Capacity Building
View GuideIncoterms
What are Incoterms? Incoterms is an abbreviation for “International Commercial Terms.” Issued by the International Chamber of Commerce (ICC) and globally recognized, they prevent confusion in foreign trade contracts by clarifying the obligations of both the buyers and sellers and provide a standard list of global terms and acronyms used in trade. Why would I use Incoterms? Different practices and legal interpretations between traders around the world necessitated a common set of rules and guidelines, which led to the development of Incoterms. These are terms that hold a common, precise, and defined meaning. Whether you are filing a purchase order, packaging and labelling a shipment for freight transport, or preparing a certificate of origin at a port, the Incoterms rules are there to guide you. Various parties involved in both domestic and international trade use Incoterms as a shorthand to help understand one another and the exact terms of their business arrangements. Given the clarifying advantages of incoterms, it is recommended that they be used in a sales contract. What are the different Incoterms that have been developed? The ICC updates Incoterms every 10 years to align them with the latest trading practices. The most recent version is Incoterms 2020. Some examples of Incoterms include: Rules for any Mode of transport Ex works (EXW): These imply minimum obligations on the seller, requiring goods to be collected and loaded onto a vehicle by the buyer. Delivered at place (DAP): This requires the seller to deliver goods ready for unloading at the destination place agreed by the buyer. Delivered duty paid (DDP): This states that the seller is responsible for all costs and risks of delivering goods to the buyer, including goods clearance and handling customs formalities. There are others in this series Carriage and Insurance Paid to (CIP): This requires the seller to obtain insurance in addition to complying with obligations on handing over goods to carriers and clearing goods for export. Rules for sea and inland waterway transport Free alongside (FAS): This requires the seller to bear risks until goods are either procured or placed alongside a ship/vessel nominated by the buyer. The buyer is responsible for carriage of the goods from the shipment port onward and handling all import formalities. Free on board (FOB): This deems that the seller is the one to deliver goods on board the ship agreed by the buyer. Once the goods have been loaded on board the vessel, the responsibility for carriage of the goods and all import formalities transfers to the buyer. Cost and freight (CFR): CFR is similar to FOB but requires the seller to bear risks until goods are placed on board the vessel at the delivery port and costs to the destination port. The seller must also manage all export formalities and unloading costs when goods reach the destination port. The buyer is responsible for insuring the goods once the goods have been loaded on board at the departure port. Cost, insurance, and freight (CIF): CIF is similar to CFR but requires the seller to insure the buyer’s risk of loss or damage from the shipment port to the destination port, at least. For detailed information about Incoterms 2020, see the ICC’s new e-commerce platform in both print and digital formats, which can be purchased online for a fee. The edition is also translated into twenty-nine languages. You can contact your local ICC country office and representatives for their help and for more information. You can also visit the websites of some international law firms to learn more about different types of incoterms. Where can I get training on how to use Incoterms? The ICC national committees worldwide organize different training seminars, online courses, and certificate programs on Incoterms and other related topics. Their Incoterms 2020 professional certification covers each Incoterm’s rules and the corresponding obligations. It is especially helpful for professionals involved in trade and international business transactions, including those working in legal and regulatory affairs. Links to Supporting Information ICC International Chamber of Commerce (ICC) website and ICC Knowledge 2 Go Guide to Incoterms 2020 ICC local ICC country office and country representatives Contact information for your local International Chamber of Commerce Aceris Law Aceris Law also provide information on incoterms ICC ICC Incoterms 2020 Certificate. IOE&IT Export essentials: Incoterms and selling goods overseas – The Institute of Export and International Trade
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Authorized Economic Operators (AEOs) – for businesses
What are Authorized Economic Operators (AEOs)? The Authorized Economic Operator (AEO) scheme was introduced in 2007 by the World Customs Organization (WCO), as a way to further improve international supply chain security, and to facilitate legitimate trade. AEO certification is recognised internationally as granting ‘trusted trader’ status, which demonstrates that a business meets the AEO standards of supply chain security and customs compliance. Any business directly involved in the international movement of goods can apply for AEO status, regardless of the size of their business, or role in the supply chain. An AEO is defined as ‘an Economic Operator who is certified reliable in their customs operations,’ and therefore is entitled to certain benefits such as priority clearance for goods at customs, and fewer physical and documentation checks. If your product is selected for controls at the border, it will be given priority as an AEO consignment. What do I need to do to benefit from AEO status? Businesses can apply for AEO status through their Customs authorities (if available). According to the World Customs