The European Union EU is an abbreviation for an organization of different states that decided to cooperate in several fields. The founding father of the European Union was Jean Monnet. Since his idea of a united Europe many problems had to be solved and of course it also will be a great challenge in the future. The general intention was to cooperate concerning business, economy and to become friends. Old disputes should be put behind this way. Meanwhile, many countries got access to the EU. A positive consequence was that trade within the EU increased rapidly, borders were opened and therefore goods are moved much easier throughout Europe. Europeans can get workplaces Europe-wide. Simultaneously, a single currency, the euro, has been introduced and this was a step towards a Monetary Union. Another advantage is that the EU is a really strong economic union in the world. During the last 50 years, the European trade with the global market increased significantly, however, the trade between the member states themselves was a more important issue for the governments. Referring to the unemployment rate in Germany, it can be said, that due to the membership German people found a job more often and without any problems anywhere in the EU. The number of unemployed persons would have risen by 10 million if the country had not been in the EU. The countries are supporting each other in difficult situations and during financial crises. Furthermore they collaborate if one of the countries is attacked by non-European ones. Incoterms Documentation plays a very important role in international trade. The International Chamber of Commerce mainly was founded to simplify this documentation and in order to make it more efficient. Special trading principles as well as strict rules have been established to protect sellers and buyers in international trade. The mentioned rules are steadily reviewed and various trade terms came into existence. Traders worldwide have to agree with the “Incoterms”, which are valid for any transaction happening nationally and internationally. They express the obligations of both, buyers and sellers, and determine the costs as well as the risks of the individual traders. Incoterms consist of a 3-letter-abbreviation, for instance CIF (Cost Insurance Freight) or FOB (Free on Board). This Incoterm for example means that the goods are placed on board of a ship at the port of shipment which is stated in the contract. Also the risk of transportation has been regulated this way. The risk of damage will be transferred from the seller to the buyer when they pass the rail of the ship. So, there is no necessity to spell out everything in detail. The traders just use the standard set of expressions. As the Incoterms are valid worldwide, everyone knows the content and the meaning of the individual expression. The terms are mentioned in the contract between buyer and seller, so everyone should know exactly how the terms work and what they mean. 1. Sum up the text in your own words. 2. Why is it important to use trading expressions, like Incoterms? How Goods are Transported Producers normally sell their goods to wholesalers in substantial quantities. Then the individual wholesaler delivers them to various retailers. The retailer is the final link to the consumer. Additionally, forwarding agencies are necessary to ship the goods in the end. Forwarding agents are for example DHL, UPS, Fedex, etc. Those companies transport goods to every corner of the world. For international trade it is of prime importance that producer, wholesaler, retailer and forwarder are working together, because costs of shipment can be reduced and finally the price for the consumer is more favorable, too. But why do producers not just transport their products directly to the retailer? What is the function of the wholesaler? Wouldn`t that be much easier and cheaper? It is obvious that the service of the wholesaler increases the final price of the product. The simple answer is that the wholesaler functions as an important mediator who knows very well how to bring the goods to the retailers. Moreover, the wholesaler runs large stocks and buys the goods in great quantities until they are requested by the retailers. A steady production flow can be granted through the wholesaler. Even if the demand changes, the wholesaler is, due to his stocks, in the position to react directly. 1. What is the function of a wholesaler? 2. State advantages for retailers. 3. Quote the process of the transport of goods. What is the first station and what is the last one?