The ICC's 2010 Revisions to International Standard Trade Terms

By Vanessa Cross

Last Updated Oct 13, 2010, Published Oct 11, 2010

Photo: Cargo Air Freight at Amsterdam's Schiphol
Photo: Martin V. Morris

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The International Chamber of Commerce's Incoterms® 2010 becomes effective 01/01/11. Some customary international sales contract terminology will change.

In 2010, the United States Department of Commerce, International Trade Administration reported on U.S. President Barack Obama’s National Export Initiative (NEI) that aims to double U.S. exports to create 2 million jobs in the U.S. over the next five years. Department of Commerce Secretary Gary Locke stated that every $1 billion in agricultural exports supports more than 9,000 jobs and generates an additional $1.4 billion in economic activity.
“Increasing the export of American products and services to global markets can help revive the fortunes of U.S. companies, spur future economic growth and support jobs here at home,” said Locke.
Many nations are encouraging increased export as a tool to recharge economies and create new jobs. This climate makes the revised and updated edition of Incoterms 2010 (International Commercial Terms) more relevant for industry players who want to avoid costly export and import blunders in developing international

The ICC and International Transportation Trade Transactions

International trade terms, international commercial terms and international shipping terms are some of the titles used interchangeably in international commercial transactions involving transportation and trade logistics. These terms generally describe buyer and seller rights and duties in international transportation documents, practice and procedure.
International trade industry officials organized under the International Chamber of Commerce (ICC) was founded in 1919. One of the missions of the ICC has been to increase efficiencies in international trade transactions by standardizing international trade terms to reduce confusion among contracting parties. The ICC has furthered that mission through publications such as its first released edition of Incoterms in 1936. "Incoterms" is a registered mark of the Paris-based ICC, distinguishing it from international customary trade law which lies in the commons or public domain.

What are Incoterms Rules?

While no official international agreement among nations exists regarding enforceable international commercial terms, the ICC's Incoterms has become the standard and accepted practice among many international trading community. Incoterms generally reflect the customary trade practices in the international transportation industry and are used in international commercial sales contracts as contract definitions.
According to the ICC, "Incoterms rules provide internationally accepted definitions and rules of interpretation for most common commercial terms." They are recognized by the United Nations Commission on International Trade Law (UNCITRAL) as the industry standard. They also closely correspond to the U.N. Convention on Contracts for the International Sale of Goods (UNCCISG).

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Accounting for Increased Electronic Data Interchange and Other Matters in International Commercial Transactions

Incoterms has been revised roughly every decade to account for trade industry developments. Incoterms 2010 will officially take effect on January 1, 2011 and contains changes such as accounting for the increased modes of global electronic communications.
“Electronic means of communication, such as electronic data interchange, have now been given the same effect as paper communication, as long as the contracting parties agree to this or where this is the customary practice,” reports Callie Lombard for the South African-based Engineering News.
Additionally, the 2010 revisions introduce two new terms: Delivered at Terminal (DAT) and Delivered at Place (DAP). It eliminates the DAF, DES, DEQ and DDU designations. Also, cargo security accounting is more fully addressed in the revised edition.

Incoterms Seminars Aimed at Legal, Banking, Business and Transportation Industries

Noting Incoterms 2010's subtitle "ICC Rules for the Use of Domestic and International Trade Terms," Lombard also reported that Incoterms has national application. As a result, understanding the international and national implications of the revised Incoterms is important for international trade and transportation practitioners.
The ICC Incoterms 2010 for Americans seminar, accredited by the ICC, is offered by the United States Council for International Business (USCIB) in locations throughout the country. The full-day seminars train attendees on the revisions in global shipping and delivery terms. Workshops are aimed at exporters, importers, international attorneys, bankers, custom brokers, freight forwarders, purchasing managers, sales managers, carriers, credit professionals, compliance officers, insurers and trade consultants. The USCIB seminars will be taught by Frank J. Reynolds, Incoterms expert and member of the ICC's Incoterms Drafting Committee.
Seminar topics are described by the USCIB to include the following:

• Overview
• Explanation of revision procedure
• Definitions review
• Incoterm-by-Incoterm analysis
• An American perspective
• Relation to payment terms
• Relation to Sales/Purchasing Contract

The seminar will also include a copy of the official ICC "Incoterms® 2010" publication along with a companion book titled "Incoterms for Americans."
Whether a new entrant to international trade or an experienced practitioner, one should be aware that there are real risks in not being well versed in the effective Incoterms in international commercial sales transactions. Purchase a copy of the revised ICC publication or attend an ICC-accredited seminar to stay on top of the game into the next decade.

Reference:

"The main features of Incoterms 2010," by Callie Lombard, Creamer Media's Engineering News, October 8, 2010.
General Disclaimer: This article is for information purposes only and should not be used as a substitute for legal or tax advice.

Published in: business & finance global shipping and delivery terms transportation document handling commercial trade risk allocation electronic data interchange multi-modal transportation

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