CGBP
duty rate information AP
APEC - Asia Pacific Economic Cooperation (www.apec.org)
High Context Culture
(e.g. China, France, most families) - many things are left unsaid; knowledge assumed.
Low Context Culture
(e.g. USA, Germany) - everything is explicit/said/discussed.
Choice of Law
"Choice of Law" - is a term of a contract which the parties specify that any dispute arising under the contract shall be determined in accordance with the law of a particular jurisdiction.
BIS
(BIS) -Bureau of Industry and Security----U.S. Department of Commerce Responsible for controlling goods and technology that could threaten US security if improperly exported. Maintains directories of individuals and companies which have been identified by BIS as having engaged in activities that threaten U.S. national security. Civil and criminal penalties. lists to check boycotts
Tariff Schedules
(available at www.export.gov) - in most cases the importer pays the import tariff. Buyers should be aware of the expected import tariff - impacts buyers "landed cost", and can impact competitiveness.
Full Absorption Costing
(pg. 166) - product costing method that allocates all manufacturing costs (variable and fixed) as well as non-manufacturing costs (i.e. factory, sales & mktg and corporate overhead, and R&D).
Variable Costing
(pg. 166) - product costing method where the only costs allocated to products are those which are directly related to the production or sales of the product.
Trademarks
(pg. 177) - protect a word, phrase, symbol, design, or combination of these. No automatic international protection offered to holders of US trademarks.
Duty Drawback
(pg. 185-86)- If the products you export contain components or raw materials that were originally imported into the US, you may be able to obtain a refund on the import duties paid when the components or materials were imported. Customs handles this and will retain a handling fee---generally 1%. Requirements to qualify - I) prior to exporting, exporter must file a drawback proposal with the regional commissioner of customs, and 2) documentation is critical.
Pro Forma Invoice
(pg. 213-215) - confirms to the interested buyer the cost of the goods and all other related cost items. Formal document with title "Pro Forma" at top. Often requested by importer to open a L/C; also helps foreign buyer obtain the necessary import documents. The goods ---accurate description---schedule B number to 6 digit level Terms of the sale Terms of payment Validity date Shipping date Documentation Weight/dimensions Mode of transportation and details Banking charges Country of origin - last country of significant modification & value added. Export Control Statement i.e. "The above goods have been exported according to the US Govt. Export Regulations... diversion of goods to another destination prohibited..." Seller's name and address Seller's pro forma reference number Specific instructions Shipping points---from---to Industry standards statement Type of packing Request for partial shipments
Commercial Invoice
(pg. 215-216) - prepared once order is received & seller is ready to ship the goods. Invoice is more than just a document between the buyers & seller - also forms the basis for the import duty applied customs of the foreign govt. No prescribed format (can adjust domestic form) If sale involves a L/C check for required information on the invoice Be sure to research specific foreign country requirements i.e. language translation, consular endorsement, placement of "marks" = any labeling that has been applied to each shipping carton. Be sure to determine how many copies are needed, if originals then all should be signed. Country Commercial Guides (CCG) or Bureau of National Affairs (BNA) can provide insight on requirements. Components Cost, description & quantities of the goods being sold to the buyer All freight costs - inland & international Payment terms Invoice date Country of origin Export Control Statement - "These commodities, technology, or software were exported from the USA in accordance with the Export Administration Regulations. Diversion contrary to US law is prohibited." Signature
Packing List
(pg. 217) - good practice to always include one with all shipments. May be used by customs in the importing country Useful to importer for inventory control Should be a 1-1 match with items and descriptions on Commercial Invoice. May have more detailed description. May need to be notarized by the foreign Govt. consulate Supports the (L/C) - Letter of Credit
Foreign Receivables Insurance
(pg. 238) - policies are available from both public and private sources, but program offered by the Export-Import Bank (ExIm) is best known. Exlm's small business policy allows exporters to offer open account payment terms to foreign buyers and ExIm insures the sales against non-payment. Policy provides 100% coverage for political risk & 95% coverage for commercial/credit risk. Private: Euler herems
Forward Rate
(pg. 244) - The foreign exchange rate quoted between two currencies for delivery in the future i.e. 30, 60 or 90 days.
Spot Rate
(pg. 244) - The foreign exchange rate quoted between two currencies for transactions that require either immediate delivery or delivery within 2 days.
Hedging
(pg. 244) - The process of protecting against the potential of foreign exchange loss due to currency exchange rate fluctuations.
L/C Letter of Credit
(pg. 248) - A commitment by a bank to pay the amount of the L/C if certain conditions are met by the seller. (Contract between bank & seller). Little risk to seller in L/C is Advised; little risk to buyer - no shipment, no payment. Buyer receives goods after payment of L/C Sight Draft or before payment of L/C Time Draft. Cost can be high - related to value of transaction. Irrevocable - cannot be changed unless both the buyer & seller agree to make the change. Revocable - can be amended or cancelled at any time without the permission of the seller. Recommended for use in higher-risk situations or new or less-established trade relationships when exporter is satisfied w/ creditworthiness of buyer's bank Pros: payment made after shipment; variety of payment/financing/risk mitigation options available Cons: labor intensive process; relatively expensive method in terms of transaction costs Most Common - Advised, irrevocable, drawn on a US Bank, payable in US $.
URR525
(pg. 252) - International agreement covering how international reimbursment (payments) are to be made.
Non-tariff barriers
(pg. 45-49) - All discriminatory barriers, other than import taxes, facing imported products and their foreign producers. (Eg: gov't limit on import quantity of specific items.) Import Licenses - commonly associated with exchange controls. Govt. Standards/Testing - i.e. CE Mark of the European Union (this is a self-certifying directive based upon internal compliance testing). Product Labeling - i.e. specific language & listing requirements unique to that country. Govt. Procurement Barriers - Quotas - govt. imposed limits on the import quantity of a product. Absolute Quota - restricts additional product from entry once quota has been filled. Tariff-Rate Quota - allows product to enter the country after the quota has been reached at an increased tariff rate. Service and Investment Barriers - expanding barriers beyond just product imports. Note: When comparing import duties between countries be careful to distinguish between import duties & local taxes (that are applied to all goods - domestic & foreign).
US Custom & Boarder Protection's
- "24-hour" Rule = 24-hour advance manifest regulation. Requires sea carriers to provide U.S. Customs with detailed descriptions of the contents of sea containers bound for the United States - 24 hours before the container is loaded on board a vessel.
Cultural relativism
- "Truth is relative". The view that no culture is superior to any other culture when comparing systems of morality, law, politics, etc. It's the philosophical notion that all cultural beliefs are equally valid and that truth itself is relative, depending on the cultural environment.
Patent Cooperation Treaty PCT
- (145 countries) provides the ability to use a single patent filing for other countries. Note: The filing cannot make any additional "claims" than those contained in the original USPTO filing. Very expensive - you must still pay for the filing in each individual country.
Paris Convention
- (174 countries) provides a 12 month right ("grace period") of priority to file in other countries.
Standard Industrial Classification (SIC)
- 4 digit # - describes what a Co. does.
North American Industry Classification System (NAICS)
- 6 digit code - provides greater sector and sub-sector descriptions than the SIC.
Polycentric
- Accepts that other cultures have value. Willing to negotiate/adapt in order to achieve balance.
Ethnocentric
- Belief that your culture is superior to all other cultures. Attempts made to impose your beliefs on others.
Tariff Engineering
- Changing or reconfiguring what is imported to minimize import duties.
OneSource (Info USA)
- Find company large database of international companies - i.e. business description, contact info, exec listing, financial data, corporate family members.
SBA International Trade Program
- Fixed Asset & WC financing
Door-to-Door Service
- Full container delivered from sellers door to buyers door.
FCL
- Full container load
FTL
- Full truck load
Graydon America
- Graydon is one of the world's leading credit and risk intelligence companies, providing access to business information on over 100 million entities in more than 190 countries.
