In the broad arena of international trade, the conclusion of each transaction requires a complex and sophisticated system of rules. These rules relate not only to the price and quality of goods, but also to the conditions of delivery, allocation of liability and risk taking. In this case, the trade term (trade terms) is like a key that opens the door to understanding and consensus between buyers and sellers. This issue will give you details of common international trade terms。
Definition of trade terms
Trade terms (trade terms) are also known as price terms (price terms) and are derived from long-standing international trade practice and are used to describe the composition of the traded price and the terms of delivery, as well as to define the specific terms of risk, liability, cost division between buyers and sellers。
Role of trade terms
In short, trade terms have the main effect of simplifying transaction procedures, clarifying the terms of transactions, reducing transaction disputes and promoting the development of international trade。
Classification of trade terms
There are currently 11 trade terms commonly used, and the incoterms for the interpretation of international trade, adopted by the international chamber of commerce in 2020, divides trade terms into two broad categories, as shown in figure 1。
Figure 1 classification of trade terms
In order to make it easier for all to identify and distinguish between the 11 trade terms that are commonly used, the following is a detailed explanation of some commonly used trade terms, as shown in figure 2。
Figure 2 detailed analysis of trade terms
There are currently 11 specific types of international trade terms in incoterms 2023, and customs currently has seven types of transactional codes, four of which are commonly used. The correspondence between the two:
Figure 3 counterpart to trade terms
International trade terms and clearance processes are important components of the international trade framework, which are mutually reinforcing and have an irreplaceable role to play in facilitating the smooth conduct of global trade. In-depth understanding and rational use of these terms not only help enterprises effectively manage risks in the course of international trade, but also improve transaction efficiency and reduce costs, thus gaining an advantage in fierce market competition。
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