweating and heating, taint, fresh/rain water damage and so on special risks: war, strikes, failure to deliver due to some special laws and regulations and so on (2) Losses the damages or losses of the insured goods incurred by the above risks. a. total loss actual total loss: the complete loss of the insured cargo in value constructive total loss: occurs when the cost of salvaging the shipment would be more than the salvaged value of the goods b. partial loss: a partial loss suffered by part of the cargos. particular average: occurs when a storm or fire damages part of the shipper’s cargos and no one else’s cargos have to be sacrificed to save the voyage. general average: when both the ship and the goods on board are endangered and the captain, for the safety of the ship and the goods on board, intentionally and reasonably does some sacrifices or makes some expenses.

(3) Expenses a. sue and labor expenses: arising from measures properly taken by the insured and his agent for minimizing or avoiding losses caused by the risks covered in the insurance policy. b. salvage charge: paid to a third party other than the insured and insurer. *Marine insurance coverage Under China Insurance Clause (CIC), there are basic coverage and additional coverage for ocean marine cargo insurance. Where the goods insured sustain loss or damage, the insurance company shall undertake to indemnify according to the insured condition specified in the Policy and the relevant Provisions.

(1) Basic coverage ☆FPA FPA covers: (1)Total loss of the whole consignment hereby insured caused in the course of transit by natural calamities.

(2)Total or partial loss caused by unexpected accidents.

(3)Partial loss of the insured goods attributable to heavy weather, lightning and/of tsunami, where the conveyance has been grounded, stranded, sunk or burnt, irrespective of whether the event or events took place before or after such accidents.

(4)Partial or total loss consequent on falling of entire package of packages into sea during loading, transshipment or discharge.

(5)Reasonable cost incurred by the insured in salvaging the goods or preventing or minimizing a loss recoverable under the Policy, provided that such cost shall not exceed the amount insured of the consignment so saved.

(6)Losses attributable to discharge of the insured goods at a port of distress following a sea peril as well as special charges arising from loading, warehousing and forwarding of the goods at an intermediate port of call or refuge.

(7)Sacrifice in and contribution to general average and salvage charges.

(8)Such proportion of losses sustained by the shipowners as is to be reimbursed by the cargo owner under the Contract of Affreightment “Both to Blame Collision” clause.

CIC FPA has the same coverage as ICC(C) except for damage of packing during loading and unloading. ☆WPA a. a wider cover than FPA. b. Besides FPA cover, it provides extensive cover against all loss or damage due to marine perils throughout the duration of the policy, including partial loss or damage which may be attributed to natural calamities like heavy weather. c. also covers partial losses of the insured goods caused by heavy weather, lightning, tsunami, earthquake or flood. d. ICC (B) has the same coverage plus damage of packing during loading and/or unloading. ☆All Risks a. Aside from the risks covered under the FPA and WPA, also covers all risks of loss of or damage to the insured goods whether partial or total, arising from external causes in the course of transit. b. “All Risks” does not, as its name suggests, really cover all risks. c. The “All Risks” clause excludes coverage against damage caused by war, strikes, riots, etc. d. ICC (A) provides cover against all risks that are not specifically excluded and is similar to All Risks of CIC. (2) Additional risks a. No additional risk can be purchased to insure goods independently. b. Kinds of additional risks

general additional risks: TPND, Fresh Water Rain Damage, Risk of Shortage, Risk of Intermixture and Odor, Damage caused by Heating and Sweating, Hook Damage, Risks of Rust, etc. General additional risks should go with FPA or WPA and are included in All Risks coverage. special additional risks: War Risk, Strikes Risk, Failure to Delivery Risk, Import Duty Risk, On Deck Risk, Rejection Risk and so on. Special additional coverage is usually taken out together with FPA, WPA or All Risks. ii. Insurance under land, air and parcel post transportation Insurance coverage for land transportation: Land Transportation Risk and All Risks for land transportation Insurance coverage for air transport: Air Transportation Risks and Air Transportation All Risks.

Insurance coverage for parcel post: Parcel Post Risk and Parcel Post All Risks. iii. Insurance clause Under FOB, CFR or CIF trade terms, the contract insurance clauses may be stipulated as follows: *Insurance to be effected by the buyer. *Insurance to be effected by the seller on behalf of the buyer for 110% of the invoice value against FPA (WPA, or All Risks), and premium to be for the buyer’s account. *Insurance to be effected by the seller for 110% of the invoice value against FPA (WPA or All Risks) and war risks as per Ocean Marine Cargo Clause of the People’s Insurance Company of China (PICC). iv. Forms of marine insurance contract 5 forms of marine insurance documents: * Insurance policy a. the most widely used insurance document. b. legally binds upon both parties. c. Contents of the insurance policy usually include the names and addresses of the insured and the insurer, the endorsement of the issued, a description of the risks covered and the insured time, a description of the consignment, the sum insured, the premium and so on. d. There are rights and obligations of the two parties on the back of the insurance policy. * Insurance certificate a. a kind of simplified insurance policy. b. the rights and obligations of the two parties are omitted. c. has the same legal validity as the insurance policy. *Open policy

a. a convenient method for insuring the goods where a number of consignments of similar export goods are intended to be covered. b. An open policy covers these shipments, as soon as they are made, under the previous arrangement between the insured and the insurer. c. The details of these shipments should be supplied to the insurer later on in the form of shipment advices which include the names of cargoes, quantities, insured amount, mode of transport, place of shipment, destination, date of shipment and so on. d. An open policy only indicates the scope of insurance coverage, insurance premium rate and highest insured amount of each lot, calculating method of the insurance premium, etc. * Combined certificate When the goods are exported to Hong Kong, and some countries in Southeast Asia, the insurance company sometimes adds the coverage, insured amount and serial number of insurance on the commercial invoice which is made out by a foreign trade company. This is a certificate which combines the invoice with the insurance policy, thus called combined certificate. It is the simplest insurance certificate in use. *Endorsement After insurance has been taken out, if the insured wants to replenish or change the contents of the policy, he may apply to the insurer, and then another certificate which indicates the relative amendment will be issued. This certificate is called endorsement.

Suggested answer to the Questions: 1. General average is in use when both the ship and the goods on board are endangered and the captain, for the safety of the ship and the goods on board, intentionally and reasonably does some sacrifices or makes some expenses. Particular average occurs when a storm or fire damages part of the shipper’s cargos and no one else’s cargos have to be sacrificed to save the voyage.

2. Under C.I.C., there are basic coverage and additional coverage for ocean marine cargo insurance. Basic coverage mainly includes FPA, WPA and All Risks. Additional coverage includes general additional coverage and special additional coverage.

3. All Risks is the most comprehensive basic coverage. Aside from the risks covered under the FPA and WPA, All Risks also covers all risks of loss of or damage to the insured goods whether partial or total, arising from external causes in the course of transit. But the “All Risks” clause excludes coverage against damage caused by war, strikes, riots, etc.

4. No additional risk can be purchased to insure goods independently. General additional

risks should go with F.P.A. or W.P.A. and are included in All Risks coverage. Special additional coverage is usually taken out together with FPA, WPA or All Risks.

5. We should be aware of the possible losses to be expected of particular goods.

6. No. Insurance coverage for land transportation can be divided into Land Transportation Risk which is almost equivalent to WPA, and All Risks for land transportation which is almost equivalent to Marine All Risks.

7. Insurance certificate is a kind of simplified insurance policy. The rights and obligations of the two parties are omitted.

An open policy is a convenient method for insuring the goods where a number of consignments of similar export goods are intended to be covered. It covers these shipments, as soon as they are made, under the previous arrangement between the insured and the insurer.

Notes for Part Two Reading 1. cover n./v. 保险，投保 We have arranged the necessary insurance cover.

We shall cover the goods against All Risks.

The insurance policy covers us against Breakage.

2. coverage n. 保险范围 We want broader coverage to include some extraneous risks.

3. General average: 单独海损，是“共同海损”的对称。船舶或货物在运输途中因海难 或其他事故而发生的不属于共同海损的局部损失。与共同海损相对而言，它只与 单独利益方有关，损失由个别的所有人或其承保人单独负责。 4. General average: 共同海损，指载货船舶在运输途中遭受海难或其他意外事故危及 船货的共同安全，船长为拯救船舶及货物而采取合理措施而导致船货等一部分财 产的特殊牺牲和支付的费用。这部分损失由船舶、货物、还有有关受益各方根据船 舶及货物到达目的港时的价值比例分摊。 5. 保险条款一般应包括一下内容：由谁投保（ to be covered by…）、保什么险别 （against…risks）、保险金额（for … amount）。 6. force majeure: 不可抗力，指不能预见、不能避免并且不能克服的客观情况，如特 大自然灾害、地震等。 7. CIC: 中国海上运输货物保险条款 8. ICC 伦敦保险协会条款

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

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insurer insurance company premium insured total loss partial loss general average particular average War Risk Strikes Risk FPA WPA All Risks TPND insurance coverage insurance policy insurance certificate open policy combined certificate endorsement

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承保人 保险公司 保（险）费 被保险人 全部损失 部分损失 共同海损 单独海损 战争险 罢工险 平安险 水渍险 一切险 偷窃提货不着险 保险范围 保险单 保险凭证 预约保险单 联合凭证 批单

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Cargo transport insurance is to protect the interests of traders from any possible financial losses.

2. The premium charged for the insurance policy is calculated according to the risks involved.

3. Two types of risks are covered by ocean marine insurance under CIC: perils of the sea and extraneous risks.

4. WPA is a wider cover than FPA. 5. In international trade, if All Risks was covered, any loss caused by any reason on the

6.

7.

8.

9.

10.

way can be compensated by insurance company.

The additional coverage can be taken out separately.

The insurance coverage of ICC (A), ICC (B), ICC (C) is roughly the same as that of FPA, WPA, All Risks under CIC respectively.

It is the best way to choose a large insurance coverage.

Land Transportation Risk is almost equivalent to WPA. When a number of consignments of similar export goods are intended to be covered, open policy is a better method.

(Answers: 1F 2T 3T 4T 5F 6F 7F 8F 9T 10T)

Unit Seven Price of Import and Export Commodity Teaching Objectives (1) To let students know how to describe price of import and export commodity.

(2) To let students master choice of currency for account and payment, knowledge about price clause including unit price, discount and so on.

Warming Up (1) How much is your‌.?

(2) Do you bargain when you buy something?

Lead-in Just as we buy something in our daily lives, price in international trade is also one important factor. In practice, bargain is common between the buyer and the seller. The buyer and the seller should select a workable price. Today, we are going to study some items relating to price, for example, currency exchange, price terms, commission and discount, etc. After reading Part II, try to answer the following questions: 1. What factors shall be taken into consideration when pricing in international trade?

2. What are included in a unit price clause?

3. What are the functions of price terms?

4.

5.

6.

7.

8.

What is the relationship between money of account and money of payment?

Is hard currency as money of payment more favorable to the exporter? Why? Why does exchange rate influence international trade greatly?

What are commission and discount? How can they affect price?

Give one example for commission-included price and discount-included price respectively.

Contents of Part II Price of Import and Export Commodity i. Pricing considerations Factors considered in arriving at a potential price: *Having a good knowledge of the international market level, establishing all relevant market data on competitive prices for similar products and evaluating them. *Considering the policies and regulations that apply to a particular international market area. *On the basis of international market level, adjusting prices according to the exporter’s specific purposes or the importer’s requirements. *Watching the change of supply and demand relationship and the trend of rising or failing of the market prices. *Including adequate profit margin over your actual production and distribution costs in price. *Considering the quality and quantity of the products contracted, the total cost of exporting(cost of production, selling and delivery costs, and taxes and tariffs), place and terms of delivery and other factors that influence the export prices. *Considering terms of payment and the possible fluctuations of foreign exchange rates when pricing. ii. Price clause Not only the price figure for each measuring unit but the division of relevant expenses, risks and obligations between the seller and the buyer during the period of transport should be stated clearly in the contract. a. unit price 1. four parts: currency unit, unit price figure, measuring unit and price terms 2. e.g., “USD200.-/MT, CIF London” 3. ISO 4217 Currency Code List: the currency code is composed of the country’s twocharacter Internet country code plus an extra character to denote the currency unit, such as CNY, HKD, GBP and AUD.

b. total amount: 1. the sum of the money for one business transaction.

2. = the unit price multiplied by the quantity of the goods.

3. often shown in the contract not only in Arabic numbers but also in English words iii. Price Terms a. Price terms are an important part of a unit price in international trade, representing specific obligations of the buyer and the seller. b. To the seller, selecting different terms means different responsibilities and costs. iv. Money of account and payment a. money of account and money of payment Money of account: the currency used for price calculation.

Money of payment: the currency for settlement. b. hard currency and soft currency hard currency: (currency that is reliable and stable and more in demand) as payment currency is more favorable to the exporter soft currency: (currency that is not readily convertible to other currencies which are more in demand, and that is unstable in value) as payment currency is more favorable to the importer c. about exchange rate If it is stipulated in the contract that the currency used for price calculation is different from the money of payment, the choice of exchange rates of different periods between the two currencies will be vital. d. exchange proviso clause: If one party agrees to use an unfavorable currency, he should take some measures beforehand against foreign exchange risks. An exchange proviso clause may be stipulated in the contract to reduce the foreign exchange risks. For example, if a soft currency (suppose to be Japanese Yen) is chosen as the money of account and payment, the seller may request to stipulate an exchange proviso clause like “the total amount of the payment should be equivalent to the value calculated at the exchange rate between Japanese Yen and US dollar on the date of signing this contract.� v. Foreign exchange rate a. Foreign exchange: the currency of any foreign country which is the authorized instrument of settlement and the basis for record keeping in that country. b. Foreign exchange rate: the price relationship between the currencies of two countries or the price of one currency in terms of the other. c. The floating of exchange rates has crucial relevance to international trade. vi. Commission and discount

Commission: a. used when an intermediary is involved in the deal. b. the money received by an intermediary for his service. c. kinds: plain commission: indicated in price clause, often represented by a capital letter “C” followed a percentage of commission rate which is inserted into the price term, for example, “USD200 per M/T CIFC2 London”. secret commission: not be indicated in the price clause of the contract but agreed upon orally by the seller or the buyer with the intermediary.

Discount: a. a certain percent of price reduction, a special favor given by the exporter to the importer to promote sales. b. types: quantity discount, cash discount and special discount plain discount: specified in the price clause, for example, “USD 200 per metric ton CIF London less 3% discount”. secret discount:

Suggested answer to the Questions: 1. (Open).

2. A unit price consists of four parts, which are currency unit, unit price figure, measuring unit and price terms.

3. Price terms are an important part of a unit price in international trade, representing specific obligations of the buyer and the seller.

