1. University of California Irvine
Overview of International Trade
Monday, September 17, 2012
James Van Eenenaam

2. Agenda – Importing and Exporting
International Trade Introduction
Benefits of International Trade
International Trade Policy, Regulations and Requirements –
WTO
Tariff Classification and Customs Duties, Quotas and Other Import Requirements
US Export Controls Requirements
International Trade Resources and Careers in International Trade

3. International Trade Introduction
Pres. Obama’s Trade Policy Priorities
Free and Fair Trade
Support a rules-based trading system
Advance social accountability
Achieve progress on energy and environmental goals
Make sure trade agreements address major unresolved issues (e.g., IPR, consumer product safety, trade security, trade facilitation/reduce trade barriers)
Build on existing Free Trade Agreements
Uphold commitment to developing countries – especially the poorest developing countries

4. Benefits of International Trade
The U.S. is the world's largest trading nation, with exports of goods and services of over $2.1 trillion in 2011.
U.S. goods and services exports supported an estimated 9.7 million jobs in 2011.
Every billion dollars of goods and services exports supported more than an estimated 5,000 jobs in 2011.
U.S. manufacturing exports supported an estimated 2.4 million manufacturing jobs in 2009 (latest data available), 20 percent of all jobs in the manufacturing sector.
U.S. agricultural exports supported 907 thousand jobs on and off the farm in 2010 (latest data available).
Every billion dollars of U.S. agricultural exports in 2010 required 7,800 American jobs throughout the economy
US jobs supported by goods exports pay percent more than the US national average
Exports at 13.8 percent of U.S. GDP in 2011 – its highest share ever.
Trade expansion benefits families and businesses by:
Supporting more productive, higher paying jobs in our export sectors
Expanding the variety of products for purchase by consumers and business
Encouraging investment and more rapid economic growth
Trade keeps our economy open, dynamic, and competitive, and helps ensure that America continues to be the best place in the world to do business.

5. International Trade Introduction National Export Initiative
The Administration has determined that fundamental reform of the U.S. export control system is needed in each of its four component areas, with transformation to a:
Single Control List
Single Primary Enforcement Coordination Agency
Single Information Technology System
Single Licensing Agency
New Cabinet-level focus on U.S. exports, expanding export financing, prioritizing government advocacy on behalf of U.S. exporters, new resources to U.S. businesses seeking to export, and ensuring a level playing field for U.S. exporters in global markets.
Double exports and create 2 million new jobs within 5 years

6. International Trade Introduction
International trade is subject to legislative, regulatory, political, and global economic/market transformation
International trade requires identifying opportunities and an understanding of trade compliance requirements, trade security, trade facilitation and safety
In 2011, US Customs and Border Protection facilitated approximately $2.3 trillion in total import value (14% increase over 2010)
In 2011, US Customs and Border Protection collected over $32 billion in duties
Approximately 71% of all import value is duty free

7. International Trade Introduction
China (21% of all shipments and 40% of all US duties) is the top trading partner of the US, followed by Canada, Mexico, Japan and Germany
Chapters 27 (fuel and oil), 84 (machinery, parts), 85 (electrical articles, parts) and 87 (vehicles, parts), comprised 52% of total import value
The US currently has Free Trade Agreements with 19 countries
FTA with Korea was finalized on March 15, 2012
FTA’s Pending Congressional Approval with Colombia and Panama.
For example, estimated $1.34 billion in tariffs imposed on US exports to Colombia
Other recently approved FTA’s with Oman (1/1/2009) and Peru (2/1/2009)

8. International Trade Policy, Regulations and Requirements
Exports: Department of State – Directorate of Defense Trade Controls
Trade Policy: United Nations
Trade Policy: World Trade Organization
Trade Policy: United States Trade Representative
Imports: Department of Homeland Security - Customs and Border Protection (Enforces 400 trade laws for 50 US Government Agencies)
Exports: Department of Commerce – Bureau of Industry and Security
Exports: Department of State – Directorate of Defense Trade Controls

9. World Trade Organization
A global organization dealing with the rules of trade between nations
A forum for governments to liberalize trade, negotiate trade agreements and settle trade disputes
The goal is to help producers of goods and services, exporters, and importers conduct their business
153 member countries

10. United States Trade Representative
USTR provides trade policy leadership and negotiating expertise in its major areas of responsibility, including:
Bilateral, regional and multilateral trade and investment issues
Expansion of market access for American goods and services
International commodity agreements
Negotiations affecting U.S. import policies
Oversight of the Generalized System of Preferences (GSP) and Section 301 complaints against foreign unfair trade practices, as well as Section 1377, Section 337 and import relief cases under Section 201
Trade, commodity, and direct investment matters managed by international institutions such as the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD)
Trade-related intellectual property protection issues
World Trade Organization (WTO) issues

11. U.S. Tariffs, Quotas and Other Import Regulations and Requirements
Customs and Border Protection (“CBP”) administers imports into the United States
19 Code of Federal Regulations Parts 1-199, Customs Duties
Harmonized Tariff Schedule of the United States
Import = merchandise entered into the territory of the United States (50 states, D.C., and Puerto Rico)
Licensed Customs Brokers – typically used by importers to enter/clear goods through CBP upon arrival

