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Chapter 1 OverviewAfter learning this unit, you will be able to: define what is meant by international trade explain the reasons for engaging in international trade identify the benefits of international trade understand various means of trade restrictionChapter 1 Overview   Reasons for International Trade 1.Resources reasons2.Economic reasonsüAbsolute advantageüComparative advantage3. Other reasons1. Resource reasonsThe￿uneven￿distribution￿of￿resources￿around￿the￿world￿is￿one￿of￿the￿basic￿reasons￿why￿nations￿began￿and￿continue￿to￿trade￿with￿each￿other.1) Favorable climatic conditions and terrainClimatic￿conditions￿and￿terrain￿are￿very￿important￿for￿agricultural￿produces.￿The￿difference￿in￿these￿factors￿enables￿some￿countries￿to￿grow￿certain￿plants￿and￿leaves￿other￿countries￿with￿the￿only￿choice￿to￿import￿the￿produces￿they￿consume.￿For￿example,￿Colombia￿and￿Brazil￿have￿the￿ideal￿climate￿for￿growing￿coffee￿beans￿but￿other￿countries￿don’t.￿Then￿Colombia￿and￿Brazil￿have￿the￿opportunity￿to￿export￿coffee￿beans￿and￿coffee￿to￿countries￿worldwide.￿Another￿example￿is￿that￿the￿US￿Great￿Plains￿states￿have￿the￿ideal￿climate￿and￿terrain￿for￿raising￿wheat.￿This￿has￿made￿the￿US￿a￿big￿wheat￿exporter.2) Natural resourcesSome countries are the major suppliers of certain natural resources because the distribution of natural resources around the world is somewhat haphazard. The Middle East West Europe and Japan need is imported from the Middle East the US oil military consumption in Europe and Asia is largely purchased from that area.3) Skilled workersUS,￿Japan,￿and￿western￿European￿countries￿have￿skilled￿workers￿who￿are￿able￿to￿manufacture￿sophisticated￿equipment￿and￿machinery￿such￿as￿jet￿aircrafts￿and￿computers,￿etc.￿Other￿countries,￿since￿they￿don’t￿have￿well-trained￿engineers￿and￿workers,￿must￿import￿the￿equipment￿from￿these￿countries.4) Capital resourcesDeveloping￿countries￿need￿to￿modernize￿their￿industries￿and￿economies￿with￿advanced￿machinery,￿equipment￿and￿plant￿that￿they￿are￿not￿yet￿able￿to￿manufacture￿because￿of￿the￿lack￿of￿capital.￿This￿has￿given￿rise￿to￿the￿need￿for￿developing￿international￿trade.5) Favorable geographic location and transport costsThere are many examples that countries have developed close economic relationships chiefly because they are geographically close to each other. Sino-Japanese trade relationship is to some degree determined by geographic proximity and low transport cost. 6) Insufficient productionSome￿countries￿cannot￿produce￿enough￿items￿they￿need.￿UK￿does￿not￿have￿a￿large￿enough￿agricultural￿population.￿only￿5%￿of￿its￿population￿is￿engaged￿in￿agriculture￿and￿they￿mainly￿grow￿fruits￿and￿flowers.￿UK￿then￿has￿to￿import￿60%￿of￿its￿total￿agricultural￿consumption.2. Economic reasonsIn￿addition￿to￿getting￿the￿products￿they￿need,￿countries￿also￿want￿to￿gain￿economically￿by￿trading￿with￿each￿other.￿It￿is￿made￿possible￿by￿varied￿prices￿for￿the￿same￿commodity￿around￿the￿world,￿reflecting￿the￿differences￿in￿the￿cost￿of￿production.1) Absolute advantageAdam Smiths -- each country could produce one or more commodities at a lower real cost than its trading partners. It then follows that each country will benefit from specialization in those commodities in which it has an “absolute advantage”, exporting them and importing other commodities which it produces at a higher real cost than does another country.Absolute-cost ExampleFrom the example, We can see clearly that Scotland should specialize in the production of cloth on which it has a cost advantage.Days of Labor Required to ProduceCountryCloth (1 bolt)Wine (1 barrel)Scotland30120Portugal100202) Comparative advantageDavid Ricardo --absolute cost advantages are not a necessary condition for two nations to gain from trade with each other. Instead, trade will benefit both nations provided only that their relative cost, that is , the ratios of their real costs, are different for two or more commodities. In short, trade depends on differences in comparative cost, and one nation can profitably trade with another even though its real costs are higher ( or lower) in every commodity.Comparative-cost ExampleClearly the United States benefits from specializing in cars, which it produces more cheaply than Brazil, and trading with Brazil for some of the computers it produces more cheaply. productU.S.Brazil100 cars2 41,000 computers343) Other reasonsAll￿in￿all,￿in￿today’s￿complex￿economic￿world,￿neither￿individuals￿nor￿nations￿are￿self-sufficient.￿Nations￿have￿utilized￿different￿economic￿resources;￿people￿have￿developed￿different￿skills.￿This￿is￿the￿foundation￿of￿international￿trade￿and￿economic￿activities.  International Trade Policy  Gains from Free TradeGains from Inter-industry specializationEconomies of ScaleIf countries can specialize in certain goods they can benefit from economies of scale and lower average costs, this is especially true in industries with high fixed costs or that require high levels of investment. The benefits of economies of scale will ultimately lead to lower prices for consumers.   Gains from Free TradeGains from Inter-industry specializationIncreased CompetitionWith more trade domestic firms will face more competition from abroad therefore there will be more incentives to cut costs and increase efficiency. It may prevent domestic monopolies from charging too high prices.  Gains from Free TradeGains from Inter-industry specializationTrade is an engine of growthWorld trade has increased by an average of 7% since the 1945, causing this to be one of the big contributors to economic growth.   Gains from Free TradeGains from Intra-industry specializationIntra-industry specialization tends to occur in industries characterized by the existence of imperfect competition. In most cases, intra-industry specialization involved countries exchanging different varieties of the same good.   Reasons for Trade Restrictionlinfant industry argument --maintains that a new industry needs to be protected until the labor force is trained, the production techniques are mastered and the operation becomes large enough to enjoy the economies of scale and to be able to compete in the market.  Reasons for Trade Restriction•Unfair competition. Foreign firms may receive subsidies or other government benefits. They may be dumping (selling goods abroad at below cost price to capture a market). •Balance of payments. Reducing imports improves the balance of trade. •Cultural Identity This is not really an economic argument but more political and cultural. Many countries wish to protect their countries from what they see as an Americanization or commercialization of their countries.   Reasons for Trade Restriction•The Senile industry argument. If industries are declining and inefficient they may require large investment to make them efficient again. Protection for these industries would act as an incentive to for firms to invest and reinvent themselves. However protectionism could also be an excuse for protecting inefficient firms.Different Means of Protection(1)￿Tariff￿barriersA￿tariff￿is￿a￿duty￿or￿fee￿levied￿on￿goods￿being￿imported￿into￿a￿country.￿It￿can￿be￿a￿revenue￿tariff,￿which￿is￿collected￿mainly￿for￿income￿purpose,￿or￿a￿protection￿tariff,￿which￿is￿collected￿in￿order￿to￿protect￿the￿domestic￿market.￿(2) Non-tariff barriersQuotaThis is a quantitative restriction or upper limit in terms of physical quantity or value. The upper limit can be set on global (first come first served) basis or on country basis. An absolute quota is one that cannot be exceeded and a tariff quota is one that requires low or no duties below the limit but high duties or penalty above the limit.Voluntary Export RestraintsVoluntary export restraints enable one country to force onto another country through bilateral agreement a low rate of increase in export volume. In many case, it is not really a “voluntary” measure taken on the part of the exporting country but rather than a measure to avoid harsher punitive actions taken by the importing country.Import licenseAn import license is a permit for import, which can be independent or combined with quotas.Product standardMany non-tariff trade barriers of ingenious new ones are constantly being developed to restrict trade. Some are technical standards, such as antipollution regulations that require automobiles to meet certain exhaust emission standards. Others may be ostensibly be introduced for reasons of health, safety, sanitary or national security but are actually intended to restrict trade.Government Procurement PolicyThis policy requires that a specified percentage of purchases by a government be made from domestic firms rather than foreign firms. It can be a non-tariff barrier to imports, if the purchasing processes are biased against foreign products, as they often are. In many countries the governments buy relatively few imported products and instead they buy mostly . Chapter 2 Trade TermsAfter learning this unit, you will be able to: understand the nature and the role of trade terms know the major rules governing the use of trade terms provide a brief explanation of thirteen terms under the Incoterms 2010compare and contrast the use of FOB, CFR and CIF list the determining factors when choosing IncotermsChapter 2 Trade Terms   Definition of International Terms FOB LONDON CIF JIUJIANGThe trade terms refer to using a brief English concept or abbreviation of English letters to indicate the formation of the unit price and determine the responsibilities, expenses and risks borne by two parties as well as the time of the passing of the property in the goods.  Definition of International TermsTrade terms are key elements of international contracts of sale, since they tell the parties what to do with respect to:Delivery terms—carriage of the goods from the seller to the buyer and division of costs and risks between the parties;Price terms—stipulating what are included in the price the buyer paid to the seller, e.g. cost, freight, insurance, export and import clearance fees, etc;Delivery obligations—what documents should the seller provide, e.g. bill of lading insurance policy, etc. The Role of Trade TermsThe￿objective￿of￿trade￿terms￿is￿to￿help￿the￿seller￿and￿the￿buyer￿to￿settle￿mentioned￿issues.￿Predefined￿trade￿terms￿have￿been￿developed￿in￿form￿of￿abbreviations￿which￿already￿allocate￿the￿obligations￿of￿seller￿and￿buyer￿so￿that￿the￿parties￿do￿not￿need￿to￿consume￿much￿time￿for￿discussing￿the￿conditions￿in￿each￿issue.￿THE MOST INFLUENTIAL TRADE CONVENTIONS1、Warsaw-Oxford Rules(W.O.Rules)1932 《华沙牛津公约》2、Revised American Foreign Trade Definitions 1941 《1941美国对外贸易定义修订本》 3、International Rules For the Interpretation of Trade Terms《国际贸易术语解释通则》 It has been amended and modernized in 1953,1967,1980,1990, 2000 and 2010.