Unit 3 Negotiating international trade agreements

Aims and objectives of Unit 3:

•• to learn the issues related to the development and authorization of foreign trade contracts;

•• to develop the skills of reading and comprehending texts about different types of trade negotiations and agreements;

•• to train the students to infer the meaning of unfamiliar words through contextual clues;

•• to enrich the students’ professional vocabulary related to the topicsofUnit3andstrengthentheirabilitytouseitinprofessional discourse;

•• to develop the learners’ skills and habits of translating and rendering texts by summing up information;

•• to improve the students’speaking and writing competences within the framework of Unit 3.

Task 1. ReadText1“Whatistradenegotiation”byMaryMcMahon.

Text 1

What is trade negotiation?

trade negotiation is a process in which nations meet together to discuss the possibility of trade, with the goal of reaching a trade agreement. Both nations have a vested interest in negotiating a successful trade agreement because it has the potential of promoting economic growth and allowing companies to expand their markets, but both are also concerned with protecting their economy and safety.

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Trade negotiations can become quite complex, and may involve more than two nations, along with moderators who take a neutral stance to help the countries reach an agreement.

International trade is one of the backbones of almost every economy in the world. While many companies do thriving business domestically, the ability to expand into international markets is critical. Nations also count on international trade to access goods and services which cannot be produced domestically, and to export goods and services which they know other nations want. For example, if a country cannot produce silk, it needs to be able to obtain silk from another nation in order to meet the demand for silk within its borders.

During a trade negotiation, representatives of nations interested in trading with each other meet to discuss the terms of those trades. Issues such as tariffs and taxes, holding periods for goods, and trade restrictions may be discussed. Nations may also be concerned with topics such as public health or food safety which might be impacted through foreign trade. For example, a country with no history of mad cow disease, might state that it is not willing to import beef products from a country with a history of this disease, due to concerns about contamination.

(From: https://www.wisegeek.com/what-is-trade-negotiation.htm)

Task 2. Make up a list of new words from Text 1. Try to deduce their meanings from the context.

Task 3. Answer the questions to Text 1.

1.What is the goal of trade negotiation?

2.Why is it important to reach a successful trade agreement for the contracting parties?

3.How many nations can participate in negotiations?

4.What is the function of negotiation moderators?

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5.Why is it critical for many companies and nations to expand into international markets?

6.Is it necessary for representatives of nations interested in trading with each other to discuss the terms of those trades?

7.What issues do they normally discuss?

8.May negotiators also be concerned with topics such as public health or food safety?

Task 4. Retell Text 1 by using the key words and the starting points for each sentence (idea). Pay special attention to the underlined discourse markers that are used to link the ideas.

To begin with, trade negotiation is a process …

Asuccessful trade agreement has the potential of … It is noteworthy that trade negotiations may involve …

Expansion into international markets is critical to access … During a trade negotiation, representatives of nations meet to

discuss such issues as …

To conclude, we should mention the topics of special concern which are …

Task 5. Write an essay (up to 250 words): “The role of trade negotiations in promoting economic growth.”

Task 6. Read Text 2 and sum it up by speaking on the UK trade policy which requires active engagement in the negotiation process with trading partners on new terms.

Text 2

Managing multiple negotiations

UK Government has committed to a transparent and inclusive trade policy, which will require active engagement with business and civil society throughout negotiations.

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The UK has not required trade negotiation skills for the past 40 years because the European Commission has negotiated agreements on behalf of the UK. After leaving the EU, the UK will negotiate on its own behalf against highly experienced trading partners.

Trade negotiations will involve complex trade-offs between different policy priorities, and require strong discipline across government. For example, the US has set out in its negotiating objectives its intention to open up the UK market for a wide range of US goods and services. This includes, for example, food products, where US regulatory arrangements are currently very different from the UK. Reductions in tariffs can also erode the benefit that the UK accords to some developing country products to help them export to the UK. Trade-offs in negotiations will impact differently on the interests of different sectors or areas of the UK. For example, unlike the UK as a whole, Scotland is a net exporter of fish, while London and the south-east of England account for more than 60% of the UK’s service exports.

A lack of engagement can be problematic for trade deals. For example, the recent Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU faced criticism from a wide range of stakeholders who did not consider their views were taken into account.

(From: https://www.nao.org.uk/wp-content/uploads/ 2019/05/Preparing-for-trade-negotiations.pdf)

Task 7. Fill in the missing words.

The WTO … the place where member governments try … sort out the trade problems they face with each … . It plays a key … in supporting free trade … in resolving trade disputes. Countries set out minimum levels … market access they will give … trading partners. The … currently has 164 member states.

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Task 8. Read Text 3 and translate it into Russian.

Text 3

Free trade agreements

Free trade agreements (FTAs) are treaties requiring scrutiny and ratification in Parliament before they come into force. Securing final ratification of trade deals will depend on ensuring Parliament has authorized the agreements. Once ratified, an FTA provides the legal framework for trade with new partners but may not on its own deliver an increase in exports without UK businesses seeking new commercial opportunities.

FTAs vary in scope and depth and can cover many different policy areas. Free trade agreements establish more favourable terms of trade between countries than those set out at the WTO. They range from purely lowering tariffs, to deep integrated trading blocs which remove trade barriers through mutual recognition of regulatory arrangements or authorization, and may allow authorizations of capital, goods, services and people.

FTAs can take many forms: bilateral, plurilateral – a sub-set of WTO members (such as the Trans-Pacific Partnership) – or multilateral.

FTAsvaryinscopeandlevelofambition.Lesscomplexagreements focus more on trade in goods and the elimination of tariffs. In recent times the scope and depth of FTAs has grown, extending beyond goods to trade in services, digital economy, intellectual property, investment and establishing provisions that harmonise areas such as labour, competition, consumer and environmental standards.

(From: https://www.nao.org.uk/wp-content/uploads/ 2019/05/Preparing-for-trade-negotiations.pdf )

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Task 9. Translate the sentences into English.

1.Правительства при переговорах сталкиваются с двумя проблемами: во-первых, с необходимостью представлять национальные интересы своих стран; во-вторых, обеспечить одобрение внутри страны решений, согласованных на международном уровне.

2.Экспертам не удалось устранить разногласия по ключевым вопросам переговоров.

3.Участники переговоров используют средства массовой информации и новые технологии для распространения своих точек зрения среди все более широкого круга общественности.

4.Торговые барьеры во всем мире постепенно снимались

врамках многосторонних торговых переговоров.

5.В ходе переговоров могут быть предложены тарифные уступки.

6.Нетарифные меры возникают, когда деловые круги и правительства вырабатывают способы защиты от иностранной конкуренции.

7.Трудности, возникшие в ходе переговоров Уругвайского раунда, подчеркивают необходимость понимания тенденций, касающихся либерализации торговых барьеров.

8.Странычастообнаруживают,чтов переговорах труднонайти правильный баланс уступок и приобретений.

9.В качестве основного инструмента регулирования внешней торговли стали использоваться таможенные тарифы, причем была ликвидирована государственная монополия на внешнюю торговлю.

10.ВТО представляет собой достаточно сложную и быстро развивающуюся систему.