Harmonized Tariff Schedule of the United States (HTSUS)
- Import classification system used by the US. Managed by the Office of Tariff Affairs and Trade Agreements under the U.S. International Trade Commission and published July 1st of each year. HTS # used to assist in the application of import duties and track import statistics. US Customs might be a better help if you need assistance. Use when importing: www.usitc.gov and use for trade statistics Free binding ruling is issued by US Customs when can't find commodity code
UN COMTRADE - (United Nations Commodity Trade Statistics Database)
- Largest depository of international trade data. Over 170 reporter countries provide the United Nations Statistics Division (UNSD) with their annual international trade statistics data detailed by commodities and partner countries. All trade statistics between countries at the six-digit level is available at no cost from the United Nations.
LCL
- Less than Container Load - Delivered Port-to-Port.
LTL
- Less than truck loan
Air Cargo Containerization
- Lower deck containers OR air cargo pallet.
Reefer
- Refrigerated containers
RORO
- Roll on, Roll off freight applies to incoterms FAS FOB CFR CIF
SNAP-R
- Simplified Network Application Process - system used to file an export license.
Coface Veritas
- The Coface Group is a trade risk expert and a worldwide leader in credit insurance.
US ITC
- U.S. International Trade Commission under the U.S. Customs Department.
USPPI
- U.S. Principal Party in Interest - the person in the U.S. that receives the primary benefit - monetary or otherwise - from the transaction.
URC
- Uniform Rules of Collection
VAT
- Value Added Tax (pg. 187-88) - National consumption taxes i.e. national sales tax Often collected at each point along the channel of delivering a good/service to the end user (as opposed to US sales tax that is collected when the final sales is made). Vat is applied to a product directly at the point of entry when the goods are cleared through customs. Payment responsibility generally falls with the importer of record. If shipping terms are DDP, xx city - then the seller may be responsible for payment.
Hoovers
- a subsidiary of Dun & Bradstreet, is a business research company that has provided information on companies & industries since 1990. Hoover's maintains a database of 66 million companies and 85 million people using an in-house editorial staff of industry experts.
International Trade Administration (ITA)
- an agency in the US Department of Commerce that promotes US exports of nonagricultural U.S. services and goods. The ITA's stated goals are to: Provide practical information to help Americans select markets and products. Ensure that Americans have access to international markets as required by the U.S. trade agreements. Safeguard Americans from unfair competition from dumped and subsidized imports.
Warsaw Convention
- an international convention which regulates liability for international carriage of persons, luggage or goods performed by aircraft for reward.
International Monetary Fund (IMF)
- came into existence in 1945. The organization's stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making financial resources available to member countries to meet balance of payments needs. Its headquarters are in Washington, D.C.
force majeure
- clause is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.
All Risk Insurance
- covers goods while in-transit against risks of damage or loss to one item, the partial shipment, or total loss of the entire shipment.
eUCP
- developed as a supplement to UCP (Uniform Customs & Practice) due to the sense at the time that banks and corporates together with the transport and insurance industries were ready to utilize electronic commerce.
Comparative Advantage
- even when a country has an absolute advantage in multiple products, it should still trade for the betterment of society.
PIERS - The Port Import/Export Reporting Service
- gathers raw import Bills of Lading for all waterborne cargo vessels that enter and exit ports in the United States, sourced by US Customs & Boarder Protection. Additionally, PIERS staff reporters manually collect export Bills of Lading from each port in the United States. These import and export records account for 15 million Bills of Lading collected by PIERS per year. PIERS provides quantitative data pertaining to commodity details, including SIC and HS Codes, tonnage shipped, twenty-foot equivalent units (TEUs), and estimated values, as well as qualitative profiles on companies that import and export.
Madrid Protocol
- gives a US company the ability to take their US trademark (application or registration) and have it filed in other countries electronically.
SBA Export Express Program
- low documentation, quick, max. loan = $500,000
Containerization
- moving freight in standardized cargo/containers. Container sizes: 7'x7'x40' or 7'x7'x20'
Intermodalism
- moving the same container by sea, air, rail or truck. Allows for seamless transportation of goods from origin to destination.
Bonded Warehouses
- offer delayed import duties and goods for re-exporting.
Reverse Culture Shock
- or "re-entry", is a term associated with the phenomenon of returning to one's own country and culture (i.e. following an overseas assignment).
Time Draft or Documents Against Time (D/T)
- paid at an agreed upon time following presentation of the required documents.
Grease Payments
- payment to facilitate or expedite regular government actions (i.e. permits, licensing, processing papers, inspections, transit goods, etc.) Allowable under the FCPA.
Distributor
- places order with the manufacturer, takes title of the goods (as guided by the sales terms), often inventory's merchandise locally in the foreign market. A foreign representative should be viewed as an extension of your US company to that foreign market. They are the face of your company, with the added value of local cultural knowledge and contacts.
Copyrights
- protecting artistic or literary work (pg. 178) Generally protected under the Berne Convention - 80 countries.
Trademarks
- protecting brands, designs, symbols (pg. 177) do not receive international protection - must be filed individually. US follows "first to use" filing; other countries use "first to file".
Transfer Pricing
- refers to the setting of charges/price made between related parties for goods, services, or use of property (including intangible property).
Open Account
- shipments with no guarantee in place other than stopping future shipments if payment is not paid. Be sure to have a credit policy in place for international buyers before extending open account terms - check the buyers financial history, current financial status including bank references, and review the credit levels offered by other suppliers.
Commodity line
- the Schedule B or HTS US #.
Expropriation
- the act of a government taking private property.
Advising Bank (L/C)
- the bank (generally US) that verifies the L/C is authentic Advising bank is the seller's bank - verifies that the foreign bank did issue the L/C. Seller can specify to buy what bank they would like to use. Relatively low fee.
Transfer Pricing
- the concern that when international trade transactions occur between two related parties (where a financial relationship exists), price collusion can occur to avoid/reduce tax obligations.
3PL
- third party logistics: outsourcing part of the supply chain. Pick and pack (break larger shipments into smaller), Holland International Distribution Council
Mercantilism
- trade based on one winning & other losing
Absolute Advantage
- trade for mutually beneficial advantages
CIA World Factbook
- www.cia.gov: Much greater country detail than export.gov site. Find date on geography, resources, population demographics, government, infrastructure, military and economic indicators. Country & Market Data
ECA
---Export Commission Agent/Broker---Typically don't fill orders just pass the order on to the manufacturer. More like a domestic sales rep.
EMC
---Export Management Companies---sell products and services on behalf of other companies.
ETC
---Export Trading Companies---same as EMC's but much larger and would usually represent competing product lines.
Piggyback Exporting
---Manufactures own product and sells them internationally. To expand their international distribution network and expertise, they also represent products they do not manufacture or sell to another company that has success exporting while maintaining its own domestic sales. Usually one product enhances the other. May never make its distribution network aware of products it produces or represents. Might lower brand awareness of your product. Might be able to provide customer svc, training and warranty support, so if your product needs industry/technical knowledge, piggyback might be favored over EMC.
Vertical Trade Mission
--Focused on one particular industry or related industries.
FCPA
--Foreign Corrupt Practices Act (pg. 171) - Anti-bribery law. Prohibits US company's/individuals (directly or indirectly) from making corrupt payments to foreign officials to obtain or keep business. Administered by the US Department of Justice.
Incoterms
--International Commercial Terms (pg. 195-201) - predefined international commercial terms defined by ICC (International Chamber of Commerce). 3 digit code (+ named place). Used to define and communicate the terms of the sale - who pays for what, to where, and when title of the goods passes between parties. Categorized: E, F, C & D (Every Frenchman Can Drink)
SITC
--Standard International Trade Classification developed by United Nations in 1950. Reporting of international trade statistics.
SWIFT
--Swift wire transfer is a type of international electronic means of moving money from country to country. SWIFT = Society of Worldwide Interbank Financial Telecommunications. Cost is low ~$50 for the sender & receiver.
