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International Trade Orientation 2013

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This presentation will provide new-to-export clients with information on getting started in international trade. Export and import basics will be provided as we walk through the four international ...

This presentation will provide new-to-export clients with information on getting started in international trade. Export and import basics will be provided as we walk through the four international trade development stages and are introduced to trade assistance resources on the federal, state and local level.

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  • California's Metropolitan Exports In 2011, the following major metropolitan areas in California recorded merchandise exports: Los Angeles-Long BeachSanta Ana ($72.7 billion) San Jose-Sunnyvale-Santa Clara ($26.7 billion) San Francisco-Oakland-Fremont ($23.6 billion) San Diego-Carlsbad-San Marcos ($17.4 billion) Riverside-San Bernardino-Ontario ($7.1 billion) Sacramento--Arden-Arcade--Roseville ($4.7 billion) Oxnard-Thousand Oaks-Ventura ($2.9 billion) Bakersfield Delano ($2.8 billion), El Centro ($2.8 billion) Fresno ($2.3 billion) Modesto ($1.3 billion) Santa Rosa-Petaluma ($1.1 billion) Visalia-Porterville ($1.1 billion) Stockton ($1.1 billion) Santa Barbara-Santa Maria-Goleta ($1.1 billion)
  • California Depends on World Markets California's export shipments of merchandise in 2011 totaled $159.1 billion. The state's largest market was Mexico. California posted merchandise exports of $25.8 billion to Mexico in 2011, 16.2 percent of the state’s total merchandise exports. Mexico was followed by Canada ($17.3 billion), China ($14.2 billion), Japan ($13.1 billion), and Korea ($8.4 billion).
  • The state's largest merchandise export category is computers and electronic products, which accounted for $46.1 billion of California's total merchandise exports in 2011. Other top merchandise exports are transportation equipment ($15.0 billion), machinery ($14.8 billion), miscellaneous manufactured products ($13.1 billion), and chemicals ($12.4 billion).
  • Fears about Exporting I'm too small to export ; only large firms with name recognition, ample resources, and export departments can export successfully. False! Most of the world ’s exporters are SMEs. I can't afford to export; I don't have the money to hire people, market abroad, or expand production if I get new export business. Not true! There are low-cost ways to market and promote abroad, handle new export orders, and finance receivables. These don't require hiring new staff or setting up an export department. I can' t compete overseas; my products are unknown and my prices too high for foreign markets. Not necessarily. The world is large, with varied needs and interests. If your product is selling well in the domestic market, it might well be wanted somewhere else in the world. What makes your product sell in the home market can help it sell abroad. Exporting is too risky; I might not get paid. I might get cheated. I might break a law I didn't know about. Not likely! Selling anywhere has risks, but they can be reduced with reasonable precautions. Exporting is too complicated; I don't know how. Wrong! You don't need to be an expert to export. You can use outside experts to deal with the complications, hire your own expert, Or, become more knowledgeable yourself with training like ours.
  • Four Stages of Export Development for New-to-Export SMEs Key Client Questions at Each Stage   Stage 1 (EEP 1-3) Build Export Capacity   Do my products have export potential? Am I export ready? As a producer As an intermediary Who can I turn to for export advice and assistance? With getting started With market research, planning and matchmaking With regulatory/documentary compliance With financing and shipping   Stage 2 (EEP 3-6) Develop Export Markets   Which export markets are best for me? What ’s the best entry strategy for my target market(s)? Distribution, pricing, and promotion Adaptation/localization (to cultures, standards, etc.) How do I find export customers? Buyers/end users Agents/distributors How can I promote myself to get better known in my target markets?   Stage 3 (EEP 6-7) Make Sales/Get Paid   How should I respond to export inquiries and leads? Requests for information Price quotes How can I make sure I get paid for export sales?   Stage 4 (EEP 7) Deliver the Goods   Are there any regulatory and documentation requirements I must comply with? U.S. export regulations and export documents Foreign import regulations and import documents How do I get my goods shipped to my overseas customers?