4. Generally, the money of account is the money of payment if no otherwise stipulated in the contract.

5. Yes. (Open) 6. (Open).

7. Commission refers to the money received by an intermediary for his service. Discount is a certain percent of price reduction, a special favor given by the exporter to the importer to promote sales. Both commission and discount may be indicated in price clause.

8. “USD200 per M/T CIFC2 London”; “USD 200 per metric ton CIF London less 3% discount”.

Notes for Part Two Reading 1. 讲到价格低廉和行得通可以说： reasonable 合理的 workable 可行的 practical 可行的 attractive 有吸引力的 realistic 现实的 competitive 有竞争力的 popular 通行的 keen 低廉的 low 低廉的 cost price 成本价 market price 市价 bottom price 最低价 in line with the market(level)与市场相符 2. 讲到价格高和行不通可以说： high 高的 on the high side 偏高 out if the line with the market(level)与市场不符 3. 常与价格在一起使用的动词有： go up 上升 come down 下降 increase 上升 drop 下降 rise 上升 fall 下降 advance 上升 decline 下降 raise 提高 cut down 减少 improve 提高 reduce 减少 lift 提高 bring down 减少 4. price n. 价格 Your price is on the high/low side. 你方价格偏高/偏低。 Your price is in line/out of line with the market 你方价格与现行价格一致/不一致。 Business is possible if you can reduce your price by 5%. 如果能降价 5%，可望成交。 current price 现价 market price 市价 buying price 买入价 selling price 卖出价 net price 净价 retail price 零售价 wholesale price 批发价 v. 给…定价 The goods are priced so high.

商品标价太高。 5. ISO 4217 Currency Code List: 国际标准化组织 4217 货币代码表。货币代码的三个 字符中，前两个代表该种货币所属的国家或地区，通常是两个字母的国家代码， 第三个代表货币单位，由货币符号的第一个字符表示。 6. examples for clause of price. （1）单价: 每箱 0.70 美元 FOB 天津 总值: 14.850 美元 Unit Price: at USD0.70 Per box FOB Tianjin.

Total Value: USD14850 (Say US Dollars Fourteen Thousand Eight Hundred And Fifty Only) （2）单价: CIF 哥本哈根每公吨 97 英镑 总值: 14550 英镑 Unit Price: at GBP97 per Metric ton CIF Copenhagen.

Total Value: GBP 14550 (Say Pounds Sterling Fourteen Thousand Five Hundred And Fifty Only) （3）单价: 每公吨 200 美元 CIFC2%伦敦. 总值: 100000 美元 Unit Price: at USD200 per metric ton CIFC2London.

Total Value: USD 100000 (Say US Dollars One Hundred Thousand Only) （4） 单价: 每打 24 加元 CFRC2% 温哥华 总值: 24000 加元 Unit Price: at CAN$ 24 per dozen CFRC2 Vancouver Total Value: CAN$ 24000 (Say Twenty-four Thousand Canadian Dollars Only) （5）单价: 每公吨 1000 人民币 CIF 新加坡含 3%佣金 总值: 50000 元人民币 Unit Price: at RMB ￥(CNY) 1000 per M/T CIF Singapore including 4% commission Total Value: RMB (CNY) 50000 (Say Fifty thousand RMB Only) （6）单价: 每件 45 英镑 CIF 汉堡折扣 2% 总值: 44100 英镑 Unit Price: at GBP 45 per piece CIF Hamburg less2% discount Total Value: GBP 44100 (Say Pounds Sterling Forty-four Thousand One Hundred Only) 7. discount n. 折扣，贴现，减价 at a discount 贴水，折扣，没有销路 The highest discount we can allow on this article is 10%. 我们对这项商品最多只能打九折。 Many articles are reported to be selling at a discount. 据报道，许多商品在打折销售。

The rate of discount in London is now 5%.

Words study Directions: Translate the following English expressions in Part II into Chinese: 1. unit price 2. total amount 3. EUR/Euro 4. price term 5. money/currency of account 6. money/currency of payment 7. home currency 8. hard currency 9. soft currency 10. exchange rate 11. exchange proviso clause 12. intermediary 13. plain commission 14. net price 15. commission-included price 16. secret commission 17. cash discount 18. special discount 19. plain discount secret discount

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单价 总值 欧元 价格术语 计价货币 支付货币 本币 硬通货币 软货币 汇率 外汇保值条款 中间商 明佣 净价 含佣价 暗佣 现金折扣 特殊折扣 明折扣 暗折扣

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. A unit price consists of four parts: currency unit, unit price figure, measuring unit and price terms.

2. Both money of account and money of payment must be stipulated in the contract clearly.

3. The fluctuations of exchange rates may influence the interests of both exporter and importer.

4. Generally, the price of a foreign exchange is expressed in another currency.

5. Generally speaking, the exporter likes to use hard currency as payment currency.

6. Commission refers to service fees, while discount is a certain percent of price reduction.

7. Commission and discount must be stipulated in the price clause in a contract.

8. According to whether the price includes commission or not, the price can be divided into net price and commission-included price.

9. Discount is usually used as a means of promoting and expanding sales.

10. “USD200 per M/T CIFC2 London� means that the seller will receive 200 US dollars for per metric ton.

(Answers: 1T 2F 3T 4T 5T 6T 7F 8T 9T 10F)

Unit Eight International Payment of Goods Teaching Objectives (1) To let students know the concept and how to use the instrument of payment, especially draft.

(2) To let students know the concept of terms of payment including remittance, documentary L/C and documentary collection.

(3) To let students master how to choose proper terms of payment according to the real situation.

Warming Up (1) When we buy something in our daily lives, we will always pay the cash in the spot. But is there any other means, for example, when you buy something on the Internet?

(2) Then will we pay cash in the spot in international trade? If no, how can we deal with that?

Lead-in International trade is different from the purchase and sale in our daily life. It can not always

be done by cash in the spot. The importer and the exporter may have relatively limited knowledge of the financial strength and commercial reputation of the other party, so payment in international trade is often more difficult. Payment clause including such aspects such as time, place, modes and instruments of payment is very important in an international sales contract. Today, we will mainly deal with the instruments and terms of payment in international trade. After reading Part II, try to answer the following questions: 1. What is the main advantage of L/C? 2. What are the types of L/C? 3. What are the instruments of payment commonly used for international trade?

4. Please describe D/A and D/P. 5. Under what conditions can collection be used in international trade?

6. What is a draft?

7. How can we decide which term of payment we shall use?

8. Arrange the order of terms of payment mentioned in the text as far as the seller’s benefit is concerned.

Contents of Part II Instruments of Payment and Terms of Payment i. Instruments of payment *Draft(bill of exchange) a. Definition: an unconditional order issued by one person to another, requiring the latter to pay a sum of money to someone on demand at a fixed time. b. Parties: the drawer: the person who draws the draft, usually the exporter the drawee: the person to whom the draft is drawn the payee: the person receiving the payment The payee and the drawer are generally but not necessarily the same person, as the drawer can instruct the drawee either to pay “to the order of ourselves” or “to the order of someone else”, for instance, the bank. c. Kinds: 1. sight draft and usance draft sight draft: calls for immediate payment on presentation to the drawee usance draft (tenor draft or term draft): payable at a later date, e.g. 30, 45, 60, or 90 days after sight or a certain date.

2. clean draft or documentary draft clean draft: without documents

documentary draft: accompanied by the relevant documents such as the B/L, the invoice, the insurance policy, etc.

3. commercial draft or banker’s draft commercial draft: drawn by a firm or a person; commonly used in international trade for payment. banker’s draft: drawn by one bank on another bank; used in settling payment between banks. *Check a. an unconditional order addressed by the drawer, requiring the bank to pay the sum of money to the payee. b. If a check is issued by a bank, it is called a banker’s demand draft. c. A check is always at sight and should be paid upon presentation. *Promissory note a. a unconditional written promise by one person to pay another person a given sum of money at a fixed time. b. A promissory note can be issued by a person, a firm or a bank. c. But promissory notes issued by persons and firms are not widely used in trade today. ii. Terms of payment *Remittance a. Definition: A person transfers money to another person through a bank. b. Process: In this case, the buyer gives money to his local bank, and the local bank issues a trust deed for payment and sends this trust deed for payment to a correspondent bank at the seller’s end. Then the local bank entrusts the correspondent bank to pay the money to the seller by mail transfer (M/T), telegraphic transfer (T/T) or demand draft (D/D). c. Kinds: M/T: the transfer made between banks by mail, with the advantages of low charges.

T/T: the transfer made by telecommunication system such as telex or telegraph.

D/D: the importers buys a check from a bank in the importing country, called a banker’s demand draft, and sends it to the exporter so that the exporter can get money by presenting the demand draft to a bank in the exporting country. D/D is transferable, which is different from M/T and T/T. Among these, T/T is very fast, and SWIFT members are able to transfer funds within their own telecommunication network at a lower cost. This has made T/T very popular as most international banks are SWIFT members. *Letter of credit a. Conditions:

The buyers prefer to gain control over the goods before paying the money while the sellers prefer to get paid before releasing the goods. A documentary L/C is an effective way to solve this conflicting problem. b. Definition: a conditional bank undertaking of payment/a written undertaking by a bank to the seller at the request, and in accordance with the instruction, of the buyer to effect payment up to a stated sum of money, within a prescribed time limit and against documents. c. Features: a kind of banker’s credit, which means that the banker is responsible to pay money and tender documents on behalf of both parties. d. Types of L/C. ☆Irrevocable L/C: cannot be amended or cancelled without permissions of all parties; widely used in international trade. ☆Unconfirmed L/C and confirmed L/C unconfirmed L/C: the issuing bank’s undertaking of payment only. There is no undertaking on the part of advising bank or another bank. confirmed L/C: the undertaking of a bank in the exporter’s country besides that of opening bank. It means that the confirming bank will pay if the issuing bank cannot pay. Thus, the seller has double assurance of payment and is better protected. ☆Sight L/C and usance L/C sight L/C: by which the beneficiary is paid upon presentation of valid documents; the seller will issue a sight draft; usance or time L/C: the beneficiary is paid in a specified period of time after the presentation of valid documents; the seller will issue a usance draft. clean L/C and documentary L/C transferable L/C and non-transferable L/C revolving L/C back to back L/C *Collection a. Features: 1. Payment is sometimes made by collection through banks 2. The banks will only do the service of collecting and remitting and will not be liable for non-payment of the importer 3. Collection can be documentary collection which needs the relevant shipping documents attached to the bill of exchange, or clean collection which uses only bills of exchange. b. Documents against Payment (D/P) of Documents against Acceptance (D/A) D/P: calls for actual payment against transfer of shipping documents.

D/P at sight: requires immediate payment by the importer to get hold of the documents.

D/P after sight: the importer is given a certain period to make payment as 30, 45, 60 or 90 days after presentation of the documents, but he is not allowed to get hold of the documents until he pays.

D/A: calls for delivery of documents against acceptance of the draft drawn by the exporter. c. Process the exporter sends the draft and the shipping documents representing title to the goods to his bank, which forwards them to another bank in the importer’s country, which in turn contacts the importer. In the case of D/P, documents will not be released to the importer until payment is made. In the case of D/A, documents are handed over to the importer upon his acceptance of the bill of exchange drawn by the exporter. Payment will not be made until a later date. D/A is always after sight.

Suggested answer to the Questions: 1.

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Payment by L/C can solve the conflicting problem that the buyers prefer to gain control over the goods before paying the money, while the sellers prefer to get paid before releasing the goods. It is a kind of banker’s credit, which means that the banker is responsible to pay money and tender documents on behalf of both parties.

There are many types of L/C such as revocable L/C, irrevocable L/C, sight L/C, usance L/C, unconfirmed L/C, confirmed L/C, clean L/C, documentary L/C, transferable L/C, non-transferable L/C, revolving L/C, bank to bank L/C and so on Drafts, remittance, promissory notes, checks and so on.

(Open). D/P means Documents against Payment, and D/A means Documents against Acceptance. D/P calls for actual payment against transfer of shipping documents. D/A calls for delivery of documents against acceptance of the draft drawn by the exporter.

Payment through collection is accepted only when the financial standing of the importer is sound or where a previous course of business has inspired the exporter with confidence that the importer will be good for payment.

A draft is an unconditional order issued by one person to another, requiring the latter to pay a sum of money to someone on demand at a fixed time.

(Open). cash in advance, letter of credit, D/P at sight, D/P after sight, D/A, open account and payment under consignment.

Notes for Part Two Reading 1. Three parties to a draft: drawer draft drawee / payer money payee (exporter) (importer) (exporter or bank) The payee and drawer may be the same person, that is ， the exporter, the payer and drawee may be the same person, that is the importer. The payee may also be a third party, or must typically, the bank at which the drawer has his account.

2. Types of draft: according to the different drawer, a draft can be divided into: Banker's Draft 银行汇票 Commercial Draft 商业汇票 a) Banker’s Draft is an order from one bank (the drawer) to another (the drawee) with whom it normally maintains a correspondent relationship, to pay to a named person (the payee) a specified sum of money on demand. b) Commercial Draft, the most commonly used instrument in world trade, is drawn by a firm or an individual. The drawee can be a firm, an individual or a bank.

3. Time draft is the one that is payable in a specified number of days after sight, the date of issue or acceptance, or at a fixed future time. For example,: At ×× days after sight 见票后若干天付款 At ×× days after the date of issue 出票后若干天付款 At ×× days after date of Bill of Lading 提单签发后若干天付款 At ×× days after acceptance 后若干天付款 4. Three types of writing the payee 1 限制式抬头： Pay ××× Co. only Pay ××× Co. Not negotiable This kind of draft is not negotiable, only the payee can receive the payment.

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这种汇票不能转让，只能由抬头人收取货款。 指示性抬头 Pay ××× Co. to the order Pay to the order of ××× Co. This kind of draft is negotiable, can be transferred after endorsement. 这种汇票经背书后可以进行转让。 持票人或来人抬头 Pay bearer This kind of draft can be transferred without endorsement.

