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Dr. Namrata Pancholi
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I ncoterms 2010
The Incoterms rules or International Commercial terms are a series of pre-
defined commercial terms published by the International Chamber of Commerce
(ICC) widely used in international commercial transactions
The eighth published set of pre-defined terms, Incoterms 2010
defines 11 rules,
reducing the 13 used in Incoterms 2000 by introducing two
new rules
("Delivered at Terminal", DAT; "Delivered at Place", DAP)
that replace four rules of the prior version ("Delivered at
Frontier", DAF; "Delivered Ex Ship", DES; "Delivered Ex
Quay", DEQ; "Delivered Duty Unpaid", DDU)
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In the prior version, the rules were divided into four
categories, but the 11 pre-defined terms of Incoterms
2010 are subdivided into two categories based only
on method of delivery.

The larger group of seven rules applies regardless of
the method of transport, with the smaller group of
four being applicable only to sales that solely involve
transportation over water.

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Rules for Any Mode(s) of Transport
The seven rules defined by I ncoterms 2010 for any mode(s) of
transportation are:
EXW Ex Works (named place of delivery)
The seller makes the goods available at its premises. This term
places the maximum obligation on the buyer and minimum
obligations on the seller.
EXW means that a seller has the goods ready for collection at
his premises (works, factory, warehouse, plant) on the date
agreed upon.
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The buyer pays all transportation costs and also bears
the risks for bringing the goods to their final

The seller doesn't load the goods on collecting
vehicles and doesn't clear them for export. If the
seller does load the good, he does so at buyer's risk
and cost.

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Free Carrier (named place of delivery)
The seller hands over the goods, cleared for export,
into the disposal of the first carrier (named by the
buyer) at the named place.

The seller pays for carriage to the named point of
delivery, and risk passes when the goods are handed
over to the first carrier.
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CPT - Carriage Paid To (named place of destination) The
seller pays for carriage. Risk transfers to buyer upon handing
goods over to the first carrier.

CIP Carriage and Insurance Paid to (named place of

Seller pays for carriage and insurance to the named destination
point, but risk passes when the goods are handed over to the
first carrier
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DAT Delivered at Terminal (named terminal at port or place
of destination).
Seller pays for carriage to the terminal, except for costs related
to import clearance, and assumes all risks up to the point that
the goods are unloaded at the terminal.

DAP Delivered at Place (named place of destination)

Seller pays for carriage to the named place, except for costs
related to import clearance, and assumes all risks prior to the
point that the goods are ready for unloading by the buyer.
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DDP Delivered Duty Paid (named place of

Seller is responsible for delivering the goods to the
named place in the country of the buyer, and pays all
costs in bringing the goods to the destination
including import duties and taxes.

This term places the maximum obligations on the
seller and minimum obligations on the buyer.
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Rules for Sea and Inland Waterway Transport
The four rules defined by Incoterms 2010 for
international trade where transportation is entirely
conducted by water are:
FAS Free Alongside Ship (named port of shipment)
The seller must place the goods alongside the ship at
the named port. The seller must clear the goods for
export. Suitable only for maritime transport but NOT
for multimodal sea transport in containers (is the
transportation of goods under a single contract, but performed
with at least two different means of transport)
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FOB Free on Board (named port of shipment) The seller
must load the goods on board the vessel nominated by the
buyer. Cost and risk are divided when the goods are actually
on board of the vessel.

The seller must clear the goods for export. The term is
applicable for maritime transport only but NOT for
multimodal sea transport in containers.
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The buyer must instruct the seller the details of
the vessel and the port where the goods are to
be loaded, and there is no reference to, or
provision for, the use of a carrier or forwarder.
This term has been greatly misused over the
last three decades ever since Incoterms 1980
explained that FCA should be used for
container shipments.

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CFR Cost and Freight (named port of destination)
Seller must pay the costs and freight to bring the
goods to the port of destination.
However, risk is transferred to the buyer once the
goods are loaded on the vessel (this rule is new!).
Maritime transport only and Insurance for the goods
is NOT included.
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Cost, Insurance and Freight (named port of
Exactly the same as CFR except that the seller
must in addition procure and pay for the
insurance. Maritime transport only.

