eBSI TradeBrief Issue 1

A Hot Tip about Trade Finance in Ireland

Last updated: 22 Sep 2011

Newsletter containing International Trade related articles and events. Signup at http://www.ebsi.ie

TradeBrief 8 ISSUE 1 200 eBSI X ICC BANKING COMMISSION MEETING IN ATHENS.................... 1 X DIPLOMA IN EXPORT OPERATIONS LAUNCHES .................................. 2 X DOC. CREDIT CLINIC ............... 4 X IFC FIT INITIATIVE?????..5 X WEBLINKS FOR TRADE............. 8 X TRADE PRACTICE CLINIC ......... 9 X COUNTRY FOCUS - MONGOLIA . 10 X EXPERT COMMENTARY ? KIM CHRISTENSEN ............................. 13 X CAREER FOCUS ...................... 14 X RECENT EVENTS..................... 16 X CHINA SYSTEMS TUTORIAL ...... 20 X EXPERT COMMENTARY ? PRADEEP TANEJA....................................... 22 X UPCOMING EVENTS................. 23 TradeBrief ICC Banking Commission Meeting in eBSI Athens takes innovative approach! The most Clear support was shown for this recent meeting of the driven by demands in the ICC Banking Commission took th international commercial market. place in Athens on Tuesday 15 and Wednesday 16 April 2008. The second day of this important event was dedicated to panel The first day of the meeting was discussions on critical issues facing dedicated to the core tasks of the the trade finance markets. ICC Banking Commission. The panels included: Following the welcoming remarks 1. the global credit crunch. from Ms. Regina Prehofer, Banking 2. innovations in the supply chain. Commission Chair and Mr. Guy 3. standardization in electronic Sebban, the ICC Secretary General Invoicing the work of the commission got 4. regional market focus underway. The regional market focus panel was ICC Opinions and DOCDEX chaired by Vincent O?Brien, First Mr. Gary Collyer, the Technical Director of eBSI. This panel included Advisor to the Banking Commission discussions on developments in lead the discussion on ICC Official Central and Eastern Europe, Latin Opinions as well as recent DOCDEX America and the Middle East. cases. The next meeting of the ICC Banking Commission will take place in Paris on A highlight of the first day was the rd th Thursday 23 and Friday 24 October presentation by Dr. Georges Affaki 2008. providing the commission members with an update on the progress of The next meeting in Paris will be held the revision of the Uniform Rules in association with the International for Demand Guarantees (URDG) Finance Corporation (IFC). Avoiding Fraud in Operational Risk The latest innovation to provide security in international banking operations is the use of Iris Recognition Technology to facilitate the speedy access of pre- authorized personnel to systems, processes and data in a secured environment. Vincent O?Brien acts as a senior consultant to the World leader in this innovative technology, Iris Guard Inc and he introduced the application of this technology to an audience of senior bankers at the Letter of Credit Annual Survey of Law and Practice held in Hong Kong and Singapore during July 2008. Iris Eyes are Smiling? The presentation can be viewed at: http://www.tradeprofessional.net/index.php?page=videos§ion=view&vid_id=100005 www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 1 TradeBrief eBSI News & Commentary Directors Note Welcome to the first edition of our new format eBSI Trade Brief newsletter! Our first issue is a bumper one with lots of articles and news about International Trade, Finance and Logistics, as well as some information on developments by eBSI this year. As you will eBSI has Launch of Diploma in Export Operations at IITI Headquarters Dublin extended its global reach and L-R: John Whelan CEO Irish Exporters Association, Minister of European Affairs Dick Roche, have been active in more Thomas Smith operation Director of EBSI, and Mohamed Hafez Manager of the IITI countries than ever before. With the credit crunch E-learning Diploma in Export Operations impacting the financial Launched in Ireland by eBSI and IITI markets banks and trading companies are once again While undertaking the Diploma in turning to traditional trade Dublin, Ireland Export Operations participants will finance instruments to The Institute of International be involved in structured guided underpin security in Trade of Ireland and eBSI have learning. Participants will be guided international transactions. been working on the development of by expert tutors through the an e-learning extension to the technical knowledge and skills The net result has been International Trade Specialist essential to practitioners positive for eBSI with our Accreditation Programme for over 2 participating in international trade. international trade and finance years now and we are delighted to The Diploma is based on 4 learning consultants in more demand inform you of its formal launch from modules geared towards than ever before. September 2008! the strategic and more The long awaited Gain advanced elements of ing a qualification in The Diploma in Export continuation of experienced international trade and related Operations provides the ITS international trade subjects is now seen as a successful participants Accreditation passport to managers: international job with a valuable inclusive programme ? Supply Chain security and mobility. international trade introduces Management qualification. Strategic Trade ? Export Marketing Management Management The Diploma in Export I would like to extend my issues to ? Law of International heartiest congratula Operations has four tions to participants. Trade the graduates of our first essential objectives: ? Global Trade Study Certificate in Finance of 1) Acknowledgement of On completion of the Diploma in International Trade under the competence in individuals operating Export Operations, successful ?FIT Initiative? which was within the international trade and candidates will be eligible for supported by the IFC in logistics environment. ongoing membership of the Institute Bangladesh and Pakistan. of International Trade of Ireland. 2) Consolidation of knowledge and expertise of participants to an We hope you will enjoy the For further details about this new advanced Diploma level. new format and feel free to innovative e-Learning Diploma 3) Enhancement and sharing of send us suggestions! contact either Thomas Smith of eBSI knowledge and expertise of (ts@ebsi.ie) or Mohamed Hafez of Yours, international trade practitioners the Institute of International Trade undertaking the Diploma. of Ireland 4) Testing, assessment and formal Vincent O?Brien (mhafez@irishexporters.com) accreditation and certification of practitioners undertaking the Enrolments will take place on 21 Diploma in Export Operations. September and 17 November 2008. