4673 – Chap 7 Page 1 of 4 CHAPTER 7 – EXPORTING FROM THE U.S. A. GOVERNMENT SUPPORT (OF U.S. EXPORTS) 1. US International Trade Administration (ITA) a. Division of US Dept of Commerce b. Purpose: i. to promote trade and investment ii. ensures fair trade by enforcing US trade laws and agreements.  c. Three divisions: i. Overseas Offices a/k/a Foreign Commercial Service/U.S. Commercial Service · Offices in 80 countries · Help introduce US business persons to local business and government leaders · Offer business services including · trade leads · financial counseling · export opportunities · political and credit risk analysis · analysis of local laws ii. Headquarters Offices · Country analysis using desk officers · Desk Officers (2 categories) · Market Access and Commercial Policy · Specialists assess a country’s economic climate, trade policy, political climate · Trade information/Trade development · Specialists who assess industry characteristics (products/services) opportunities, etc. iii. Domestic Offices · operating through Export Assistance Centers (EACs) in the US · Offers services of US Comm’l Services, EXIM Bank, SBA in single location 2. District Export Councils a. Organizations of local/regional business leaders b. Appointed by Secretary of Commerce 2. District Export Councils (continued) c. Work as volunteers alongside EACs d. Services include i. “How-to” international trade seminars and workshops ii. Public awareness of Dept of Commerce trade assistance programs OMIT: “Small Business Development Centers” and “Service Corps of Retired Executives” p. 171 3. Office of Export Trading Company Affairs (OETCA) a. Allows US businesses to join together to export using Export Trading Companies b. Administered through the ITA c. Issues Export Trade Certificate of Review i. allows exporters to avoid antitrust legislation ii. enables firms to work together to reduce export costs and risks while developing new export business opportunities OMIT: From “INFORMATION SOURCES” p. 172 to middle of p. 179 B. FREIGHT FORWARDING 1. Freight Forwarder a.Defined as: private company licensed to support shippers and the movement of their goods. b. Provides advice on i. Export/import documentation ii. Freight costs/shipping rates iii. Consular fees iv. Insurance v. Packing c. Types include: i. Ocean freight forwarder · Must be licensed by Federal Maritime Commission ii. Air cargo agents · Certified by Cargo Network Services (U.S.) through International Air Transportation Association (IATA) 2. Shipper a. Any company may ship its own goods but cannot receive compensation without license C. EXPORT CONTROLS 1. Export license a. Defined as: a grant of authority from a government issued to a particular exporter to export a designated item to a designated country b. Features: i. Issued on a case-by-case basis ii. Issued for single transaction or multiple trans.

1. 4673 – Chap 7
Page 1 of 4
CHAPTER 7 – EXPORTING FROM THE U.S.
A. GOVERNMENT SUPPORT (OF U.S. EXPORTS)
1. US International Trade Administration (ITA)
a. Division of US Dept of Commerce
b. Purpose:
i. to promote trade and investment
ii. ensures fair trade by enforcing US trade laws and
agreements.
c. Three divisions:
i. Overseas Offices a/k/a Foreign Commercial Service/U.S.
Commercial Service
· Offices in 80 countries
· Help introduce US business persons to local business and
government leaders
· Offer business services including
· trade leads
· financial counseling
· export opportunities
· political and credit risk analysis
· analysis of local laws
ii. Headquarters Offices

2. · Country analysis using desk officers
· Desk Officers (2 categories)
· Market Access and Commercial Policy
· Specialists assess a country’s economic climate, trade policy,
political climate
· Trade information/Trade development
· Specialists who assess industry characteristics
(products/services) opportunities, etc.
iii. Domestic Offices
· operating through Export Assistance Centers (EACs) in the US
· Offers services of US Comm’l Services, EXIM Bank, SBA in
single location
2. District Export Councils
a. Organizations of local/regional business leaders
b. Appointed by Secretary of Commerce
2. District Export Councils (continued)
c. Work as volunteers alongside EACs
d. Services include
i. “How-to” international trade seminars and workshops
ii. Public awareness of Dept of Commerce trade assistance
programs
OMIT: “Small Business Development Centers” and “Service
Corps of Retired Executives” p. 171

3. 3. Office of Export Trading Company Affairs
(OETCA)
a. Allows US businesses to join together to export using
Export Trading Companies
b. Administered through the ITA
c. Issues Export Trade Certificate of Review
i. allows exporters to avoid antitrust legislation
ii. enables firms to work together to reduce export costs and
risks while developing new export business opportunities
OMIT: From “INFORMATION SOURCES” p. 172 to middle
of p. 179
B. FREIGHT FORWARDING
1. Freight Forwarder
a.Defined as: private company licensed to support shippers and
the movement of their goods.
b. Provides advice on
i. Export/import
documentation
ii. Freight costs/shipping rates
iii. Consular fees
iv. Insurance
v. Packing
c. Types include:

4. i. Ocean freight forwarder
· Must be licensed by Federal Maritime Commission
ii. Air cargo agents
· Certified by Cargo Network Services (U.S.) through
International Air Transportation Association (IATA)
2. Shipper
a. Any company may ship its own goods but cannot receive
compensation without license
C. EXPORT CONTROLS
1. Export license
a. Defined as: a grant of authority from a government issued
to a particular exporter to export a designated item to a
designated country
b. Features:
i. Issued on a case-by-case basis
ii. Issued for single transaction or multiple transactions
within a specified period of time
2. U.S. Export license/control
a. Jurisdictional control of licenses
i. Dept of Commerce/Bureau of Industry and Security (BIS)
– most items exported
ii. Other departments:

5. · Dept of State - Arms, ammunition, etc.
· Dept of Justice/DEA – dangerous drugs, narcotics
· Nuclear Regulatory Commission – nuclear materials
· Dept of Agriculture – meat, poultry, etc
b. BUREAU OF INDUSTRY AND SECURITY (BIS)
i. Administers the Export Electronic Information (EEI)
(formerly the Shipper’s Export Declaration (SED) Form 7525-v)
· EEI required for all exports needing export license
· EEI indicates to US Customs type of export authorization used
(e.g. dangerous good, etc.)
· Used to compile trade statistics for US Census
ii. Interprets the Export Administration Regulations (EAR)
iii. Types of licenses
· “Dual Use” – term for goods having both commercial and
military applications
· Validated license – issued for items usually under control of a
US government agency/dept (i.e. CCL) and requires a license
(e.g. arms shipment)
· License Exception – on CCL, needs license
CONTINUED
iii. Types of licenses (continued)
· No License Required (NLR)

6. · items subject to EAR but not listed on CCL under a specific
ECCN
· on CCL but no license needed
· EAR99
· Items not on CCL
· generally no license required
· vast majority of goods shipped from US.
· EXCEPTION – Item is not going to embargoed country,
prohibited end user or prohibited end use.
iv. COMMERCE CONTROL LIST (CCL) and EXPORT
CONTROL CLASSIFICATION NUMBER (ECCN)
· Classifications of lists of controlled items
· ECCNs are listed in the Commerce Control List (CCL)
· Commerce Control List categories
0 = Nuclear materials, facilities and equipment (and
miscellaneous items)
1 = Materials, Chemicals, Microorganisms and Toxins
2 = Materials Processing
3 = Electronics
4 = Computers
5 = Telecommunications and Information Security
6 = Sensors and Lasers
7 = Navigation and Avionics
8 = Marine
9 = Propulsion Systems, Space Vehicles, and Related
Equipment
Five Product Groups (subset of CCL)
A. Systems, Equipment and Components

7. B. Test, Inspection and Production Equipment
C. Material
D. Software
E. Technology
OMIT: “EXPORTER’S OBLIGATIONS” p. 183 to end of
chapter
4673 – Chap 5
Page 1 of 7
CHAPTER 5 – COMPLETING A SUCCESSFUL
TRANSACTION
A. FORMS OF BANK FINANCING
Two primary categories
1. Secured Financing:
a. Defined as: Financing secured by collateral
b. Types of collateral include:
i. Advanced funds
ii. Shipment documents
iii. Banker’s acceptance (BA) time draft where bank
guarantees payment at a future date. BA’s are negotiable,
tradable instruments
2. Unsecured financing
a. Uncollaterized financing available to customers with
excellent, established relationships with the bank.
OMIT “FACTORS” p. 98
B. SOURCES OF FINANCING

8. 1. Private Export Funding Corp (PEFCO)
a.Founded 1970
b. Operates in conjunction with EXIM
Bank, OPIC, SBA
c. Loans guaranteed by EXIM and SBA
d. Typical loan minimum of $1m
2. Overseas Private Investment Corp (OPIC)
a. U.S.government’s development
finance institution
b. Works with private sector (via private
capital) to promote economic growth
c. Programs include
i. Financing (e.g. to SMEs)
ii. Political risk insurance
iii. Investment Funds
3. Small Business Administration – loans and support
services to small businesses
4. Export Import Bank (EXIM Bank)
a. US Government agency
b. Has funds to provide credit (loans, guarantees, etc) to
support US exports.

