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СИБИРСКИЙ ГОСУДАРСТВЕННЫЙ УНИВЕРСИТЕТ ПУТЕЙ СООБЩЕНИЯ (НИИЖТ)

Е.А. СТУЧИНСКАЯ, Е.Н. МАТВИЕНКО, Т.А. АРКАНОВА

ENGLISH

FOR CONTRACTING

IN INTERNATIONAL TRADE

АНГЛИЙСКИЙ ЯЗЫК В КОНТРАКТНОМ ДЕЛЕ

Рекомендовано УМО по образованию в области финансов, учета и мировой экономики в качестве учебного пособия для студентов, обучающихся по специальности «Мировая экономика»

Новосибирск 2009

УДК 339 = 20 С885

С т у ч и н с к а я Е.А., М а т в и е н к о Е.Н., А р к а н о в а Т.А. English for Contracting in International Trade. Английский язык в контрактном деле: Учеб. пособие для студентов внешнеэкономических специальностей. — Новосибирск: Изд-во СГУПСа, 2009. — 228 с.

ISBN 5-93461-367-7

Пособие описывает базовые теоретические и практические вопросы ведения международной торговли и основное содержание стандартного контракта купли-продажи: методы ведения международной торговли, коммерческую деятельность и типы контрактов, условия поставки и отгрузки товара, условия платежа, упаковку и маркировку, страхование, арбитраж. Предлагаемая система упражнений и тестовых заданий обеспечивает приобретение навыков использования английского языка в профессиональной деятельности.

Пособие предназначено для обучения английскому языку студентов и аспирантов вузов по специальности «Мировая экономика» и другим внешнеэкономическим специальностям, а также для специалистов, в чьи профессиональные обязанности входит знание основ контрактного дела в международной торговле.

Рекомендовано редакционно-издательским советом Сибирского государственного университета путей сообщения в качестве учебного пособия.

О т в е т с т в е н н ы й р е д а к т о р доц. Н.Н. Емельянова

Р е ц е н з е н т ы:

кафедра иностранных языков Сибирской академии государственной службы (завкафедрой, канд. филол. наук, доц. Н.М. Гришина)

профессор кафедры региональной экономики Сибирской академии государственной службы, канд. экон. наук Т.С. Суходаева

ISBN 5-93461-367-7

© Стучинская Е.А., Матвиенко Е.Н.,

 

Арканова Т.А., 2009

 

© Сибирский государственный

 

университет путей сообщения, 2009

Contents

 

Предисловие.....................................................................................................................................................

5

Unit 1. INTERNATIONAL TRADE ................................................................................................................

6

Text 1.1. Forms of International Business.........................................................................................................

7

Text 1.2. Approaches to Doing Business ..........................................................................................................

7

Text 1.3. Reasons for and Advantages of International Trade ..........................................................................

8

Text 1.4. The Document in Which International Trade Transactions Are Reflected ........................................

8

Text 1.5. The Case for Free Trade...................................................................................................................

12

Text 1.6. Trade Based on Absolute Advantage: Adam Smith.........................................................................

13

Text 1.7. Trade Based on Comparative Advantage: David Ricardo................................................................

14

Text 1.8. Relative Price ...................................................................................................................................

15

Text 1.9. Controlling International Trade........................................................................................................

18

Text 1.10. Methods of Controlling International Trade...................................................................................

20

Text 1.11. The General Agreement on Tariffs and Trade (GATT) .................................................................

22

Unit 2. METHODS OF FOREIGN TRADE. INTERMEDIARIES INVOLVED ..........................................

27

Text 2.1. Direct and Indirect Ways of Trade...................................................................................................

28

Text 2.2. Functions of Agents and Distributors...............................................................................................

31

Text 2.3. Specific Features of Joint Ventures..................................................................................................

35

Unit 3. COMMERCIAL ACTIVITIES AND TYPES OF CONTRACTS......................................................

41

Text 3.1. Foreign Trade Activities...................................................................................................................