这种汇票无须背书即可转让。 5. SWIFT: 是“Society Worldwide Interbank Financial Telecommunication 环球同业银行 金融电讯协会”的英文简称, 是一国际性非营利法人组织,总部设于比利时首都布鲁 塞尔。组织宗旨在使全球各国的银行及金融机构得透过标准化电文格式从事资金 调拨及清算、收发信用状、交易确认和对帐及传递讯息等资讯，可加速及简化国际 银行、金融机构汇款服务作业，提升处理效率，降低通讯成本。凡该协会的成员银 行都有自己特定的 SWIFT 代码，即 SWIFT CODE。在电汇时，汇出行按照收款行 的 SWIFT CODE 发送付款电文，就可将款项汇至收款行。 6. Four parties for remittance: 1 Remitter 汇款人 The person who remits the payment to the second party. (usually it is the importer) 2 Payee or beneficiary 收款人 The person who receives the payment (usually it is the exporter) 3 Remitting Bank 汇出行 The bank remitting the payment by the requirement of the remitter. (usually it is the bank located in the importer’s country) 4 Paying Bank 汇入行/解付行 The bank pays the money to the beneficiary by the requirement of remitting bank. (usually it is the bank located in exporter’s country) 7. draw v. write out 开出 draw a draft 开汇票 draw on you at 30 days sight 开出见票 30 天付款的汇票向你方收款 As agreed, we are drawing a draft on you for the value of this sample shipment. 按照商定，我们对所购样货开汇票索款。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

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term of payment instrument of payment banker’s demand draft remittance/remit mail transfer (M/T) telegraphic transfer (T/T) demand draft (D/D) check

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支付方式 支付工具 银行票汇 汇付 信汇 电汇 票汇 支票

9. promissory note 10. irrevocable L/C 11. confirmed L/C 12. sight L/C 13. usance/time L/C 14. non-transferable L/C 15. usance draft 16. commercial draft 17. Documents against Acceptance (D/A) 18. documentary collection 19. D/P at sight D/P after sight

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本票 不可撤销信用证 保兑信用证 即期信用证 远期信用证 不可转让信用证 远期汇票 商业汇票 承兑交单 跟单托收 即期付款交单 远期付款交单

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. There are three parties involved in a draft, while two parties in a promissory note 2. Remittance involves four parties together.

3. An L/C is a conditional bank undertaking of payment, and refers to banker’s credit.

4. An L/C is an irrevocable one if it does not stipulate whether it is irrevocable or revocable in it according to UCP 600.

5. The seller prefers a confirmed L/C to an unconfirmed L/C. 6. The payee and the drawer of a draft used in international trade must be the same person, that is, exporter.

7. A check can be seen as a special draft.

8. Under the terms of D/A, it is the bank in exporter’s country who makes acceptance to the draft and delivers documents to the importer.

9. As to the seller, the risk of D/A 60 days after sight is greater than D/P 60 days after sight.

10. In the case of D/P, documents will not be released to the importer until payment is made.

(Answers: 1T 2T 3T 4T 5T 6F 7T 8F 9T 10T)

Unit Nine

Inspection, Claim, Force Majeure and Arbitration

Teaching Objectives (1) To learn about the inspection of goods and claim, force majeure and arbitration clause.

(2) To make students master how to make the clause of claim, force majeure and arbitration.

Warming Up (1) When you buy something, will you inspect it first? Why? (2) What about the case in international trade?

Lead-in In international trade, one of the parties may run into trouble or suffer great losses because of various factors. In order to make clear the responsibilities, it is important to stipulate inspection clause, claim clause, force majeure clause and arbitration clause clearly in the contract. Let’s first look at something about inspection. After reading Part II, try to answer the following questions: 1. What are the ways to stipulate the place and time of inspection?

2. How does one decide the place and time of inspection?

3. Why should a penalty clause be included in a contract sometimes?

4. How can one settle the claims?

5. What is force majeure? And how does it influence the international trade?

6. What is arbitration? And what will be included in an arbitration clause?

7. What is the force of an arbitration award?

8. Who will bear the arbitration fee?

Contents of Part II Inspection, Claim, Force Majeure and Arbitration i. Commodity inspection * Definition: the inspection conducted by an authorized party to testify whether the quality, quality, package, etc. would be the same as those terms stipulated in the contract. *Inspection agency and certificate a. Inspection agency 1. state commodity inspection agency, authentic surveyor, or manufacturer and user.

2. permitted by relevant laws that might require certain type of commodity to be inspected by a particular type of agency.

3. If no specific requirement of law, the agency should be acceptable to both the buyer and the seller. b. Inspection certificate 1. kinds: inspection certificate of quality, inspection certificate of quantity, inspection certificate of weight, inspection certificate of value, inspection certificate of origin, inspection certificate of damaged cargo, inspection certificate of health, sanitary inspection certificate, etc.

Inspection certificates are used to show whether the goods are in conformity with the terms of contract. If inspection findings are positive, the certificates are the documents for payment. If not, they are the documents for refusal of the goods and claim for compensation. *Place and time of inspection (1) Shipping quality and weight i. Meaning: the goods are to be inspected by the inspection agency specified in the contract at the seller’s factory or at the port/place of shipment in exporting country. The inspection certificate issued thereunder is the final basis of the delivery of the goods. ii. In case the goods are found by the buyer to be not in conformity with the stipulation of contract after arrival at the port/place of destination, the buyer can not claim against the seller unless he can prove that the unconformity is blamed to the seller. iii. favorable to the seller.

(2) Landed quality and weight i. Meaning: the goods are to be inspected by the inspection agency specified in the contract at the port/place of destination in importing country. ii. The inspection certificate issued thereunder is the final basis of the goods delivered and the buyer could claim against the seller supported by it. iii. The seller has to guarantee that the goods are in conformity with the stipulation contract after arrival at the port/place of destination, which is unfavorable to him.

(3) Inspection in the exporting country and reinspection in importing country i. Meaning: the goods are to be inspected first at the port/place of shipment in exporting country and then re-inspected at the port/place of destination in importing country. ii. The inspection certificate issued by the inspection agency at the port/place of shipment will be a part of the documents to be presented by the seller, immediately after shipment, for payment under relevant L/C. The inspection certificate issued at the port/place of destination in importing country will support the buyer to lodge a claim with the seller if the goods are found unconformity with the stipulation of contract by re-inspection after arrival at the above destination. iii. favorable to both sides and widely used in international trade.

Notes: i. In a contract, the place and time of inspection should be clearly specified and the same method of inspection should be used for both inspection and resinspection to avoid disputes. ii. The terms of delivery used, the nature of the commodity and packing, and the laws and regulations of different countries may decide the time and place of inspection. iii. Sometimes, according to certain laws and regulations of importing countries, goods should be inspected before loading by a nominated inspection agency. ii. Discrepancy and claim Example: “any claim by the buyer regarding the goods shall be filed within thirty days after the arrival of the goods at the port of destination specified in the relative B/L and supported by a survey report issued by a surveyor approved by the seller.” *Penalty clause i. Sometimes, a penalty clause should be included in the contract in case one party fails to carry out the contract such as non-delivery, delayed delivery, delayed opening of L/C. ii. Under this clause, the party who has failed to carry out the contract must pay a fine, a certain percentage of total contract value. iii. Example, “should the buyer for its own sake fail to open the L/C on time stipulated in the contract, the buyers shall pay a penalty to the seller. The penalty shall be charged at the rate of 1% of the amount of the L/C for every ten days delay. However, the penalty shall not exceed 10% of the total value of the L/C which the buyers should have opened. Any fractional days less than ten days shall be considered as ten days for the calculation of penalty.” *Ways to settle claims (1) making refund and compensating for other direct losses or expenses.

(2) selling the goods at lower prices.

(3) replacing the faulty goods with perfect ones. iii. Force majeure

i. Definition: an event that can be neither anticipated nor reduced to control, e.g., an industrial strike that leads to loss of profits. ii. Including natural disasters such as fire, flood, storm, heavy snow and earthquake, and social disturbances such as war, strike and sanctions. iii. Result: the termination or postponement of the contract. iv. Force majeure clause the scope of force majeure events, consequences, time limit of notice to the other party, certificates and the agencies who issue them. v. Settlement: the party who quotes the clause should give prompt notice to the other party within the specified time limited. A force majeure event should also be verified by a certificate. The issuer of the certificate should be mentioned in the clause vi. Example for a force majeure clause Force majeure: If the shipments of the contracted goods is prevented or delayed in whole or in part by reason of war, earthquake, flood, fire, storm, heavy snow or other causes of force majeure, the seller shall not be liable for non-shipment or late shipment of the goods or nonperformance of this contract. However, the seller shall notify the buyer by cable or telex and furnish the later by registered airmail with a certificate issued by the China Council for the Promotion of International Trade (CCPIT) attesting such event or events. iv. Arbitration *Definition: Arbitration is a means of setting a dispute between two parties through a third party who is not partial to either of the parties to the dispute, and whose decision on the dispute is final and binding. *An arbitration clause i. An arbitration clause should specify an arbitration agency, a location for arbitration, the number of arbitrators and their selections. An arbitration agency can be either a permanent organization of arbitration that provides facilities and personnel, or a temporary arbitration tribunal set up for a particular dispute. ii. In addition, how the cost of the arbitration is to be divided and the scope of arbitration is normally stipulated in the clause. iii. It is also necessary to stipulate a reasonably time limit for arbitration to take place. A location for arbitration can be anywhere in the seller’s country, the buyer’s country or a third country. * Arbitration force and fees An award is the decision made by the arbitration tribunal. The conclusion of the award shall be read to the parties at the closing session of the hearings. The award shall be made in writing within 45 days from the date of the reading of the conclusion, and shall be signed by the presiding arbitrator and arbitrators, or by the sole arbitrator. The arbitral award once

made has the force of law, and it is final and binding on both parties. Either party should recognize and enforce the arbitral award and could not appeal to the court to revise it.

It is sure that to arbitrate a dispute costs some. An arbitration agreement or the arbitration clause in the contract shall provide that which party is to bear the arbitration fees. Fees can be borne by the losing party of the disputes, can be divided between the two parties or can be called according to the award.

The parties should automatically execute the arbitral award within the time limit specified in the arbitral award. In case one party fails to execute the arbitral award, the other party has the right to apply to competent court for enforcement.

Suggested answer to the Questions: 1. There are generally three ways to stipulate the place and time of inspection: shipping quality and weight, landed quality and weight, and inspection in the exporting country and reinspection in importing country.

2. He should consider the terms of delivery used, the nature of the commodity and packing, the laws and regulations of different countries and other aspect.

3. A penalty clause should be included in the contract in case one party fails to carry out the contract. Under this clause, the party who has failed to carry out the contract must pay a fine, a certain percentage of total contract value.

4. Claim can be settled by making refund and compensating for other direct losses or expenses, selling the goods at lower prices or replacing the faulty goods with perfect ones.

5. Force majeure is an event that can be neither anticipated nor reduced to control, e.g., an industrial strike that leads to loss of profits. It may cause the termination or postponement of the contract.

6. Arbitration is a means of setting a dispute between two parties through a third party who is not partial to either of the parties to the dispute, and whose decision on the dispute is final and binding. An arbitration clause should specify an arbitration agency, a location for arbitration, the number of arbitrators and their selections, how the cost of the arbitration is to be divided, the scope of arbitration, and a reasonably time limit for arbitration to take place when necessary.

7. The arbitral award once made has the force of law, and it is final and binding on both parties. Either party should recognize and enforce the arbitral award and could not appeal to the court to revise it.

8. The arbitration fee can be borne by the losing party of the disputes, can be divided

between the two parties or can be called according to the award.

Notes for Part Two Reading 1. CCPIT: 中国国际贸易促进委员会, 由中国经济贸易界有代表性的人士、企业和团 体组成的全国民间对外经贸组织，成立于 1952 年 5 月。宗旨是开展促进对外贸易、 利用外资、引进外国先进技术及各种形式的中外经济技术合作等活动，促进中国 同世界各国、各地区之间的贸易和经济关系的发展，增进中国同世界各国人民以 及经贸界之间的了解与友谊。 2. Example for discrepancy and claim clause in a contract: Any claim by the buyer regarding the goods shall be filed within thirty days after the arrival of the goods at the port of destination specified in the relative B/L and supported by a survey report issued by a surveyor approved by the seller. 买方对货物的任何异议必须于装运货物的船只到达提单指定目的港 30 天内提出。 并须提供经卖方同意的公证机构出具的检验报告。 3. Penalty clause 罚金条款 Sometimes a penalty clause should be included in the contract in case one party facts to implement the contract such as non-delivery, delayed delivery, delayed opening of L/C. under this clause, the party who has failed to carry out the contract must pay a fine, a certain percentage of total contract value. 买方自身原因不能按合同规定的时间开立信用证，应向卖方支付罚金，罚金按延 迟开证每 10 天收取信用证金额的 1%，不足 10 天按 10 天计。但罚金不超过买方应 开信用证金额的 10%。 Should the buyers for its own sake fail to open the Letter of Credit on time stipulated in the contract, the buyers shall pay a penalty to the sellers. The penalty shall be charged at the rate of 1% of the amount of the letter of Credit. However, the penalty shall not exceed 10% of the total value of the Letter of Credit which the buyers should have opened. Any fractional days less than ten days shall be deemed to be ten days for the calculation of penalty.

4. 有关索赔的最常用句型是： “to lodge/file/raise/make/register a claim against…. (sb.) for… (reason) for… (amount) on… (goods) ” “对…（货物）因…（原因）向…（某人）提出…（金额）的索赔”如： Buyers have lodged a claim against the shipper on this shipment for USD 500 for short weight. 由于分量短缺，买主已就此批货向货主提出 500 美元的索赔。

We consider it difficult to file a claim against the manufacturers. 我们认为向厂家提出索赔有困难。 5. Award: 裁决。指仲裁庭对有争议的案件审理后所做出的决定。裁决除了应向当事人 宣布外还应做出书面裁决书。根据英美等国的仲裁法，仲裁裁决无需说明理由， 但大多数国家都规定裁决书应包括裁决的理由。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1. inspection 2. claim 3. force majeure 4. arbitration 5. inspection certificate of quality 6. inspection certificate of quantity 7. inspection certificate of weight 8. inspection certificate of value 9. certificate of origin 10. shipping quality and weight 11. landed quality and weight 12. discrepancy 13. penalty 14. compensate/compensation 15. arbitration agency 16. arbitration tribunal 17. (tribunal) award 18. hearings 19. presiding arbitrator sole arbitrator

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检验 索赔 不可抗力 仲裁 质量检验证书 数量检验证书 重量检验证书 价值检验证书 原产地证 离岸质量和重量 到岸质量和重量 异议 罚金 赔偿 仲裁机构 仲裁庭 裁决 审理 首席仲裁员 独任仲裁员

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. The agency to inspect the commodities in international trade must be decided by the

2.

3.

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seller and the buyer.

When EXW or DDP is used, the commodity is generally inspected in the exporting country.

All export commodities should be inspected by commodity inspection bureaus.

Landed quality and weight means that the inspection carried out at the port of destination will be final.

For one contract, the same method of inspection should be used for inspection and reinspection to avoid disputes.

Once the payment of penalty is made, the contract is no longer to be performed.