《《2010年通则年通则》》 四组术语四组术语(共共11种种)Group EDepartureEXW --Ex works(… named place)All modes of transport including multimodalGroup FMain Carriage UnpaidFCA--Free Carrier(… named place)DittoFAS--Free Alongside Ship(…named port of shipment)Sea and inland waterway transport onlyFOB--Free On Board(…named port of shipment)DittoGroup CMain Carriage PaidCFR—Cost and Freight (…named port of destination)DittoCIF—Cost, Insurance and Freight (named port of destination)DittoCPT—Carriage Paid To (…named place of destination)All modes of transport including multimodalCIP—Carriage and Insurance Paid To (…named place of destination)DittoGroup DArrivalDAT—Delivered at Terminal (…named terminal at port or place of destination)DittoDAP—Delivered at Place (…named place of destination)DittoDDP—Delivered Duty Paid (…named place of destination)DittoDifference between Incoterms 2000 and Incoterms 2010        The newly published 2010 version takes into account issues The newly published 2010 version takes into account issues such as developments in cargo security and the need to such as developments in cargo security and the need to replace paper documents with electronic ones. It made replace paper documents with electronic ones. It made several important changes to the previous version, such as a several important changes to the previous version, such as a reduction in the number of terms to 11 from 13. The DAF, reduction in the number of terms to 11 from 13. The DAF, DES, DEQ, and DDU designations have been eliminated, DES, DEQ, and DDU designations have been eliminated, while two new terms, Delivered at Terminal (DAT) and while two new terms, Delivered at Terminal (DAT) and Delivered at Place (DAP), have been added. INCOTERMS Delivered at Place (DAP), have been added. INCOTERMS 2010 also attempt to better take into account the roles cargo 2010 also attempt to better take into account the roles cargo security and electronic data interchange now play in security and electronic data interchange now play in international trade.international trade.A Brief Explanation of the Terms in Incoterms 2010A Brief Explanation of the Terms in Incoterms 2010 Explanations of Group EEXW EX WORKS (…named place of delivery) The term means that the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.The Seller's only responsibility is to make the goods available at the Seller's premises. The Buyer bears full costs and risks of moving the goods from there to destination. So this term represents the minimum obligation for the seller.Under EXW term it is not guaranteed that the goods will be exported. It should not be used when the buyer cannot carry out the export formalities directly or indirectly. The buyer may keep the goods in the exporting country and re-sell to a third party. Explanations of Group FFCA FREE CARRIER (…named place of delivery)“Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point. If the parties intend to deliver the goods at the seller’s premises, they should identify the address of those premises as the named place of delivery. If, on the other hand, the parties intend the goods to be delivered at another place, they must identify a different specific place of delivery.FCA requires the seller to clear the goods for export, where applicable. However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.FASFREE ALONGSIDE SHIP (…named port of shipment) The term FAS means that the seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards. The parties are well advised to specify as clearly as possible the loading point at the named port of shipment, as the costs and risks to that point are for the account of the seller and these costs and associated handling charges may vary according to the practice of the port.Where the goods are in containers, it is typical for the seller to hand the goods over to the carrier at a terminal and not alongside the vessel. In such situation, the FAS rule would be inappropriate, and the FCA rule should be used.FOBFree on Board (…Named port of Shipment) It means that the seller fulfils his obligation to deliver the goods when they have passed over the ship’s rail at the named port of shipment. This means that the buyer has to bear all expenses and risks of or damage to the goods from that point.Such as Such as FOB ShanghaiFOB Shanghai or or FOB HamburgFOB HamburgTHE SELLER’S RESPONSIBILITIES1、deliver the goods at the time stipulated in the contract，provides sufficient notice2、obtains the export licenses and authorizations and carry out all export formalities and procedures3、assume all risks of loss or damage to the goods until they have passed the ship’s rail 4、provides the buyer with a proof of delivery or a transport document (such as B/L ,inspection documents)The most important is deliver the goods on time and notice to the buyer. Explanations of Group CCFR    COST AND FREIGHT (…named port of destination)It shares every features with FOB on the nature of delivery, the passing of the risk and obligation of custom formalities except that The seller must arrange and bear the cost of transporting the goods to the named port of destination. However, the seller is not obliged to take out an insurance policy for the goods. Explanations of Group CCIF   COST, INSURANCE AND FREIGHT (…named port of destination)Under the CIF term, the seller must pay the costs and freight necessary to bring the goods to a named port of destination, and must also procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage.CIF is the same as CFR except that the seller is responsible for effecting insurance, paying the premium. The insurance required under a CIF contract has to cover minimum conditions. Explanations of Group CCPT CARRIAGE PAID TO (named place of destination)This term means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place and that the seller must contract for and pay the costs for carriage necessary to bring the goods to the named place of destination. The risk of los of or damage to the goods, as well as any additional costs due to the events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier.CPT requires the seller to clear the goods for export. This term may be used for any mode of transport and may also be used where more than one mode of transport is employed. Explanations of Group CCIP   CARRIAGE AND INSURANCE PAID TO (named place of destination)CIP to CPT is similar to CIF to CFR. This means that the seller has the same obligations as under CPT but with the addition that the seller has to procure cargo insurance against the buyer’s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium.The buyer should note that under CIP the seller is only required to obtain insurance on a minimum coverage.This term requires the seller to clear the goods for export. This term may be used for any mode of transport and may also be used where more than one mode of transport is employed. Explanations of Group D DAT    DELIVERED AT TERMINAL (... named terminal at port or place of destination)The term DAT is one of the two new terms introduced by Incoterms 2010.The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer's disposal at a named terminal at the named port or place of destination. "Terminal" includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.Moreover, if the parties intend the seller to bear the risks and costs involved in transporting and handling the goods from the terminal to another place, then the DAP or DDP rules should be used.DAT requires the seller to clear the goods for export. This term may be used for any mode of transport and may also be used where more than one mode of transport is employed. Explanations of Group DDAP  DELIVERED AT PLACE (... named place of destination)The Seller delivers when the goods are placed at the Buyer's disposal on the arriving means of transport ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place.By definition of costs and obligations this term is very similar to CPT. However, one significant difference from the CPT term is that, DAP requires the seller to bear all risks involved in bringing the goods to the named destination. Under DAP at the time of delivery the risk and cost related to unloading the goods are for the account of the buyer. This term may be used for any mode of transport and may also be used where more than one mode of transport is employed. Explanations of Group DDDPDELIVERED DUTY (named place of destination)DDP means that the seller fulfils his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, cleared for import. This term represents the maximum obligation for the seller.DDP should not be used if the seller is unable directly or indirectly to obtain the import license.Clauses Commonly Used about the Trade Terms in Contract①US$100￿per￿dozen￿CFR￿New￿York②US$150per￿M/T￿CIF￿London￿including￿our￿2%￿commission③RMB￥25￿per￿case￿CFR￿Singapore￿less￿1%￿discountChapter 3 Terms of CommodityAfter learning this unit, you will be able to: understand the importance of the names of commodity explain the various practices to express the quality of   commodity understand different approaches to measure quantity of commodity understand the significance of packing and the types of packagingChapter 3 Terms of CommodityProject I Name of CommodityName of commodity concerns the rights and obligations of the buyer  should be clearly stated  should be agreed by both parties or a name internationally acceptedThe importance of the quality of commodityMethods Used to Express the Quality of GoodsMethodsSales by SampleSales by descriptionSales by seller’s sampleSales by buyer’s sample1.specification2. grade3. standard4. illustration5. Brand or trade mark6. Place of originProject II Quality of CommoditySection II Quality of CommodityThe importance of the quality of commodityThe quality of the goods refers to the intrinsic attributes and the outer form or shape of the goods. In international trade, quality of the commodity not only concerns the value in use and the price of the goods, but also concerns the sale of the goods and credit standing of the manufacturer.Section I Name of CommodityName of commodity must be definite and specific internationally recognized practical, realistic and truthfulMethods Used to Express the Quality of GoodsI. Sales by Sample1. A sample is a small quantity of a product, often taken out from a whole lot of consignment or specially designed and processed that is given to encourage perspective customers to see and buy the product or set aside as the quality standard of the whole consignment. Garments, light industrial products, and agricultural native produce are generally sold by sample. Sales by sample falls into two categories: 2. categories:sales by seller’s samplesales by buyer’s sample.sales by seller’s sampleIn this case, representative samples/ original samples/ type samples, are usually sent by the seller to the buyer, and at the same time, duplicate samples are always kept by the seller for later reference. (The duplicate sample can serve as a proof of quality if there is a dispute about the quality of goods later on.)When the sample is accepted by the buyer, the