  • Open Account A seller ships the goods and all the necessary shipping and commercial documents directly to a buyer. This buyer agrees to pay the seller’s invoice at a future date ( net 15 days, net 30 days or with a discount offered--for example, 1% if paid within 20 days of invoice date). Documentary Collections A documentary collection is a payment mechanism in which a seller uses a bank as his/her "agent" in collecting payment from a buyer located overseas. After shipping the goods, the seller submits a draft (a demand for payment) and the relevant shipping documents to the bank. The draft will include instructions to release the documents to the buyer upon the buyer’s payment or acceptance of the draft. The seller’s bank sends the documents, draft, and collection instructions to a branch or correspondent bank in the buyer’s country. This bank carries out the seller’s collection instructions and, upon receipt of payment from the buyer, remits payment to the seller’s bank for the credit of the seller. Documentary collection procedures are uncomplicated. After shipping the goods, the exporter submits to the bank: shipping documents, including the bill of lading conveying title to the goods, as well as other documents related to the shipment. a draft, also called a bill of exchange, demanding payment from a buyer. Depending on the agreed terms of sale, this may be a sight draft, demanding payment on presentation, or a time draft, demanding payment at some stated future time after presentation or after the bill of lading date. instructions to the bank as to how to handle the transaction. Note that a documentary collection requiring payment before the release of documents may sometimes be transacted without a sight draft. Under cash against documents (CAD) terms, the documents are released to a buyer against receipt of payment. CAD terms are generally used when the government of the importing country requires tax stamps affixed to drafts; by eliminating the draft, both buyer and seller avoid stamp taxes. release documents to a buyer upon payment of the sight draft, which is known as a documents against payment, or D/P collection; or release documents to a buyer upon acceptance of the time draft, a documents against acceptance, or D/A collection. The seller’s bank, called the remitting bank, sends the documents, draft, and instructions to one of its branches or correspondent banks in the buyer’s country. This bank, called the collecting or presenting bank, contacts the buyer and informs him/her that the documents have arrived and can be obtained when he/she complies with the payment terms, which may be documents against payment or documents against acceptance. Documents against Acceptance (DA) A buyer is required to "accept" a seller’s time draft, thus acknowledging obligation to pay at the specific future date. The time of payment occurs at maturity of an accepted time draft, 30, 60 or 90 days after date of acceptance or date of bill of lading. Documents against Payment (DP) A buyer is required to pay a seller’s sight draft in order to obtain shipping documents. Payment is made on presentation of the sight draft by a bank to the buyer, usually one or two weeks after shipment. Under D/P terms, the seller, through a bank acting as an agent, is able to retain control of the goods until the buyer pays. Under certain circumstances, such as to meet legal requirements of the importing country or to obtain a government permit for foreign exchange, the buyer will require possession of the documents before payment. The seller should inquire as to the practice in specific countries. Air shipments are often made under documentary bill collections. The buyer, as direct consignee of the non-negotiable air waybill, will be able to take possession of the goods before meeting his/her payment obligations. Letter of Credit A commercial letter of credit is, essentially, an agreement in international trade whereby a bank assumes a conditional obligation on behalf of its customer, a buyer, to make payment to a seller. Payment is conditional upon a seller’s compliance with the terms and conditions specified in the letter of credit. These terms and conditions require the seller to present stipulated documents, which are usually those required for transport, commercial, and official purposes ( bill of landing, commercial invoice, insurance certificate, consular invoice). Once the seller has complied with the documentary requirements of the letter of credit, prompt payment is secured. In effect, a bank in the letter of credit transaction substitutes its credit standing for that of the buyer. Thus, the seller, who is the beneficiary of the letter of credit, has the undertaking of a bank to pay when the terms and conditions of the credit have been complied with. On the other side, the buyer is assured that payment will not be made unless the seller meets the conditions stipulated in the letter of credit. The buyer’s bank substitutes its creditworthiness for that of its customer and agrees to honor a seller’s demand for payment if that seller complies with all the requirements specified in the letter of credit. Confirmed Letter of Credit In addition to the standard letter of credit, this instrument carries the undertaking of a second bank, usually in the seller’s country, to honor the seller’s demand for payment upon presentation of documents specified in the credit. A second bank, usually in the seller’s country, gives its undertaking to the letter of credit issued by the buyer’s bank and promises to pay the seller upon that party’s compliance with the terms and conditions of the credit. If the seller does not want to lessen risk, this seller may require that the letter of credit be confirmed by a bank in his/her country (or in some third country). A bank that confirms the letter of credit adds its commitment to pay to the original credit. Since the seller can look to the confirming bank for payment, he/she is protected against the financial risk of the issuing bank and the political risk of the importing country. To the extent that the credit standing of the confirming bank is undoubted, this is the most favorable type of letter of credit from the seller’s point of view. Advised Letter of Credit A letter of credit issued by the buyer’s bank (the issuing bank) may be advised to a seller by a bank, usually in his country--called the advising bank--without any undertaking on the part of that bank, except that it must use reasonable care to check the authenticity of the credit which it advised. As the issuing bank undertakes to pay the seller, the advised letter of credit relieves the seller of the financial risk of the buyer. However, as beneficiary of the advised credit, the seller is subject to the financial risk of the issuing bank, which may not be willing or able to make payment when due. In addition, the seller is subject to political risk of the importing country: that is, the risk that sovereign action of the government may block the transfer of funds regardless of the issuing bank’s ability or willingness to pay the credit. Cash in Advance The seller requires receipt of payment from the buyer before shipping goods. Payment may be made by wire-fund transfer from the buyer’s bank to the seller’s bank, or by company check, credit card, or other agreed upon means.
