Unit 1 Introduction
1.Unit Points 2. Information
3. Language Tips
4. Reading Practice
5. Exercises & Keys
Objectives Preview Case
After reading this unit, you will understand ★The importance of foreign trade to a nation ★In a general way China’s foreign trade ★The main process of export and import ★In a general way the relevant laws and regulations in international trade ★The organizations involved in export and import ★Basic requirements for the work of import and export
BEIJING, July 6，2009 (Xinhua) — The Bank of China (BOC), China’s largest foreign exchange bank, announced Monday that it had transacted the first cross-border yuan trade settlement deal Monday morning. The BOC said its Shanghai branch had received the first cross-border yuan trade settlement deal from the BOC (Hong Kong) Monday. The payee was Shanghai Electric International Economic and Trading Co. Ltd., a subsidiary company of Shanghai Electric Group Co. Ltd., and the remitter was the company’s business partner in Hong Kong，said the Beijing-based BOC in a statement on its Web site Monday. China’s State Council, or Cabinet, announced in April this year a pilot program to allow exporters and importers in Shanghai, and southern Guangzhou, Shenzhen, Zhuhai and Dongguan cities to settle cross-border trade deals in Renminbi(RMB), or yuan.
? cross-border yuan trade settlement 人民币跨境结算 ? 中国银行本周一宣布已于当日清晨完成首笔跨境贸易人民币结算业务 ，该行是中国最大的外汇银行。 ? 所谓跨境贸易人民币结算，是指经国家允许指定的、有条件的企业在 自愿的基础上以人民币进行跨境贸易的结算，商业银行在人民银行规 定的政策范围内，可直接为企业提供跨境贸易人民币相关结算服务。 ? 国务院常务会议于2009年4月8日决定，在上海市和广东省内四城市 开展跨境贸易人民币结算试点(the trials of settling cross-border trade accounts in RMB)。中国国务院总理温家宝8日主持召开国务院常务 会议，会议决定在上海市和广东省内四城市开展跨境贸易人民币结算 试点。2010年已经扩大到20多个省市 ? 收款人是上海电气国际经济贸易公司 ? Subsidiary company 子公司 ? State Council 国务院
1.1 The Importance of Foreign Trade for a Nation 1.2 A View on China’s Foreign Trade 1.3 The Classification of International Trade 1.4 The Analysis of Foreign Trade for a Nation 1.5 International Organizations Involved in International Trade 1.6 Export Procedures 1.7 Laws and Regulations Governing International Trade 1.8 The Aim of the Course
?1.1 The Importance of Foreign Trade for a Nation Foreign Trade
the exchange of commodities or services between one nation or area with other nations or areas.
Why do countries trade?
Countries engage in international trade f
or the following reasons: 1. Resources Reasons,
eg. Natural resources High technology and Capital resources Human resources
2. Economic Reasons eg. Comparative advantage
3. Political Reasons
In these cases, political objectives outweighed economic considerations. eg. Former Soviet Union and Cuba.
The Importance of Foreign Trade for a Nation Foreign trade is of great importance to a nation for three reasons. Economic Growth Foreign trade can create jobs; Nations can gain more market share on its exported goods and take advantage of economies of scale. higher living standards Cheaper Goods or Services; greater variety Competitiveness Competition with foreign companies brings long-term improvement in industrial competitiveness.
1.2 A View on China’s Foreign Trade
Since 1978, China has seen steady growth in its foreign trade.
Historical data of intl trade
On the encouraging side of things: In1980: less than 1% ranked 32 in the world In 2008: more than 8% ranked third in the world In 2008: industrial finished goods 94.6% of total export volume primary goods 5.4% In 1980: primary goods 50.3%. On the less encouraging side of things The export mix needs further optimization. China’s control over its export is still relatively weak. Target export markets are restricted.
