Incoterms© (International Commercial Terms) are devised by the International Chamber of

Commerce in Paris and observed by the most important trading nations.

CIF READS, “The seller delivers the goods on board the vessel or procures the goods already so
delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named
port of destination. The seller is also responsible for insuring the goods to cover the risk of loss or
damage during carriage. Further insurance beyond the required minimums must be agreed upon
between the buying and selling parties, or must be arranged for separately by the buyer. It is also
important to note that the term applies only to sea and inland waterway transport."

Ex works (EXW)

By using the “ex works” (EXW) term, the seller minimizes his risk, since the goods are made
available at his factory or place of business. The seller (exporter) makes the goods available to the
buyer (importer) at the seller’s business premises.

Free alongside ship (FAS)

The seller transports the goods from his place of business, clears the goods for export and places them
alongside the ship at the named port, where title and risk of loss transfer to the buyer. Unless
otherwise agreed, the buyer is responsible both for loading the goods onto the ship and for paying all
costs incurred for shipping the goods to the destination port.

Free carrier (FCA)

The seller (exporter) clears the goods for export and hands them over to the carrier at the place
designated by the buyer. If the place chosen by the buyer is the seller’s place of business, the seller
must load the goods onto the transport vehicle, otherwise the buyer himself is responsible for loading
the goods.

Free on board (FOB)

The seller (exporter) is responsible for transporting the goods from his place of business to the named
port, loading onto the ship and clearing the goods for Customs in the exporting country. As soon as
the goods are on the ship, title and risk of loss pass to the buyer (importer). From this point the buyer
is responsible for all carriage and insurance costs and must also clear the goods through Customs in
the importing country.

Cost and freight (CFR)

The seller (exporter) is responsible for transporting the goods from his place of business to the named
port, loading onto the ship, clearing the goods for Customs in the exporting country and paying
international freight costs. The buyer assumes the title and risk of loss as soon as the goods are on the
ship. From this juncture the buyer must provide insurance cover and bear the costs of unloading,
Customs clearance in the importing country and carriage of the goods to the named destination

Cost, insurance, freight (CFR)

The “cost, insurance, freight” (CIF) Incoterm can only be used if at least part of international carriage
of the goods is by water. The seller (exporter) is responsible for transporting the goods from his place
of business to the named port, loading onto the ship, clearing the goods for Customs in the exporting
country and paying international freight costs and must also bear the corresponding carriage insurance
in favour of the buyer (importer). Title transfers when the goods are on the ship.

Carriage paid to (CPT)

The seller (exporter) clears the goods for export, hands them over to the carrier and is responsible for
the cost of carriage to the named destination. The transfer of title takes place on hand-over to the
carrier. From this point on the buyer must insure the goods. If the Customs valuation basis is “free on
board” (FOB), the international freight costs must be deducted from the “carriage paid to” (CPT)
price.

Carriage and insurance paid (CIP)

The seller transports the goods to the named port of export, clears them through Customs and hands
them over to the carrier, and then the title transfers to the buyer. The seller is responsible for carriage
and insurance costs until the goods reach the agreed named destination.

2. International trade is a complicated area of law to research because there are numerous levels of
trade organizations and interactions. There are bilateral trade agreements, regional trade agreements
and multinational trade agreements. Each of these agreements has its own history, policies and dispute
settlement procedures. Trade organizations established under the agreements have separate resources
that can be searched. Furthermore, individual countries have their own policies and laws relating to
international trade. As an example, the United States Congress must pass legislation enacting
international trade agreements before the United States can officially become a party. The national
policies have to be researched individually and frequently separately from the resources relating to the
international organizations.

The General Agreement on Trade and Tariffs (GATT) was enacted as an attempt to reduce the
number of tariffs and trade barriers and to foster international trade in the years following World War
II. It was signed in 1947 by over 100 countries and has served the international community for
decades. Under the auspices of GATT there have been numerous rounds of trade negotiations on a
variety of issues. Beginning in 1986, the Uruguay Round negotiations included the areas of tariffs,
services and intellectual property. Over seven years of negotiations, the GATT agreements evolved
into their current state. The Bretton Woods system of monetary management established the rules for
commercial and financial relations among the United States, Canada, Western Europe, Australia,
and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was the first example
of a fully negotiated monetary order intended to govern monetary relations among independent states.

