Page 43 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes International Maritime Organization, etc. were also active in interpreting the trade terms during
the 2000 revision. All sections of the trading community reflected their views in a manner that
led to the actual trading practices and solutions to problems faced by traders being incorporated
in Incoterms-2000. The huge response surpassing all previous record of incoterms revisions has
made it clear that INCOTERMS enjoy worldwide recognition among trading nations, institutions
and above all, among trading parties. The International Chamber of Commerce therefore decided
that delivery terms should be tailor-made as expected by the trading community and other
stakeholders and emphasis was given to consolidation of Incoterms. The changes that were
made and incorporated in 2000 revision of Incoterms are as follows:

1. The procedure for clearance of customs and payment of duties obligations under FAS and
DEQ was ensured as requested by trading community.
2. The procedure of the loading and unloading obligations of cargo under FCA was ensured
as per trading community requirements.
The very interesting fact is that all such changes have taken place only on the basis of rigorous
substantive research among users of incoterms. Hence the 2000 revision of incoterms reflected
the most participative, democratic and realistic trade mechanism represented according to the
wishes of actual stakeholders in international trade in the liberalised era.

Incorporating INCOTERMS

Incoterms must provide clarity and consistency in the trade transactions, particularly when
being incorporated in international sales contracts, used for assigning carriers for transportation
of goods and determining the export pricing. For example, if the goods are to be shipped from
Kolkata on FOB terms, the exporter shall quote it as FOB Kolkata (Incoterms 2000) everywhere
in contract of carriage, international sales contract, marine insurance certificate, commercial
invoice, consular invoice, certificate of origin, certificate of inspection, shipment advice, shipping
bill or combined transport bill, etc. so as to show consistency and clarity in various documents
being used in international trade. Such clarity helps the exporter in realization of payment
under D/A, D/P and L/C terms of payments.
The failure on the part of the exporter in incorporating the right version of Incoterm may cause
a dispute between the exporter and importer and may lead to a costly process of litigation and
arbitration. It is, therefore, advisable that the exporter should particularly take care of such
circumstances to avoid ambiguity in international trade deals.

Various Types of INCOTERMS

As per the ICC revision of incoterms in 2000, there are thirteen types of incoterms and these are
divided into four distinct groups as outlined below:
1. Group E: Group E Incoterms indicate that the goods shall be made available to the importer
at the exporter’s premises; for example, at the exporter’s factory gate.
2. Group F: Group F indicates that the exporter must deliver the goods to a carrier that has
been appointed by the importer for carrying the goods to destination.
3. Group C: Group C indicates that the exporter is liable for losses and damages only up to
the port of shipment and all losses and damages subsequent to exporter delivery of cargo
to shipping company and any additional cost or charges, etc. shall be borne by the importer.
The exporter accepts the obligation of all risks of losses or damages to the cargo only
before the start of the cargo’s journey.
4. Group D: The Incoterms under Group D indicate that the exporter will be having
obligations and responsibility to incur all the costs, charges and other risks that may be

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