Trade

International trade is performed in several forms. The most important form is direct
commercial import-export operations with deliveries paid in hard currency. Still, 25—
30% of international trade accounts for barter and countertrade, with deliveries paid
by goods. Such payment is usually initiated by the importer which does not have hard
currency to pay for the goods.

Barter is a trade in which merchandise is exchanged directly for other goods without
the use of money. It is a characteristic of quite primitive economies.

Countertrade transactions are more complex and difficult to arrange. They began in
the 1950s and are mainly carried out with developing countries and in Eastern Europe.
Their currencies are not freely convertible and they do not possess enough hard
currency to make the essential purchases necessary for economic development. The
transaction may include the exchange of some currency as well as goods. For
example, the contract may stipulate that the seller be paid in hard currency provided
that the seller agrees to find markets for specified products (often cash crops) from
the buyer's country.

Usually only large corporations can set up such deals but they are one way of doing
business with countries that have high foreign trade deficits, a large debt problem and
small reserves of foreign currencies.

Another form of countertrade is the buyback arrangement. One party supplies the
technology or equipment that allows the other to produce goods. The sale of these
goods provides the money to repay the supplier.

Transactions of tolling type are connected with processing raw materials in other
countries, payment is made with a part of produced products.

Goods can be sold to a foreign consumer as a result of direct transactions with the
exporter and through middle-men, that is dealers, distributers, commissioners,
consignors, agents. A great part of sales of mass raw materials and products is done
at international commodity exchanges.

Incorterms are a set of international rules published by the International Chamber of

Commerce, Paris, for the interpretation of the most commonly used terms of foreign
trade. The aim is to avoid disagreements resulting from differences in trading
practices in various countries by describing clearly the duties of the seller and the
buyer. The terms are grouped in four separate categories.

• An E term: the seller makes the goods available to the buyer at the seller's
premises.

• F terms: the seller has to deliver the goods to a carrier appointed by the
buyer.

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 • C terms: the seller pays for carriage, but does not accept liability for loss or
damage after ____________shipment and dispatch.

• D terms: the seller bears all costs and risks in shipping goods to the
country of destination.

Under FOB terms the goods are placed on board ship by the seller at a port of
shipment named in Contract. The risk of loss or damage of the goods is transferred
from the seller to the buyer when the goods pass the ship's rail. The buyer is
responsible for the transport costs from the port to the destination. However, it is the
seller who has to obtain an export license or documentation necessary for goods to
leave the country.

When CIF terms are used, the buyer pays not only for the goods, but for their
transportation (freight), and also insures the goods. Freight is usually prepaid.

C&F can only be used for sea and inland waterway transport. The seller must pay for
the transport used to bring the goods to the named port but is not liable for risks from
the moment the goods pass the ship's rail in the port of shipment.

The Contract is a business agreement between two parties which buy or sell goods
or services. Contracts are concluded either between companies in one country or
internationally, that is between companies from different countries.

The Contract has the following clauses or articles:

1) Naming (definition) of the parties and their legal addresses.

2) The subject of the Contract, that is what goods or services will be bought or sold
and the volume of delivery.

3) Prices and the total value (amount) of the Contract including terms of delivery.

The price stated in the Contract may be firm, fixed or sliding. Firm prices cannot be
changed in the course of the Contract performance. Fixed price is the price in the
market on the day of delivery or for a given period. Sliding prices can be for machinery
and equipment which require a long period of delivery.

4) Time (dates of delivery) is shown in the Contract too.

5) Terms of delivery. The most usual terms of delivery are FOB, CIF, C& F.

6) The Contract also specifies packing, marking and terms of payment.

Payment in foreign trade may be made in cash and on credit. The most widely used
method is payment by letter of credit (L/C). The following types of L/C are usually
used: irrevocable, confirmed, and revolving. An irrevocable L/C cannot be modified or
cancelled without the consent of the party in whose favour it has been opened. A
confirmed L/C is an irrevocable L/C, payment under which is guaranteed by a first
class bank.

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A revolving L/C is one under which its value is constantly made up to a given limit
after payment for each shipment.