42

Text 3.2. Countertrade.....................................................................................................................................

42

Text 3.3. Disposal of Countertraded Goods ....................................................................................................

45

Text 3.4. Other Forms of Basic Activities.......................................................................................................

46

Text 3.5. Licence Agreements.........................................................................................................................

50

Text 3.6. Types of Contracts ...........................................................................................................................

53

Text 3.7. Steps to Conclude the Contract of Sale ............................................................................................

54

Text 3.8. Main Characteristics of the Contract of Sale....................................................................................

55

Unit 4. TERMS OF DELIVERY.....................................................................................................................

65

Text 4.1. International Transportation.............................................................................................................

65

Text 4.2. Development of Incoterms...............................................................................................................

66

Text 4.3. Structure of Incoterms......................................................................................................................

70

Text 4.4. Mode of Transport and the Appropriate Incoterms 2000.................................................................

75

Unit 5. TERMS OF SHIPMENT.....................................................................................................................

82

Text 5.1. General Considerations about Transportation of Cargoes Abroad...................................................

83

Text 5.2. Transportation of Goods...................................................................................................................

83

Text 5.3. Difficulties in the World Sea Transportation ...................................................................................

86

Text 5.4. The Freight Market and Different Types of Chartering ...................................................................

87

Text 5.5. Charter Parties and Other Shipping Contracts..................................................................................

93

Text 5.6. Export Documents............................................................................................................................

96

Text 5.7. Documents of Dispatch....................................................................................................................

97

Text 5.8. Bill of Lading (B/L) .........................................................................................................................

97

Text 5.9. Types of Invoices and Certificate of Origin.....................................................................................

99

Unit 6. PACKING AND MARKING............................................................................................................

105

Text 6.1. The Essence of Packing and Marking ............................................................................................

106

Text 6.2. Functions and Tasks of Packing.....................................................................................................

107

Text 6.3. Loading and Unloading..................................................................................................................

111

Text 6.4. Recent Developments in Packing and Carrying Goods..................................................................

115

Text 6.5. Packing and Marking Regulations .................................................................................................

117

Unit 7. PAYMENT IN INTERNATIONAL TRADE...................................................................................

123

Text 7.1. How to Avoid Hazards in International Transactions ....................................................................

123

Text 7.2. Currency and Financial Terms of the Sales Contract.....................................................................

126

 

3

Text 7.3. Two Methods to Effect Payment....................................................................................................

128

Text 7.4. Bills of Exchange ...........................................................................................................................

129

Text 7.5. Letter of Credit...............................................................................................................................

131

Unit 8. FORCE MAJEURE AND INSURANCE .........................................................................................

138

Text 8.1. Force Majeure Circumstances........................................................................................................

138

Text 8.2. Why to Insure.................................................................................................................................

142

Text 8.3. Marine losses..................................................................................................................................

144

Text 8.4. Principles of Insurance...................................................................................................................

145

Text 8.5. Insurance Policies...........................................................................................................................

145

Unit 9. CLAIMS ANS SANCTIONS. ARBITRATION...............................................................................

151

Text 9.1. Application of National and International Legislation in Arbitration ............................................

152

Text 9.2. Infringement of Liabilities .............................................................................................................

153

Text 9.3. The Seat for Arbitration .................................................................................................................

157

Text 9.4. Establishment of the Arbitration Procedure in Russia....................................................................

158

Appendix 1. SUPPLEMENTARY READING..............................................................................................

165

Appendix 2. CONTRACTS ..........................................................................................................................

180

Appendix 3. CASE STUDY .........................................................................................................................

188

Appendix 4. TESTS AND READING COMPREHENSION........................................................................

206

GLOSSARY..................................................................................................................................................

218

REFERENCES.............................................................................................................................................. 227

4

ПРЕДИСЛОВИЕ

Впоследнее время резко возросло число предприятий и организаций, принимающих участие

вэкономическом, производственном и научно-техническом сотрудничестве с партнерами из зарубежных стран. Это означает, что во внешнеэкономическую деятельность вовлекается все большее количество специалистов различных отраслей народного хозяйства. Таким образом, особую актуальность приобретают вопросы профессиональной компетенции этих специалистов в области внешних экономических связей.

