Chapter 15 1. How the U.S. government helps exporters 2. The additional steps necessary to move good across country borders 3. How various import restriction are used politically

Chapter Learning Objectives 4. Means of reducing import taxes to remain competitive 5. The main instruments of foreign commercial payments 6. The mechanics of export documents and their importance 7. The logistics and problems of the physical movement of goods

Exporting is an integral part of all international business Introduction Exporting is an integral part of all international business It is important to be knowledgeable about the export and import documents, tariffs, quotas, and other barriers to the free flow of goods between countries

Export Restrictions To comply with various regulations, the exporter may have to acquire export licenses or permits from the home country To alleviate problems of exporting, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations (EAR)

Import Restrictions Import regulations may be imposed to protect health, conserve foreign exchange, serve as economic reprisals, protect home industry, or provide revenue in the form of tariffs The most frequently encountered trade restrictions include: Tariffs Exchange Permits Quotas Import Licenses Standards Boycotts Voluntary Restrictions

Import Restrictions 1. Tariffs: Custom duties are based on value or quantity or a combination of both and are classified as follows: 2. Exchange Permits: To conserve scarce foreign exchange many countries impose restrictions on the amount of their currency they will exchange for the currency of another country

Import Restrictions (contd …) 3. Quotas: Countries may also impose limitations on the quantity of certain goods imported during a specific period 4. Import Licenses: 5. Standards: Health standards, safety standards, and product quality standards are necessary to protect the consuming public from imported

Terms of Sale 1. CIF (cost, insurance, freight) to a named overseas port of import. It includes the costs of goods, insurance, and all transportation and miscellaneous charges to the named place of debarkation 2. C&F (cost and freight) to a named overseas port. It includes the cost of the goods and transportation costs to the named place of debarkation. The cost of insurance is borne by the buyer (free on board) at a named inland point, at a named port of exportation, or at a named vessel and port of export. The price includes the cost of the goods and delivery to the place named 3. FOB

Getting Paid: Foreign Commercial Payments The basic payment arrangements for exported goods include: Letters of Credit Cash In Advance

Export Documents The most frequently required documents are: Export Declarations Consular Invoices or Certificates of Origin Bill of Lading Commercial Invoice Insurance Policy or Certificate, and Licenses

Customs-Privileged Facilities To facilitate export trade, countries designate areas called customs-privileged facilities, where goods can be imported for storage and/or ­processing with tariffs and quota limits postponed until the products leave the designated areas Customs-Privileged Facilities include: Foreign trade zones (also known as free trade zones) Free ports, and In-bond arrangements or Maquliadoras

Foreign Freight Forwarder The forwarder is an indispensable agent for an exporting firm that cannot afford an in-house specialist to handle paperwork and other export trade mechanics A freight forwarder double-checks all assumptions made on the export declaration, such as commodity classifications, and will check the list of denied parties and end uses