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Part I

Unit 1. International Trade

1. Introduction to International Trade

1a. Discussion

1.How long have people been trading?

2.Why do people trade with each other?

3.What is international trade?

4.How are you involved in international trade?

1b. Reading

Read the text about the basics of international trade and compare with your ideas.

Introduction to International Trade

As long as people have been aware of other people, they have traded with each other to improve their lives. Nearly 2000 years ago, the philosopher Plutarch wrote the following about trade: “…the sea brought the Greeks the vine from India, from Greece transmitted the use of grain across the sea, from Phoenicia imported letters as a memorial against forgetfulness, thus preventing the greater part of mankind from being wineless, grainless, and unlettered.” People have traded non-stop since then, all over the world.

Nowadays, international trade is part of our daily life. You probably work on a computer which was produced in China using Japanese chips and an American operating system. You may be wearing a pair of trousers made in Taiwan, Italian sunglasses, and a Swiss watch. Perhaps tonight you will have a cup of Brazilian coffee with your dinner. You may drive a Korean or German car or use a Finnish phone. This is our reality today, which has become possible due to increasing international trade.

International trade is the exchange of goods and services across international boundaries or territories. Countries trade with one another because they can buy foreign goods at lower price than it costs to make the same goods at home. International trade enables a nation to specialise in those goods it can produce most cheaply and efficiently. Further, countries cannot produce all goods because of the geographical distribution of the natural resources. Trade enables a country to consume more than it would be able to produce if it depended only on its resources. Finally, trade enlarges the potential market for the goods of a particular economy. Thus trade has always been the major force behind the economic relations among nations.

Today, international trade involves a vast number of different types of transactions, ranging from conventional exporting and importing to electronic deliveries. At the same time, the types of things traded have grown to include not only traditional commodities but also services and even “intangibles” such as copyright, trademark, licences, etc. With the advent of the computer and Internet, the shape of trade will continue to evolve.

Like any business transaction, exporting and importing involve local laws and regulations. However, unlike traditional domestic business, exporting and importing also involve the laws and regulations of another country. For example, if you export a product from your country, country A, to another country, country B, your business will need to follow all the laws and rules in country A for taking that product out of that country, as well as all laws and rules in country B for bringing that product into that country.

In the 1900’s, the need to establish standardised operating procedures in international trade was recognised, and in 1919 the International Chamber of Commerce (ICC) was established. Today, exporters and importers continue to rely on its principles.

International trade is not the same everywhere; trade between the USA and Canada differs from trade between the USA and Russia. There are several reasons for that.

First, governments monitor trade which crosses their national frontiers and treat the imported goods from various countries differently. The government normally decides on a set of policies for each trading partner under which tariffs or quota restrictions are imposed on imported goods. These tariffs or quotas are lowered for countries with which there are bilateral trade agreements or multilateral trade agreements.

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Second, international trade may involve the use of different national currencies. The buyer of the goods pays in one currency, and the foreign producer of the same purchased goods receives the price of his products in a different currency.

In order to safeguard the best interest of every country, a number of organisations, such as the World Trade Organisation (WTO), were founded in the XX century. The WTO is an international, multilateral organisation, which sets the rules for the global trading system and resolves disputes between its member states.

1c. Comprehension

Answer the following questions on the text:

1.What makes countries trade with each other?

2.In what way has international trade changed in the last decades?

3.What is the difference between doing business locally and internationally?

4.Why was the International Chamber of Commerce founded?

5.Why do countries treat imported goods differently?

6.What are the main duties of the WTO?

1d. Pronunciation

Check the pronunciation of the following words:

boundaries, foreign, specialise, resources, enlarges, transactions, intangibles, laws, standardised, procedures, recognised, treat, currencies.

1e. Vocabulary

Find the italicised words in the text which mean the following:

a)different

b)founded

c)traditional

d)increases

e)deals

f)borders

g)goods

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

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1f. Discussion

Match countries to their geographical regions and think about typical commodities which these countries export.

2. Who is Who in International Trade

2a. Over to you

Study the chart showing the international supply chain and identify the parties using the words from the box.

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2b. Reading

Read the text about the main responsibilities of the parties involved in international trade. What area would you like to work in and why?

