some basic concepts and words in foreign trade
Familiarity with some basic concepts and words in foreign trade
The chain of executive work in foreign trade includes various and at the same time interconnected matters that foreign trade managers and businessmen and all persons and companies that deal with the import and export of goods necessarily know and use it. They are not unnecessary and, of course, knowledge of the information required in foreign trade is essential for them. This booklet has been prepared with the aim of providing the most important information, regulations and various issues in foreign trade and contains information, concepts and key words in foreign trade executive issues. Which is hoped to be exploited by esteemed colleagues and the business community of the province.
1- INCOTERMS or international trade conditions:
In the 1930s, the International Chamber of Commerce (ICC) conducted a study of the interpretation of trade terms and laid down the rules for the uniform interpretation of international trade terms in 1936, known as the Incoterms. Incoterms, which includes international trade terms, actually determine the rules between a buyer and a seller in commercial transactions, the latest of which is Incoterms 2000, which has been published.
Incoterms 2000 is classified into four main groups:
1) Group E: In this group, only one word EXW means delivery of goods at the point of departure has been used. (The point of departure may be the workplace, warehouse, factory, farm, or any other agreed location.) The seller does nothing but deliver the goods to the buyer at the designated location.
2) Group F: which has three words: * FAS: Goods are delivered by ship and on the dock at the port of loading (origin). * FOB: The goods must be delivered on the deck of the ship and at the origin. * FCA: Delivery of goods to the shipping company at the designated point or location.
3) Group C, in which the seller is responsible for concluding a contract for transportation and payment of freight to the destination and includes the following components: * CFR: The seller accepts responsibility for paying the freight to the port specified in the destination. * CPT: Delivery of goods is done by rent or any type of vehicle to the designated place in the destination. * CIF: In addition to freight, the seller is responsible for concluding the insurance contract and paying for it up to the specified location at the destination. * CIP: Delivery of goods is done by freight and insurance without shipping to the designated place at the destination.
4) Group D: In this group, the seller has the most responsibility in the transaction, while the buyer has the least responsibility and its components are: * DES: The buyer must clear the goods to enter. (Delivery of goods on the deck of the ship and at the destination) * DEQ: Clearance of goods at the destination customs is the responsibility of the buyer. (Delivery of goods at the pier and at the destination).
DAF: Clearance of goods for entry is the responsibility of the seller. (Delivery of goods at the specified border) * DDU: Delivery of goods to the designated place at the destination without clearance and without paying customs duties *
DDP: Clearance of goods for entry is the responsibility of the seller. (Delivery of goods in the buyer’s warehouse or destination customs and payment of all relevant fees and charges).
2- FREE TRADE ZONE :
Free trade zones are enclosed and protected areas that are usually created along the coast or areas that have special privileges and facilities for the rapid transport of goods. UNIDO defines free trade zones as “free trade zones are a stimulus to encourage industrial exports”.
3- Counter trade:
Mutual trade is the oldest form of trade. In this type of transaction, contracts and agreements are usually concluded between the two governments, and the central banks of the two governments open commercial accounts for commercial and financial operations. Important methods of mutual trade are: A: Bilateral transactions (seller-buyer) In such transactions, the seller or exporter receives one hundred percent of the goods in exchange for the goods he gives to the other party. B: Tripartite transactions (seller-intermediary buyer) A: Industrial Cooperation (Buy Back): In this method, one party provides the machinery and technical knowledge and production facilities of a product to another, and the other party undertakes after operation for a certain period of time all or part of Provide products to him.
Foreign exchange earnings are one of the most important tools for economic growth and development, which is achieved through the sale of products or services to other countries and it is called export. Exporting and selling goods in foreign markets has certain subtleties and sensitivities that failure to pay attention to them may lead to the destruction of financial and human capital.
The steps of exporting are: A: Marketing: is the first and most important step in exporting. Marketing means knowing the foreign markets and ways to penetrate it. Achieving this knowledge through negotiating with buyers, using official information and statistics, participating in international exhibitions, contacting business advisers in embassies and chambers of commerce, as well as inquiring about International institutions and centers that provide services in this regard are possible. Also, identifying competing goods and their quality and price in the target market and using advertising methods to introduce the goods have an important role in the success of an exporter.
B: Obtaining an export license: After marketing, the exporter must obtain an export license from the Ministries of Industry, Agriculture or Commerce, but currently the export of most goods does not require a license and only for specific goods.