Понятие «внешнеэкономическая деятельность» охватывает самые разнообразные сферы деятельности, такие как общий маркетинг и технику проведения внешнеторговых операций, финансирование и рекламу, умение вести переговоры и разбираться в деталях внешнеторгового контракта и т.п. Компетентность специалиста и определяется, прежде всего, глубиной его знаний в этих областях, а также умением использовать их в конкретной деятельности.

Целью данного пособия является приобретение студентами определенных профессиональных компетенций, а именно, навыков использования английского языка в профессиональной деятельности: чтение и перевод источников информации на английском языке, связанных с характером предстоящей профессиональной деятельности (профессиональная научная литература, газетно-журнальные статьи и материалы Интернета), анализ прочитанного, выборка необходимого материала, обобщение и применение этой информации в практической деятельности. Аутентичные тексты пособия, система упражнений и контрольно-тестовые задания помогают в достижении этой цели.

Пособие состоит из девяти уроков (Units), четырех приложений (Appendices) и глоссария (Glossary). Для лучшей ориентации в учебном материале и облегчения работы преподавателей и студентов с данным пособием все уроки имеют четкую унифицированную структуру:

каждый урок предваряется вопросами дискуссионного характера, целью которых является проверка уже имеющихся знаний и развитие речевых навыков;

все уроки разделены на смысловые блоки (Reading), каждый из которых содержит упражнение по введению основной терминологии (Key concepts and terms), тексты для чтения и задания по контролю понимания прочитанного (Concept check);

после каждого блока следуют упражнения на отработку и закрепление лексического материала (Language study);

все тексты блоков предваряются предтекстовыми заданиями, направленными на развитие умений извлекать основную смысловую информацию;

раздел урока, предназначенный для формирования навыков и умений работы с внешнеторговым контрактом купли-продажи (Contracting), знакомит с основным содержанием типового контракта купли-продажи и направлен на развитие навыков и умений чтения, понимания и обсуждения соответствующей теме урока статьи контракта купли – продажи (Units 3–9);

раздел урока, содержащий соответствующий тематике урока текст на русском языке для его изложения на английском языке (Rendering), направлен на практическое применение сформированных речевых навыков и умений при работе с текстами профессиональной тематики.

Пособие содержит четыре приложения и глоссарий:

приложение 1 (Supplementary reading) предлагает дополнительные тексты для чтения на английском языке, связанные с основными текстами пособия и расширяющие содержание курса;

приложение 2 (Contracts) содержит образцы внешнеторгового контракта купли-продажи на русском и английском языках;

приложение 3 (Case study) представляет реальные внешнеэкономические проблемные ситуации, позволяющие решать предлагаемые проблемы компаний, использовать полученные знания о внешнеэкономической деятельности и контрактном деле при анализе ситуаций, а также развивать коммуникативные навыки в процессе презентации материала;

приложение 4 (Tests and reading comprehension) содержит тесты (Tests) на контроль усвоенного понятийно-терминологического аппарата уроков и тестовые задания (Reading comprehension) на проверку пройденного материала, а также навыков понимания текстов и умения извлекать из них необходимую информацию.

Глоссарий учебного пособия способствует закреплению и активизации профессиональной лексики.

Авторы

5

Unit 1

INTERNATIONAL TRADE

DISCUSSION

1.We are all traders. Do you agree? Does it sound good?

2.What do people trade? What are you trading now?

3.Why and how do people trade?

4.Do you agree with the following statements?

“Smart nations try to get the most back from what they sell”.

“The cheaper imports are the better off the nation is”.

“Inflows of money tend to equal outflows”.

READING

WHY INTERNATIONAL TRADE ARISES

Key concepts and terms

Match up the terms on the left with the definitions on the right.