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 2 TradeBrief News & Commentary eBSI Irish Owned Burke Shipping Group establishes First European All China Inland Network Mr. Ciaran McCann, joined the Burke Shipping Group Ireland, in 2000, as a freight and passenger manager at Terminal 2 in Dublin Port. Over the next number of years, Ciaran moved into Group Project Management and finally onto today?s position of Director at BSG Shanghai. Prior to the establishment of the company in China, Ciaran completed the Trade and Customs Practice Course offered by EBSI. ?The Trade and Customs Practice Course was extremely valuable for me in getting over overall perspective on the industry, consolidating my professional experience within the group and adding an in-depth international dimension to my knowledge base? L-R: Alan Dai, GM and ? One example of this would be the Incoterms 2000 Module, as working Ciaran McCann, MD of BSG Shanghai on the front line of export operations from China, familiarity with Incoterms is a necessity. This coupled with other units such as documentation in international trade and customs procedures has in essence paved the way for a smooth transition from Ireland to China. I would highly recommend this course for anyone working in or wishing to work in International Trade. Burke Shipping Group Shanghai Ltd, is a Class A Freight Forwarding Company with a NVOCC License awarded by the Chinese Ministry of Communications. Building on previous years experience of exporting from China to Ireland through agents, a decision was made in June 2007 to establish the company. Ciaran McCann began conducting interviews whilst on business travel in China, and eventually in 2007 moved to Shanghai. ?The opening of our company has enabled us to provide our customers with a greatly increased level of service, and this can be reflected through the volume of trade we have facilitated since BSG commenced in China. It has also afforded us the opportunity to look at other markets outside of the EU. We have developed an all China inland network, and are also developing further networks in South east Asia, on top of our Sino Irish, US and EU trade. It is a very exciting time to be here, and despite all the talk of global slowdown and recession in Europe, a dynamic approach to business will always prove to seek out new markets and develop relationships.? Ciaran plans to stay in China for the foreseeable future. You can contact Ciaran cmccann@bsg-shanghai.com.cn, or visit their company website www.bsg-shanghai.com.cn. eBSI Now Offers Certified International Trade Skillnet Shipping Courses Launched by Chambers Ireland eBSI is delighted to announce that we have entered into an agreement with Coracle Online to begin providing online courses in preparation for the examinations for the Institute of Chartered Shipbrokers (ICS) leading to the following qualifications: The International Trade Skillnet will operate for the period January 2008 ? December 2009. Training will be aimed * Background to Shipping at sensitising Irish companies to the implications of * Foundation Diploma regulatory changes in the field of international trade and * Advanced Diploma to make sure that these changes will result in * ICS Membership exams ? PQE considerable gains in competitiveness to all member Courses we can offer online now include: participants. Single Window, Authorised Economic * Background to Shipping Operator, and pre-arrival pre departure will be important * Dry Cargo Chartering elements of the training modules. Ireland has around * Economics of Sea Transport and International Trade 15,000 companies involved in import or export, with four * Emissions Trading importers to every one exporter ? the majority of these * Introduction To Shipping companies need to be educated and prepared for all of * Legal Principles in Shipping these new changes. We believe that this Skillnet will * Liner Trades address the current training vacuum in these important * Logistics and Multi Modal Transport areas. * Marine Insurance This Skillnet will offer a host of activities which will be * Port Agency enterprise-led and funded by member companies and the * Port and Terminal Management Training Networks Programme, an initiative of Skillnets * Ship Operations and Management Ltd, funded from the National Training Fund through the * Ship Sale and Purchase Department of Enterprise, Trade and Employment. * Shipping Business * Shipping Law For further information, please visit the skillnet website at * Tanker Chartering http://www.internationaltradeskillnet.com Participants can study at their own pace and take the Members of this skillnet can get up to 50% funding courses alone or as preparation for the ICS Exams. To towards the cost of some eBSI courses. Contact Mary enrol or for further details on these courses please email Meehan mary.meehan@chambers.ie for more info! John Farrell at jfarrell@ebsi.ie. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 3 TradeBrief eBSI Doc. Credit Clinic Vincent O?Brien tackles some queries on UCP 600 Q. 2008/00x ? ?'military action ?force majeure ?? As a beneficiary under commercial Expert Profile LCs it is our Name: Vincent O?Brien company policy to Position: First Director request confirmation Employer: eBSI on all LCs issued by Location: Kiltimagh, Ireland Specialisation: International Trade Finance banks in certain Contact: vob@ebsi.ie markets. Approximately five months ago we made a presentation to a confirming bank under a credit available by deferred payment at 180 days from bill of lading date. The presentation was made within the presentation period and the expiry date at the counters of the confirming bank where the LC was available. The documents were processed by the confirming bank without any communication to ourselves regarding discrepancies or otherwise. However, it has transpired that due to military driven unrest it has been impossible to unload the goods at the port of discharge stated in the LC and furthermore the issuing bank has been closed for some weeks. We have been advised by the Confirming Bank that payment may be delayed due to a ?Force Majeure Event? at port and country of destination. We argued that this is not correct as they had earlier added their confirmation to the LC. The confirming bank replied stating that they have no liability as this situation is a ?force majeure event? quoting UCP 600 Article 36 ?A bank assumes no liability or responsibility for the consequences arising out of the interruption of its business by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes beyond its control? Please clarify, as this appears to us to be bending the rules. A. Answer Yes, this is certainly ??a bend too far!? Let us take this step by step. First, once the confirming bank added its confirmation then per UCP 600, article 2 it has given you a ?definite undertaking? to ?honour a complying presentation? of documents.. Second, as the confirming bank did not issue a notice of refusal by the close of the fifth banking day following the day of presentation, the confirming bank is now clearly precluded from claiming that the documents do not constitute a complying presentation ? and must honour. Third, the unfortunate events you mention in your query did not interrupt or have an effect on the business of the confirming bank whose undertaking is additional and separate to that of the issuing bank. Bluntly put, the confirming bank is quoting Article 36 out of context and must honour, which means the confirming bank has an obligation to effect payment to you as beneficiary on the maturity date. If you have a query on documentary credits or UCP 600 why not contact Vincent at vob@ebsi.ie! This Article was originally printed in LC Monitor, a leading Documentary Credit Publication. www.lcmonitor.com/ International Trade Certified Training Programmes Programme Intakes every two months from September & November 2008 ? Certificate in Logistics ? Certificate in Finance ? International Trade Specialist Delivered exclusively by: Accreditation The electronic Business School International ? Diploma in Export Operations Tel: +353 94 9381444 Fax: +353 94 9381708 ? Certified Courses in Shipping Web: http://www.ebsi.ie Email: info@ebsi.ie www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 4 TradeBrief eBSI eBSI Projects eBSI Projects International Finance Corporation leads way in e-Learning for Trade Finance Practitioners Dhaka & Chittagong, Bangladesh, Karachi & Lahore, Pakistan The first national roll-outs of the 'FIT' Initiative were launched on 5 March 2008 in Dhaka in Bangladesh and on 30 April in Karachi, Pakistan. This initiative is based on the introduction of a specialised Finance of International Trade (FIT) certificate program designed to encompass the core operational areas of International Trade Finance and Payments. This innovative initiative from IFC will be delivered by a team of leading organisations from around the world in order to