Export & Import Practices Chapter 16

Exporting Why get involved? Serve markets where no production facilities Serve markets where local operation does not create product mix Satisfy host government’s requirements Remain competitive at home Test foreign markets inexpensively Customer requests Offset cyclical demand

Exporting Why get involved? Why not to export> Gain additional sales Extend product life cycle Distract competition entering your market Copy others’ success Improve efficiency at full capacity Why not to export>

Locating Foreign Markets Sources of Export Financing Trade Information Center International Trade Administration Market access and compliance Trade development U.S. Foreign Communication Service Small Business Administration

Locating Foreign Markets Department of Commerce Export Assistance Program Foreign Market Research National Trade Data Bank Direct or indirect exporting Commerce District Office Show and sell Trade events

Locating Foreign Markets Other Sources of Assistance World Trade Centers District Export Councils State governments

Locating Foreign Markets Export Marketing Plan Similar to domestic Marketing mix Pricing policies Terms of sale Definition FAS CIF CFR DAF Factory door cost Sales Agreement Calvo Doctrine

Payment & Financing Procedures Export Payment Terms Cash in advance Open account Consignment Letters of credit Must be Confirmed Irrevocable Air waybill Pro forma invoice Documentary drafts Export draft Sight draft Time draft

Payment & Financing Procedures Export Financing Private source Banker’s acceptance Factoring Forfaiting Export-Import Bank Direct and intermediary loans Working capital guarantee Guarantees Export credit insurance

Other Government Incentives Overseas Private Investment Corporation Foreign Sales Corporation Foreign Trade Zones Free trade zone Foreign trade zone Advantages to exporters Rebates and customs drawbacks

Export Procedures Transaction paper costs Foreign Freight Forwarders Export Documents Shipping documents Shipper’s Export Declaration Names and addresses of shipper and consignee U.S. port of exit and foreign port of unloading Description and value of goods Export license number and bill of lading number Carrier transporting the merchandise

Export Procedures Shipping documents (cont’d) Export licenses General export license Validated export license Export bill of lading Insurance certificate Legal obligation? Three marine insurance policies Basic named perils Broad named perils All risks What dictates premiums? Automated Export Systems

Export Procedures Collection documents Commercial invoices Like domestic invoices Differences Consular invoices Certificates of origin Some countries Inspection certificates Grain, foodstuffs, live animals

Export Shipments Containers LASH RO-RO Air Freight Advantages Barges More expensive? Insurance rates Packing Customes duties Replacement costs for damaged goods Invenory Other

Export Shipments Air Freight Advantages More expensive? Insurance rates Packing Customes duties Replacement costs for damaged goods Invenory Other Other considerations Production and opportunity costs Air dependency Perishable market Spare parts available

Importing How to Identify Import Sources Check labels Call counsel/ embassy Contact counsel/ embassy World Trade Centers Electronic board Accidental importing

Importing Customhouse Brokers What do they do? Primary activity Other activities Transport Monitor quotas Quota limits Bonded warehouse Abandon Send to another country

Importing Import Duties Prospective Importer Should: Harmonized Tariff Schedule of U.S. How does it work? Ten-digit numbers First six digits= Universal Last four digits= U.S. only Prospective Importer Should: Disclose all foreign arrangements Ask customhouse before making arrangements Calculate landed price in advance