Readings Ingles Avanzado Aplic. A Las Finanzas

SEDE TEMUCO
2013
ADVANCED ENGLISH APPLIED TO FINANCES
UNIT 4: INTERNATIONAL TRADE
Text 1
1.1. Pre-reading activities
1.1.1. An acronym is a word made up from the first letters of the name of something,
especially an organization.
e.g.: NATO : North Atlantic Treaty Organization
What do you think the following acronyms stand for !an you translate them into
"panish !an you e#plain them
$N%&'"(
A!)ON*+
",AN'"(
A!)ON*+
$-,&ANAT'ON . T)AN"&AT'ON
NATO North Atlantic Treaty Organization
/N
'+0
W(O O+"
11!
01'
'!! !!'
/2
OA" Organization of American "tates
03A
0AO
WTO O+!
)A+
4AT '4A
0A5
6.1.1.6. What are the main e#ports of the following countries
!O/NT)* ,)O3/!T 7$nglish8 ,)O3/!T 7"panish8
Argentina
1razil
!hile 9ino, co:re
!u:a
0rance
%ermany
'taly
;apan
+alaysia
New <ealand dairy products
,ortugal
"pain
'ndia Tea
Taiwan
4enezuela
2.1. Reading
'n the te#t :elow, a general description of international trade is gi9en. )ead the te#t
paying special attention to the e#planations of the main technical concepts in it.
Internationa Trade
$conomic transactions can :e traced :ack to prehistoric times. At the :eginning,
human groups esta:lished self=sufficient economies that pro9ided them with e9erything
they needed. As time went on, human settlements :ecame aware of the fact that there
were groups that had greater amounts of some resources and less or not enough of
others.
!onse>uently, they started trading the goods they needed without any e#change of
money. This is known as :arter. "ince then, trade :etween groups grew wider, more
comple# and far=reaching.
'n general, natural resources are distri:uted randomly all o9er the world? :esides, some
nations ha9e de9eloped technologies and ser9ices. All of these are su:@ect to :e
imported 7:ought from another country8 and e#ported 7sold to another country8. This is
known as international trade, which can :e defined as the e#change of goods 79isi:le
trade8 and ser9ices 7in9isi:le trade8 :etween different countries.
$ach nation manages its e#port=import acti9ities in order to :alance its economy? in
fact, go9ernments try to maintain a fa9oura:le :alance of trade, that is to say, to e#port
more than they import. The opposite condition is to ha9e an unfa9oura:le :alance of
trade A they import more than they e#port.
The earnings from e#ports and the spending on imports make up the :alance of
payments, which is a record of the nations transactions. When there is a deficit in the
:alance of payments, go9ernments can correct it in a num:er of ways. Two of the most
common measures that nations can take are >uotas 7ma#imum >uantity of imported
goods8 and tariffs 7ta#es on imported goods8. When these measures are applied, they
tend to protect locally=made products since they increase the price of imported goods.
'n addition, as foreign trade :ecame so widespread and comple#, countries agreed
upon some mechanisms to regulate the acti9ity, thus they created some international
organisations such as %ATT 7%eneral Agreement on Tariffs and Trade8, which was
replaced :y the WTO 7World Trade Organization8, and '!! 7'nternational !ham:er of
!ommerce8, among others. The purpose of these international :odies is to regulate
tariffs and to reduce trade restrictions :etween mem:er countries.
The $uropean community was esta:lished in 1BCD to create a common market in order
to minimize and e9entually eliminate protectionist measures. This initiati9e has
continued gaining ground to form a growing single $uropean market without technical
restrictions. 't has thus :ecome one of the worldEs largest trading :locks, ser9ing o9er
FGG million people.

2.2. Reading !o"#re$ension
6.1.F.1 +atch the concepts :elow with their corresponding definitions.
!oncepts 3efinitions
a. 9isi:le trade the ratio :etween money earned and spent :y a
country.
