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Q:
What are the most common mistakes made by exporters?
A: Most companies that have not succeeded in exporting, regardless
of their country, product or service, have made one, or possibly several
of the following ten mistakes. They:
- Failed to develop
an international marketing plan before beginning to export.
- Lacked total commitment
of top management in the initial stages of exporting.
- Selected overseas
representatives too quickly without thorough investifation.
- Chased orders around
the world instead of using a systematic marketing plan.
- Neglected new export
customers when their domestic market was booming.
- Failed to treat
international and domestic representatives on an equal basis.
- Refused to modify
products to meet foreign regulations and local preferences.
- Did not print sales,
service, and warranty messages in local languages.
- Refused to use
export management comapnies (EMC) in less promising markets.
Failed to consider
licensing or joint venture agreements in more restrictive markets. (The
Export Institute, Ask the Experts, Category One.)
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Q:
What Export Forms Do I Need To Fill Out?
A: Some of the common
government-required forms of documentation are listed below. The seller
normally prepares his or her own commercial documents and the freight
forwarder normally prepares the transportation documents. Some freight
forwarders will do all the paperwork for you.
Shipper's Export
Declaration (SED). The SED authorizes the export of freight. It is
used to control exports and compile trade statistics and must be prepared
and submitted to the customs agent for shipments by mail valued at more
than $500 and all other shipments by any other means valued at more than
$2,500. An SED must be prepared for all IVL shipments regardless of value.
Filing a Shipper's Export Declaration is easier and less costly than ever
before thanks to the Census Bureau's and US Customs Service's Automated
Export System which automates the export process. Small exporters will
benefit from substantially reducing processing costs by filing the Shipper's
Export Declaration electronically and eliminating the handling of paper.
For more information call (202) 927-0280; fax at (202) 927-3555; or visit
the Internet site at www.customs.ustreas.gov/AES
Bill of Lading.
These documents are contracts between the owner of the goods and the carrier.
There are two types: a straight bill of lading, which is non-negotiable,
and the negotiable/shipper's order bill of lading, which can be bought,
sold, or traded while goods are in transit and is used for letter-of-credit
transactions. The customer usually needs a copy as proof of ownership
to take possession of the goods.
Certificate of
Origin. A certificate of origin is a document signed by the exporter
and witnessed by a semi-official agency, like a Chamber of Commerce, required
by certain foreign countries for tariff purposes. It indicates that the
country originating the specified goods is indeed the exporter's country.
An exporter can obtain a certificate of origin from several sources including
a local US Department of Commerce office, a freight forwarder, or a local
Chamber of Commerce. Chambers of Commerce are often viewed by many foreign
companies as having more authority and function than is actually the case
in the United States. A freight forwarder or foreign consulate office
of that particular country can provide advice on the actual need for a
certificate of origin.There is no uniform rule as to when a certificate
of origin is required. The requirement is left to the discretion of each
country. Proof of origin is critically important to those countries in
which the US has a reciprocal trade agreement, especially under the North
American Free Trade Agreement (NAFTA). Exporters must prove that the goods
they are exporting are entitled to receive the preferential tariff reduction
or elimination. In brief, goods produced entirely in the United States
qualify for NAFTA tariff treatment. In some cases, at least fifty percent
of the product must be produced in the United States. Goods processed
outside of the US, Mexico, or Canada regardless of the original content
do not qualify for NAFTA tariff treatment.
Commercial Invoice.
As in a domestic transaction, the commercial invoice is a bill for the
goods from the buyer to the seller. A commercial invoice should include
a description of the goods, addresses of the shipper and seller, and the
delivery and payment terms. The buyer needs the invoice to prove ownership
and arrange payment. Some government agencies use the invoice to access
customs duties.
Consular Invoice.
Consular invoices are required by certain nations and used to identify
goods. The invoice is purchased from the consulate of the country into
which the goods are being shipped and must be prepared in the language
of that country. Call the nearest major city in your region and request
the number of the country's consulate office located in that city.
Destination Control
Statement. This statement appears on the commercial invoice, ocean
or airway bill of lading, and SED to notify the carrier and all foreign
parties that the item may be exported only to certain destinations.
