Incoterms, short for International Commercial Terms, are a set of standardized rules that define the responsibilities of buyers and sellers in international trade. They clarify who is responsible for shipping, insurance, and tariffs, helping to avoid misunderstandings and disputes. Established by the International Chamber of Commerce, these terms are updated periodically, with the latest version being Incoterms 2020. Each term, such as FOB (Free on Board) or CIF (Cost, Insurance, and Freight), specifies the obligations of each party, making global transactions smoother and more efficient.