Who is Who in International Trade

The international trade sector includes many different organisations engaged in a wide range of

trade-related activities. The key players are:

Manufacturers/traders/exporters/importers – they make, purchase, and sell products and services. Freight forwarders (also known as forwarding agents, freight brokers, transit agents) help exporters

in a variety of ways to prepare shipments for overseas delivery. They advise and assist clients on how to

move goods most efficiently from one destination to another.

Carriers (shipping companies or shipping lines, airline companies or airlines, hauliers, railway companies) transport goods from point to point by sea, air, road, rail, or by any combination of these modes.

Carriers work closely with importers, customs brokers, exporters, and freight forwarders prior to arrival or

departure of merchandise.

Customs brokers help to clear goods through Customs. They can provide information on export and import duties and the methods of goods clearance, prepare and process import documents, and arrange for

the clearance of cargo.

Customs officials (officers, inspectors) inspect incoming or outgoing goods, check documents, examine luggage, clear goods for import or export, collect import and export duties, provide information about customs procedures, board a ship/plane/train/lorry to detect illegal activity.

Ports, both sea and air, generally provide the infrastructure for the carrier to receive, warehouse, and ship the goods. The goods are usually transported from the exporter to the port directly and stored until ready for shipment.

Banks offer services to finance export and import transactions and facilitate payment for the traded

goods.

Insurance agencies provide insurance to protect exporters against commercial (e.g. slow payment) or political risks (e.g. war) and against losses or damage to cargo stored in warehouses or in transit to their export or import destination.

2c. Pronunciation

Check the pronunciation of the following words:

engaged, key, freight, forwarder, variety, hauliers, prior, merchandise, officials, luggage, procedures, illegal, infrastructure, warehouse, facilitate, insurance, damage.

2d. Vocabulary

Find English equivalents of the following in the text:

производители; грузовые экспедиторы; партии (товаров); доставка; пункт назначения; перевозчики; судоходные компании; авиакомпании; автотранспортные компании; железнодорожные компании; от места до места; способы (перевозки); таможенные брокеры; до прибытия или отправления товара; проводить таможенную очистку товара; методы таможенной

очистки товара; таможенные служащие; ввозимые или вывозимые товары; взимать импортные и экспортные пошлины; таможенные процедуры; проверять документы; проверять багаж; подниматься на борт корабля; грузовик; выявлять незаконную деятельность; хранить на складе; отправлять товары; отгрузка; финансировать экспортные сделки; помогать производить оплату; страховые агентства; защищать экспортеров от коммерческих рисков; предоставлять страховку от потери груза или его повреждений; в пути.

2d. Pair work

Study the text about the main functions of freight forwarders. Then read your card and roleplay the telephone conversation.

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Freight Forwarders

Transporting goods to an international market is a complex and time-consuming process. Freight forwarders can help exporters reduce risks and solve problems associated with international trade logistics. Logistics is the planning, organisation, management, execution, and control of freight transport operations.

A freight forwarder is often described as a travel agent for transporting goods. Whether the exporting firm is large or small, the shipment light or heavy, freight forwarders will take care of cargo from door to door if requested to do so. Many specialise in arranging shipments to certain countries, while others concentrate on particular types of products. They often consolidate many separate consignments that have the same destination into one large shipment.

Their functions also include advising clients on how best to transport goods to or from any area in the world; calculating all costs to transport export goods from the factory to the ultimate destination; assuring that shipments comply with the import laws of foreign countries; assuring that all shipping documents required by the exporting and importing countries are properly prepared; locating the best or most inexpensive vessel to transport the goods; and tracing the cargo to the final destination. In addition, freight forwarders can offer customs clearance, packing and labelling services. These agencies will negotiate rates for exporters with carriers, customs brokers, and insurance firms.

In general, forwarders’ extensive knowledge of documentation requirements, regulations, transportation costs, and banking practices can ease the exporting process for many companies.

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Unit 2. Modes of Transport 1. Sea Freight

1a. Vocabulary

The eight words in this puzzle can all complete the sentence: “We are sending the goods by … .” What are these words?

1

T

2

3

A

4

R

5

S

6

P

7

S

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R

Complete the sentences with the words from the box.

trucks location speed perishable delivery integral cost modes ocean

1.There are 3 fundamental _____ of transportation.