seller is responsible for the delivery of the goods of the same quality as shown in the sample. Such transaction is called sales by seller’s sample.In case the quality of the goods delivered is not identical with the sample, the buyer is entitled to claim compensation for losses or reject the goods.Samples can also be provided by the buyer. They are given as the quality standard for the goods to be produced and delivered by the seller. Under such circumstances, to avoid future disputes over the quality of the goods, the seller usually first duplicates the sample and then sends the duplicate to the buyer for confirmation. This confirmed sample is called counter sample/return sample. sales by buyer’s sample.Before producing what the buyer’s sample requires, the seller should first make sure that he has the necessary technical and productive resources. Besides, it is necessary for the seller to declare in the contract that any disputes arising from property right shall be tackled by the buyer.Project II Sales by Description Sale by Specification, Grade or StandardSpecifications are detailed descriptions of the goods to be sold. They include composition, content, strength, purity, size etc. of the commodity. Grade of the goods is the classifications of one type of commodity, indicated by words, numbers or symbols. In case of sales by grade, it is important to state the grades of the commodity such as large, medium small or Grade A, Grade B, Grade C and so on.Standard refers to those specifications or grades that are laid down and proclaimed in a unified way by government departments or commercial organizations of a country. It is worthy to note that the standard of a commodity is subject to change or amendment and a new standard often replaces the older one, therefore, in case of sale by standard, it is important to specify the name of the publication, in which the standard of the commodity appears.In￿the￿agricultural￿and￿by-products￿market,￿it￿is￿really￿difficult￿to￿stipulate￿the￿uniform￿standard￿for￿such￿products.￿It’s￿a￿regular￿practice￿to￿use￿“F.A.Q.”￿(￿Fair￿Average￿Quality￿)￿or￿“G.M.Q.”￿(￿Good￿Merchantable￿Quality￿)￿to￿indicate￿the￿quality￿of￿the￿products.￿F.A.Q.￿denotes￿a￿quantity￿offered￿not￿on￿a￿particular￿quality￿specification￿but￿on￿the￿basis￿that￿is￿equal￿to￿the￿average￿quality￿of￿the￿current￿group,￿recent￿shipment,￿etc..￿While￿G.M.Q.￿refers￿to￿the￿sound￿quality￿that￿is￿free￿from￿defects￿and￿is￿sufficiently￿good￿to￿satisfy￿the￿needs￿of￿the￿buyer￿.However,￿both￿terms￿are￿too￿general,￿therefore￿when￿in￿use,￿it￿is￿better￿that￿they￿are￿supplemented￿by￿some￿concrete￿specifications. Sales by Brand or Trademark   Some products may have been sold in the market for many years and enjoy high popularity. Their quality can be represented by their trade marks and brands, such as Coca cola, SHARP. Goods of the same brand or trademark are of the same quality. From the brand or trade mark people can tell what quality the goods possess. It is more convenient to name the brand or trademark of a commodity to indicate its quality than to list so many specifications one by one. Sale by name of origin     Some goods, such as agricultural by-products whose qualities are affected by nature conditions and traditional production techniques, are well known by their origins for excellent qualities. Their origins are usually recognized as the indications of their qualities. Such goods are sold by name of origin.Sale by Illustration   Some products like machineries, instruments, apparatuses and sets of equipment are complicated in structure and the installations, application and maintenance are subject to specified rules. It is difficult to describe the full aspects of their quality, therefore, they are inclined to sell by illustration, drawing, graphs or diagrams. since their structure and function are complicated Consequently, related technical booklets, manuals and instruction of directions, pictures and diagrams will serve the purpose.Project III Quantities of CommodityThe Importance of quantities of commodity   According to United Nations Convention on Contacts for Sales of Goods, if the seller delivers a quantity of goods greater than that provided for in the contract, the buyer may take delivery or refuse to take delivery of the excess quantity. If the buyer takes delivery of all or part of the excess quantity, he must pay for it at the contract price. If the quantity of goods delivered is less than that provided for in the contract, the seller must replenish the goods within the stipulated time of delivery, and without causing unreasonable losses to the buyer and the buyer reserves the right of claiming damages. 2.Units of measurement货物的计量单位和计量方法货物的计量单位和计量方法按按weight：：metric ton, long ton, short ton, kg, gram, ounce, pound…按按number: piece, pair, set, coil, bale, dozen, roll, ream, bag, case…按按length: meter, foot, yard, inch, cm…按按area: square meter, square foot, square yard…按按volume: cubic meter, cubic foot…按按capacity: bushel, liter, gallon…Units of Measurement Numbers: piece (pc), pair, dozen (doz), gross (gr), ream (rm), etc.Weight:  gram (g), kilogram (kg), metric ton (M/T), ounce (oz), pound (lb), long ton, short ton, hundredweight etc.Length:  meter (m), centimeter (cm), foot (ft), inch (in), yard (yd), etc.Area:  square meter (sq m), square inch (sq in), square foot (sq ft), square yard (sq yd), etc.Volume:  cubic centimeter (cu m), cubic meter (cu cm), cubic inch (cu in), cubic foot (cu ft), cubic yard (cu yd), etc.Capacity:  liter (L).  gallon (gal), bushel (bu), pint (pt), etc.Calculation of WeightGross weight refers to the weight of the cargo itself plus the tare, i.e., the weight of the cargo plus the weight of the packing material.The net weight is the actual weight of the goods. The tare is not included. The net weight is pursued by means of the gross weight minus the tare. The methods of calculating the tare are as follows:Net Weight is the weight of the commodity alone, that is, the tare is excluded. Conditioned Weight refers to the weight obtained by deduction of the actual moisture content of the commodity and addition of standardized moisture, both by scientific methods. Conditioned weight is usually applicable to commodities that have a high unit of value and tend to absorb from the air, such as raw silk, wool and cotton which are of high economic value and with unsteady moisture content. Calculation of WeightTheoretical Weight: Some products are of uniform sizes and /or specifications such as galvanized iron and steel plate, so the weight of each unit is almost the same and they are often subject to use of theoretical weight. So long as the specifications and the size of such commodities are the same, their theoretical weight is construed by the number of the sheets put together. We can get the total weight by multiplying the total number and the weight of each unit.  Legal Weight is the weight of the commodity plus the weight of the immediate (sales) packageMore or Less ClauseThe￿more￿or￿less￿clause￿means￿that￿the￿seller￿may￿deliver￿the￿goods￿with￿a￿certain￿percentage￿more￿or￿less￿in￿quantity￿according￿to￿the￿agreed￿quantity￿Latitude.￿In￿practice,￿it￿is￿sometimes￿hard￿to￿control￿strictly￿the￿quantity￿of￿some￿bulk￿cargoes￿like￿farm￿products,￿mineral￿products.￿Besides,￿owing￿to￿changes￿to￿supplies￿and￿limitation￿to￿processing￿conditions,￿the￿actual￿quantity￿may￿be￿somewhat￿more￿or￿less￿than￿the￿contracted￿quantity.￿Under￿such￿circumstances,￿more￿or￿less￿clause￿is￿usually￿stipulated￿in￿the￿contract￿so￿that￿the￿seller￿can￿fulfill￿the￿contract￿more￿smoothly.￿More or Less ClauseFor￿example,￿the￿clause￿“Shandong￿peanut,￿80￿000￿M/Ts,￿2007￿Crop.￿F.A.Q.￿with￿5%￿more￿or￿less￿both￿in￿quantity￿and￿amount￿to￿be￿allowed￿at￿the￿seller’s￿option."￿￿is￿good￿for￿the￿purpose.￿In￿this￿case￿the￿quantity￿delivered￿can￿range￿from￿76000￿to￿84000￿metric￿tons,￿and￿the￿payment￿will￿be￿made￿for￿the￿actual￿quantity￿delivered￿at￿the￿contracted￿price￿or￿at￿the￿market￿price￿at￿the￿time￿of￿shipment.Project IV Packing of CommodityFunctions of Packing    Packing can protect commodity and keep it good in quality and intact in quantity in the circulation process. Types of Packing    According to packing functions of the goods in the process of circulating and the packing materials and methods, packing can be classified into three types: outer packing, inner packing and neutral packing. 1. Transport Packing   Transport packing is also called giant packing or outside packing. It is used mainly to keep the goods safe and sound during transportation. It must not only be solid enough to prevent the packed goods from any damage, but also be pilferage-proof, easy to store, convenient to load and unload and discharge. Project IV Packing of Commodity2. Sales Packing   Sales packing is also called inner packing, small packing or immediate packing.  It is not only designed as protection to reduce the risk of cargoes damaged in transit and prevent pilferage but also to aid marketing. Inner packing is now universally recognized as a decisive selling factor of household consumer goods and goods alike. 3. Neutral Packing    A neutral packing has no a name of the origin, no a name and address of the manufacturer, no trade mark, no brand or even no any word on it. This type of packing is adopted to break down trade barriers, tariff and non-tariff, in some countries or regions. Sometimes, neutral packing can also help to expand sales.Project V Marking of PackageModule 1. Shipping Marks   Shipping marks normally include the following information:Name of exporter and his addressName of importer and his contract number /shipping markCase or crate number (e.g., 1-25) Weight (gross, net)/measurement Name of carrying vesselPorts of shipment and destination Origin of goodsProject V Marking of PackageModule 2. Indicative / Warning Marks    The following marks are usually found on the exterior of the package during transit to ensure smooth delivery:Glass            Keep DryTop              This Side UpPerishable        Do Not CrushKeep Cool        be Protected from Heat Lift Here          No Turning Over Keep on Deck     Stow away from Boiler Project V Marking of Packagehe following are widely used warning marks printed on the outer package:Oxidizing Material           Compressed Gas             PoisonHazardous Article      Material Radioactive         CorrosivesInflammable                Compressed Gas             ExplosivesProject V Marking of Package3. Additional Marks   The following are the two illustrative examples of this kind of mark∶    Dimensions∶  1×⒍5×0.5 meters      2"511×3"01"×54”    Weight∶       Gross weight           165 kilos    Net weight              150 kilos    Tare                   15 kilosChapter 4International Cargo TransportationAfter learning this unit, you will be able to: understand the importance of ocean transportation and how liner is obtained know other modes of transportation in terms of their features, suitability and freight calculation be aware of the importance of ocean bill of lading and its different types describe a range of other transportation documents stipulate delivery clause in a sales contractChapter 4 International Cargo TransportationProject I. OCEAN TRANSPORTOcean￿transport￿has￿been￿the￿most￿important￿mode￿of￿transport￿in￿international￿trade.