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Selection of Trade Terms
 
It has been extensively noted that the trade terms refer to the division of responsibilities between parties to a contract, by using abbreviation of English letters, between a buyer and a seller in a sale including selling prices, the payment of costs such as shipping, insurance and customs; the arrangement of the performance of these activities; and the determination of the transfer of title to goods. Among the whole trade terms, it can be roughly divided into two types, be it any mode of transport and the sea and inland waterway transport only. Of the two, the former includes EXW, FCA, CPT, CIP, DAT, DAP, DDP, while the latter contains FAS, FOB, CFR, CIF. On account of different impacts of different trade terms, it is crucial to select the trade terms reasonably according to our own interests.
 
1.Differences of the selection of trade terms for the exporters and importers
Based on different traffic condition, diverse weather condition and so on, different trade terms will make a difference. Thus, we are supposed to select a trade term to maximize our own interests in condition that we are the exporter or the importer. First and foremost, the “E” terms about EXW can enable the exporters to make their good available at their own premises to the importers, which is absolutely good for the exporters. Afterwards, it is the “F” terms about FCA, FAS, FOB that the exporters are responsible for delivering the goods to a carrier named by the importers. Thus, the exporters assumed more responsibilities in this deal, which deem to be beneficial for the
 
 
importers. Additionally, selecting the “C” terms covered CPT, CIP, CFR, CIF means that the exporters are responsible for contracting and paying for carriage of the goods, but not responsible for additional costs or risk of loss or damage to the goods once they have been shipped. Therefore, in these terms, the importers have more risk to undertake compared to the previous one. Last but not least, in the “D” terms, contained DAT, DAP, DDP, the exporters are responsible for all coats and risks associated with bringing the goods to the place of destination, which is totally in favor of the importers to ensure their own interests. As shown below.
 
2. How to choose a suitable trade term be you the exporter or importer
As mentioned earlier, you ought to do the utmost of your power to select the “E” terms or “C” terms for the sake of more availability and less risk to your own interests supposing you are the exporter. Conversely, if you are the importer, you’d better choose the “F” terms or “D” terms in order to cost less and take less risks for obtain more interests.
 
 
3. Conclusion
To conclude, different trade terms will lead to different distribution of benefits between the exporters and the importers. No matter the exporters or the importers we are, we all hope to maximize our own profits. Now therefore, it is of significance for us to realize the details of the trade and choose the most suitable trade term.
                                                                                                    
Reference
1. Refer to《国际贸易实务》, P45, P47
2. Refer to PPT《贸易术语》, P17
3.https://m.baidu.com/s?from=1012852y&word=%E8%B4%B8%E6%98%93%E6%9C%AF%E8%AF%AD
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