:. $#port the proportion :etween imports and e#ports.
c. :alance of
payments
the e#change of goods and ser9ices :etween
countries.
d. 'mport ta#es on imported goods.
e. :alance of trade the amount of some product that is allowed to :e
imported.
f. international trade transactions of products :etween countries.
g. 5uotas a system used to fa9our domestic industry and trade.
h. Tariffs the purchase of goods from another country.
i. in9isi:le trade a common market constituted :y most $uropean
countries.
@. protectionism the selling of goods to another country.
k. $uropean
!ommunity
international trade of ser9ices
6.1.F.6. Answer the following >uestions
a8 What does the acronym WTO stand for
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
:8 What do the initials '!! mean
c8 What does the a::re9iation $! stand for
d8 What is the main o:@ecti9e of the $!
e8 What is the importance of the $!
f8 3o you know what countries the $! is constituted :y
2.%. Text %
2.%.1. Reading
Operations in the field of international trade re>uire careful handling of a num:er of
documents. The letter of credit is one of them. 1elow is a description of the way in
which a letter of credit is arranged.
)ead the following te#t. ,ay special attention to the e#pressions that refer to the
documents which are necessary for the operation descri:ed.
The &etter of !redit
A letter of credit is a payment document widely used :y :anks in international trade
operations? it is an instrument that facilitates :usiness transactions :etween e#porters
and importers.
&etters of credit used in international transactions are go9erned :y the 'nternational
!ham:er of !ommerce /niform !ustoms and ,ractice for 3ocumentary !redits.
A commercial letter of credit is a contractual agreement :y which a :ank 7the issuing
:ank8, on :ehalf of one of its customers, authorizes another :ank 7the ad9ising or
confirming :ank8 to make payment to the :eneficiary. The issuing :ank, on the re>uest
of its customer, opens the letter of credit. The :eneficiary is normally the pro9ider of
goods.
The issuing :ankEs role is a8 to pro9ide a guarantee to the seller that, if compliant
documents are presented, the :ank will pay the seller the amount due, and :8 to
e#amine the documents, and only pay if these documents comply with the terms and
conditions set out in the letter of credit. A letter of credit is usually negotia:le i.e. the
instrument is passed freely from one party to another almost in the same way as
money.
The most common type of letter of credit is the irre9oca:le letter of credit, which may
not :e re9oked or amended without the agreement of the issuing :ank, the confirming
:ank, and the :eneficiary. Therefore, it is crucial that the importer and the
ad9ising.confirming :ank make sure that the :eneficiary 7the e#porter8 is in a good
financial position :efore ad9ising the credit.
All letters of credit re>uire the :eneficiary to present a draft and specified documents in
order to recei9e payment. A draft is a written order :y which the party creating it orders
another party to pay money to a third party. A draft is also called a :ill of e#change.
There are two types of drafts: sight and usance. A sight draft is paya:le as soon as it is
presented for payment. A usance draft is not paya:le until the ending of the time period
stated on the draft. The issuing :ank is o:ligated to accept drafts and pay them at
maturity. Accepted drafts can usually :e discounted :y the sellers if they do not want
to wait until the due dates for their money.
Typically, the documents re>uested, called shipping documents, will include a
commercial in9oice, a transport document, such as a :ill of lading or airway :ill, and an
insurance document, among others.
a. A commercial in9oice is the :illing for the goods. 't includes a description of
merchandise, price, origin, and name and address of :uyer and seller. The :uyer and
seller information must correspond e#actly to the description in the letter of credit.
'n9oicing can occur under two main agreement conditions: !'0 terms and 0O1 terms.
On !.'.0. terms 7!ost 'nsurance and 0reight8, the e#porter :ills for the cost of the
merchandise, the insurance policy, and shipping charges? correspondingly, the
importer pays for customs clearance and other costs and risks. On 0.O.1. terms 70ree
on 1oard8, the e#porter in9oices only for the cost of the merchandise and insurance
charges until the merchandise is officially recei9ed for shipment. 0rom that moment on,
the importer has to co9er the charges for freight and other costs and risks.