  • EXPORT WORKING CAPITAL The Small Business Administration (SBA) Export Working Capital Program (EWCP) and the Working Capital Guarantee (WCG) of the Export-Import Bank of the United States (Ex-Im Bank) assist U.S. Exporters to obtain loans to produce goods or services for export by guaranteeing repayment to the lending institution. The loans can be either transaction specific or revolving and there is no minimum or maximum transaction amount. The U.S exporting company should normally have one-year operating history and the current financials of the company should reflect a positive net worth.   EXPORT CREDIT INSURANCE Ex-Im Bank ’s Export Credit Insurance enables U.S. exporters to confidently extend credit terms to their international buyers. Export Credit Insurance covers export receivables against commercial risk, if the foreign buyer should default, and political risk coverage, in the case of war, inconvertibility of currency etc. The policy can be a single-buyer policy or it can be a multi-buyer policy. The Ex-Im Bank offers both short and medium-term insurance policies. With short-term policies, the typical terms are 180 days or less, exceptionally 360 days. Medium term insurance covers capital equipment, projects and related services with repayment terms up to 5 years (exceptionally 7 years) with financing up to $10 million. The importer would make cash payment of at least 15 percent.   LOAN GUARANTEE The Ex-Im Bank's Loan Guarantee is a very useful program for exporters. Under this program, the Ex-Im Bank provides loan guarantees that allow lenders to offer financing to exporters' foreign customers with fixed or floating competitive rates. This program reduces payment risks to exporters as they are paid upfront for their exports. Foreign buyers are enabled to overcome financing problems and can buy US. goods and services. Banks with delegated authority from the Ex-Im Bank participate in the loan guarantee program and would do due diligence on foreign buyers to ensure that there is reasonable assurance for repayment before granting the loan.   UNITED STATES DEPARTMENT OF AGRICULTURE (USDA) FOREIGN AGRICULTUREAL SERVICES (FAS) PROGRAMS United States Department of Agriculture (USDA) – Foreign Agricultural Services (FAS) export finance programs. If the product of the U.S. exporter is agricultural, i.e. the “3Fs” food, feed and fiber, programs offered by the FAS of the USDA could assist exporters to expand their international trade. There are basically three programs: the Supplier Credit Guarantee Program (SCGP), the GSM-102 and GSM-103 programs. The SCGP provides 65 percent guarantee on the principal receivable for credit terms of up to 180 days. Importers must issue Promissory Notes to cover payment. The GSM-102 and GSM-103 are bank driven programs where Dollar denominated Letters of Credit must be issued by the importer from USDA approved foreign banks. GSM-102 program covers credit terms up to three years and GSM-103 programs covers credit term up from 3 to 10 years .
