Key International Trade Organizations and Incoterms for Foreign Trade
Key Organizations in Foreign Trade
1. IATA: The International Air Transport Association represents airlines and establishes standards for air transportation. In foreign trade, it is important because it facilitates and standardizes procedures related to international air cargo.
2. DGAC: The General Directorate of Civil Aviation is the authority that regulates and supervises civil aviation in Peru. In foreign trade, it ensures that air cargo operations comply with safety and operational regulations.
3. AWB: The Air Waybill is the document used to transport goods by air. It is important because it proves the existence of the transport contract and contains information about the shipper, consignee, cargo, weight, origin, and destination.
4. MAWB: The Master Air Waybill is the main air waybill issued by the airline to the freight forwarder. Its function is to represent consolidated cargo transported under the same international air shipment.
5. HAWB: The House Air Waybill is an air waybill issued by the freight forwarder for each customer whose goods are part of a consolidated shipment. It allows each individual shipment to be identified and controlled.
6. ICAO: The International Civil Aviation Organization is a United Nations agency that establishes standards for international civil aviation. It is important for foreign trade because it helps ensure that international air cargo transportation is safe and organized.
7. ULD: A Unit Load Device is a container or pallet specially designed to transport cargo inside an aircraft. Its importance lies in facilitating handling, protecting merchandise, and making better use of the available space in the aircraft.
8. CAN – Decisión 837: A Andean Community regulation related to the international road transport of goods. Its importance lies in facilitating and regulating the land movement of goods between member countries of the CAN.
9. CAN – Decisión 617: Regulates the Community Customs Transit within the Andean Community. It allows goods to be moved under customs control between member countries, facilitating foreign trade operations and reducing unnecessary border procedures.
10. CAN – Decisión 331: Regulates International Multimodal Transport in the Andean Community. It is important because it allows goods to be transported using two or more means of transport under a single international operation.
11. CAN – Decisión 393: This Decision modifies and complements Decision 331 on International Multimodal Transport. Its function is to improve the rules applicable to operators and multimodal operations within the Andean Community.
12. ICC – International Chamber of Commerce: A global business organization that develops rules used in international commercial operations. It is especially important because it created the Incoterms, which determine responsibilities, costs, and risks between buyer and seller.
Trade Development and Maritime Organizations
13. UNCTAD: The United Nations Conference on Trade and Development promotes the participation of developing countries in world trade. Its work includes trade, transportation, logistics, investment, and trade facilitation.
14. IMO: The International Maritime Organization establishes standards for the safety, security, and operation of international maritime transport. It is essential for foreign trade because a large part of world trade is transported by sea.
15. WTO: The World Trade Organization administers the rules that regulate trade between countries. It facilitates trade negotiations, supervises agreements, and helps resolve disputes, making international trade more predictable.
16. FIATA: The International Federation of Freight Forwarders Associations represents freight forwarders and cargo agents. It is important in foreign trade because it promotes standards and documents used in international transportation, especially multimodal transport.
17. BIC: The Bureau International des Containers manages an international container identification system. Its importance is to allow each container to be correctly identified during its movement between countries, ports, and terminals.
18. ICS: The International Chamber of Shipping internationally represents shipowners and ship operators. It participates in matters related to safety, regulation, maritime operations, and good practices that directly affect international trade.
Commercial Practices and Customs Cooperation
19. ICC – International Chamber of Commerce: In foreign trade, the ICC establishes international commercial rules and practices that facilitate operations between companies from different countries. Its best-known contribution is the Incoterms, used in international sales contracts.
20. UNCTAD: A United Nations organization that studies and promotes trade and economic development. In foreign trade, it helps improve trade facilitation, transportation, and logistics, especially in developing countries.
21. WCO: The World Customs Organization promotes cooperation and modernization among customs administrations. It is important because it develops standards to simplify procedures, facilitate legitimate trade, and improve the control of goods at borders.
22. TEU: The Twenty-foot Equivalent Unit is a unit used to measure the capacity of ships and container terminals. One TEU is equivalent to one 20-foot container, so it allows the capacity of maritime cargo transport to be measured and compared.
Incoterms 2020: Rules for Any Mode of Transport
EXW – Ex Works: The seller has the least responsibility. The seller only makes the goods available at their premises or another agreed place. From that point, the buyer assumes practically all costs and risks, including transportation and export and import formalities.
FCA – Free Carrier: The seller delivers the goods to the carrier designated by the buyer at the agreed place. The seller completes the export formalities, and the risk passes to the buyer when the goods are delivered to the carrier.
CPT – Carriage Paid To: The seller pays the transportation costs to the agreed destination, but the risk is transferred earlier, when the goods are delivered to the first carrier. This means that the party paying the transport does not necessarily assume the risk until destination.
CIP – Carriage and Insurance Paid To: It works similarly to CPT, but the seller also arranges insurance for the goods.
DAP – Delivered at Place: The seller transports the goods to the agreed place of destination and assumes the costs and risks until that point. However, the goods arrive without being unloaded, and the buyer normally handles the import formalities.
DPU – Delivered at Place Unloaded: The seller transports the goods to the destination and also unloads them. This is the main difference from DAP: under DPU, the seller delivers the goods already unloaded.
DDP – Delivered Duty Paid: It is the Incoterm in which the seller has the greatest responsibility. The seller transports the goods to the agreed destination and also handles both export and import formalities.
Incoterms for Sea and Inland Waterway Transport
FAS – Free Alongside Ship: The seller transports the goods to the port and places them alongside the vessel. From that point, the buyer assumes the following costs and risks.
FOB – Free on Board: The seller delivers the goods on board the vessel at the port of shipment. The risk passes to the buyer once the goods are on board.
CFR – Cost and Freight: The seller pays the cost and freight to the port of destination, but the risk passes to the buyer once the goods are on board the vessel at the port of origin. This means that cost and risk do not end at the same point.
CIF – Cost, Insurance and Freight: It is similar to CFR, but the seller also pays for insurance. The seller covers the cost, insurance, and freight to the port of destination, although the risk is transferred once the goods are on board at the port of origin.