11.Интеграция России в международную торговую систему представляет собой длительный и сложный процесс.

12.Одним из важнейших шагов на пути интеграции России

вмеждународную торговую систему является вступление страны в ВТО.

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13.Вступление в ВТО должно обеспечить стране режим наибольшего благоприятствования в торговле с США, которого Россия пока не имеет.

14.Полноправное членство в ВТО позволит окончательно решить проблему признания за РФ статуса страны с рыночной, а не командно-административной экономикой.

Task 10. Read Text 4 “What are the different types of international trade contracts?” by K. Kinsella.

Text 4

What are the different types of international trade contracts?

A basic trade contract involves an agreement whereby one party promises to pay for goods or services that another party provides. International trade contracts are agreements between parties located in two different states. In many instances, international trade contracts involve import and export agreements. Trade contracts are subject to international law, and are impacted by trade agreements between particular nations.

Multi-national companies create trade contracts with manufacturers that produce low-cost goods in other nations. Such deals enable firms to reduce costs by cutting domestic labor costs. Companies also enter into trade agreements to import food and produce from overseas. Some tradeagreementsaredesignedtotransportmineralsincludingoil,gasand precious stones to nations where such natural resources do not exist.

These trade contracts often involve government entities or businesses in a particular nation paying for services that are provided by contractors from another nation. Such agreements often involve skilled professionals such as engineers or scientists who bring their expertise to nations where few professionals have the requisite skills to perform certain functions. The supply of goods is often negotiated into service contracts as a condition of the deal.

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Governments often enter into trade contracts on behalf of companiesdesignedtofacilitatetradebetweennations.Agreementsto eliminate tariffs are common features of international trade contracts. Inotherinstances,governmentsenterintoaid-for-tradedealswhereby one nation provides aid to a poor nation and that nation agrees to buy goods or services from contractors based in the donor nation. Such contracts often become null and void if the nations become involved in political or economic disputes. In extreme cases, nations place trade embargoes on one another, which means that companies located in the two nations can no longer trade.

Entities involved in international trade contracts have to reach an agreement on how the goods should be transported from the supplier to the buyer. Ships and airplanes often have to pass through the territory of several other nations before reaching the final destination. Consequently, an international trade contract should detail which party should cover the cost of transportation and which party should cover the applicable taxes and tariffs.

Trade contracts are often complicated because nations around the world use different forms of currency. Since currency prices fluctuate on a daily basis, many trade contracts are based upon payments being made in types of currencies that typically have low levels of volatility such as the United States dollar, the Euro or the Swiss franc. Trades of certain types of goods such as crude oil are always priced in US dollars.

(From: https://www.wisegeek.com/ what-are-the-different-types-of-international-trade-contracts.htm)

Task 11. Retell Text 4 according to the outline below:

−− Abasic trade contract;

−− International trade contracts;

−− The purposes of concluding trade contracts;

−− Entities involved in international trade contracts;

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−− Details (elements) of international trade contracts (supplier, buyer, place of destination, mode of transport, type of currency, costs etc.).

Task 12. Translate the sentences into English. Use lexical prompts in the parentheses.

1.Договор купли-продажи (sales contract) – это юридическое соглашение между покупателем и продавцом, участвующим

всделке (transaction).

2.Договор купли-продажи описывает приобретаемый товар или услугу, называет покупателя и продавца, а также предоставляет информацию о стоимости (cost), смете поставки (delivery estimate) и других вопросах, связанных с продажей.

3.Кроме того, договор купли-продажи охватывает условия продажи (terms and conditions of sale), которые могут вступить

всилу (come into play) по мере совершения сделки.

4.Договор купли-продажи обязывает покупателя совершить покупку (commits the buyer to the purchase) и устанавливает последствия отказа от сделки (establishes consequences for reneging on the deal).

5.Покупатели имеют защиту в виде гарантии поставки

(delivery guarantee).

6.Если продавец решает расторгнуть сделку (terminate the deal), договор купли-продажи обычно включает пункт (clause), предусматривающий компенсацию покупателю.

7.Обе стороны (parties) должны внимательно прочитать дого-

вор и ознакомиться (become familiar with) с ним.

8.Если кто-то хочет пересмотреть условия (renegotiate the terms and conditions), это должно быть обсуждено до подписания контракта и вступления сторон в сделку (the parties embark on the transaction).

9.Как только (once) договор подписан и принят обеими сторонами, он не может быть изменен (cannot be altered).

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Task 13. Read Text 5 “What is a purchase agreement?” by Malcolm Tatum. Find in the text specific terms to use them while describing a purchase agreement. Suggest their Russian equivalents.

Text 5

What is a purchase agreement?

A purchase agreement is a legal document that outlines the terms and conditions connected with a transaction that includes the act of purchasing goods or services. Generally, the terms of this agreement involve identifying specific conditions that both the buyer and the seller agree to meet and perform as part of the transaction.

A purchase agreement serves the purpose of creating a binding contract between a buyer and the seller. In any situation where a purchase agreement is put in place between two parties, it is necessary for both the buyer and the seller to comply with the terms and conditions outlined in the contract. Should a buyer fail to deliver the agreed upon down payment, the seller normally has the legal ability to declare the agreement null and void.

Purchase agreement forms used in various industries typically are a basic boilerplate design that complies with any governmental regulationsthatmayapplytothatparticularindustry.Thetypicalform also provides room to add any particular covenant made between the buyer and the seller that are above and beyond those required by law.

(From: https://www.wisegeek.com/what-is-a-purchase-agreement.htm)

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Task 14. Read Text 6 “What Is a consignment agreement?” by Ray Hawks. Compare the information fromText 5 andText 6 to explain the difference between purchase and consignment contracts.

Text 6

What is a consignment agreement?

Aconsignment agreement is usually a formal or informal contract betweenapersonwhoproducesaparticularproductandaretailerwho agrees to stock it on their shelves for sale, in exchange for a portion of the profits. The product ownership is retained by the creator, not the retailer, and all responsibility for loss, damage, and expenses of delivery and custom display are usually those of the creator of the product. The retailer, or consignee, is generally offering the business locationasapointofcontactwithcustomersforthesaleoftheproduct and otherwise not assuming responsibility for expenses incurred.

Displaying inventory based on a consignment agreement is often of benefit to both small producers of products and small retail locations that otherwise might have difficulty locating vendors of products for their store space. The store also benefits by not having capital tied up in inventory, and, if a product does not sell, it can end the consignment agreement with the consignor with little perceived loss on its part. In contrast,thesmallbusinessproductproducerbenefitsbythefactthathe or she can locate his or her product in multiple outlets without having to actually own and manage the outlets themselves. This provides widespread exposure to customers in various market environments and offers a fast, convenient way to get a start up business going.

The consignment agreement is used for durable goods sales, such as those of automobiles, furniture, and heavy machinery.

