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AMITY BUSINESS SCHOOL MBA

Dr. Namrata Pancholi

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I ncoter ms 2010The Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce(ICC) widely used in international commercial transactions

The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules,reducing the 13 used in Incoterms 2000 by introducing twonew rules

("Delivered at Terminal", DAT; "Delivered at Place", DAP)that replace four rules of the prior version ("Delivered atFrontier", DAF; "Delivered Ex Ship", DES; "Delivered ExQuay", DEQ; "Delivered Duty Unpaid", DDU)

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In the prior version, the rules were divided into fourcategories, but the 11 pre-defined terms of Incoterms2010 are subdivided into two categories based only

on method of delivery.

The larger group of seven rules applies regardless ofthe method of transport, with the smaller group offour being applicable only to sales that solely involvetransportation over water.

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Rules for Any Mode(s) of Transport The seven rules defined by I ncoter ms 2010 for any mode(s) of

transportation are:

EXW

Ex Works (named place of delivery)The seller makes the goods available at its premises. This term

places the maximum obligation on the buyer and minimumobligations on the seller.

EXW means that a seller has the goods ready for collection athis premises (works, factory, warehouse, plant) on the dateagreed upon.

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The buyer pays all transportation costs and also bearsthe risks for bringing the goods to their finaldestination.

The seller doesn't load the goods on collectingvehicles and doesn't clear them for export. If theseller does load the good, he does so at buyer's riskand cost.

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FCA Free Carrier (named place of delivery)

The seller hands over the goods, cleared for export,into the disposal of the first carrier (named by the

buyer) at the named place.

The seller pays for carriage to the named point ofdelivery, and risk passes when the goods are handedover to the first carrier.

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CPT - Carriage Paid To (named place of destination) Theseller pays for carriage. Risk transfers to buyer upon handinggoods over to the first carrier.

CIP Carriage and Insurance Paid to (named place ofdestination)

Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to thefirst carrier

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DAT Delivered at Terminal (named terminal at port or placeof destination).

Seller pays for carriage to the terminal, except for costs relatedto import clearance, and assumes all risks up to the point thatthe goods are unloaded at the terminal.

DAP Delivered at Place (named place of destination)

Seller pays for carriage to the named place, except for costsrelated to import clearance, and assumes all risks prior to the

point that the goods are ready for unloading by the buyer.

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DDP Delivered Duty Paid (named place ofdestination)

Seller is responsible for delivering the goods to thenamed place in the country of the buyer, and pays allcosts in bringing the goods to the destinationincluding import duties and taxes.

This term places the maximum obligations on theseller and minimum obligations on the buyer.

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Rules for Sea and Inland Waterway Transport

The four rules defined by Incoterms 2010 forinternational trade where transportation is entirely

conducted by water are: FAS Free Alongside Ship (named port of shipment)

The seller must place the goods alongside the ship atthe named port. The seller must clear the goods forexport. Suitable only for maritime transport but NOT for multimodal sea transport in containers (is thetransportation of goods under a single contract, but performed

with at least two different means of transport ) 11

http://en.wikipedia.org/wiki/Intermodal_containerhttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Intermodal_container

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The buyer must instruct the seller the details ofthe vessel and the port where the goods are to

be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder.

This term has been greatly misused over thelast three decades ever since Incoterms 1980 explained that FCA should be used forcontainer shipments.

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CFR Cost and Freight (named port of destination)Seller must pay the costs and freight to bring thegoods to the port of destination.

However, risk is transferred to the buyer once thegoods are loaded on the vessel (this rule is new!).

Maritime transport only and Insurance for the goods

is NOT included.

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CIF Cost, Insurance and Freight (named port of

destination) Exactly the same as CFR except that the seller

must in addition procure and pay for theinsurance. Maritime transport only.

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The Export Credit Guarantee Corporation of IndiaLimited (ECGC ) is a company wholly owned by theGovernment of India based in Mumbai, Maharashtra.

It provides export credit insurance support to Indian exportersand is controlled by the Ministry of Commerce. Governmentof India had initially set up Export Risks InsuranceCorporation (ERIC) in July 1957.