  • EXPORT WORKING CAPITAL The Small Business Administration (SBA) Export Working Capital Program (EWCP) and the Working Capital Guarantee (WCG) of the Export-Import Bank of the United States (Ex-Im Bank) assist U.S. Exporters to obtain loans to produce goods or services for export by guaranteeing repayment to the lending institution. The loans can be either transaction specific or revolving and there is no minimum or maximum transaction amount. The U.S exporting company should normally have one-year operating history and the current financials of the company should reflect a positive net worth.   EXPORT CREDIT INSURANCE Ex-Im Bank ’s Export Credit Insurance enables U.S. exporters to confidently extend credit terms to their international buyers. Export Credit Insurance covers export receivables against commercial risk, if the foreign buyer should default, and political risk coverage, in the case of war, inconvertibility of currency etc. The policy can be a single-buyer policy or it can be a multi-buyer policy. The Ex-Im Bank offers both short and medium-term insurance policies. With short-term policies, the typical terms are 180 days or less, exceptionally 360 days. Medium term insurance covers capital equipment, projects and related services with repayment terms up to 5 years (exceptionally 7 years) with financing up to $10 million. The importer would make cash payment of at least 15 percent.   LOAN GUARANTEE The Ex-Im Bank's Loan Guarantee is a very useful program for exporters. Under this program, the Ex-Im Bank provides loan guarantees that allow lenders to offer financing to exporters' foreign customers with fixed or floating competitive rates. This program reduces payment risks to exporters as they are paid upfront for their exports. Foreign buyers are enabled to overcome financing problems and can buy US. goods and services. Banks with delegated authority from the Ex-Im Bank participate in the loan guarantee program and would do due diligence on foreign buyers to ensure that there is reasonable assurance for repayment before granting the loan.   UNITED STATES DEPARTMENT OF AGRICULTURE (USDA) FOREIGN AGRICULTUREAL SERVICES (FAS) PROGRAMS United States Department of Agriculture (USDA) – Foreign Agricultural Services (FAS) export finance programs. If the product of the U.S. exporter is agricultural, i.e. the “3Fs” food, feed and fiber, programs offered by the FAS of the USDA could assist exporters to expand their international trade. There are basically three programs: the Supplier Credit Guarantee Program (SCGP), the GSM-102 and GSM-103 programs. The SCGP provides 65 percent guarantee on the principal receivable for credit terms of up to 180 days. Importers must issue Promissory Notes to cover payment. The GSM-102 and GSM-103 are bank driven programs where Dollar denominated Letters of Credit must be issued by the importer from USDA approved foreign banks. GSM-102 program covers credit terms up to three years and GSM-103 programs covers credit term up from 3 to 10 years .
  • The law of general average is a legal principle of maritime law according to which all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. In the exigencies of hazards faced at sea, crew members often have precious little time in which to determine precisely whose cargo they are jettisoning. Thus, to avoid quarrelling that could waste valuable time, there arose the equitable practice whereby all the merchants whose cargo landed safely would be called on to contribute a portion, based upon a share or percentage, to the merchant or merchants whose goods had been tossed overboard to avert imminent peril. While general average traces its origins in ancient maritime law, still it remains part of the admiralty law of most countries. The first codification of general average was the York Antwerp Rules[2] of 1890. American companies accepted it in 1949. General average requires three elements which are clearly stated by Mr. Justice Grier in Barnard v. Adams: "1st. A common danger: a danger in which vessel, cargo and crew all participate; a danger imminent and apparently 'inevitable,' except by voluntarily incurring the loss of a portion of the whole to save the remainder." "2nd. There must be a voluntary jettison, jactus, or casting away, of some portion of the joint concern for the purpose of avoiding this imminent peril, periculi imminentis evitandi causa, or, in other words, a transfer of the peril from the whole to a particular portion of the whole." "3rd. This attempt to avoid the imminent common peril must be successful".