￿Two-thirds￿of￿the￿world￿total￿volume￿and￿over￿80%￿of￿China’s￿imports￿and￿exports￿now￿are￿transported￿by￿sea.Advantage and disadvantagesOcean￿transport￿has￿many￿advantages.￿easy￿passagea￿large￿capacityreduced￿unit￿distribution￿costgood￿adaptability￿to￿cargoes￿of￿different￿size,￿weight,￿shape,￿etc.Of￿course,￿there￿are￿also￿disadvantage,slow￿passage￿vulnerable￿to￿bad￿weather￿less￿punctualModule 1 Major types of cargo vessels1) A general/packed cargo vessel 2) An OBO (or/bulk/oil) carrier  3) A refrigerated ship  4) A timber ship  5) An oil tanker  6) A container vessel  7) A Roll on-Roll Off (Ro-Ro) ship  8) A LASH (Lighter Aboard Ship)  Module 3. Major Modes of ocean vesselsMerchant vessels are operated in two ways. The first type is liners. Another type is tramps.1) LinersA liner is a passenger or cargo vessel that operates over a regular route according to an advertised time-table. It has the following characteristics:□fixed route, ports, schedule and relatively fixed freight□loading and unloading charges included in freight□good service□simple procedures□ideal for cargo of small quantity1) LinersConference Liners   These ships are operated by a line, a conference carrier or members of a shipping conference. Conference means shipping conference, steamship conference or liner conference, which is an association, formed by a number of shipping companies or vessels operators of various nationalities. Non-conference Liners    Non-conference line vessels, sometimes called outside shipping, are operated by an independent carrier or shipping companies that do not belong to conference, but provide scheduled services. They determine their own freight rate, sailing schedule, ports of call etc. without reference to any agreement with any other line. 2) TrampsA tramp is a freight carrier that does not operate regularly, but can pick up cargoes for almost any port. The characteristics of a tramp are as follows:□no fixed route, ports or schedule but direct trip;□freight determined by market to be competitive, and□ideal for cargo of a complete shipload, such as cargo of low value and huge quantity.Tramps can be divided into voyage charter, time charter and bareboat charter.Voyage charterA voyage charter is the hire of a ship for a particular trip that can be further divided into:□ Single voyage charter□round voyage charter□consecutive voyage charter□voyage charter on time basis ( a voyage charter, but the fees are collected according to the days used)□contract of affreightment.Time charterSometimes  a  government  or  shipping  company wishing  to  strengthen  its  fleet  temporarily  will charter a ship for a specified period of time. In most cases, it is the trading company who charters the ship for a certain time span. In this condition, the contract of  time charter may call for a specific or unlimited number of voyages within the agreed time. When a ship is chartered, control also remains with the owner, and the master and crew continue to be his servants. Bare boat charter (BBC)   The term bareboat means a ship without crew and ship’s master. The chatterer is responsible for crewing, provisioning and fuelling, maintaining and even paying different taxes or duties within a period of time.    The charter or has to pay an agreed sum of freight to the owner within the agreed time of charter. This kind of charter is less popular than time charter and voyage charter. It is mainly used when there is an unexpected or sudden increase of export goods to be shipped.Project II Air TransportModule 1. Characteristics of Air Transportationquick transit. Low risk of damage and pilferage with consequent competitive insurance premium a high operating cost an air waybillModule 2. Types of Air Transportation    Air transport services are divided into three categories: scheduled airlines,  chartered  carriers, and consolidated consignments by freight forwarders.          Scheduled Airlines Chartered Carriers Consolidated Consignments Project III   Other Means of International Cargo TransportationModule1. Road TransportModule 2. Rail Transport Module 3. Inland Waterway TransportModule 4. ContainerizationModule 5. PalletizationModule 6. PipelinesModule 7. International Multimodal TransportProject IV   Transportation DocumentsModule 1 Bill of Lading   Bill of Lading (B/L) is a document signed by a carrier (shipping company) or the carrier’s representative and issued to a consignor (the shipper), with whom the carrier has entered into a contract for the carriage of goods.Module 1 Bill of Lading1) Functions of the documentsA bill of lading is a shipping document that serves as:★ a receipt from the shipping company for shipper’s goods;★ a title document to the goods shipped;★ an evidence of the contract of carriage between the shipping company and the shipper.2) Contents of B/L:Particulars on the face of the B/LConsignor Consignee Party to be notified Name of the vesselVoyage Port of shipment and Port of destination etc.3) Contents of B/L:Clauses on the back of the B/LObligations and responsibility of the carrierExceptions Claim and action clausesDuty and obligation of the consignorTransportation clauses for special goodsOther clauses3) Types of B/L:Shipped on Board B/L and Received for Shipment B/L Clean B/L and Unclean B/L Straight B/L, Blank B/L and Order B/LDirect B/L, Transshipment B/L and Through B/L Long Form B/L and Short Form B/L Liner B/L and Charter Party B/LOther types of B/LShipped (on Board) B/L and Received for Shipment B/L nA shipped (on Board) B/L is issued by the shipping company after the goods have been actually loaded 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 and most B/L forms are preprinted as “shipped Bill”.nA received for shipment B/L is evidence given by the ship-owner that the goods have been received for shipment but have not yet been actually loaded on a particular ship.Shipped (on Board) B/L and Received for Shipment B/L It merely confirms that the goods have been handed over to, and are in the custody of the ship-owner. The buyer under CIF contract will not accept such a B/L because, in the absence of the date of shipment, he is in no position to anticipate the arrival of the consignment. Clean B/L and Unclean B/L A clean B/L is a bill of lading where the carrier has noted that the goods have been shipped on board a vessel in apparent good order and condition. (no apparent damage, loss, etc.)--- “shipped in apparent good order and condition”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”, “packages in damaged condition” ,“insufficiently packed” (包装不固) , “carton old and stained” (玷污的)。

Straight B/L, Order B/L and Blank B/LA straight B/L indicates that the shipper will deliver the goods to the consignee.  only the named consignee at the destination is entitled to take delivery of the goods under the bill.  Straight B/L is not transferable.Straight B/L, Order B/L and Blank B/L "记名提单记名提单”,"指示提单指示提单"和和 “空白提单空白提单”An order B/L is widely used in international trade. A shipper’s order bill of lading is a title document to the goods, issued “to the order of ” a party, usually the shipper, whose endorsement is required to effect its negotiation. 是指收货人一栏只填写凭指示￿(Order 或￿To Order) 或凭某人指示￿(Order of…)字样的一种提单。

 Order B/L can be transferred after Order B/L can be transferred after endorsement.endorsement.（背书）（背书）Straight B/L, Order B/L and Blank B/LOrder B/L is negotiable– it can be bought, sold, or traded while goods are in transit and is commonly used for letter-of-credit transaction.Straight B/L, Order B/L and Blank B/LA blank B/L is 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 is entitled to the goods the bill represents. Blank B/L can be transferred without endorsement. due to the exceedingly high risk involved, this bill is rarely used.Direct B/L, Transshipment B/L and Through B/LA direct B/L is evidence that the goods are shipped and carried by the steamer and transported from the port of loading direct to the port of destination without transshipment during the voyage.A transshipment B/L is a document showing that when there is no direct service between two ports, the goods are transited by another steamer during the voyage.Direct B/L, Transshipment B/L and Through B/LA through B/L is issued when the entire voyage involves more than one carrier.The first carrier issues the bill and collects the freight for the entire voyage, and arranges transshipment and forwarding of the goods at the intermediate port.Long Form B/L and Short Form B/LA long form B/L:  on the back of which all the detailed terms and conditions about the rights and obligations of the carrier and consignor are listed as an integral part of the bill.A short form B/L is a document which omits（省略）the terms and conditions on the back of the B/L.Freight Prepaid B/L and Freight to be Collected B/LAccording￿to￿the￿payment￿condition￿of￿freight,￿bills￿of￿lading￿can￿be￿classified￿into￿freight￿paid￿B/L￿and￿freight￿to￿be￿collected￿B/L.A￿freight￿prepaid￿B/L￿indicates￿that￿the￿freight￿has￿been￿paid￿by￿the￿consignor.￿This￿type￿of￿B/L￿is￿usually￿issued￿only￿after￿the￿freight￿has￿been￿paid.