:. A :ill of lading is a shipping document e9idencing the receipt of goods for shipment
and issued :y a freight carrier engaged in the :usiness of transporting goods. They
also ser9e as a receipt for the merchandise shipped and as e9idence of the carrierIs
o:ligation to transport the goods to their proper destination.
c. An insurance policy is a guarantee of payment in case of partial or total loss of
merchandise due to a specified set of accidents that may occur during the transport.
2.%.2. Reading !o"#re$ension
6.F.6. )eading !omprehension
6.F.6.1. +ark the following statements T 7true8 or 0 7false8 according to the information
from the te#t.
1. A letter of credit is an instrument used for payment.
2. The regulations for a letter of credit are esta:lished :y each country.
3. The :ank that opens the letter of credit is also the :ank that confirms the
:eneficiary a:out the credit.
4. The issuing :ank is the :ank that finally pays the e#porter.
5. A letter of credit can only :e re9oked with the appro9al of the e#porterEs :ank
and the importerEs :ank.
6. A :ill of e#change is not e#actly the same as a draft.
7. 1oth sight and usance credits must :e paid :y the issuing :ank.
8. 0O1 and !'0 terms differ mainly in the payment responsi:ilities of importers
and e#porters.
9. 'n9oices, :ills of lading, and insurance documents can :e classified as shipping
documents.
1. HHH 6. HHH F. HHH
J. HHH C. HHH K. HHH
D. HHH L. HHH B. HHH
6.F.6.6. (ere is a sample of a letter of credit. ,ut the la:els pro9ided in their
corresponding places according to the information from the document.
'nsurance payment
%OO3"
3O!/+$NT" TO 1$ ,)$"$NT$3 1* T($
1$N$0'!'A)*
,resentation of documents
1$N$0'!'A)*
A,,&'!ANT
&atest shipping day
A+O/NT
A34'"'N% 1AN2
BLUE GLOBE BANK
,ost Office 1o# JF6-
&ondon, $ngland, FJC- !ourt )oad A9.
No9em:er 1, 6GGJ
'rre9oca:le Negotiation !redit
!ON0')+'N% O/) !A1&$ O0 TO3A*
!)$3'T N/+1$): '+,=KJGG=GGGGDKC-
$-,')*: ;anuary FG, 6GGC in "ANT'A%O, !('&$.
'3$NT'0'!AT'ON
1o#port 'nc. JFB 0arina, "antiago
1anco 1anco 0oreschile
Andrea Ace9edo, "antiago, !hile.
M JG.GGG.GGG 7!hilean pesos8
!redit a9aila:le and 0)$$&* N$%OT'A1&$ 1* AN* 1AN2 :y negotiation against
presentation of the documents detail herein and of your drafts drawn at KG days "'%(T
drawn on T($ A+"T$)3A+ 1AN2 at 1GGN O0 'N4O'!$ !O"T.
WOO3$N 0/)N'T/)$ ,$) ,/)!(A"$
O)3$) No JCFD- !O0 &ondon
'n9oices in triplicates indicating import
license no. '& 7L=!!8 $ 766=6F8
"pecial customs in9oice in duplicate
0ull set of clean in :oard ocean :ills of
lading consigned to 1lue %lo:e 1ank,
&ondon, 0reight ,repaid and notify
--- !ustoms "er9ices.
OT($) T$)+" AN3 'N"T)/!T'ON"
;anuary 1G, 6GGC
:y the :uyer.
within 61 days after the date of issuance of
shipping documents :ut not later than e#piry.
6.F.F &ra""ar
6.F.F.1 3efinition
3efining is saying what something is. Thus, the typical >uestion to elicit a definition is
PWhat is -P
e.g. What is a commercial letter of credit
A commercial letter of credit is a contractual agreement :y which a :ank authorizes
another :ank to make payment to a :eneficiary.