1.3 The Classification of International Trade
1. International trade and foreign trade 2. Visible trade and invisible trade cars, wines, shoes; shipping, education, International cargo transportation insurance 3. Export and import two sides of the same transaction 4. Direct trade and indirect trade whether involving a third nation or country
1.4 The Analysis of Foreign Trade for a Nation
1. Scale of a nation’s foreign trade
2. Export mix发达国家对外贸易商品结构是以进
口初级产品、出口工业制成品为主；发展中国 家对外贸易商品结构的特征是以出口初级产品、 进口工业制成品为主。要了解国际上一个国家 的经济实力、科学技术水平，通常都要查看该 国的对外贸易出口商品结构
3. The geographic distribution of exports 4. Foreign trade policy
1.5 International Organizations Involved in International Trade
To help international trade develop smoothly and normally, quite a few organizations were set up. They include the World Trade Organization (WTO), the International Chamber of Commerce (ICC), the United Nations Conference on Trade & Development (UNCTAD), the International Monetary Fund (IMF) and the World Bank Group (WB). 1.World Trade Organization(WTO) According to the website of the WTO, “The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal of the WTO agreements is to help producers of goods and services, exporters, and importers conduct their business.”
For more imformation,please visit the official website of WTO:(http://www.wto.org/) Do you know the following about the WTO? Location: Geneva, Switzerland Established in: January, 1995 Created by: The Uruguay Round Negotiations Membership: 153 members on 23 July,2008
?ICC 《国际商会国际贸易术语解释通则》 Incoterms 2010 《托收统一规则》 URC522 《跟单信用证统一惯例》UCP600 ICC International Court of Arbitration
?UNCTAD 联合国贸易和发展会议 Generalized System of Preferences
1.6 Export procedures
?The preparation of a transaction ?The negotiation of the contract ?The performance of the contract
1.6.1 The preparation of a transaction
?Selecting the right market
? Relevant information of the market
? ? ? ? Cultural background and economic situations Political climate Current import and export statistics Government policy on international trade such as trade barriers and restrictions
? Sources of information
? Domestic organizations: Ministry of Commerce and its provincial committees ? Overseas organizations: Chinese Embassy, the Local banks, the agent and the local newspaper / journal articles
1.6.1 The preparation of a transaction
?Finding the potential partner
? Sources of information
? ? ? ? ? ? Reference provided by the foreign partners The nearest consulate office(领事馆) International or local chamber of commerce Consulting firms Foreign exchange banks Trade directories and publications
1.6.1 The preparation of a transaction
?Studying creditability of the partner
Credit reference from ? the local bank or correspondent bank（代理行） ? business range and annual sales volume ? sales literature and pricelists ? major customers ? business culture
1.6.1 The preparation of a transaction
?Applying for Export or Import License
? Checking whether the goods to be transacted are within certain export or import controls such as license or quota
1.6.2 The negotiation of a sales contract
?Two forms of business negotiation
? in words, i.e. face-to-face negotiation ? in writing, i.e. business correspondence
?Four main steps involved:
? Enquiry: asking for price by either seller or buyer ? Offer:
? an answer to enquiry or initiated by either seller or buyer ? binding force upon the offerer within the validity
? counter-offer: addition, modification or refusal of the offer ? Acceptance:
? the unconditional acceptance of the offer ? A contract is concluded when an acceptance becomes effective
1.6.3 The performance of the contract
?Export procedure (business under CIF on L/C)
? Examining L/C
? Urging and expediting the opening of L/C ? Examining L/C with reference to the sales contract
? Getting goods ready
? preparing goods according to the name, quality, quantity, packing and making required in the contract
? Applying for mandatory inspection
? For goods required inspection by the governmen
ts or in the contract ? Documents Submitted: commercial invoice, copy of sales contract, L/C, etc.
? Receiving importer’s inspection before shipment ? Booking shipping space after receiving L/C and getting goods ready ? Clearing goods for export
? After the goods are inspected and before the goods are loaded ? Documents submitted for export customs clearance: commercial invoice, export license, copy of sales contract, inspection certificates, shipping order, etc.
? Getting goods loaded
? Delivering goods to carrier for loading after the goods are cleared for export ? Receiving B/L from the carrier after shipment
? Obtaining insurance
? Under CIF, insurance is a must for seller ? Minimum coverage
? Presenting documents for bank negotiation
? Documents required for negotiation
– commercial invoice, packing list, billing of lading, insurance policy, inspection certificates, etc. – Other documents required for issuing import license or to calculating import customs duty: the Certificate of Origin, the Consular Invoice, etc.