￿A￿freight￿to￿be￿collected￿B/L￿refers￿to￿the￿B/L￿on￿which￿“freight￿payable￿at￿destination”￿or￿“freight￿to￿collect￿at￿destination”￿is￿indicated.Module 2 Other types of transportation documenntsAir￿waybillMulti-modal￿Transportantion￿DocumentProject III Clause of Shipment in the Sales ContractModule 1 Time of shipmentIn negotiating this clause, considerations in relation to the time should be made in the following areas:The time of shipment stipulated in contract should be sufficient in terms of availability in goods and shipping space, if the seller is responsible for transport.The time of shipment should be stipulated in a clear and explicit way and ambiguous words like “immediate shipment ” should be avoided as they may lead to future disputes.Some flexibility to allow reasonable length of time of loading the cargo is very important to the seller.Project III Clause of Shipment in the Sales ContractModule 2 Port of shipment and port of destinationPort of shipment is the port where the goods are shipped and depart from, while port of destination is the port at which goods are ultimately discharged. In international trade, both of them should be clearly specified in the contract.Port of shipment Port of destination Project III Clause of Shipment in the Sales ContractModule 3 shipping adviceShipping advice (advice of shipment) is required to coordinate the responsibilities of the exporters and importers.The advice often includes information such as contract number, name of commodity, name of the carrying vessel, loading date, invoice value, and quantity, etc.Project III Clause of Shipment in the Sales ContractModule 4 Partial shipment and TransshipmentPartial shipment means the commodities under a contract are to be shipped in more than one lot.The clause of shipment must specify whether partial shipment is allowed by using a phrase such as “Partial shipment (not) to be allowed”.Project III Clause of Shipment in the Sales ContractModule 4 Partial shipment and TransshipmentTransshipment means the cargo being shipped will change ships before reaching the port of destination. If the bill of lading incorporates clauses stating that the carrier reserves the right to transship, then the transshipment is allowed even if the L/C prohibits transshipment. The clause must also specify whether transshipment is allowed by using a phrase such as “To be transshipped at XXX” or “Transshipment not to be allowed”.Chapter 5 International Payment and SettlementAfter learning this unit, you will be able to: understand the definition and the role of international trade payment and settlement identify the payment instruments in international trade understand the methods of paymentChapter 5 International Payment and Settlement Project I  Payment Instruments of International TradePayment Instrument is a document that has monetary value, or is evidence of a financial transaction. International trade, payment can be made by various instruments: drafts, promissory notes, checks, money orders, credit cards, and cash, etc.Module 1 Bill of ExchangeIn￿Britain,￿a￿bill￿of￿exchange￿is￿defined￿by￿the￿Bills￿of￿Exchange￿Act￿1882￿as￿an￿unconditional￿order￿in￿writing￿addressed￿by￿one￿person￿to￿another,￿signed￿by￿the￿person￿giving￿it,￿requiring￿the￿person￿to￿whom￿it￿is￿addressed￿to￿pay￿on￿demand￿or￿at￿a￿fixed￿or￿determinable￿future￿time￿a￿certain￿sum￿in￿money￿to￿or￿to￿the￿order￿of￿a￿specified￿person,￿or￿to￿the￿bearer.Module 1 Bill of ExchangeA bill of exchange has three parties: the drawer, the drawee and the payee.The DRAWER is one who draws or issues the bill. With the bill of exchange, he demands the Drawee to pay a certain sum of money to the payee. He signs his name on the bill, and guarantees that the payer will pay the money or accept the bill upon the presentation of the draft.Module 1 Bill of ExchangeThe DRAWEE of the bill of exchange is required by the bill of exchange to pay a certain sum of money to the payee upon the presentation of the bill, or, if the bill is a time bill, he is required to accept the bill and effect the payment at the maturity of the bill.The PAYEE of the bill of exchange is the creditor of the bill of exchange. He is entitled to ask the drawee for the payment. If refused, he is entitled to have recourse to the drawer for the payment.Module 1 Bill of ExchangeThe forms of draft might be different, but the contents are basically the same as listed below.Date and place of issueTime of paymentDrawer’s Name and signatureName of drawee/payerName of payeeCurrency and amountCredit referenceModule 1 Bill of ExchangeAccording to different criteria, bills of exchange fall into several types:  Commercial Bill and Banker’s Bill Clean Bill and Documentary bill Sight (Demand) Bill and Time (Usance) Bill Commercial Acceptance Bill and Banker’s Acceptance Bill   Module 2 Promissory NoteA￿promissory￿note￿is￿a￿negotiable￿instrument,￿consisting￿of￿an￿unconditional￿promise￿in￿writing￿made￿by￿one￿person￿(the￿maker￿or￿issuer)￿to￿another￿(the￿payee￿or￿the￿holder)￿signed￿by￿the￿maker￿engaging￿to￿pay￿on￿demand￿or￿at￿a￿fixed￿or￿determinable￿future￿time￿a￿sum￿certain￿in￿money￿to￿or￿to￿the￿order￿of￿a￿specified￿person￿or￿maker.￿Module 2 Promissory NoteMain contents are stated as follows:(1) The words “Promissory Note” clearly indicated;(2) An unconditional promise to pay;(3) Name of the payee or his order;(4) Maker’s signature;(5) Place and date of issuing;(6) Tenor of payment;(7) A certain amount of money.Module 3 ChequeA￿cheque￿is￿defined￿as￿an￿unconditional￿order￿in￿writing￿drawn￿on￿a￿bank￿signed￿by￿the￿drawer,￿requiring￿a￿bank￿to￿pay￿on￿demand￿a￿sum￿certain￿in￿money￿to￿the￿order￿of￿a￿named￿person￿or￿to￿the￿bearer.Module 3 ChequeThe￿drawer￿of￿a￿check￿must￿be￿a￿depositor￿that￿keeps￿an￿account￿current￿in￿the￿paying￿bank.￿The￿drawer￿of￿the￿check￿must￿be￿sure￿that￿the￿sum￿carried￿on￿the￿check￿is￿not￿more￿than￿the￿amount￿he￿has￿deposited￿in￿the￿bank,￿or￿the￿check￿will￿be￿dishonored.￿If￿the￿paying￿bank￿marked￿“certified”￿with￿signature￿on￿the￿check,￿it￿is￿a￿certified￿check￿that￿will￿not￿be￿dishonored.Project II Methods of PaymentModule 1. Remittance Remittance is one of banking customer services, in which funds will be transferred from one person to another. When two persons live in the same country, this type remittance is called domestic remittance, while the remittance will be a foreign banking business when the two persons live in different countries.Project II Methods of PaymentModule 1. Remittance Originally, there are four parties involved in this business, i.e.    (1) Remitter：who applies to transfer money to another person.    (2) Payee or Beneficiary: to whom the money will be transmitted.    (3) Remitting Bank: who is entrusted to remit the funds outward.    (4) Paying bank: who is entrusted by the remitting bank to make payment to the payee.Module 1. Remittance   Based on the manner by which the payment in instruction is transmitted from remitting bank to paying bank, there are 3 types of remittance:1.Telegraphic transfer (T/T)2.Mail transfer (M/T) 3.Demand draft (D/D) Module 1. Remittance1. Telegraphic transfer (T/T)By telegraphic transfer, payment instruction given by the remitting bank to the paying bank will be transmitted by telecommunication, such as cable, telex or computer system. The key point is that the paying bank must authenticate whether the instruction is really given by the remitting bank indicated in the telecommunication, for the funds should eventually be reimbursed by this remitting bank to the paying bank. By T/T, the payee can receive the payment promptly, but the bank charges are relatively high.Module 1. Remittance2. Mail transfer (M/T)     A Mail Transfer means that payments instruction given by the remitting bank is transmitted by mail or by courier. Payment instruction is in a form of Payment Order. Procedure of M/T is almost the same as the T/T. The cost of M/ T is less, but the speed is slower. Owing to the mail time being much longer than that of telecommunication, the M/T is not broadly used in international trade.Module 1. Remittance 3. Demand draft (D/D)    Demand Draft is called also remittance by banker’s demand  draft.  The  payment  instruction  is  written down  directly  on  the  surface  of  the  bank  draft. A bank draft is a negotiable instrument drawn by the remitting bank, ordering the paying bank to pay on demand  the  stated  amount  to  the  holder  of  the draft. After being issued, the bank draft should be handed over to the remitter, who may dispatch or even bring it to the beneficiary abroad. The process of Remittance ( T/T as an example)remitterRemitting bank (draft-issuing bank)Paying bank (Drawee)payee123456⑥⑥ debit note: send an advice or copy of the draft;①① application: request to issue a banker’s draft;②② issuance: issue a draft and hand to remitter ③③ send the bank draft;④④ presentation: present the draft for payment;⑤⑤ payment: verify and pay the draft, claim reimbursement.Module 2 CollectionCollection￿means￿instructing￿others￿to￿collection￿money.￿Generally￿speaking,￿collection￿serve￿as￿a￿compromise￿between￿open￿account￿and￿payment￿in￿advance.￿When￿funds￿are￿not￿required￿immediately,￿or￿when￿bills￿are￿not￿sufficiently￿attractive￿to￿a￿banker￿for￿negotiation,￿they￿may￿be￿handed￿to￿his￿bank￿for￿collection.￿Under￿collection,￿the￿exporter￿takes￿the￿initiative￿to￿collect￿the￿payment￿from￿the￿buyer.￿Upon￿the￿delivery￿of￿the￿goods,￿the￿export￿draws￿a￿bill￿of￿exchange￿on￿the￿importer￿for￿the￿sum￿due,￿with￿or￿without￿relevant￿shipping￿documents￿attached,￿and￿authorizes￿his￿bank￿to￿effect￿the￿collection￿of￿the￿payment￿through￿his￿branch￿bank￿or￿correspondent￿bank￿in￿the￿country￿of￿the￿importer.￿Module 2 CollectionNormally,￿there￿are￿four￿main￿parties￿which￿are￿involved￿in￿collection.￿They￿are￿the￿principal￿(seller/exporter/drawer),￿the￿remitting￿bank￿(principal’s/seller’s￿bank),￿the￿collecting￿/￿presenting￿bank￿and￿the￿drawee￿(buyer/importer).￿Module 2 CollectionDocumentary Collection is a method of effecting payment for goods whereby the seller/exporter ships goods to the buyer, but instructs his bank to collect a certain sum from the buyer/importer in exchange for the transfer of title, shipping and other documentation enabling the buyer/importer to take possession of the goods. There two types of documentary collection: Documents against payment (D/P) and Documents against acceptance (D/A).Module 2 CollectionDocuments against payment (D/P)     Under D/P, the exporter ships the goods ordered and sends the relevant shipping documents to the importer through the remitting bank and collecting bank with instructions not to release the documents to the importer until the full payment is effected. According to the different time of payment, D/P can be further divided into D/P at sight and D/P after sight.).Module 2 Collection D/P at sightWhen such method is adopted, the relevant clause in the sales contract can be as follows:Upon first presentation, the buyer shall pay against documentary draft drawn by the seller at sight. The shipping documents are to be delivered against payment only.Module 2 CollectionD/P after sightAfter shipment of the goods, the exporter shall draw a draft and send it as well as shipping documents to his bank (remitting bank), through which and whose corresponding bank (collecting bank) the documentary draft is presented to the importer. The importer shall accept the draft, and make payment on the due date of the draft.Module 2 Collection   Documents against acceptance (D/A)D/A calls for delivery of documents against acceptance of the draft drawn by the exporter. That is, the collecting bank will release the shipping documents to the importer without any payment but merely against the acceptance of the bill by the importer to honor the draft at a certain future date agreed upon between the exporter and the importer. This term of payment is applied only to a time bill, therefore, the exporter would have to take great risks.Module 3  Letter of CreditThe documentary credit or letter of credit is an undertaking issued by a bank for the account of the buyer(the applicant)or for its own account, to pay the beneficiary the value of the draft and/or documents provided that the terms and conditions of the documentary credit are complied with. Although a letter of credit is not a guarantee, it serves almost the same purpose in that the bank assures payment to the seller as long as he complies with stated conditions. Therefore, letter of credit has become a safer and quicker method of obtaining payment in international trade.Module 3  Letter of Credit   The terms and conditions of a documentary credit revolve around two issues: (1) the presentation of documents that evidence title to goods shipped by the seller and (2) payment.   