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  • QA 143
    Question:
    Why are Incoterms not used in the European coffee trade?
    Background:
    Why does the European coffee trade not use Incoterms?
    Asked by:
    Extension Agent/Researcher - Mexico
    Answer:

    Both the European Coffee Federation (ECF) and the Green Coffee Association of New York (CGA) have their own dedicated, stand-alone standard forms of contract. These have been specifically drawn up for the trade in green coffee.  Incoterms on the other hand, are a general set of international trade conditions, i.e. they are not product-specific.

    The exclusion of Incoterms by both ECF and GCA should not at all be seen as having negative connotations. It is done purely to safeguard the stand-alone status and clarity of both the ECF and CGA contracts. Contracts that have been written for and by the coffee trade.

    The reason ECF and GCA have established their own contracts (under whose terms most green coffee is traded internationally) is simply that the trade in green coffee is complicated. Quite a number of issues require specific consideration when it comes to establishing contract conditions. As a result the coffee trade knows very precise and clear contractual conditions, applicable to green coffee transactions only, which have grown from many decades of green coffee trade experience. A large amount of jurisprudence (formal interpretations) has also been built up.

    Incoterms are standard trade definitions, devised and published by the International Chamber of Commerce - ICC.  Among the best-known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To).

    Most contracts made after 1 January 2000 using Incoterms will refer to the latest edition, which came into force on that date - the correct reference is therefore to "Incoterms 2000". The English text is the original and official version of Incoterms 2000, which have been endorsed by the United Nations Commission on International Trade Law (UNCITRAL). Authorized translations into 31 languages are available from ICC national committees.

    A number of producer members of the International Coffee Organization (ICO) have from time to time expressed a wish to see more use being made of Incoterms in the coffee trade but, to date this has never gone beyond the discussion stage.

    For more go to http://www.iccwbo.org/incoterms/id3042/index.html - for the ECF contracts go to www.ecf-coffee.org, and for the GCA contracts go to www.green-coffee-assoc.org.

    Posted 04 April 2007

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