International Trade Orientation 2013 International Trade Orientation 2013 Presentation Transcript

  • INTRO TO EXPORTING & IMPORTING ORIENTATION SEMINAR FOR NEW CLIENTS Center for International Trade Development Hosted by El Camino College
  • 2011 LEADING U.S. STATES IN EXPORTING 2 Source: TradeStats Express™ International Trade Administration, USDOC and Foreign Trade Division, U.S Census Bureau, USDOC
  • 2011 CALIFORNIA’S TOP EXPORT MARKETS 3 Source: TradeStats Express™ International Trade Administration, USDOC and Foreign Trade Division, U.S Census Bureau, USDOC
  • 2011 CALIFORNIA TOP EXPORT INDUSTRIES 4 Source: TradeStats Express™ International Trade Administration, USDOC and Foreign Trade Division, U.S Census Bureau, USDOC
  • 2011 U.S. MERCHANDISE TRADE BALANCE 5 Source: TradeStats Express™ International Trade Administration, USDOC and Foreign Trade Division, U.S Census Bureau, USDOC
  • 2011 U.S. MERCHANDISE TRADE BALANCE 6 Source: TradeStats Express™ International Trade Administration, USDOC and Foreign Trade Division, U.S Census Bureau, USDOC
  • CALIFORNIA’S EXPORT OPPORTUNITY •  95.54% of the world’s consumers live outside the U.S.•  70% of the world’s purchasing power is located outside the U.S. Many Companies Make Exportable Products•  Less than 1% of America’s 30 million companies export •  58% of companies export to only one country•  98% of U.S. exporters are SMEs (but represent less than one-third of the known export value of U.S. goods’ exports); 96% of California exporters are SMEs (Total 59,543 in 2010) Many Companies Have New-to-Market Export Potential•  5.1% of Californias total private-sector employment is supported by manufacturing exports•  22.4% of manufacturing workers in California depend on exports for their jobs•  SMEs generated over two-fifths (46%) of Californias total exports•  Foreign investment in California supported 4.7% private-industry employment (567,000 jobs in 2010) California Depends on International Trade and Investment for Jobs
  • EXPORT FEARS •  Too Small•  Too Complicated•  Too Risky•  Too Expensive I’m too•  Cannot Compete small It’s too It’s too complicated Risky I Can’t Compete I can’t afford it Export Fears
  • TRADE BENEFITS TRADE AND INVESTMENT = JOBS•  Export Jobs Receive Higher Wages•  Exporting Increases your Sales to More Markets•  Exporting Reduces Dependence on the U.S. Market•  Source Products Unavailable Domestically•  Increase Sales Volume / Profits•  Adjust for Seasonal Availability•  Source at Lower Cost; More Price Competitive
  • EXPORT DEVELOPMENT STAGES Build Export Capacity Develop Export Markets Make Sales & Get Paid Deliver the Goods 10
  • INTERNATIONAL TRADE GROWTH PLAN •  Company Goals , Financial Resources , Non-financial Resources , Current Trends and Practices, Production Capacity, and SWOT Analysis •  Target Market Product Characteristics , Product Packaging, and Product Handling •  Product Potential Markets, Market Assessments, Your Target Market, and Industry Analysis •  Pricing Market Price , Pricing Strategy, Unit Price, and Profit •  Market Entry General Strategies and Promotional Strategies •  Action Plan Objectives, Tasks, Priorities, Resources , Schedule, and Evaluation
  • DOMESTIC BUSINESS REGISTRATION Review all Federal, State, County, City and Municipal licenses, permits and other registrationsapplicable to your business.
  • EXPORT READINESS INDICATORS ACCESS YOUR EXPORT READINESS•  Has your company received any unsolicited inquiries from foreign firms? •  Are domestic sales of your product doing reasonably well? •  Do you have a relatively strong share of the domestic market? •  Is your product price-competitive in the domestic market? •  Does your product compare favorably with domestic competitors in features and benefits?
  • IDENTIFY TRADE ASSISTANCE RESOURCES FEDERAL, STATE, COUNTY, CITY, NON-PROFIT•  U.S. Department of Commerce, ExIm, SBA•  State Trade Office•  California Centers for International Trade Development•  Manufacturing Extension Partnerships•  District Export Councils•  World Trade Centers•  Chambers of Commerce•  Foreign Consulates and Trade Commissioners•  LARExC, FTA, LACBFFA, WIT-LA, NASBITE, AAEI•  Service Providers (legal, finance, insurance, shipping)•  Plus many more…
  • INTERNATIONAL TRADE INTERMEDIARIES INDIRECT EXPORTING•  Export Management Company (EMC) An independent firm which acts as the exclusive export sales department for manufacturers. Income is usually made on commission or retainer basis, however, title of the goods may also be taken whereas a price mark-up is made.•  Export Trading Company (ETC) An independent agent that takes title of the goods for export and pays the manufacturer directly. Payment is made on a price mark-up, usually 10-15%. This is attractive for the manufacturer as they avoid risks associated with exporting.•  Job Function ü  Market research/planning/promotion ü  Present purchase orders ü  Find customers abroad ü  Handle export paperwork ü  Respond to inquires/Issue quotes ü  Arrange shipping and financing•  Main Issues ü  Exclusive/Non-exclusive ü  Duration ü  Territory ü  Non-Circumvention
