Chapter1InternationalTradeWhatarethereasonsforinternationaltrade?Therearethreemainreasons:resourcereasons,economicreasons,andpoliticalreasons.Theresourcereasonsrefertotheunevendistributionofresourcessuchasnaturalresources,capital,andlabor.Theeconomicreasonsareexplainedbytheprincipalofabsoluteadvantageandprincipalofcomparativeadvantage.Besides,nationsaremotivatedtotradeornottotradewitheachotherbyinternationalanddomesticpoliticalneeds.Whatistheprincipalofcomparativeadvantage?CreatedbyDavidRicardo,theprincipalofcomparativeadvantageisabasictheoryforspecializationandtradewhichsaystradewillbenefitbothnationsprovidedonlythattheirrelativecosts,thatis,theratiosoftheirrealcostsmeasuredbylabor-houroranothercommodity,aredifferentfortwoormorecommodities.Inotherwords,tradedependsondifferencesincomparativecostoropportunitycost,andonenationcanprofitablytradewithanotherthoughitsrealcostsarehigher(lower)ineverycommodity.Whatarethebenefitsofinternationaltrade?Thebenefitsofinternationaltradeincludecheapergoods,morechoicesofgoods,widermarketfordomesticproducers,andthegrowthofdomesticandworldeconomy.Whydoestradeprotectionismstillexistdespitethebenefitsofinternationaltrade?Tradeprotectionismexistsforeconomicandpoliticalreasons.Nationswanttoprotecttheirinfantindustriesandjobsfromforeigncompetition,tomaintainbalanceofpayment,andnottosupporttheirfoes.Wantaresomeoftheformsoftraderestrictions?Traderestrictionstaketheformsoftariffbarriersandnon-tariffbarriers.Whatisatariffbarrierandwhatisanon-tariffbarrier?Atariffbarrierisadirectmonetaryburdentodiscouragetradeinwhichadutyorfeeisleviedongoodsbeingimportedinto(orexportedoutof)acountry.Anon-tariffbarrier,ontheotherhand,isnotdirectlyamonetaryburdenthoughitoftencostsmoretimeandmoney.Non-tariffbarriersincludequota,license,foreignexchangecontrol,technicalstandards,andregulations,etc.TermsAtariff:isadutyorfeethatisleviedongoodsbeingimportedinto(orexportedoutof)acountry.Surtax:isanadditionaltax.Itmayalsobetemporaryanddiscriminatory.Ininternationaltrade,importsurtaxisoftencollectedtocopewithinternationalpaymentdifficultiesandtopreventdumping.Anti-dumpingduty:isafeethatiscollectedbytheimportingcountrywhenitbelievesthattheexportingcountryissellingasignificantamountgoodstotheimportingcountryatpricesmuchlowerthanintheexportingcountry.Specificduty:isataxofacertainsumassessedandcollectedonanarticlewithoutreferencetoitsvalueormarket.Advaloremduty:isataxwhichisgradedaccordingtothecost,ormarketvalue,ofthearticletaxed.Aquota:isaquantitativerestrictionoranupperlimitintermsofphysicalquantityorvalue.Animportlicense:isapermitforimportissuedbythegovernmenttocontroltheimportofgoods.Foreignexchangecontrol:meansvariousformsofrestrictionimposedbyagovernmentonthepurchase/saleofforeigncurrenciesbyresidentsoronthepurchase/saleoflocalcurrencybynonresidents.Chapter2TermsofDeliveryWhatarethekeyissuesthatacontractmustspelloutclearly?Seller’sandbuyer’sresponsibilitiesandassociatedcostsTimeandplaceofdeliveryDocumentsandexpensesTitletothegoodsWhyareIncotermscreated?Incotermsarecreatedtoprovideasetofinternationalrulesfortheinterpretationofthemostcommonlyusedtradetermsinforeigntrade.Thus,theuncertaintiesofdifferentinterpretationsofsuchtermsindifferentcountriescanbeavoidedoratleastreducedtoaconsiderabledegree.HowarethetermsstructuredinIncoterms?Thetermsaregroupedinfourbasicallydifferentcategories:E-term,F-terms,C-terms,andD-terms.E-termrequiresthesellertomakethegoodsavailabletothebuyerusuallyatthesellerownpremises.F-termsrequirethesellertodeliverthegoodstoacarrierappointedandpaidbythebuyer.C-termsrequirethesellertocontractandpayforcarriagewithoutassumingtheriskoflossofordamagetothegoodsoradditionalcostsduetoeventsoccurringaftershipmentanddispatch.D-termsrequirethesellertobearallcostsandrisksneededtobringthegoodstotheplaceofdestination.DoyouhavetouseIncotermsineverytransaction?Whyorwhynot?No,sellersandbuyersdon’tneedtouseIncotermsintheirtransactionbecauseIncotermsarecreatedonlytoprovideanoption,notanobligation.Whatshouldbeconsideredinthechoiceoftermsofdelivery?TransportcapacityCustomer’slocationFreightrateLoading/unloadingfacilitiesandlocalportcustomRisksintransitChapter3CargoPackaging,Stowage&MarkingGenerallyspeaking,whatarethemainreasonsforcargopackaging?Generallyspeaking,therearefourmainreasonsforcargopackaging:protectivefunctionthatessentiallyinvolvesprotectingthecontentsfromtheenvironmentandviceversa;loadingandtransportfunctionthatrequiresproperpackagingdesignforeasyhandlingspace-savingtransportationstowagefunctionthatfacilitatesstowageanddistribution;andpromotionfunctionthathelpsgenerateproductawarenessandsalesTheprotectivefunctionofpackagingessentiallyinvolvesprotectingthecontentstheenvironment.Isthisstatementtrueorfalseandwhy?Thisstatementisonlypartiallytruebecausetheprotectivefunctionofpackaginginvolvesprotectingpeopleandtheenvironment,notonlythecontents,particularlyforhazardousmaterials.Whatisthemostefficientmethodofhandlinggeneralcargo?Themostefficientmethodofhandlinggeneralcargoistomakeupcargounit.Whatarethemainfactorsinfluencingtypesofcargopackaging?Themainfactorsinfluencingtypesofcargopackagingare:natureofcargo;transport;Customsandstatutoryrequirements;Insuranceacceptanceconditions;Cost;andEaseofhandlingandstowageWhatshouldbeconsideredinthestowageofcargo?Thefollowingshouldbeconsideredinthestowageofcargo:observationofweightlimitationsanddistributions;preventionofdamagetotransportvehicle;bestuseofavailabledeadweightorcubiccapacitytominimizethebrokenstowage;avoidanceofmixingincompatiblecargo;planforeaseofunloadingWhatpurposesdoescorrectandcompletemarkingserve?Correctandcompletemarkingofpackageshelpspreventincorrecthandling,accidents,incorrectdelivery,lossesofweightandvolumeandCustomsfinesWhatarethemaintypesofmarks?Themaintypesofmarksincludeshippingmarks,informationmarks,indicativemarksandwarningmarks.Whatarethemarkingrequirements?Themarkingrequirementsareinternationality,visibility,legibilityandindelibilityChapter4TransportWhatarethekeydifferencesbetweenlinersandtramps?Alineroperatesoveraregularrouteaccordingtoanadvertisedtime-tablebutatrampdoesnotoperatethisway.Instead,atrampisavesselhiredtopickupcargofromalmostanyportandgodirectlytotheportofdestination.WhatdoestheabbreviationFIOstandfor?Whatdoesitmean?FIOstandsfor“freeinandout”,whichmeansthatthechartererofavessel,nottheshipoperator,isresponsibleforthecostsofloadingandunloading.WhatkeypurposesdoesaB/Lserve?AB/Lservesthreekeypurposes.First,itisevidencethatavalidcontractofcarriageexistsbetweenthecarrierandtheshipper,anditmayincorporatethefulltermsofthecontractbetweenthem.Second,itisareceiptsignedbythecarrierconfirmingwhethergoodsmatchingthecontractdescriptionhavebeenreceivedfromtheshipperingoodcondition.Third,itisalsoadocumentoftitle,creatingownershipofthegoodsshipped.Whatshouldaclauseofshipmentinclude?Aclauseofshipmentshouldincludetimeofshipment,portofshipmentandportdestination,adviceofshipment,partialshipmentandtransshipment.WhatisAirWaybillandwhatisthekeydifferencebetweenthedocumentandanOceanB/L?Anairwaybillisatransportdocumentissuedbyairlinesoraircargocompaniesortheiragents.ThekeydifferencebetweenthisdocumentandanoceanB/Listhatairwaybillisnotatitledocument.Asastraightwaybill,anairwaybillisnottransferrableornegotiableandashipperdoesnotlosehisownershipofthecargobyhandingtheairwaybilltotheairline.However,asthebuyerisnamedtheconsigneeonthewaybillandhe/shecanclaimtheconsignmentfromthecarrierbysimplyshowingproofofidentity.Whatisinternationalmultimodaltransport?Internationalmultimodaltransportisthecarriageofgoodsbyatleasttwodifferentmodesoftransportonthebasisofamultimodaltransportcontractfromaplaceinonecountryatwhichthegoodsaretakeninchargebythemultimodaltransportoperatortoaplacedesignatedfordeliverysituatedinadifferentcountry.Whatarethegeneralconsiderationsincargotransport?Reliability,speedandfrequency,andcost.Chapter5Foreignexchangerate&Contractformation-Offer&AcceptanceHowistheexchangeratebetweenanytwocurrenciesexpressed?Therearetwowaystoexpresstheexchangeratebetweenanytwocurrencies,i.e.,thepriceofCurrencyAcanbequotedintermsofCurrencyBorviceversa.Dependingonwhetherhomecurrencyisusedtoexpressthepriceofforeigncurrenciesorforeigncountriesareusedtoexpressthepriceofhomecurrency,wehavedirectquotationandindirectquotation.Howmanyratesdoesabanknormallyquote?Two,abuying(bid)rateandaselling（ask）rate.Whyisexchangerateanimportantissueforinternationaltraders?Whiletheexchangeratesbetweencurrenciesfloat,paymentisnormallymadesometimeafterthecontractisconcluded.Thefinalearningsinthehomecurrency(ifthecontractcurrencyisaforeigncurrency)willonlybeknownwiththeprevailingexchangerateatthetimethepaymentismade.Afavorableexchangeratewillgivetheexportermorehomecurrency.Ontheotherhand,anadversemovementoftheexchangerateswillbringhimalossintermsofhomecurrency.Howcanwemanagetheexchangeraterisks(foreignexchangerisks)?Thereareanumberofchoices:choosingtherightcurrencyforatransaction,bookingaforwardcontract,andusingotherproductsthatbanksoffer.Ifyouintendtomakeyourofferindefinite,whatcanyoudotoavoidmisinterpretation?Ifanoffererwantsto makeanofferindefinite,heshouldmakeclearreservationstoavoidmisinterpretation.Howcanyouterminateanoffer?Anoffercanbeterminatedby:Thepartyofferingmayrevoketheofferifnoconsiderationhasbeengiven.Theoffermaylapse(eitherafteraspecifiedtime,oritmayjustbecomestale).Offermaycometoanendafterastipulatedeventoccursordoesnotoccur.OffermaylapseondeathofthepartyofferingOfferiskilledbyacounter-offer.Whocanacceptanoffer?Onlytheoffereecanacceptanoffer.Whatdoesacceptancemeantoacontract?Sinceanacceptanceindicatesassenttoanoffer,itvalidatesthecontractandmeansthatboththe