ensure the highest standards of content, support and accreditation are offered to participants. This international group is led by the electronic Business School International (eBSI), a leading International Trade and Finance Training organisation specialising in the delivery of eLearning programs in these important areas. eBSI has partnered with IFC to deliver the FIT Initiative in IFC's Priority Countries with IFC support and through eBSI's own Emerging Markets Grant Scheme (EMGS). The FIT Initiative is certified by the Institute of Export UK and successful participants who pass the FIT Program's continuous assessment elements will receive a certificate in Finance of International Trade from the Institute of Export UK. Course content also includes ICC approved online training in UCP 600 provided by Coastline Solutions in Ireland. The IFC 'FIT Initiative' is an essential component in the training make up of all trade finance practitioners given its practical online approach to a broad spectrum of core trade finance products including Documentary Collections, Documentary Credits, Factoring, Forfaiting, Invoice Discounting, Bonds and Guarantees, all delivered in a comfortable and permanent Global Trade Finance Campus online. The Dhaka event included representatives from IFC, eBSI and ICC Bangladesh among over 80 other mainly trade and banking related delegates. There was significant press coverage at the event and positive feedback on the relevance and need for such a Finance of International Trade qualification has already been received. Promotional Seminar in Dhaka, participants meet ICC Bangladesh President Mr. Mahbubur Rahman Promotional Seminar in Chittagong 3 March 2008 www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 5 TradeBrief eBSI eBSI Projects A series of seminars were held in Karachi and Lahore in conjunction with the Institute of Bankers, Pakistan to mark the launch of the IFC FIT Initiative in Pakistan. The Karachi event took place on 30 April and had over 60 participants. At the launch in Lahore, Mr Nadeem Siddiqui, Country Head for IFC in Pakistan explained ?The ?FIT Initiative? in Pakistan has been implemented with the support of the ?IFC Global Trade Finance Program? which itself, in a short period of time has proven to be a highly successful global trade finance support program for banks and their customers in emerging markets, including Pakistan?. Notwithstanding the continued importance of Letters of Credit in financing such trade into and out of Pakistan, it has been identified that there is a need to apply other methods of payment and more advanced trade finance products to further accelerate the development of exports from Pakistan. Further details about this IFC Training Program can be found at http://www.ifcfitinitiative.net. The ?FIT Initiative? is an e-learning program Online Collaboration Site for stakeholders that is designed with an important dual To leverage the network aspect of the 'FIT' purpose: Initiative all stakeholders (participants, tutors 1. to train and certify international trade and coordinators) will have access to an online finance professionals networking and collaboration system designed to 2. to build an online global network of facilitate exchange of ideas and contact building. international trade and finance professionals who will share knowledge and experience on CD ROM Based Core Learning Material an online platform specifically developed for The Finance of International Trade (FIT) is the program comprised of the following Learning Units: * Methods of Payment This Three Month program is delivered in a * Bills of Exchange combination of the following learning * Documentary Collections elements: * Documentary Credits * Import Documentary Credits Online Support site for students * Bonds & Guarantees Students will be incorporated into the eBSI * Forfaiting, Factoring & Invoice Discounting Alumni and will be able to collaborate through * Structured Trade Finance a purpose built learning platform. * Export Credit Agencies Pa * Complex Transactions rticipants at Promotional Seminar Online Specialised training in UCP 600 * Warehouse Financing in Karachi, 30 April 2008 ICC Approved Online Training in UCP 600 * IFC Global Trade Facilitation Program (Mentor or Upskill 600). Mr. Vincent O?Brien with participants at promotional event organized by Institute of Bankers in Pakistan in Lahore on 2 May 2008. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 6 TradeBrief eBSI eBSI Projects Mr. Vincent O?Brien presents the FIT Mr. Vincent O?Brien takes the Chittagong event Initiative at promotional event in Dhaka attendees through the benefits of the FIT Program In FIT Participants receive their eLearning materials in Dhaka itiation Seminar for FIT Participants, Dhaka Next Intake Dates for the IFC FIT Initiative The next program intakes will take place in the following countries in December 2008 Bangladesh, contact Ataur Rahman, Bangladesh@ifcfitinitiative.net Pakistan, contact Umar Farooq, Pakistan@ifcfitinitiative.net For other countries please contact info@ifcfitinitiative.net Project Partners in the IFC FIT Initiative eBSI Gratefully acknowledges the participation and contribution provided to The panel of speakers at the Karachi FIT Initiative Launch the success of this project by the following project participants: Vincent O?Brien with Nadeem Siddiqui, Country Head for IFC Pakistan with participants www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 7 TradeBrief eBSI eBSI Weblinks for Exporters eBSI Weblinks for Exporters is a new section that will provide every issue with websites recommended by our course participants as being of particular use to them in their international Trade Activities! Websites that can be considered for inclusion in this section include but are not limited to International Trade, Trade Finance and Logistics sites such as: ? Business Networking Sites ? References or Blogs If you have a site to recommend then send it ? Import Export Directories to Weblinks for Exporters at weblinks@ebsi.ie! ? Country Portals Shippingpodcasts.com is a website providing just what the domain name says: Online Podcasts covering various aspects of Shipp world's ing, Shipping Law, recrui SITPRO is widely recognised as the tment, currencies, leading trade facilitation body. Its focus is the Clean Products and more! All provided by our friends at procedures and documentation associated with Coracle Online! international trade. Great Guides! http://www.shippingpodcasts.com http://www.sitpro.org.uk The goal of World Port Source is to be the premier Internet website of The Organization of Women in International Trade (OWIT), is a publicly accessible seaport non-profit professional organization designed to promote women information. doing business in international trade by providing networking A treasure trove of Shipping info! and educational opportunities. Their Mission is to unite women Nice Daily ?Name the Seaport? around the globe to foster international trade and the quiz. advancement of women in business. http://www.worldportsource.com http://www.owit.org Need a basic translation of a web page? Or Just a One of the most Informative websites I have found phrase from an email has you stuck? translate it on China! It has Blogs, Questions and Answers, at http://uk.babelfish.yahoo.com News, tips and lots more! Excellent! http://www.chinasuccessstories.com Xing, formerly OpenBC recently Tradeprofessional.net is a Business Ecademy is a Business bought Neurona making it one Networking Site dedicated only to Networking Site based in UK of the biggest European based International Traders and includes a trade with Large UK and US Business Networking Sites. Jobsite, Blogs, Forums, Events, groups and membership, good Remarkably high quality online Marketplace. Highly Recommended! communications