  • TARGET A FEW SPECIFIC MARKETS IDENTIFY BEST MARKETS WITH HIGHEST POTENTIAL FOR RETURN•  Product/Service Demand (Significant Market Segment) –  Highest Import Volume over past 5 years –  Highest Import Growth over past 5 years•  No Significant Barriers to Entry•  No or Little Domestic Competition•  Strong U.S. Market Share•  High Receptivity•  Comfort Market•  Infrastructure Available to Finance and Deliver Goods•  Market Research –  Best Market Reports –  Country Commercial Guides (Chapter Four)
  • MARKET CONSIDERATIONS •  Differences That Make A Difference –  Language –  Religion –  Tastes –  Business Practices –  Income Levels –  Product Standards –  Physical Environments –  Legal Requirements•  Adaptations Worth Considering –  To The Product –  To The Promotional Materials –  To The Packaging
  • CULTURAL CONSTRUCT VARIANCES •  Cause for Negotiation Breakdown•  Cultural Etiquette –  Conversation –  Dress –  Entertaining –  Negotiating •  Context –  High –  Low•  Cultural Dimensions –  Power Distance –  Individualism vs. Collectivism –  Masculinity vs. Femininity –  Uncertainty avoidance –  Long-term Orientation
  • CULTURAL COMPARISON
  • MARKET ENTRY STRATEGY •  Indirect Exporting –  Hire an EMC/ETC (outsource your export department) –  Technology exchange/license agreement (royalties for technology sharing and use)•  Direct Exporting –  Sell directly to end-users –  Sell to a foreign distributor or agent with POA (contractual)•  Foreign Investment –  Hire staff overseas (manufacture representative) –  Establish joint venture (JV)/strategic alliance –  Establish a branch/subsidiary overseas –  Acquisition
  • U.S. COMMERCIAL SERVICE INTERNATIONAL BUSINESS MARKETING, PROMOTION, AND MATCHMAKING•  Trade Information Center: 1-800-USA-TRAD(e)•  On-line: Featured U.S. Exporter (FUSE), •  Media Advertisements: Commercial News USA and USA Export Expo•  Marketing Events: Trade Shows and Mission •  Business Matching Services: International Partner Search and Gold Key Service and•  Advocacy: Support with public tenders
  • QUALIFICATION CHECKLISTS FOREIGN PARTNER SCREENING MECHANISM•  Sales Force•  Sales Performance Example:•  Territorial Coverage Tire repair•  Companies/Products Represented company best•  Customer Profile served by•  Facilities and Equipment distributor already representing and•  Localization Capabilities distributing tires•  Market Development Capabilities (complementary).•  Industry Knowledge – Supply Chains,   Distribution Channels•  ALWAYS do your due diligence and get a credit report and check references on serious partners
  • INTERNATIONAL TRADE PAYMENT METHODS •  Methods of Payment in International Trade•  Cash-in-Advance•  Letters of Credit •  Documentary Collections •  Open Account•  Consignment •  Export Working Capital Financing •  Government-Guaranteed Export Working Capital Loan Programs •  Export Credit Insurance •  Export Factoring •  Forfaiting •  Government-Assisted Foreign Buyer Financing•  Government-Backed Agricultural Export Financing•  Foreign Exchange Risk Management
  • PAYMENT RISK DIAGRAM FROM THE TRADE FINANCE GUIDE (PAGE THREE)
  • LETTER OF CREDIT (L/C) Exporter   1.  Contract  Signed   Importer   (Seller)   (Buyer)     5.  Ship  the  Goods     6.  Submit  Documents   11.  Release  Documents   10.  Make  Payment   2.  Apply  for  L/C   9.  Make  Payment   4.  Advise  L/C   Seller’s  Bank   8.  Payment  /  Acceptance      Buyer’s  Bank        (Advising  Bank)   7.  Send  the  Documents      (Issuing  Bank)   (Confirms  L/C)   3.  Issue  the  L/C  
  • COUNTRY LIMITATION SCHEDULE HTTP://WWW.EXIM.GOV/TOOLS/COUNTRYLIMITATIONSCHEDULE
  • International Commercial Terms
  • International Commercial TermsHTTP://WWW.SEARATES.COM/REFERENCE/INCOTERMS/
  • REGIONAL TRADE AGREEMENTS OF THE U.S. The United States has free trade agreements in force with 19 countries: Australia; Bahrain;Canada; Chile; Colombia; Costa Rica; Dominican Republic; El Salvador; Guatemala; Honduras;Israel; Jordan; S. Korea; Mexico; Morocco; Nicaragua; Oman; Panama; Peru; and Singapore.The United States is also in negotiations of a regional, Asia-Pacific trade agreement, known asthe Trans-Pacific Partnership (TPP) Agreement with the objective of shaping a high-standard,broad-based regional pact.
