Lisa Waller of BDG International gave a presentation on entering the global trade world. She discussed key government agencies involved in international trade, import and export compliance requirements, common trade documents, incoterms, terms of sale, transportation, liability and insurance considerations, and the roles of international freight forwarders and customs brokers. Waller has extensive experience and qualifications in global trade and emphasized the importance of understanding how global events and regulations can impact international shipments.

1. Entering the world
of Global Trade

2. Presenter: LISA VICTORIA WALLER, CHB
VICE PRESIDENT
BDG International, Inc.
840 Tollgate Road
Elgin, IL 60123
Tel: 847-760-0014
lisaw@bdginternational.com

3. Credentials:
 Bachelors of Science- Illinois State University
 (International Business, emphasis of Eastern Studies)
 Licensed Customs Broker
 Certified Customs Specialist
 Certified Export Specialist
 IATA (International Air Transportation Association) Certified
 DG (Dangerous Goods) Certified
 Committee co-chair for Export Compliance of the CBFFAC
 Active Member of the NCBFFA

4. Current Events / Going Global
Importance of understanding how the world
around us effects each and every shipment
coming in and out of the USA.

5. Overview
Overview:
The role of Government agencies
Duty Preferences
Cargo Security
Export issues
Sample documents

6. Government Agencies
U.S. Senate / Congress
Department of Homeland Security (DHS)
U.S. Customs Border Protection (CBP)
United States Department of Agriculture (USDA)
Animal Plant Health Inspection Service (APHIS)
Department of Health and Human Services
Food And Drug Administration (FDA)
Department of Commerce (DOC)
Environmental Protection Agency (EPA)
Department of Interior (DOI)
U.S. Treasury,
Office of Foreign Assets Control (OFAC)
Department of State (State)
Department of Defense (DOD)

7. Connection between
U.S. Government
and
Foreign Governments?
For every U.S. Government Department, Office or governing body
There is an equal governing body in each country that we import from
or export to.
Thus to understand your own country first will allow you to know what
to look for in other countries.
Commodity Specific – you will know quickly which governing bodies
will effect your commodity and industry.

8. Who brings the world
together?

9. World Trade Organization
The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. At its heart are the WTO
agreements, negotiated and signed by the bulk of the world’s trading nations and
ratified in their parliaments. The goal is to help producers of goods and services,
exporters, and importers conduct their business.
The WTO and main Parliments of each country come together to decide on countries
with special needs, and economies that need to be promoted.
The U.S. Congress / Senate approve Trade Agreements, Trade Acts, Global
Trade Decisions, and requests for specific Industry or Commodity duty preferences.
The WTO is in charge of the Harmonize Tariff
System. Each country belonging to the program
will share the first 6 digits of the HTS system.

10. DUTY PREFERENCES
The Office of U.S. Trade Agreements
The U.S. trade strategy is to pursue multiple market-opening initiatives
on a global, regional and bilateral basis, establishing models of
success that can be used throughout all negotiations.
What prevents a free trade agreement (FTR) from being passed:
- local Lobbyist afraid that duty preferences will hurt the USA
economy
- Labor laws in the foreign country

11. FTA
Singapore FTA (SG)
Australia FTA (AU)
Oman FTA (OM)
Morocco FTA (MA)
Bahrain FTA (BH)
Israel FTA (IL)
Central America FTA various
North American FTA (MX or CA)
Jordon FTA (JO)
Chile FTA (CL)
Peru Trade Promotion Agreement (PE)
Colombia FTA
Panama FTA
Korea FTA

12. Harmonize Tariff System
Each product has its code

13. Classification
The duty will be based on a product as per the General Rules of Interpretation
from the U.S. Regulations & Harmonize Tariff System
http://www.usitc.gov/tata/hts/index.htm
Sections, Chapters, Headings, Subheadings
Chapters: 1-99
Living or Raw = beginning of the tariff
Manufactured = at the end of each section and tariff
EXPORT CODE IS CALLED: SCHEDULE B NUMBER
http://www.census.gov/foreign-trade/schedules/b/index.html

14. Classification
CUPS, PLASTIC
3924.10.2000
PLASTIC,PLATES, CUPS, SAUCERS......
6.5%
3924.10.2000
39 = Chapter 39 covers plastics
(there are 1-99 chapters)
24 = Tableware / Kitchenware or other house
hold articles made of plastic
.10 = Tableware or Kitchen ware
20 = Plates, cups saucers, soup bowls
etc.