In international commodity sales contract, penalty and compensation for the losses is the same thing.

The seller should bear the loss cause by force majeure.

Arbitration is the best way to solve problems in international trade.

The arbitral award once made is the final decision and has the force of law.

(Answers: 1F 2F 3F 4T 5T 6F 7F 8F 9F 10T)

Unit Ten L/C Examination and Amendment Teaching Objectives (1) To let students master the relevant parties involved in the documentary credit and the procedure of using credit.

(2) To let students know how to urge the opening of credit and how to check and amend the credit.

Warming Up (1) Review of the part of L/C in Unit Eight.

(2) Then how is the L/C opened? And if there are mistakes in the L/C, what shall the seller do?

Lead-in In international trade, L/C is commonly used. If there is something wrong with the L/C, the seller will have difficulties in getting payment. What parties are involved in an L/C? How is it issued? And how does the exporter urge the opening of L/C, check the L/C and require the amendment of the L/C? Those are all the issues we will meet when using L/C. Today, we are going to deal with the above-mentioned issues. After reading Part II, try to answer the following questions: 1. Why is it necessary to examine L/C and make amendment to L/C? 2. What are the parties involved in an L/C? 3. What is the relationship of opening bank and advising bank?

4. Why shall the seller notify the buyer to apply for the opening of L/C sometimes?

5. How can the buyer apply for the opening of L/C? 6. What are the emphasis of examination of L/C for both the banks and the trade company?

7. What is the process of amendment to L/C? 8. Who will bear the fee of amendment to L/C?

Contents of Part II L/C Examination and Amendment i. Introduction Because distrust exists between exporters and importers as to whether the other party will carry out his obligations, it is better to have a third party that makes sure payment to the exporter and goods to the importer. Banks have been chosen as that party since banks are much better trusted in the business world. Therefore, L/C becomes a commonly used term of payment.

Under L/C term of payment, the exporter looks to the bank for payment instead of relying on ability or willingness of the importer to pay, but the exporter cannot get payment unless he obeys all the terms in the L/C. At the same time, the bank pays on behalf of the importer against documents which represent the goods and give the importer rights to the goods.

However, in practice, delayed opening of the L/C and discrepancies between L/C and contract or other regulations often occur and influence the payment in international trade. In order to collect the payment safely and perform the contract smoothly, sometimes, the buyer should be urged to apply for the opening of L/C in time and the L/C should be examined carefully according to the contract. ii. Parties involved

*Applicant: the party who applies for the opening of an L/C. Generally speaking, it is the importer. *Opening bank/issuing bank: the bank located in the importer’s country that opens the L/C on behalf of the importer. By issuing a credit, the bank assumes full responsibility for payment after the proper drafts and documents have been presented. *Advising bank/notifying bank: the bank located in the exporter’s country who informs the exporter that an L/C has been opened in his favor and transfers the L/C to the exporter.

It is usually the correspondent of the issuing banking. *Beneficiary: the party in whose favor the L/C is issued, and who is entitled to receive the payment, that is, the exporter. *Negotiating bank: the bank who buys an exporter’s draft submitted to it under an L/C and then forwards the draft and documents to the opening bank for reimbursement. Usually the advising bank is also the negotiating bank. *Paying bank: the bank that makes payment to the beneficiary against presentation of required documents. It is usually the opening bank but can also be a third designated bank. *Confirming bank: the bank that is requested to add its own commitment to the L/C. *Reimbursing bank/clearing bank: the bank located in the third country that reimburses the money to the negotiating bank on behalf of the opening bank. *Transferee/second beneficiary: the person to whom the L/C is made available in whole or in part by the prime beneficiary. iii. Procedures 1. The seller and the buyer stipulate that the payment will be by a documentary credit.

2. The buyer instructs his bank to open a documentary credit for the exporter on the terms and conditions agreed upon by both the buyer and the seller. In this step, the buyer shall fill up the application with commodity name, quality, quantity, unit price, total value, trade term, date of payment, packing, shipping period and so on. It is very common for a buyer to clearly specify a period of validity of the L/C. 3. The opening bank issues the L/C then sends it to the advising bank, usually his correspondent bank in the seller’s country.

4. The advising bank informs the seller of the establishment of the L/C, and passes L/C to the exporter after checking. If the seller requires a confirmed L/C, then the advising bank may be asked to confirm the L/C and a fee will be charged to the buyer for this service.

5. The seller checks the L/C according to the contract and relevant regulations, and if there are any discrepancies, he should advise the buyer to revise the L/C. After the seller is satisfied with the clauses in L/C, he will make cargo ready and shipment of goods.

6. After shipment of the goods, the seller sends the draft and all the documents to the negotiating bank for negotiation within the validity of the L/C.

7. If the documents are full and correct, the negotiating bank will pay or accept the draft and then send the documents to the paying bank. The paying bank is usually the issuing bank.

8. The paying bank will reimburse the money to the negotiating bank after careful checking the documents and if no problems are found.

9. The opening bank will present the documents to the importer and ask for payment or acceptance. Documents will be handed over to the buyer upon buyer’s payment of the amount due or acceptance of the draft.

10. The buyer can take delivery of the goods with the documents. iv. Notify to open L/C i. Usually the buyer will apply for the opening of L/C as required by the contract on time if L/C is the term of payment agreed by both parties of the contract. ii. But in the export trade of China, foreign clients often delay opening L/C or payment for the problem of fund shortage or market fluctuation. In this case, the exporter should follow the contract clauses about L/C, inform the importer by mail or telephone that the importer should open the L/C in time or open earlier than the contracted date. iii. The importer can apply for the opening of L/C directly from the opening bank with his operating license, import and export license, and contract signed by trade parties. The importer will fill the application of L/C and in turn the opening banks will examine his foreign exchange and domestic currency funds. If the importer is qualified, the bank opens the L/C and sends it to foreign advising bank. Sometimes, the opening of an L/C can also be applied by importer’s agency at the request of the importer. iv. Generally speaking, the L/C should arrive to the seller at least 15 days before the time of shipment to allow sufficient time to check and amend, if necessary, the L/C and to arrange shipment. v. Examination of L/C i. Upon receipt of the relevant L/C, the beneficiary is expected to check the details of L/C according to the contract and UCP 600. ii. The clauses of L/C should be in accordance with the ones in contract and with laws, and could not be revised without the seller’s permission. But in actual business, the unconformity between L/C and the contract or national policies often occurs for the reasons of foreign client’s or issuing bank’ negligence and mistakes, special regulations in L/C in some nations, or a few vicious client’s trap in the L/C. Therefore, the examination of incoming L/C is the key step in delivery and payment process. iii. The examination of L/C is the common duty of both banks and foreign trade companies. iv. The emphasis of examination is different from each other. Banks mainly check the details about creditworthiness of issuing bank, related parties’ responsibilities and payment

route. Foreign trade companies focus on the conformity between L/C and contract, and whether they can carry out the contract even if the unconformity exists. v. If the discrepancies are caused by the clients in the following aspects such as quality, quantity, packing, amount, trade terms, delivery date and loading or discharging place (port) which can not be accepted or performed by the seller, the seller should require the importer to make amendment to the L/C. vi. Even if some problems like late shipment are caused by the seller, L/C should also be revised in time on both parties’ consultation. vi. Amendment to L/C Principles: Basically, the totally unacceptable clauses should be amended in time without condition, but the partly acceptable clauses could be operated with reasonable bilateral consultation.

Operation: any amendment to L/C should be operated under the agreement of all parties. In exporting, the seller should notify the foreign importer to revise L/C if necessary.

Procedures: With the importer’s agreement on the amendment, the importer applies for amendment through his issuing bank. The amendment notification should be forwarded by advising bank as the same as opening L/C---issuing bank sends the amendment notification or inform advising bank by telegraph or telex, advising bank in turn passes the notification to beneficiary. The seller should also present the amendment notification to advising bank for confirming. Sometimes, the importer needs the amendment to the L/C. The operation in this case is that issuing bank will inform exporter through advising bank. If exporter agrees with the amendment, the amendment will be effective with the issuing bank’s confirmation.

If exporter rejected, the changes to the L/C could not be established, and the original clauses of L/C is still effective. Exporter should return the unacceptable amendment notification to advising bank within 3 says after he receives it. Otherwise, banks will operate according to the changed clauses assuming beneficiary has agreed with the amendment.

Refusal: the amendments should be announced only one time. If the notification involves two or more clauses, he relevant parties have to accept or reject them all according to practice, and can not accept one part while reject the other parts of them.

Charges: The fees charged by the banks involved in amending the L/C may be borne by either the exporter or the importer，but who is to bear which charges should be specified in the L/C.

Suggested answer to the Questions: 1. Because the bank pays against documents and in practice, discrepancies between L/C and contract or other regulations often occur and influence the payment in international trade.

2. The parties involved in an L/C are applicant, opening bank, advising bank, beneficiary, negotiating bank, paying bank. Sometimes, confirming bank, reimbursing bank, or transferee may also be involved.

3. Opening bank is located in the importer’s country, while advising bank is the bank located in the exporter’s country; opening bank opens the L/C on behalf of the importer, while advising bank informs the exporter that an L/C has been opened in his favor and transfers the L/C to the exporter; advising bank is usually the correspondent of the issuing banking.

4. Because foreign clients often delay opening L/C or payment for the problem of fund shortage or market fluctuation, which may make exporter suffer loss.

5. The importer can apply for the opening of L/C directly from the opening bank or through his agency.

6. Banks mainly check the details about creditworthiness of issuing bank, related parties’ responsibilities and payment route. Foreign trade companies focus on the conformity between L/C and contract, and whether they can carry out the contract even if the unconformity exists.

7. (Open).

8. The fees may be paid by either the exporter or the importer, but who is to pay which charges should be specified in the L/C.

Notes for Part Two Reading 1. amendment n.修改，修改书 Please rush the amendment to the L/C. 请对信用证速做修改。 We enclose amendment advice of L/C No. 520. 兹附寄第 520 号信用证的修改通知。 The wording of the agreement calls for amendment.

2. “开证”除了用 open 一词外，还可以用 issue 或 establish。 如： The relevant L/C has been opened in your favor. 以你方为受益人的信用证已经开出。 3. 在审查信用证的过程中自始至终要注意几个问题：

（1） 信用证的两个主要当事人——开证申请人和受益人的名称是否有误，否 则会影响收汇。 （2） 装运期、信用证有效期、交单期是否合理。装运期与信用证有效期一般相隔 为 15 天左右，提单日期与向银行交单期相隔一般不超过 21 天。 （3） 信用证到期（议付）地点是否在出口国境内。若不在境内，一般不可接受。 （4） 信用证主要项目是否齐全。如单据条款、货物条款、有效期、目的港、金额等 缺一不可。 （5） 合同主要条款是否在来证中得到如实反应。此点要与合同一一对照；其他 情况，如有无“保留条款”、银行费用问题、分批装运和转运问题等。

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

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applicant opening bank/issuing bank advising bank/notifying bank correspondent bank negotiating bank reimbursement/reimburse paying bank clearing bank transferee prime beneficiary validity acceptance/accept amendment notification confirmation/confirm

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开证申请人 开证行 通知行 代理行 议付行 偿付 付款行 清算行 受让人 第一受益人 有效期 承兑 修改通知书 保兑

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Generally speaking, it is necessary for the buyer to clearly specify a period of validity of the L/C when applying for the opening of L/C. 2. The issuing bank should be located in the importer’s country, while the advising bank

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should be located in exporter’s country.

The buyer will inform the seller the opening of L/C and pass the L/C to the seller.

The L/C should arrive at the seller several days before the time of shipment.

It is only the exporter that should examine the L/C. All the discrepancies in an L/C should be amended.

The L/C can be amended directly by applicant and be transferred to the beneficiary.

If the exporter does not return the unacceptable amendment notification to advising bank within 3 says after he receives it, it will be thought that he has agreed with the amendment.

When there are more than two changes in L/C amendment, the beneficiary can only accept all or refuse all.

The amendments should be announced one by one for several times.

(Answers: 1T 2T 3F 4T 5F 6F 7F 8T 9T 10F)

Unit Eleven Import and Export Commodity Inspection Teaching Objectives (1) To let student know the importance, the mechanism and standards of inspection.

(2) To let students master how to make the goods inspected.

Warming Up (1) We have mentioned that we need to inspect the goods when we buy them. But how and when do we inspect them?

(2) What about inspection in international trade? What standards shall the goods meet?

Lead-in In international trade, commodity inspection relates closely to the benefits of both exporter and importer. For the seller, it has much to do with his reputation, whereas for the buyer, he has to make sure whether his interests have been well protected. So the seller, as well as the buyer, pays much attention to the inspection of goods. But how do exporter or importer

make the goods inspected and what are the relevant standards or mechanism? We will find out the answers in this unit. After reading Part II, try to answer the following questions: 1. Why is inspection of commodity necessary in international trade?

2. What are the three standards for commodity inspection?

3. Explain the mechanics of inspection in China briefly.

4. What aspects does inspection on import and export commodities cover?

5. How shall the exported commodity be inspected?

6. How shall the imported commodity be inspected?

7. How to inspect a complete set of equipment in large size when importing them?

8. What can inspection certificates be used for?

Contents of Part II Import and Export Commodity Inspection i. The importance of inspection In international trade, the quality, quantity and packing of the goods delivered by the seller should be in conformity with the terms and conditions of the sales contract. In this sense, inspection of commodity and the issuance of certificates of inspection are one of the necessary steps in a transaction.

Inspection may be made by the seller and the buyer themselves. However, probably, neither party is willing to have the goods inspected by the other party to judge whether the goods are in conformity with the stipulation in the sales contract. Therefore, for the purpose of identifying responsibilities and showing facts, inspection by authoritative inspection agencies and the certificates of inspection issued by them are usually required in the sales contract. The certificate of inspection is regarded as the basis of the delivery of the goods. ii. Inspection standards *If the inspection standards which must be complied with are specified by laws or administrative regulations, the inspection shall be performed according to the standards as specified by laws and administrative regulations. * In the absence of the inspection standards which must be complied with as specified by laws or administrative regulations, the inspection shall be performed according to the standards agreed upon in the international trade contracts. *In the absence of the inspection standards which must be complied with as specified by laws and administrative regulations, and in case inspection standards are either not agreed upon or agreed upon unclearly in the contract, the inspection shall be conducted according to the standards of the manufacturing country, relevant international standards or the standards designed by the state inspection agency.

iii. Mechanism of inspection In China, it is the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China(AQSIQ)who is in charge of the inspection of import and export commodities throughout the country. The local import and export commodity inspection authorities set up by the AQSIQ are responsible for the inspection of import and export commodities within areas under their jurisdiction. They perform the inspection of import and export commodities in accordance with the Law of the People’s Republic of China on Import and Export Commodity Inspection.