3. Commercial law of Nations:

As States become more active in areas once considered the domain of private business interests, an
increasing proportion of international commercial transactions become the necessary concern of
public international law, These transactions fall into three major categories:

(1) Commercial transactions between States or between States and international organizations;

(2) Financial transactions of international agencies; and, (3) Transactions to which a government or a
governmental organization and a private business corporation are parties, for example, a straight
commercial sale or an agreement relating to the exploitation of natural resources or the development
of government-owned public utilities, often in partnership with the government. The first two
categories of transactions are generally recognized as being within the purview of the Commercial
Law of Nations. However, the third category raises the problem of whether public international law
can be applied to transactions involving private parties.

4. origin of international trade law:

It is widely recognized that such an autonomous body of law, whose terms offer more effective
solutions to the problems of international trade, is increasingly replacing the conflict-of-laws approach
which may indicate as applicable one of the many national systems of law that may be inadequate in
the changed circumstances of modern international trade. Two factors have made this development
possible. One is the elective character of the law; the other is the growing use of arbitration
in trade disputes. The elective nature of the Law of International Trade exists because this branch of
law is founded on the principle of the autonomy of the parties' wills. Such relative freedom in
tailoring contracts enables the parties to overcome the peculiarities of the various municipal systems
of law, and to adopt rules more suitable to the requirements of their in- dividual relationship. This
new, autonomous law is being expressed in model contracts, standard clauses, general terms of
delivery, commercial customs and trade usages. The Law of International Trade has gone through
three stages of development: the medieval lex mercatoria; the incorporation of the law merchant into
municipal law; and, finally, the modern Law of International Trade.

5. Parties to ITL: There are a number of disciplines in the GATS related to recognition. In addition to
Article VII that directly refers to recognition, other disciplines related to domestic regulation (Article
VI.6) are relevant. Additional instruments related specifically to the accountancy profession have also
been developed by WTO Members. A general background to the GATS, which provides some context
for these specific disciplines, The GATS does not require Members to recognise the professional
qualifications of other Members, nor does it require any particular standards to be applied in
considering recognition. Article VII (Recognition) simply allows Members to recognise the education
or experience obtained, requirements met, or licenses or certifications granted in some WTO
Members and not others.3 That is, it permits countries to break the normal rule that treatment offered
to one WTO Member must be extended to all other WTO Members (the “Most Favoured Nation”, or
MFN, requirement that you treat all WTO Members as well as you treat your most favoured WTO
Member). This deviation from MFN is based on the realistic assessment that, given the range of
regulatory differences amongst Members, recognition is most likely to be agreed bilaterally or
plurilaterally amongst a group of Members),4 and that a requirement to automatically extend
recognition to all other WTO Members would probably result in far fewer, if any, recognition
agreements being negotiated.

6. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries
cannot normally discriminate between their trading partners. Grant someone a special favour (such as
a lower customs duty rate for one of their products) and you have to do the same for all other WTO
members.

This principle is known as most-favoured-nation (MFN) treatment (see box). It is so important that it
is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in
goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and
the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although
in each agreement the principle is handled slightly differently. Together, those three agreements cover
all three main areas of trade handled by the WTO.

Some exceptions are allowed. For example, countries can set up a free trade agreement that applies
only to goods traded within the group — discriminating against goods from outside. Or they can give
developing countries special access to their markets. Or a country can raise barriers against products
that are considered to be traded unfairly from specific countries. And in services, countries are
allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions
under strict conditions. In general, MFN means that every time a country lowers a trade barrier or
opens up a market, it has to do so for the same goods or services from all its trading partners —
whether rich or poor, weak or strong.

2. National treatment: Treating foreigners and locals equally Imported and locally-produced goods
should be treated equally — at least after the foreign goods have entered the market. The same should
apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.
This principle of “national treatment” (giving others the same treatment as one’s own nationals) is
also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and
Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.
National treatment only applies once a product, service or item of intellectual property has entered the
market. Therefore, charging customs duty on an import is not a violation of national treatment even if
locally-produced products are not charged an equivalent tax.

7. PRINCIPLE 12 OF RIO: States should cooperate to promote a supportive and open international
economic system that would lead to economic growth and sustainable development in all countries, to
better address the problems of environmental degradation. Trade policy measures for environmental
purposes should not constitute a means of arbitrary or unjustifiable discrimination or a disguised
restriction on international trade. Unilateral actions to deal with environmental challenges outside the
jurisdiction of the importing country should be avoided. Environmental measures addressing trans
boundary or global environmental problems should, as far as possible, be based on an international
consensus.