tools. contacts can be made here. http://www.tradeprofessional.net http://www.ecademy.com?xref=13403 http://www.xing.com www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 8 TradeBrief eBSI Trade Practice Clinic Following on from our complete redesign of eBSI Tradebrief we have also given our Trade Practice Clinic a new look and feel. The process remains the same though, simply email us at trade_clinic@ebsi.ie to have your question considered for the next issue! Our queries this issue come from Taiwan and Bangladesh! Taipei, Taiwan Dhaka, Bangladesh Q : We have recently begun exporting from Taiwan and Q : We are exporting into the Russian market and am have been asked to arrange shipment of a container of glad to say business is growing. We are currently goods from Keelung to Sydney. As part of the conditions shipping to Moscow on a monthly basis. of the sales contract our buyer in Australia have specified that our goods should not be transhipped nor Stowed on Our problem relates to Incoterms 2000, specifically CIP Deck. Can you explain why this is so as I feel it is a Moscow. Having received payment by SWIFT transfer, rather unreasonable requirement? we shipped goods to Moscow. To obtain clearance of the goods our customer had to pay a duty surcharge. Our customer maintains that it is not their obligation to pay A : Lets take a look at each of these issues one at a this duty surcharge, but that of the exporter. time. First of all, lets get our definitions correct: We disagree! Transhipment means to transfer from one ship or We would appreciate if you could clarify who is conveyance to another for further transit. responsible for paying the duty surcharge under the Incoterm CIP Moscow (Incoterms 2000)? Deck Stowage means to stow or place cargo on board the ship on its deck rather than under its deck in a cargo A : Under CIP Moscow (Incoterms 2000), the seller hold. must: Both of these practi + Organise and pay for transport to named place Moscow. ces are less than ideal because of the + Organise Insurance with risk transferring at first carrier. additional risks they bring into the transportation of the + Pay costs including insurance cost to named place Moscow goods. In the case of transhipment there is the additional risks inherent to unloading and reloading the goods from one method of conveyance to another. Added to this are the risks attributable to holding the goods in a ports cargo yard between shipments such as the effects of weather, pilferage, accidental damage and excessive delay. Remember, the risk and responsibility transfers from In the case of Deck Stowage, the most obvious problems the seller to the buyer when the goods have been associated with this are exposure to the elements during received by the first carrier, which in this case occurred the voyage and the risk of having the goods washed at the point of departure. overboard in stormy weather! There is also a very real risk that in the event of an emergency where cargo must However, the key point and the answer you need is that be jettisoned to save the ship that your cargo stowed on import duties and all clearance formalities are a cost to deck will be the first to go!. be borne by the importer, your customer. You are right to disagree, under CIP Moscow the importer is Sometimes though, Deck Stowage will be unavoidable as responsible for the payment of any duty surcharges. your cargo may be too bulky or could pose a risk to the safety of the ship if stowed below deck. If you wished to take on the responsibility of paying the import duties and taxes for further shipments then the I notice from the details of your query that your cargo will appropriate incoterm to quote is DDP Moscow. However, be shipped in containers. In this case you need not worry if you decide to use DDP Moscow you must remember to as stowing containers on deck is common and does not factor the extra costs into the price quoted on the pro- count as Deck Stowage because the container is forma invoice. It must also be borne in mind that you considered for all intents and purposes to be part of the will be exposed to any fluctuations in the rates of duty vessel. levied at Moscow and for that matter any duty surcharges that may arise. Regards, Incoterms 2000 is an official publication of the International Chamber of Commerce Tom Grace. and is currently under revision by the ICC. Customs & Foreign Trade Specialist Regards, IBM Ireland Pavel Andrle Trade & Finance Specialist DISCLAIMER: Articles within this publication contain information, which is for guidance on matters of general interest only. There may be omissions or inaccuracies in information contained in this publication and the information is given on the understanding that it should not represent a substitute for professional consultation. Although we have made every effort to ensure the information in this publication is reliable, the electronic Business School International, GTI Learning.com and the Authors of these articles accept no responsibility for errors, omissions or adverse results obtained from using the information. The electronic Business School International, GTI Learning.com and the Authors of these articles issue no guarantee of completeness, accuracy, timeliness or results obtained from using the information. The electronic Business School International, GTI Learning.com and the Authors of these articles will therefore not be liable to you or anyone else for decisions made or actions taken in reliance on the information in this publication. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 9 TradeBrief eBSI Country Focus - Mongolia eBSI has been very active this year in Mongolia and in this issue we have decided to do our first Country Focus feature on this vast yet under-populated country, rich in mineral resources and bursting with opportunity for those willing to venture! The country has become the focus of a number of international development organisations and programmes including the EBRD Trade Facilitation Programme which is supporting trade finance in the emerging corporate banking sector in Mongolia. The beneficiary banks are Khan Bank, Xac Bank, Trade and Development Bank of Mongolia and Zoos Bank. EBRD Trade Finance Advisory services have provided a fast track option for banks in emerging markets to develop trade finance and undertake trade deals. This important Mongolian project is supported by the EBRD Mongolia Cooperation Fund. The Trade Advisory services provide hands on assistance in trade product development, operational procedures, training in trade finance risk management and guidance on structuring more complex transactions. For example, Khanbank is emerging as a leading and highly rated corporate bank in Mongolia and is seeing the benefit of the EBRD Trade Advisory Project. Barry Maddams, Deputy CEO of Khan Bank said ?the practical approach of the EBRD trade advisor is paying dividends in terms of new trade finance business being transacted which will in turn help us maximise the benefits of the EBRD Trade Facilitation Programme?. The EBRD trade advisory services are being delivered by Vincent O?Brien from Ireland who has delivered training or technical assistance in all the EBRD countries of operation. According to O?Brien ?banks such as KhanBank are well positioned to undertake trade finance - Mongolia?s trade balance is going the right way and with the increasing value of Mongolian natural resource commodities, the picture looks bright for this expansive country with it?s small but highly literate and well educated young population? Since Pictures speak a thousand words we have compiled a photo Trade Finance Workshop for Khanbank summary of some of the events eBSI has been involved in this delivered in Ulaanbaatar, Mongolia under the exciting emerging market! EBRD Trade Finance Advisory Project by Vincent