The AQSIQ in the light of the needs in the development of foreign trade, makes, adjusts and publishes a List of Import and Export Commodities Subject to Inspection by the Commodity Inspection Authorities (the List of Commodities). Import and export commodities which are included in the List of Commodities must be inspected by the AQSIQ the local commodity inspection authorities, or inspection organizations designated by them.

The import commodities in the List of Commodities cannot be sold or used and export commodities cannot be exported until they have been found to be up to standard through inspection . iv. Inspection of export commodities In practice, before delivery, the manufacturers shall make a precise and comprehensive inspection of the goods with regard to its quality, specifications, performance and quantity or weight, and issue an inspection certificate certifying the technical data and findings of the inspection.

For export commodities which are subject to inspection by the commodity inspection authorities, the consignor should apply for inspection in the places and within the time limit specified by them. The inspection authorities shall accomplish the procedures for inspection and issue a certificate without delaying the prescribed time for shipment. The goods which don’t need legal inspection should also be arranged to inspection agencies for inspection to obtain certificates in accordance with contract and/or L/C for payment. Other goods should be inspected by relevant authorities or production department, supply department or foreign trade companies themselves.

Export commodities which have been inspected and passed by the commodity inspection authorities and for which an inspection certificate has been issued by the same authorities shall be declared for export and shipped out of the country within the time limit. It should be noted that the valid dates of different certificates differ from each other, and the goods whose certificates are overdue should be applied for reinspection.

Export commodities which are included in the List of Commodities shall be checked and released by the customs upon presentation of the inspection certificate or the seal of the inspection authorities affixed to the customs declaration.

v. Inspection of import commodities For import commodities which are subject to inspection by the commodity inspection authorities, the consignee must register them with the commodity inspection authorities located at the port of discharge or the station of arrival. He shall also apply to the same authorities for a further inspection as to the specifications and quantity or weight of the goods within the time limit. The procedures could involve application and completion of forms, and submission of import contract, invoice, packing list, B/L, discharging advice, weight list and other relevant documents. The commodity inspection authorities shall accomplish the procedures for inspection and issue an inspection certificate within the period of validity of claims prescribed in a foreign trade contract. Import commodities which are included in the List of Commodities shall be checked and released by the customs upon presentation of the seal of the commodity inspection authorities affixed to the customs declaration.

For important import commodities and a complete set of equipment in large size, the consignee can, in accordance with the terms agreed upon in a foreign trade contract, conduct initial inspection or initial supervision over manufacturing or loading in the exporting country before shipment. The commodity inspection authorities may, when necessary, dispatch inspection personnel to take part in such inspection and supervision.

If import commodities are found to be not up to the quality standard, damaged or short on weight or quantity, the consignee is to apply to the commodity inspection authorities for inspection and the issuance of an inspection certificate if such a certificate is necessary for claiming compensation.

In practice, if the quality or weight of the goods changes during transit, then inspection results at ports of shipment and destination would be different. Sellers and buyers might have different arguments about the difference. A seller would argue that his responsibilities end where the goods are delivered. For example, for FOB, he is responsible only for loading the goods according to the contract and once the goods pass over the ship’s rail, all risks pass over to the buyer. A buyer can argue that the seller is responsible for the goods to be marketable when they arrive at the port of destination. So for small difference (e.g., 0.5% of weight), inspection result at the port of shipment is considered final or the difference is divided between the buyer and the seller. When the difference is big, it needs to be settled by negotiation or by arbitration. vi. The functions of inspection certificates The inspection certificates can be useful at least for the following three purposes: (1) For statutory inspected commodities, the certificates are one of the necessary documents for their entry or exit of a country. Customhouses will give clearance for them upon receiving relevant inspection certificates.

(2) For those commodities to be inspected as specified in a business contract signed between two parties, the certificates are used to certify the quality, quantity or weight, packing, etc. of commodity up to the standard specified in the contract. Both parties to the contract usually agree on their appointed agency, place and time for inspection.

(3) Even if the terms on inspection are not included in a contract, the buyer and the seller may have their commodities inspected voluntarily. For the seller, a certificate of commodity can certify the commodities up to the standard specified in the contract. For the buyer, inspecting commodity immediately after they reach the place of destination can make him ensure the condition of commodities.

Suggested answer to the Questions: 1. Because it is in order to make sure the quality, quantity and packing of the goods delivered by the seller in conformity with the terms and conditions of the sales contract.

The certificate of inspection is regarded as the basis of the delivery of the goods.

2. The first is the standards as specified by laws and administrative regulations, the second is the standards agreed upon in the international trade contracts, and the third is standards of the manufacturing country, relevant international standards or the standards designed by the state inspection agency.

3. (Open) 4. Commodity inspection covers quality, specifications, quantity, weight, packing and the requirements for safety and hygiene.

5. (Open) 6. (Open) 7. The consignee can, in accordance with the terms agreed upon in a foreign trade contract, conduct initial inspection or initial supervision over manufacturing or loading in the exporting country before shipment. The commodity inspection authorities may, when necessary, dispatch inspection personnel to take part in such inspection and supervision.

8. (open)

Notes for Part Two Reading 1. General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China 国家质量监督检验检疫总局。中国进出口商品检验局 （China commodity inspection bureau) 与动植物检验机构和卫生检疫机构合并，称

为出入境检验检疫局（CIQ)，之后又与质量监督机构合并为国家质量监督检验检 疫总局。 2. AQSIQ：国家质量监督检验检疫总局 3. Law of the People’s Republic of China on Import and Export Commodity Inspection: 《中华人民共和国进出口商品检验法》 4. List of Import and Export Commodities Subject to Inspection by the Commodity Inspection Authorities: 《商检机构实施检验的进出口商品类表》

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Inspection by manufacturer himself and the certificates of inspection issued by him are usually required in the sales contract.

2. Goods shall be first meet the standards stipulated in laws and regulations when the inspection standards are specified by laws or regulations.

3. There is no need to inspect the goods which do not need legal inspection.

4. The export goods shall be inspected after shipment.

5. If the inspection certificates are overdue, the goods need to be reinspected.

6. The commodity inspection authorities shall go through the procedures for inspection and issue a certificate without delaying shipment.

7. Import commodity subject to legal inspection can not be marketed or used before being inspected.

8. Sometimes, the inspection certificates are necessary for claiming compensation.

9. In China, State Administration of Import and Export Commodity Inspection is in charge of the inspection of import and export commodities throughout the country.

10. In practice, for 0.5% of weight difference in inspection results at ports of shipment and destination, inspection result at the port of shipment can be considered final or the difference can be divided between the buyer and the seller. (answers: 1F 2T 3F 4F 5T 6T 7T 8T 9T 10T)

Unit Twelve Shipment

Teaching Objectives (1) To let student know basic knowledge about shipment and how to arrange shipment.

(2) To let students master B/L including the definition and types.

(3) To make students clear about how to calculate the freight according to different modes of transport.

Warming Up (1) Will you pay same amount of money when you come back home by different modes of transport? Why? (2) When arranging shipment, what factors should be considered?

Lead-in In international trade, the goods have to be delivered to the buyer abroad. Shipment is a very important part. The exporter or importer should arrange shipment after signing the contract. This covers rather a wide range of activities, including appointing shipping agent, choosing transport means, booking shipping space, calculating and paying freight, getting transport document, etc. This unit tells us how to arrange shipment in detail. After reading Part II, try to answer the following questions: 1. What is the role of forwarding agents?

2. What are the procedures of arranging shipment?

3. What factors will influence freight rate?

4. How can the freight rates for liners be marked with?

5. What does open rate mean?

6. What are the different transport documents for different modes of transport?

7. What is a “Clean on board, to order, blank endorsed B/L�?

8. What shall be considered when arranging shipment?

Contents of Part II Shipment i. Freight forwarding agents Definition: experts in the transportation field with an up-to-date and specialized knowledge of different modes of transport and relative freight rates.

Advantages: in touch with the constantly changing conditions at ports and the requirements of customs authorities. The consolidation or groupage of a number of cargoes from different exporters into one consignment makes transportation more economical.

Job contents: booking shipping space, arranging documentation, collecting cargos, dealing with customs entries and other formalities, arranging payment and insurance, grouping a number of consignments, giving advice on markets, import or export regulations and export packing and so on.

Fees: Apart from charging their customers any direct costs encountered, such as transport, bills of lading, customs entry, etc., they will usually levy a service fee based on a percentage of the freight charge. ii. The procedure of arranging shipment Whether the exporter or the importer is arranging the shipment by himself or using the service of an agent, the following steps will be necessary: (1) Selecting the means of transport and shipping line for the required place of destination.

(2) Procuring shipping space.

(3) Calculating freight.

(4) Paying the freight (5) Loading on board according to the shipping date.

(6) Obtaining transport documents. iii. Freight rate Freight is a special unit used in calculating charges that must be paid for shipping the cargo. *Factors influencing freight rate Generally speaking, the following factors are important in fixing freight rates: (1) Competition between various modes of transport.

(2) Nature of commodity in terms of quantity to be shipped, period of shipment, measurement and value of cargos.

(3) Origin and destination of goods that represent distance, risks and convenience of transport.

(4) Overall transport cost including fuels, wages for the crew, port duties, etc.

(5) Nature of packing and convenience of handling.

(6) Possibility of cargo to damage and pilferage.

(7) General loadability of transport unit.

(8) Additional facilities like heavy lifts facilities required to complete the transport.

(9) Actual routing when two or more routes are available. *Freight rate for different transport modes Different modes of transport will use different ways to fix freight rate, and the followings are the commonly used ways.

(1) Freight rates for liners “W”: Freight can be calculated per metric ton on weight (weight ton) “M”: It can be also calculated on measurement ton (every 40 cubic feet or one cubic meter).

“Ad Val.”: For valuable cargoes, ad valorem freight rate is charged in proportion to the estimated value of the cargo “W/M or Ad Val.” or “W/M plus Ad Val.”: the highest rate is applicable.

Different goods or packing: Where different goods are contained in one package, the higher freight rate is applicable, while the same kind of commodity in different packing is subject to different rates.

For cargoes such as trucks and animals: freight is charged for each unit of trucks or each head of animals.

Minimum charge and “extras”: For each shipment, there is a minimum charge regardless of the size of the shipment. In addition to the basic freight rate, there are also possible “extras” such as Extra Charges on Heavy Lifts, Extra Charges on Over Lengths, Additional on Optional Discharging Port, Direct Additional, Transshipment Additional and Port Additional. For huge quantity of cargo such as grain, coal and ore, freight rate is open to negotiation. That is called an open rate.

(2) Freight rates for air transport i. General Cargo Rates (GCR) are the basic rates. ii. Special Cargo Rates or Specific Commodity Rates (SCR) are reduced rates applicable to a wide range of commodities specified in the traffic of the carrier. iii. If no commodity rate is available for cargoes like live animals, human remains or valuable cargoes, Commodity Classification Rates (CCR) will be used.

Characteristics: the freight is charged for airport to airport (single trip) only, and it is the freight only, excluding other charges such as customs fees and storage fees. iv. Lay time, demurrage and dispatch Lay time: the time allowed for the completion of loading and unloading, and usually expressed by days and hours. ways of stipulating lay time: i. Days or running days: including bad weather days, Sundays or any other holidays, unfavorable to the shipper. ii. Weather working days of 24 hours: excluding Sundays, holidays and rainy days, favorable for shipper but unfavorable for shipowner. iii. Weather working days of 24 consecutive hours: excluding the bad weather time period, suitable for pots that operate day and night.

Regulation of lay time: As lay time concerns the interests of shipowner, consignor and consignee, it is important to make it clear in the contract. Vague phrases as “to load/discharge in customary quick dispatch” should be avoided.

Demurrage: If loading and unloading are not completed within the agreed lay time, demurrage should be paid at an agreed rate by the party that charters ships to the shipowner to compensate for the cost sustained.

Dispatch: If loading and unloading are completed in advance, the shipowner will pay dispatch money as a reward to the party who charters ships.

Demurrage and dispatch are considered as a way of encouraging timely shipment. v. Transport documents Introduction: Different modes of transport require different transport documents. B/L is used for ocean transport, air waybill for air transport, consignment note for rail and road transport, multimodal transport document for multimodal transport. Among those transport documents, bill of lading is a very important, if not the most important, document in an international trade deal. First, sea transport is the most commonly used mode of transport in international trade. Second, bill of lading represents the title to the goods. Any discrepancy in this document might result in non-payment by either the bank or the buyer. Therefore, bill of lading must be handled carefully.

Types of bill of lading: ☆Shipped (on board) B/L and received for shipment B/L Shipped B/L: issued by the shipping company after the goods are actually shipped on board the designated vessel. Since shipped B/L provides better guarantee for the consignee to receive the cargo at the destination, the importer will normally require the exporter to produce shipped B/L. Received for Shipment B/L: where the word “shipped” does not appear on the B/L. It merely confirms that the goods have been handed over to, and in the custody to the shipowner. ☆Clean B/L and unclean B/L Clean B/L: states that the goods have been “shipped in apparent good order and conditions”.

It is issued when the goods do not show any defects on their exteriors at the time of loading at the port of shipment. unclean B/L: If defects are found on the exteriors of the goods, or the shipping company does not agree to any of the statements in the B/L, the bill will be marked as “unclean”, “foul” or “…packages in damaged condition” ☆Straight, blank and order B/L Straight bill of lading: has a designated consignee. Under this bill, only the named consignee at the destination is entitled to take delivery of the cargo. As it is not transferable,

it is not commonly used in international trade and normally applies to high-value shipments or goods for special purposes.

Blank B/L: also called open B/L or bearer B/L, means that there is no definite consignee of the goods. There usually appear in the box of consignee words like “To bearer”. Anyone who holds the bill of lading is entitled to the goods the bill represents. No endorsement in needed for the transfer of the blank bill. Due to the exceedingly high risk involved, this bill is rarely used.

Order B/L: widely used in the international trade. It means that the goods are consigned to the order of a named person. In the box of consignee, “To order”, “To order of the shipper”, or “To order of the consignee” is marked. It can be transferred only after endorsement is made. If the B/L is made out “To order of the shipper”, the shipper will endorse the bill. If it is made out “To order of consignee”, the consignee will endorse the bill to transfer it. A blank endorsement is usually required for a “To order” bill. ☆Direct B/L, transshipment B/L, through B/L, liner B/L, container B/L, combined B/L, etc.