For small businesses considering a consignment sales agreement, there are certain key points for which to look. The retail business needs to be a good match for the type of product being consigned and in a location that receives adequate customer traffic, as a consignment agreement reduces profit margins much more than selling goods

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outright.Theconsignororcreatoroftheproductalsoneedstobeaware of how his or her products are being displayed in the store, what fees the store might decide to charge for this, and how excess inventory will be treated. Small shops often have limited storage space, yet, if a product is selling well, they also require enough inventory to keep displays fully stocked at all times.

Every consignment contract should be negotiated independently and an exact fee and payment structure clearly laid out in writing. A store that specializes in consigned goods may be reluctant to take on a new vendor without a proven track record of product sales at other locations, or it may offer consignment on a trial basis first to see if the product will sell.

(From: https://www.wisegeek.com/what-is- a-consignment-agreement.htm)

Task 15. Comment on the statements below. Agree/disagree with the help of one of the clichés in italics.

I strongly (totally, partly) agree/disagree with the statement because…

I would rather accept/refute the statement as … My assumption (idea) is that …

In my (humble) opinion, … There is no doubt that …

1.International trade contracts are more complex than domestic contracts because they must work across multiple country borders.

2.International trade contracts are optional for doing business overseas.

3.International trade contracts can challenge a small or midsize enterprise.

4.Different countries may have different legal codes.

5.Each business trading with a company in a different country traditionally finds it advantageous.

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6.Every trading party should use International CommercialTerms (Incoterms) created by the International Chamber of Commerce to reduce potential misinterpretations.

7.The more specific an international trade contract is, the less room for disputes.

8.Any modifications to an international trade contract are written instead of just verbally agreed.

9.Some trade contracts should also specify what duties each party is responsible for.

10.For a solid contract, it is important to anticipate potential problems, such as which party will pay, for insurance, excuses for breach of contract due to a “force majeure” (e.g. a natural disaster or war), how disputes will be resolved, and steps necessary for contract termination.

Task 16. Write an essay (up to 250 words): “A dilemma: to draft a trade contract from scratch or to use a model contract?”

Task 17. Read Text 7 and complete the sentences after the text.

Text 7

Franchise agreement: everything you need to know

Afranchise agreement is a legally binding settlement that outlines the franchisor’s terms and circumstances for the franchisee. The franchise agreement also outlines the obligations of the franchisor and the obligations of the franchisee.

A franchise contract governs the authorized relationship between the franchisee and the corporate entity and consists of necessary provisions for future actions if the connection needs to be terminated.

The franchise agreement is used to set out precisely what of and how thefranchiseemay usethe franchisor’s intellectualproperty.Two main types of franchising can be identified by the degree in which the franchisorentitlesthefranchiseetouseitsintellectualproperty.Firstly,

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with product and trademark/trade name franchising, the franchisee is only entitled to use the franchisor’s name or trademark and product. Secondly, with a full business format franchise, the franchisee uses the franchisor’s entire business concept, which includes the name, trademarks, copyright, goodwill, know-how, trade secrets, trade dress and similar intellectual property.

One of many fundamental targets of the franchise settlement is to guard the franchise system as a whole. This consists of the model, integrity of the working system and franchisees’ behavior within the mixture.

Upon your first read of the agreement, you will note that there are many guidelines which clearly define actions that you must regularly perform. These guidelines may also help you perceive and prioritize areas of your enterprise.

The franchise agreement will also indicate a large range of actions that cannot be done as a franchisee.As the franchisor is getting ready to disclose many proprietary products, processes, and services to you, it only makes sense for them to contractually protect their investment. This is also important to you, as it will protect your interests as the overall franchise grows and adds additional franchisees. This allows the overall enterprise to grow in a healthy manner and prevents injury and detrimental influences on all the franchisees in the system.

(From: https://www.upcounsel.com/franchise-agreement)

1.Afranchise agreement is a legally … .

2.The franchise agreement outlines … .

3.Afranchise contract consists of necessary … .

4.The franchise agreement is used to set out … .

5.One of many fundamental targets of the franchise is … .

6.There are many guidelines in the franchise contract which …

7.The franchisor is getting ready to disclose many … .

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Task 18. Read and translate Text 8 “Commercial lease agreement” into Russian.

Text 8 Commercial lease agreement

A commercial lease agreement is a contract made between a property owner and a business. The commercial lease allows businessestouserentalproperty,ratherthanbuyingproperty.Thishas a number of advantages for a variety of business types, the primary of which is a lower amount of cash needed to get started.

Commercial lease agreements are more in depth and complex than residential leases, and terms vary greatly, depending on the needs of both the business and the property owner. There are a number of common terms of a commercial lease as compared to a residential lease:

−−Fewer consumer protection laws apply to commercial leases. −−Commercial leases are more negotiable, and the terms are often subjecttochange,intermsofallowableimprovementstotheproperty,

and rent increases.

−−Commercial leases are often for terms greater than five years. Before entering into a commercial lease agreement, the business must ensure the property meets its needs. This includes being certain thatthelocationofthepropertymeetsthezoningrequirementsneeded

to operate a business.

Even a ready-made lease is a legal contract, so it is important that the parties read carefully to make sure the provisions suit their needs.

Any lease agreement form should include certain information, some of which is required by law, to be enforceable. These laws vary by state. The minimum information that should be included on a lease agreement form includes: address of the property, and general description of the property type; name, address, and phone number of the landlord; name and phone number of the tenant(s); date the lease takes effect; term of the lease (number of months or years); amount of deposit(s)required,theirpurposes,andunderwhatcircumstancesthey

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will be returned; amount of monthly payments; payment schedule and terms regarding late payments; consequences for breaching the lease etc.

The most common breach of a lease agreement occurs when a tenant fails to pay rent in a timely manner, though failure to adhere to other provisions of the lease also constitute a breach.

(From: https://legaldictionary.net/lease-agreement/)

Task 19. Browse the internet to find the samples of two types of international contracts: 1) a franchise agreement and 2) a lease agreement. Study the documents you have found. Compare them and get prepared to speak on their structural elements.

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Unit 4

Foreign trade documents

Aims and objectives of Unit 4:

•• to learn the main types of foreign trade documents;

•• to develop the skills of reading and comprehending texts about different types of trade documents and international shipments;

•• to train the students to infer the meaning of unfamiliar words through contextual clues;

•• to enrich the students’ professional vocabulary related to the topicsofUnit4andstrengthentheirabilitytouseitinprofessional discourse;

•• to develop the learners’ skills and habits of translating and rendering texts by summing up information;

•• to improve the students’speaking and writing competences within the framework of Unit 4.

Task 1. Read and translate Text 1 into Russian.

Text 1

Documentation for foreign trade operators

International trade is an economic activity between countries or companies. Every country has its own business culture, currency and economic system. This system requires some documents. These documents may change based on the country, regulations and means of transportation. Trade agreements between importer and supplier or between countries require documents to protect both sides’ rights during trade.

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There is an abundance of documentation involved in international orforeigntrade.Thedocumentsprovideimporters,exporters,shipping companies, banks and regulatory agencies instructions, authorizations and appropriate guides.

All documents used in foreign trade transactions fall into five groups:

1.Commercial documents (Sales Contract, Pro Forma Invoice, Commercial Invoice, Consular Invoice, Certificate of Origin (CO), Packing List, Weight Notes/Certificate(s), Inspection/Quality Certificate, Insurance Policy, Insurance Certificate, Product Testing Certificate,A.T.ACarnet).

