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Traditionally,theimportandexportpracticeortheinternationaltradebusinessconfinestotheimportandexportofgoods.However,intheUruguayRoundoftheGeneralAgreementonTariffsandTradestartingfrom1986,thetraditionaldefinitionofinternationaltradeisforthefirsttimeextendedtotheimportandexportoftechnologiesandservicesonaccountofthedevelopmentoftheinternationaleconomicexchange.Uptonow,manycountrieshaveacceptedthenewdefinition.Inourcountry,thenewdefinitionhasbeenadoptedintolaw.ForeignTradeLawofthePeople’sRepublicofChinaadoptedattheSeventhSessionoftheStandingCommitteeoftheEighthNationalPeople’sCongressonMay12,1994definesintheArticle2that“ForthepurposesofthisLaw,foreigntradereferstoimportandexportofgoodsandtechnologiesandtheinternationaltradeinservices.”
1.3WhatAreCharacteristicofInternationalTradeinGoods?
Theinternationaltradeismoreorlessthesamewiththedomestictradeinthatarebothessentiallycommercialactivitieswiththesamepurposeofsaleandpurchaseofgoodswhicharerestrictedbytherulesofeconomics.Buttheydifferfromeachotherinthefollowingaspects:
First,sincetheinternationaltradeisdonebetweentwocountries,itislikelytobeaffectedbytheforeigntradepolicy,trademeasuresandforeignexchangecontrolofthecountriesconcerned.Naturally,itismoredifficulttodointernationaltradebusiness.
Second,thetradebusinessbetweentwocountriescertainlyinvolvestheproblemofapplicationofrelatedtradelawandregulationsofdifferentcountrieswhichgivesrisetothediscrepanciesandconflictsbetweentwolegalsystemsandpractices.Infact,theapplicationoflawsforthepretectionofinternationaltradeismorecomplicatedthanwecanimagine.
Moreover,boththequantitiesandsumsoftheinternationaltradeingoodsareusuallylargerthanthoseofthedomestictrade.Thereisalwaysalongtimespanbetweenthesigningofacontractcircumstances,thereexistsinevitablygreaterriskininternationaltrade.
Finally,theturbulenceofinternationalsituationandthechangeofmarketconditionsoftenresultintradedisputes.Whatismore,thefrequentfluctuationofforeignexchangeratesintheworld,therisingandfallingofgoodspricesintheinternationalmarket,andtheoccurrenceofeconomicandfinancialcrisisalladdgreatlytothedifficultyandriskininternationaltrade.
1.4WhatAretheBasicProceduresofImportandExportBusiness?
Infact,thebasicproceduresoftheimportandexportbusinessmaybesummedupinthefollowingthreestages,namely,preparationforimportandexport,negotiationoftermsandconditionsfortheformationofacontract,andfulfilmentofacontract.
1.4.1PreparationofImportandExport
Firstofall,themarketsurveyisawaytocollectsomerelatedinformationabouttheinternationalmarketsoastostudyandpredictitsfuturemovement,allofwhicharethenecessarybasisforcorrectdecisions.Ininternationaltradebusiness,themarketsurveyusuallyfocusesonthespecificimportingcountrywithregardtoitspoliticalandeconomicconditions,itsforeignpolicyandtradepolicy,itsprincipletradingcountries,itsusualexportingandimportingcommodities,etc.Themarketsurveyalsoaimsatthetargetmarketconditionsoftheimportingcountryingeneral,therelatedproductsinparticular,especiallythevarieties,styles,qualities,packing,etc.Meanwhile,themarketsurveyshouldtrytodiscovertheprospectiveclients.
Second,theregisteringoftrademarkisveryimportant,ifacompanyhasnotregisteredthetrademarkinthecountry,itwouldlosethemarketinthecountry.
Third,theadvertisingisanimportantwayinthepromotionofproducts.Ifitisproperlyused,advertisingwilleffectivelyinfluencethebuyingdecisionsofclientsintheimportingcountry.Theusualmeansofadvertisingincludesnewspapers,magazines,TV,radiobroadcast,brochure,etc.
Moreover,thepricingismadeonthebasisofthemarketsurvey.Itdirectlyaffectstheprofitoftheexporter.Whataretakenintoconsiderationwhenmakingpricingarethedemandofthetargetmarket,theadvantagesanddisadvantagesoftheexportingproducts,andcostaccounting,etc.
Furthermore,butnottheleast,insomebusiness,theexportermayberequiredtoapplyforanexportinglicenseoraquotaaccordingtotheregulationsofourcountry.Itistheexporter‘sdutytoobtaintheexportinglicenseorthequotabeforethenegotiationoftradetermsandconditions.