Notes: ☆All the above mentioned bills are not independent of each other. Several types may be combined into one like “Clean on board, to order, blank endorsed B/L”. A received for shipment may also be straight and clean bill. ☆ Bills of lading are made out in sets, consisting of a number of originals (usually three) and a number of copies and marked “original” and “copy” respectively. Only the originals signed by the carrier enable the consignee to take delivery of the goods. The copies are just for reference. vi. General considerations when arranging shipment *Reliability Shippers must make sure that goods will arrive before the import license expires and that goods will arrive in good condition. *Speed and frequency Shippers want to reduce stocks and warehouse expenses to reduce cost. Manufacturers need to avoid the risk and expense of obsolescence, especially for consumer goods. It is important for importers to market the goods by an accurate arrival date, and to reduce costs and banking charges. And finally, consumers want to get the right goods like fresh fruits and fashionable clothing. *Cost Shipping cost is different in different times and directions with different carriers. * the customer’s choice and needs * the nature of the commodity to be shipped

* the total time available * the urgency of the consignment and the suitability of available transport services.

Suggested answer to the Questions: 1. Forwarding agents can provide service of shipping arrangements to shippers. They are experts in the transportation field.

2. The following steps will be necessary when arranging shipment: selecting the means of transport and shipping line for the required place of destination; procuring shipping space; calculating and paying freight; loading on board according to the shipping date; and obtaining transport documents.

3. Such factors will influence freight rates as competition between various modes of transport, nature of commodity, origin and destination of goods, overall transport cost, nature of packing and convenience of handling, and possibility of cargo to damage and pilferage.

4. They can be marked with “W”, “M”, “Ad Val.”, “W/M”, “W/M or Ad Val.” or “W/M plus Ad Val.” 5. For huge quantity of cargo such as grain, coal and ore, freight rate is open to negotiation. That is called an open rate.

6. B/L is used for ocean transport, air waybill for air transport, consignment note for rail and road transport, multimodal transport document for multimodal transport.

7. It means that (1) the goods have been “shipped in apparent good order and conditions”; (2) it is issued after the goods are actually shipped on board the designated vessel; (3) in the box of consignee, “To order” is marked; (4) a blank endorsement is required.

8. Reliability, speed and frequency, cost, etc. should be considered when arranging shipment.

Notes for Part Two Reading 1. shipment 装运是对外经济贸易中一个重要的环节，是卖方履行交货的义务。在这 一环节中，买卖双方应注意一下几个问题： （1） 货 物 装 运 之 后 ， 卖 方 应 该 立 即 通 知 买 方 ， 发 出 装 运 通 知 （ shipping advice），买方在收到装运通知后应立即办理保险； （2） 如果合约中有规定，卖方可以分批装运，要记住下列常用句型： The goods are shipped (Or: Shipment is to be made) in 3 equal monthly installments beginning form September.

货物应分三批等量装运，9 月开始。 （3） 如合约中规定允许卖方转运，可记住一下句型： Transshipment is to be made at Hongkong. /The goods are to be transshipped via Hongkong. （货物）在香港转运。 2. original n. 正本 These are original bills of lading. 这些都是正本提单。 We want two originals and three copies. 我们要正本两份，副本三份。 This contract is made out in two originals in both Chinese and English. 本合同制成中英文正本两份。 3. 其他类型提单： Direct B/L: * The goods are shipped from the port of loading direct to the port of destination without involving transshipment.

Transshipment B/L: * the goods need to be transshipped at an intermediate port as there is no direct service between the shipment port and the destination port.

Through B/L: * it is sometimes necessary to employ two or more carriers to get the goods tithe final destination. In this case, usually the first carrier will sign and issue a through B/L. Liner B/L: * issued by a liner company for shipment on scheduled port calls through scheduled routes.

Container B/L: * covering the goods from port to port or from inland point of departure to inland port of destination.

Combined transport B/L: * issued by combined transport operator that covers the multimodal transport on a doorto-door basis in one contract of carriage. * Ideal for container transport. * Differing “through B/L” in that combined transport is operated by only one operator.

Long form B/L: * more detailed with shipping contract clause printed on the back of the page.

Short form B/L: * an abbreviated type of document, smaller and not contain the long list of detailed

clauses that generally appear on the B/L.更短的且背面没有通常出现的详细条款。 On deck B/L 舱面提单 Stale B/L 过期提单 Ante-dated B/L 倒签提单 Advanced B/L 预签提单

Words study Directions: Translate the following English expressions in Part II into Chinese: 1. freight forwarding agents 2. freight rate 3. weight ton 4. measurement ton 5. ad valorem freight rate 6. open rate 7. General Cargo Rates (GCR) 8. Specific Commodity Rates (SCR) 9. lay time 10. demurrage 11. dispatch 12. air waybill 13. consignment note 14. multimodal transport document 15. shipped (On board) B/L 16. clean B/L 17. order B/L 18. straight B/L 19. blank B/L through B/L

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运输代理行 运费率 重量吨 尺码吨 从价运费 议价费率 普通货运费率 指定商品运价 装卸时间 滞期费 速遣费 航空运单 运单 多式联运单据 已装船提单 清洁提单 记名提单 不记名提单 指示提单 联运提单

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Trading companies can arrange shipment by themselves or through freight forwarding

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agents.

The freight forwarding agent usually levies a service fee based on a percentage of the freight charge for income.

Freight rates can be influenced by such factors as mode of transport, origin and destination of the cargo, and nature of good and packing.

One weight ton is equal to one cubic meter, while one measurement ton to one metric ton.

W/M plus Ad Val means that the highest of them will be collected when freight is calculated.

The air freight includes charges such as customs fees and storage fees.

Lay time in the contract is the same thing as shipment time.

Consignment note is used not only for road or rail transport, but also for multimodal transport.

Bill of lading represents the title to the goods and needs to be handled carefully.

The consignee can take delivery of the goods by using originals of B/L or copies of B/L signed by the carrier.

(Answers: 1T 2T 3T 4F 5T 6F 7F 8F 9T 10F)

Unit Thirteen Insurance Arrangement Teaching Objectives (1) To let students know factors influencing insurance coverage, insured amount and premium.

(2) To make students know how exporter or importer takes out insurance according to various conditions.

Warming Up (1) How do your parents buy the insurance?

(2) Then what shall the buyer or the seller do when taking out insurance for the goods?

Lead-in When the contract stipulates the party who is responsible for taking out insurance, that party shall arrange insurance according to the contract clause when the goods are ready and the date of shipment as well as the name of vessel has been determined. How does the exporter or importer take out insurance? We will get a general idea about that from this unit. After reading Part II, try to answer the following questions: 1. What factors will influence the insurance coverage?

2. What shall the buyer note if the seller takes out insurance under CIF and CIP? 3. How to fix the insured amount?

4. What factors will influence the premium rate?

5. What are the advantages of using an open policy for importers?

6. What should the insured pay attention to when apply for insurance?

7. Why is sea protest needed when filing a claim?

8. How to protect the interests of insurer?

Contents of Part II Insurance Arrangement i. Choosing insurance coverage *The coverage usually varies according to the type of goods and the circumstances. *Besides, on the goods carried by different kinds of conveyance, we should take out different insurance coverage. *Different lines influence the goods, too. *The buyer should note that under the CIF and CIP terms, 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 reach an agreement with the seller and specify definitely in the contract or to make his own extra insurance arrangement. ii. Determining insured amount Insured amount: the highest compensation amount undertaken by the insurer, and it is also the foundation for calculating the insurance premium. The insured may usually determine the insured amount himself.

Calculation: the insured amount is usually determined on the basis of the CIF invoice value; the insured amount may be a certain percentage over the actual value of the insured goods. Formula: the insured amount under CIF trade terms is shown as follows: Insured amount=CIF value Ă— (1+markup percentage) Insured amount in open policies: an average freight rate and an average insurance premium rate are stipulated, and the insured amounts will not be marked up any more.

iii. Calculating premium Factors on the rate of insurance premium: a) the nature of packing used. b) the type and the value of the goods to be insured. c) the nature of transport and the related warehouse facilities d) the past experience of the insurance company e) the type of cover needed f) the volume of cargo also influences the premium Calculation: the premium = the insured amount * the premium rate. iv. Taking out insurance a) on “warehouse to warehouse� basis. b) a contracted legal action of the insured who usually applies for insurance in a written form. c) This kind of written form is called Application for Marine Insurance. d) When the insured fills in the application, he should pay attention to the following points: (1) Details of the insured goods shall be provided on the principle of utmost good faith.

(2) Contents shall be in conformity with the stipulations in the contract and L/C. (3) The insurer takes no responsibilities for any willful fault or negligence of the insured.

(4) The insured amount, insurance coverage, the name, quantity, packing of the insured goods, the name of the vessel, sailing date, etc. must be filled in correctly. e) How: When transaction is made on a CIF or CIP basis, the exporter should take out cargo insurance by connecting with the local insurance company. The exporter should insure the goods against the risks and for the amount stipulated in the sales contract when the goods are ready and the date of shipment as well as the name of vessel has been determined. He should first fill in the application form and pay the premium, on which the insurance policy or certificate issued by the insurance company is based.

The date of insurance policy or certificate should not be later than the date of the B/L. If the insured amount is not specified in the sales contract, according to the usual practices, it is the CIF or CIP price plus 10% CIF or CIP price. If the buyer asks for increased percentage of addition, it is generally acceptable. But the additional premium should be borne by the buyer.

When transaction is based on FOB, CFR, FCA or CPT basis, the importers may want to effect insurance by themselves. In order or simplify the procedures and avoid failure of insurance, open policies are used. The insured should inform the insurer in written form of

the information concerning the name of the vessel, the sailing date and route, the name and quantity of the goods, and the amount insured. The insurance company should then be reliable automatically as soon as the ship departs.

Those firms which do not sign any open policy with the insurance company should effect insurance by separate contract. Upon receiving shipping advice from the seller abroad, these firms should carry out insurance procedures immediately. v. Insurance claim *Introduction a) In case the insured goods suffered losses within the scope of insurance cover, the insured can claim for indemnity from the insurer on the strength of the insurance contract. b) In case of loss or damage, the consignee shall determine who will be responsible for the loss or damage, and thus determine the party against whom he should raise a claim. * Advice and inspection of goods damaged After the insured goods have arrived at the place of destination, the insured or his agent should inspect the goods in time. If he finds any loss or damage within the scope of insurance, he should inform the inspector or the agent of the insurer at the place of destination. That the insured informs the insurer of the loss or damage is a necessary step of application for indemnity.

The following parties should be responsible for inspection: (1) The carrier or tally department.

(2) The insurer and other relevant parties.

(3) The authentic surveyor. * Evidence of lodging a claim (1) The inspection declaration of loss or damage.

(2) The insurance policy or insurance certificate.

(3) The invoice, B/L, packing list or weight memo.

(4) The sea protest: the true record of vile weather, unexpected accidents or other perils during the voyage. The purpose of it is to indicate that the ship or cargoes may suffer losses due to the perils, and declare that the captain and the crew have already taken all necessary and reasonable measures. If the losses are due to force majeure events, the shipowner should not be responsible for any obligations.

(5) The detailed list of expenses.

(6) The relevant documents and circular letters to the carrier and other third party to lodge a claim. * Protecting the interests of the insurer (1) Any person who files a claim should have the insurable interest.

(2) Loss of or damage to the insured goods shall be the direct result of the perils within the

scope of the insurance cover.

Suggested answer to the Questions: 1. The type of goods, the circumstances, kinds of conveyance, etc. will influence the insurance coverage.

2. The buyer should note that the seller is required to obtain insurance only on minimum cover.

3. In practice, the insurance amount should be a certain percentage over the actual value of the insured goods.

4. The nature of packing used, the type and the value of the goods to be insured, the nature of transport and the related warehouse facilities, the past experience of the insurance company, the type of cover needed, the volume of cargo, etc. will influence premium.

5. Using an open policy can simplify the procedures and avoid failure of insurance. There is no need to take out insurance for every transaction. The insured just need inform the insurer in written form of the relevant information, and then the insurer will be reliable automatically as soon as the ship departs.

6. (Open).

7. The purpose of it is to indicate that the ship or cargoes may suffer losses due to the perils, and declare that the captain and the crew have already taken all necessary and reasonable measures. If the losses are due to force majeure events, the shipowner should not be responsible for any obligations.

8. First, any person who files a claim should have the insurable interest. Second, loss of or damage to the insured goods shall be the direct result of the perils within the scope of the insurance cover.

Notes for Part Two Reading 1. 保险这一业务环节中最常用的句型为： We usually effect insurance for 110% of the invoice value against… (risks). 我们通常按照发票金额的 110%投保 XXX 险。 为货物投保还可以说： Cover… (the goods) against… (risks) for… (amount)如 We’ve covered the above shipment against All Risks for USD 50,000. 我们已经按 5 万美元为上述货物投保了一切险。 2. Principles of cargo transport

i Insurable interest 可保利益: 投保人对所保货物由绝对的所有权,而且必须是当险情出现时遭受经 济损失的人. ii Good Faith 最大诚信:要遵守诚信,不能错误陈述事实或者掩盖事实.投保人有责任向承包人 揭示所知的有关货物的一切详情. iii Indemnity 赔偿,投保人不能获得高于实际损失的赔偿. a. the loss must be caused by the insured risk.

The loss is recoverable under the insurance cover. b. the insured must be lawful bearer of the party c. the insured must have the insurable interest

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. It should be the exporter’s obligation to take out insurance on minimum cover under CIF or CIP. 2. Although the insurance has been taken out by the exporter, sometimes, the importer still needs to make extra insurance arrangement for a wider cover.

3. The insured amount should be the actual value of the insured goods plus the expected operating expenses and profit.

4. According to the usual practices, the insured amount, if not specified in the sales contract, will be 110% of CIF or CIP price.

5. Generally speaking, the insured amount will not be marked up in an open policy.

6. The past experience of the insurance company is important in fixing the premium rate.

7. The date of issuance of B/L should be earlier than the date of issuance of insurance policy.

8. Cargo transport insurance is usually taken out on “warehouse to warehouse” basis.

9. No matter what losses the insured suffers, he can lodge a claim for indemnity from the insurer.

10. The person who lodges a claim should have the insurable interest.

(Answers: 1T 2T 3T 4T 5T 6T 7F 8T 9F 10T)

Unit Fourteen Customs Declaration Teaching Objectives (1) To let students know the general knowledge about the customs.

(2) To make students master the way of clearing the goods for import and export.

Warming Up (1) Have you ever seen in the film how a person goes through the customs examination when going abroad?

(2) Then if the goods are exported from or imported into a country, what will be done?