A formal definition e#plains the meaning of an e#pression :y assigning it to a class and,
then, differentiating it from the other mem:ers of that class.
e.g. = What is a commercial letter of credit
A commercial letter of credit is a contractual agreement :y which a :ank authorizes
another :ank to make payment to a :eneficiary.
a8 class = contractual agreement
:8 differentiation = :y which a :ank authorizes another :ank to make
payment to a :eneficiary
= What is an in9oice
An in9oice is a shipping document which descri:es the goods and the price.
a8 class = shipping document
:8 differentiation = description of the goods and the price
6.F.F.1 !ompose the definitions of the items :elow :y pairing the right e#pressions from
columns A and 1.
A '
a. A loan is an amount of money in case of partial or total loss of merchandise due
to a specified set of accidents that may occur
during the transport.
:. A :ill of e#change is a written order to pay money to a particular person when
demanded.
c. A promissory note is a written and
signed promise
which is lent and then returned after a specified
time with additional payment for its use.
d. insurance policy is a guarantee of
payment
on which a usance :ill falls due for payment.
e. A letter of credit is a contractual
agreement
made :y a :orrower to repay money with interest at
a certain date.
f. A :ill of lading is a shipping
document
e9idencing the receipt of goods for shipment and
issued :y a freight carrier engaged in the
:usiness of transporting goods.
g. +aturity is the date :y which a :ank, on :ehalf of one of its
customers, authorizes another :ank to make
payment to the :eneficiary.

6.F.F.6 Translate the following definitions into "panish.
a8 A che>ue is a written order to a :ank, usually made on a specially printed sheet of
paper supplied :y the :ank, to pay a certain sum of money from oneIs :ank
account to another person.
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
:8 'nflation is the rise in prices which is caused :y increases in the costs of
production.
c8 "tock is the money which is owned :y a company, di9ided into shares.
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH

d8 +arket is the series of acti9ities :y which goods are supplied, ad9ertised, and
sold.
Text 2
F.1.1 ,re=reading acti9ities.
F.1.1.1 a8 Which e#pressions on the scram:led list :elow, do you think, match other
e#pressions on the same list
:ank768 A :ill7F8 A :ills A :usiness768 A charges768 A clean A clearance = clearing =
collection768 A credit A customer A customs = department A document = documentary
drawee A duty e#port A import A insurance = international A letterA organization A
procedures A title = trade
HHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHH
:8 !an the e#pressions you ha9e formed :e found in the te#t 'f they can, what do
you think they mean.
%.1.2 Reading
The te#t :elow is a description of the process of collecting :ills as conducted :y :anks.
)ead the te#t carefully paying special attention to the words and e#pressions that refer to
this process directly.
'is (or !oection
'n :anking, a collection is a negotia:le instrument presented to a :ank for
payment. This instrument is drawn :y an indi9idual or a :usiness organization. The
:ank it is presented to is the drawee :ank. 3epending on their scope, collections can
:e national or international. 'n turn, international collections can :e either clean, when
no documents are attached to the negotia:le document, or documentary, where title
documents accompany the draft.
'nternational collections differ from letters of credit in that the drawee :ank is
only an agent acting on the :asis of instructions and does not pro9ide financing or
credit. 'n fact, there is an important degree of mutual responsi:ility acting :etween
customers and :anks and :etween :anks themsel9es in the case of documentary
collections. 'n other words, the documentary collection is an interesting alternati9e to
the letter of credit when financing from the :ank is not necessary and.or there ha9e
:een pre9ious transactions :etween the parties in9ol9ed.
!ertain conditions are re>uired for proper handling of collections. 0or e#ample,
in the case of an e#port.import operation, the :ills departments at :oth the e#porterIs
and the importerIs :anks must :e familiar with the procedures related to such a
transaction: import, customs and clearance ones, among others. 'n this conte#t,
instructions :etween :anks :ecome particularly important. Thus, prompt payment for or
acceptance of documents cause effecti9e progress and completion of the operation in
>uestion? in contrast, non=payment or non=acceptance implies rigorous application of
the instructions.
!harges are another case in point. 'n the field of international :usiness,
customs duty, clearing and insurance charges tend to :e high. 'f instructions sent to the
importerIs :ank are unclear or untimely, there is a risk of hurried or delayed action for
want of suita:le instructions. This can cause an increase in charges or e9en a loss of
9alue when stored goods are auctioned. 'n :oth cases the importerIs :ank may :e held
responsi:le.