9. CONTINUED
B. SOURCS OF FINANCING (continued)
5. Agency for International Development (USAID)
a. An agency of US State Dept
b. Provides economic and humanitarian assistance (e.g.
grants and loans) to lesser developed countries
OMIT “INTERNATIONAL DEVELOPMENT COOPERATION
AGENCY” p. 101
C. RISKS IN IMPORT/EXPORT INDUSTRY
Types of risk include
1. Commercial Risk
a. Defined as: Risk resulting from miscommunication, fraud,
etc between seller and buyer
b. Major concern(s):
i. Seller – not getting paid
ii. Buyer – goods not received on time (or at
all) incorrect goods received
c. How to avoid:
i. Written sales contract
ii. Check buyer’s credit
iii. Check reputation of all parties

10. NOTE: Payment methods covered later in chapter
2. Shipping Risk
a. Defined as: Risk of loss or damage
during transportation
b. Major concern(s):
i. Limited liability of carriers
· ocean limited to $500 per package (or freight unit)
· regulated by U.S. Carriage of Goods by Sea (COGSA) 1936
· Air limited to US$9.07 per lb (gross weight) or US$20/kg
· regulated by the Warsaw Convention
c. How to avoid:
i. Obtain cargo/marine insurance
· covers warehouse-to-warehouse (e.g. inland marine insurance
– land based; ocean marine insurance – ocean)
· rates based on product, destination, loss history, shipping
method
3. Political risk
a. Defined as: the likelihood that a company’s investment
will be constrained by the actions of a foreign government
b. Major concern(s):
i. Wars
ii. Expropriation
iii. Expulsion
iv. FX controls
v. Export/import license revocation

11. c.How to avoid:
i. Obtain credit/loan guarantees via EXIM bank, OPIC
ii. EXIM Bank has specific
program for political risk
4. Foreign Exchange Risk
a. Defined as: Risk of loss of investment
due to fluctuations in FX
b. Major concern(s):
i. Loss of value of transaction due to unstable currencies
c. How to avoid:
i. Denominate transaction using hard currencies
ii. Use forward rate
D. GETTING PAID
1. Methods of payment
In order of riskiness to seller (most – least)
a. Open Account
i. Goods ship with no guarantee of payment
ii. Riskiest for seller
iii. Use only when close relationships
b. Consignment

12. i. Buyer (importer) keeps goods in warehouse or retail
location until sold
ii. Seller (exporter) maintains
ownership of goods
iii. Seller gets paid when goods
sold
CONTINUED
D. GETTING PAID (Continued)
1. Methods of payment (continued)
c. Drafts (a/k/a Bills of Exchange)
Include:
i. Bank draft – a “check” payable at “sight” or “tenor” (tenor
= a release period; including at “sight”)
ii. Time draft
· payable a number of days after “sight”.
· Must be accompanied by supporting documents (bill of lading,
commercial invoice, etc)
iii. Sight draft – similar to time draft, except payment due
upon sight.
d. Authority to purchase – omit
e. Letters of Credit (L/C)
i. Importer’s bank guarantees that exporter will be paid if all

13. conditions of L/C (documents, delivery, etc.) are met.
ii. Governed by the Uniform Customs and Practice for
Documentary Credits (UCP) (established by ICC)
iii. Parties to L/C
· Applicant – the buyer (importer)
· Beneficiary – seller (exporter)
· Issuing bank – buyer’s bank (issues the L/C) (may also be an
Opening bank
· Advising bank – notifies seller that LC has been issued
· Confirming bank - often the seller’s bank which adds its
commitment to the LC
iv. Types of L/Cs
· Two main categories
· Revocable – can be amended or cancelled at any time by the
applicant without consent or notification of the beneficiary
· Irrevocable – all parties must agree to amendments or
cancellations
· Common types of L/Cs
· Stand-by – L/C not executed unless payment not received in
xx days
· Transferable – see below
· Common types of L/Cs (continued)
· Transferable L/C
· buyer opens L/C naming middleman (e.g. supplier or

14. subcontractor) as beneficiary middleman transfers L/C to seller
· Assignment of proceeds (similar to Transferable L/C)
· Back-to-back – seller asks his/her bank to issue credit in favor
of a supplier using seller’s L/C as security
· Red Clause L/C – allows partial payments as a project
f. Cash in Advance
i. Least risky to seller
ii. Requires buyers to tie up capital
OMIT “AGENCY/DISTRIBUTOR AGREEMENTS” p. 119-120
E. PHYSICAL DISTRIBUTION and SHIPPING
1. Logistics a/k/a Physical Distribution
a. Defined as: the means by which goods are moved from the
manufacturer to the end customer
2. Shipping
a. Types of shipping methods (modes)
i. Water Transportation
Types of ocean lines:
· Ocean conference lines – association of ocean lines formed to
offer common rates
· Independent lines – accept any booking, based on availability
of space

