English for foreign trade

Trang 2 ENGLISH FOR FOREIGN TRADE *1.2016.ENG106* Trang 3 Preface Engaging in international trade is a never-ending challenge for a host of reasons: political turmoil in one or another

BỘ GIÁO DỤC VÀ ĐÀO TẠO ĐẠI HỌC CÔNG NGHỆ TP.HCM

Biên Soạn:

Nguyễn Thành Lân

Lê Văn Tuyên

www.hutech.edu.vn

ENGLISH FOR FOREIGN TRADE

*1.2016.ENG106*

Các ý kiến đóng góp về tài liệu học tập này, xin gửi về e-mail của ban biên tập: tailieuhoctap@hutech.edu.vn

Preface

Engaging in international trade is a never-ending challenge for a host of reasons: political turmoil in one or another country, protectionist regulations, market uncertainties, exchange rate fluctuations, trade organization edicts, compliance requirements, payment problems, shipping delays, cultural differences, and an awful lot of changing procedures and documentation to contend with in every country In such challenging economic

all international regulations, rules, customs and practices if they want to conduct their business transactions in international market smoothly and profitably

With a view to helping learners who will use English in foreign trade to be familiar with such provisions, regulations and rules, this book is written to serve as a valuable guide to international trade operations, particularly in the fields of forwarding, international payment and sale contract dealings

As in most endeavors, the basic ingredients of enthusiasm, interest, and hard work are important to achieving success in foreign trade transaction, but they alone are not sufficient The critical additional factors needed are technical knowledge and training, which will lead to success for those who carefully apply what they learn This all encompassing book makes that learning process orderly and understandable

We hope that after their study of this book, Vietnamese learners will have a thorough grasp of the knowledge in foreign trade dealings and can achieve all the rewards it can offer them and their business