? If documents are in strict line with L/C, the exporter will receive payments from the bank
Selecting the right market Finding the potential partners Studying customer creditability
1.4 Export Procedures
Applying for export license
Enquiry Acceptance (contract)
Offer Negotiation Stage Counter-offer
Getting goods ready Applying for mandatory inspection
Booking shipping space Clearing goods for export Loading and getting B/L
Commercial invoice, packing list
Receiving buyer’s inspection
Presenting documents for bank negotiation
Lodging claim in case of disputes Disputes Settlement Stage Settling disputes (negotiation, mediation, arbitration or litigation) Figure 1.1 Flowchart of Export Procedure
Bill of lading
Letter of credit
1.7 Laws and Regulations Governing International Trade
Doing international business is just like playing games with people from all around the world. To insure the play fair and smooth, a set of rules and laws must be in place. With hundreds of years’ development, quite a few rules and laws have come into being to regulate and administer the transactions of international trade. 1.The United Nations Convention on Contracts for the International Sale of Goods (CISG) The United Nations Convention on Contracts for the International Sale of Goods is a treaty offering a uniform international sales law that, as of July 2008, had been ratified by 71 countries that account for a significant proportion of world trade, making it one of the most successful international uniform laws. Japan is the most recent state to have ratified the Convention. The CISG allows exporters to avoid choice of law issues as the CISG offers “accepted substantive rules on which contracting parties, courts, and arbi
trators may rely”. The CISG was developed by the United Nations Commission on International Trade Law (UNCITRAL) and was signed in Vienna in 1980. It came into force as a multilateral treaty on 1 January, 1988. after being ratified by eleven countries. Countries that have ratified the CISG are referred to within the treaty as “Contracting States”. Unless excluded by the express terms of a contract, the CISG is deemed to be incorporated into (and supplant) any otherwise applicable
1.8 The Aim of the Course
The aim of this course is to give the students training in three aspects: language, knowledge and skills required for the practice of international trade. Language Knowledge Skills
1.Knowledge After learning this course, students will be-well equipped with knowledge in the following areas: commodity name; quality and quantity of goods; packing of goods; price terms; cargo transport and insurance in international trade practice; payment in international trade; commodity inspection; claim and arbitration and the negotiation and performance of contracts. The knowledge will give the students a clear picture about the process of international trade practice and help them think and solve problems in a systematic way. 2.Language In international trade, most communications, either written or oral, are done in English. English is becoming increasingly important for a student who wants to develop a career in the field of foreign trade. The English used in international trade is quite different from the English used in daily life. English in international trade practice has its own vocabulary, grammar, style and format. Only through use can a student improve his/her ability to communicate in English in different international trade settings. 3.Skills The practical skills needed in international trade practice include: the skills of negotiation; problem analysis and solving; communicating orally and in writing effectively; preparing various documents required for the transaction and skills for the management of risks.
? Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and nonphysical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. ? Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading fo
r other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions’ size allows for the benefits of mass production. As such, trade at market-prices between locations benefits both locations. ? Trading can also refer to the action performed by traders and other market agents in the financial markets.
governments intervene in the market through price adjustments and supply restrictions. Such government interventions can increase as well as decrease the cost of goods and services to both consumers and producers. Interventions include subsidies, taxes and tariffs, non-tariff barriers, such as regulatory legislation and quotas, and even inter-government managed trade agreements such as the North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA) (contrary to their formal titles) and any governmental market intervention resulting in artificial prices. Most states conduct trade polices that are to a lesser or greater degree protectionist. One ubiquitous protectionist policy employed by states comes in the form of agricultural subsidies whereby countries attempt to protect their agricultural industries from outside competition by creating artificial low prices for their agricultural goods. Free trade agreements are a key element of customs unions and free trade areas. The details and differences of these agreements are covered in their respective articles.
1. be true of适用于，符合于 eg: Possibly the same is true of social work. eg: Parents of young children often become depressed, and this is especially true of single parents. 2.International Trade 国际贸易 International trade is the exchange of commodities or services between different nations. Foreign trade is the exchange of goods or services between one nation or area with other nations or areas. All foreign trades together form international trade. 3. account for 占有，占?百分比;说明〔解释〕?原因，证明; 负有? 责任 eg: Students account for the vast majority of our customers. In Florida, senior citizens account for more than 25 percent of the population. 4. Export Mix 出口商品结构
Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Then trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing the factor of production a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor. An example is the import of labor-intensi
ve goods by the United States from China. Instead of importing Chinese labor the United States is importing goods from China that were produced with Chinese labor. International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.