15. · Tramp vessels – bulk carriers operating on charter-basis.
ii. Air Transportation
iii. Land Transportation (road and rail)
b. Shipping terms
i. Intermodalism – transportation using multiple methods per
trip
ii. Load centers – omit
iii. Bridges – omit
b. Shipping terms (continued)
iv. LCL/FCL – Less than container load/Full container
load(containers typically 20’, 40’ or 45’
v. Consignor – seller/exporter/shipper
vi. Consignee – buyer/importer
OMIT “PACKING AND MARKING FOR OVERSEAS
SHIPMENT” p. 124 to top of p. 126
F. DOCUMENTATION
Classification of documents:
1. Shipping documents:
a. Defined as: documents allowing cargo to clear customs,
get loaded aboard a vessel, and shipped to destination

16. b. Types include:
i. Export license – discussed further in Ch. 7
ii. Packing list – describe contents in shipment/cargo
iii. Bill of lading –
· Contract between seller and carrier
· Types include
· Ocean bill of lading
· Air waybill
· Surface waybill (trucking/rail)
· Straight bill of lading – non-negotiable. Goods delivered to
anyone listed as “consignee”
· Order bill of lading – negotiable. Represents ownership/title
of goods
· Clean on Board – cargo accepted/loaded without “exception”
(e.g. without damage)
· Foul bill of lading – an exception was noted (i.e. some type of
damage)
iv. Export Electronic Information (formerly Shipper’s Export
Declaration)
· Prepared by exporter or freight forwarder
· Required by US government for shipments $2,500 and over
· Used to measure volume of exports from U.S.
2. Collection Documents
a. Defined as: documents needed for submission to
receive payment
b. Include:

17. i. Commercial Invoice – details all aspects of the final
agreement between seller and buyer
2. Collection Documents (continued)
ii. Consular invoice – required by some countries for entry of
goods.
iii. Certificate of Origin – certifies that goods are made in a
particular country.
iv. Inspection Certificate – may be required by importer to
verify condition of goods prior to shipment. Often done by
independent firm.
MAN 4673 Video Case Analysis
Page 1 of 1
MAN 4673-U01 – TRADE POLICY AND BUSINESS
VIDEO CASE ANALYSIS GUIDELINES and QUESTIONS
Video case: “Budding Biz - David Wernick video interview with
Ralph Gazitua
This video is an interview that examines the founding and
growth of WTDC, a leading Miami-based logistics
infrastructure company founded by the Gazitua family in the
1970s. WTDC President and CEO Ralph Gazitua explains how
and why his family started the company, the various challenges
his company has faced over time and how he has adapted his
business model to meet the demands of the marketplace. The
15-minute video includes a tour of WTDC's warehouse and a
brief interview with WTDC's marketing manager.
INSTRUCTIONS:
1. Watch the 15-minute video, available at the links below.
Note that the video is in two parts. You must watch both parts:

18. Part 1:
https://www.youtube.com/watch?v=DNRnF58Bu94&feature=yo
utu.be
Part 2: https://www.youtube.com/watch?v=x0QaVG4f0G0
2. After watching the video, answer the following two
questions:
a. Identify at least four specific terms from the chapters/notes
that Mr. Gazitua mentioned in the video. In your own words,
briefly explain what each term means.
b. Review the notes for Chapters 5 and 7. Assume that Mr.
Gazitua needs to “reengineer” the firm again. His main goal is
to attract more foreign clients and to provide assistance to these
clients as they try to enter the US market. He has hired you as a
management consultant to give him some guidance.
There are several agencies of the U.S. government that offer
various services to U.S. companies involved in international
trade. These agencies were discussed in Chapters 5 and 7.
Discuss the ways in which Mr. Gazitua could take advantage of
the services offered by these agencies as he reengineers his
firm. Be sure to identify the specific agency(ies) you are
referring to.
3. Submission Instructions:
a. Answer the case in a Word doc. The paper must be turned
in as a Word doc attachment in the Video Case Analysis
Dropbox link in Blackboard.
b. Answer all questions using complete sentences. Points
will be deducted for using a bulleted/numbered list format. NO
BULLETS!!!

19. c. Please number the question you are answering. Include
your name, Panther ID, and the case title on the title page of
your paper.
d. The paper should be approximately 500 words (total)
excluding the title page and questions.