O?Brien www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 10 TradeBrief eBSI Country Focus - Mongolia Mongolia Background In 1991, Mongolia started a rapid transition from central planning to a market- oriented economy. The collapse of the USSR and the socialist trading system threw the Mongolian economy into great difficulties, resulting in a sharp Basic Economic Facts depression and increasing poverty in the first half of the 1990s. At the same time, GDP: US$3.2bn (2006) US$3.9bn (2007 est) progress was made in establishing the foundations for a market economy. GDP per head: US$1,216 (2006), US$1,486 Reforms included price and trade liberalisation, the reduction of lending to state (2007 est) owned enterprises, the creation of a commercial banking system and a massive Annual Growth: 7.5% (2006); 9.9% programme of privatisation which saw the proportion of the economy in private (2007) hands rise from 4% to over 70% between 1990 and 2000. Inflation: 9% (2007) Major Industries: Mining, cashmere, The transition to democracy and a market economy continues to be difficult, but agriculture Mongolia remains committed to the process and retains donor confidence. Major trading partners: China, Russia, Progress is clearly being made and this is driven by expectations from the United States, Japan emerging mining sector based on the abundant natural resources in Mongolia. Exchange rate: (in Togrogs). EBRD in Mongolia US dollar USD 1149.19 Euro EUR 1642.77 The EBRD completed its first full year of operations in Mongolia in 2007. During Japanese yen JPY 10.55 the year, the EBRD signed six projects, all in the private sector. British pound GBP 2042.23 Russian rouble RUB 45.33 In future, the EBRD?s pipeline of potential projects in the country include Chinese yuan CNY 167.95 transactions in mining and related services, agribusiness, property, textiles, telecommunications, renewable energy, downstream petroleum, as well as in the financial sector. EBRD Trade Advisory Project for Mongolia For any emerging economy rich in natural resources the ability to develop an international trading structure is of paramount importance. Central to the development of Mongolia?s trade potential is a development of international trade finance services to international standards. The EBRD Trade Advisory Project provided direct technical assistance to four banks in Mongolia: ? KhanBank ? XacBank ? Trade and Development Bank ? ZoosBank Each Bank involved in this project went through four key stages: 1. Initiation and Evaluation Phase 2. Knowledge Transfer Phase 3. Technical Implementation Phase UCP 600 Seminar Mongolian Chamber of Commerce& Industry with project 4. Evaluation and Review beneficiaries Trade Development Bank of Mongolia, Xacbank, Zoos Bank, Khan Bank and Bank of Mongolia in attendance. The Initiation and Evaluation Phase involved the consultant in evaluation the current status and needs of each bank and developing a tight work-plan to achieve the deliverables agreed. The Knowledge Transfer Phase involved the training of selected staff within each bank in the operations and management of international trade finance services. This second phase was followed by the Technical Implementation Phase which focused on the development and implementation of best practices in international banking practices based on international rules of operation such the UCP 600 introduced globally by the International Chamber of Commerce on 1 July 2007. Product Knowledge Workshop ? Xacbank This phase also involved development of standard forms and templates to facilitate the smooth operation of international trade finance products within the emerging international trade banking sector in Mongolia. The Evaluation and Review Phase examined the impact and derived benefits from the EBRD Trade Advisory Project. The primary evidence of success in any trade advisory project is the demonstration of the development and increased transacting of international trade finance transactions using international trade finance instruments such as letters of credit and guarantees. In all four cases the benefits of the EBRD Trade Advisory Project have been clearly demonstrated. The consultant delivering this project for EBRD was Mr.Vincent O?Brien, First Director of eBSI. Zoos Bank Product Knowledge Workshop www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 11 TradeBrief eBSI Country Focus - Mongolia Mr. Barry Maddams, Deputy CEO welcomes customers to launch of KhanBank ITS Useful Websites on Mongolia Useful Websites on Mongolia Ministry of Industry and Trade Bank of Mongolia http://www.mit.pmis.gov.mn/ http://www.mongolbank.mn/ Khanbank Foreign Investment and Foreign Trade Agency http://www.khanbank.com/ (FIFTA) http://www.investmongolia.com/ Trade Development Bank of Mongolia Doing Business in Mongolia http://www.tdbm.mn/ http://www.mongoliatrade.mn/ Xac Bank Mongolian National Chamber of Commerce & Industry http://www.xacbank.mn/ http://www.mongolchamber.mn/ Zoosbank Government of Mongolia http://www.zoosbank.mn/ http://www.pmis.gov.mn/ Mongol Business Institute Mongolian Stock Exchange http://www.mbi.edu.mn/ http://www.mse.mn/index.php Mongolian Business Guide Mongolian Development Gateway http://www.mongolia-gateway.mn/index.php?newlang=english http://www.un.int/mongolia/busin.htm News about Mongolia Daily Business News on Mongolia http://www.mongoliatoday.com/ http://www.business-mongolia.com/ Xasbank/ Tuushin Workshop for Corporate Customers Zoos Bank Trade Finance Presentation to Board of Directors and Chairman www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 12 TradeBrief eBSI Expert Commentary Is the LC Available? There are a number of letter of credit issues that by the users (importers and exporters) are considered ?banking issues? ? i.e. of no real relevance for them. One of those issues is ?availability? i.e. where and up till when the letter of credit is available. This is an issue often discussed within the banking community ? and following those discussions one may in fact get the impression that this is only a banking Issue. These discussions will normally circle around the question on whether or not the nominated or advising bank is ?protected? by the letter of credit rules ? i.e. if the bank issuing the letter of credit has an independent obligation to pay or reimburse the advising or nominated bank. Expert Profile Name: Kim Christensen In these discussions there is however one element often forgotten ? and that is the Position: TF Business & Product Specialist position of the exporter; the beneficiary to the letter of credit. What the exporter is Employer: Nordea Trade Finance normally being told is that it is important that the documents are made in a way so Location: Copenhagen, Denmark that they comply with the terms and conditions of the letter of credit. There is however Specialisation: International Trade Finance another element ? equally important ? and that is where and when to present the Contact: kim.christensen@nordea.com documents ? in order to trigger the obligation of the issuing bank ? and the confirming bank ? if the credit is confirmed. The letter of credit rules (UCP 600) is quite clear in saying that a bank issuing a letter of credit is obligated to honour (i.e. pay according to the terms of the credit) provided the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation. Now ? why is that so important? Is it not always the case that the exporters bank is a ?nominated bank?? No! it is not so ? UCP 600 sub-article 6(a) states that a ??credit must state the bank with which it is available or whether it is available with any bank??. This means for example that it may be available only with the issuing bank ? and place of expiry of the letter of credit may be at the issuing bank ? i.e. often located in the country of the importer. Such structure of