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The Export Credit Guarantee Corporation of India
Limited (ECGC) is a company wholly owned by the
Government of India based in Mumbai, Maharashtra.

It provides export credit insurance support to Indian exporters
and is controlled by the Ministry of Commerce. Government
of India had initially set up Export Risks Insurance
Corporation (ERIC) in July 1957.
It was transformed into Export Credit and Guarantee
Corporation Limited (ECGC) in 1964 and to Export Credit
Guarantee of India in 1983.

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Provides a range of credit risk insurance covers to
exporters against loss in export of goods and services.

Offers guarantees to banks and financial institutions
to enable exporters to obtain better facilities from

Provides Overseas Investment Insurance to Indian
companies investing in joint ventures abroad in the
form of equity or loan
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Products and Services
Credit Insurance Policies
Service Policy
Where Indian companies conclude contracts with foreign
principals for providing them with technical or professional
services, payments due under the contracts are open to risks
similar to those under supply contracts.
In order to give a measure of protection to such exporters of
services, ECGC has introduced the Services Policy.
Guarantees to Banks Packing Credit Guarantee
Special Schemes Exchange Fluctuation Risk Cover

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Special Economic Zone (SEZ)
A Special Economic Zone (SEZ) is a geographical region
that has economic and other laws that are more free-market-
oriented than a country's typical or national laws.
"Nationwide" laws may be suspended inside a special
economic zone.
The category SEZ covers, including free trade zones (FTZ),
export processing Zones (EPZ), free Zones (FZ), industrial
parks or industrial estates (IE), free ports, free economic
zones urban enterprise zones and others.
Usually the goal of a structure is to increase foreign direct
investment by foreign investors, typically an international
business or a multinational corporation (MNC), development
of infrastructure and to increase the employment.

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International Monetary Fund
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International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an
international organization that was created on July 22,
1944 at the Bretton Woods Conference (Bretton
Woods is an area within the town of Carroll, New
Hampshire, USA, and came into existence on
December 27, 1945 when 29 countries signed the
Articles of Agreement.

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The IMF's stated goal was to assist in the reconstruction of the
world's international payment system postWorld War II.
Countries contribute funds to a pool through a quota system
from which countries with payment imbalances temporarily
can borrow money and other resources.

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As of the 14th General Review of Quotas in
late 2010 the fund stood at or about
US$755.7bn at then-current exchange rates.

Through this fund, and other activities such as
surveillance of its members' economies and the
demand for self-correcting policies, the IMF
works to improve the economies of its member
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Surveillance of Global Economy
The IMF is mandated to oversee the international
monetary and financial system and monitor the
economic and financial policies of its 188 member
countries. This activity is known as surveillance and
facilitates international co-operation.
Surveillance has evolved largely by way of changes in
procedures rather than through the adoption of new


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Conditionality of loans
IMF conditionality is a set of policies or
conditions that the IMF requires in exchange
for financial resources.
The IMF does not require collateral from
countries for loans but rather requires the
government seeking assistance to correct its
macroeconomic imbalances in the form of
policy reform. If the conditions are not met,
the funds are withheld. Conditionality is
perhaps the most controversial aspect of IMF

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Structural adjustment
Further information: Structural adjustment
Some of the conditions for structural adjustment can include:
Cutting expenditures, also known as austerity.
Devaluation of currencies, Trade liberalisation, or lifting
import and export restrictions,
Increasing the stability of investment (by
supplementing foreign direct investment with the opening of
domestic stock markets),
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Balancing budgets and not overspending,
Removing price controls and state subsidies,
Privatization, or divestiture of all or part of state-owned
Enhancing the rights of foreign investors vis-a-vis national
Improving governance and fighting corruption.
These conditions have also been sometimes labelled as
the Washington Consensus.

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Technical Assistance

-Special drawing rights
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The IMF describes itself as an organization of 188

The organization's stated objectives are :
to promote international economic cooperation,
international trade, employment, and exchange rate stability,
including by making financial resources available to member
countries to meet balance of payments needs.