Organization, there are currently 80 operational AEO programs worldwide, with 5 more under development, the WCO AEO online Compendium provides a list of all programmes. Although different governments have different requirements for becoming an AEO, broadly, to qualify, a company must: comply with national domestic laws; abide by Customs and taxation requirements; maintain appropriate records; and practice required safety and security measures. Where can I learn more about AEO for my business? The World Customs Organization (WCO) offers a guide for small businesses that can help you learn more about the context and general aspects of AEOs. In addition, some institutions offer training and courses that can help you navigate the process around obtaining AEO status. Links to Supporting Information The World Customs Organization (WCO) safe-framework-of-standards and World Customs Organization World Customs Organization (WCO) AEO Compendium 2020 Edition World Customs Organization United Nations Economic Commission for Europe (UNECE) Trade Facilitation Guide – AEO Authorized economic operators The World Customs Organization (WCO) guide for small businesses Guide for small businesses The World Customs Organization (WCO) Authorised Economic Operator (AEO) Validation – WCO – Academy Online training course and aeo-implementation-guidance The European Commission Course: Authorised Economic Operator (AEO), Topic
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Gender
Trade and Gender There is a growing body of research showing that while international trade can be important for business development, innovation, and resilience, there is a need for trade to become more inclusive. Barriers exist not just for MSMEs to trade, but also more specifically for women traders and entrepreneurs, complicating their efforts at realizing the benefits of trade’s economic opportunities. Trade can foster women’s economic empowerment and advance gender equality. Governments can make this possible through the development and implementation of gender-responsive trade policies, as well as by implementing the WTO Agreements with a gender lens. Trade policy can support women entrepreneurs by lifting the many additional obstacles they face through financial and non-financial incentives, government procurement, or capacity building in trade. Why MSMEs and Gender? Women entrepreneurs constitute a significant share of MSMEs globally. They represent about 30% to 37% (8–10 million) of all MSMEs in emerging markets (see MSME FINANCE GAP from 2017). In Nigeria, women represent 41% of micro-business owners, with 23 million female entrepreneurs operating in the country. Nigeria has one of the highest female entrepreneurship rates globally (the PWC report can be found here). Women entrepreneurs mostly own, and lead, micro enterprises and they are typically smaller than men-owned, or led, firms. For instance, in Canada, 92.7% of women-owned firms employ less than 20 staff members (the Women Entrepreneurship Knowledge Hub and Women’s Enterprise Organizations of Canada report can be found here). Their micro size makes competing in the international market very difficult and it is one of the many reasons why they are not integrated in the global market (See Unlocking Markets for Women to Trade for more information). Women entrepreneurs not only face the same trade challenges as MSMEs, such as relatively higher cost burdens imposed by non-tariff measures and customs procedures, they can also face additional barriers and trade costs such as legal prohibitions to economic participation, additional discrimination for access to finance, and unequal access to the digital economy due to the persisting gender digital divide. Where can policymakers access more resources? For more resources on trade and gender, please see: The World Trade Organization’s (WTO) women and trade website contains information on relevant resources and events, as well as a link to the WTO informal working group on trade and gender webpage. Published in 2020, a World Trade Organization and World Bank report, Women and Trade: The role of trade in promoting gender equality, looks at the role of trade in promoting gender equality and provides new information and data on this important topic. Other papers of interest are: Women’s economic empowerment: an inherent part of Aid for Trade “; Gender Provisions in African Trade Agreements: Assessment of the Commitments for Reconciling Women’s Empowerment and Global Trade ; and Trade Policies Supporting Women’s Economic Empowerment: Trends in WTO Members. The International Trade Centre’s (ITC) women and trade webpage links to resources including the ITC’s SheTrades initiative, which is a platform for women-owned businesses, organizations, and companies to connect, access workshops, and find suppliers. The ITC also issued a publication in 2020 on Mainstreaming Gender in Free Trade Agreements, among other relevant reports. The Organisation for Economic Co-operation and Development (OECD) also has a trade and gender webpage with related research and publications on ways trade can contribute to women’s economic empowerment. The United Nations Conference on Trade and Development (UNCTAD) provides a webpage on gender equality, its importance for sustainable development, and the role for trade. This webpage features all recent publications, projects, and events on the subject. The World Bank’s trade and gender webpage is another resource linking to relevant publications and upcoming events on women and trade. Where can policymakers access good practices or national examples? The WTO Informal Working Group on Trade and Gender has prepared a progress report outlining the technical work that WTO Members and Observers have undertaken on women’s economic empowerment. It can be accessed at the WTO website
