The International Commercial Terms, known as Incoterms®, are a set of international recognized and adopted rules for international trade, published by the International Chamber of Commerce (ICC). In fact, these rules have become an essential part of the daily language of trade.
They were created in 1936 to provide a standard set of guidelines for interpreting the most commonly used trade terms in foreign trade, and have since been incorporated in contracts for the sale of goods worldwide. Incoterms provide directions and assistance to importers, exporters, lawyers, transporters, insurers and students of international trade. Essentially, they define obligations, risks, and costs to exporters and buyers.
“It is important for companies to understand, right at the beginning of contracts negotiations, which of the 11 Incoterms will be in place, so that exporters know what type of costs, risks and liabilities they will be carrying in the international trade transaction,” says Emiliano Introcaso, National Program Manager, Canadian Manufacturers & Exporters.
Organizations like Export Development Canada (EDC) can help with the financial risks of a global transaction, but Incoterms are there to “make the transportation risks between buyers and sellers very clear”, adds Introcaso.
He advocates that “Incoterms are as important as insuring accounts receivables. Safeguarding your exports isn’t just about profits, it also means protecting your company when shipping products, in the event when something goes wrong during transportation of commercial goods.”
ICC expert lawyers and trade practitioners have updated Incoterms ® six times since 1936. These updates are to keep pace with the development of global trade, so it’s important that your business is in the know and utilizes the most updated version to facilitate international business.
If you would to learn more on how to select, quote and apply the right trade terms to contracts in order to mitigate any financial liabilities, limitations and responsibilities, you should participate in the upcoming “Incoterms ® 2010 for Export Success” webinar. These series is hosted by the Global Business Service division of Canadian Manufacturers & Exporters (CME) in collaboration with Export Development Canada (EDC). The webinar is presented by Emiliano Introcaso, National Program Manager of CME’s Export Success Program.
For more information on how and when to register for the Incoterms session, visit the Enterprise Canada Network