Contents

Unit 1 OVERVIEW OF FOREIGN TRADE 1

1 The need for international trade 1

2 The aim of international trade 2

3 Characteristics of international trade 2

4 Obstacles in international trade 3

5 The nature of foreign trade 5

5.1 Participants in foreign trade 5

5.2 Features of Vietnamese enterprises in foreign trade 5

6 Stages of transactions in foreign trade 6

6.1 Enquiry 6

6.2 Offer 6

6.3 Order 6

6.4 Counter-offer 7

6.5 Acceptance 7

6.6 Confirmation 8

Unit 2 PATTERNS OF BUSINESS TRANSACTION IN FOREIGN TRADE 10

1 Transactions through intermediary 10

1.1 Agency 11

1.2 Brokerage 11

2 Direct business 12

3 Re-exportation 13

4 Counter-trade 13

5 International processing 14

Unit 3 INTRODUCTION OF INCOTERMS 2010 15

1 Purpose of Incoterms 15

2 History of Incoterms 15

3 The scope of Incoterms 18

4 Some concepts related to Incoterms 20

5 Important differences between shipment and arrival contracts 22

Unit 4 SELLER’S AND BUYER’S OBLIGATIONS IN INCOTERMS 25

1 Summary of seller‘s and buyer‘s responsibilities in Incoterms 2010 25

2 Classification of Incoterms 2010 26

3 The uses of each group 27

Unit 5 THE USAGE OF 11 RULES UNDER INCOTERMS 2010 37

1 Rules for any mode or modes of transport 37

1.1 EXW 37

1.2 Free carrier (FCA) 37

1.3 Carriage Paid To (CPT) 38

1.4 Carriage and Insurance Paid To (CIP) 39

1.5 Delivered at Terminal (DAT) 39

1.6 Delivered at Place (DAP) 40

1.7 Delivered Duty Paid (DDP) 41

2 Rules for marine-restricted transport 41

2.1 Free Alongside Ship (FAS) 41

2.2 Free On Board (FOB) 42

2.3 Cost and Freight (CFR) 42

2.4 Cost Insurance and Freight (CIF) 43

3 Some notes when applying Incoterms 2010 43

Unit 6 DOCUMENTS IN FOREIGN TRADE 46

1 Documents related to goods 46

1.1 Invoices 46

1.2 Packing List 49

1.3 Certificate of Origin 49

1.4 Certificates of Inspection 51

2 Documents related to shipment 53

2.1 Mate‘s Receipt 53

2.2 Certificate of Measurement 54

2.3 Bill of Lading 54

2.4 Airway Bill 57

3 Documents related to loading and unloading 57

3.1 Cargo manifest 57

3.2 Stowage plan/ cargo plan 58

3.3 Statement of facts 58

3.4 Report on Receipt of Cargo (ROROC) 59

3.5 Cargo outturn report (COR) 59

3.6 Certificate of short-landed cargo (CSC) 59

3.7 Dock sheet/ Tally sheet 60

Unit 7 INSTRUMENTS OF INTERNATIONAL PAYMENT 61

1 Payment currency 61

2 Time of payment 61

2.1 Advanced payment 61

2.2 Sight payment 62

2.3 Deferred payment 62

2.4 Combination of different time of payment 62

3 Payment instruments 62

3.1 Bill of exchange 62

3.2 Cheque 65

Unit 8 METHODS OF INTERNATIONAL PAYMENT 69

1 Cash in Advance (CIA) 69

1.1 Application 70

1.2 Advantages and disadvantages 70

2 Open Account 71

1.1 Application 71

1.2 Advantages and disadvantages 71

3 Remittance 72

3.1 Forms of remittance 72

3.2 Participating parties 72

3.3 Process of payment by deferred remittance 73

3.4 Application of Remittance 73

3.5 Advantages and disadvantages of Remittance: 74

4 Collection 74

4.1 Clean Collection 74

4.2 Documentary Collection 76

Unit 9 DOCUMENTARY CREDIT 79

1 Introduction of Documentary Credit 79

2 Participating parties 79

3 Process of payment by L/C 79

Unit 10 TYPES OF LETTER OF CREDIT AND ASSOCIATED DOCUMENTS 82

1 Types of Letters of Credit 82

1.1 According to the nature of the L/C 82

1.2 According to the time of payment 82

1.3 Other types of L/C 82

2 Letter of Credit and its associated documentation 83

2.1 Commercial Invoice 84

2.2 Transport Documents 84

2.3 Insurance Documents 85

2.4 Customs Documents 85

Unit 11 NEGOTIATING THE TERMS OF A LETTER OF CREDIT 87

1 Negotiating the terms of a Letter of Credit 87

2 Segments in a Letter of Credit 89

3 Common Discrepancies in documents 95

3.1 Problems with the letter of credit 95

3.2 Problems with the bill of lading 96

3.3 Problems with insurance 96

3.4 Inconsistencies among the Documents 96

Unit 12 OVERVIEW OF INTERNATIONAL SALE CONTRACTS 98

1 Introduction 98

2 Requisites to the effect of an international sale contract 99

2.1 Legal status of contracting parties 99

2.2 Object of an international sale contract 99

2.3 The form and essential clauses required in a sale contract 100

Unit 13 TERMS AND CONDITIONS IN INTERNATIONAL SALE CONTRACTS 102

1 Introduction 102

2 General structure of a contract 102

2.1 Preamble 102

2.2 Terms and conditions 103

2.3 Execution 103

3 Major terms and conditions 104

3.1 Scope of supply 104

3.2 Financial terms 107

3.3 Terms of delivery 109

3.4 Legal terms 111

Unit 14 PERFORMANCE OF INTERNATIONAL SALE CONTRACTS 115

1 Obtaining import-export licenses 116

2 Arranging the goods for export 116

3 Examining the quantity and quality of goods 117

4 Contracting for carriage 119

5 Contracting for insurance 120

6 Conducting customs formalities 120

7 Making and taking delivery of import-export goods 121

7.1 Making delivery of exported goods 121

7.2 Taking delivery of imported goods 122

8 Making payment for imports and exports 122

8.1 Payment procedures for exported goods 122

8.2 Payment procedures for imported goods 122

9 Making and settling complaints 122

Unit 15 SPECIMEN CONTRACTS FOR REFERENCE 124

1 ITC model contract used for small firms 124

1.1 Introduction 124

1.2 Contents of ITC Model International Commercial Sale of Goods 126

2 ICC model sale contract 133

3 ICC General CIF contract 143

4 ICC General FOB contract 149

References 156