Newer language of global trade

The International Chamber of Commerce (ICC) has decided to launch a revised edition of the International Commercial Terms (‘Incoterms’) by the first week of September. Thus, businesses will get nearly four months to adapt, prepare and train users of the new Incoterms before these take effect from January 1. 

Incoterms are a collection of three-letter abbreviations that outline the obligations of importers and exporters, responsibility for various costs involved in the transport and delivery of goods, and when and how the risks pass from sellers to buyers. Some hold universal meaning round the world — FCA (free carrier), CIF (cost, freight and insurance), FOB (free on board), CIP (carriage and insurance paid). 

ICC introduced Incoterms in 1936, to harmonise practices and understanding of parties on terms of delivery of goods. The common guidelines eliminated many different practices and interpretations, through use of well-defined terms. Since then, these have evolved with changing technology and business practices, with seven revised editions. These reflected contemporary methods of carrying goods, implementing contracts of sale, clearing goods for export and import, and using documents as evidence to secure the rights of entitled persons to receive goods from carriers at agreed destinations. 

Incoterms are invariably incorporated in all international contracts for sale of goods. These have gained recognition and acceptance by governments, legal authorities and practitioners. 

The present Incoterms 2010, containing 11 terms, are in use since January 1, 2011. Since then, many developments have taken place in global trade, especially in the way technology is used, new environmental regulations, need for increased security of cargo, more government regulations and so on. More than ever, participants in the global trade system require precise guidance and greater clarity on their obligations. 

Recognising this, the ICC set up a drafting group in 2016, of nine experts from round the world, with a mandate to revise these. The group featured four users of Incoterms and five commercial lawyers specialising in international trade. It met many times at length to analyse, discuss and consider more than 3,000 substantial comments provided by ICC national committees. Successive consultations took place with participation from ICC national committees and the international editorial board to discuss the proposed changes, culminating in Incoterms 2020. The ICC is now developing customisable, self-executing digital sales agreements, incorporating the new Incoterms. 

The ICC Academy, the body’s dedicated e-learning platform, has announced online training courses for Incoterms 2020. It is also offering a certificate course in the use of these revised rules. The training includes interactive case studies that allow trainees to apply their understanding of the Incoterms rules by simulating real-life work scenarios. IIC national committees will also be offering a wide range of training sessions and supplemental services. So far, 10 launch events and over 130 training seminars in 20 countries and about 60 cities worldwide. 

All persons connected with import and export should get prepared to get the authentic versions of Incoterms 2020 and be trained before the end of this year in their use. 

Email: tncrajagopalan@gmail.com