It was transformed into Export Credit and GuaranteeCorporation Limited (ECGC) in 1964 and to Export CreditGuarantee of India in 1983.

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Provides a range of credit risk insurance covers toexporters against loss in export of goods and services.

Offers guarantees to banks and financial institutionsto enable exporters to obtain better facilities fromthem.

Provides Overseas Investment Insurance to Indiancompanies investing in joint ventures abroad in theform of equity or loan

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Name of InstitutionProducts and Services

Credit Insurance Policies Service Policy Where Indian companies conclude contracts with foreign

principals for providing them with technical or professionalservices, payments due under the contracts are open to riskssimilar to those under supply contracts.

In order to give a measure of protection to such exporters ofservices, ECGC has introduced the Services Policy.

Guarantees to Banks Packing Credit Guarantee Special Schemes Exchange Fluctuation Risk Cover

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Name of InstitutionSpecial Economic Zone (SEZ )

A Special Economic Zone (SEZ ) is a geographical regionthat has economic and other laws that are more free-market-oriented than a country's typical or national laws."Nationwide" laws may be suspended inside a specialeconomic zone.

The category SEZ covers, including free trade zones (FTZ),export processing Zones (EPZ), free Zones (FZ), industrial

parks or industrial estates (IE), free ports, free economiczones urban enterprise zones and others.

Usually the goal of a structure is to increase foreign directinvestment by foreign investors, typically an international

business or a multinational corporation (MNC), development

of infrastructure and to increase the employment. 19

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Name of InstitutionInternational Monetary Fund

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International Monetary Fund (IMF)

The International Monetary Fund (IMF ) is aninternational organization that was created on July 22,1944 at the Bretton Woods Conference ( BrettonWoods is an area within the town of Carroll, NewHampshire, USA, and came into existence onDecember 27, 1945 when 29 countries signed theArticles of Agreement.

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The IMF's stated goal was to assist in the reconstruction of theworld's international payment system post World War II.Countries contribute funds to a pool through a quota systemfrom which countries with payment imbalances temporarilycan borrow money and other resources.

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As of the 14th General Review of Quotas inlate 2010 the fund stood at or aboutUS$755.7bn at then-current exchange rates.

Through this fund, and other activities such assurveillance of its members' economies and thedemand for self-correcting policies, the IMFworks to improve the economies of its membercountries.

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Surveillance of Global EconomyThe IMF is mandated to oversee the internationalmonetary and financial system and monitor the

economic and financial policies of its 188 membercountries. This activity is known as surveillance andfacilitates international co-operation.

Surveillance has evolved largely by way of changes in procedures rather than through the adoption of newobligations.

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Conditionality of loans

IMF conditionality is a set of policies orconditions that the IMF requires in exchangefor financial resources.

The IMF does not require collateral fromcountries for loans but rather requires thegovernment seeking assistance to correct its

macroeconomic imbalances in the form of policy reform. If the conditions are not met,the funds are withheld. Conditionality is

perhaps the most controversial aspect of IMFolicies

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Structural adjustment Further information: Structural adjustment Some of the conditions for structural adjustment can include:

Cutting expenditures, also known as austerity. Devaluation of currencies, Trade liberalisation, or lifting

import and export restrictions, Increasing the stability of investment (by

supplementing foreign direct investment with the opening ofdomestic stock markets),

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Balancing budgets and not overspending, Removing price controls and state subsidies, Privatization, or divestiture of all or part of state-owned

enterprises, Enhancing the rights of foreign investors vis-a-vis national

laws, Improving governance and fighting corruption.

These conditions have also been sometimes labelled asthe Washington Consensus.

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Technical Assistance

-Special drawing rights

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The IMF describes itself as an organization of 188countries.

The organization's stated objectives are : to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making financial resources available to member

countries to meet balance of payments needs.

Its headquarters are in Washington, D.C.