VAT
--Value Added Tax - consumption tax paid each step of the way---see page 187 of book
C-TPAT
-Customs-Trade Partnership Against Terrorism Key benefit of participation = lowers the cargo inspection rate for participants, which translates to lower costs for the company (can provide a competitive edge) Initiated November 2001 after 9/ll; Started with 7 companies - now more than 10,000 companies participate Includes manufactures (if they are importers into the USA) & related foreign plants Voluntary program with validation componets Benefits the participants and Customs and Border Protection Lowers cargo inspection rate for participants Lowers cost because less inspection and freight moves faster through the system. Gives a competitive edge to participants. Protects the nation from terrorist Tier 1 -Certified - risk score reductions, eligibility for FAST lanes at land borders. Tier 2 - Validated - risk score reduced further, lower level random compliance exams. Required validation by Customs & Boarder Patrol (CBP) at domestic & foreign site. Tier 3 - Validated and Exhibiting best practices - expedited processing of cargo during all threat levels.
AES
AES--Automated Export System - allows for the electronic submission of export documents
Economic Integration - Government Trade Collaboration -
5 levels (order important) - as each level builds on the levels listed before): Free Trade Area (FTA) - e.g. NAFTA. Allows free movement of goods Customs Union - common external trade policy i.e. same duty rate amongst all members Common Market - Free movement of all factors of production i.e. free labor movement Economic Union - members utilize a common currency (Monetary Union/Currency Union) Political Union or Nation State - common foreign policy, army etc. i.e. UK, USA
Partner Search Services
: Available for a fee from the US Dept. of Commerce -
Antitrust
: legislation targeted at practices that inhibit competition, including price fixing, conspiracies, etc. Sherman Antitrust Act and the Federal Trade Commission Act.
TeU's
= twenty foot equivalent units
Currency union
A currency union (also known as monetary union) is where two or more states share the same currency, though without there necessarily having any further integration such as an Economic and Monetary Union, which has in addition a customs union and a single market.
Netting
A hedging tool. Netting (pg. 244) - an available option if a company has a subsidiary, affiliated company or parent in the foreign country where a sales is being made. Using netting the foreign affiliate would engage in an off-setting transaction i.e. the purchase of US goods for the same $ value, XX days out. Because the two exposures are opposite each other (one a sale and the other a purchase), they net out and remove the foreign exchange rate change risk.
NAFTA "Rules of Origin" Preference Criteria: (pg. 221)
A. Product originates within the territory - born, planted or grown within a NAFTA country. B. Transformation within the territory - product was locally manufactured regardless of material origin. C. Assembled using originating materials - no transformation, but 93%+ of the bill of materials are local. D/E/F - Special Applications.
ATA Carnets
ATA Carnets - Passport for products for temporary admission to a country for trade shows. Issued and guaranteed by various US companies under a set of guidelines established by IBCC--cost $100/$300.
Customs Broker
Acts as an agent for the importer in conducting Customs business on their behalf. Prepares and files the necessary Customs entries, arranges for the payment of duties found due, takes steps to effect the release of goods in Customs custody, and represents clients in custody matters. May also assist clientele with advise on transportation options, types of carriers and shipping routes.
Advising bank (L/C)
Advising bank is the seller's bank - verifies that the foreign bank did issue the L/C. Seller can specify to buy what bank they would like to use. Relatively low fee.
Against Acceptance (Time Draft/Usance L/C)
Against Acceptance (Time Draft/Usance L/C) - payment is made at some time after the documents are presented for payment i.e. 30 days, 60 days, 90 days from the date of shipment. Recommended for use in established trade relationships, in stable export markets and for transactions involving ocean shipments Pros: bank assistance in obtaining payment; process is simple/fast/less costly than L/C Cons: bank's role is limited and they do not guarantee payment; banks don't verify accuracy of documents
Agent
Agent - represents product, but never takes legal title of the product.
Agent/
Agent - represents product, but never takes legal title of the product. A foreign representative should be viewed as an extension of your US company to that foreign market. They are the face of your company, with the added value of local cultural knowledge and contacts.
Air waybill
Air waybill (pg. 223) - Bill of lading issued by an Airline
Anti-boycott regulation
Anti-boycott regulations - the Bureau of Industry & Security (BIS) is charged with administering and enforcing the Antiboycott Laws under the Export Administration Act. The antiboycott laws were adopted to encourage/require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. Implemented in 1970's - Isreali focus.
Anti-dumping
Anti-dumping - A federal statute authorizing the imposition of special duties on imported foreign goods when the manufacturers are attempting to sell the goods in the United States at less than fair value to the material detriment of American industry.
Applicant (L/C)
Applicant - the foreign buyer
Arbitration
Arbitration - process for resolution of disputes between people or groups by referring them to a third party, either agreed on by them or provided by law, who makes a judgment.
AES
Automated Export System (AES) allows for the electronic submission of export documents. Maintained by U.S. Customs and Border Protection.
Beneficiary (L/C)
Beneficiary - the seller
BMR---
Best Market Reports---Each country commercial guide (CCG) includes a list of industries that are particularly good prospects for U.S. suppliers. BMR save you the time of researching all of the various CCG's.
Bills of Lading
Bills of Lading (pg. 223) - Issued by the carrier (trucking, RR, shipping). Serve 3 purposes: Receipt of cargo; Contract for transportation; Documentation of title/ownership
air waybill
Bills of Lading - issued by the carrier (trucking, RR, shipping line). Airline = air waybill
Value of an International Business Plan:
Builds consensus - aids in company-wide commitment & support Aids in communication/sharing Help identify critical steps company must take Identifies responsibilities Provides a basis for evaluation & future improvement
BIS
Bureau of Industry & Security (BIS) - Licensing Terminology
C-TPAT
C-TPAT-Customs-Trade Partnership Against Terrorism Initiated November 2001; now more than 10,000 companies participate Includes manufactures & related foreign plants Voluntary - Validation program Benefits the participants and Customs and Border Protection Lowers cargo inspection rate for participants Lowers cost because less inspection and freight moves faster through the system. Gives a competitive edge to participants. Protects the nation from terrorist Tiers: Certified Validated Validated and Exhibiting best practices
CCG
CCG--Country Commercial Guide (pg. 49) -Reports from the National Trade Data Bank - great source of country specific info on "Doing Business in xx", the political & economic environment, selling US products in xx, trade regulations, customs and standards, tariffs, etc.
CCL
CCL - Commerce Control List - details all the ECCN's
CCL
CCL--Commerce Control List
CE Mark
CE Mark - (an acronym for the French "Conformite Europeenne") European conformity mark - certifies that a product has met EU health, safety, and environmental requirements, which ensure consumer safety. Manufacturers in the European Union (EU) and abroad must meet CE marking requirements where applicable in order to market their products in Europe.
CSI
CSI--Container Security Initiative Developed in response to 911 Pushes borders of our country outward---US is the last line of defense not the first. Increased international cooperation—foreign custom agents stationed in US to inspect target export cargo to other countries. World Customs Organization (WCO) framework of standards Looking at technology to pre-screen and make containers tamper proof.
CIP
Carriage & Insurance Paid To (...named place of destination) Group C (Main Carriage Paid - seller pays the bulk of the freight cost)
CPT
Carriage Paid To (....named place of destination) Group C (Main Carriage Paid - seller pays the bulk of the freight cost)
Cash in Advance
Cash in Advance - no risk to seller, risk to buyer high; buyer receives goods after payment; low cost (not related to the value of the transaction). Payment often made by SWIFT wire transfer. Other options - credit card or checks. Recommended for use in high-risk trade relationships or export markets; appropriate for small export transactions Pros: payment before shipment; eliminates risk of non-payment Cons: may lose customers to competitors over payment terms; no additional earnings thru financing options
Certificate of Origin
Certificate of Origin (pg. 218) - Used to establish the country of origin so when the good reaches its foreign destination, local customs officials can determine the appropriate import duty or other applicable taxes. Issued by the seller. Required by the buyers govt.
COO
Certificate of Origin ... Certificate of Origin (pg. 218-222) - used to establish the country of origin so when the good reaches it foreign destination, local customs officials can determine the appropriate import duty or other applicable taxes. 1. Generic - accepted by most countries /Specific - some countries (e.g. NAFTA) require certification by a Chamber of Commerce or local consulate.
bill of lading
Clean bill of lading - Issued by carrier indicating no damages to the goods and no shortages.
