International trade



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Invoice is the most important document in international trade .
The commercial invoice is the seller’s demand for payment of money in exchange for the sale of goods.
A commercial invoice should provide:
• The name and address of the exporter and importer and any other parties to the transaction
• A complete and precise description of the goods including the quantity and price
• All information needed to fulfil customs requirements
A proforma invoice or sales confirmation is an official price quote- a more legally binding document then an ordinary commercial invoice, it formalises the terms of the sale.
An electronic invoice, or e-invoice, has the same functions as a paper invoice.
Using e-invoice has several advantages compared to paper invoices: they save time, fewer errors are made, it is easier to store and retrieve e-invoices.
To send and receive e-invoices a trader needs an e-mail account and a software which locks the contents into a read-only document so that the data cannot be altered.
An electronic signature can be added to each e-invoice that verifies the contents and identifies the sender of the invoice.
The only customs documents required for trade within EU are related to systems for the collection of VAT and the compilation of statistics.
• VAT information exchange system (VIES):each VAT registered exporter to an other member states must complete a VIES form. This allows the authorities to check that the correct amount of VAT has been paid.
• International trade statistics (INTRASTAT): the intrastate system is designed to compile statistics of trade within the EU.
• Single administrative document (SAD):the main documentary requirement for shipments to markets outside of the EU is the SAD. The SAD is used to complete the export, transit and import requirements for customs.
• Certificate of origin: a country of origin certificate states the country of origin of the goods being exported. Not all countries require a certificate of origin but most middle eastern arab countries do.
When trying to choose the most efficient means of transport an exporter must take the following factors into consideration:
• Cost
• Urgency of the order
• Speed and security
• Type, value and dimension of the goods
• Distance.
The railway is road transport’s major inland competitor
Advantages: it is faster for long journeys, it is suitable for larger volumes of goods, it isn’t affected by bad weather or traffic conditions.
Disadvantages: compared to road transport it is slower, it cannot deliver door to door, it isn’t as flexible as trains have specific timetables and must follow fixed routes.
Transport by road is the main means of inland transport in the EU.
Advantages: it is relatively cheap and quite fast, it is extremely flexible, it is a door to door service (the goods are collected and delivered directly to the buyer).
Disadvantages: it is comparatively slow over long distance, the volume of the cargo is limited, road traffic strikes and bad weather can cause delays.
Advantages: it is the cheapest method of transport, it is especially suitable for such low-cost bulk items as oil, coal, ore and cotton.
Disadvantages: ships are slow and sailings are often infrequent, at least one other form of transport is needed to deliver to the buyer, sea transport is often delayed by bad weather.
Advantages: it is the fastest means of transport, it is suitable for urgently required.
Disadvantages: it is very expensive, the cargo has volume and weight limitations, there may be delays or cancellations due to bad weather or problems, other form of transport are needed to make the final delivery.
Transport by pipeline is an important new development.
Advantages: pipelines are expensive to build but very cheap to operate and maintain, for petrol, natural gas coal or wood chips pipelines are an effective mode of transportation, it isn’t affect by bad weather or traffic.
Disadvantages: pipeline is slow and the routes are inflexible, only certain types of goods can be transported by pipeline.
Forwarding agents are experts in the transportation of goods. The services they offer include:
• Arranging for the goods to be packed
• Organising all the stages of transportation, often using their own vehicles
• Insuring the goods
• Supervising export formalities
• Preparing all the necessary documentation
• Handling the necessary procedures in the event of missing or damaged goods.
Transport documents accompany goods that are shipped from one country to another.
The international road consignment note is usually completed by the carriers and serves as:
• A receipt for the goods and a contract of carriage between the consignor and the carriers
The international road consignment note contains:
• Details about the consignor, carriers and consignee
• A description of the goods
• Details about where the goods should be picked up and delivered.
The railway consignment note is a document stating that the goods have been handed over to the rail authorities. It is issued at a local railway station and copies must also be distributed to the customs authorities and to the departure and arrival station. It contains:
• The names and addresses of the consignee
• The consignor and both stations
• A description of the cargo
• The carriage charges.
The bill of lading is the most important document in sea transport. It is:
• A document of title declaring who is the legal owner of the goods. The consignee doesn’t receive a copy of the b/l until he has paid for the goods.
• A receipt for the goods confirming that they have been loaded and also what condition they are in.
• A contract by the shipping company to carry the goods to their port of destination.
There are two types of b/l:
• A clean b/l when the carrier states that the goods were received in a good condition
• A foul b/l when the carrier states that the goods were received in a bad condition
A combined b/l includes the use of road and/or rail shipment at either end of the sea journey.