2.Offical/Government documents (Import / Export Declaration,

Import / Export Licence, International Import Certificate (IIC), Delivery Verification Certificate (DVC), Customs Invoice, Health Certificate, Phytosanitary Certificate).

3.Insurancedocuments(InsurancePolicy,InsuranceCertificate).

4.Financial documents (Documentary Credit D/C, Standby

Credit, Collection Instruction, Bill of Exchange (B/E) or Draft, Trust Receipt (T/R), Promissory Note).

5.Transport documents (Shipping Order S/O, Shipping Guarantee (SG), Bill of Lading (B/L), Sea Waybill, Air Waybill (AWB) /Air Consignment Note, House Air Waybill (HAWB), Railway Receipt /Railway Consignment Note, Dock Receipt D/R or Mate’s Receipt, Roadway Bill, Post Parcel Document).

A freight forwarder should understand how much transportation process and costs are important for all parties to the transactions. To avoid additional costs or delay on cargo arrival, these documents are crucial and should be prepared carefully.

(From: https://www.schoolmattazz.com/2017/02/ documents-internationalforeign-trade)

Task 2. Make up a list of new words from Text 1. Try to deduce their meanings from the context.

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Task 3. Sum up Text 1 by speaking on the importance of documentation in international trade and different types of documents necessary for doing business with international partners.

Task 4. Match the documents used in international trade to their definitions.

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Task 5. Translate Text 2 into English. Use the prompts given in the parentheses.

Text 2

Международные расчеты

К международным расчетам относят операции, сопровождающие финансовые обязательства по контрактам между компаниями, предприятиями и физическими лицами различных государств. Оформление международных торгово-экономических

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сделок включает договоренность сторон о виде валюты платежа. Этоможетбытьнациональнаявалютастраны,которуюпредставляет одна из сторон договора, либо валюта третьего государства. В американских долларах по статистике совершается половина торговых операций, а также 4/5 операций валютного рынка. Кроме того, 2/5 валютных запасов государств МВФ тоже представлены в этой валюте.

Какие различают формы международных расчетов:

1)авансовый платеж (advance payment);

2)платеж с отсрочкой (deferred payment), подкрепленный резервным аккредитивом (standby letter of credit) или банковской гарантией (bank/banking guarantee);

3)документарный аккредитив (documentary credit) или D/C (также известный как «аккредитив», «коммерческий аккре-

дитив» (letter of credit) или L/C);

4)документарное инкассо (documentary collection);

5)открытый счет (open account).

Последняя форма является наименее безопасным методом расчета для экспортера, который должен использоваться только, когда кредитоспособному импортеру можно полностью доверять. Экспортеру следует в таком случае рассмотреть необходимость защиты при помощи кредитного страхования.

(From: http://www.iccwbo.ru/blog/2016/ mezhdunarodnye-raschety/)

Task 6. Read Text 3 and answer the questions after the text.

Text 3 International shipping basics

Transportation of goods between countries takes place for many reasons. With the rapid growth of e-commerce, a large number of smaller businesses now require international transportation.

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There are many players involved in international transportation: shipping lines, freight forwarders, shippers, consignees, booking agents, and customs house brokers.

Theshippinglineisthecompanycarryingyourcargoatsea.Freight forwarder, however, is the logistics provider you will be dealing with. They can arrange the transportation from a shipper to a consignee.

The shipper is the party of the shipment at the origin. It could be you or a factory or seller that you buy a product from. The consignee is the receiver of the cargo. This again could be you or someone that you are selling a product to.

Inthemovementofgoodsfromshippertoconsignee,therearefive physical steps and two documentation steps, which must all take place for every single shipment. The seven steps of international shipping are 1) export haulage, 2) origin handling, 3) export customs clearance, 4) ocean freight, 5) import customs clearance, 6) destination handling and 7) import haulage.

The first part of the transportation is export haulage. This relates to the movement of the cargo from the shipper’s to the forwarder’s premises. The goods would typically move on road (by truck), rail or a combination. It would typically be arranged through a local transportation company or freight forwarder who can offer export haulage as part of the international transportation.

Handlingofthecargo(loadingontoatruck)attheshipper’spremises is not considered part of export haulage, as off loading of the truck at the forwarder’s premises is normally not part of export haulage.

For every shipment leaving a country, customs formalities must take place to meet regulatory requirements. Customs clearance is a transaction whereby a declaration is developed and required documents are submitted to authorities, and can only be performed by companies holding valid customs licenses, so-called “customs house brokers.”

Export customs clearance can either be performed by a freight forwarder with a valid license or an agent appointed by the freight

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forwarder,oritcanbeperformedbyacustomshousebrokerappointed directly by the shipper.

Origin handling covers all physical handling and inspection of the cargo from receiving it at the origin warehouse till it is loaded on a ship in a container.

It is always ultimately the freight forwarder performing origin handling. The freight forwarder decides on a shipping line to perform the ocean freight from origin to destination in order to meet the required timeline for the shipments. The cost of the ocean freight will ultimately be charged to the shipper or the consignee.

Import customs clearance can typically begin before the cargo arrives at its destination country. As for export customs clearance, it is a formality where a declaration is developed and submitted together with relevant documents enabling authorities to register and levy any customs duty on the shipment. Import customs clearance is performed by the freight forwarder or an agent of the freight forwarder, or by a customs house broker appointed by the consignee.

The import customs clearance process must be completed prior to the cargo leaving a customs bonded area in the country of destination.

As for the origin, cargo handling is also required in the destination before it can be released to a consignee. In short, destination handling includes transfer of the container from the ship to shore and from the port to the forwarder’s destination warehouse.

The last leg of the transportation is the actual delivery of the cargo to the consignee. It can either be performed by the freight forwarder or a local transportation company appointed by the consignee.

The import haulage typically covers transportation to a specific address, but not unloading from the truck, which is the responsibility of the consignee.

(From: https://transporteca.co.uk/international-shipping-guide/)

1.What players are involved in international transportation?

2.Who can arrange the transportation from a shipper to a consignee?

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3.Is the shipper or the consignee the receiver of the cargo?

4.What are the physical and documentation steps in the movement of goods from shipper to consignee?

5.What is the first part of goods transportation?

6.What is customs clearance?

7.What is origin handling and who normally performs it?

8.When can import customs clearance typically begin and when must it be completed?

9.What does destination handling include?

10.Who performs the last leg of the transportation?

11.Does import haulage typically cover transportation to a specific address?

Task 7. Role-play an international cargo shipment delivery as if you were:

−− The shipper; −− The consignee;

−− The freight forwarder;

−− The customs house broker; −− The customs officer.

Task 8. TranslatethesentencesintoRussiananddiscusssomerules

binding for international shipments.

1.For international shipments, additional costs such as import duties and/or custom fees could be applied, depending on the legislation of the receiving country.

2.International shipments may be subject to the customs fees and import duties of the country to which the order has been shipped.