1) trade

a) a system of organising the manufacture of an article in a series of

 

separate specialised operations, each of which is carried out by a

 

different worker or group of workers, region or country, leading to

 

interdependence

2) supply

b) the benefit that could have been gained from an alternative use of the

 

same resource

3) demand

c) the factors which make it possible for larger organisations or

 

countries to produce goods or services more cheaply than smaller ones

4) specialisation

d) the act of buying and selling goods and services either on the

 

domestic (wholesale and retail) markets or on the international (import

 

and export) markets

5) opportunity cost

e) a certificate of creditorship or property carrying the right to receive

 

interest or dividend, such as shares or bonds

6) economy of scale

f) that part of the balance of payments composed of the balance of trade

 

and the invisible balance

7) real asset

g) the amount of a commodity that producers are willing and able to

 

offer for sale at a specified price

8) security

h) the amount of a commodity that consumers are willing and able to

 

purchase at a specified price

9) current account

i) an identifiable asset, such as a building, machinery and equipment,

 

patents and trade marks in contrast to financial liabilities

10) portfolio

j) money that people or companies of one country invest in another by

investment

buying property, building factories, buying businesses, etc., thus

 

acquiring the right to control property abroad

11) foreign direct

k) the difference over a given time between total payments to foreign

investment

nations (arising from imports of goods and services and transfers

 

abroad of capital, interest, grants, etc.) and total receipts from foreign

 

nations (arising from exports of goods and services and transfers from

 

abroad of capital, interest, grants, etc.)

12) balance of trade

l) investment that provides a yield but does not provide the right to

 

control property; capital employed for the purchase of bonds and shares

13) balance of

m) the difference in value between total exports and total imports of

payments

goods

6

14) capital account

n) differentiation and specialisation of labour

15) labour division

o) that part of a balance of payments composed of movements of

 

capital and international loans and grants; a record of international

 

exchanges of assets and liabilities

16) foreign exchange

p) foreign bills and currencies

Text 1.1. Study the brief description of the five forms of world business, which link the national economies, forming the global economy. Elicit more information about them from your fellow-students.

 

 

Forms of International Business

 

 

International trade

An exchange of goods, results of intellectual labour, services and work

 

 

force on the international level. International trade is the most ancient

 

 

and important form of the world business. At the heart of international

 

 

trade lies the tendency of the world economy to use the results of the

 

 

international division of labour most efficiently. This leads to

 

 

specialisation of countries in the production of a particular good. So, the

 

 

main reason for people and nations to trade is the benefit derived from

 

 

specialisation. Another one is the difference in technology. Technology

 

 

refers to the techniques used to turn resources (labour, capital, land) into

 

 

outputs.

International

production

Production relations for joint activities in terms of international labour

cooperation

 

division. Joint ventures and multinationals are the examples of this

 

 

form. Nowadays employing foreign assets is widely spread: selling and

 

 

purchasing patents and licences, employing foreign technologies,

 

 

trademarks and brands, franchising, transfer of know-how, etc.

 

 

International services

Economic goods which do not take a tangible and storable form but

 

 

bring benefit to the consumer. They include consulting, transport,

 

 

insurance, scientific and technical, tourist and other services.

 

 

 

International

finance and

World business related to the operations with money and securities.

credit relations

 

International investments

The activity based on international capital transfer from one country to

 

 

another aiming at profit gaining and social effect. There are direct

 

 

investments acquiring the right of ownership and portfolio investments.

Text 1.2. Read the text and discuss the difference between “cowboy capitalism” and “global village” approaches to doing business both internally and externally.

Approaches to Doing Business

Economist Kenneth Boulding uses the term ‘cowboy capitalism’ to describe the American economy of yesterday. He compares yesterday’s capitalism to the early American West. The land was so rich and the resources so vast that people could abuse their environment with impunity. They could cut down trees, kill buffalo, and plow the grass land. And if erosion began to take the land or the animals got sparse, the answer was easy: move on to a virgin territory, and leave the worn-out land behind. There was always more over the horizon.