  • INDUSTRY CLASSIFICATION SYSTEMS •  Standard Industry Classification (SIC) replaced by NAICS•  North American Industrial Classification System (NAICS) •  U.S. exports codes (Schedule B) are administered by the U.S. Census Bureau•  U.S. import codes (HTS) are administered by the U.S. International Trade Commission (USITC)•  First 6 digits are the same worldwide (WTO members); the last 4 vary
  • THE HARMONIZED SCHEDULE (HS) •  28 Chapter•  2801 Heading•  2801.30 Subheading•  2801.30.10 Subheading for Duties (tariff, CVD, ADD)•  2801.30.10.00 Subheading for Statistical Data
  • U.S. EXPORT CONTROLS HTTP://WWW.BIS.DOC.GOV•  Export Administration Regulations (EAR), Bureau of Industry & Security, U.S. Department of Commerce –  Deemed Exports –  Anti-boycott –  The Wassenaar Arrangement (Dual Use) –  ECCNs listed in the CCL (EAR99=NLR)•  International Traffic in Arms Regulations (ITAR), U.S. State Department –  Country Embargos –  United States Munitions List (USML)•  OFAC Sanctions, U.S. Treasury•  Foreign Corrupt Practices Act (FCPA), U.S Department of Justice
  • CONSOLIDATED SCREENING LIST HTTP://EXPORT.GOV/ECR/EG_MAIN_023148.ASPDenied Persons List A list of individuals and entities that have been denied export privileges. Any dealings with aparty on this list that would violate the terms of its denial order is prohibited.Unverified List A list of parties where BIS has been unable to verify the end-user in prior transactions. The presence of aparty on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction.Entity List A list of parties whose presence in a transaction can trigger a license requirement under the Export AdministrationRegulations. The list specifies the license requirements that apply to each listed party. These license requirements are in addition toany license requirements imposed on the transaction by other provisions of the Export Administration Regulations.Specially Designated Nationals List A list compiled by the Treasury Department, Office of Foreign AssetsControl (OFAC). OFAC’s regulations may prohibit a transaction if a party on this list is involved. In addition, the Export AdministrationRegulations require a license for exports or reexports to any party in any entry on this list that contains any of the suffixes "SDGT","SDT", "FTO", "IRAQ2" or "NPWMD".Debarred List A list compiled by the State Department of parties who are barred by §127.7 of the International Traffic inArms Regulations (ITAR) (22 CFR §127.7) from participating directly or indirectly in the export of defense articles, including technicaldata or in the furnishing of defense services for which a license or approval is required by the ITAR.Nonproliferation Sanctions Several lists compiled by the State Department of parties that have been sanctionedunder various statutes. The Federal Register notice imposing sanctions on a party states the sanctions that apply to that party. Someof these sanctioned parties are subject to BIS’s license application denial policy described in §744.19 of the EAR (15 CFR §744.19).