12. Importing – Things to Consider
Your wholesale cost isn't what you pay for an item. Your wholesale cost is the cumulative total for getting that item to your warehouse, ready to be shipped to your customers. You may be paying fifty cents a vase, but after you pay a Customs broker, import duties, various fees, freight, consolidation, and insurance expenses, your actual cost of goods may be $2.25 each. Look at all your costs before you jump at a deal - anything you forget will come directly out of your profit margin.
You'll have to allow significant lead time when placing an overseas order. It can sometimes take two or three months, or even longer, from the time you place your order to the time you receive the goods. Problems with Customs can delay your orders even further. The costs of air freight are probably ten times higher than the costs of ocean shipping, but it's a lot faster and less risky. You must understand when you need to receive your wares, in order to determine whether the benefits of air shipping will offset the additional expense.
You need look at the legal aspects. There are numerous government forms to fill out and a great many regulations regarding your imports. You are responsible for ensuring that what you bring into this country complies with safety codes and all other applicable laws.
Start with the Customs Broker
Source: Article by Chris Malta & Robin Cowie of Worldwide Brands

13. U.S. Export Regulations
Bureau of Industry and Security (Commerce) and Directorate of Defense Trade Controls (State)
15 Code of Federal Regulations Parts , Export Administration Regulations, covers commercial and “dual-use” commodities, software and technology
Items are covered by a specific Export Control Classification Number (ECCN) found on the Commerce Control List (15 CFR 774.1) or a “catch-all” category (EAR 99)
22 Code of Federal Regulations Part , International Traffic in Arms Regulations (“ITAR”), covers items specially designed for military use
The ITAR applies to items listed on the United States Munitions List (22 CFR Part 121.1), and the technology for the design, development, production or use of those items

14. International Trade Pro form invoice Letter of Credit
Represents the details of an international sale to the Customs authorities.
Presented in the place of a commercial invoice when there is no sale between the sender and the importer, or if the terms of the sale between the seller and the buyer are such that a commercial invoice is not yet available at the time of the international shipment
Letter of Credit
Issued by a financial institution
Used as payment to the exporter in an international transaction for deals between a supplier in one country and the customer in another country

15. Incoterms® 2010
Updated in 2010
Incoterms - short for "International Commercial Terms"
Standard trade definitions most commonly used in international sales contracts
Incoterms make international trade easier and help traders in different countries to understand one another
Covers tasks, costs and risks involved in the delivery of goods
Incoterms do not deal with transfer of title
The risk of loss or damage of the goods is generally transferred when the seller has fulfilled its delivery obligation
Include reference to a location of delivery
Incoterm should be clearly stated in the contract
Among the best known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDP (Delivered Duty Paid)
Below is an example of the correct use of Incoterms® rules:
“FCA 123 Example Street, Paris, France Incoterms® 2010”

16. International Trade Resources – Identifying Trading Partners and Shipping Costs
US Department of Commerce, International Trade Administration, US Commercial Service
International Chamber of Commerce
World Trade Center Association
FITA
Online international marketplace - or
TradePort - a repository of free information and resources for businesses involved in all aspects of global trade -

17. US Commercial Service
Export.gov brings together resources from across the U.S. Government to assist American businesses in planning their international sales strategies and succeed in today’s global marketplace.
From market research and trade leads from the U.S. Department of Commerce’s Commercial Service to export finance information from Export-Import Bank and the Small Business Administration to agricultural export assistance from USDA, Export.gov helps American exporters navigate the international sales process and avoid pitfalls such as non-payment and intellectual property misappropriation.

18. International Trade Careers
A business degree is helpful, but not required
A good working knowledge of the products to be imported/exported and sold
Ability to discern and choose a good product and a good market
Ability to work under pressure and under hectic conditions
You will have international clients/customers across various time zones – 24 hour work day!
Openness to international travel
You cannot be afraid of “selling” or “sales”
Choose a team of international trade consultants
Find a supplier and a buyer
Seal the deal - the transaction and delivering the product

19. International Trade Careers
Customs Broker
Freight Forwarder
International Trade Specialist
Import Specialist
Import Compliance Specialist
Export Compliance Specialist
International Trade Compliance Administrator
Foreign Service Officer
Foreign Commercial Service Officer
International Sales
International Trade Consultant

20. Why Countries Engage in International Trade?
“Countries engage in international trade for two basic reasons, each of which contributes to their gain from trade. First, countries trade because they are different from each other. Nations, like individuals, can benefit from their differences by reaching an arrangement in which each does the things it does relatively well. Second, countries trade to achieve economies of scale in production. That is, if each country produces only a limited range of goods, it can produce each of these goods at a larger scale and hence more efficiently than if it tried to produce everything. In the real world, patterns of international trade reflect the interaction of both these motives.”
Paul Krugman, International Economics

21. GOOD LUCK AND THANK YOU VERY MUCH
“Any nation which leaves all her ports open to the World on equal terms will have commodities cheaper, sell its own production dearer, and be on the whole most prosperous”
- Benjamin Franklin