15. EXPORT COMPLIANCE

16. Export Compliance
How is the data gathered?
CBP regulates the data and reports to Census. Census
organizes and analyzes the data and gives it to Commerce.
- EEI – Electronic Export Information
- AES – Automated Export System
2009 versus years before?
- Informed compliance vs. Enforced Compliance

17. Export Enforcement Act of 2007
http://www.bis.doc.gov/enforcement/eaarenewalbillfactsheet.pdf
Criminal Max: Corporate Greater of $5
millions or ten times value of the exports
involved.
Individual Max: Greater of $1 million(s)
and 10 years of imprisonment

18. Export Compliance
What is the commodity?
 Commerce Control List
Can it be used for some other purpose?
 Dual usage
Who are you selling it to?
 Embargoed countries (Cuba – for example)
 Denied parties
Where are you shipping it?
 Do you know the end user?
 Will it be sold to another party?
 Do you have knowledge?
Is your loading process secure?
 Illegal activity within your company?

19. THREE COMPLIANCE MUSTS
FOR EXPORT

20. 1. SCREEN FOR DENIED
PARTIES
Background check on all parties
involved in the transaction.
http://www.bis.doc.gov/complianceand
enforcement/liststocheck.htm

21. 2. KNOW YOUR ECCN
NUMBER
 (EXPORT CONTROL CLASSIFICATION
NUMBER)
 Checks for controlled products versus
countries and parties
http://www.bis.doc.gov/licensing/do_i_needa
neccn.html

22. 3. DESTINATION CONTROL
STATEMENT
15 CFR 758.6
The Destination Control Statement (DCS) must be entered on
the invoice and on the bill of lading, air waybill, or other
export control document that accompanies the shipment
from its point of origin in the United States to the ultimate
consignee or end-user abroad. The person responsible for
preparation of those documents is responsible for entry of
the DCS. The DCS is required for all exports from the
United States of items on the Commerce Control List that
are not classified as EAR99, unless the export may be
made under License Exception BAG or GFT (see part 740
of the EAR). At a minimum, the DCS must state

23. DCS
“These commodities, technology or
software were exported from the
United States in accordance with the
Export Administration Regulations.
Diversion contrary to U.S. law is
prohibited.”
(licensable goods may have an
alternative statement)

24. TERMS OF SALE

25. Terms of Sale
When will you be paid for your goods?
How will you be paid?
What method of payment will be used?

26. Terms of Sale
Open Account
– 30 days, 60 days, etc.
Sight Draft
– Funds transferred upon sight of documents at the
applicant bank.
Time Draft
– Funds transferred upon # days after sight of
documents at the applicant bank

27. Terms of Sale
Letter of Credit
Contractual agreement between Shipper
(Beneficiary), Consignee (Applicant), Beneficiary
Bank and Applicant Bank
– Confirmed - Guaranteed to be paid by the
advising bank
– Advised- Guaranteed to be paid the
opening bank.

28. INCOTERMS
www.iccwbo.org
www.commerce.gov

29. What are INCOTERMS?
International Commercial Terms
 ICC (International Chamber of Commerce)
 1936
To simplify creation of international
agreements, contracts.
To develop a standardized way to speak
global and define the words used equally
across all cultures and languages

30. Incoterms assist:
Understanding who is responsible to
pay for transportation to a certain point.
Define who is responsible for payment
of documentation, packing and other
charges.

31. Incoterms
Who will pay for the transportation?
Global rules for a global sale !!
EXW EX WORKS (named place)*
FCA FREE CARRIER (named place)
FAS FREE ALONGSIDE SHIP (named port of shipment)*
FOB FREE ON BOARD (named port of shipment)
CFR COST AND FREIGHT (named port of destination)
CIF COST, INSURANCE AND FREIGHT (named port of destination)*
CPT CARRIAGE PAID TO (named place of destination)
CIP CARRIAGE AND INSURANCE PAID TO (named place of destination)*
DAT DELIVERED at TERMINAL (named place of destination)
DAP DELIVERED at PLACE (named place of destination)*
DDP DELIVERED DUTY PAID (named place of destination)*

32. Incoterms
Who will pay for the transportation?
Global rules for a global sale !!
EXW = E term (collect)/ least control for shipper
FCA, FAS, FOB = F term (collect)/ less control for shipper
CFR, CPT, CIP, CIF = C term (prepaid)/ more control for the shipper
DAT, DAP, DDP = D term (prepaid) / most control for the shipper
CIP and CIF = are the only terms that discuss insurance
All other terms would require insurance to be
discussed separately.
Having less control does not automatically mean you have less liability.