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Main functions of IMF-Surveillance of Global Economy

-Technical Assistance

-Special drawing rights

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Name of InstitutionWorld Trade Organization

The WTO's predecessor, the General Agreement on Tariffs and Trade(GATT), was established after World War II in the wake of other newmultilateral institutions dedicated to international economic cooperation notably the World Bank and the International Monetary Fund.

The GATT was the only multilateral instrument governing internationaltrade from 1946 until the WTO was established on January 1, 1995.

The World Trade Organization (WTO ) is an organization that intends tosupervise and liberalize international trade.

Most of the issues that the WTO focuses on derive from previous tradenegotiations, especially from the Uruguay Round (1986 1994).

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Objectives:1. Raising standards of living.

2. Ensuring full employment and a large and steadily growingvolume of real income and effective demand.

3. Expansion of production and international trade.

4. Developing full use of the resources of the world.

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For the realization of the objectives, it adopted thefollowing principles:

Non Discrimination

Prohibition of quantitative restrictions

Consultations

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Full Form GATT WTO

Year of Creation 1948 1995

Purpose To strengthen international trade. To govern GATT andinternational trade

practices.

Framework Has a permanent structure with a permanent framework.

Has a permanent structurewith a permanent framework.

Scope Trade in goods. Trade in goods; trade inservices and trade-relatedaspects of intellectual

property rights.DisputeResolution

Has a permanent appellate body toreview findings and settle disputes.

Disputes are resolved fasteras settlement system has aselect time frame.

Less powerful Strong dispute settlement

machinery 35

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The WTO has 160 members.

Russia became a member in August,2012.

China became a member in 2002.

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The WTO launched the round of negotiations, the DohaDevelopment Round, at the fourth ministerial conference inDoha, Qatar in November 2001.

An ambitious effort to make globalization more inclusive andhelp the world's poor, particularly by slashing barriers andsubsidies in farming.

Disagreements still continue over several key areas includingagriculture subsidies, which emerged as critical in July 2006.

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On 13 February 2012, India requested consultations withTurkey under the dispute settlement system concerning thelatters safeguard measures on import of cotton yarn (otherthan sewing thread).

On 6 March 2012, the United States requested consultationswith India under the dispute settlement system concerning thelatters import restrictions on agricultural products from the

United States.

On 12 April 2012, India requested consultations with the USunder the dispute settlement system concerning the latters

countervailing duties on certain steel products from India. 39

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Organization Structure-Top level decision making body is the ministerial

conference meets atleast once in 2 years.

-Below is the General Council Meetingto(Dispute settlement, trade policy review body , trade

negotiations committee.)-Councils- goods council, services and intellectual

property council report to general council.

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Name of InstitutionThe World Bank

The World Bank was created at the 1944 Bretton WoodsConference, including the International Monetary Fund (IMF).The World Bank and the IMF are both based in Washington,D.C., and work closely with each other.

The United States and United Kingdom were the most powerful in attendance and dominated the negotiations

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The World Bank is a United Nations international financialinstitution that provides loans to developingcountries for capital programs. The World Bank is acomponent of the World Bank Group , and a member of

the United Nations Development Group.

The World Bank's official goal is the reduction of poverty. by promotion of foreign investment and international tradeand to the facilitation of capital investment.

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Name of InstitutionMembers

The International Bank for Reconstruction and

Development (IBRD) has 188 member countries, whilethe International Development Association (IDA) has 172members.

Each member state of IBRD should be also a member ofthe International Monetary Fund (IMF) and only members ofIBRD are allowed to join other institutions within the Bank(such as IDA).

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Voting power In 2010, voting powers at the World Bank were revised to

increase the voice of developing countries, notably China. Thecountries with most voting power are now the United States(15.85%), Japan (6.84%), China (4.42%), Germany (4.00%),the United Kingdom (3.75%), France(3.75%), India (2.91%), Russia (2.77%), Saudi Arabia (2.77%)

and Italy (2.64%).

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The changes were brought about with the goalof making voting more universal in regards tostandards, rule-based with objective indicators,and transparent among other things.

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United States would nominate Jim YongKim as the next president of the Bank.

Jim Yong Kim was elected on 27 April 2012.

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THANKS