't can, then, :e said that clear instructions ensure the realization of the
responsi:ilities e#isting :etween the parties in9ol9ed.
%.1.% Reading !o"#re$ension
F.1.F.1 0ill in the :lanks in the sentences :elow with suita:le ideas from the te#t and
the corresponding 9oca:ulary.
a8 The collection is presented to the HHHHHHHHHHHHH :ank.
:8 Attached documents are necessary for HHHHHHHHHHHH collections.
c8 3ocumentary collections re>uire HHHHHHHHHHHHHHHH documents.
d8 1oth the e#porterEs and the importerEs :ank must :e familiar with import, customs
and clearance HHHHHHHHHHHHHHHHHH.
e8 "tored goods can :e HHHHHHHHHHHHHHH if instructions are not clear.
f8 'ncreased HHHHHHHHHHHH may :e the responsi:ility of the importerEs :ank.

F.1.F.6 Answer the following >uestions in "panish with information from the te#t.
a8 (ow do collections differ from letters of credit 7two ideas8
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
:8 When is it :etter to use collections rather than letters of credit
c8 What procedures must :oth the e#porterEs :ank and the importerEs :ank :e
familiar with
d8 Why are clear instructions indispensa:le in the case of collections
%.2 &ra""ar
F.6.1 'dentification
a. To identify is to pro9e or show the identity of, that is, to specify who or what a particular
person or thing is in order to pre9ent any sort of am:iguity. Thus, a possi:le >uestion to
elicit some sort of identification is: PWhich . What - are you talking a:outP. - stands for
the person or thing that needs to :e identified.
e.g. A: (a9e you read the report
1: The report Which one
A: The :ranchIs monthly report we recei9ed yesterday.
). Accurate identification can :e e#pressed :y means of a Nominal
%roup 7N%8? the more detailed the N%, the more precise the identification. 1elow is the
typical order of the elements in a N%, that is to say, the order in which the information is
recorded in the mind and in which it is e#pressed.
3eterminer $numerators !haracteristics NUCLEUS Additiona
in(or"a
tion
Article
Ordinal .!ardinal $9aluati9e . 3escripti9e
*
,repositional . 4er:al
,ossessi9e
3emonstrati9e
5uantifier
3ual
).1 3eterminers
Articles: a.an the
,ossessi9e: "ingular: my your his.her.its the :ankIs
,lural: our your their the :anksI

3emonstrati9e: "ingular: this that
,lural: these those
5uantifiers: some any e9ery no
3ual: :oth either neither
).2 $numerators
Ordinal: first 71st8 second 76nd8 third 7Frd8 fourth 7Jth8
fifth 7Cth8 si#th 7Kth8 se9enth 7Dth8 eighth 7Lth8
twelfth 716th8 hundredth 71GGth8 === th
ne#t following comingother last
!ardinal: one 718 ten 71G8 twel9e 7168 si#teen 71K8 twenty 76G8
si#ty 7KG8 one hundred 71GG8 two thousand 76GGG8
few se9eral many
).% !haracteristics 7Ad@ecti9es8
$9aluati9e: important difficult interesting nice
comple#
3escripti9e: financial scientific philosophical economic
customs credit import company
The words underlined are :asically nouns 7names8, :ut they refer to a characteristic if
they are placed right :efore the nucleus in a N%.
e.g. customs procedures Q procedimientos aduaneros
credit pro:lems Q pro:lemas crediticios
import :ills Q documentos de importaciRn
company organization Q organizaciRn de la compaSTa
the Tokyo :ranch Q la sucursal en Tokyo
the &ondon office Q la oficina de &ondres

).4 N/!&$/": the entity which is identified or specified 7*8
e.g. a delicate financial situation
the first >uestion discussed at the meeting
e#port :ills for collection
the :ankIs technical specifications for the operation
).+ Additional information
,repositional: ,repositions are e#pressions of connection

on at to of with
a:out :etween :efore after without in connection with
in relation to etc.
