7. The world trade organisation. European financial sector.

Thw World Trade Organization came into being in 1995. The WTO is the succesor to the General Agrement on Tariffs and Trade (GATT) established in the wake of the Second World War. So the multilateral trading system that was originally set up under GATT is already 50 years old. The past 50 years have seen an exceptional growth in world trade. Merchandise exports greww on average by 6% annualy. GATT and the WTO have helped to create a strong and prosperous trading sytem contributing to unprecedented growth. The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The agreement was reached on telecommunications services, with 69 governments agreein to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information.

The organization:

The WTO’s overriding objective is to help trade flow smoothly, freely, fairly, and predictably. It does by:

Administering trade agreements

Acting as a forum for trade negotiations

Settling trade disputes

Assisting developing countries in trade policy issues, through technical assistance and training programmes.

Cooperating with other international organizations

The WTO has more than 130 members, accounting for 90% of world trade. Over 30 others are negotiating membership. Decisions are made by the entire membership and typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO predecessor, GATT. The WTO’s agreements have been ratifies in all member’s parliaments. The WTO’s top level decision-making body is the Ministerial Conference which meets at least once every two years. Below this is the General council (normally ambassadors and heads of delegation in several Geneva, but sometimes officials sent from member’s capitals) which meets several times a year in Geneva head-quarters. The General council also meets as the Trade Policy Review Body and the Dispute Settlement Body. At the next level, the Goods Council, Services Council and Intelectual Property (TRIPS) Council report to the General Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other arese such as the environment, development, membership applications, regional trade agreements, relationship between trade and investment, the interaction between trade and competition policy and transparency in government procurement.

5. Documents needed in international trade and incoterms.

An import/export transaction usually requires a lot of complicated documentation.

A company which sells goods or services to other countries is known as an exporter. A company which buys product from other country is called importer. Methods of payment may be on a cash with order basis, on open account, where the buyer pays the supplier soon after receiving the goods, by irrevocable letter of credit or by bill of exchange.

Payments for imported products is usually by documentary credit, also called a letter of credit. This is a written promise by a bank to pay a certain amount to the seller, within a fixed period,whan a bank receive instructions from the buyer. Documentary credits have a standard form and contain:

• A short description of the goods

• A list of shipping documents required to obtain payment

• A final shipping date

• A final date for presenting the documents to the bank

Document credit are usually irrevocable, meaning that they cannot be changed unless all the parties involved agree. Irrevocable letter of credits guarantee that the bank which establishes the letter of credit will pay the seller if the documents are presented within the agreed time.

Another method of payment is a bill of exchange or draft. This is a payment demand, written by an exporter, instructing an importer to pay a specific sum of money at a future date.

Exporter have to prepare a number of documents to go with the shipment or transportation of goods.

• The commercial invoice contains details of the goods: quantity weight number of packages price terms of delivery terms of payment and information about the transportation.Prices for exports may be quoted in the buyer's currency, the seller's currency or in a third "hard" currency (e.g. US dollars).

• The bill of lading is a document signed by the carrier or transporter confirming that the goods have been received for shipment

• The insurance certificate also describes the goods and contains details of how to claim if they are lost or damaged in transit- while being transported

• The certificate of origin states where the goods come from

• Quality and weight certificates issued by private inspection and testing companies

• An export licence that gives the right to sell particular goods abroad.

Companies exporting or importing goods use standard arrangements called Incoterms - established by the iNternational Chamber of Commerce (ICC) - that state the responsibilities of the buyer and the seller. They determine whether the buyer or the seller will pay additional costs - the costs on top of the costs of the goods. These include transportation or shipment, documentation - preparing all the necessary documents, customs clearance - completing import document and paying any import duties or taxes and transport insurance.

There are 13 different Incoterms that can be divided into 4 different groups: an E Term (Deprature), the F Term (Free, Main Carriage Unpaid), the C Term (Main carriage Paid) and the D term (Delivered/Arrival). Each group of terms adds more responsibilities to the seller and gives fewer to the buyer.

The E term is EXW or Ex Wroks. This means that the buyer collects the goods at the seller's own premises - place of busines - and arranges insurance against loss or damage to the goods in transit.

In the second group, the F terms, the seller delivers the goods to a carrier appointed by the buyer and located in the seller's country. The buyer arranges insurance.

FCA or Free Carrier means that the goods are delivered to a named place where the carriers can load them onto a truck, train or aeroplane.

FAS - Free Alongside Ship means that seller delivers the goods to the quay next to the ship in the port.

FOB - Free on board means that the seller pay for loading the goods onto the ships.

In the third group the C terms, the seller arranges and pays for the carriage or transportation of the goods, but not for the payment of custos duties and taxes. Transportation of goods is also known as freight.

In CFR - Cost and Freight (used for ocean freight) and CPT - Carriage to paid (used for air and land freight) the buyer is responsible for insurance.

In the terms CIF - Cost, Insurance and Freight (used for ocean freight) and CIP - Carriage and INsurance Paid To ... (used for air freight and land freight), the seller arranges and pays for insurance.

In the group D, the seller pays all the costs involved in transporting the goods to the country of destination, including insurance.

In DAF - Delivered at Frontier, the importer is responsible for preparing the documentationand getting the goods through customs.

If the goods are delivered by ship to a port, the two parties can choose who pays for unloading the goods onto the quay. The two possibilitites are:

DES - Delivered Ex Ship - the buyer pays for the goods from the ship.

DEQ - Delivered EX Quay - the seller pays for unloading the goods from the ship to the quay, and for the payment of customs duties and taxes.

If the goods go theough customs and are delivered to the buyer, there are 2 possibilities:

DDU Delivered Duty Unpaid - the buyer pays any import taxes

DDP - Delivered Duty Paid - the seller pays any import taxes.