There are four main parties to a documentary credit transaction and some other parties, which facilitate the transaction.Applicant／importer／the buyer:Beneficiary exporter／the sellerIssuing Bank／opening bank／the buyer’s bankAdvising Bank(Transmitting Bank)Negotiating BankPaying Bank／drawee bankReimbursing BankConfirming BankModule 3 Letter of CreditIn￿general,￿the￿procedure￿of￿using￿an￿L/C￿is￿shown￿in￿the￿following￿picture.￿Module 3 Letter of Credit   Generally speaking, L/C can fall into different categories in international trade. They are:1. Sight and Time Letter of Credit2. Revocable and Irrevocable Letter of Credit3. Transferable and Non-transferable Letter of Credit4. Confirmed and Unconfirmed Letter of CreditChapter 6 International Cargo Transportation InsuranceAfter learning this unit, you will be able to: understand the basic concepts in international trade insurance practicesbe aware of the risks and losses in ocean transportationknow the fundamental insurance coverage and additional insurance coverage be familiar with the procedures of Marine Insurance know the insurance of Land, Air, and Postal TransportationChapter 6Project I   Fundamental Concepts in International Cargo InsuranceModule 1．．￿ ￿Parties Involved Insurer Insured Broker ClaimantProject I   Fundamental Concepts in International Cargo InsuranceModule 2．．Some conceptsInsured AmountPremiumInsurance PolicyThe signed insurance policy Insurance certificate  Open policy    Project II Marine Transportation InsuranceModule 1 Risks Covered by Marine Insurance Perils of the seaPerils of Sea include both natural calamities and fortuitous accidents.Natural calamities include heavy weather, lightening, earthquake, volcanic eruption, tsunami and so on. Project II Marine Transportation InsuranceModule 1 Risks Covered by Marine Insurance Perils of the seaFortuitous accidents are events such as fire, explosion, stranding, grounding, sinking, capsizing and collision, missing of vessels, contact of vessel with any external object other than water, etc. Project II Marine Transportation Insurance  Extraneous risksExtraneous Risks includes General Extraneous Risks and Special Extraneous Risks. General Extraneous Risks includes theft and pilferage, contamination, leakage, breakage, sweating and/or heating, taint of odor, rusting, hook damage, fresh and /or rain water damage, short-delivery and non-delivery, shortage in weight, clashing and so on. Special Extraneous Risks includes war, strike, and failure to deliver due to some special laws or regulations.Module 2 Losses Covered by Marine           Insurance①①Total loss 全部损失全部损失a)Actual Total Loss (实际全损实际全损) : The insured subject matter is totally and irretrievably (不能挽回地) lost.b)Constructive Total Loss (推定全损推定全损): It is estimated that the actual total loss of cargo is inevitable or the cost of salvage (抢救) or recovery (恢复) could have exceeded the value of the cargo.Module 2 Losses Covered by Marine Insurance②②Partial loss 部分损失部分损失a)General Average (共同海损)Refers to a certain special sacrifice (牺牲) and extra expense intentionally incurred for the general interests of the ship-owner, the insurer, and the owners of the various cargoes aboard the ship.b) Particular Average (单独海损)means a partial loss suffered by part of the cargo and solely borne by the owner of the lost property. It occurs when a storm or fire damages part of the shipper's cargo and no one else's cargo has to be sacrificed to save the voyage. Particular Average is recoverable from the insurance underwriter if it has been covered.Module 4. Major Categories of General Insurance Coverage基本险别基本险别 Basic Risks 附加险别附加险别  Additional Risks一切险（一切险（AR））平安险（平安险（FPA））  水渍险（水渍险（WPA/WA））一般附加险一般附加险General Additional Risks特殊附加险特殊附加险Special additional RisksModule 4. Major Categories of General Insurance   Coverage Basic coverageFPA Coverage ( Free from Particular Average)  WPA /WA (With Particular average/With Average)  All Risks  Module 4. Major Categories of General Insurance   Coverage  Additional coverageGeneral additional risks  Special additional risks  Module 4. Major Categories of General Insurance   Coverage  Duration of basic insuranceThe duration of insurance is the period throughout which the insurance company undertakes an insurance liability. There are different stipulations over this clause in the world, however, nearly all the cargo insurance business now includes what is called Warehouse to Warehouse Clause (W/W Clause). By the Warehouse to Warehouse Clause, the insurance company undertakes an insurance liability over the insured cargo from the warehouse or place of storage of the receiver named in the policy. The policy provides an overriding time limit of 60 days after the completion of discharge of the insured goods from the seagoing vessel at the final port of discharge. Module 5 Procedures of Marine Insurance To apply for marine insurance To determine the insurance value or the goods to be insured To determine the insurance average and coverage To determine insurance premium rates  To Sign an insurance policy  To lodge an insurance claimChapter 7 Inspection and Force MajeureAfter learning this unit, you will be able to : understand the importance of inspection in international trade understand the inspection agency and certificate  identify the inspection procedure master the definition of force majeure learn the consequences of force majeure  understand the clauses involved in force majeure.Chapter 7 Inspection and Force Majeure Project I Commodity InspectionModule 1. Importance of Commodity InspectionCommodity inspection is an indispensable link of the smooth handling of international transaction. To the buyer   a buyer wants to make certain that the goods delivered to him are exactly the goods described by the contract he has signed with the seller. Project I Commodity InspectionModule 1. Importance of Commodity InspectionTo the seller    a seller wants to control the quality of the goods so that his image will not be damaged and the market will be developed. Second, a seller wants to prove with an inspection document that the goods delivered have met the relevant contract terms so that he will not be responsible for any problems in the goods after delivery.   it is advisable that the goods be inspected by a third party and an inspection certificate issued, the certificate will be served as a proof to ascertain the trouble and which party is to blame.Module 2. Inspection Agency and Certificate Inspection agencyUsually, export and import commodity inspections are carried out by the third party which takes an impartial or neutral position in the inspection of the goods. These inspection agencies are generally known as the surveyors, who execute inspection or analysis over the export or import commodities as to their quality, weight, quantity, packaging, marking, and place of origin or damage. Module 2. Inspection Agency and Certificate Inspection agency   There are mainly two types of inspection agency:ü    governmental ---the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) and China Commodity Inspection Bureau (CCIB) in our country, the Food and Drugs Administration (FDA) in the USA, etc. ü    non-government---the Society General De Surveillance S.A. (SGS) in Geneva, Swiss, Underwriter Laboratory (UL) in the USA, Lloyd’s Surveyor, B.V., etc. Module 2. Inspection Agency and Certificate CertificateAfter the inspection of the imported or exported goods, the inspection institution will issue inspection certificate. They are used to verify whether the goods are in conformity with the terms of contract. Module 2. Inspection Agency and Certificate Certificatecommonly issued by commodity inspection institutions in our country:Inspection Certificates of Quality;Inspection Certificates of Weight;Inspection Certificates of Quantity;Inspection Certificates of Origin;Inspection Certificates of Health;Disinfection Inspection Certificates;Sanitary Inspection Certificates;Veterinary Inspection Certificates ;Inspection Certificates on Damaged Cargo;Inspection Certificates on Tank/Hold Module 3. Inspection OperationTime and place of inspectionThe time and place of inspection is the first item in an inspection clause. It stipulates when and where the inspection should be conducted and is associated with the terms of delivery used, the nature of the commodity and packaging, and the laws or regulations of different countries.Module 3. Inspection OperationShipping quality and shipping weight This means that inspection at the seller’s factory or at the port of shipment is final. In this way, inspectors from both sides conduct a joint inspection, usually at the seller’s factory or at the port of shipping, the inspection certificate issued will serve as the final proof of the quality and quantity of the commodity shipped. Module 3. Inspection OperationLanded quality and landed weight This means inspection carried out at the port of destination is final. In this mode of inspection, both the seller and buyer agreed that the inspections of the quality, quantity (weight) of the commodities are carried out at the port of destination, and the inspection certificate issued by the inspection organization is final. Module 3. Inspection OperationInspection at the port of shipment and re-inspection at the port of destinationIt means after inspection at the port of shipment, the buyer retains the right to re-inspect and claim for compensation if the merchandise doesn’t comply with the contract. With this method of inspection, the seller and the buyer both agree to inspect the quality and quantity (weight) of the commodities in the place of shipment, the certificate issued at the port of shipment will be used as one of the documents for payment, but the buyer retains the right to re-inspect the goods in the place of destination and to claim for compensation if the merchandise is not in conformity with the contract.Module 3. Inspection OperationInspection procedureInspection and quarantine procedures normally include six steps: application for inspection, acceptance of application, calculation and collection of fees, inspection and quarantine, decontamination treatment, and issuance of certificate and release of goods.Inspection clauseThe inspection clause in international trade contracts usually contains stipulations on the inspection right, the time and place of inspection or re-inspection, the inspection organization, the inspection certificate. Project II   Force MajeureModule 1. Definition of Force Majeure   A force majeure event which means superior force in French refers to an event or effect that cannot be reasonably anticipated nor controlled, such