e.g. a conflict with the workers
a discussion a:out financial pro:lems
some serious pro:lems in relation to the regulations
4er:al: 4er:s refer to action or non=action
Action: in9est discuss discount work
Non=action: understand consist :elong like
e.g. the conflict which was sol9ed :y the union
a serious pro:lem negotiated with the customer
the regulations which organize the employeesI acti9ities
the manager who o:@ected to the operation
F.6.1.6 Write the e#pressions of identification :elow in their correct order. Translate your
e#pressions into "panish.
a. complicated . procedures . recruitment . the companyIs
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
:. instrument . presented to the drawee . negotia:le . the companyEs
c. the enterpriseIs . sophisticated . e>uipment . technological
d. to the operation . serious . managementIs . o:@ections
e. transactions . :usiness . some . negotiated in 6GGG . important
f. clear . for the customer . instructions . the e#porterEs
g. which were issued :y our :ank . of credit . the . two .letters . first
h. charges . clearance . that agentIs . e#pensi9e
i. comple# . these customersI . which took up our time . collections . unpaid
@. professional . defined in the regulations . the e#ecuti9esI . important . responsi:ilities
F.6.1.F Translate the following e#pressions of identification into "panish.
a. the completion of the operation
:. e#port :ills for collection
c. the :ranchesI documents which ha9e not :een paid
d. the countryEs comple# clearance procedures
e. the companyIs unsuccessful strategies that should :e corrected
f. :oth (eads of 3epartment in9ol9ed in the operation
g. this organizationIs difficult customs and clearance procedures which determined the
e#pensi9e charges
Te#t F
F.6.1 )eading
'NT$)NAT'ONA& T)A3'N% !ONT)A!T T$)+" 7'N!O Terms8
O9er the last decades, international trade has increased in >uality and >uantity. As a
direct result of the growing num:er of customs=free zones, the e#tended use of
electronic communications, and the impro9ement in transport systems, each day more
countries are e#changing a greater 9ariety of goods and ser9ices to more countries all
o9er the world. The field of international commerce is :ecoming more comple# than
e9er :efore.
'n this world of interconnected :usiness, one of the crucial issues related to
international trade has :een the way :uyers and sellers esta:lish clearly their
corresponding responsi:ilities in their trading agreements. The situation is that the
terms in which a contract is esta:lished :etween an e#porter and an importer can 9ery
easily :e misinterpreted :y one or the other simply :ecause they are people from
different cultures and they may not :e aware of the different trading practices in each
otherEs countries.
!onfusion can arise in the esta:lishment of many types of contract that are
needed to carry out any international transaction, such as contracts of sale, carriage,
insurance, and financing. The issue here is that these contracts must e#press, in a
shared language, what the o:ligations of each party in9ol9ed in an operation are and,
at the same time, reduce the risk of legal complications as much as possi:le.
"ome pro:lems of interpretation are related to the use of am:iguous
terminology. 0or e#ample, in a sale contract, the person known as the shipper can
actually :e two different people: the one who hands o9er the goods for carriage or the
one who makes the contract with the carrier. Other pro:lems may arise with terms
which are sometimes too 9ague, for instance, when deciding what a reasonable period
of time is for the deli9ery of goods or the presentation of documents. A further kind of
confusion can arise from the a:sence of e#plicit indications in the contract in relation to
the partiesE reciprocal o:ligations, as it is when contracts indicate that Uthe seller
must... and the buyer must... gi9ing thus the impression that e9ery important o:ligation
is reciprocal, which is not necessarily so.
0or some rele9ant aspects of sale contracts, the 'nternational !ham:er of
!ommerce esta:lished a set of rules for the interpretation of the most commonly used
terms in foreign trade, thus pro9iding a 9alua:le uni9ersal reference that sa9es time
and money to e#porters and importers who ha9e no need to negotiate e9ery aspect of
this transaction :ut rather agree on a particular 'ncoterm.