The international chamber of commerce has established 13 standard terms called incoterms.
These terms clearly define the responsibility of both the importer and the exporter for transport costs, risk, duties, loading and unloading, insurance and customs formalities.
E-TERMS: the seller makes the goods available to the buyer at his own premises. The buyer is responsible for the entire cost of transporting the goods.
F-TERMS: the seller must deliver the goods to a carrier named by the buyer. The buyer is responsible for the cost and risk of the carriage.
C-TERMS: the seller pays for the international carriage of the goods, but the buyer assumes the risks during the carriage.
D-TERMS: the seller bears all the costs and risks of delivering the goods to the agreed destination point. Incoterms:
EXW (EX-WORKS)+SELLER’S TOWN :minimum obligation for the seller. he makes the goods available at his premises. The buyer is responsible for the entire cost of transporting the goods which are at his risk from the moment they are made available by the seller.
FCA (FREE CARRIER)+NAMED PLACE: the seller must clear the goods for export and hand them over to the carrier named by the buyer. The transfer of expenses and risks to the buyer becomes effective when the carrier takes charge of the merchandise.
FAS (FREE ALONGSIDE SHIP) +LOADING PORT: the seller clears the goods for export and delivers them to the quay alongside the ship. From this point on the buyer incurs all expenses and risks.
FOB (FREE ON BOARD)+ LOADING PORT/AIRPORT: the seller must deliver the goods, cleared for export, on board a carrier named by the buyer. At this point the expenses and risks are transferred to the buyer.
CFR (COST AND FREIGHT)+PORT/AIRPORT OF DESTINATION: the seller must clear the goods for export and pay for them to be transported to a named port/airport of destination and unloaded at that destination. the seller retains the risk on the goods until they are loaded onto the carrier. At this point the risk passes to the buyer.
CIF (COST,INSURANCE AND FREIGHT)+ PORT/AIRPORT OF DESTINATION: it is the same as CFR but the seller must also supply insurance against risk of loss or damage to the merchandise.
CPT (CARRIAGE PAID TO)+PLACE OF DESTINATION: the seller must arrange and pay for the transport of the goods cleared for export to the point agreed as the destination. The seller bears the risk in the goods until they have been handed over to the first carrier. The risk then transfers to the buyer. The buyer is responsible for customs duties at the destination.
CIP (CARRIAGE AND INSURANCE PAID TO)+PLACE OF DESTINATION: it is the same as CPT but the seller must also supply transport insurance.
DAF (DELIVERED AT FRONTIER)+NAME OF THE FRONTIER: the seller clears the goods for export and bears the costs and risk until the goods reach the frontier of destination named in the contract.
DES (DELIVERED EX SHIP)+PORT OF DESTINATION: the seller chooses the ship, pays the freight and accepts the transport risks. transfer of expenses and risk is effected on board the ship at the time of unloading at the port of destination.
DEQ (DELIVERED EX QUAY)+PORT OF DESTINATION: the seller makes the goods available to the buyer on the quay at the named port of destination, cleared through customs for importation.
DDU (DELIVERED DUTY UNPAID)+PLACE OF DESTINATION: the seller bears the risk and expense of transporting the goods to a named destination. The buyer pays duties, taxes and other official charges.
DDP (DELIVERED DUTY PAID)+PLACE OF DESTINATION: maximum obligation for the seller. He pays all the expenses up to the final destination.
When shipping goods abroad, exporters must make sure that they are well packed. When deciding what type of packing to use the seller must consider the following factors:
• Type of goods ( durable, fragile)
• Weight and size of goods
• Distance
• Type of transport
• Weather conditions
• The customer’s special instructions
The most common type of packing are:
• Bags and sacks: made of paper, jute, canvas or plastic
• Crates(cassette): made of wood or plastic
• Cartons or cardboard boxes
• Bales: made of protective material
• Drums(tanica): made of metal
• Cases: made of wood or plastic
• Barrels(barili): made of wood
Goods without packing are called ‘goods in bulk’(all’ingrosso)
One great convenience of modern transport is the container. Containers are large steel boxes of an internationally agreed size, which are transported as a sealed unit.
Wagons on trains, lorries, ships, and planes, are made to the right size to take containers.
Insurance protects people and companies against accidents, risks or losses.
The insurance company (also known as insurer or underwriter) and the company or person that requires insurance (insured) sign a contract called insurance policy which is a document specifying the precise terms under which insurance cover has been provided, including the level of financial compensation (indemnity) that will be paid.
The company pays a sum of money called a premium. In the event that it suffers a loss, it makes a claim (richiesta di risarcimento) ad it will be reimbursed.