as a strike, flood and war. As no fault to both parties, neither the seller nor buyer is obligated to any damage, provided that the contract contains a force majeure clause. To prove the event or effect is force majeure, the breaching party has to show:1. That his failure was “due to an impediment beyond his control”;2. That the impediment was something he could not have reasonably taken into account at the time of contracting;3. That he remains unable to overcome the impediment or its consequences Project II   Force MajeureModule 2. Consequences of Force Majeure There are usually two consequences of force majeure:Termination of contractPostponement of contractProject II   Force MajeureModule 3. Force Majeure ClauseContent of force majeure clauseüThe force majeure clause usually contains:üThe scope of force majeure eventsüTime limit of notifying the other party:  üThe issuer of the certificate: Project II   Force MajeureModule 3. Force Majeure ClauseThree ways of stipulating what constitutes force majeureüGeneralization üSpecificationüCombinationProject II   Force MajeureModule 1. Definition of Force Majeure   A force majeure event which means superior force in French refers to an event or effect that cannot be reasonably anticipated nor controlled, such as a strike, flood and war. As no fault to both parties, neither the seller nor buyer is obligated to any damage, provided that the contract contains a force majeure clause. To prove the event or effect is force majeure, the breaching party has to show:1. That his failure was “due to an impediment beyond his control”;2. That the impediment was something he could not have reasonably taken into account at the time of contracting;3. That he remains unable to overcome the impediment or its consequences Chapter 8 Claim and ArbitrationAfter learning this unit, you will be able to : understand the definition of liabilities of breach of contract learn the ways of stipulating the claim clause in the contract understand the settlement of claim master the definition of arbitration identify the procedures of arbitration. learn the ways of stipulating the arbitration clause in the agreementChapter 8 Claim and Arbitration Project I  ClaimModule 1. Liabilities of breach of contractBreach of contractüBreach of contract commonly committed by the seller:The seller fails to deliver the goods on time or even no delivery;The documents relating to the goods are incomplete;The goods delivered are not in conformity with contract, etc.üBreach of contract commonly committed by the buyer:The buyer fails to pay the price;The buyer fails to take delivery of the goods, etc.Project I  ClaimLiabilities of breach of contractA claim appears only in the case of breach of contract. Different legal systems differ in their definition of breach of contract:1. According to the United Nations Convention on Contracts for the International Sale of Goods (CISG), there are two types of breach of contract: fundamental breach, and non-fundamental breach.2. The British Law divides the breach of contract into Breach of Condition and Breach of  Warranty.Project I  ClaimModule 2. The Claim Clause in the Contract  Discrepancy and Claim ClauseSample: “Any discrepancy on the shipped goods should be put forward within 30 days after the arrival of the vessel carrying the goods at the port of destination and the Buyer should present the Survey Report issued by the Surveyor agreed by the Seller. If the goods have been processed, the Buyer will loss the right to claim. The Seller shall not settle the claim within the responsibility of the Insurance Company or Ship Company.” Project I  ClaimModule 2. The Claim Clause in the Contract Penalty ClauseSample: “Should the Buyers for their 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 L/C. 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 deemed to be ten days for the calculation of penalty.”Project I ClaimModule 2 Settlement of ClaimFor a moderate contract of general merchandise, a discrepancy and claim clause is often included. In case the goods delivered are inconsistent with the contract stipulations for quantity, quality, packaging, etc, the buyer should make a claim against the seller within the time limit of re-inspection and claim under the support of an inspection certificate or a survey report issued by a nominated surveyor accepted by both parties. Project I ClaimModule 2 Settlement of ClaimIf the claim is justified, prompt and well-supported, it can be settled by the seller in the following methods: Agreeing to the rejection of the goods and refund to the buyer the value of the rejected goods and compensation for the direct losses or expenses incurred from the rejection, including interest, bank charges, freight, insurance premium, inspection charges, storage charges, and all other expenses for the custody and protection of the rejected goods;Devaluating the goods,  Replacing the defective goods with new ones conforming to the specifications, quality and performance as stipulated in the contract and bearing all expenses incurred. Project I ClaimModule 2 Settlement of ClaimTo file or to settle a claim, the following points should be paid due attention to: whether the claim is justified by the contract; whether the claim is made in time;  whether the claim is well supported by good documentation. Failing to have positive answers to the above would mean difficulties in settling the claim. Project II   ArbitrationModule 1. Definition of Arbitration   Arbitration is the resolution of a dispute between two parties through a voluntary or contractually required hearing and determination by a impartial third party chosen by the parties in controversy or a higher or disinterested body. In international trade, the main arbitration body is the International Chamber of Commerce (ICC).    Arbitration should have the following features:1. Voluntarily. 2. An arbitration agreement in written form is required for arbitration.   3. Arbitration is simpler in procedures, less costly and time consuming than litigation. 4. The award is final and binding on both parties. Project II ArbitrationModule 2. Procedure of Arbitration   Submitting disputes to arbitration  Appointing arbitrators Case hearing Issuing an awardProject II ArbitrationModule 3. Arbitration Clause    An arbitration clause expresses the willingness of the parties to submit the disputes to arbitration and excludes the jurisdiction of courts.   Under the condition of institutional arbitration, an eligible, effective, complete and accurate arbitration clause or arbitration agreement should have the following elements.The arbitration bodPlace of arbitrationArbitration awardArbitration procedures             Arbitration fees             Project II ArbitrationModule 3. Arbitration Clause  An example of arbitration clause in a contract                 “All disputes in connection with the contract or the execution thereof shall be settled through friendly negotiations. In case no settlement can be reached through negotiations, the case should then be submitted for arbitration to the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade. The decision rendered by the said Commission shall be final and binding upon both parties. The arbitration fee shall be borne by the losing party.”Thank you!Chapter 9 Export & Import DocumentationsAfter learning this unit, you will be able to: understand the importance of documentation in export transactionbe aware of the basic requirements and information sources of export documentation be familiar with the different types of documents used in international tradeunderstand the major functions of various documentations in international tradeChapter 9 Export&Import Documentations Project I Role and Requirements of DocumentationModule 1 Role of Documentation Documentation means an act of furnishing or authentication of all or any of the documents relating to a transaction.  The major purpose of documentation is to provide a specific and complete description of the goods so that they can be correctly processed for transport, payment, credit, insurance, import duty, etc.Project I Role and Requirements of DocumentationModule 2. Requirements for Documentation Usually, documents should have the following characteristics: AccuracyCompleteness Conciseness PromptnessProject I Role and Requirements of DocumentationModule 2. Requirements for DocumentationAccording to the sources of document, the most commonly used international trade documents can be classified roughly into five categories:   Official documents Commercial documents Financial documentsTransport documents Insurance documentsProject II  Official DocumentsInternational trade involves complex flows of goods and services between many countries. Therefore, a set of official documents are used by countries to monitor and control these flows. These usually include:  Export License,  Import license and Foreign Exchange Authorization, Certificate of Origin, Inspection Certificate,  Consular Invoice,  Customs Invoice, Module 1. Export LicenseExport￿license￿is￿also￿called￿the￿export￿permit,￿which￿is￿the￿first￿document￿a￿seller￿has￿to￿prepare￿when￿he￿intends￿to￿export￿commodities￿that￿are￿under￿export￿control￿of￿his￿country.￿Such￿a￿document￿is￿normally￿required￿for￿the￿export￿of￿certain￿key￿raw￿material,￿equipment,￿machinery￿or￿other￿restricted￿goods￿related￿to￿national￿or￿international￿security;￿or￿works￿of￿arts￿or￿antiques￿that￿are￿of￿national,￿cultural￿or￿historic￿importance.￿Module 2. Import License and Foreign AuthorizationMany￿countries￿use￿import￿license￿and￿foreign￿authorization￿system￿to￿restrict￿importers￿to￿present￿pro￿forma￿invoices￿to￿their￿licensing￿authorities￿or￿to￿their￿central￿banks,￿or￿sometimes￿to￿both￿to￿apply￿for￿the￿license.￿Module 3. Certificate of OriginA￿certificate￿of￿origin￿is￿the￿document￿which￿states￿the￿country￿or￿the￿place￿of￿origin￿of￿the￿goods.￿It￿is￿a￿form￿to￿prove￿that￿the￿merchandise￿in￿question￿did￿come￿from￿wherever￿it￿is￿claimed.￿The￿certificate￿is￿usually￿prepared￿by￿the￿shipper,￿signed￿in￿the￿presence￿of￿a￿notary￿public,￿and￿then￿certified￿by￿a￿non-governmental￿commercial￿organ￿acceptable￿to￿the￿country￿of￿destination.￿Module 4. Certificate of InspectionThis￿document￿contains￿many￿similar￿kinds￿of￿certificate,￿such￿as￿certificate￿of￿value,￿certificate￿of￿quality,￿certificate￿of￿quantity,￿certificate￿of￿health,￿weight￿memo.￿Module  5. Consular InvoiceA Consular Invoice is a document certified by the consul of the country for which the merchandise is destined and an exporter must purchase from the importing country’s commercial Consulate. The invoice is used by customs officials of the country of entry to verify the value, quantity, and nature of the merchandise imported. Most of the consular invoices are in the language of the country to which the goods are shipped. it is the most difficult document of all and must be filled in with extreme care.Module  6. Customs InvoiceCustoms￿invoice￿is￿required￿by￿the￿importing￿country￿in￿order￿to￿clear￿the￿customs,￿to￿compile￿statistics,￿to￿verify￿country￿of￿origin￿for￿import￿duty￿and￿tax￿purpose,￿to￿compare￿exporting￿price￿and￿domestic￿price,￿and￿to￿fix￿anti-dumping￿duty.