'ncoterms like 0O1, !0), !'0, or 0A" are widely used and understood :y the
ma@ority of international traders, who can then sol9e pro:lems like the mentioned
a:o9e. 0or e#ample, in 'ncoterms, a shipper will always :e the person who hands o9er
the goods for carriage under 0O1 terms? the word usual is preferred o9er the 9ague
reasonable, :ecause it can :e referred to the ha:itual acti9ities of sellers and :uyers?
finally, the inclusion of the e#pression no obligation, where necessary, will indicate that
a party does not owe an o:ligation to the other party.
Although 'ncoterms is a 9alua:le tool for the trade acti9ity, it does not pro9ide
for all types of contract, only for contracts of sale and e9en within these, it does not
account for all the duties which parties may wish to include in a contract of sale. The
need for uni9ersal terms of agreement remains to :e satisfied with well=de9eloped sets
of definitions.
F.6.6. )eading !omprehension
F.6.6.1 +ark the alternati9e that :est completes the following statements according to
the te#t.
1.'nternational commerce has :ecome more comple# :ecauseV
a8 ta# conditions in many countries are :ecoming stricter.
:8 communications are 9ery difficult to esta:lish :etween trading countries.
c8 the amount of countries that are commercially related is now :igger.
d8 there is a small num:er of transport possi:ilities.
6.The responsi:ilities :etween e#porter and importer areV
a8 uni9ersally esta:lished.
:8 different from one country to another.
c8 impossi:le to negotiate.
d8 unknown to the two parties.
F.The language of a contract can reduce the risk of legal complications :yV
a8 e#plaining cultural differences :etween seller and :uyer.
:8 e#plaining the meaning of e9ery technical e#pression used in it.
c8 using $nglish as the main language.
d8 specifying the partiesE o:ligations in terms understood :y :oth of them.
J.The case of the word reasonable is pro9ided as an e#ample ofV
a8 an 'ncoterm.
:8 am:iguous e#pression.
c8 specific e#pression.
d8 9ague e#pression.
C.'n a sale contract, 'ncoterms can sa9e time to seller and :uyer :ecauseV
a8 it is a 9ery short document.
:8 it pro9ides a simple system to negotiate commercial terms.
c8 they do not need to negotiate specific contractual conditions.
d8 it is written in $nglish, which as a widely=used language.
K.'n 'ncoterms, a condition of a contract marked with the e#pression no obligation is
used to show thatV
a8 the seller or :uyer has no o:ligation to comply with that condition.
:8 the seller or :uyer has no o:ligation for that condition in relation to the other party.
c8 the seller or :uyer must not comply with that condition.
d8 that specific condition is ne9er considered an o:ligation in 'ncoterms.
D.The fact that 'ncoterms are only applica:le to sale contracts means thatV
a8 it can only :e used :y a few countries.
:8 it is not really useful.
c8 it only works for a limited num:er of operations.
d8 it is an incomplete document.
F.6.6.6 !omplete the following chart with appropriate information from the te#t.

Te#t J
F.F.1.)eading
International trade has increased
There are problems with the interpretation of
contracts
There is a need for uniersal definitions for the
terms of the most usual contracts
!"#$%$
1. &&&&&&&&&&&&&&&&
2. &&&&&&&&&&&&&&&&
3. Improed transport
s'stems&&&
!"#$%
There are different tradin( practices
%)"*+,%$
%)"*+,% 1
"mbi(uous
e-pressions.
