Dave McGuire Senior Manager, International Trade Global Logistics Import Licensing for Information Technology Products July 16, 1999

1 Nortel Networks Global Trade Activity Export to more than 160 Countries Many ITA Signatory Countries Manufacture in 10 Countries 1998 Revenues US$18b

2 INFORMATION TECHNOLOGY AGREEMENT PHASE I Nortel Endorses the ITA Encourage other Countries to Participate Duty Reduced to Zero by Year 2000 Lower Costs to Importer and Consumers Encourage other Initiatives Intended to Ensure Smooth Delivery of Goods to Customers

3 IMPORT LICENSING Required by some Countries prior to Import May be Reviewed by Many Government Departments Prior to Approval Administrative Burden Adds to Delivery Time Clerical Errors Delay Delivery No value seen by Importer or Exporter

4 IMPORT LICENSING Tariff Classification Required on License H.S. Code based on Product Description Buyers Interpretation may be Different from Sellers Description Classification Interpretation not Consistent in all Countries –LAN/WAN Equipment Results in Delays if the is a Discrepancy –License must be amended –Goods remain in Storage ($)

5 IMPORT LICENSING Product Descriptions Marketing Brochure, Purchase Order, Engineering Description, Customs Description, Import License Description. Inconsistent Description Leads to Misinterpretation and Delays Adds Costs not Value

6 IMPORT LICENSING Customs Clearance Seller may make Partial Shipment Delay in Release While Import License is Matched to other Customs Documents No Customs Release if License does not Match Storage Charges Incurred While License is Corrected Adds Cost not Value

7 IMPORT LICENSING RECOMMENDATION 1 Eliminate Import License Requirement for ITA Eligible Goods –Reduced Administrative Burden –Simplifies the Import Process –Demonstrates the spirit of the ITA – Open Market for Technology Products

8 IMPORT LICENSING RECOMMENDATION 2 Simplify Import License Requirement for ITA Eligible Goods –Eliminate Multiple Department Review –Reduce the Number of Reporting Fields –Permit Flexibility in Modifying License to Correct Errors