Lead-in Both imports and exports need to clear the goods to the customs. Only after getting the permission of the customs, the exported goods can be loaded on the board, while the imported goods can be sold or used. Successful customs clearance is necessary in international trade. In order to avoid possible problems, the exporter and importer should know the general knowledge about the customs. And in this unit, we are just going to learn it. After reading Part II, try to answer the following questions: 1. How does the China Customs examine the goods entering and leaving China?

2. What is over-landed cargo? How to deal with such cargoes?

3. What is over- carried cargo? How to deal with such cargoes?

4. What is the function of a shipping order and a Bill of Lading?

5. Why is damaged cargo a matter of interest to the customs?

6. Explain general rates and preferential rates.

7. How does the customs make customs valuation?

8. How does the customs deal with it in the case that the duties are short-levied or overlevied?

Contents of Part II Customs Declaration i. Introduction

China Customs is a state organ responsible for the supervision and control means of transport, goods and other articles entering or leaving China’ territory, the collection of customs duties, taxes and fees, the prevention of smuggling, the compilation of the customs statistics and dealing with other customs matters.

All international inward and outward-going means of conveyance, such as vessels, trains and civil aircraft, must pass through customs supervision and control. The importer or the exporter must submit declarations to customs on goods entering or leaving Chinese territory. Only after release by the customs may the cargo be discharged or loaded. The supervision and control of cargos is one of the main tasks of China Customs. ii. Customs examination In order to carry out the state policy of controlling foreign trade, the customs has to examine and release all cargos entering or leaving Chinese territory upon verification of the import and export licenses issued by the foreign trade control organs. Cargo subject to commodity inspection, animal or plant quarantine, medical tests or other state restrictions must be examined, and released by the customs only on production of certificates issued by the authority concerned. For instance, export cargo subject to legal commodity inspection is released by the customs only upon verification of the commodity inspection certificate; imported animal and plant products, such as cotton, wheat, hemp, etc. are released only upon verification of the quarantine organ; imported medicines, Western or Chinese, are released only against test laboratory quality certificates issued in China.

Imported and exported cargo, except where specially exempted, is subject to the necessary customs examination. The cargo-owner or his agent is required to be present during the examination and is held responsible for the unpacking of goods upon customs’ demand. The examination of the cargo by the customs is a measure to prevent any illegal cargos being imported into or exported from China. During the course of the examination, the customs must check that the shipping marks, number of package, weight, specifications of the cargo, and trading country correspond with those on the licenses, that the cargos accord with relevant regulations on foreign trade, that there is no damage to or loss of cargo, that the quality and packing of exported goods are up to requirements, and that there are no irregulations during loading, discharging or storing. In so doing, state property is properly protected and our country’s reputation in the foreign trade is maintained.

As a rule, cargo is examined at wharves or warehouses under customs supervision and control. However, in certain case, where it is proved to be necessary, cargo may be examined at other places, upon request, or at the trading corporation concerned. With a view to facilitating goods traffic, the customs may authorize early release, upon examination, to such items like certain bulk cargos, dangerous goods or perishable goods, so as to expedite transportation and prevent losses.

Important exports, after being examined and found to be in accordance with the regulations, may be released with the relative documents signed and sealed by the customs, against which the delivery or shipment of the cargo may be made between the cargo-owner and the harbor, airport, railway station, post office or other unit concerned. Any import or export cargo not in conformity with the stipulations may not be released and will fall to be disposed of by the customs according to the regulations. iii. Customs supervision and control over imports and exports Customs supervision and control over cargo must closely keep pace with China’s foreign trade policy. In the event, for example, that during a certain period of time China suspends trade with a particular country, the customs is held responsible for enforcement of the ban.

If cargo from the country barred from trade is smuggled in by foreign merchants, it is required to be disposed of by the customs. In carrying out its supervision and control duties, the customs simplifies the procedure as far as possible with a view to facilitating goods traffic. For instance, imports such as raw cotton, logs, etc., which are subject to plant quarantine, are permitted by the customs to be discharged whilst still under quarantine, thus shortening the ship’s stay in port.

According to the regulations, any over-landed cargo may be reshipped abroad within three months. Over-landed cargo is cargo discharged at a port in excess of the amount contracted for. If one of the interested parties, such as the cargo-owner or the shipping organization asks, with the consignor’s consent, to compensate over-landed cargo with short-landed cargo, i.e., cargo discharged which is less than the amount contracted for, the customs may release the over-landed goods within the specified time limit after all customs formalities have been fulfilled and the duty paid.

Over-carried cargo relates to goods, destined for a port but not actually discharged there, due to error or overweight, and which are carried on to the next port. The customs can determine the quantity and type of over-carried cargo by checking the import manifest. Nor should they be confused with the shut-out cargo, which is a term referring to goods intended for export and which have gone through customs formalities but have not actually been loaded, for example, because the ship finds that it has not sufficient space to take them. In that event a Shut-Out cargo form must be completed and the Shipping Order amended.

The customs should also be familiar with documents customarily used in export and import, such as shipping orders and bills of lading. A shipping order covers cargo intended for export, and a bill of lading refers to goods intended for import. They become the instrument for loading or unloading after all the customs requirements have been met and the customs seal affixed.

Damaged cargo is also a matter of interest to the customs. Goods partly damaged or destroyed before loading in a foreign port should have been noted on the bill of lading by a

ship’s officer, with an indication of the extent of the damage sustained. This is not a matter directly for the customs. But the customs becomes directly involved when cargo becomes damaged or destroyed at sea, due to bad weather, mishandling of the ship, or any other reason, a “broken and damaged cargo list” must then be prepared and signed by an authorized ship’s officer. The extent of the damage will then be assessed by a panel of interested bodies, including the customs. The involvement of customs is essential as duty is abated on damaged goods.

As for exporters, customs and commodity inspection bureaus must pay strict attention to the quality of the goods to be exported so as to maintain the good prestige of China in foreign trade. Behind the busy activity of unloading or loading a ship or aircraft, opportunities arise with the potential for developing into violations of the Chinese Customs Law. Pilferage or theft will be eliminated altogether, but any steps which can be taken to minimize the general problems will have the effect of reducing the likelihood of smuggling. Customs officers should therefore be at all times alert in the performance of their duties. iv. Types of customs duties All goods permitted to be imported into or exported out of the customs territory of China shall be subject to the levy of customs duties on imports or exports according to the Customs Import and Export Tariff of the People’s Republic of China except as otherwise provided for by the State Council.

Tariff rates on imports fall into two categories: general rates and preferential rates. The general rates apply to the goods imported from and produced or manufactured in countries or regions with which China has concluded no agreement for reciprocal tariff preference.

The preferential rates apply to the goods imported from and produced or manufactured on countries or regions with which China has concluded such an agreement. v. Customs valuation The customs valuation of import and export goods shall be determined by the customs on the basis of the transaction value of the goods. If the transaction value can’t be ascertained, the customs valuation shall be determined by the customs according to law.

The customs evaluation of import goods includes the value of the goods, cost of transport, charges associated with transport of the goods and cost of insurance occurred before the goods are unloaded at the entering point of the territory of China; the customs valuation of export goods includes the value of the goods, cost of transport, charge associated with transport of the goods and cost of insurance occurred before the goods are loaded at the leaving point of the territory of China. vi. Payment of customs duty Both the consignee and the consignor of imports and exports are persons obligated to pay customs duty. The clearing agent entrusted to go through the related customs procedures

shall abide by all the provisions pertaining to his client. The person obliged to pay the customs duty and taxes on import and export shall pay the amount payable within 15 days from the day of issuance of the duty memorandum. In case of failure to meet this time limit, a fee for delayed payment will be imposed by the customs. If the person fails to pay the duties within 3 months, the customs may take certain coercive measures on approval from the head of the competent customs authorities.

If the customs finds that the duties are short-levied or not levied on a consignment of import or export goods after the release, the customs shall collect the money payable from the obligatory duty payer within one year of the previous duty payment or the release of the article. If the short-levied or non-levied duties are attributable to the duty payer’s violation of the customs regulation, the customs may collect the unpaid amount from him within 3 years. In the case that the duties are over-levied, the customs, upon discovery, shall refund the money without delay. The obligatory duty payer may ask the customs for refunding within one year of the date of duty payment.

Where the obligatory duty payer is involved in a dispute over duty payment within the customs, he shall pay the duties, and may apply to the customs for administrative consideration in accordance with relevant provisions; if the decision made by the customs is still considered unacceptable, he may file a suit at the People’s court.

Suggested answer to the Questions: 1. (open) 2. Over-landed cargo is cargo discharged at a port in excess of the amount contracted for.

If one of the interested parties, such as the cargo-owner or the shipping organization asks, with the consignor’s consent, to compensate over-landed cargo with short-landed cargo, the customs may release the over-landed goods within the specified time limit after all customs formalities have been fulfilled and the duty paid.

3. Over-carried cargo relates to goods, destined for a port but not actually discharged there, due to error or oversight, and which are carried on to the next port. The customs can determine the quantity and type of over-carried cargo by checking the import manifest.

4. A shipping order covers cargo intended for export, and a Bill of Lading refers to goods intended for import. They become the instrument for loading or unloading after all the customs requirements have been met and the customs seal affixed.

5. Because the customs becomes directly involved when cargo becomes damaged or destroyed at sea, due to bad weather, mishandling of the ship, or any other reason, a

“broken and damaged cargo list” must then be prepared and signed by an authorized ship’s officer. The extent of the damage will then be assessed by a panel of interested bodies, including the customs. The involvement of customs is essential as duty is abated on damaged goods.

6. The general rates apply to the goods imported from and produced or manufactured in countries or regions with which China has concluded no agreement for reciprocal tariff preference. The preferential rates apply to the goods imported from and produced or manufactured on countries or regions with which China has concluded such an agreement.

7. The customs valuation of import and export goods shall be determined by the customs on the basis of the transaction value of the goods, that is the price actually paid or payable for goods when sold for export to the importing country. If the transaction value can’t be ascertained, the customs valuation shall be determined by the customs according to law.

8. (Open)

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

declarations to customs over-landed cargo over-carried cargo short-landed cargo shut-out cargo shipping order general rates preferential rates customs valuation short-levied duties

11.

12.

13.

14.

15.

16.

17.

18.

19.

报关 溢卸货物 漏泄货物/溢载货物 短卸货物 退关货物 装货通知 普通税率 优惠税率 海关估价 短装关税

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. All imported and exported cargos must be subject to the necessary customs

2.

3.

4.

5.

6.

7.

8.

9.

10.

examination.

The customs is held responsible for the unpacking of goods during the examination.

Cargo can only be examined at wharves or warehouses under customs supervision and control.

If cargo from the country barred from trade is smuggled in by foreign merchants, it is required to be disposed of by the customs.

Over-landed cargo and over-carried cargo mean different things, while over-carried cargo and shut-out cargo mean the same thing.

A shipping order covers cargo intended for export, and a Bill of Lading refers to goods intended for import.

Duty is abated on damaged import goods.

The customs valuation of import and export goods shall be determined by the customs on the basis of the transaction value of the goods.

In case that the person fails paying customs duty within the time limit, a fee for delayed payment will be imposed by the customs.

There is nothing to do when the customs finds that the duties are short-levied.

(Answers: 1F 2F 3F 4T 5F 6T 7T 8T 9T 10F)

Unit Fifteen Documentation and Payment Teaching Objectives (1) To let students know types of document and requirement of documents in international trade.

(2) To make students master payment procedures and different documents required under different term of payment, especially under documentary credit.

Warming Up (1) What can prove that you have bought something from others? Yes, a receipt or an invoice.

(2) Then what will prove that different activities have happened in international trade?

Lead-in International trade involves different documents, and such documents relate to different aspects such as transport, payment, insurance, import duty, etc. It is not a simple job to make all documents correct. In this unit, we will discuss details about documentation and payment. After reading Part II, try to answer the following questions: 1. Why is documentation important in international trade?

2. What are the four major types of documents classified by ICC? 3. What are the requirements for exporting documents?

4. What are the procedures for payment under L/C? 5. Why is documentation especially important under L/C payment?

6. What documents may be needed for payment under L/C? 7. What discrepancies should be avoided about draft for payment?

8. What are the points to check the bill of lading?

Contents of Part II Documentation and Payment i. Importance of documentation * Trade documentation and related procedures are an important component of international trade. * They help the imports and exports identify goods in terms of description, value and ownership. * They allow for the tracking of cargos so that the importers and exporters know where their shipments are and when they will arrive at the final destination. * Trade documents are also important evidence of customs clearance and are used for financing and the payment for the goods especially if payment is made under L/C terms. * An important part of international trade practice is a good comprehension of various documents involved in the performance of the sale contract including their role, limitation, likely problems, etc. The exporter is responsible for ensuring that the documents for the transport of the goods are complete, accurate and properly and promptly processed in accordance with the sales contract. If a documentary credit is used, then all the documents must be made out according to the L/C terms. Failure to do so can frequently result in costly consequences. The importer, on the other hand, is responsible for accurately completing the necessary forms for the goods to be licensed for import and cleared through customs.

Improper documentation can cause goods to be impounded, warehoused or left on the quayside with consequent damage, loss and expense. ii. Types of documents The ICC classifies four major categories of trade documents: *The commercial documents, principally the invoice, are the seller’ description of the goods shipped and the principal means by which the buyer gains assurance that the goods shipped are those ordered. *The transport documents are “documents indicating loading on board or dispatch or taking in charge�. Shipping note, packing list, bill of lading, consignment note and multimodal transport document are all examples of this category. *Insurance documents represent that the goods are duly insured, hence transferring the risks if they are lost in transit. *Other documents may be the official documents required by governments in order to regulate and control the pass of goods across their borders. They typically include consular invoice, import license, export license and certificate of origin. They may also include certificate of weight, certificate of quality or analysis named by the buyer. iii. Requirements for documentation (1) Correct The documents provided should be correct, which is the guarantee for seller to collect foreign exchange safely and in time. The accordance between documents and L/C and between documents and documents are the key in L/C settlement. The accordance between documents and goods should also be the point.

(2) Full The parties should provide all the documents according to the clauses of L/C and contract.

The type, copies and necessary items should be full without shortage and omission.

(3) In time Sellers should make documents in time and present them to banks for negotiation to collect payment before the validity date and presenting day. If possible, sellers should send the documents to banks for pre-examination so that they should have enough time to examine and correct possible mistakes in the documents or ask to revise the L/C. (4) Simple The contents of the documents should be filed according to L/C and trade practices. The unnecessary contents should not be added.

(5) Neat The layout of the documents should be clear and clean, and the amended parts should be printed with stamps. Some items, e.g., amount, quantity, numbers and weight in important documents such as B/L and drafts could not be revised without permission of the parties.

iv. Payment under documentary L/C Procedures: It is very important for the parties to prepare the documents and collect foreign exchange safely. In L/C settlement, banker’s negotiation is merely based on L/C and documents rather than on the terms of sale or the condition of the goods sold.