3.Since virtually all international shipments require the use of more than one mode of transport, governments need to ensure that

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transport infrastructure development is coordinated and appropriate for national requirements.

4.Using an express courier service for international shipments is strongly recommended because this way the package can be traced.

5.The information that must precede or accompany international shipments of listed chemicals may facilitate improved management of the chemicals in the importing country.

6.International shipments must be accompanied with supporting documents.

7.The development of the overall transport capacities, the elimination of barriers hampering international shipments, joint expansion of the access of the carriers to international transport markets and the development of transport infrastructure can improve global trade contacts.

Task 9. Study the advertisement and say whom it may concern.

Intermodal and multimodal transport of goods

Multimodal and intermodal transport is in high demand across the market, especially for mediumto long-distance shipping. Multimodal transportation of goods involves the use of several modes of transportation such as rail, ship, and truck. Different means of transport are used throughout the delivery process to create the most efficient and economic route for a given set of dispatch and delivery points.Thankstoanoptimalcombinationoftransportmodes,delivery timing improves, costs fall, and cargo remains secure. Cooperation with a multimodal transport operator is typically performed, as a rule, on the basis of a single contract so as to lower the legal burden on the customer.AsstrAhelps its Clients enjoy all advantages of multimodal freight shipping in Europe and internationally. Our employees analyze Client needs and cargo characteristics, optimize delivery routes, and estimate multimodal delivery costs. AsstrA performs multimodal transportation of any goods in compliance with delivery

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terms regardless of geography. Thanks to our own fleet and close cooperation with reliable Partners, we are able to offer a flexible pricing policy and maintain a high level of service quality.

(From: https://asstra.com/mode-of-transport/ multimodal-transportation/)

Task 10. Render the international trade cases in English and discuss them with your classmates.

Case 1

Поддельный коносамент

В одном из судебных дел, касавшихся продажи товаров на условиях «CIF Гонконг отправка из континентального порта не позднее 31 октября» («c.i.f. Hong Kong shipment from continental port not later than 31st October»), товары были фактически отправ-

лены после такой даты, однако коносамент был подделан, и в нем была указана своевременная дата отправки. Подделку обнаружили только после того, как покупатели осуществили физическую приемку товаров, не заявив при этом никаких возражений в отношении их качества. Суд пришел к следующему выводу: «Существует право отказаться от принятия документов, и существует право отказаться от приемки товаров, и эти две вещи совершенно отличаются друг от друга. Контракт, заключенный на условиях CIF, накладывает ряд обязательств на продавца, некоторые из которых касаются товаров, а некоторые – документов. Что касается товаров, продавец обязан погрузить товары на борт судна в порту отгрузки в соответствии с содержащимся в контракте описанием, но он также должен отправить документы, и такие документы должны соответствовать контракту».

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Case 2

Поставки рубашек с одним рукавом

Бизнесмен из Австралии, который занимается импортом одежды, рассказывает о необычном случае, который произошел при заказе 5000 рубашек-регби. Перед оформлением окончательного заказа он попросил у поставщика образец изделия для тестирования состава ткани. Для исследования полученной рубашки-рег- би импортер отрезал ее рукав, из которого взял для тестирования несколько нитей. Результат анализа бизнесмена удовлетворил, поэтому он вернул образец (без рукава) поставщику, сопроводив посылку сообщением «Хорошо, направляйте партию согласно договоренности». Заказанный товар был отправлен напрямую основному дилеру импортера. Через некоторое время от этого партнера поступил звонок. Оказалось, что клиенту была доставлена партия рубашек-регби в количестве 5000 штук без одного рукава!

(From: http://www.iccwbo.ru/blog/2016/ dokumentarnye-prodazhi-v-mezhdunarodnykh-sdelkakh/)

Task 11. StudytheLandClassicServiceConditionsforinternational shipments offered by the SEUR company from Spain. Match the description of each part of the Conditions with the corresponding type of condition/service.

a)DELIVERY CONDITIONS;

b)WEIGHTSAND MEASURES;

c)CUSTOMS FORMALITIES;

d)TRANSIT TIME;

e)LIMITATION OF LIABILITY;

f)DEADLINES FOR CLAIMS.

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1.______________

Maximum coverage €520 per package/shipment, included in the price.

2.______________

In accordance with the provisions of article 30 of the C.M.R., a claim may be made to the Transport Agency within seven days of the receipt of the goods for any damage to or defect in the goods, unless that damage was evident at the time of receipt of said goods, in which case the claim will only be accepted upon their receipt. At the end of the aforementioned terms, no claim made to theAgency on the state in which the transported goods were delivered will be accepted. At the end of the aforementioned deadlines, actions arising from the carriage contract will expire after one year.

3.______________

Maximum weight per package: 31.5 Kg. (and each package will be considered a shipment). Maximum length of the package: 175 cm. Calculation basis for volume limitation: Length in cm. + (width in cm. x2) + (height in cm. x2) must be less than or equal to 300 cm.

4.______________

The delivery times indicated do not include weekends or public holidays in any of the countries where the shipment is transited. The transit times are indicative only as this is not an express service and refer to shipments sent from Spain.

5.______________

Allshipmentswillbemadecarriagepaidtotherecipient’saddress. For destinations outside the EU. There are two types of shipment: a. DAP.Carriagepaidtotherecipient’saddressexcl.customsformalities at destination. B. DDP. Carriage paid to address including customs formalities at destination, import duties and taxes.

6.______________

DAP shipments: Customs office of exit formalities is included in the tariff. DAPshipments: Customs office of exit formalities included in the tariff and customs clearance at destination formalities are as follows: Switzerland – €17 plus duties and taxes; Norway – €20 plus

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duties and taxes. All shipments must be accompanied by the original commercial invoice issued in ENGLISH or Value Declaration, with the name and signature of the legal representative, Recipient’s full address including Tel. and VAT; Incoterm (DAP or DDP); Country of Origin of the goods; Tariff item of each of the products in the shipment; Product units as well as unit and total units of value.

(From: https://www.seur.com/en/professional/ services/international-transport/ general-conditions-for-international-shipments/)

Task 12. Below are parts of the original advertisements of shipping companies. There are some mistakes in the advertisements to be corrected.

1.Quanzhou Baojian Import&Export Trading CO., LTD was established in December 19, 2012, which have 8 million yuan’s registered capital and the right of import export. We complete cargo-clearance system, like China E-Port etc.

2.We are logistic company and located Bursa in the Turkey has agencyIstanbulIran.Ourmainofserviceisseacontainertransport,air cargo, inland trucking, storage services, road transport, international freight frowarder, custom brokers, door to door services, air and sea freight.

3.Ourcompanyisamodernanddynamicallydevelopingenterprise withdomesticinternationalreach.Weofferroadrailtransportservices in very competitive prices. Our long-term experience allows us to accomplish even the most complicated of all kind cargo.

4.We are a leader in international trade. We offer experience and innovation in every single of our operations. We bring what you need wherever it. We can manage all types transport (air, train, highway), and bring your goods from everywhere to everywhere.

