SMICE EDUCATIONAL SERVICES
FOREIGN TRADE NEGOTIATORS (FTN)
From: Dec 2, 2020
Corrections applied over time: Additional information applies monthly.Personal opinions of the author are also served.
PCT: Advance Trading Procedures and Added Aspects to ITSI
For informed applicants (PCT's) who have studied ITSI or a FTNX BETA in-house doctrine 2016 onwards and who have been trading solid for at least one full year thereafter at FOB/FCA delivery mode.. Everyone must learn the basic formal trading aspect, before trying advance procedures.
FTNX procedures have not changed with new Incoterms 2020. The PCT is now able to offer CIF with Class ‘A” cover, whereas the end buyer may seek the minimum Class ‘C” insurance Cover as per incoterms 2010, which is permissible under ICC delivery rules. The PCT could simply leave incoterms 2010 aspect and wait for the end buyer to ask for the higher cover at CIF, which is generally not sought, which questions this new option offered under the 2020 rules.We are still seeking contract from suppliers with 2010 rules apparent, as such stating that 2010 or 2020 rules apply, is allowed.
FTNX has tested asking the suppliers in 2019 to cover the TF, with positive results especially for large orders where margin and discount are more on the low end. Where end buyer are receiving a great discount , the end buyer pays for the TF, otherwise the PCT now has option to seek the TF on its OTP when sourcing goods. A low end aspect is defined when the buy price and the market price has a 3.0% or less OPX differential. Once a differential of 6.0% or more is apparent on the buy price, where the end buyer has received 4.0% or more of the discount secured, the end buyer pays for the T.F, In any case it is now allowed under the doctrine to secure the T.F from the supplier as an alternative option when margins are tight. The PCT has discretion on this matter.Please note ; this advice like others served herein assumes that the PCT has spend at least 12 months trading after completing the study, or is supported by FTNX (i.e: as a FTNX Agent). Experience in applying all aspects of the FTNX base formal doctrine (ITSI) as specified, is very important, as it gives all PCT's the boundaries they need to master working within, before venturing into highly advanced trading situations. FTNX has to test many aspects first before an advance application is deemed acceptable or allowable.The first year is about sourcing export ready suppliers as such the simplest approach is the best–in getting their attention.
The PCT may now extend (option) the first delivery date to 35 days instead of 30, with the addition of ‘-/+ 5 days’ tolerance factor aspect applied. This means if loading operation are delayed due to Covid 19, the first delivery date could be extended to 40 days maximum. The option to apply the new ‘Good Samaritan’ clause to the contract is at the direction fro the PCT which give the option to the PCT to cancel a contract after its signed and before first delivery is initiated, if its is found that if the deal continues, the end buyer could suffer a financial loss, especially due to delays caused by Covid 19. In such a case the PCT will only cancel such a deal if not consequences apply, for saving the end buyer, the potential of a huge financial loss.
GOOD SAMARITAN CLAUSE ADVICE
32.0 GOOD SAMARITAN CLAUSE
FTNX FRUSTRATION CLAUSE 2020, AS IT APPLIES TO OFFER:
32.1 As it applies to the Offer that was presented, so shall it apply to the Contract, where special circumstances have become apparent and in where the Buyer has agreed prior, to a ‘no consequence’ clause, in that, due to special circumstances, for all its efforts, the Seller was unsuccessful in securing a bank to accept the financial instrument served to pay for goods offered, or where accepted, the seller is concerned that the end buyer could face costly delays.
32.2 The Seller, in an attempt to assist the End Buyer secure a much needed product, has agreed to apply its best efforts to sell offered goods to the Buyer named herein, even though the Seller has expressed concerns with the type of financial instrument being advised without such a financial instrument being confirmed, and concerns regarding to the country importing goods being purchased.
32.3 The Seller has agreed to enter into this Contract of Supply, even though issues pertaining to sanction and/or ranking of bank issuing the DLC for the payment or goods may create difficulty in servicing this Contract.
32.4 And that, once the bank of the Seller, or any other bank, accepts the financial instrument offered by the bank of the Buyer, this ‘Good Samaritan Clause' is no longer in effect.
32.5 The bank of the Seller has to accept the correctly formatted financial instrument within 5 banking days of issuance.