the letter credit has two main consequences from the perspective of the exporter: ? The exporter?s bank is not nominated to act under the letter of credit ? meaning that such bank would in most cases be reluctant to take on any kind of obligation ? like effecting prompt settlement. ? The risk of document being lost ? or just delayed ? in transit before reaching the issuing bank lies with the exporter. Or in other words: a formal presentation according to the letter of credit rules has only been made when the documents reaches the counters of the issuing bank where the letter of credit is available. The difference here compared to the situation where the exporter?s bank is nominated to act under the credit is significant. Here are the key differences: ? The obligation of the issuing bank is ?triggered? once a complying presentation is made to the nominated bank (and that bank accepts to e.g. forward the documents to the issuing bank) ? regardless if that bank has chosen to act under the credit (e.g. pay). This means also that such bank will often be prepared to offer additional services like paying the exporter before having received the funds from the issuing bank. ? The risk of documents being lost or delayed in transit lies with the issuing bank (assuming that a complying presentation has been made). For that reason it is very important that the exporter carefully checks the letter of credit to determine with which bank it is available and when and where it expires. It should also be noted that a ?.. credit available with a nominated bank is also available with the issuing bank? ? meaning that the beneficiary always has the option to present the documents directly to the issuing bank. Such option is only rarely used ? but may be convenient where for example the nominated bank is closed for force majeure reasons. In that case it is important to note that the documents must still be at the issuing bank on or before the time limits set by the credit. Issuing bank: Bank A, Italy Ending this I will share with you a real case that is not unlike many letters of credit ---------------------------------------- being issued today: 31D: Date and place of expiry In this case the credit has been structured in such a way that documents may be 080808 China delivered to a bank in China. However no bank in China is nominated to act under -------------------------- this credit ? as it is only available with the issuing bank in Italy. Such structure is not 50: Applicant in line with the UCP 600 ? and may be labeled ?ambiguous?. Chinimp, China This structure however may work well in many cases ? but from the perspective of ------------------------- the exporter it is important to observe that no formal presentation has been made 59: Beneficiary when the documents are delivered in China ? even where such delivery is timely. So for example where the documents are lost in transit between the bank in China and Itexp, Italy the bank in Italy ? that risk lies with the exporter. --------------------- 41A: Available with .. by Consequently before accepting such letter of credit the exporter should carefully Bank A by payment consider the (additional) risk elements involved ? and decide whether or not (s)he is willing to accept these risks. -------------------------------------- www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 13 TradeBrief eBSI Career Focus Give Your CV a Certified Career Boost ! Perhaps you will think I am crazy when I say this, but I believe now has never been a better time to consider a career in International Trade. What? You ask in disbelief? Is this guy crazy? Doesn't he know there's a recession out there? YES! I do, and I am sticking to my guns on this one! Let me explain why... Expert Profile Yes we are experiencing a downturn and there are less jobs out there, but in Name: Thomas Smith the area of International Trade and related fields such as Logistics, Shipping, Position: Operations Director and Trade Finance there are opportunities to be had for those who have a clear Employer: eBSI understanding of the mechanics of International Trade! Location: Kiltimagh, Ireland Specialisation: International Trade Training Picture yourself in an interview for a position in an exporting company... Contact: ts@ebsi.ie whether it be as Warehouse Supervisor, Supply Chain Assistant, Import/Export Clerk, Export Sales Executive... all these positions require a specific set of skills that have been hard to find in one place? Until Now! E-Learning, of course, overcomes this, IF you can carry out your professional development in a structured manner, and obtain internationally recognised qualifications at the end of your studies. To the relief of training managers and trade professionals both experienced and aspiring, the solution is now available through a specialised International Trade School completely focused on certified courses in International Trade, Finance, Logistics and Shipping: The electronic Business School International... they offer e-learning certifications as follows: ? Background to Shipping course from Institute of Chartered Shipbrokers UK ? Certificate in Trade Finance from the Institute of Export UK ? Certificate in Logistics from the Chartered Institute of Logistics and Transport ? Advanced Certificate in International Trade from the Institute of Export UK ? International Trade Specialist Accreditation from Institute of International Trade of Ireland ? Foundation Diploma in Shipping from the Institute of Chartered Shipbrokers UK ? Diploma in Export Operations from the Institute of International Trade of Ireland ? Advanced Diploma in Shipping from the Institute of Chartered Shipbrokers UK ? Institute of Chartered Shipbrokers Membership Exams As you can see, there are a broad range of training options and one can easily pick and choose a clear path to any number of career specialisations. From the diagram we can see that the skills offered above can be applied to a broad range of business types such as: ? Internationally Trading SME?s ? Trade Service Providers ? Exporting Multinationals ? Shipping and Logistics Firms ? Manufacturers ? Banks ? Customs Brokerages ? And export agents! Its up to you, the reader to decide what area of this exciting career you want to enter! Export Sales Career One example of an e-learning career development route would involve taking the International Trade Specialist (ITS) Accreditation programme from eBSI which leads upon completion to the Advanced Certificate in International Trade (ACIT) awarded by the Institute of Export. Further study can bring you to the Diploma in Export Operations from the Institute of International Trade of Ireland. You can even get a free Dell Laptop as part of a special course bundle covering the ITS Accreditation! www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 14 TradeBrief eBSI Career Focus UK Exemptions At present, ITS Accreditation holders are granted complete exemption from the Advance Certificate plus one Diploma subject in the Institute?s full professional examinations. This means that ITS is recognised at the level a bit beyond level 3 and HNC, and its holders will be awarded the Diploma in International Trade from the Institute of Export UK by completing the remaining 3 Diploma subjects (level 4) only. This would then qualify them for full membership of the Institute of Export UK. Institute of Export UK and City & Guilds of London Co-validation In the United Kingdom, Full Members of the Institute of Export can be assessed for the City & Guilds Licentiateship in Export Management by experience and job position, without examination, by using the ITS to satisfy the CPD requirement for the award of the Licentiateship (NVQ level 4) under the ?vocational education and experience route?. The stipulated CPD requirement for this route is 100 CPD Credits, and ITS Accreditation, as