Export Packing
List. An export packing list itemizes the material in each individual
package, and shows the individual net, legal, tare and gross weights in
US and metric values. Package markings should be shown along with the
shipper's and buyer's references. The packing list is attached to the
outside of the package in a clearly marked waterproof envelope. The list
can be used to determine the total shipment weight and whether the correct
cargo is being shipped. Customs officials may use it to check the cargo
at inspection points.
Inspection Certificate.
Some purchasers and countries may require a certificate of inspection
attesting to the specifications of the goods shipped, usually performed
by a third party and obtained from independent testing organizations.
Insurance Certificate.
If the seller provides insurance, the insurance certificate states the
type and amount of coverage. (Tradenet, Forms and Documentation FAQ's.
http://export.2rad.net/faq.htm)
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Q:
Are Special Certificates Required To Export Agricultural Goods?
A: The federal government
offers highly specialized information and services for businesses dealing
in agricultural products through the US Department of Agriculture Foreign
Agricultural Service (FAS). The FAS is a full-service agency offering
the exporter everything from marketing assistance and information to technical
assistance to export programs. The AgExport Action Kit provides detailed
information on all services available and the appropriate contacts. For
your free kit contact: AgExport Connection, US Department of Agriculture-FAS,
Washington, DC 20250-1000; (202) 720-7103; fax: (202) 690-4374.
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Q:
Where Can I Obtain Export Processing Forms?
A: Most of the forms
necessary for export are available from a Government Printing Office store
or are available for order from business supply stores and mail order
services or a freight forwarder will provide the forms. Most of the forms
are regulated by the US Department of Commerce. If you are having difficulty
locating forms, call the US Department of Commerce's Trade Information
Center at (800) USA-TRADE to obtain copies of necessary forms. Or contact
the National Council on International Trade Documentation (NCITD) at (212)
925-1400 for several low-cost publications that contain information on
specific documentation commonly used in international trade. NCITD provides
a free listing of its publications.
Because of the vast
amount of documentation that can be required, it is best to enlist the
expertise of a freight forwarder whose job is to know documentation required
with exporting. The necessary documentation varies from order to order
and country to country and it must be precise. Slight discrepancies may
prevent the merchandise from being exported or precipitate it being seized
by the United States or a foreign government. Collection documents are
subject to a time limit and may not be honored if out of date. With so
much at stake, an export manager can see why it is best to consult a freight
forwarder to help insure accuracy. After gaining some export experience,
management may be able to do it by themselves, but they should learn from
a freight forwarder or a trade specialist until comfortable doing it solo.
(Tradenet, Forms and Documentation FAQ's. http://export.2rad.net/faq.htm)
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Q:
What are INCOTERMS and how are they used in exporting?
A: INCOTERMS is a
codification of the terms used worldwide in foreign trade quotations and
contracts. They clarify the responsibilities of the buyer and seller in
international commerce. Examples of INCOTERMS are EXW (Ex Works), FCA
(Free Carrier), FAS (Free Alongside Ship), FOB (Free On Board Vessel),
CFR (Cost & Freight), and CIF (Cost, Insurance & Freight).
INCOTERMS were last
revised on July 1, 1990 by the International Chamber of Commerce. They
provide a new set of comprehensive rules for export transactions that
are more compatible with recent developments in worldwide electronic data
exchange (EDI). They accommodate international cargo shipped in containers,
multi-modal transport and roll-on/roll-off traffic. If you are or plan
to become an active exporter, we recommend that you purchase the publication
"Incoterms 1990 (The telephone number is 212-206-1150.) They also
have an internet site located at http://www.iccwbo.org. (The Export Institute,
Ask the Experts, Category Six.)
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Q:
What are Schedule B codes?
A: Schedule B is a
U.S. adaptation of the international Harmonized System (see What are Harmonized
System codes?). Schedule B codes are used to classify products for export,
and is administered by the US Census Bureau. (Tradenet, Export FAQ's.)
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Q:
What are Harmonized Tariff Schedule (HTS) codes?
A: The Harmonized
Tariff Schedule is another (see "What are Schedule B codes?")