￿⑤￿It￿is￿issued￿on￿a￿special￿form￿prescribed￿by￿the￿customs￿authorities￿of￿the￿importing￿country.￿Project III   Commercial Documents   Commercial document are generally issued by the importer, exporter or some relevant non-governmental business organizations. They aim to ensure smooth transactions and usually include∶ Pro forma invoice Commercial InvoiceQuality CertificateWeight CertificateModule 1. Pro Forma InvoiceA Proforma invoice is an invoice provided by a supplier in advance of providing the goods or service. A quotation in the form of an invoice prepared by the seller that details items which would appear on a commercial invoice if an order results.Proforma invoices basically contain much of the same information as the formal quotation, and in many cases can be used in place of one.  A pro forma invoice is used as a preliminary invoice together with a quotation; it has a detailed information on the transaction that can help him plan. A pro forma invoice has no legal status. It is only a means to facilitate the buyer to accomplish the corresponding tasks.Module 2. Commercial InvoiceA￿commercial￿invoice￿is￿one￿of￿the￿most￿important￿documents￿which￿identifies￿the￿seller￿and￿the￿buyer￿of￿goods￿or￿services,￿numbers￿such￿as￿invoice￿number,￿date,￿shipping￿date,￿mode￿of￿transport,￿delivery￿and￿payment￿terms,￿and￿a￿complete￿list￿and￿description￿of￿the￿goods￿or￿services￿including￿prices,￿discounts￿and￿quantities.￿Module 2. Commercial Invoice   A commercial invoice must show the following basic information about the transaction:   （1）The shipper    （2）The description    （3）￿Net and gross weight    （4）The dimension of the shipment    （5）The unit price    （6）Freight, insurance, package    （7）Date    （8）￿Signature   Module 3. Quality CertificateA Quality Certificate confirms that the quality/specification of a particular consignment of goods is in agreement with the sales contract at the time of shipment. It may be issued by the exporter or a relevant government department as required under Letter of Credit or Sales Contract terms. It is essential that cargo description in the Quality Certificate conforms to its terms found in other relevant documents, such as the commercial Invoice, L/C, insurance Policy.Module 4. Weight CertificateWeight￿Certificate￿is￿usually￿requested￿by￿the￿importer￿to￿confirm￿that￿the￿weight￿of￿the￿goods￿is￿in￿accordance￿with￿the￿sales￿contract￿at￿the￿time￿of￿shipment.￿It￿is￿a￿supplement￿to￿a￿commercial￿invoice￿to￿show￿the￿details￿of￿a￿shipment￿when￿specification,￿quantities,￿weights￿or￿contents￿of￿individual￿units￿in￿the￿shipment￿vary.￿Similar￿to￿a￿Quality￿Certificate,￿it￿may￿be￿issued￿by￿the￿exporter￿or￿a￿relevant￿government￿department￿as￿required￿under￿Letter￿of￿Credit￿or￿Sales￿Contract￿terms.￿The￿purpose￿of￿weight￿certificate￿is￿to￿recognize￿the￿goods,￿to￿clear￿the￿customs￿and￿to￿check￿the￿goods.Project IV   Financial Documents   In international trade, quite a number of financial documents are used to ensure that the exporter receives full and timely payment for the shipment. These documents are usually issued by banks or exporters: Application Form for international Money TransferDraftsBanker's DraftCommercial Draft Sight Draft Time DraftApplication for Documentary Letter of CreditLetter of CreditModule 1. Application Form for International Money TransferWhen￿Cash￿in￿Advance￿or￿0pen￿Account￿is￿used,￿payment￿may￿be￿effected￿by￿transferring￿money￿through￿banks.￿Thus,￿the￿overseas￿buyers￿need￿to￿complete￿the￿relevant￿application￿form￿for￿International￿Money￿Transfer.￿This￿kind￿of￿form￿is￿essentially￿a￿request￿to￿a￿bank￿to￿make￿an￿international￿money￿transfer￿on￿the￿remitter's￿behalf.￿In￿other￿words,￿an￿overseas￿buyer￿instructs￿a￿bank￿in￿the￿buyer's￿country￿to￿transfer￿an￿amount￿of￿money￿to￿an￿exporter's￿bank￿by￿M/T,￿T/T￿or￿D/T.￿Module 2. DraftsA￿draft￿or￿bill￿of￿exchange￿is￿an￿unconditional￿order￿signed￿by￿one￿party￿(the￿drawer)￿requesting￿a￿second￿party￿(drawee￿or￿payer)￿to￿make￿payment￿in￿lawful￿money￿immediately￿or￿at￿a￿determinable￿future￿time￿to￿a￿third￿party￿(payee).￿In￿the￿context￿of￿international￿trade,￿the￿drawer￿and￿the￿payee￿is￿usually￿the￿seller￿while￿the￿drawee￿and￿payer￿is￿always￿the￿buyer.￿There￿are￿Banker’s￿Draft.,￿Commercial￿Draft,￿Sight￿Draft,￿Time￿Draft,￿Clean￿Draft,￿Documentary￿Draft￿etc,￿however,￿these￿drafts￿are￿not￿mutually￿exclusive,￿that￿is￿,￿one￿draft￿can￿be￿commercial,￿documentary,￿and￿time￿draft￿at￿the￿same￿time.￿Module 2. Drafts Banker’s draft  Commercial draft  Sight draft  Time draft  Clean draft  Documentary draft   Promissory notesModule 3. Application for Documentary Letter of CreditAn Application for Documentary Letter of Credit is the form used by the buyer to request his or her bank to open a Documentary Letter of Credit in favor of the seller. It is used to authorize a bank to open a Letter of Credit.Module 4. Letter of CreditThe details listed below are the ones that require special attention when an L/C is opened by the buyer or checked by the seller.   Method of advice: airmail/cable  Type of credit: whether the L/C is irrevocable or revocable   Date of expiry   Documents required   Applicant's name and address   Beneficiary's name and address   Advising/paying/ confirming bank  AmountAllow partial shipmen /transshipment or notPort of shipment and port of dischargeProject V Transportation Documents   A single export shipment can involve a lot of different documents to ensure that the goods reach the final consignee. A few commonly used transportation documents are listed below:Bill of lading Shipping Note Packing List Rail Consignment Note Road Consignment NoteAir WaybillCombined Transport DocumentsArrival NotificationModule 1. Bill of LadingA￿bill￿of￿lading￿is,￿therefore,￿both￿a￿receipt￿for￿merchandise￿and￿a￿contract￿to￿deliver￿it￿as￿freight.￿It￿is￿a￿document￿of￿title￿to￿the￿goods,￿enabling￿the￿shipper￿or￿owner￿of￿the￿goods￿to￿endorse￿title￿to￿other￿parties,￿sell￿goods￿in￿transit,￿and￿present￿to￿banks￿with￿other￿documents￿in￿seeking￿payment￿under￿documentary￿credits.￿Abbreviated￿generally￿as￿B/L,￿it￿is￿the￿most￿important￿document￿for￿sea￿transport.￿Module 2. Shipping Note/Shipping AdviceA￿shipping￿advice￿is￿to￿be￿forwarded￿by￿the￿seller￿(shipper)￿to￿the￿buyer￿(consignee).￿The￿purpose￿of￿the￿shipping￿advice￿is￿to￿notify￿the￿buyer￿that￿goods￿are￿loaded￿and￿that￿he￿can￿proceed￿to￿prepare￿for￿making￿payment￿and￿for￿receiving￿the￿goods￿at￿the￿destination.￿If￿the￿contract￿is￿concluded￿under￿FOB,￿FCA,￿CFR￿or￿CPT,￿the￿seller￿also￿has￿to￿pass￿the￿shipping￿advice￿to￿the￿buyer￿without￿delay￿so￿as￿to￿facilitate￿the￿buyer￿to￿arrange￿insurance.Module 3. Packing ListThe￿packing￿list￿is￿an￿extension￿of￿the￿commercial￿invoice;￿as￿such￿it￿looks￿like￿a￿commercial￿invoice.￿The￿exporter￿reserves￿the￿shipping￿space￿based￿on￿the￿gross￿weight￿or￿the￿measurement￿shown￿in￿the￿packing￿list.Module 4. Air WaybillThe￿air￿waybill￿(AWB)￿is￿one￿of￿the￿most￿important￿cargo￿documents￿prepared￿and￿issued￿by￿a￿carrier￿or￿its￿authorized￿cargo￿agents,￿it￿is￿the￿shipping￿document￿when￿the￿goods￿are￿shipped￿by￿air.￿It￿is￿a￿proof￿acknowledging￿receipt￿of￿the￿goods￿from￿the￿shipper￿by￿the￿airline.￿a￿contract￿between￿the￿shipper￿and￿the￿airline￿for￿moving￿the￿goods.￿a￿certificate￿of￿insurance.￿a￿customs￿declaration,￿an￿instruction￿sheet￿guiding￿the￿carrier's￿staff￿in￿handling￿the￿cargo.Project VI   Insurance DocumentsThese are the important insurance documents:    Insurance Policy    Insurance Certificate    Open PolicyModule 1. Insurance PolicyBroadly, an Insurance Policy is the entire written contract of insurance, It provides actionable evidence of an insurance contract.     A typical insurance policy should include the following data:   Name, address and signature of the insurer   Name of the assured   The endorsement of the assured   A description of the risks covered and the insured time   description of the consignment   The sum or sums insured   PremiumModule 2. Insurance CertificateAn￿Insurance￿Certificate￿is￿a￿document￿indicating￿the￿type￿and￿amount￿of￿insurance￿coverage￿in￿force￿on￿a￿particular￿shipment,￿used￿to￿assure￿the￿consignee￿that￿insurance￿is￿provided￿to￿cover￿loss￿of￿or￿damage￿to￿the￿cargo￿while￿in￿transit.￿Module 3. Open PolicyOpen￿policy￿is￿recommended￿for￿exporters￿and￿importers￿who￿do￿a￿large￿volume￿of￿business.￿An￿open￿policy￿provides￿coverage￿for￿all￿goods￿shipped￿by￿the￿insured￿while￿the￿policy￿is￿in￿effect.￿The￿duration￿of￿this￿policy￿may￿last￿indefinitely.￿China’s￿export￿by￿using￿such￿policies￿is￿automatically￿covered￿with￿pre-agreement￿of￿the￿PICC.Chapter 10 E-CommerceAfter learning this unit, you will be able to:get to know the definition of E-commerce.master some knowledge of the brief history of E-commerceknow the process of E-commercefigure out the classification of E-commerce the distinctive features of each category of E-commercethe advantages and the disadvantages of E-commerceChapter 10 E-CommerceProject I   E-commerce and its Historical DevelopmentModule 1. Definition of E-commerceElectronic commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services and information via. telecommunication and computer networks including the Internet.  Module 2. Historical Development of E-commerceProject II   Categories of E-commerce Based on the types of parties (business, consumers, etc.) involved, E-commerce may be of the following types:1. Business-to-Business (B2B)  2. Business-to-Consumer (B2C)3. Consumer-to-Consumer (C2C)4. Consumer-to-Business (C2B)5. Government-to-Citizen (G2C)6. Government-to-Business (G2B)7. Peer to Peer (P2P) 8. M-Commerce Module 2. Business Models of E-commerce   One way for an entrepreneur to make money by using a computer is to start an e-commerce business. Several common e-commerce business models can be applied to the online business. They are respectively vanity, information, advertising, subscription and storefront sites  Vanity  Billboard sites Advertising  Subscription sites Storefront sitesProject  IV   Advantages of E-commerce   In general, businesses are lured to e-commerce by the following various factors:1. Global Reach2. Lower Sales and Marketing Costs3. Lower Telecommunication Costs4. Large Purchase per Transaction 5. Integration of Business Procedures6. Flexibility and Availability of Information7. Improved Interactions (especially Customer Service)Project V   Limitations of E-commerceE-Commerce is a new type of business with many advantages, some organizations are still not involved in it and some consumers are hesitant to purchases online. In order to obtain a comprehensive understanding of E-commerce, the limitations should be observed. They can be classified into technical and non-technical features.1. Technical Limitations2. Non-Technical Limitations。