Lastcontactingclientstoestablishastablesalenetworkisaboveallimportanttoanexporter.Areliableclientwithconnectionsinhiscountryisasurewayofminimizingrisksandmaximizingprofits.Whencontactingaclientforbusinessforthefirsttime,however,itisalwaysadvisabletotakeapolicyofcaution.Theexporterneedstogetsuchnecessaryinformationabouttheclientasreputation,credit,financialstatusandbusinessmode,etc.beforeconcludingatransaction,especiallyonethatinvolvesalargesumofmoney.
1.5WhatAretheGeneralContentsofanInternationalContractforSaleofGoods?
Aninternationalcontractforsaleofgoodsisaformalwrittenagreementmadebetweentwoormorepartiesofdifferentcountriesforthepurposeofpurchaseandsaleofgoods.Toensurebothparties’fulfillmentofcontractualobligations,aninternationalcontractforsaleofgoodsusuallycoversthefollowingcontents:
i.Title
ii.Preamble:
Contractdate,place,partiesconcerned
iii.Nameofcommodity
iv.Qualityclause:
themethodandstandardbywhichtodeterminethequality,thetimeandplacetodeterminethequality,andtoleranceclause,etc.
v.Quantityclause:
theunitofmeasurement,theplaceandtimetodelivertheagreedquantity,calculationofweight,andmoreorlessclause,etc.
vi.Packingclause:
innerpacking,outerpacking,liningmaterial,packingmeasurement,weightandmarking,etc.
vii.Priceclause:
thetermsofprice,thecurrencyused,commissionanddiscount,etc.
viii.Paymentclause:
time,terms,currencyforpayment,andstipulationsfordeferment,anddishonor,etc.
ix.Shipmentanddelivery:
place,time,mode,ofshipmentanddelivery,and
shippingadvice,etc.
x.Insuranceclause:
insurant,conditions,theinsuredamountandplacefor
claim,etc.
xi.Inspectionclause:
placeofinspection,standard,andtheauthorized
inspectioninstitution,etc.
xii.Claimclause:
validityofclaim,andclaimcertificate,etc.
xiii.Arbitrationclause:
locationofarbitration,applicablearbitralrulesof
procedure,theorganizationofarbitration,etc.
xiv.ForceMajeureclause:
scopeofforcemajeureaccidents,timeandmeans
ofnotification,certifiedstatement,reportsand
documents,theescapeclause,etc.
xv.Breachandcancellationofcontractclause:
settlementofbreach,thecompensationamount,
etc.
xvi.Applicablelaws
xvii.Miscellaneousclause
xviii.Witnessclause:
signaturesofthepartiesconcerned,etc.
1.6WhatLawsAreApplicabletoInternationalsalesContract?
1.6.1DomesticLaws
Domesticlawsaremadebythelegislativebodyofacountryandareeffectivewithinthatcountryonly.TheContractLawofourcountry,adoptedattheSecondSessionoftheNinthNationalPeople’sCongressonMarch15,1999,specifiesintheArticle126that“Thepartiestoacontractinvolvingforeigninterestsmaychoosethelawapplicabletothesettlementoftheircontractdisputes,exceptasotherwisestipulatedbylaw.Ifthepartiestoacontractinvolvingforeigninteresthavenotmadeachoice,thelawofthecountrytowhichthecontractismostcloselyconnectedshallbeapplied.”Therefore,usuallybothpartiestoacontractmaychooseeitherthelawoftheexportingcountryortheimportingcountry,orthatofathirdcountry.Ifbothpartiestoacontractagreetochoosetobegovernedbythelawofacertaincounty,thenthecontractshouldstipulateitclearly.
1.6.2InternationalTradePractice
Internationaltradepracticeisalsoknownasinternationalcommercialpractice.Itisamongthemostimportantlegalrulesthatapplytotheinternationaltradeingoods.Itiscomposedofgeneralprovisions,normsandrulesprescribedbysomeinternationalorganizationsandcommercialgroups.
Infact,theinternationaltradepracticeisknowntobusinesspeopleofmostcountriesintheworldandisgenerallyacceptedbythemintheirbusiness.AmongthetradepracticewidelyinusetodayareIncoterms(ICCPublicationNo.560),UniformCustomsandPracticeforDocumentaryCredits(ICCPublicationNo.600),andUniformRulesofCollection(ICCPublicationNo.522),allprescribedbyInternationalChamberofCommerce(ICC).
Strictlyspeaking,however,theinternationaltradepracticeisnotlawandithasnobindingforceuponthepartiestoacontractunlessthecontractsti