  • INTERNATIONAL TRADE DOCUMENTATION OTHER CERTIFICATES FOR SHIPMENTS OFCOMMON EXPORT DOCUMENTS: CommercialInvoice; Export Packing List; Pro Forma Invoice SPECIFIC GOODS: ATA CARNET/Temporary shipment certificate; Certificate of Analysis; Certificate of Free Sale; Dangerous GoodsTRANSPORTATION DOCUMENTS: Airway Bill or Bill Certificate; Fisheries Certificate; Fumigationof Lading; Electronic Export Information Filing Certificate; Halal Certificate; Health Certificate;(formerly known as the Shipper’s Export Declaration) Ingredients Certificate; Inspection Certificate; Pre- Shipment Inspections; Insurance Certificate;EXPORT COMPLIANCE DOCUMENTS: Export Phytosanitary Certificate; Radiation Certificate;Licenses; Destination Control Statement Other (Product-Specific) Certificates; Weight CertificateCERTIFICATES OF ORGIN: Generic Certificate of Origin; Certificate of Origin for claiming benefits OTHER EXPORT-RELATED DOCUMENTS: Consularunder Free Trade Agreements; Certificate of Origin Invoice; Canadian Customs Invoice; Dock Receiptfor goods not manufactured in the United States and Warehouse Receipt; Import License; ISPM 15 (Wood Packaging) Marking; Shipper’s Letter ofhttp://export.gov/logistics/eg_main_018121.asp Instruction TEMPORARY SHIPMENT DOCUMENTS: ATA CARNET/Temporary shipment certificate; Customs Certificate of Registration; Transporting Goods by Truck to Canada
  • TRANSPORTING THE GOODS •  Freight Forwarder vs. Customs Broker•  Modes of Transportation –  Electronic –  Land (Truck or Rail) –  Water •  Lower cost, slow movement •  Majority of trade –  Air •  Higher cost, fast movement •  Higher value goods•  Insure Cargo •  Book, Track, & Trace Cargo•  Customs Clearance
  • REASONABLE CARE CHECKLIST HTTP://WWW.CBP.GOV/LINKHANDLER/CGOV/TRADE/LEGAL/ INFORMED_COMPLIANCE_PUBS/ICP021.CTT/ICP021.PDF•  Established reliable procedures to ensure you provide a correct description of your merchandise to Customs?•  Established reliable procedures to ensure you provide a correct tariff classification of your merchandise to Customs?•  Established reliable procedures to ensure you provide a correct valuation of your merchandise to Customs?•  Consulted a Customs "expert" (eg., customs broker, lawyer, or accountant) to assist in description, classification, and valuation? Have you given them full, complete, and accurate information on all the facts and circumstances surrounding the import?•  Consulted the Harmonized Tariff Schedule, the Explanatory Notes, Customs publications, court cases, and Customs rulings to assist in description, classification, and valuation?•  Obtained a Customs ruling on your merchandise, and, if so, have you established reliable procedures to ensure you have followed that ruling?•  Established reliable procedures to ensure that errors are found, corrected, Customs is apprised in a timely manner?
  • FOREIGN TRADE ZONES HTTP://IA.ITA.DOC.GOV/FTZPAGE/LETTERS/FTZLIST-MAP.HTML#CALIFORNIA•  Cost savings (tax relief, lower wage costs)•  Add value to meet Rules of Origin regulations•  Tariff shifts can reduce customs duties (inverted tariffs) •  Duty exemption on re-exports (don’t have to file duty drawbacks)•  Duty elimination on unused merchandise (waste, scrap, and yield loss)•  Weekly entry filing (vs. transactional filings) to save on merchandise processing fees•  Defer customs duties (use as a warehouse) until you have a buyer
  • NAFTA Regional Value Content (RVC) Formulas HTTP://IA.ITA.DOC.GOV/FTZPAGE/LETTERS/FTZLIST-MAP.HTML#CALIFORNIA Transaction Value: 60% minimum RVC = [(TV – VNM) / TV] x 100 Net Cost: 50% minimum RVC = [(NC – VNM) / NC] x 100 TV=Transaction Value (amount paid or payable for a good) NC=Net Cost (amount to produce a good) VNM=Value of Non‐Originating Material
  • CUSTOMS AND BORDER PROTECTION http://www.cbp.gov/xp/cgov/toolbox/contacts/ports/ca/2704.xml Los Angeles/Long Beach Seaport Los Angeles International Airport- (Port Code: 2704) Cargo Operations (Port Code: 2720) 301 E. Ocean Blvd., Suite 1400 11099 South La Cienega Blvd. Long Beach, CA 90802 Los Angeles, CA 90045 General Phone: (562) 366-5555 General Phone: (310) 215-2618 Public Information Line: (562) 366-5454 HTTP://WWW.CBP.GOV A Service Port is a CBP location that has a full range of cargo processing functions, including inspections, entry, collections, and verification (19 CFR 101.1).
  • CENTER FOR INTERNATIONAL TRADE DEVELOPMENT HOSTED BY EL CAMINO COLLEGE DIVISION OF COMMUNITY ADVANCEMENT Bronwen E. Madden Acting Director 13430 Hawthorne Boulevard Hawthorne, CA 90250 USA Appointment Line: (310) 973-3177 Phone: (310) 973-3173 Fax: (310) 973-3132 bmadden@elcamino.edu http://elcaminocitd.org