23-4 Exhibit 23.1 Alternative International Trade Relationships Unaffiliated Known Party A long-term customer with which there is an established relationship of trust and performance Unaffiliated Unknown Party A new customer which with exporter has no historical business relationship Affiliated Party A foreign subsidiary or affiliate of exporter Requires: 1. A contract 2. Protection against non-payment Requires: 1. No contract 2. No protection against non-payment Requires: 1. A contract 2. Possibly some protection against non-payment Exporter Importer is ….
23-6 Exhibit 23.2 The Mechanics of Import and Export Importer Exporter Importer Preference Exporter Preference 1 st : Exporter ships the goods 2 nd : Importer pays after goods received 1 st : Importer pays for goods 2 nd : Exporter ships the goods after being paid
23-8 Exhibit 23.3 The Bank as the Import/Export Intermediary Importer Exporter Bank 1 st : Importer obtains banks promise to pay on importers behalf. 2 nd : Bank promises exporter to pay on behalf of importer. 3 rd : Exporter ships to the bank trusting banks promise. 4 th : Bank pays the exporter. 6 th : Importer pays the bank. 5 th : Bank gives merchandise to the importer.
23-16 Exhibit 23.5 Parties to a Letter of Credit (L/C) Issuing Bank Beneficiary (exporter) Applicant (importer) The relationship between the importer and the exporter is governed by the sales contract. The relationship between the importer and the issuing bank is governed by the terms of the application and agreement for the letter of credit (L/C). The relationship between the issuing bank and the exporter is governed by the terms of the letter of credit, as issued by that bank.
23-25 Exhibit 23.8 Steps in a Typical Trade Transaction Exporter Bank XBank I Importer Public Investor 1. Importer orders goods 2. Exporter agrees to fill order 6. Exporter ships goods to Importer 4. Bank I sends L/C to Bank X 9. Bank I accepts draft, promising to pay in 60 days, and returns accepted draft to Bank X 7. Exporter presents draft and documents to its bank, Bank X 12. Bank I obtains importers note and releases shipment 3. Importer arranges L/C with its bank 13. Importer pays its bank 8. Bank X presents draft and documents to Bank I 5. Bank X advises exporter of L/C 10. Bank X sells acceptance to investor 14. Investor presents acceptance and is paid by Bank I 11. Bank X pays exporter
23-29 Exhibit 23.10 Typical Forfaiting Transaction Exporter (private industrial firm) Importer (private firm or government purchaser in emerging market) FORFAITER (subsidiary of a European bank) Importers Bank (usually a private bank in the importers country Investor (institutional or individual) Step 1 Step 3 Step 2 Step 7 Step 5 Step 4 Step 6