2.The appropriate transportation mode depends on _____, _____, _____.

3.For _____ goods, air transport is preferable.

4.A quick _____costs more.

5.Packing costs for air freight are cheaper than for _____ freight.

6.Land transportation is an _____ part of any shipment.

7._____ are capable of going to more places than trains.

1b. Discussion

Look at the bar chart (Fig.1) representing the modal split. What method of transportation plays the biggest role in international trade?

Figure 1. Modal Split of International Trade in Goods ($ billion) 2000-2006 (Source: GlobalInsight)

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1с. Reading

Read the text about the main facts concerning the international shipping industry.

Sea Freight

Choosing the right transportation method, or combination of methods, is vital to export success. Over 90% of world trade is carried by the international shipping industry. Without shipping the

import and export of goods on the scale necessary for the modern world would not be possible.

This kind of trade continues to expand, bringing benefits for consumers across the world through low and decreasing freight costs. Advances in technology have also made shipping an increasingly efficient and fast method of transportation.

The world fleet is registered in over 150 nations, so there is strong competition between both individual shipping companies and different countries.

Shipping is regulated at the global level by the United Nations International Maritime Organisation (IMO), thus regulations on matters such as construction standards, navigational rules, and crew qualifications are common to all ships in international trade.

1d. Pronunciation

Check the pronunciation of the following words:

vital, success, scale, expand, consumers, low, decreasing, advances, efficient, fleet, registered, competition, maritime, construction, navigational, crew, qualifications.

1e. Discussion

1. What ideas can be referred to advantages or disadvantages of sea freight? Tick (√ ) in the appropriate column.

2.Look at the chart (Fig.2) which shows the percentage of the world fleet based on the total deadweight tonnage and think about possible reasons for countries’ positions on the scoreboard. Can you name the capitals of these countries?

Figure 2. Percentage of world fleet (Source: UNCTAD, 2007)

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2. Types of Ships

2a. Discussion

Describe the pie-chart showing the percentage of different types of ships in the world fleet.

Percentage of different types of ships

General cargo ships (37%)

12% 4%

Bulk carriers (14%)

Container ships (8%)

14%

Passenger ships (12%)

25%

Other (4%)

Figure 3. Different types of ships as percentage of total number of ships in world fleet (Source: Lloyd's Register Fairplay, January 2008)

2b. Reading

Read the text about different types of cargo ships. Match the picture with the type. Identify the parts of the ships which were mentioned.

Types of Cargo Ships

In general, commodities are either moved in bulk or as general cargo. Most finished goods are shipped as general cargo, while raw materials in bigger lots are usually bulk cargos. The cargo characteristics will influence the choice of a ship needed for a specific job. Different ships are constructed to carry different

bulk cargos.

Traditional general cargo ship

A traditional general cargo ship, or freighter, carries break bulk cargo as opposed to containerised cargo. Freighters utilise numerous deck-mounted cranes to transfer uncontainerised cargo from a wharf or a

lighter onto the vessel where stevedores stow the cargo into the holds.

Ro-Ro (Roll-on Roll-off) vessel

A Ro-Ro (Roll-on Roll-off) vessel is designed to transport motor vehicles or any other rolling stock. They have a hinged ramp that allows motor vehicles (automobiles, trucks, trailers, tractors, buses, yachts,

etc.) to drive on and off the vessel.

Container vessel

A container vessel is designed to carry uniform-sized ocean freight containers 20ft or 40ft long, 8ft wide, and 8.5ft to 9.5ft high. Containers are loaded by cranes into tall slots that extend from three to six

containers below deck to three to six containers above deck.

Bulk carrier

A bulk carrier is designed to carry dry bulk cargo. It typically has a flush deck with numerous

waterproof hatches covering holds in which bulk cargo is stored. Some bulk carriers have deck cranes.

Tanker

A crude oil tanker is a liquid bulk vessel designed specifically to carry crude oil. A tanker’s deck is

covered with pipes and pumps used to transport crude oil from ship to shore or from hold to hold.

Liquified Natural Gas Carrier

An LNG Carrier is designed to transport natural gas that has been cooled at high pressure and extremely low temperature (-260°F/-162°C) until it contracts into liquid. LNG spherical storage tanks are positioned half below and half above the deck.

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