32.6 Furthermore, if the Seller is morally unable to perform it duties pertaining to the execution of the Contract, once it is signed, due to matters of legal frustration, as caused by a subsequent unforeseeable event or unforeseen discovery, which the Seller has deemed may cause the Buyer to be placed in an adverse and financially precarious position, then the Seller at his or her discretion, may cancel or suspend the Contract or financial instrument – before the DLC is accepted, or after it is accepted but before carrier is booked – Inter alia; in the event of this scenario occurring so as protect the interests of the Buyer, no compensation nor consequences for the Seller’s honourable action shall be sought, from the Buyer, once first class evidence of the frustrating event is provided.
32.7 The bank of the Buyer seeking advice from the bank of the Seller, where the bank of the Seller declares that it will not accept the financial instrument issued from the bank of the Buyer, is defined as inter alia ‘first class evidence.’
32.8 An ‘unforeseen discovery’ when compared to ‘unforeseen event’ is an event which at the time of serving the contract seemed to be manageable in where by the time first delivery date nears the discovery has become un-manageable to such an extent that employers and staff members have ben effected ‘en masse’ so much so that first delivery was unable to be concluded on time, in the near future. The near future in this context shall mean “14 days of more.”
32.9 A Government forcing people or citizens under local laws, to remain at home due to a declared curfew, epidemic or pandemic; an explosion or other disastrous event, at port of loading or unloading where live have been lost; a change of a friendly Government to an unfriendly Government, and new policies therein; or where import rules applied domestically by Customs have been unreasonably changed and applied without notice so as to impose a ‘penalty’ or ‘punishment’ against a country, not agreeing with such policies.An event not deemed as legal ‘Frustration’ or ‘Forces Majuere’ could be deemed an ‘unforeseen discovery’ is the purpose of the ‘Good Samaritan’ clause.
The majority of ships, trucks, long haul trains, and planes world-wide use ‘dirty fuels’ and a large number ion coal powered electricity producing stations still exist; these product will not vanish overnight and will still be in demand for decades to comes, accordingly crude oil , fuels and coals transactions may be fully applied by the PCT. the expectation sis that when the market place returns to normal, and increase in the demand o for such products will become apparent.
SANCTIONS AND THE CHINA SYNDROME
A PCT cannot conduct business with a country holding sanction with USA (or its allies as declared) where western banking system is in use. A belligerent country ( Government) such as China is now deemed an ‘unreliable end buyer’ or ‘problematic supplier’ accordingly; all Chinese based suppliers must offer a 2.0% P.G minimum as an unconditional penalty for late deliveries, and another 3.0% P.G for delivering goods not as ordered. Likes wise, a Chinese based end buyer may now be asked for a 2.0 % P.G (up to 5.0% Max ) for failing to honour a legitimate contract basis , in where no reasonable excuse is apparent for breaching a contract. Where the directives of a government in the importing country has deliberately created local laws without notice ( 3 months minimum) , for Customs to impose, which has created the imposition for the end buyer to perform; upon the next shipment failing to be accepted by the end buyer, due to such localised laws, the loss of the P.G for the benefit of the Seller shall be unconditionally called upon, once a breach of contract is in effect.
FTNX MARKET PLACE FOCUS 2021
India, Canada, USA, U.K, Mexico, Africa, Italy, New Zealand , Japan, Germany and former colonies of GB are defined as the premier market place of business for the PCT in 2021; all others are considered on merit. Copper, Metal, Ore and ULSD2 remains as much sought after products in 2021. In the matter of Japan; no trading houses or “agents” are accepted even if the end buyer is named; is the exception to the general rule and procedures specified under the doctrine as such entities cannot be trusted has been declared, due to adverse experience being recorded by FTNX from 2018. The PCT must conduct business with the Japanese supplier directly is now the expectation.
A huge influx of traders are expected in 2021 after a huge influx of ITSI purchasers have been recorded world wide 2020 due to lock down laws and Coronavirus. A PCT must not trade with a person who has studied the doctrine and is applying unworkable hybrid procedures using the Doctrine to legitimise their own trading aspect. Do a Google search on the name of any person claiming to be a indoctrinated trader. Such search will often reveal aspect of a FTNX endorsed ISS position.