CCL
Commerce Control List - details all the ECCN's
Commerce Country Chart
Commerce Country Chart - shows by country ECCN
Commerce Country List
Commerce Country List - shows by country the specific limitations for the ECCN
Common Market
Common Market - Free movement of all factors of production i.e. free labor movement
Contract manufacturing:
Company outsources mfg to a foreign mfg
Export Success - business that is "export ready" and market where opportunity exists.
Conditions NOT critical for Export Success - International experience (that can be hired); foreign language ability (though it helps); travel to the foreign market (though this also helps too).
Confirming Bank (L/C)
Confirming Bank - the bank (generally US) that adds its own guarantee to pay.
Confirming bank (L/C)
Confirming bank is the seller's bank that adds its own guarantee to pay the seller if the seller fulfills obligations of L/C --- "Confirmed L/C" - removes all international risk from payment. Fee can be high.
Consignment
Consignment: Recommended for use in competitive environments to enter new markets and increase sales in partnership w/ a reliable and trustworthy foreign agent. Significant risk to exporter because payment is required only after the goods have been sold to end customer. Pros: help enhance export competitiveness on the basis of greater availability and faster delivery of goods; help reduce direct costs of storing and managing inventory Cons: Exporter is not guaranteed payment; addt'l costs associated w/ risk mitigation measures
CSI--
Container Security Initiative Developed in response to 911 Pushes borders of our country outward---US is the last line of defense not the first. Increased international cooperation—foreign custom agents stationed in US to inspect target export cargo to other countries. World Customs Organization (WCO) framework of standards. Looking at technology to pre-screen and make containers tamper proof.
Copyrights
Copyrights (pg. 178) - protecting artistic or literary work. Internationally, generally protected under the Berne Convention - 80 countries.
CFR
Cost & Freight (....named port of destination) Group C (Main Carriage Paid - seller pays the bulk of the freight cost) boat only non-container
CIF
Cost, Insurance & Freight (....named port of destination) Group C (Main Carriage Paid - seller pays the bulk of the freight cost) boat only non-container
CCG
Country Commercial Guides. Reports from the National Trade Data Bank that generally includes information from trade barriers, to taxes, import procedures, logistics, standards, valuations, prohibited imports, free trade zones, labeling, gov't procurement barriers, translations, etc. Available from www.export.gov.
duty rate information EU
Country Desk Officer (US Dept. of Commerce) EU tariff database, ec.europe.eu
Country of Origin
Country of Origin - Country where the product was born/planted/grown or the last country that made significant transformation or added to the value of the product.
COO
Country of origin - last country of significant modification & value added.
Credit Risk
Credit Risk (pg. 234) - Foreign buyer's inability to pay invoices (in full or on time) due to internal problems. To lower this risk - match payment terms with identified risk... > risk, then use secured terms i.e. payment in advance, L/C's, foreign receivables insurance from ExIm Bank.
Cultural Risk
Cultural Risk - consumer backlash, brand-bashing.
Currency Option Contracts
Currency Option Contracts - A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified exchange rate during a specified period of time.
Currency Options
Currency Options (pg. 246) - a tradable forward contract, that gives the holder of the contract the choice (when the contract comes due) of either buying the currency at the agreed price or not buying the currency. Establishes the right, not the obligation, to deliver a fixed amount of one currency in return for a fixed amount of another currency by an agreed future date. Note: The brokerage fee and premium to secure this option must be paid whether the option is exercised or not.
CMA
Customized Market Analysis (CMA) report - Includes details on competitors, distribution channels, pricing of comparable products, potential buyers, quotas, marketing venues, regulations and duties, licensing, etc.
Customs Union
Customs Union - common external trade policy i.e. same duty rate amongst all members
D&B
D&B - Dunn & Bradstreet - world's leading source of commercial information and insight on businesses. D&B's global commercial database contains more than 205 million business records.
DAP
DAP Delivery at Place (.....named place of destination) Group D (Delivered - seller bears all costs & risks to bring goods to the co. of destination)
DAT
DAT Delivery at Terminal (....named terminal at destination) Group D (Delivered - seller bears all costs & risks to bring goods to the co. of destination)
DDP
DDP Delivery & Duty Paid (.... Named place of destination) Group D (Delivered - seller bears all costs & risks to bring goods to the co. of destination)
DISC
DISC vs. IC-DISC - DISC is a paper company created for tax benefits whereas IC-DISC (International Charge Domestic International Sales Corporation) is a domestic corporation or sister company/subsidiary
Distributor Contracts/Agreement guidelines: (pg. 179-80)
Definitions Exclusive vs. nonexclusive (performance targets) Terms of the agreement Technical information Duties of each partner Termination
Demurrage
Demurrage - the detention of a ship by the freighter beyond the time allowed for loading, unloading, or sailing
Discrepancies
Discrepancies - problems with the paperwork submitted for payment which leads to payment delays & extra costs.
International Chamber of Commerce (ICC)
Dispute resolution---arbitration by the International Chamber of Commerce (ICC)
Distributor
Distributor - places order with the manufacturer, takes title of the goods (as guided by the sales terms), often inventory's merchandise locally in the foreign market.
Documentary Collection
Documentary Collection - (At Sight or Against Acceptance) - (pg. 253) Also referred to as - "Cash against Documents" or "Payment against Documents". When product is shipped seller forwards documents to foreign buyer's bank, which holds the documents until the payment term (i.e. sight or against acceptance) is met. Risk to seller - potentially high if foreign bank or forwarder is unreliable; risk to buyer similar to a L/C (lower if buyer is allowed to inspect goods prior to payment); buyer receives goods after fulfilling payment terms. Low cost.
Drafts
Drafts (pg. 225) - A reverse check - request to be paid. An unconditional order (instruction) in writing from one party to another party. In an export, the seller (drawer) orders the buyer (drawee) to pay a fixed amount of money as specified by the draft. The draft is the instrument used to effect payment when certain payment methods are used i.e. L/C.
Duty Drawback
Duty Drawback (pg. 185-86)- If the products you export contain components or raw materials that were originally imported into the US, you may be able to obtain a refund on the import duties paid when the components or materials were imported.
EAR -
EAR - Export Administration Regulations - regulations for controlled goods
EAR
EAR--Export Administration Regulations - governs controlled commodities.
EAR99
EAR99 - default EAR# used if the product is not otherwise listed - non-controlled products.
ECCN
ECCN - Export Control Classification Number - used to determine if a product is controlled.
ECCN
ECCN--Export Control Classification Number - This is used to determine if a product is controlled. Must have an ECCN number on all products/services being exported. If not on the list for restrictions then the default is 99----no regulation of product. Some countries are restricted some are not for the same product. Example is handcuffs---Argentina is restricted Australia is not. Commerce Control List - details all the ECCN's Commerce Country Chart - shows by country
EEI
EEI--Electronic Export Information (formerly known as the Shippers Export Declaration)- filed using the AESDirect electronic filing system.
EMC
EMC--Export Management Company- Sell products and services on behalf of other companies. Indirect Export strategy.
EMS
EMS - Export Management System
ETC
ETC--Export Trading Companies and commission agents/brokers. Indirect Export strategy.
Economic Union
Economic Union - members utilize a common currency
EEI /AESDirect Filing:
Electronic Export Info (EEI) - formerly known as the Shippers Export Declaration (SED). Filed thru AESDirect - used to track exports - linked to Export Controls. Declaration is not required for shipments in which the total value of each single harmonized code product category does not exceed $2500. e.g. if a shipment contains multiple products (diff. HS codes), some of which are valued over $2,500 and some less; only those items over $2,500 need to be listed in the EEI. The 4 Required Fields You Must complete for each USPPI Ultimate Consignee Commodity line COO
Embargoes/Sanctions
Embargoes/Sanctions (pg. 172) - prohibit all or limit exports & foreign direct investments into targeted countries. Method used to implement foreign policy. OFAC = trade sanctions
Ethnocentric
Ethnocentric - Belief that your culture is superior to all other cultures. Attempts made to impose your beliefs on others.
Euromoney
Euromoney magazine, a monthly periodical, is the flagship publication of business and financial publisher Euromoney Institutional Investor.