officially confirmed by the Institute of Export UK, is worth exactly 100 CPD Credits. The ITS Accreditation thus offers to mid-career executives the most time and cost effective way to getting an internationally recognised NVQ level 4 qualification in international trade. US Academic Evaluation Finally, according to US academic evaluating agencies, the credit worth of IoE Advanced Certificate and Diploma is 4 semester credits per subject. This means that the ITS Certification is worth 4 x 5 = 20 semester credits within the US academic system. Again, real progress as international institutions make a vote of confidence in the ITS Accreditation Programme. The International Trade Specialist Accreditation helps individuals and organizations move beyond simply obtaining assistance with International Trade matters from available external resources, to a level of self-sufficiency by building your own internal expertise in the area of International Trade. Flexible Role Based Learning The spectrum of courses offered by the eBSI allows inexperienced and experienced learners alike the chance to pick and choose their certified training as best meets their professional requirements at any given time. Export Sales Executives are more important than ever in Irish and UK based companies as internationally focused businesses, particularly SME's struggle to compete in a more difficult global environment. A good supply chain specialist could mean the difference between maintaining competitive position in one's core business and losing out to cheaper competitors. A good Trade & Compliance specialist can ensure cost savings throughout the international function of the exporting SME. All these roles can be achieved through the certified programmes outlined in this article, your only question really should be... which way will your heart carry you! Who's in YOUR professional network? A key element in e-learning certifications facilitated by eBSI is the synergy of networks that often takes place between participants. Because of the cross functional approach of the certifications, participants gain greater exposure to complimentary skill sets than could be the case when studying alone. A Shipping clerk working in a freight forwarder can help a small SME exporter and bring in new business for their company. A trade banker can help that shipping clerk with the correct preparation of a transport document for presentation under a documentary credit. The possibilities are limited only by your imagination and your eye for opportunity. Graduates of eBSI certifications gain lifetime membership of the eBSI Online Campus in order to ensure lifelong sharing of knowledge and also membership of an International Trade oriented Business Networking site Trade Professional.net where they can manage their professional network and develop life long relationships with fellow trade professionals. Grants and Assistance towards Training A number of Agencies and Organisations provide assistance in part funding training programmes in the areas of International Trade. For Example FAS can offer up to 50% grant aid on for participants working in SME's who wish to take the ITS Accreditation Programme. The Chambers of Commerce of Ireland can also provide support through their International Trade Skillnet. Participants from Emerging Markets can apply for grants of up to 60% depending on their personal circumstances. For more information about the certified training outlined in this article feel free to contact Thomas Smith at eBSI on Tel: +353 94 93 81444 or email ts@ebsi.ie. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 15 TradeBrief eBSI eBSI Recent Events We have been clocking up a lot of air miles while delivering seminars and attending conferences around the world, here is a brief overview of some of our more notable appearances this year! Ulaanbaatar, Mongolia A Workshop was held in Ulaanbaatar, Mongolia, on 14 June 2008 covering International Banking Practice. The workshop was organised by Tuushin International Freight Forwarding and delivered by eBSI First Director and Finance Tutor, Vincent O'Brien. Mr Vincent O?Brien with participants at Tuushin International Freight Forwarding ?International Banking Practice Workshop? Muscat, Oman A workshop was held in Muscat, Oman on 2-3 June 2008 covering International Standard Banking Practices. The 2 day workshop was organised by National Bank of Oman and delivered by eBSI First Director and Finance Tutor, Vincent O'Brien. According to M. Ramalingam Head-Trade Services at National Bank of Oman ?This was the most practical trade finance training we have ever experienced?. Vincent O?Brien with Participants of National Bank of Oman at ISBP workshop held in Muscat on 2 June 2008 Doha, Qatar A Trade Finance Workshop was held in Commercial Bank of Qatar in Doha on the 31st of May 2008 covering a broad range of trade finance issues. The workshop was delivered by eBSI First Director, Vincent O'Brien. Vincent O?Brien, eBSI Director with Participants at Trade Finance Workshop at Commercial Bank of Qatar on 31 May 2008 www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 16 TradeBrief eBSI eBSI Recent Events Dubai, United Arab Emirates A workshop was held in United Arab Bank in Dubai, United Arab Emirates on 29 May covering International Standard Banking Practices. The training was delivered by eBSI First Director and Finance Tutor, Vincent O'Brien. Vincent O?Brien, Director of eBSI with Participants at ISBP workshop with United Arab Bank UAE, held in Dubai on 29 May 2008 Amman, Jordan eBSI was joint sponsor or the first Arab Logistics and Multimodal Transport Conference which was held in Amman, Jordan on 22-23 May 2008. Conference outline can be downloaded from http://www.ebsi.ie/news/Conference12.pdf Vincent O?Brien lead a panel discussion on the latest developments in trade finance rules, trade finance processing and use of verification and authentication technology to an audience of delegates predominantly from the Middle East and from another 17 countries. Ljubljana, Slovenia A Seminar was held in Ljubljana, Slovenia on 13-14 May covering International Standard Banking Practices. The 2 day workshop, organised by ICC Slovenia, was delivered by eBSI First Director and Finance Tutor, Vincent O'Brien. Vincent O?Brien with participants at ISBP workshop in Ljubliana Slovenia www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 17 TradeBrief eBSI eBSI Recent Events Bank Asia Limited, Zonal Office, Agrabad C/A, Chittagong, Bangladesh. On 21st March, 2008 a workshop on the Transport Documents Articles of UCP-600 was delivered by eBSI and IFC FIT Initiative local tutor Mr. Md. Bakhteyer Hossain. This workshop also saw the launch of the "Documentary Credit Forum, Chittagong", comprising 35 banker members working in the Trade Finance area from 14 Banks in Chittagong. The Documentary Credit Forum, Chittagong has been established with an objective to develop Trade Finance skills among professionals at regional level. Chittagong is the main port city and Business capital of Bangladesh. This is the first time that such a forum has been formed in Bangladesh. There is no such Forum in the capital city of Dhaka. A.T.M. Nesaruddin, Senior Officer of Bank Asia Ltd., also delivered an engaging presentation on "Exclusion of Articles of UCP- 600: A Troublesome Trend". The forum generated lot of enthusiasm among Trade Finance people in Chittagong. Participants at seminar conducted by Md. Bakhteyer Hossain in Agrabad, Chittagong at the launch of the Documentary Credit Forum, Chittagong. Cox's Bazzar, Bangladesh Hotel Seagull, Cox's Bazar. On 15th March, 2008 a workshop on UCP-600 was conducted by eBSI and IFC FIT Initiative local Tutor for Bangladesh Mr. Md. Bakhteyer Hossain. Approximately 30 participants from 6 Banks in Dhaka were present at the seminar. The workshop covered the evolution, background, development & changes from UCP500 to UCP600. The new IFC-FIT Initiative launched earlier in Dhaka and Chittagong was also introduced to the participants. Participants at seminar conducted by Md. Bakhteyer Hossain in Hotel Seagull Cox's Bazzar. