Ch 12: BASICS OF EXPORTING & IMPORTING:EX-IM Specialists, Terminology and Documentation

FREIGHT FORWARDER SERVICES CAN INCLUDE:

-Advise basic Letter of Credit compliance -Booking space with a carrier -Completing export documentation -Arranging for cargo insurance -Advising on export regulations -Advising on foreign import regulations -Providing guidance on packaging, marking, and labeling -Arranging for products to be packed and containerized at the exporter's request and -Export clearance.

ITEMS NEEDING AN EXPORT LICENSE

-Defense articles and services (nat'l. security) -Dangerous drugs and narcotics -Endangered plants and wildlife -Chemicals: Precursors Fertilizers Other -Radioactive materials -Explosives

EXPORT PACKING LIST

-This document itemizes product material in U.S. and metric weights, indicating the weights, measures, and numbers of each package and how it is carried; i.e., box, crate, drum, etc. -It may be duplicated in the language the foreign destination. Your buyer should be able to determine the total shipping weight and volume and the contents of your cargo. -It should include shipping marks and references of the shipper and buyer and must refer to the letter of credit, if applicable and conform exactly to the conditions of sale.

INCOTERMS flow chart

EXW -> FCA ->FCA ->FAS -> FOB -> CFR -> CIF -> CPT CIP -> DDU DDP

EXAMPLES of INCOTERMS

EXW= EX Works FCA= FreeCArrier, named premises FAS= FreeAlongSide, usually ship FOB= FreeOn Board CFR= Cost & FReight CIF= Cost,Insurance & Freight, named port CPT= CarriagePaid To CIP= Carriage & InsurancePaid to DDU= Delivered,Duty Unpaid DDP= Delivered,Duty Paid

EX-IM SPECIALISTS

FREIGHT FORWARDERS CUSTOMS BROKERS EXPORT MANAGEMENT COMPANIES (EMC) EXPORT TRADING COMPANIES (ETC)

EXPORT LICENSE

Most exporters work a "general" license However, if your company deals in products considered "controlled" under U.S. or foreign laws, you will need to obtain a "validated" license.

INSURANCE CERTIFICATE

Negotiable when signed, this certifies the amount of insurance coverage provided on the shipped goods. Usually the amount meets a minimum of 110% of CIF. It must be negotiable in the same currency as the credit and must specifically call out coverage concerning all risks of the credit it covers.

FREIGHT FORWARDERS

Organizations that can make the arrangements and provide the necessary services for expediting the shipment of goods to their destination. At the beginning of a sale, they can provide the exporter with a quotation on: •Freight costs •Port charges •Consular fees •Cost of special documentation •Insurance costs, and •Freight forwarding fees.

CUSTOMS BROKERS

Prepares and files the necessary Customs entry documents, * Arranges for the payment of duties * Takes steps for the release of goods in customs custody, and * Represent their clients in custody matters.

DOCUMENTATION

Regardless of who does the job, certain documents must be prepared before an export shipment goes. It takes less time to do a thing rightthan to explain why you did it wrong. --- Henry Wadsworth Longfellow

PRO FORMA / COMMERCIAL INVOICE

The commercial invoice acts as a bill for goods from buyer to seller. The buyer needs this invoice to prove ownership and arrange payment. Customs will the commercial invoice at the time of delivery and may use it to assess import tariffs. It is a signed statement which must provide the following: Letter of credit number Waybill number Voyage number Bill of Lading number Container number Seal number; and

CERTIFICATE OF ORIGIN

This document is countersigned by the local Chamber of Commerce and sometimes "visaed" by the Consulate/Embassy of the destination foreign country. It can actually save money when it attests to preferential duty rates in countries offering free trade agreements to U.S. exports

INSPECTION CERTIFICATE

This is requested by the buyer and usually certified by an independent third-party organization or certified upon the affidavit of the seller. It specifies to the buyer that the goods either conform to the order, or where discrepancies exist. Complete Report of Findings

SHIPPER'S EXPORT DECLARATION U.S. FORM 7525V

This is required for: -mail shipments over $500; -other shipments valued over $2,500; or -any shipment covered under a "validated license" The SED information is used by the Bureau of Census to track the type of goods exported overseas. It requires the Harmonized System - Schedule B number for every product in the shipment.

INCOTERMS: International Commercial Terms are

abbreviations indicating what services are included in a price quote for an international sale (usually of exported goods), and where in the process the title shifts from the seller to other parties (usually the buyer).

CONSULAR INVOICE

•A commercial invoice validated with a consular's certification, number, and signature (from the foreign embassy). It accommodates foreign inspectors, and is frequently written in English but may be in the language of the foreign destination.

DOCUMENTS PREPARED BEFORE SHIPMENT: Examples

•Commercial invoice •Consular Invoice •Foreign Customs Invoice •Export License •Shipper's Export Declaration •Certificate of Origin •Export Packing List •Insurance Certificate •Inspection Certificate

CUSTOMS BROKER DUTIES

•Liaison with Customs: present or transmit required data / documents. •Provide shipping advice. •Monitor the status of shipments. •Keep abreast of new developments and regulations and advise their effect on imported goods. •Obtain the release of imported goods. •Make the necessary payments to take possession of the shipment. •Maintain accurate and complete records. •Responding to Customs requests or concerns after payment is made.

EXPORT MANAGEMENT COMPANIES (EMC)

•Performs the functions typically performed by the • export department or the international sales department of a manufacturer or supplier.

EXPORT MANAGEMENT COMPANIES (EMC) duties include:

•Promoting their client's products to international buyers and distributors. • •Usually represent the manufacturer on an exclusive basis and solicits and transacts business in the names of the producers it represents or in its own name for a commission, salary, or retainer plus commission. • •Larger EMCs provide immediate payment for the producer's products by either arranging financing or directly purchasing products for resale.

FOREIGN CUSTOMS INVOICE

•Similar to a commercial invoice in form that accommodates foreign inspectors, and is frequently written in the language of the foreign destination. Your buyer may provide this for you.

Additional EMC duties include:

•Usually specialize either by product or by foreign market, or sometimes both. • •Because of EMC's specialization, they know their products and the markets they serve very well and have well-established networks of foreign distributors in place. This immediate access to foreign markets is one of the principal reasons for using an EMC, since establishing a productive relationship with a foreign representative may be a costly and lengthy process.

EXPORT TRADING COMPANIES (ETC)

•is designed to encourage small and medium-sized companies to participate in the international marketplace. An ETC is more market-orientated and transaction driven than an EMC. It often acts as an independent distributor creating transactions by linking domestic producers and foreign buyers. • •It does not represent a given manufacturer in a foreign market, rather the ETC determines what products are desired in a given market and then work with producers to satisfy that demand.