5.Exercises & Keys
Ⅰ. Translate the following institution names into Chinese and
explain their basics to your classmates in your own words.
1. World Trade Organization ________________ 世界贸易组织 2. International Chamber of Commerce ________________ 国际商会 3. United Nations Conference on Trade & Development ________________ 联合国贸易和发展会议 4. World Bank ________________ 世界银行 5.International Monetary Funds ________________ 国际货币基金组织 6. The Ministry of Commerce of the People’s Republic of China _______________ 中华人民共和国商务部 7. The China Council for the Promotion of International Trade _______________ 中国国际贸易促进委员会 8. General Administration of Customs of the People’s Republic of China _______________ 中华人民共和国海关总署 9. General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China 国家质量监督检验检疫总局 ________________
Ⅱ. Judge whether the following statements are
true (T) or false (F) through your research and share your opinion with your classmates.
1.China is now the biggest country in the world in terms of export and import volume（F ）. 2.According to Factor-Proportion Theory, China shall only produce labor intensive products（T ）. 3.GSP tariff rate is the lowest compared with MFN Tariff Rate and General Tariff Rate（ T ）. 4.Incoterms 2000 specify all the obligations of the seller and the buyer in a trade transaction（ F ）. 5.Most of the international transactions are paid by letter of credit （ F ）.
THE FACTOR-PROPORTIONS THEORY:
?The theory holds that a country will tend to export products that utilize factors of production relatively abundant in that nation. ?根据要素禀赋论(要素比例学说)，一国的比较优 势产品是应出口的产品，是它需在生产上密集使 用该国相对充裕而便宜的生产要素生产的产品， 而进口的产品是它需在生产上密集使用该国相对 稀缺而昂贵的生产要素生产的产品。简言之，劳 动丰富的国家出口劳动密集型商品，而进口资本 密集型商品；相反，资本丰富的国家出口资本密 集型商品，进口劳动密集型商品。
?In countries with many people relative to the size of the available land, labor would be relatively (comparatively) cheap; thus those countries should concentrate on producing and exporting labor-intensive goods.
?ICC 是国际商会的英文名称缩写，是为全球 商业服务的组织，是世界上重要的民间经贸 组织，
成立于1919年，总部设在巴黎。其宗 旨是：在经济和法律领域里，以有效的行动 促进国际贸易和投资的发展。其工作方式为 ：制定国际经贸领域的规则、惯例并向全世 界商界推广；与各国政府及国际组织对话， 以求创造一个有利于自由企业、自由贸易、 自由竞争的国际环境；促进会员之间的经贸 合作，并向全世界商界提供实际的服务。
? 随着国际贸易的发展，信用证方式逐渐成为国际贸易中通 常使用的一种支付方式。但是因为缺乏统一的解释和公认 的准则，争议和纠纷经常发生。国际商会为了减少因解释 和习惯不用引起的争端，制定了《商业跟单信用证统一惯 例》 ? 目前最新的是2007年修订本《商会第600号出版物》简称 UCP600 ? 虽然《UCP600》是国际惯例，获得了世界范围内的普遍 采用，但是它不具有强制性，只有在当事人同意适用时， 才对当事人又约束力。一般在信用证中注明“按UCP600 办理”，如This credit is subject to Uniform Customs and Practice for Documentary Credits 1993 Revision, ICC Publication No.600.
?特惠税率（Preferential Duties）、普惠税 率(GSP Tariff rate) 、最惠国税率(MostFavored-Nation Tariff Rate) 、普通税率 (General Tariff Rate )
Do a research on the foreign trade condition of the city/area where you are studying and write a report of no less than 500 words to cover your findings. You may work by yourself or with other students to accomplish this project. Your research may include some or all of the following: 1.the foreign trade volume of the city/area; 2.the main target markets for the export; 3.the main categories of goods for export and import; 4.the advantages and disadvantages of the export; 5.the main companies involved in export and import. Your report shall meet the following requirements: 1.the data and facts shall be true and real; 2.the reasoning process is logic; 3.the conclusion shall be reasonable; 4.the sources of information for reference shall be indicated; 5.English shall be the report language.
Assessment criteria for reference:
Team work (if any) Research method and preparation