shipper___
%)"*+,% 2
&&&&&&&&&
&&&&&&&&&&&&
&&&&&&
%)"*+,% 3
&&&&&&&&&
&&&&&&&&&
&&&&&&&&&
I/!0T%1*$ I/!0T%1*$ $0,#TI0/$
$0,#TI0/ 1
&&&&&&&&&
&&&&&&&&&&&&
&&&&&&&&&
$0,#TI0/ 2
Reasonable is
replaced b'
usual
usual____
$0,#TI0/ 3
&&&&&&&&&
&&&&&&&&&
&&&&&&&&&&&&
"23"/T"4%
It saves
time in
negotiations
2I$"23"/T"4%
&&&&&&&&&&&&
&&&&&&&&&&&&
&&&&&&&&&&&&
A 1rief (istory of 0oreign $#change
The acti9ity of foreign trade has historically :een dynamic and has interconnected
people from all o9er the world? in addition, it has always :een greatly affected :y the
fluctuations of the market, especially, due to its close relation with the
interchangea:ility of national currencies: foreign e#change 70- or 0ore#8. 0inancial
crisis such as the Asian 0lu, the de9aluation of the +e#ican ,eso and the recent
e9ents in Argentina are an e#ample of the importance of sta:ility in international
finance markets, including the 0oreign $#change +arkets.
At specific periods of time, the insta:ility and 9olatile nature of foreign e#change has
made international trade particularly trou:lesome and risky, as it is >uite 9ulnera:le.
3uring the decades following 1BFG, the insta:ility of national currencies was great
especially as a result of World Wars and, on the other hand, the use of restricti9e trade
policies :y nations. The e#change markets were scarcely regulated and the e#change
of currencies mainly depended on gold reser9es held :y countries.
'n 1BJJ, some 6F nations gathered in 1retton Woods New (ampshire in the /nited
"tates to design a post war strategy to sta:ilize e#change rates and encourage
international trade and thus, re9italize the glo:al economy. 'n 1BJD, this agreement
forged the creation of three international organizations: The %eneral Agreement on
Tariffs and Trade 7%ATT8 7later known as the World Trade Organization8, the
'nternational 1ank for )econstruction and 3e9elopment 7'1)38 and the 'nternational
+onetary 0und 7'+08.
$#change rates were set at certain 9alues, and permitted to fluctuate only within tight
:ands around those 9alues? these rates were determined against gold reser9es. The
/" dollar was not only supported :y American gold reser9es :ut officially
e#changea:le for gold. 'n fact it was esta:lished the American dollar would :e pegged
to gold at a price of MFC per ounce. The gold system operated more or less
satisfactorily until the :eginning of 1BDGEs when it collapsed since the /nited "tates
unilaterally decided not to keep its guarantee to e#change /" dollars for gold demand.
The /" had accumulated a large :alance of payments deficit, and was importing an
e9er=larger amount of goods and ser9ices from o9erseas, which resulted in
accumulations of /" currency in foreign countries, which the /" gold reser9es could
not longer support. Nations tried to correct the deficiencies of the system in su:se>uent
meetings :ut, it was unsuccessful and conse>uently, a new system e9ol9ed: the
floating=rate system of foreign e#change. This system is the current model and
operates su:@ect to the law of supply and demand. This means that today the ma@or
currencies mo9e independently of other currencies and that the e#change rates are
calculated in accordance to the market demand for certain currencies. 'f demand
fluctuates, the e#change rate fluctuates too A rising when demand is greater and
decreasing when supply e#ceeds demand.
0rom 1BLG on, the flow of capital was accelerated with the arri9al of computers and
leading technologies that permitted to e#tend the trading day to the time zones of the
world making it possi:le to trade 6J hours a day.
F.F.6.)eading !omprehension
F.F.6.1 Which of the following e#pressions :est e#presses the relationship :etween the
statements in the pairs :elow.
e.g. 'n other words . as a conse>uence . to :egin with
The gold system collapsed.
The floating=rate system e9ol9ed.
The gold system collapsed. As a conse,-ence, the floating=rate system
e9ol9ed.
(-rt$er"ore . as a "atter o( (act . $o/ever . t$ere(ore .an0/a0 . t$at is to sa0 .
-nder t$ose circ-"stances
The acti9ity of foreign trade has :een
dynamic?
it has always :een affected :y the market
fluctuations.
Nations tried to correct the deficiencies of
the system?
it was still unsuccessful.
The /" dollar was officially e#changea:le
for gold?
the price of the ounce was set at MFC.
3emand tends to fluctuate? the e#change rate will also fluctuate.
international trade is >uite 9ulnera:le? international trade is trou:lesome and
risky.

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