Chapter 3 Flashcards
What organisation regulates international trade and what does it aim to achieve
WTO is the organisation that regulates international trade
It aims to mediate disputes (Arbitration)
Provides a forum for negotiating trade agreements
What are the advantages and disadvantages of International Trade
Advantages: Peaceful and Collaborative relationships
Economy market stimulation
Emerging country support
Disadvantages:
Poor political relations
Change in currency values
What is a trade bloc?
Group of nations that create preferential trade conditions, they lesser restrictions on tariffs and import duties
Common Market
Free Trade
What is the role of a custom agency
Custom agencies ensure prohibited goods do not make it to the end user
They have already restricted the limit on commodity quotas and aim to ensure these are not exceeded
What is a T1 document
A T1 document accompanys goods in transit through the EU
What is a Single Administrative Document
A document that accompanies goods leaving or entering the EU
What is a New Computerised Transit System
Electronically tracks the movement of goods being transported within the EU
What is a Customs Declartion Service
Allows users to submit electronic import and export requests
What is non-preferential origin and preferential origin
Non preferential- goods are subject to tariff quotas between nations
Preferential- no duty charges or limitations (remember as preferential, preferred option)
What is a call for competition
A call for competition is released by OJEU to make potential suppliers aware that they may participate in a sourcing competition
When discussing the public sector what restrictions do they have when it comes to rendering
Pressure
Public scrutiny
Requires a good audit trail
Over a certain £ must be open to competition, start with a call for competition in the OJEU. A PIN can be released before.
Public interest test: should the info be released to the public
Import duties- what needs to be considered
Need good understanding and frequent communication with supplier to avoid any unexpected pricing increases
What are the reasons for limiting imported goods
To protect end users
To protect infant industries
National defence products
Strictly monitor goods
What is a bill of lading
A bill of lading is a document stating what is required of those transporting, consigning and carrying the goods until delivery
What is the certificate of origin
The certificate of origin specifies the origin of goods, where the goods came from I.e. a particular country
What is a carnet?
A temporary free movement of goods within a designated boundary, within the EU under the Single EU act allows free movement of goods for member states
What is the order of Incoterms from highest risk of buyer to supplier
Highest risk for Buyer: Ex-Works
FCA
CIF
Highest risk for Supplier: DAP, DDP, DAP
What payment mechanism benefits the buyer?
Open Account as this is where the supplier delivers the items before payment is made
What payment mechanism benefits the supplier?
Cash in Advance benefits the supplier as the buyer will pay upfront for goods before receiving them
What is the payment mechanism, time draft?
Time draft is more favourable to the buyer as it is a guarantee of payment from the bank, once the goods have been delivered there is a delay with payment so the buyer can inspect the goods
What is sight draft?
Sight draft is similar to term draft but is more favourable to the supplier as there is no delay for inspection
What is a letter of credit?
A letter of credit is where the supplier is paid once the conditions of the contract have been met
What is currency hedging
Currency hedging is buying currency ahead of a future payment to secure the value
How can an organisation safe guard themselves against price fluctuations?
Paying the supplier upfront
Ensuring the buyers nations value is greater than the suppliers so they can exchange a small quantity for a large quantity