The first step for the seller after shipment is to make all the documents needed properly according to the clauses of L/C if L/C is adopted. He should submit the documents to banks for negotiation before the maturity and presenting date of L/C. He should pay attention to the conformity between documents and L/C, which means that “the documents are in accordance with L/C” and “documents are in accordance with other documents.”

Before payment, the bank responsible for making payment verifies that all documents are exactly as required by the L/C. When they are not as required, the discrepancy must be cured before payment can be made. Thus, the full accordance of documents with those specified in the L/C is necessary.

The documents that may be needed for L/C settlement: ☆Draft Drafts are generally to be drawn on a bank, but some credits require them to be drawn on the importer. The following are discrepancies in a draft that should be avoided: (1) The value of the draft does not correspond with invoice value.

(2) The signature and/or name of the drawer do not correspond with the name of beneficiary.

(3) The amount in figures and words does not correspond.

(4) The amount drawn for exceeds the balance available in the documentary L/C. ☆Commercial invoice A commercial invoice gives details of the goods, the value in particular. Points about commercial invoice under L/C are as follows: (1) The issuer must be the beneficiary of the credit.

(2) The buyer must be the party named in the credit and its name must be identical to that in the credit.

(3) Description of commodity must be identical to that in the credit.

(4) Number of copies must be sufficient. ☆Certificates of inspection The certificates of inspection are used to ensure that the goods meet a certain standard. The agency issuing the certificates must be the one specified in the sales contract, and the description of goods in the certificates must be identical to that in the credit. ☆Bill of lading

Bill of lading is a very important shipping document if sea transport is used. In general, the following discrepancies are most common and special attention should be paid to avoid them.

(1) Document not presented in full set as requested.

(2) The type of B/L must be correct.

(3) Not endorsed “on board” when so required, “on board” not signed and dated or dated after the latest shipment date on credit.

(4) Cargo description must be as specified in credit.

(5) Failure to indicate if freight prepaid or freight collect.

(6) Unconformity between B/L and other documents.

(7)B/L dated later than the shipping date in L/C. (8) Amendments must be signed on all originals.

(9)Consignee’s name must be as specified in the credit. ☆Insurance policy/certificate Pointes to be considered about insurance documents are: (1) The amount must be sufficient and the same with that specified in the L/C. (2) Description of commodity must be the same as that in L/C. (3) Risks covered must be as specified in L/C. (4) Issuing date shall not be later than the date on the transport document. ☆Certificate of origin An importing country often asks for such a certificate in order to extend preferential duties to goods from acceptable countries.

Pointes to check this document are: (1) Description of commodity must be the same with that of L/C. (2) Issuer must be the authorized party or the party agreed by both the seller and the buyer.

On receipt of the documents, the negotiating bank should examine them to make sure whether they are in conformity with the L/C and are matched with each other. The negotiating bank in turn collects the payment from the paying banks, exchanges the foreign exchange collected for local currency, and pays the local currency amount to exporter according to the foreign exchange settlement agreement between the exporter and the bank.

The paying bank will examine the documents according to the L/C, and decide whether or not he will make the payment or acceptance against it. If the bank confirms that the documents are correct, he will send them to the importer for further examination. After the importer acknowledging the documents’ integrity, the bank will make the payment according to the clauses of L/C. When some unconformity is found, the bank will discuss with the importer. If the importer accepts the unconformity, he can instruct the bank to make payment or acceptance.

Suggested answer to the Questions: 1. (Open).

2. Commercial documents, transport documents, insurance documents and other documents are the major types.

3. The documents shall be correct, complete, in time, simple and neat.

4. (Open).

5. Because in L/C settlement, banker’s negotiation is merely based on L/C and documents rather than on the terms of sale or the condition of the goods sold.

6. Draft, commercial invoice, bill of lading, certificates of inspection, insurance policy or certificate, certificate of origin, etc.

7. The discrepancies in the aspect of the value, the signature and/or name of the drawer, the amount, etc should be avoided.

8. (open)

Words study Directions: Translate the following English expressions in Part II into Chinese: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

documentation commercial invoice shipping note packing list consignment note consular invoice import license freight prepaid freight collect original B/L

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

制单 商业发票 托运单 装箱单 运单 海关发票 进口许可证 运费预付 运费到付 正本提单

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Some trade documents are necessary for customs clearance.

2. The accordance between documents and L/C and between documents and documents is necessary in L/C settlement.

3. The parties should provide the documents for payment according to the clauses of L/C. 4. In L/C settlement, banker’s negotiation is merely based on L/C and documents not contracts and goods.

5. The bank has the right of refusing to pay if the documents are presented later than the validity of L/C. 6. The drawee of the draft must be a bank in L/C settlement.

7. The issuer of commercial invoice must be the beneficiary of the relevant credit.

8. Amendments must be signed on all originals of bill of lading.

9. The beneficiary may get no payment if some unconformity between the documents and L/C was found.

10. The documents shall be sent to the buyer by exporter directly under L/C settlement.

(Answers: 1T 2T 3T 4T 5T 6F 7T 8T 9T 10F)

Unit Sixteen Settlement of Disputes Teaching Objectives (1) To let students get a general view of ways to solve disputes and the difficulties.

(2) To make students be able to choose the proper way to solve a certain dispute and know details of arbitration including the procedures.

Warming Up (1) If there are misunderstanding and disputes between you and another person, how do you solve the problem?

(2) Then how to solve the disputes between importer and exporter?

Lead-in Just as the purchase and sale in our daily lives, disputes are common in international trade, too. A contract can not be carried out smoothly when there are disputes. So how to solve

disputes affect the enforcement of the contract directly. This unit discusses ways to solve disputes and the difficulties in detail. After reading Part II, try to answer the following questions: 1. What may the disputes be about in international trade?

2. What are the ways of settling disputes?

3. What shall be noted when settling disputes through a third party?

4. Why is arbitration commonly used in settlement of international trade disputes?

5. What are the procedures for arbitration?

6. How to execute the arbitral award?

7. What does market claim mean?

8. What shall be noted when handling the disputes in international trade?

Contents of Part II Settlement of Disputes i. Disputes in international trade If everything is done so carefully that no mistakes are made and nothing be damaged, then the sales contract will be carried out smoothly. But in practice, disputes occur often.

Disputes about seller’s refusal or failure to fulfill an obligation as stipulated in the contract mainly cover non-delivery, late delivery, unconformity of the goods and so on. Disputes about buyer’s refusal or failure to fulfill an obligation as stipulated in the contract mainly cover non-payment, late payment, failure to take delivery of the goods and so on.

Generally speaking, disputes about damage are usually the business of insurance companies, but if the damage is caused by the negligence of the carrier, then the insurance companies will not take responsibilities. When there is a dispute that the wrong goods were sent, or too many, or too few, there it is always necessary to check the packing list as well as the invoice.

Bad, inferior or inadequate packing may cause damage to goods in transit. The buyer may accept the damaged goods if the supplier offers a discount. But if the goods are badly damaged, they may be not usable and in this case the buyer will demand compensation. If the delay is very long, the buyer may cancel the order, and there may be loss to both the supplier and the buyer.

When a dispute occurs, the parties involved often try to resolve it between themselves because the people concerned are most familiar with the problem and dealing with it personally can avoid damage to their friendship. If the parties involved are both unwilling to make any concessions or one party refuses to try and solve the problem, they can then seek settlement through a third party or a trade authority, or go for arbitration by an international

commercial body or resort to litigation. Which method to use depends on the contract and on the intention of a party or both parties. ii. Ways of settlement of disputes The following four ways may be used to settle such disputes. * Friendly consultation It is best for the parties to settle disputes through friendly consultation. Thus the disputes could be resolved with the friendly business relationship maintained between the two sides.

However, in practice, it is so difficult for the two sides to reach an agreement through friendly consultation. * Mediation Introduction: Mediation could be considered as negotiation with a mediator.

The mediator can be any neutral third party or international chamber of commerce or government trade authority.

It makes efforts to help the two parties work out their own solutions and then reach an agreement.

In order to arrive at a satisfactory result, both sides concerned in the disputes have to be prepared to make concessions.

The mediation has little chance of success unless the mediator is trusted by both two parties, but it is not easy to find such a mediator.

Procedures: the first thing to be done is to look into the case and see whether the people involved are in fact qualified to lodge a claim and whether the documents presented are complete.

If all is correct, the third party will accept the case and inform the parties concerned by either letter or telegram that the case is under processing, and any future development thereof will be made known to them later on.

If it is found after examination that the applicant is not qualified to lodge a claim or the documents presented are not complete, the third party will quickly contact by letter or telegram the party concerned and ask him to provide supplementary documents within a certain time limit.

If, by the deadline, the required documents have not been presented or are still not complete, then the case will not be handled and it will be put away in file.

Also, if it is found that there is an arbitration agreement or an arbitration clause in the contract, the third party will also ask the party concerned to follow the stipulation and refer the case for arbitration, and will not handle the case. * Arbitration: a method of settling disputes arising between the two parties who voluntarily render their disputes to a panel of arbitrators agreed by themselves to deal with

in accordance with certain arbitration rules and make a final decision binding both two parties based on the arbitration agreement or arbitration clause in the contract. * Litigation: lawsuit, a process in law instituted by one party to compel another to do him justice. It is usually costly and time-consuming. It is likely to make the two parties hostile to each other and damage the relationship between them. Therefore, this way should be used as rarely as possible. iii. Arbitration procedures (1) Application for arbitration When applying for arbitration, the claimant should submit to the arbitration organization specified in the arbitration agreement or the arbitration clause in the contract an application for arbitration in writing, the arbitration agreement or clause, the statement of facts and the evidences on which his claim is based on. The application for arbitration and relevant documents should be submitted in the same copies to the defendant and all the arbitrators.

The claimant shall pay an arbitration fee in advance to the arbitration organization.

(2) Formation of arbitration tribunal Arbitrators should be appointed by two parties to form an arbitration tribunal to hear the arbitration case and make the award. If the dispute is submitted to an arbitration organization, the arbitrators may be selected from its panels of arbitrators. No matter whether the arbitrators are appointed by the two parties themselves or selected from the panels, they should remain impartial and the number of them should be odd.

(3) Hearing Generally, oral hearings are concluded in the course of arbitration. However, the arbitration tribunal may examine the case and make an award on the basis of documents only at the request of the parties or with their consent, and with the arbitration tribunal’s confirmation that oral hearings are unnecessary.

The date of oral hearing should be fixed by the arbitration tribunal and be informed to the parties some days before the date of hearing so that they may have sufficient time to make necessary preparations.

(4) Award In the ordinary arbitration procedures, the arbitration tribunal should render an arbitral award within reasonable time. According to the arbitration rules of the CIETAC, the arbitration tribunal shall render an arbitration award within nine months from the date of its formation.

(5) Enforcement of an award The parties should automatically execute the arbitral award within the time limit specified in the arbitral award. In case one party fails to execute the arbitral award, the other party has the right to apply to the competent court for enforcement. Whenever one party applies for

enforcement to the competent foreign court, he shall submit to the court written application for enforcement together with the arbitration agreement, the original copy of arbitral award and its corresponding translation copy.

(6) Setting aside an award If one party thinks that there are matters not in conformity with the statutory procedures in the award after receipt of the arbitral award, he may apply for setting aside the arbitral award to the competent court in the place where the arbitration takes place. iv. Difficulties in settlement of disputes a) It is sometimes a rather complicated matter to handle a dispute properly because it may be made out of different reasons. b) market claim: there are also other cases in which the buyer intentionally lodges a claim against the seller due to the decline of the market price or for some other unfavorable factors. The seller, on the other hand, may also try to find fault with the buyer and make a market claim. c) Considerations: First, the contract clause should be studied carefully because the contract signed by the seller and the buyer stipulates both parties’ obligations and may serve as the foundation for the disputes. Second, they should investigate with great care into the evidences that support the claim in order to decide whether it is justified or not. Third, a careful study should be made on the nature of the breach of the contract. A breach of condition or a fundamental one can lead to the revocation of the contract as well as a claim for damages while a breach of warranty or a non-fundamental one only lead to a claim for damages. Finally, a further study should be made on the correct standards and methods to calculate the losses, which will make the amount of compensation reasonable.

Suggested answer to the Questions: 1. (Open). Disputes may be about non-delivery, late delivery, unconformity of the goods, non-payment, late payment, failure to take delivery of the goods and so on.

2. Friendly consultation, mediation, arbitration and litigation are the ways of settling disputes.

3. (Open).

4. Because in practice, it is so difficult for the two sides to reach an agreement through friendly consultation, and it is not easy to find a mediator that is trusted by both two parties. In addition, compared with litigation, arbitration may save both the cost and the time. Moreover, it will not ruin the relationship between the two sides and helps to maintain a long-term business relationship.

5. Application for arbitration, formation of arbitration tribunal, hearing, award and enforcement of an award are the procedures for arbitration. Sometimes, setting aside an award will all be involved.

6. The parties should automatically execute the arbitral award within the time limit specified in the arbitral award. In case one party fails to execute the arbitral award, the other party has the right to apply to the competent court for enforcement.

7. There are cases in which one party intentionally lodges a claim against the other party due to the decline of the market price or for some other unfavorable factors. Such a claim is a market claim.

8. First, the contract clause should be studied carefully. Second, they should investigate with great care into the evidences that support the claim. Third, a careful study should be made on the nature of the breach of the contract. Finally, a further study should be made on the correct standards and methods to calculate the losses.

Discussion: Directions: close the textbook and try to remember the contents in Part II, then discuss whether the following instatements are true or false with your partner.

1. Disputes in international trade may be about late delivery, unconformity of the goods, late payment, etc.

2. The insurance companies will be responsible for settling all disputes about damage.

3. Friendly consultation is the best way to solve disputes for both the buyer and the seller in international trade.

4. When applying for arbitration, the party concerned must submit the contract which includes a clause for arbitration or a temporary agreement on arbitration, otherwise the application will be rejected.

5. The claimant shall pay an arbitration fee in advance to the arbitration organization.

6. The number of arbitrators to settle one dispute shall be even.

7. Oral hearings are always necessary for arbitration.

8. In case one party fails to execute the arbitral award, the other party has the right to apply to the competent court for enforcement.

9. The buyer may intentionally lodge a claim against the seller due to the decline of the market price sometimes.

10. A careful study should be made on the nature of the breach of the contract when settling disputes.

(Answers: 1T 2F 3T 4T 5T 6F 7F 8T 9T 10T)