EU -
European Union
ExIm EWCP
ExIm/SBA Export Working Capital Program (EWCP) - WC financing; pre & post export
ExW
ExW Ex Works (....named place) i.e. seller premises Group E (Departure Terms) - seller makes good available to buyer at the sellers premises
Distributor contract
Exclusive vs. non-exclusive Territory Marketing & customer support Grandfather clause: commission on sales for certain amount of time after contract ends Errors and omissions umbrella policy Avoid block-your-product buyer and line collectors
Export Control Statement
Export Control Statement i.e. "The above goods have been exported according to the US Govt. Export Regulations... diversion of goods to another destination prohibited..."
Export Controls
Export Controls (pg. 173) - Originally imposed under the Export Control Act 1949 (during the Cold War). If your products (or technology) have the potential for use as weapons of mass destruction, tools of terrorism, or products that can disrupt regional stability, the product may require an export license.
Export Credit Insurance
Export Credit Insurance - Foreign Receivables Insurance (pg. 238) - policies are available from both public and private sources, but program offered by the Export-Import Bank (ExIm) is best known. Exlm's small business policy allows exporters to offer open account payment terms to foreign buyers and ExIm insures the sales against non-payment. Policy provides 100% coverage for political risk & 95% coverage for commercial risk.
Schedule B -
Export classification system used by the US. Managed by the US Census Bureau within the US Dept. of Commerce. Use when exporting. Found in the schedule B book. www.census.gov Note: Schedule B & HTS - first 6 digits of classification # the same; last 4 digits may be different.
Country & Market Data
Export.gov Country Commercial Guide (CCG) CIA World Factbook World Bank Development Indicators OECD Country Desk Officers GlobalEdge Euromonitor DNB BNA Datamonitor
Industry Data
Export.gov US Dept of Commerce Industry Desk Officers US Export Assistance Center US Commercial Service Trade Associations Publications/periodicals (Dow Jones and Lesixnexis) Networking
FCPA
FCPA--Foreign Corrupt Practices Act (pg. 171)---Prohibits US companys/individuals from making corrupt payments to foreign officials to obtain or keep business.
FDI
FDI--Foreign Direct Investment--investments made by the company exporting in a facility in a foreign country to market or produce the product in the foreign country. Direct Export strategy.
American Chambers of Commerce Abroad (AmChams)
Find company
Commercial News USA (CNUSA)
Find company Commercial News USA (CNUSA): advertising publication, www.thinkglobal.us on behalf of US Dept. of Commerce
USDOC- Dept of commerce, IPS, CMA
Find company U.S. Department of Commerce (USDOC) offers customized market analysis (CMA) reports. Country Desk Officer---Individual assigned one or more countries or markets and maintains a wealth of information not found in reports. Start by contacting Trade Info Center and US Dept. of Commerce Export Assistance. Where you find duty rate information. Find company : Commercial News USA (CNUSA): advertising publication, www.thinkglobal.us on behalf of US Dept. of Commerce
Kompass www.kompass.com
Find company - large global databases listing companies by agent, distributor, manufacturer i.e. all medical product distributors in China
Solusource -
Find company from Thomas Register
Alibaba -
Find company open-source site (self-reported data).
duty rate information
For fee: Customs Info Database, www.customsinfo.com
Force Majeure
Force Majeure - A French term literally translated as "greater force", this clause is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.
Foreign Exchange (Fx) Risk
Foreign Exchange (Fx) Risk (pg. 235)- a change in the foreign exchange rate from the time the sales price was established and accepted to when payment is made. Exists with any transaction involving two currencies.
Forward Contract/Hedge
Forward Contract/Hedge (pg. 245) - a contract with another party (bank) to deliver a fixed amount of one currency in return for a fixed amount of another currency at an agreed future date (the value date - i.e. 30, 60, 90, 180 days). Binding agreement that sets the exchange rate for a future date. No funds are exchanged until the value date.
FAS
Free Alongside Ship (.....named port of shipment) Group F (Free - Main Carriage/Freight Unpaid - buyer pays bulk of freight cost) boat only non-container
FCA
Free Carrier (....named place) Group F (Free - Main Carriage/Freight Unpaid - buyer pays bulk of freight cost)
FTA
Free Trade Area (FTA) - e.g. NAFTA. Allows free movement of goods
FOB
Free on Board (....named port of shipment) Group F (Free - Main Carriage/Freight Unpaid - buyer pays bulk of freight cost) boat only non-container
FTZ
Free/Foreign Trade Zones (FTZ) - allow the delay or non-payment of import duties when imports are from designated trade partners/areas. Note: Importation is not a physical thing; it is a computer transaction.
Freight Forwarders
Freight Forwarders (pg. 201) - Travel agents for your freight. Trained & equipped to handle the entire export process from freight cost quote - shipping management - export documentation - to foreign customs clearance.
Futures Contract
Futures Contract (pg. 245) - Forward contracts traded on financial exchanges i.e. if a company enters into a forward contract (90 days) & partway through the contract (45 days) decides to get out of its obligation to conduct the future exchange, the forward contract could be sold to another party that needs the exchange in 45 days. Generally limited to transactions > $1m.
Fx Economic Risk
Fx Economic Risk (pg. 235) - Over time, seller may become non-competitive due to movements in the exchange rate. Company's int'l strategy must be flexible enough to deal with LT foreign exchange movements - i.e. diversify sales markets.
Fx Transaction Risk
Fx Transaction Risk(pg. 235) - Change in exchange rate between seller & buyer resulting in loss on a particular transaction for one of the parties. To lower risk use hedging techniques such as netting & forward contracts.
Fx Translation Risk
Fx Translation Risk (pg. 236) - Loss resulting from restating the values of assets and liabilities on the balance sheet. To lower risk use techniques such as netting and swaps.
GATT) -
General Agreement of Tariffs & Trade - e.g. of a multi-lateral trade agreement
General Average
General Average - a system founded on a principal of justice to all, making good ocean marine losses voluntarily incurred for the safety of the ENTIRE VENTURE, that is SHIP, FREIGHT AND CARGO. During a voyage, the property of one party may be sacrificed to save all. Following such a sacrifice and the ship safely reaches port, then the fortunate party whose cargo was untouched should contribute to the loss of the party whose cargo was sacrificed.
Gray Marketing
Gray Marketing—foreign buyer goes around manufacture and purchases product from another source on the open market or from domestic distributors. Done to get the product at a cheaper price or a supporting product line.
Grease Payments
Grease Payments - payment to facilitate or expediate regular government actions (i.e. permits, licensing, processing papers, inspections, transit goods, etc.) Allowable under the FCPA.
Group/Collectivism
Group/Collectivism - each member of group is expected to care for others i.e. Venezuela, Colombia, Chile.
HC
HC--Harmonized Code - 10 digit product identification # - broken down by chapter, heading, subheading and commodity code.
HTS
HTS--Harmonized Tariff Schedule (pg. 22-29) - Import classification system for the US managed by OTATA - Office of Tariff Affairs and Trade Agreements under the U.S. International Trade Commission. Use to assist with the application of import duties & to track import statistics.
Hedging
Hedging (pg. 244) - The process of protecting against the potentials of foreign exchange loss due to currency exchange rate fluctuations.
Uruguay Round -
Helped reduce govt. procurement barriers.
ICP
ICP - International Company Profile - report from US Dept. of Commerce (USDC) foreign commercial service includes bank and trade references, financial data.
IPI
IPI - manufactured products tax.
IPS
IPS--International Partner Search----completed by USDOC for a fee of $300 to $500, used to find overseas agents/distributors without travel.
ISO 9000
ISO 9000 - family of standards is related to quality management systems and designed to help organizations ensure that they meet the needs of customers and other stakeholders while meeting statutory and regulatory requirements related to the product.
ISO
ISO--International Organization for Standardization
ITAR
ITAR - International Traffic in Arms Regulation. Key is understanding when a "non-defense" article "becomes" an ITAR item. If you manufacture a product that falls under this regulation, even though you do not export, you must notify ITAR. ITAR Commodity Jurisdiction (CJ) is the formal process to determine if a good or service is subject to ITAR controls. Note: Every manufacture, exporter, and broker of defense articles or services must register with DDTC. Registration requirement applies even if a company is not exporting.
