Incoterms Analysis: Seller Pays Carriage, Buyer Handles Insurance & Customs
This question asks to identify an Incoterm where the seller pays for delivery to the destination, but the buyer handles insurance, import customs clearance, duties, taxes, and bears the risk.
Analyzing Incoterms Options
- Carriage and Insurance Paid To (CIP): The seller pays for carriage and insurance to the named destination. Since the question states the buyer assumes insurance, CIP is not the correct term.
- Cost, Insurance and Freight (CIF): The seller pays for cost, insurance, and freight to the destination port. Similar to CIP, the seller covering insurance makes this incorrect based on the question's criteria.
- Carriage Paid To (CPT): The seller pays for the carriage of goods to the named destination. The risk transfers from the seller to the buyer when the goods are delivered to the first carrier (not necessarily at the final destination). The buyer is responsible for arranging and paying for cargo insurance, import customs clearance, duties, and taxes. This aligns perfectly with the question's description.
- Cost and Freight (CFR): The seller pays the cost and freight to the destination port. Risk transfers to the buyer when goods are delivered on board the vessel at the origin port. While the buyer handles insurance and customs, CPT more closely matches the condition where the seller pays carriage *to the destination* and the buyer explicitly handles insurance and risk from the point of delivery to the carrier.
Conclusion
Based on the Incoterms rules, Carriage Paid To (CPT) is the term where the seller bears the cost of carriage to the destination, while the buyer assumes responsibility for insurance, import customs, duties, taxes, and the associated risks after the goods are handed over to the carrier.
Important Questions from International Trade
Consider the following statements about the international financial sources :
I. A Global Depository Receipt (GDR) is a bank certificate issued in more than one country for shares in a foreign country.
II. A GDR is very similar to American Depository Receipt (ADR).
Select the correct option.
Which of the following documents is not required for obtaining export license?
_________ was set up with prime objective of professionalizing the country’s foreign trade management by providing training, research and data dissemination.
Which one of the following does not fall within the ambit of WTO operations ?
The following statements relate to Restrictive Trade Practices (RTP). Choose the correct code for the statements being correct or incorrect.
Statement I: Often the low price is the result of the predatory pricing strategy; prompting selling at prices below cost.
Statement II: This is done with an aim to drive out existing competitors because predatory pricing is a restrictive trade practice.