There is nothing we can do to change the past and Boulding’s cowboys are now gone. Boulding says that the time of cowboy capitalism is also gone. The cowboy capitalist cannot operate successfully without a vast world of untapped markets. And it is easy to see that the untapped markets are getting fewer and fewer, faster and faster. The time for quick and dirty profits has run out.

Another term to describe our world became popular in the 1960s. We are on ‘spaceship Earth’, according to some writers. All persons are part of one survival system, hurtling through space together. Each one's actions affect everyone else on the spaceship. We can no longer afford to use up resources. We must recycle them and use them again.

Almost everything being said about natural resources in our crowded times is also true for international business practice. Business people of the international global village must recognize that

7

the time of cowboy capitalism is over. The abuse of any part of the world’s environment must be seen as hazardous to the progress of all our fellow travellers on ‘spaceship Earth’. This new awareness must accompany the learning of world trade concepts. International marketing is no longer a matter of language, distance, and politics. International trade demands a place in the education of all business people who mean to survive in the global market.

Texts 1.3. Read the text and explain how and why international trade arises.

Reasons for and Advantages of International Trade

International trade arises simply because countries differ in their demand for goods and in their ability to produce them.

On the demand side, a country may be able to produce a particular good but not in the quantity it requires. The USA, for instance, is a net importer of oil. On the other hand, Kuwait does not require all the oil it can produce. Without international trade most of its deposits would remain untapped.

On the supply side, resources are not evenly distributed throughout the world. One country may have an abundance of land; another may have a skilled labour force. Capital, oil, mineral deposits, cheap unskilled labour and a tropical climate are other factors possessed by different countries in varying amounts.

Nor can these factors be transferred easily from one country to another. Climate, land and mineral deposits are obviously specific. Labour is far more immobile internationally than within its own national boundaries. Capital, too, moves less easily; exchange controls, political risks and simple ignorance of possibilities may prevent investors from moving funds abroad.

Because factors are difficult to shift, the alternative – moving goods made by those factors – is adopted. What happens is that countries specialise in producing those goods in which they have the greatest comparative advantage, exchanging them for the goods of other countries.

International trade has the following advantages.

1) It enables countries to obtain the benefits of specialisation.

Specialisation by countries improves their standard of living. It is obvious that without international trade many countries would have to do without certain products. Britain, for instance, has no gold or aluminum, and Sweden has no oil. More important, many goods can be enjoyed which if produced at home would be available only to the very wealthy, for instance, bananas, spices, oranges and peaches in Britain. But this benefit can be applied generally to all imports. The law of comparative costs shows that, provided countries differ in the relative costs of producing certain goods, they can probably gain by specialisation and trade. The law of comparative costs merely shows how two countries can specialise to advantage when their opportunity costs differ.

2)By expanding the market, international trade enables the benefits of large-scale production to be obtained.

Many products, e.g. computers, pharmaceuticals, aircraft and cars, are produced under conditions of decreasing cost. Here the home market is too small to exploit fully the advantages of large-scale production. This applies particularly to small countries such as Switzerland. In such cases international trade lowers costs. So, the economy of scale implies a fall in average costs resulting from an increase in the scale of production.

3)International trade increases competition and thereby promotes efficiency in production.

Any restriction of the market makes it easier for one seller to gain control. In contrast, international trade enhances competition. A government must always consider the risk of a monopoly developing when it gives protection to the home industry by tariffs, etc.

4) International trade promotes beneficial political links between countries. Examples of this are the European Community (EC), and with the Commonwealth trade is still an important link.

Text 1.4. Read the text and spell out the purpose of the balance of payments.

The Document in Which International Trade Transactions Are Reflected

International trade transactions are exposed in the balance of payments. The balance of payments is an overall statement of a country’s economic transactions with the rest of the world over some period, often a year. It is the net result of all transactions, including trade in goods, between one

8

country and all others. A table of the balance of payments shows amounts received from foreign countries and amounts spent abroad. If receipts exceed spending, a country has a balance surplus. On the contrary, if spending exceeds receipts, a country has an adverse balance. There are a great many of transactions with ‘invisible’ items, such as trade in services (sales of services to non-residents and purchases of services from non-residents: services of airlines and shipping, hotels and other tourist facilities, banking, insurance, tourism, medical services and education, and various forms of consultancy) and ‘visible’ items which are exports and imports of goods that have to be physically transported between countries.