ITAR
ITAR-International Traffic in Arms Regulation
Incoterms
Incoterms--International Commercial Terms - predefined commercial terms defined by ICC (International Chamber of Commerce).
Foreign Market Entry Modes: (Rank order: Low control & feedback to High; Low Risk to High)
Indirect (EMC's, Piggyback) Direct (export only, no foreign direct investment) Company sells product to overseas buyer, typically a distributor or agent who then represents mfg in the market. Direct (with foreign direct investment) Overseas salesperson Overseas sales/marketing office Overseas distribution Overseas manufacturing
Individual (culture)
Individual - concerned with themselves & immediate family. Individual freedom & achievement valued i.e. USA.
Insurance Certificate
Insurance Certificate (pg. 223) - all international shipments should have adequate insurance to insure against product damage or loss and potential liability. Important that seller ensures insurance is in place... even if buyer is paying for it.
International Executive Service Corps:
International Executive Service Corps: Non profit that links executives w/ international expericne directly w/ US companies expanding internationally. www.iesc.org
US Department of Commerce's -.
International Trade Administration investigates unfair trade practice issues
Harmonized System (pg. 23-35)—
Internationally known as the International System of Numbering or the International Harmonized Code - consists of 22 sections divided into 97 chapters. (Harmonized Commodity Description and Coding System reduced disagreements.) commodity classification 10-digit number Int'l Chamber of Commerce? n.e.s.o.i.: not elsewhere specified or included
Issuing Bank (L/C)
Issuing Bank - foreign bank which opens the L/C
export documents
Key Information contained in export documents: (pg. 208) Note: Other than pre-printed forms (i.e. bills of lading, insurance certificates, certificates of origin) there is no set format for many export documents. The information contained in the document is critical. Consistency and accuracy is essential. Description of the goods Mode of transport Terms of the sale (incoterms) Identity of the seller and shipper Identity of the buyer Terms of payment Shipping instructions Evidence of shipment
Kompass
Kompass - Leading provider of company information. A subscription service.
L/C-
L/C--Letter of Credit (pg. 248-252) --- a commitment by a bank to pay the amount of the L/C if certain conditions are met by the seller.
Legal Risk
Legal Risk - lack of intellectual property protection (IPP), contract law, national laws.
Licensing
Licensing - Contractual agreement between two business entities in which the licensor permits the licensee to use a brand name, patent, or other proprietary right, in exchange for a fee or royalty.
Licensing/Franchising
Licensing - for technology or patent - typically where a royalty is paid for the use of technology. Franchising - associated with the whole way a company does business, involving processes, branding, etc.
How to deal w/ int'l pricing
Long term: partial mfg, local assembly, foreign mfg Short term: product differentiation, distribution channels, lower your pricing, discounts/promos
Low Context Culture
Low Context Culture (e.g. USA, Germany) - everything is explicit/said/discussed.
Global indicators
Macroeconomics - i.e. overall economic conditions i.e. inflation, eco growth potential, currency stability, GDP, GDP growth rates, etc. Government policy - i.e. import controls, tariffs, regulations concerning use of products, currency exchange controls, labeling standards, non-tariff trade barriers, etc. Environmental - i.e. weather, geography, infrastructure. Import/export data - trade statistics Industry specific - i.e. factors unique to the country being evaluated i.e. industry structure, product usage, competition, industry stability/growth etc.
Madrid System
Madrid System - the primary international system for facilitating the registration of trademarks in multiple jurisdictions around the world.
Export Success Requires:
Management commitment In-depth experience with the product/service - the business must have a solid product/service, and understand how they compete, and devise an effective way to compete. Adequate Cash Flow Capacity & Capability to expand and get product to international markets.
NAFTA COO
NAFTA COO (Certificate of Origin) - (pg. 219-222) - very specific format. Exporter (seller) should complete---not the freight forwarder. Must identify the 6 digit Schedule B number and the preference criterion. May be issued with a 365 day validity and copied for additional shipments.
NAFTA
NAFTA---North American Free Trade Agreement - (US, Mexico & Canada) Criterion A---obtained or produced locally - usually the one for food and agriculture products Criterion B---Transformation---product was locally manufactured regardless of materials origin Criterion C---Assembled using local materials---no transformation but all materials are local---must have 7% or less materials outside of NAFTA Criterion D, E, F---are special applications
Country of Origin
Name of the Country of Origin must be clearly "marked" on all goods imported into the US.
NTDB -
National Trade Data Bank provides market/industry data, list potential agents/distributors.
NTDB—
National Trade Data Bank---managed by the U.S. Department of Commerce. Single most important research tool available to the global entrepreneur and the information is free. The site is managed by STAT-USA an agency of the USDOC. Contains thousands of documents relating to international trade.
bill of lading
Negotiable bill of lading (Order Bills) - can be bought, sold or traded while the goods are in transit. Allows exporter to endorse the bill over to its bank; bank can endorse bill over to foreign bank; foreign bank can endorse bill over to buyer who finally gets title to the goods.
Netting
Netting (pg. 244) - an available option if a company has a subsidiary, affiliated company or parent in the foreign country where a sales is being made. Using netting the foreign affiliate would engage in an off-setting transaction i.e. the purchase of US goods for the same $ value, XX days out. Because the two exposures are opposite each other (one a sale and the other a purchase), they net out and remove the foreign exchange rate change risk.
bill of lading
Non-negotiable bill of lading (Straight Bills) - carriers can only deliver the goods to the consignee. Air waybills are always non-negotiable.
Noncontainerized cargo
Noncontainerized cargo - not all products can be containerized. Some cargo must be sent breakbulk for sea transport or as individual shipments for air or land transport. incoterms FAS FOB CFR CIF Ro Ro
NAFTA) -
North American Free Trade Agreement - e.g. of a regional trade agreement
OFAC
OFAC--Office of Foreign Assets Control - part of the U.S. Department of the Treasury. Enforcement includes trade sanctions that support foreign through economic controls and may be political or national security. Penalties include civil and criminal action.
OPIC
OPIC---Overseas Private Investment Corporation---U.S. Govt. Development Finance Institution---mobilizes private capital to help U.S. business gain a foothold in emerging markets. Provides medium to long-term funding through direct loans and loan guarantees for eligible investment projects in developing countries and emerging markets.
OTATA
OTATA--Office of Tariff Affairs and Trade Agreements - within the U.S. International Trade Commission.
bill of lading
Ocean bill of lading - issued by an ocean carrier for sea freight.
Ocean bill of lading
Ocean bill of lading - issued by the shipping line. Serves 3 purposes - i) receipt of cargo, ii) contract for transportation of goods, and iii) document of title (ownership).
bill of lading
On board bill of lading - certifies cargo has been placed aboard a certain vessel - signed by the vessel master or his rep... usually required when letters of credit are involved.
Open Account
Open Account (pg. 253) - places all risk that the buyer will pay on the seller. Buyer receives goods as soon as they are released from customs. Low cost. Generally extended after developing a relationship with a buyer. Recommended for use in low-risk trading relationship or market and in competitive markets to win customers Pros: boost competitiveness; help establish & maintain a successful trade relationship Cons: Significant exposure to non-payment; addt'l costs associated w/ risk mitigation measures
OPIC
Overseas Private Investment Corporation is the US government's development finance institution. OPIC works with the private sector, it helps U.S. businesses gain footholds in emerging markets. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
OPIC
Overseas Private Investment Corporation (OPIC) - US Govt. Agency. Provides medium to long-term funding (direct loans & guaranties) to eligible investment projects in developing/emerging markets.
Paris Convention
Paris Convention - signed in Paris, France on March 20, 1883, was one of the first intellectual property treaties. It established a Union for the protection of industrial property.
Dept. of Commerce
Partner Search Services: (IPS) - International Partner Search - US Dept. of Commerce provides a list of potential agents/distributors that you can contact directly (without in-country travel). Gold Key Service- Commercial Services identify and make contacts with potential agents/distributors and arrange all meetings, provide meeting space and translators for a fee---usually $700/country. Contact U.S. Export Assistance Center.
