1. How to operate in international markets
ACT SME:
Accelerating Cross-Border
Transaction of SM
FOREIGN TRADE

2. Contents 1 2 3 Module1: Legal and Regulatory Aspects
Module 2: Logistics and Transport Implications 2
Module 3: Financial Management and Fiscal Regime 3

3. Legal and Regulatory Aspects
Module 1
Legal and Regulatory Aspects
Unit 1
Section 1: Tariff codes, taxing, regimes
Unit 2
Section 2: Delivery Terms, Payment Terms
Unıt 3
Section 3: Documentation and special applications

4. Unit 1
Section 1: Tariff codes, taxing, regimes
Customs Tariff Codes
There is a unique customs tariff position for every product group and a specific customs tariff code for each product to make an international validity identification
Specifying this codification is quite important as all operations are based on this data
Declaration of the suppliers, transporter and customs brokers are obligatory for the exporter / importer
Choosing correct import / export regime is also a part of primary liabilities.
Regimes: Permanent, temporary, free of charge, IPR .

5. Special taxes (antidumping etc.)
Unit 1
Section 1: Tariff codes, taxing, regimes
Special taxes (antidumping etc.)
In some cases customs authority asks for additional taxes
In addition to VAT, Customs Taxes, Antidumping Taxes
Tariff Code and Tax details should be studied before firm order step (at planning and supplier assignment stage).

6. Unit 1
Section 1: Tariff codes, taxing, regimes
Warehouse Regime (Authorized Customs Broker, Handling, Periodic and Non-periodic Reports and Contracts)
There is a specific customs regime and legislation for Bonded Warehouse connected shipments
In this regime a warehouse declaration should be released during the arrival of the goods
In addition to Customs Broker, Authorized Customs Broker Service is mandatory

7. Customs Declarations Lines
Unit 1
Section 1: Tariff codes, taxing, regimes
Customs Declarations Lines
There are various lines with their own administrations
ASC - AEO (Approved Status Applications, Approved Economic Operator applications) (
Red, Yellow, Blue and Green line at customs)
Red: Subject to inspection before customs clearance
Blue: Subject to post-clearance control
Green: It is a brand new application, implemented with Authorized Economic Operator Status. There isn’t any control step. Beneficiary company can complete all customs procedure by itself. Government follow up with remote access.

8. Import / Export Types Permanent Import / Export Unit 1
Section 1: Tariff codes, taxing, regimes
Import / Export Types
Permanent Import / Export
With a commercial or pro-forma invoice, sales or free of charge
Temporary Import / Export
If the material will return back to the exporter country this regime should be used with needed document(s). Test studies, repair etc. Customs check the material physically before export and import clearance.
Partial Import
Doing customs clearance for a lot out of whole shipment
Import / Export within IPR (Inward Processing Regime) and other state supports
Tax immunity by declaring imported materials will be used for producing finished goods and goods will be exported.
Transit Trading
3rd company releases the sales invoice to final customer instead of exporter

9. Incoterm 2010 (EXW, DAP, DDP etc.)
Unit 1
Section 2: Delivery Terms, Payment Terms
Incoterm 2010 (EXW, DAP, DDP etc.)
There are several delivery terms subject to agreement between importer and exporter which are settling responsible side for each step (transportation, insurance, export / import customs etc.)
An exporter will be responsible for every part of process with DDP (Delivery Duty Paid) delivery terms
Importer can be responsible for every step of the process with EXW (Exworks) delivery terms starting with shipment from the supplier to delivery of customer’s depot.

10. CHART OF RESPONSIBILITIES
Unit 1
Section 2: Delivery Terms, Payment Terms
CHART OF RESPONSIBILITIES

11. Unit 1
Section 2: Delivery Terms, Payment Terms
Payment (CAD «Cash Against Document» CAG «Cash Against Goods», L/C (Letter of Credit) etc.) Resource Utilization Support Fund – RUSF
This topic is also subject to agreement between the exporter and importer
Settles time of payment, basis of payment and similar rules
It is a must to provide payment document to Customs Authority to do customs clearance according to some countries’ Customs Legislation
Otherwise importer is obliged to pay % 6 of material price as state withholding for some Tariff Codes.

12. Customs Post Release Audit – Archive
Unit 1
Section 3: Documentation and special applications
Customs Post Release Audit – Archive
All documents and records must be kept up to date and archived, in order to be ready for any audit
Customs Broker services and minimum wage legislation
All customs clearance operations are being done by nominated brokers who has signature authorization
Companies can prefer either to employ a broker or to make a contract with a broker company
There is a Minimum Wage Legislation released by government annually which includes all possible services

13. Unit 1
Section 3: Documentation and special applications
Documents (Invoice, Packing List, Insurance Policy, Free Circulation Document, A.TR, EUR1, FORM A, Certificate of Origin, ATA Carnet)
For any kind of import / export operation, companies should declare below listed documents:
Invoice and packing list that includes; exporter details, issue date, document number, bill to details, delivery address, description, quantity, unit price, total amount, currency, delivery terms, payment details, bank details, case details (qty., net gross weight, dimension, content of each case), goods’ identification details (part number, serial number if any etc.)
A.TR for Free Circulation entry, requested documents which ensure tax advantages
EUR1, if there is Bilateral Trade Agreement between trader countries
FORM A & Certificate Of Origin for special regulations
ATA Carnet for temporary shipments (fair, show)
Details for «Import by ofsetting»

14. Surveillance Services
Unit 1
Section 3: Documentation and special applications
Transit Trade
Shipper company and exporter company are localized in different countries
Invoicing and other applications
Surveillance Services
Shipper or customer may request optionally
According to arrival country’s legislation it can be mandatory
In this case exporter should prepare proper conditions to the accredited survey company for requested audit

15. Exporters Union (Membership fees and contributions)
Unit 1
Section 3: Documentation and special applications
Exporters Union (Membership fees and contributions)
There are different Exporter Unions for different sectors. Exporter companies should registered as a member to the related union
Membership fees
Contributions
Return to Country of Origin
Customer can decide to reject materials completely or partially for some reason and can ship back to origin without finalizing import clearance by following needed processes. This application has a different standard than regular export.

