Exporting Guide to Legal and Marketing Issues for Small to Mid-Size Businesses.

1. Exporting for Growth & Profit
An Introduction for Small &
Mid-Size Businesses
Shelley Smith, Esq.
20 S. Clark St.
Suite 300
Chicago, IL 60603
Copyright © Sept. 10, 2012

2. The Case for Exporting
• 2011 U.S. Exports: $2 Trillion
• 2010-2011: 500,000 New jobs paying 20% more.
• NATO/Other FTAs eliminate tariffs and non-
tariffs trade barriers.
• 95% of World’s Customers are outside the U.S.

3. Exports from Chicago
• Chicago is 7th in exporting
• Only 5,000 of Chicago’s almost 100,000
small businesses export their products
overseas.
• Of these, less than half, about 2,000
export to more than one country.

4. Getting Started
• Prepare a Business Plan
• Identify a Target Market
• Find a Buyer
• Obtain Financing

5. The Business Plan
1. Business Plan should include selected products
or services, target markets, sales forecasts,
method of transport, estimated transportation
costs, possible use of freight forwarder and
financing options.
2. For market research, consult Dept. of
Commerce, ITA’s Commercial Service Market
Research Reports.
3. For export statistics, go to the Census Bureau’s
Foreign Trade Division.

6. Meet with the Experts
1. U.S. Dept. of Commerce, ITA, Chicago
2. Illinois DCEO, OTI: Trade Specialists in
Asia, Latin America, ; Offices in Toronto,
Mexico City, Japan, Hong Kong,
3.Illinois SBDC, ITC, 8 in Illinois, AON Bldg.

7. Top Illinois Export Industries – 2011
Top 5 Industries for export in 2011
Machinery, Except Electrical $17.78 Billion
Chemicals $ 8.49 Billion
Transportation Equipment $17.78 Billion
All Agricultural and related products $17.78 Billion
Computer and Electronic Products $17.78 Billion

8. Choose your Market
Select a Target Market

9. Top 5 Countries for Illinois Exports 2011
Canada $19.17 Billion
Mexico $ 5.72 Billion
China $ 3.89 Billion
Australia $ 3.69 Billion
Brazil $2.55 Billion

10. Identifying Target Markets
• After considering standard factors such as
demand, also research:
–Free Trade Agreements
–Low Tariff Countries
–Product Restrictions

11. Finding FTA Countries
• Use the “FTA Tariff Tool” at export.gov, a
site that identifies tariffs by product for
each of the 17 FTA countries.
• Consult alphabetical list of countries that
describes their trade status in
export.gov/logistics.

12. Finding Low Tariff Countries
• Resources for finding foreign tariffs on U.S.
exports include:
– WTO Tariff Database;
– Customs Info Database;
– Economic and Monetary Community of Central
Africa’s Common External Tariff.

13. How to Find a Foreign Buyer
• Attend Trade Shows/Missions (U.S. & Foreign)
• Contact the U.S. Dept. of Commerce for pre-
screened potential buyers
• Contact Illinois DCEO’S Office of Trade &
Investment for customized lists of potential
foreign buyers, agents and distributors.

14. Export Financing
How do I convince my lender to finance
sales to a foreign buyer?

15. Private Financing
• Convince the buyer to provide:
– cash in advance and/or
– a letter of credit.
• When these options are unavailable, the Small
Business Administration (“SMA”) and U.S.
Export Import Bank (“Ex-Im Bank”) have export
financing programs.

16. SBA Export Financing (1)
• Export Express Program: Financing up to
$500,000 using the lender’s forms if the
borrower has been in business for at least
one year and the loan proceeds will be
used for export-related activities.

17. SBA Export Financing (2)
• International Trade Loan: a loan of up to
$5 million with a 90% guarantee to lenders
for businesses modernizing or expanding
facilities in order to meet growing export
demand.

18. The United States Export-Import Bank
• Working Capital Guarantee Program:
• Export Credit Insurance: protects against the
political and commercial risks of a foreign buyer
defaulting on payment.

19. Ex-Im Bank - Foreign-Buyer Guarantees
1. Medium and long-term guaranties of
commercial loans made to foreign buyers.
1. Guaranties cover 85% of the contract
price (100% of the financed portion).
1. The foreign buyer must pay 15% of the
purchase price in cash.

20. Financing Success!

21. U.S. Filing System for Exports
1. Electronic Export Information (“EEI”) is used
by the U.S. Census and Customs
Departments for statistical and export control
purposes.
1. The Shipper’s Export Declaration (“SED”) has
been replaced with the Automated Export
System (“AES”).

22. Country & Territory Codes
Found on Annex A, Schedule C of the HTS.

23. Where Do I Find Export Codes?
• Codes for classifying goods for import
tariffs are in the Harmonized Trade
Schedule, available on the U.S. Census
Dept. web site.
• HTS’s “Notice to Exporters” says HTS’
codes from Schedule B can be used for
the SED/AED.

24. Do Other Countries
Use Schedule B Codes?
• Almost all countries use tariff classification
systems based on the International
Harmonized Tariff System (HTS).
• The HTS is defined to the six-digit level, so
foreign tariff schedules will be identical to
the HTS up to the six-digit level but may
include more digits for finer levels of detail.

25. What if I’m Exporting Green Peas?

26. HTS Schedule B Code for Green Peas
Code Definition Example
07 2‐digit chapter in which a
commodity is classified
Chapter 7, "Edible
Vegetables and Certain
Roots and Tubers"
0713 4‐digit heading within the
chapter
"Dried leguminous
vegetables, shelled,
whether or not skinned or
split"
0713.10 6‐digit HS code or
subheading
International Harmonized
code for "Peas (Pisum
sativum)"
0713.10.4020 10‐digit statistical
classification
Commodity code for
"Green peas"

27. Help with Finding the Correct Codes
1.Read the Definitions and General
Interpretation Guidelines in the HTS;
2.Use the Schedule B Search Engine at
www.export.gov.; and
3.Consult reported decisions of the Customs &
Border Protection Dept. on the CROSS
database using HTS codes.

28. U.S. District and Port Codes

29. Finding U.S. District and Port Codes
• U.S. District and Port codes are also required for
foreign trade statistical reporting purposes.
• Find them in Statistical Annex D to the HTS.
• The U.S. District and Port code for Chicago is
39.01.

30. How to File Export Information
Export information must be filed in the form of
EEI through AES or through AESDirect, a free
on-line filing site, if:
1. an export shipment is made by a U.S.
principal party in interest (“USPPI”) to a
foreign buyer on a single day that is valued
at over $2,500, or requires a license, and
2. the shipment previously required a
Shipper’s Export Declaration.

31. Deadlines for AES Filing
1. Vessel: 24 hours before loading;
2. Truck: 1 hour before reaching U.S. border;
3. Air: 2 hours before scheduled departure;
4. Rail: 2 hours before reaching the U.S. border;
5. Mail: 2 hours before export.

32. Resolving Trade Barriers
• The Trade Agreements Compliance Program is designed
to resolve foreign government trade barriers.
• The International Trade Commission (ITC) has a Trade
Remedy Assistance Office that accepts Trade Complaint
Forms to aid small businesses with trade difficulties. 19
C.F.R. 213.1.
• Office of the U.S. Trade Representative (USTR) has an
enforcement division to handle FTA violations.