5.One Express Global Pty Ltd is located in Melbourne Australia. We provide a complete transport services from Australia wide road

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and rail freight to International logistics. Our logistic mainly covers Asia, North SouthAmerica,Africa from/to New Zealand.

6.IBG Logistics is a Global Trade Management company. The services that we offer cater to companies operate in the area of international trade. IBG provides two areas; Freight Transportation and Import/Export management.

7.Sinotech was founded in 1999 with headquarters Shenzhen next to Hong Kong. We have over 800 staffs develop our service Guangdong Province and operate international air & sea freight forwarding door express delivery.

8.Days Yutong International Logistics Co., Ltd. Is a Hong Kong registered professional international logistics company, Chartered Post mail service. Our focus on delivering small parcels of Hongkong aviation, four express, EMS, air transport, shipping.

(From: https://www.company-ist.org/products/ import_and_export_services/1.html)

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Unit 5

Global commodity markets

Aims and objectives of Unit 5:

•• to learn about the history and the present day of the global commodity market as well as the main factors of pricing in the global commodity markets;

•• to develop the skills of reading and comprehending texts about the principles, functions and segments of global commodity markets;

•• to train the students to infer the meaning of unfamiliar words through contextual clues;

•• to enrich the students’ professional vocabulary related to the topicsofUnit5andstrengthentheirabilitytouseitinprofessional discourse;

•• to develop the learners’ skills and habits of translating and rendering texts by summing up information;

•• to improve the students’speaking and writing competences within the framework of Unit 5.

Task 1. Read and translate Text 1 into Russian.

Text 1

The history of commodity markets

Commodity-based money and commodity markets in a crude early form are believed to have originated in Sumer between 4500 BC and 4000 BC. Sumerians first used clay tokens sealed in a clay vessel, then clay writing tablets to represent the amount – for example, the number of goats, to be delivered. These promises of time and date of delivery resemble futures contracts.

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Early civilizations variously used pigs, rare seashells, or other items as commodity money. Since that time traders have sought ways to simplify and standardize trade contracts.

Gold and silver markets evolved in classical civilizations. At first the precious metals were valued for their beauty and intrinsic worth and were associated with royalty. In time, they were used for trading andwereexchangedforothergoodsandcommodities,orforpayments of labor. Gold, measured out, then became money. Gold’s scarcity, its unique density and the way it could be easily melted, shaped, and measured made it a natural trading asset.

Beginning in the late 10th century, commodity markets grew as amechanismforallocatinggoods,labor,landandcapitalacrossEurope. Between the late 11th and the late 13th century, English urbanization, regional specialization, expanded and improved infrastructure, the increased use of coinage and the proliferation of markets and fairs were evidence of commercialization.

The Amsterdam Stock Exchange, often cited as the first stock exchange, originated as a market for the exchange of commodities. Early trading on the Amsterdam Stock Exchange often involved the use of very sophisticated contracts, including short sales, forward contracts, and options.

In 1864, in the United States, wheat, corn, cattle, and pigs were widely traded using standard instruments on the Chicago Board ofTrade (CBOT), the world’s oldest futures and options exchange. Other food commodities were added to the Commodity Exchange Act and traded through CBOTin the 1930s and 1940s, expanding the list from grains to include rice, mill feeds, butter, eggs, Irish potatoes and soybeans.

Successfulcommoditymarketsrequirebroadconsensusonproduct variations to make each commodity acceptable for trading, such as the purity of gold in bullion. Classical civilizations built complex global markets trading gold or silver for spices, cloth, wood and weapons, most of which had standards of quality and timeliness.

Through the 19th century the exchanges became effective spokesmen for, and innovators of, improvements in transportation,

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warehousing, and financing, which paved the way to expanded interstate and international trade.

Reputation and clearing became central concerns, and states that could handle them most effectively developed powerful financial centers.

(From: https://en.wikipedia.org/wiki/Commodity_market)

Task 2. Make up a list of new words from Text 1. Try to deduce their meanings from the context.

Task 3. Mark the statements as TRUE/FALSE. Explain your answers.

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Task 4. Translate the sentences into English.

1.Энергетические товары включают сырую нефть, в частности нефть марки Brent, природный газ, мазут, и этанол.

2.Сырая нефть может быть легкой или тяжелой.

3.Нефть была первым энергетическим товаром, который широко торговался на рынке.

4.Некоторые спекуляции на товарных рынках напрямую связаны со стабильностью отдельных государств.

5.Нефть и бензин торгуются в единицах по 1000 баррелей.

6.Хеджирование является обычной практикой для торговли этими сырьевыми товарами.

7.Драгоценные металлы, которые в настоящее время торгуются на товарном рынке, включают золото, платину, палладий

исеребро, которые продаются по тройской унции.

8.По мнению Всемирного совета по золоту, инвестиции в золото являются основным драйвером роста промышленности.

9.Цены на алмазы были более стабильными, чем на металлы, поскольку глобальная алмазная монополия – компания De Beers – когда-то занимала почти 90% нового алмазного рынка.

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10.Цены на золото очень волатильны из-за больших потоков спекулятивных денег.

11.Большинство сырьевых рынков не так сильно зависят от политики нестабильных регионов.

12.Сельскохозяйственные товары включают зерно, продовольствие и клетчатку, а также скот и мясо.

Task 5. Fill in the gaps with missing words.

A commodity market is … market that trades … the primary economic sector rather … manufactured products, … as cocoa, fruit

…sugar. Hard commodities … mined, such … gold and oil. Futures contracts are … oldest way … investing … commodities. Futures

…secured by physical assets. Commodity … can include physical trading … derivatives trading using spot prices, forwards, futures, and options … futures.

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Text 2

Energy stocks surge as oil hits a 4-month high

Energy stocks jumped on Tuesday, sending the S&P 500 Energy Sector Index up more than 6%, the best performance of any group in the S&P 500 index.

Shares of energy companies gained amid rising oil prices, which on Tuesday hit their highest levels since March as investor optimism for a solid economic recovery grows. West Texas Intermediate crude gained as much as 3.9% to $42.40 per barrel. Brent crude, the international benchmark, rose 3.7%, to $44.89 per barrel, at intraday highs.

The commodity faced a rocky start to the year. In March, a price war broke out between SaudiArabia and Russia, pushing oil lower.

Now, oil prices are rising as economic reopening efforts are spurring expectations of boosted demand in the future, and energy stocks are gaining as well.

(From: https://markets.businessinsider.com/commodities/news/ energy-stock-prices-oil-hits-four-month-high-optimism-exx- on-2020-7-1029416115)

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Task 8. Read Text 3 which contains some parts from the article “Global commodity markets – price volatility and financialisation” byA. Dwyer, G. Gardner andT.Williams. Complete the sentences below the text.

Text 3

Fundamental drivers of recent commodity prices

The substantial increase in commodity prices over the past decade has been supported by a number of fundamental drivers. One of the most significant has been theshift in the composition of global growth overthisperiod,asemergingmarketeconomies–particularlyChina– have come to prominence as the engines of world growth. Since these emerging market economies are generally at a relatively commodityintensive stage of development, there has been a corresponding shift inglobaldemandtowardscommoditiesasthesecountriesindustrialise and expand their infrastructure.