16. Logistics and Transport Implications
Module 2
Logistics and Transport Implications
Unit 1
Section 1: Cost items and pricing
Unit 2
Section 2: Points to consider for service procurement and cost saving

17. Monitoring and following departure and arrival countries’ conditions
Unit 2
Section 1: Cost items and pricing
Monitoring and following departure and arrival countries’ conditions
This is important to see and understand effective parameters on pricing such as freight, local transportations, port costs etc.
Important points along the freight
Port costs, bonded warehouse costs, local taxes…
Warehouse costs, demurrage, free time, port costs
Deciding about proper shipping type by checking necessity date analyze, price benefit study
Payment term
Briefly; total cost must be taken into consideration, not only the freight

18. Transit time, direct, indirect services
Unit 2
Section 2: Points to consider for service procurement and cost saving
Pricing of transportation (charge based on minimum, weight, volume etc.)
Pricing principle of carrier invoices
Always uses maximum kind of above listed pricing scale
Therefore loading optimization should be studied with the shipper company and agreed in advance
Transit time, direct, indirect services
Direct / Indirect services are important (especially for sea freight)
Express Service is important (especially for truck shipments)
Transit times should be agreed during purchasing negotiation
Stackable, non-stackable loading and effects
Monitoring, follow up and reporting services

19. Bonded and free warehouse utilization
Unit 2
Section 2: Points to consider for service procurement and cost saving
Transport Insurance
It is responsibility of the carrier but content should be negotiated
Bonded and free warehouse utilization
It is better to negotiate this pricing with the carrier inside of transportation (all in)
Loading consolidation – Milk Run
Studying consolidation will provide cost saving. Before supplier assignment it is better to analyze with this point of view
Common purchasing
For all kind of purchasing both service and material, jointly purchasing will cause positive impacts from common suppliers (by bargaining on a higher purchasing budget, advantage on lot size and lead time, shipment optimization)

20. Financial Management and Fiscal Regime
Module 3
Financial Management and Fiscal Regime
Unit 1
Section 1: Material payment and other costs
Unit 2
Section 2: Supplier management and its effect to financial conditions

21. Payment methods for the goods
Unit 3
Section 1: Material payment and other costs
Payment methods for the goods
L/C (Irrevocable, Revocable Letter of Credits)
Documents must be released as depicted on the L/C
Realization dates must be coherent with L/C
Otherwise discrepancy occurs and causes delay / extra costs
Deferred Payment
Cash In Advance
Cash Against Documents
Cash Against Goods
All payments and receipts must be accountable
Other Payments
VAT, Customs Duty, Stamp Duty, Antidumping
Penalties, Reconciliation

22. Goods Available To Buyer
Unit 3
Section 1: Material payment and other costs
Method
Usual Time of Payment
Goods Available To Buyer
Risk
Risk to Buyer
to Seller
CASH IN ADVANCE
Before shipment
After payment
None
Complete. Relies on seller to ship exactly the goods expected, as quoted and ordered
LETTER OF CREDIT (L/C)
Commerical Invoice must match the L/C exactly. Dates must be carefully headed. "Stale" documents are unacceptable for collection.
CONFIRED IRREVOCABLE CREDIT
After shipment is made, documents presented to the bank.
Gives the seller a double assurance of payments. Depends on the terms of the letter of credit.
Assures shipment is made but relies on exporter to ship goods as described in documents. Terms may be negotiated prior to L/C agreement, alleviating buyer's degree of risk.
UNCONFIRMED IRREVOCABLE CREDIT
Same as above
Seller has single bank assurance of payment and seller remains dependent on foreign bank. Seller should contact his banker to determine whether the issuing bank has sufficient assests to cover the amount.

23. Goods Available To Buyer
Unit 3
Section 1: Material payment and other costs
Method
Usual Time of Payment
Goods Available To Buyer
Risk
Risk to Buyer
to Seller
DRAFTS
Remittance time from buyer's bank to seller's bank may still take one week to one month.
Drafts, by design, should contain terms and conditions mutually agreed upon.
SIGHT DRAFT (with Documents against Payment, D/P)
On presentation of draft to buyer.
After payment to buyer's bank.
If draft not honored, goods must be returned or resold. Storage, handling, and return freight expenses may be incurred.
Assures shipment but not content, unless inspection or check-in is allowed before payment.
TIME DRAFTS (with Documents against Acceptance, D/A)
On maturity of the draft
Before payment, after acceptance
Relies on buyer to honor draft upon presentation.
Assures shipment but not content. Time of maturity allows for adjustments, if agreed to by seller.
OPEN ACCOUNT O/A
As agreed, usually by invoice
Before payment
Relies completely on buyer to pay account as agreed
None

24. Unit 3
Section 2: Supplier management and its effect to financial conditions
Supplier Management
In order to manage all the processes, preliminary works and feasibility is important before assigning exporter, transporter, customs broker
Strong Contract Administration will avoid risks
All responsibilities, quality standards, rejection issues etc. must be clarified
A confidentiality agreement should be done
Financial Position of the supplier should be checked
New Supplier assignment
Pricing escalation should be determined
Parameters for manufacturers (Lead time, Safety stock, forecast)

25.
Thank You !