7) The Contract also includes terms of insurance (if any) and a Force Majeure
clause. It usually includes natural disasters such as an earthquake, flood, fire,
etc. which the parties can't control.

8) It is also specified in the Contract in what ways disputes are solved.

All the clauses of the Contract have numbers, and in the negotiations or
correspondence one can refer to the specific clause or sub-clause.

The international Contract is usually written in two languages, one copy for each
party.

Free trade is a system of trade policy that allows traders to act and or transact
without interference from government. According to the law of comparative advantage
the policy permits trading partners mutual gains from trade of goods and services.

Under a free trade policy, prices are a reflection of true supply and demand, and are
the sole determinant of resource allocation. Free trade differs from other forms of
trade policy where the allocation of goods and services amongst trading countries are
determined by artificial prices that may or may not reflect the true nature of supply
and demand. These artificial prices are the result of protectionist trade policies,
whereby governments intervene in the market through price adjustments and supply
restrictions. Such government interventions can increase as well as decrease the cost
of goods and services to both consumers and producers.

Arguments for protectionism fall into the economic category (trade hurts the
economy) or the moral category (the effects of trade might help the economy, but
have ill effects in other areas); a general argument against free trade is that it is
colonialism or imperialism in disguise. The moral category is wide, including concerns
of income inequality, environmental degradation, supporting child labor and
sweatshops, wage slavery, harming national defense, and forcing cultural change.

Negotiation is a dialogue intended to resolve disputes, to produce an agreement

upon courses of action, to bargain for individual or collective advantage, or to craft
outcomes to satisfy various interests. It is the primary method of alternative dispute
resolution.

Negotiation occurs in business, non-profit organizations, government branches, legal

proceedings, among nations and in personal situations such as marriage, divorce,
parenting, and everyday life.

There are some tips for negotiating.

• I guess the first one is to identify who the decision maker is. I've lost count of
the occasions at every level, from first-line salesman through to board director,
board to board negotiations, where I've seen fantastic presentations, superb
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 dialogue and the person that's been sitting across the table, so to speak, is not
the decision maker. So that's the first tip, make sure you know who you're
talking to.

• The second one is that all salesmen, if they're good salesmen, tend to be very
enthusiastic about what they're selling. That could be a product or a service, or
even a social occasion, but it's all selling at the end of the day. And in their
enthusiasm they focus on their need, rather than the buyer's need. So, for
example, in our own case I've seen on many, many occasions people basically
go straight to the point - We're here to sell you Coca-Cola, it's the world's
number one brand, you must want it. What they haven't done is establish the
buyer's need. So, for example, the buyer's need may be in a grocery store that
they want to supply the world's number one brand to encourage consumers to
come in and purchase their range of products. The manager of a ball bearing
factory might want a vending machine because if he supplies a free, or
discounted refreshment service it keeps his union employees happy. So the
important thing is to understand the buyer's need.

Now, it’s not impossible to sell without establishing that need. But it tends to mean
you'll never have a long term relationship. So, for example, again the workplace
example, I could come in, bang, sell you a Coca-Cola vending machine, pay you
maybe a small royalty. Because I never established your need, if another soft drinks
supplier walks through the door and just offers you more money, you will probably
switch. Whereas if we'd established the fact that all you were interested in was
offering a service and you wanted it to be as hassle free as possible, we could have
tailored our offering. So I think that's very important. My favourite one, and I'm
probably in danger of doing it myself now, is once you've made the sale, shut up. I
think it's very important: close the sale, reinforce the buyer's decision - everybody
likes to feel they've made a good decision - and then leave.

There are two styles of negotiating described in Gavin Kennedy’s book – red stylists
and blue stylists.

Red stylists mean:

• want something for nothing;

• try to win by showing they are stronger than the other person;

• see negotiation as a short-term activity;

• use tricks and pressure to get what they want.

Blue stylists:

• want to trade something for something;

• try to succeed by cooperating with the other person;

• see negotiations as long-term activity;

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 • do not use tricks, they think about each other’s interests.

As for me, I am not aggressive person, and I think it is easier to deal with partner
when you ready to understand him and find fin the way of profitability for each other.