International trade terms, also known as price terms, are specialized terms used to divide the costs, risks and responsibilities that the buyer and seller should bear, so as to determine the respective obligations of both parties in the process of delivery and receipt of goods.
International trade business includes procedures such as loading and unloading goods, insuring cargo transportation insurance, customs declaration, tax payment, etc., and freight, insurance premiums, loading and unloading fees and other fees must be paid. At the same time, during the transportation and loading and unloading process, goods may also encounter natural disasters, accidents and various external risks. When negotiating transactions and signing contracts, the buyer and seller must clearly stipulate who will handle these matters, who will pay the fees, and who will bear the risks. However, if so many responsibilities, costs and risk divisions are discussed for each transaction, it will inevitably increase the cost of fast trade. Therefore, there are specialized trade terms that are unified internationally and expressed in simple letter combinations. As long as the two parties to the transaction negotiate and determine which trade term to use, the responsibilities, costs and risks that each party to the transaction bears are basically clarified, without having to discuss many specific details in detail.
International Rules for the Interpretation of Trade Terms
Some international organizations have formulated different international trade terms, among which the most influential and widely used is the International Rules for the Interpretation of Trade Terms (INCOTERMS) formulated by the International Chamber of Commerce. Its latest version is the 2010 revision, referred to as INCOTERMS2010 or 2010. The 2010 Rules is an international practice, not a legal provision, and has no binding force. If the buyer and seller stipulate in the trade contract that they are bound by it, then its various provisions are binding on both parties.
In my country’s foreign trade, the most frequently used main trade terms are FOB, CFR and CIF.