Food prices have also been affected by economic development, with the composition and volume of food intake changing as per capita income in these economies rises, generally resulting in a shift away from grains towards higher protein foods such as livestock and dairy, which have high resource.

These trends are likely to continue for some years. At the same time, supply has struggled to keep pace with the unexpectedly rapid rise in emerging market demand over the past decade.

Relatively low and falling real commodity prices throughout the 1980s and 1990s resulted in low levels of investment in production capacity for some commodities. Given the long lead time to bring new production online for many commodities, prices have increased substantially in order to clear the market, prompting a pick-up in investment. Weather-related disturbances – droughts, floods, cyclones – in some key producer countries have also boosted the prices of a number of agricultural commodities over recent years. The impositionofexportbans(ofteninresponsetofoodsecurityconcerns)

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has further contributed to global supply shortages of some food stocks at times. In addition, accidents and natural disasters have periodically reduced output at mines, including copper and coal.

To place the recent price movements in a historical perspective, such a sharp increase in real commodity prices has not been seen since the 1970s. Following the 1970s episode, real commodity prices fell for most of the subsequent two decades. While oil and metals prices are quite high in real terms by historical standards, regaining or exceeding their levels of 40 years ago, real agricultural prices remain well below their previous peaks.

(From: https://www.rba.gov.au/publications/bulletin/ 2011/jun/bu-0611-7a.html)

1.The increase in commodity prices has been supported by … .

2.The shift in the composition of global growth has been one of the most significant, as … .

3.There has been a corresponding shift in … .

4.The composition and volume of food intake have been also changing, generally resulting in a shift away from … .

5.Supply has struggled to keep pace with … .

6.Due to bringing new production online for many commodities, prices have increased substantially in order to … .

7.Weather-related disturbances have also boosted … .

8.The imposition of export bans has further contributed to … .

9.Real commodity prices fell for … .

10.Oil and metals prices are … .

11.Real agricultural prices remain … .

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Task 9. Choose the best answer (or, probably, both). Explain your choices.

1.Commodity prices do tend to be more volatile than many other prices in the economy because

a)in the short term both global supply and demand for commodities are relatively price inelastic;

b)it can take considerable time to change consumption habits.

2.The higher volatility of some commodity prices is also related to the fact that

a)many commodities are traded in transparent, continuously priced markets;

b)supply and demand shocks can result in large price movements in order to clear the market.

3.Commodity prices are sometimes considered to be even more volatile than

a)financial prices;

b)consumer prices.

4.The proximate cause of the recent heightened volatility was

a)the global financial crisis;

b)the Great Depression.

Task 10. Read Text 4 and answer the questions which you can find before each paragraph.

Text 4

Financial investment in commodities

What may have significantly increased the volatility of recent commodity prices?

In addition to fundamental supply and demand factors, the activity of speculators in financial markets may have played a significant role

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in contributing to the increase in the level and volatility of some commodity prices in recent years.

Why do financial markets provide a useful complement to physical commodity markets?

Financial markets provide a useful complement to physical commodity markets because they allow consumers and producers to hedge their exposures to movements in commodity prices. These markets exist precisely because prices can be volatile, and allow uncertainty about future price movements to be managed.

Can financial investors add to the liquidity and price discovery improvement of commodity markets?

Financial investors provide additional liquidity to these markets and can improve price discovery. In the case of commodities, holding a physical commodity can incur large storage costs, complicating the ability of arbitrage to maintain the relationship.

What has allowed financial investors greater access to commodity futures markets?

Over the past decade, regulatory changes and the development of new financial products have allowed financial investors greater access to commodity futures markets. Demand from investors has been strong, with the ‘search for yield’prevalent in financial markets making commodities an appealing investment option. Reflecting these incentives, financial investment in commodities has grown rapidly.

Where has the majority of investment been concentrated in?

The majority of investment in recent years has been concentrated in exchange traded products (ETPs) tracking commodities.Almost all non-precious metal commodity ETPs use derivatives to give investors an exposure to commodities, with only a few holding the physical commodities.

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Are ETPs subject to speculative activity? Do they affect prices?

AlthoughalargeshareofETPstrackpreciousmetals–particularly gold and, to a lesser extent, silver – these commodities have long been considered financial products and subject to speculative activity. PreciousmetalETPsbuyandstoretheunderlyingphysicalcommodity, providing an obvious mechanism for investment to affect prices.

How can the size of commodity derivatives markets be measured?

A widely used measure of the size of commodity derivatives markets is the value of open positions in major commodity futures contracts. Much of this growth is due to the increasing presence of financial investors. Turnover of these derivative contracts has grown significantly over the same period, although part of this can be attributed to greater ease of access due to the introduction of full electronic trading on commodity futures exchanges.

Istheamountoffinancialinvestmentbiggerthanthatofunderlying physical commodity markets?

While commodity prices have risen rapidly over recent years as commodities have emerged as an asset class for investors, the size of financial investment still remains modest relative to underlying physical commodity markets.

(From: https://www.rba.gov.au/publications/bulletin/2011/jun/7.html)

Task 11. Choose the correct words from the alternatives.

Commodity prices are 1) currently/concurrently both high and volatile relative to the past 2) a few/few decades, consistent with the physical supply and demand fundamentals that underpin 3) this/these markets.4)Otherwise/However,theincreaseinpricesand5)volatility/ volatile is not unprecedented, having occurred during 6) another/other large global supply and demand shocks throughout the past century. There is a 7) lack /luck of 8) convinced/convincing evidence that financial markets have had a materially adverse 9) effect/affect on

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commodity markets over time periods of relevance to the economy. It is possible that 10) speculations/speculators have had some effect 11) at/on commodity price volatility, but their 12) attribution/ contribution would appear to be relatively small – 13) particularly/ partially when compared with the contribution from fundamental factors – and short term in nature.

Task 12. Write an essay (up to 250 words): “The effect of financial investment on commodity markets.”

Task 13. Render Text 5 in English. Suggest a title to the text.

Text 5

Товарная биржа (commodity exchange) – это постоянно действующий оптовый рынок чистой конкуренции, на котором по определенным правилам совершаются сделки купли-прода- жи. Товарные биржи появились значительно раньше фондовых бирж. Первая товарная биржа была основана в Брюгге (Бельгия)

в1409 г. Позднее товарные биржи появились в других городах Европы. В Соединенных Штатах Америки первые биржи появились в начале XIX в.

По мере развития рыночной экономики, совершенствования транспорта, создания современных средств связи число товарных бирж сокращалось. Одновременно происходил процесс сокращения количества видов товаров, продаваемых и покупаемых на биржах. Если в период расцвета бирж на них обращалось более 200 видов товаров, то в настоящее время их око-

ло 100.

ВРоссии первая биржа была создана в 1703 г. на основании указа Петра I, который познакомился с работой биржи, будучи

вГолландии. В СССР и в России в период плановой экономики практически не было бирж. С переходом к рынку в России стали появляться и биржи, число которых росло очень быстро.