Its headquarters are in Washington, D.C.

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Main functions of IMF
-Surveillance of Global Economy

-Technical Assistance

-Special drawing rights
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World Trade Organization
The WTO's predecessor, the General Agreement on Tariffs and Trade
(GATT), was established after World War II in the wake of other new
multilateral institutions dedicated to international economic cooperation
notably the World Bank and the International Monetary Fund.

The GATT was the only multilateral instrument governing international
trade from 1946 until the WTO was established on January 1, 1995.

The World Trade Organization (WTO) is an organization that intends to
supervise and liberalize international trade.

Most of the issues that the WTO focuses on derive from previous trade
negotiations, especially from the Uruguay Round (19861994).

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1. Raising standards of living.

2. Ensuring full employment and a large and steadily growing
volume of real income and effective demand.

3. Expansion of production and international trade.

4. Developing full use of the resources of the world.

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For the realization of the objectives, it adopted the
following principles:

Non Discrimination

Prohibition of quantitative restrictions


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Full Form GATT WTO
Year of Creation 1948 1995
Purpose To strengthen international trade. To govern GATT and
international trade
Has a permanent structure with a
permanent framework.
Has a permanent structure
with a permanent framework.
Scope Trade in goods. Trade in goods; trade in
services and trade-related
aspects of intellectual
property rights.
Has a permanent appellate body to
review findings and settle disputes.

Disputes are resolved faster
as settlement system has a
select time frame.
Less powerful Strong dispute settlement
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The WTO has 160 members.

Russia became a member in August,2012.

China became a member in 2002.

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The WTO launched the round of negotiations, the Doha
Development Round, at the fourth ministerial conference in
Doha, Qatar in November 2001.

An ambitious effort to make globalization more inclusive and
help the world's poor, particularly by slashing barriers and
subsidies in farming.

Disagreements still continue over several key areas including
agriculture subsidies, which emerged as critical in July 2006.

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On 13 February 2012, India requested consultations with
Turkey under the dispute settlement system concerning the
latters safeguard measures on import of cotton yarn (other
than sewing thread).

On 6 March 2012, the United States requested consultations
with India under the dispute settlement system concerning the
latters import restrictions on agricultural products from the
United States.

On 12 April 2012, India requested consultations with the US
under the dispute settlement system concerning the latters
countervailing duties on certain steel products from India.

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Organization Structure
-Top level decision making body is the ministerial
conference meets atleast once in 2 years.
-Below is the General Council Meeting
(Dispute settlement, trade policy review body , trade
negotiations committee.)
-Councils- goods council, services and intellectual
property council report to general council.

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The World Bank
The World Bank was created at the 1944 Bretton Woods
Conference, including the International Monetary Fund (IMF).
The World Bank and the IMF are both based in Washington,
D.C., and work closely with each other.
The United States and United Kingdom were the most
powerful in attendance and dominated the negotiations

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The World Bank is a United Nations international financial
institution that provides loans to developing
countries for capital programs. The World Bank is a
component of the World Bank Group, and a member of
the United Nations Development Group.

The World Bank's official goal is the reduction of poverty.
by promotion of foreign investment and international trade
and to the facilitation of capital investment.

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The International Bank for Reconstruction and
Development (IBRD) has 188 member countries, while
the International Development Association (IDA) has 172

Each member state of IBRD should be also a member of
the International Monetary Fund (IMF) and only members of
IBRD are allowed to join other institutions within the Bank
(such as IDA).
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Voting power
In 2010, voting powers at the World Bank were revised to
increase the voice of developing countries, notably China. The
countries with most voting power are now the United States
(15.85%), Japan (6.84%), China (4.42%), Germany (4.00%),
the United Kingdom (3.75%), France
(3.75%), India (2.91%), Russia (2.77%), Saudi Arabia (2.77%)
and Italy (2.64%).

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The changes were brought about with the goal
of making voting more universal in regards to
standards, rule-based with objective indicators,
and transparent among other things.
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United States would nominate Jim Yong
Kim as the next president of the Bank.

Jim Yong Kim was elected on 27 April 2012.
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