33. Incoterms are not:
They are not law
They are not recognized by
government entities
They do not take the place of having a
proper purchase agreement, sales
agreement or order.

34. International document flow

35. FORMAL AGREEMENT
PURCHASE ORDER
PROFORMA INVOICE
COMMERCIAL INVOICE

36. Purchase/Sales Agreement
Between the buyer and the seller there must be a
formal Agreement.

37. Purchase Agreement
The Purchase Agreement documents the standard terms and
conditions where you, the buyer, are contracting w /a seller in
the course of a business to business transaction, and includes
the following basic items
payment and price warranty
origin and destination sub-contracting
samples title and risk
packaging inspection
testing indemnity
confidentiality termination
terms of shipping government regs
Liablity and title Incoterms

38. Purchase Order
ISSUE A PURCHASE ORDER
or
REQUIRE A PURCHASE ORDER

39. Proforma Invoices
Proforma Invoice (purpose)
FINAL DOCUMENT prior to actual documents
Used to source funds
Used to buy foreign currency in controlled markets
Opening Banks use this document to open L/C's.
This document can not be used for customs clearance.

40. Proforma v. Commercial Invoices
 Commercial Invoices
Importer will pay off this invoice.
Customs clears freight using commercial
invoices.
Banks transfer money using the Commercial
Invoice.

41. Transportation
Who can assist with understanding
how to ship cargo and questions on
the transaction?

42. International Freight Forwarders
An agent for the exporter in moving cargo to an overseas.
“Travel Agent for Cargo”
Specializing in:
- the import rules and regs of foreign countries
- the export regulations of the U.S. government
- the methods of shipping, and the docs related to foreign trade
- Foreign to foreign moves
- Pricing and rate negotiation via all modes of transportation
- Agent for the Department of Homeland Security
- Track and trace cargo
- Resolve Challenges

43. Documentation
(Export)
•
Shipper's Letter of Instruction (SLI) or Shipper
Transmittal Letter
Power of Attorney
Detailed Instructions to the forwarder
SED Completion
• Letter of Credit (if issued)
• Hazardous Declaration (only used if cargo is
a hazardous substance)
• Pre-Shipment Inspection Certificate (e.g. SGS)

44. Customs Brokers
Customs brokers are organizations licensed, regulated and
empowered by U.S. Customs and Border Protection (CBP)
to assist importers and exporters in meeting Federal
requirements governing imports and exports.
Specializing in:
- The import regulations of the U.S. government
- Classification of commodities / trade agreements
- All other government agencies that may be involved in
the import shipment
- Releasing cargo at the warehouses
- Deliveries of the cargo Domestically in the USA
- Post entry processing
- Government research

45. Documentation
(Import)
Power of Attorney
Continuous Bond
Classified Products
 The Customs Broker you designate must have a
signed Power of Attorney, signed by an officer of the
company.
 The Corporation must be Bonded under a Customs
Continuous Bond.
 All products being imported should be classified in
advance in order to ensure a smooth shipping
process.

46. Liability and Insurance

47. Floating Containers

48. Fire on board

49. Crushed

50. Crash Landing

51. Liability
RISKS:
As the importer/exporter you are liable to follow the U.S.
Regulations. You must ensure that your forwarder / broker
are concerned about compliance.
Customs Liability
-Reasonable Care -Record Keeping -Correct
Classification
Risks of International Business
Additional Fees not quoted
Storage for Inspection
Penalties and Fines
Delays
Loss - Damage - Missing Cargo

Non-Payment by client

52. Consulting

53. Advise, Audit and Planning
Develop your compliance program
 Classification of merchandise
 Valuation of merchandise
 Country of origin Markings
 Export licensing issues
 Export licensing exemption
 Deemed Exports
 Embargoed country issues
 Compliance and Training

54. Thank you for attending
today’s seminar.
BDG INTERNATIONAL, INC