Patents
Patents (pg. 176) - Protects the invention or product itself. To obtain overseas protection after receiving a US Patent, application must be made with each foreign country or regional authority where protection is desired. Most countries use the "first to file" standard.
Political Risk
Political Risk (pg. 234) - Foreign buyer's inability to pay invoices due to government action (i.e. imposition of currency controls, war/military action, insurrection or expropriation). To lower this risk - match payment terms with identified risk... > risk, then use secured terms i.e. Prepayment or Export Credit Insurance (ExIm has programs that can be tied to specific transaction/buyer). Info sources: National Trade Data Bank - Country Commercial Guides or Dun & Bradstreet, Euler Hermes.
Political Union or Nation State
Political Union or Nation State - common foreign policy, army etc. i.e. UK, USA
Polycentric
Polycentric - Accepts that other cultures have value. Willing to negotiate/adapt in order to achieve balance.
D&B
Private Credit Reporting - i.e. Dun & Bradsteet, Veritas Business Info, GraydonAmerica.
Euler Hermes
Private providers of Foreign Receivables Insurance = Coface,
Coface
Private providers of Foreign Receivables Insurance and is the leading provider of international credit reports with an extensive international reach, including: Database of 50 million companies in 176 countries 8,000 credit decisions made daily by almost 300 underwriters 17 underwriting centers globally
ICP
Public - International Company Profile (ICP) - Credit history Report available from the US Dept. of Commerce Foreign Commercial Service (FCS) - compiled by embassy staff. Reasonably prices, contains valuable info tailored for the US business. Can take 30-45 days to compile if no previous reporting has been done.
Exlm Bank
Public provider of Foreign Receivables Insurance
Quotation
Quotation (pg. 211-13) - very similar to a pro-forma invoice (but may appear in the form of a letter, fax, email). i) Confirms the selling price of goods to the buyer. Clarifies the various costs buyer must pay in addition to the product cost i.e. export packaging, freight, insurance, special document charges. Cost of goods @ EXW Cost of export packaging - if special packaging is needed Cost of special labeling/translation - if required Inland freight to port of exit Handling charges/inspections/etc. Bank charges associated with L/C or payment method selected Bank charges associated with L/C or payment method selected Taxes - who is responsible for the payment of foreign taxes, import duties Warranty specifics Expiration date - how long pricing is valid Other limitations - wording that limits your liability in terms of accepting future orders.
Nine Essential Export Documents:
Quotation Generally issued by Seller before sales is confirmed Pro-forma invoice Commercial invoice Generally issued by seller and accompany shipment Packing List Shippers Export Declaration - now known as Electronic Export Info (EEI) Bill of Lading or Air Waybill Issued by freight company Certificate of Origin Issued by seller (not always required) Insurance Certificate Issued by various parties Draft Issued by seller (not always required)
Patent
Receiving a US patent does not provide international protection! Most countries use the "first to file" standard not the "first to invent". The US is moving in this direction too.
SED
SED--Shippers Export Declaration (EEI - Electronic Export Information) - filed with the US Govt. NOT required if the total value of each HC code does not exceed $2,500.
SNAP
SNAP --Simplified Network Application Process - used to file an export license SNAP-R--Simplified Network Application Process Redesigned
Reasons to Go Global
Sales to other markets - 95% of worlds consumers live outside the US; common customer demands/tastes; improved economies of scale (operating & process efficiencies). Diversification of customers & risk Access to lower cost structures - labor, material costs, etc. Global branding - aiding access to new markets, distributors, etc. Worldwide distribution & manufacturing - this can become a strong competitive barrier to entry. Economies of scale and learning beyond the US Global cash flow - strategic movement of cash/assets.
Schedule B
Schedule B--System of classification for exporting managed by the U.S. Census Bureau.
Market Selection Model:
Selecting indicators for market screening - assign point score, weight and then evaluate/analyze.
Bills of Lading
Serves 3 Purposes: i) as a receipt for the cargo ii) as a contract for the transportation of the goods, and iii) as a document of title (ownership).
Sight (Sight Draft)
Sight (Sight Draft) - payment will be made to the seller as soon as the documents verifying shipments are presented to the bank. The buyer must pay before taking possession of the goods.
Sight Draft or Documents Against Payment (D/P)
Sight Draft or Documents Against Payment (D/P) - paid upon presentation of required documents.
Issuing bank (L/C)
The Issuing bank is the buyer's bank
USTR
The Office of the United States Trade Representative (USTR) is the US agency responsible for developing and recommending US trade policy to the president of the US, conducting trade negotiations at bilateral and multilateral levels, and coordinating trade policy within the government through the interagency Trade Policy Staff Committee (TPSC) and Trade Policy Review Group (TPRG).
APHIS
The U.S. Department of Agriculture's - Animal and Plant Health Inspection Service (APHIS) has set standards for wood packaging material (WPM) imported into the U.S. through 7 CFR 319.40 - Importation of Wood Packaging Material.
UCP
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. UCP has been standardized by the International Chamber of Commerce (ICC). Regarded as one of the most successful international attempt at unifying rules ever - UCP is utilized by bankers and commercial parties in more than 175 countries in trade finance. Latest version = UCP600.
CMA
U.S. Department of Commerce (USDOC) offers customized market analysis (CMA) reports.
Applicant (L/C)
The foreign buyer (Applicant) goes to its bank to open the L/C.
Exclusive or Non-Exclusive Representation?
The more you expect the distributor to do for you (marketing, sales development) the stronger the justification for exclusivity.
Beneficiary (L/C)
The seller is the Beneficiary listed on the L/C
Competitive / trade info
Trade Statistics - US Trade Online, census.gov Directory of US Exporters PIERS Datamyne Directory of US Exporters UN COMTRADE database US Exports by Commodity
Freight Forwarders (pg. 201-05)
Travel agents for your freight. Trained & equipped to handle the entire export process from freight cost quote - shipping management - export documentation - to foreign customs clearance.
Civil law
Type of Legal structure. Civil law - Detailed set of laws organized into codes—Russia, Japan, EU. Courts not often required to interpret the law.
Common law
Type of Legal structure. Common law - Tradition-precedent-custom—e.g. U.S. federal courts, U.K. Not uncommon for the courts to overturn law it is considered unconstitutional.
Theocratic
Type of Legal structure. Theocratic - based on religious principals i.e. Saudi Arabia, Iran.
U.S. Customs and Border Protection (CBP)
U.S. Customs and Border Protection (CBP) - mission is to keep the US safe by: preventing the illegal entry of goods and ensures the appropriate duties and fees are paid, ensuring counterfeit goods are not illegally imported, Maintaining the Automated Export System (AES) in partnership with other federal agencies preventing the illegal entry of goods and ensures the appropriate duties and fees are paid,
U.S. Department of State
U.S. Department of State - The Directorate of Defense Trade Controls (DDTC) -. Controls defense/military articles through the International Traffic In Arms Regulation (ITAR).
U.S. Department of Treasury
U.S. Department of Treasury - Office of Foreign Assets Control (OFAC) - controls the Where. Enforces trade sanctions to countries and individuals i.e. embargos.
UNCISC
UN Convention on Contracts for the International Sales of Goods (UNCISC) - umbrella organization that can help with contract interpretation/rulings.
US CBP
US CBP - U.S. Customs and Border Protection - secures the homeland by preventing the illegal entry of people and goods while facilitating legitimate travel and trade.
US Department of Commerce
US Department of Commerce - Bureau of Industry and Security (BIS) determine What (products) and Who (individuals). Responsible for controlling goods and technology that could threaten US security if improperly exported. Maintains directories (Lists to Check) of individuals and companies which have been identified by BIS as having engaged in activities that threaten U.S. national security - www.bis.doc.gov/complianceandenforcement/liststocheck.htm
Four Key US Agencies for Export Control:
US Department of Commerce - Bureau of Industry and Security (BIS) determine What (products) and Who (individuals). Responsible for controlling goods and technology that could threaten US security if improperly exported. Maintains directories (Lists to Check) of individuals and companies which have been identified by BIS as having engaged in activities that threaten U.S. national security - www.bis.doc.gov/complianceandenforcement/liststocheck.htm U.S. Department of Treasury - Office of Foreign Assets Control (OFAC) - controls the Where. Enforces trade sanctions to countries and individuals i.e. embargos. U.S. Department of State - The Directorate of Defense Trade Controls (DDTC) -. Controls defense/military articles through the International Traffic In Arms Regulation (ITAR). U.S. Customs and Border Protection (CBP) - mission is to keep the US safe by: preventing the illegal entry of goods and ensures the appropriate duties and fees are paid, ensuring counterfeit goods are not illegally imported, Maintaining the Automated Export System (AES) in partnership with other federal agencies preventing the illegal entry of goods and ensures the appropriate duties and fees are paid
USPPI
USPPI - US Principal Party in Interest - person in US that receives the primary benefit (monetary or otherwise) of the export transaction.