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 18 TradeBrief eBSI eBSI Recent Events Board Room, ICC Bangladesh Office, Dhaka, Bangladesh. On 6th March, 2008 a meeting to exchange views and tips for the upcoming CDCS exams was held at ICC Dhaka. The meeting and open house discussion was conducted by ICC Bangladesh for the CDCS Candidates from Bangladesh who were due to sit the CDCS Exam for 2008. Speakers at this event included Mr. Mahbubur Rahman, President, ICC Bangladesh, Mr. Vincent O'Brien, First Director of eBSI & member of ICC Banking Commission, Mr. Ataur Rahman, Secretary, ICC Bangladesh, Dr. Taufiq A. Chowdhury of Bangladesh Institute of Bank Management (BIBM) & Mr. Md. Bakhteyer Hossain, CDCS & International Trade Specialist (ITS). Candidates for CDCS Exams in Bangladesh discussing the exams with Vincent O'Brien and ICC Bangladesh Resource persons. Port of Spain, Trinidad & Tobago eBSI worked with the International Finance Corporation in delivering a week long Trade Finance Operations Course which was developed specifically for Latin American and Caribbean Banks from the region. eBSI Finance of International Trade Tutor, Mr. Pavel Andrle delivered the Training. Pavel Andrle with participants of the Trade Finance course in Trinidad. Certificate in Finance of International Trade Learn all you need to know about Methods of Payment & Finance! ? Online Tutorials with ICC Banking Commission Members Contact us for more details: ? Certified by the Institute of Export UK The electronic Business School International ? Includes ICC Online Training in UCP 600 Tel: +353 94 9381444 Fax: +353 94 9381708 ? Recognised by International Finance Corporation Web: http://www.ebsi.ie Email: info@ebsi.ie www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 19 TradeBrief eBSI China Systems Trade Tutorial Incoterms 2000 ? Forewarned is forearmed! With the revision process now underway for the next edition of Incoterms, Mark Zeller in South Africa reviews some of the pitfalls of underestimating the importance of the current set of International Commercial Terms, more commonly known as INCOTERMS 2000. Expert Profile Name: Mark Zeller Most readers who are involved in international sales will have been asked for a Position: Customs Consultant pro forma invoice at one stage or another quoting EXWorks, FOB, CIF or DDP Employer: Self employed prices; to name but a few. But what are these mysterious codes for, and what Location: Durban, South Africa are the real implications of their use in international sales contracts? Specialisation: African Customs Regulations Contact: SouthAfrica@ebsi.ie First of all, lets get our definitions correct. The word 'INCOTERM' is an abbreviation of ?International Commercial Term? and the chosen INCOTERM is a term of the contract of sale. The International Chamber of Commerce (ICC) created INCOTERMS in 1936. Since then, this set of international commercial terms has undergone revisions in 1953, 1967, 1976, 1980, 1990 and the latest revision was brought out in 2000. The ICC has now set to work, through the establishment of the ICC Taskforce on Incoterms, Chaired by Charles Welcome to our new Debattista (Professor of Commercial Law, University of Southampton) on series of Technical Trade bringing these essential trade terms up to date within the context of our Articles sponsored by changed trading environment. China Systems! http://www.chinasystems.com Incoterms enable the contracting parties to set out clearly and concisely the extent of their respective obligations, and above all, the moment when costs and risks are transferred from the exporter to the importer. In Incoterms 2000, the parties define the point to which the exporter is responsible for the goods and what are the expenses relating to his obligations which will therefore have to be included in the price offered by the exporter. Identification of these responsibilities and costs is made clear when the point of handover of risks - always a physical location - is effectively decided upon by the buyer and seller. As a general rule (there are exceptions as we will see later) all risks and responsibilities that the cargo might be subject to prior to the cargo?s arrival at the agreed and named place are the concern of the seller. All risks and responsibilities that the cargo might be subject to after the cargo?s arrival at the agreed and named place are the concern of the buyer. INCOTERMS 2000 are like shorthand - a series of expressions that buyers and sellers will communicate in and understand regardless of their home language. The system of expressing Commercial Terms as a universally understandable set of codes allows buyers and sellers, who may not share the same language, to establish their individual responsibilities to the other party clearly ? thereby avoiding dispute as best as possible. Even when the actual spoken language used by the buyer and seller is the same, using a set standard for Commercial Terms minimizes the possibility of misunderstanding. It is important to realize that, while these are available to use in any sales situation, they are by no means universally enforced. Traders therefore have the freedom to engage in trade without using INCOTERMS. The impact of this freedom of practice results in assumptions and misunderstandings using similar expressions. These lead to lengthy, unwanted disputes. Of further importance, the prudent trader needs to recognise that INCOTERMS cannot deal with everything. They therefore need to be used in conjunction with the International Contract of Sale ? possibly mentioned more than any other document within the text of INCOTERMS 2000 and yet arguably one of the most underused documents in trade today. Another prominent exclusion is the issue of ownership or title ? the moment of transfer of title must be clearly established within the International Contract of Sale, as this is not within the scope of INCOTERMS 2000. Usage Any tool can be used correctly or incorrectly. In order to use INCOTERMS 2000 effectively, and enjoy the recognition of an International body such as the ICC, these codes need to be used according to their individual design. Incorrect usage can actually work against the trader and/or service provider, because they may have disregarded a particular term's spirit and should have either used it in a different way, or changed their term altogether. An obvious example of this is using a mono-modal term for a multi- modal shipment. Should they fall into dispute, traders may risk the exposure of judgment against them in a court of law, as the term has not been properly utilised. www.ebsi.ie ELECTRONIC BUSINESS SCHOOL INTERNATIONAL 20 TradeBrief eBSI eBSI Tutorial In practice Another case in point was described by an eBSI graduate in the Czech Republic in relation to a shipment to Moscow under the CIP INCOTERM. Under INCOTERMS 2000, ICC Publication 560, CIP means CARRIAGE AND INSURANCE PAID TO (... named place of destination). Under the case in question the shipment had been loaded on a truck in Prague, Czech Republic, but had been stopped and stolen just prior to arrival to Moscow, its named place of destination. The buyer in Russia refused to pay for the goods claiming that the Czech Exporter had not fulfilled their delivery obligation under INCOTERMS 2000. However, upon closer examination of the wording of the CIP INCOTERM, the Czech Exporter was able to clearly establish to his buyer that his delivery obl
Posted: 21 September 2011, last updated 22 September 2011

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