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Самые крупные по объему совершаемых сделок международные товарные биржи (МТБ) являются универсальными. Так,

на Чикагской товарной бирже (Chicago Mercantile Exchange)

торгуют крупным рогатым скотом, живыми свиньями, беконом, золотом, пиломатериалами, ценными бумагами, иностранной валютой.

Для специализированных бирж характерна более узкая товарная номенклатура, в основном, по группам товаров. К таким биржам относятся, например, Лондонская биржа металлов (The London Metal Exchange), Нью-Йоркская биржа кофе, сахара и ка-

као (New York Coffee, Sugar and Cocoa Exchange), Нью-Йоркская биржа хлопка (New York Cotton Exchange) и др.

МТБ выполняют следующие основные функции: 1) ежедневное установление цены на товар (pricing); 2) хеджирование (hedging) – форма страхования цены, по которой продается или покупается товар в будущем; 3) гарантия поставки товара/ исполнения обязательств по контракту (delivery).

Наряду с выполнением своих основных функций, биржи являютсяинститутомрыночнойэкономики,которыйпредоставляет следующие возможности для участников рыночных отношений: игра на разнице цен (спекулятивные операции); возможность инвестирования капитала в биржевые активы; арбитражные операции; финансирование.

Все сделки, совершаемые на биржах, предполагают использование стандартных договоров, которые получили название фьючерсных контрактов (фьючерсов). Этот вид контрактов строго единообразен и стандартизован в соответствии с биржевыми правилами. Переменной величиной при заключении контракта является цена, определяемая в момент заключения сделки на бирже между продавцом и покупателем (или их представителями – брокерами).

Фьючерсы в отличие от контрактов на поставку реального товара могут быть исполнены двумя способами: путем заключения противоположной сделки на равное количество товара в любой

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день в соответствии с условиями поставки (так называемый офсет), либо поставкой обусловленного товара.

Современные биржи в основном представляют собой рынок фьючерсов и опционов. Все фьючерсные контракты в обязательном порядке должны быть зарегистрированы в расчетной палате биржи (Clearing House). После регистрации контракта в расчетной палате биржи он может быть в одностороннем порядке ликвидирован любой стороной путем заключения офсетной сделки.

(From: https://ru.wikipedia.org/wiki/Товарная_биржа)

Task 14. Speak on the following topics:

−− The history of commodity markets;

−− Types and functions of commodity markets; −− Pricing in commodity markets;

−− Financial investment in commodities.

Task 15. Read Text 6 about the main participants of commodity exchanges and their functions. Make up a dialogue with your partner as if you were:

−− producer;

−− industrial end-user; −− speculator;

−− trader.

Text 6

The role of exchanges is to ensure that the rules are fair to all of these market participants:

−−producers (the individuals and companies that supply the commoditybeingtraded;theyoftensellcommoditiesfuturescontracts prior to producing the commodity; by utilizing a commodities exchange, producers can lock in a price for future production);

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−−industrial end-users (the individuals and companies that provide the demand for the commodity being traded; they use commodities in their production process; commodity exchanges allow end-users to purchase products in advance);

−−speculators (the traders that speculate or bet on the direction of commodities prices; they play a crucial role in commodities markets since they are often a source of liquidity for both producers and industrial end-users);

−−traders (professional independent traders and trading firms that play an essential role as intermediaries between producers and industrial end-users; they provide liquidity when there are imbalances in the markets; traders often maintain an inventory of commodities to provide to buyers; professional traders negotiate prices with both sellers and buyers ).

(From: https://commodity.com/trading/exchanges/)

Task 16. Read Text 7 and discuss two methods of conducting business at commodity exchanges.

Text 7

How do commodities exchanges work?

Commodities exchanges conduct business via two methods: pit trading and electronic trading.

There was a time not long ago when most commodity exchanges conductedtradingviaameanscalled“openoutcry”inlocationscalled “trading pits.” This process works as follows:

1.The buyer or seller of a futures contract calls a commodities broker and places an order.

2.The commodities broker relays the order to a desk clerk on the floor of a commodities exchange.

3.The desk clerk relays the order to a floor broker standing in the pit where the particular commodity trades.

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4.The floor broker executes the trade on behalf of the customer with another floor broker or with a market maker (a trader that provides liquidity for brokers).

5.The floor broker informs the desk clerk when the trade is executed.

6.The desk clerk informs the commodities broker.

7.The commodities broker informs the customer.

The process might take as long as a few minutes from start to finish. Although some trading still takes place in trading pits, the overwhelming majority of commodity trading now takes place electronically.

With electronic trading, traders simply enter their orders onto an electronic trading platform where exchanges match buyers and sellers. Electronic trading has several advantages over pit trading: 1) simplicity, 2) cost, and 3) transparency.

Although pit trading is increasingly being replaced with electronic trading in most commodities exchanges across the globe, there are still some places such as the London Metals Exchange (LME) where pit trading remains.

(From: https://commodity.com/trading/exchanges/ #How_Do_Commodities_ Exchanges_Work)

Task 17. Read Text 8 (a newspaper article). Explain how the disappearance of “open cry” and a switch to an electronic platform will change the work of the International Petroleum Exchange (IPE).

Text 8

Open outcry trading to end on IPE

Open outcry trading came to an end at London’s International Petroleum Exchange (IPE) on Thursday, closing almost 25 years of noisy business. IPE is switching to a fully electronic system, a move it says will better meet client needs and boost efficiency.

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Many traders, who work in multicoloured jackets, shout orders and use hand signals, are unhappy with the move. They will relocate to a rival exchange in Dublin that is being run by the New York Mercantile Exchange (Nymex). Nymex has said that it is committed to bringing open outcry trading back to London because demand is still strong.

It currently is awaiting regulatory approval from the Financial Services Authority, something that is expected to take up to six months.

Despite the boisterous image of the IPE pit, supporters say it is a very effective way of doing business and point to the fact that trading volumes have been climbing annually. IPE, and its owner the Intercontinental Exchange (ICE), were unable to comment on the decision because they are planning a share sale and are in a so-called “quiet period”. When ICE took control of IPE one of its conditions were that it would take the exchange fully electronic.

For some, the end of open outcry trading on the IPE is yet another example of London’s financial markets losing their personality, and the little guy getting trampled by the big players. Compounding this feeling is the fact that should open outcry disappear, then there would be significant job losses among traders and brokers.

For others, the end of an era is nothing more than the inevitable march of progress that ultimately will lead to a more sophisticated market. Switch to an electronic platform, the argument goes, and there is no longer the need for a physical presence in the IPE, allowing a trader to work in any number of markets from any location.

Instead of just trading Brent crude oil futures in London, why not also cover the FTSE 100 stock index, the metals exchange and US bonds?

On top of that the paper trail is easier for regulators to follow, ensuring a more transparent market.

(From: http://news.bbc.co.uk/2/hi/business/4415905.stm)

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Task 18. Render Text 8 in English.

Task 19. Make a group project for further presentation to peers. Browse the Internet for relevant information. The class is to be divided into 3-4 working groups according to the project chosen:

−− International e-trading: the present day and prospects; −− Major commodity markets of today;

−− Investing in commodities: pros and cons; −− Customs regulations in e-commerce.

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