Ultimate Consignee
Ultimate Consignee - company receiving the shipment in foreign country.
UCP
Uniform Customs & Practice for Documentary Credit (UCP) - a set of rules on the issuance and use of L/C's.
URR
Uniform Rules of Reimbursement (URR) - uniform rules for Bank to Bank reimbursements under Documentary Credits set by the ICC
UN CISG
United Nations Convention on Contracts for the International Sale of Goods (UN CISG), which was created to promote international trade through standardization.
Hands-Off Pricing
Use "Hands-Off Pricing" to avoid perception of transfer pricing - be able to show documentation/use of a pricing structure that: you already offer to other non-related customers; or is justified due to volume.
WCO
WCO--World Customs Organization
Export Controls (pg.173) - US Government wants to limit/approve shipments of:
WHAT is exported ... specific products (what) (i.e. as dual use products, weapons, possible articles for terrorism) WHERE it's going ... to specific countries (where) or WHO imports ... to specific individuals (who).
When to move to Non-Exclusive?
When the market is maturing and you need more control When you are ready to assume more sales & marketing responsibilities
Bureau of NationalAffairs (BNA) or BNB Exporters Encyclopedia (www.bna.com)
Where do you find packing material or labeling requirements at a country level? BNA has the Export Reference Library
WCO
World Customs Organization (WCO) framework of standards Framework of standards is CSI (container security initiative)
WCO
World Customs Organization (WCO) framework of standards. for CSI (container security initiative)
WTO) -
World Trade Organization
Kompass -
a comprehensive B-2-B database, with more than 3 million international and domestic companies listed, which link buyers and sellers worldwide.
VAT) - Value Added Tax -
a consumption tax that is applied to products purchased by consumers, regardless of the products origin.
Forward Contract
a hedging tool. (pg. 245) - a contract with another party (bank) to deliver a fixed amount of one currency in return for a fixed amount of another currency at an agreed future date (the value date - i.e. 30, 60, 90, 180 days). Binding agreement that sets the exchange rate for a future date. No funds are exchanged until the value date.
World Bank -
an international financial institution that provides loans to developing countries for capital programs. Goal = poverty reduction. World Bank publishes over 1300 indicators for @ 200 countries: GDP, rural population, income held by highest 20%, etc.
Reactive Strategy (pg. 37-39) -
based on previous experience i.e. past leads, past sales, competitive behavior, feedback from domestic tradeshows, discussion with industry experts, or input from customers. An attractive strategy for many businesses because it's - low cost, fast, low risk approach. Key Q remains - Is it right for you?
STAT-USA -
ceased to exist after September 30, 2010. The STAT-USA service was provided by an agency in the Economics and Statistics Administration of the U.S. Department of Commerce. It delivered vital economic, business, and international trade information produced by the U.S. Government. It included State of the Nation, with a wealth of current and historical data on the U.S. economy, and GLOBUS & NTDB, which included current and historical international market research, trade data, and country analysis.
Consolidation -
combining freight from more than one shipper.
US TradeOnline -
data source provided by the Foreign Trade Division of the U.S. Census. Provide subscribers with access to current and cumulative U.S. export and import data for over 18,000 export commodities and 24,000 import commodities. USA Trade Online provides trade statistics using the Harmonized System (HS) up to the 10-digit level and the North American Industry Classification System (NAICS) commodity classification codes.
Market segmentation:
defining a market opportunity by focusing on a subset of prospects that share a common need or similar characteristic. (geographic - city/region, demographic - age/income, psychographic - behavior/values, behavioralistic - brand loyalty, first adopters.
Standard International Trade Classification (SITC)
developed by the United Nations in 1950 and is used for reporting international trade statistics.
Export License -
necessary documentation seller must secure to sell these controlled products/countries/individuals. Fines for infringement can be significant.
Futures Contract
hedging tool (pg. 245) - Forward contracts traded on financial exchanges i.e. if a company enters into a forward contract (90 days) & partway through the contract (45 days) decides to get out of its obligation to conduct the future exchange, the forward contract could be sold to another party that needs the exchange in 45 days. Generally limited to transactions > $1m.
Currency Options
hedging tool (pg. 246) - a tradable forward contract, that gives the holder of the contract the choice (when the contract comes due) of either buying the currency at the agreed price or not buying the currency. Establishes the right, not the obligation, to deliver a fixed amount of one currency in return for a fixed amount of another currency by an agreed future date. Note: The brokerage fee and premium to secure this option must be paid whether the option is exercised or not.
PIERS www.piers.com
int'l data source (fee) - Piers purchases copies of "ocean bills of lading" from customs to track in-bound and out-bound product (Import/Export reporting system). Info available at the company level. (Note: often the Freight Forwarders name shows up on the export documentation vs. the manufacturer's name).
www.datamyne.com
int'l data source (fee) - import and export data, esp. Latin countries
www.nationmaster.com -
int'l data source (fee) helpful site to find indicators that World Bank doesn't have i.e. # McDonalds restaurants, marriage rate, etc.
www.euromonitor.com & www.datamonitor.com
int'l data source (fee)- provide market share, consumption data and consumer profile info. Foreign market research.
www.fas.usda.gov
int'l data source (free) - good source of Ag-related product info.
Global Edge www.globaledge.msu.edu
int'l data source (free) - good source of info. by country, glossary of terms, online course modules. Find company(Michigan State)
Comtrade www.comtrade.un.org
int'l data source (free) - import and export data by HTS code. (only goes to 6 digits of harmonized code)
Export.gov www.export.gov
int'l data source (free) good source of market research, export info, tarrif/tax/license info, trade leads and up-coming tradeshows. Best Market Report. Country & Market Data Country Commercial Guides. Reports from the National Trade Data Bank
World bank http://data.worldbank.org
int'l data source (free) int'l data source (free)- listing of 331 indicators (what) for 214 countries (where), available over multiple time series (when).
Relativism -
judging cultures on their own terms: the principle that people should not judge the behavior of others using the standards of their own culture, and that each culture must be analyzed on its own terms.
Quantitative Data - (research technique)
numbers
United States Department of State (DoS)
often referred to as the State Department, is the US federal executive dept. responsible for international relations of the US. The Department operates the diplomatic missions of the US abroad and is responsible for implementing the foreign policy of the US and U.S. diplomacy efforts.
Qualitative Data - (research technique)
opinions
Primary Data (research technique)
original research, commissioned by a company to answer specific questions they have.
Embargoes/Trade Sanctions (pg. 172) -
prohibit all or limited exports and foreign direct investments into targeted countries. Used as a method to implement US foreign policy. Usually led by UN/United Nations.
Moodys -
source of global market financial information - providing credit ratings, research, tools and analysis.
OECD.statextracts:
stats.oecd.org: Organisation for Economic Co-Operation and Development. Good companion site to World Bank. Can fill in indicators such as data relating to education and training, science technology and patents, transport. More up date because publishes monthly.
Off-shoring:
taking the whole of a mfg facility overseas and closing domestic facility
Secondary Data - (research technique)
using existing data that someone else has already compiled.
National Customs Brokers & Forwarders Association of America:
www.ncbfaa.org
Tariffs
—taxes applied on imported goods. Two types: Ad-valorem- calculated as a % of the value of the product. Specific—assessed on a per unit basis, independent of value. Tariffs are often applied against the CIF Value - Cost + Insurance + Freight, not simply the selling price of the product.