The balance of payments record or account is conventionally divided into the current account and the capital account. The current account records payments and receipts for immediate transactions, such as the sale of goods and rendering of services. Consequently, it is subdivided into the merchandise, or visible account (often also termed the trade account or balance of trade), comprising the movement of goods; and invisible account, comprising the movement of services, transfers and investment income. Services comprise transport, travel, banking, insurance, broking and other activities. Transfers include money movement for the transmission of legacies, pensions and other non-commercial items. Investment income consists of the interest, profits and dividends deriving from capital placed abroad.

The current account is contrasted with the capital account, where transactions do not involve income or expenditure, but change the form in which assets are held. Receipt of a loan, for example, is not income, but exchange of cash now for a promise to repay, usually with interest, in the future. The capital account shows money movements not immediately devoted to trade, such as investments; it is a record of international exchanges of assets and liabilities. This account is normally subdivided into long-term and short-term capital, the former relating to capital employed for investment purposes, the latter to bank advances, trade credit and the like. Long-term capital is again subdivided into foreign direct investment (FDI) capital, or capital employed for the establishment of commercial premises and industrial plant; and portfolio investment capital, or capital employed for the purchase of bonds and shares.

FDI implies the acquisition of real assets abroad. This may be done by remitting money abroad to be spent on acquiring land, mines, or machinery, or buying existing foreign businesses. With FDI, the right to control property is acquired. Portfolio investments do not provide the right to control property; they only give a profit or yield.

The third element in the balance of payments is changes in official foreign exchange reserves. Such reserves are liquid assets held by a country’s government or central bank for the purpose of intervening in the foreign exchange market. These include gold or convertible foreign currencies, for example, US dollars for countries other than the United States, and government securities denominated in these currencies.

Concept check

1. Complete the table with details about the five forms of international business.

Forms of International Business

1) International trade

 

2)

3)

4)

5)

 

 

 

 

 

 

a) the oldest form

of

a)

a)

a)

a)

international business

 

 

 

 

 

 

 

 

 

 

 

b)

 

b)

b)

b)

b)

 

 

 

 

 

 

 

2. Fill in the table with specific features of “cowboy capitalism” and “spaceship Earth/global village” and describe these concepts.

“cowboy capitalism”

“spaceship Earth/global village”

 

 

1)

1)

 

 

2)

2)

 

 

 

 

9

3.Read each statement and decide if it is true or false according to Text 1.3. Explain your point

of view.

1)Supply and demand are primary factors that give rise to international trade.

2)All production factors are internationally mobile.

3)Specialisation of a country can be explained by different opportunity costs.

4)International trade may either enable or disable favourable political relations between countries.

5)It is more problematic for bigger countries to enjoy the pluses of large-scale production.

6)Protection of home industries enhances competition.

7)Without specialisation certain products would be accessible only to the rich.

4.Use the words in the box to complete the table. Use a dictionary for help.

 

 

barriers

dumping

protectionism

 

quotas

open borders

tariffs

 

 

laissez-faire

deregulation

 

strategic industry

liberalise

subsidise

 

 

infant industries

restrictions

 

customs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In favour of free trade

 

 

 

Against free trade

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1) open borders

 

 

 

 

1) barriers

 

 

 

 

 

2)

 

 

 

 

2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.Discuss the following questions.

1)Is free trade always a good thing?

2)Do you think it leads to the creation of jobs, or to unemployment? Why?

3)Should certain industries be protected? If so, which and why?

6.Complete the chart with the three parts in the balance of payments and their details. Describe the balance of payments.

7. “Exports are good for a country. Imports are bad for a country.” Do you agree with this statement?

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