US adaptation of the international Harmonized System (see What are Harmonized
System (HSC) codes?). Harmonized Tariff Schedule codes are used to classify
products for import, and is administered by the US International Trade
Commission (Office of Tariff Affairs and Trade Agreements). (Tradenet,
Export FAQ's.)
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Q:
What are Harmonized System (HSC) codes?
A: The Harmonized
System is an international method of classifying products for trading
purposes. Under the Harmonized System, products are assigned a six-digit
identifying number. The first two digits of this number identify the chapter
into which the product falls. The second two digits identify the heading
within that chapter. The final two digits identify a specific class of
products. Each country may further expand the Harmonized System by adding
additional digits (see "What are Harmonized Tariff Schedule (HTS)
codes?"). This classification is used by Customs Officials around
the world to determine the duties, taxes and regulations that apply to
the product. (Tradenet, Export FAQ's.)
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Q:
How can I get a Harmonized System or Schedule B code for my product?
A: To obtain a Harmonized
System code for your product, call the US Census Bureau's Foreign Trade
Division at (301) 457-1084.
The Schedule B can
also be purchased on CD-ROM for $20 by calling (301) 457-4100. You can
purchase a print version of the Schedule B (Stock # 903-009-00000-4) from
the Government Printing Office (GPO) for $105. Contact the GPO at (202)
512-1800 to order over the phone. (Tradenet, Export FAQ's.)
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Q:
How do I get an export license and do I need an export license to ship
my product to a particular market?
A: The Bureau of Export
Administration administers export licenses and regulations. Most goods
can be cleared by simply entering "NLR" (no license required)
on the Shipper's Export Declaration. A written or validated license is
necessary when exporting certain restricted commodities (e.g., high technology,
defense-related, or dual-use items) or when exporting to countries under
a US trade embargo or other trade restrictions (e.g., Libya or Cuba.)
Exporters can call the Bureau of Export Administration (BXA) to determine
if they need a validated or written license. BXA can be reached by phone
at (202) 482- 4811 on the East Coast, or (714) 660-0144 on the West Coast.
(Tradenet, Export FAQ's.)
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Q:
How do you choose a good freight forwarder?
A: Exporters fail
because they are unable to deliver their products in a timely and reliable
manner. A reputation for late delivery is easy to acquire but difficult
to correct. We recommend that you consider the following factors before
selecting your freight forwarder:
(1) Location and operating
hours of their local office. You may have to visit their office often.
If they are located nearby, you will save on communication and travel
expenses. Make certain that they will be accessible evenings and weekends
in case of emergencies.
(2) Location of branch
offices. This will be especially important if you have to locate an export
shipment quickly. If they have worldwide branches and affiliates, they
will be able to trace your misrouted or delayed shipments from both ends
of the transaction without involving third parties.
(3) Are they a "full
service" forwarder? Can they handle ocean shipments, air shipments
and container consolidation to reduce transport costs? Could they handle
importing? Check out their references to make certain they can process
your shipping documents correctly and efficiently?
(The Export Institute,
Ask the Experts, Category Six.)
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Q:
What services can I expect from my freight forwarder?
A: A freight forwarder
will make arrangements for and expedite shipments to overseas destinations.
Your freight forwarder should be able to do the following on your behalf:
(1) Act as your agent
per your power of attorney to transport your products to the foreign port
of import and, if requested by you, directly to the importer's location
in the foreign market.
(2) Prepare and examine
shipping documents for accuracy, completeness and compliance with the
legal requirements of importing countries.
(3) Distribute international
shipping documents and, if requested by you, submit them directly to your
bank for collection and deposit to your account.
(4) Act as your "Customhouse
Broker" per your power of attorney and arrange for clearance of your
import shipments through the designated port of entry.
(The Export Institute,
Ask the Experts, Category Six.)
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Q:
Who pays for legal and banking fees in an export transaction?
A: The final customer
in the foreign market ultimately pays legal and banking fees. However,
they are usually handled differently in the invoicing process.
(1) Legal fees are
estimated in advance by the exporter and are included in the purchase
price. They may include legal counsel to review contracts, to ensure compliance
with export licensing requirements, and to protect the exporter against
violation of intellectual property rights. Legal fees are paid by the
seller and the buyer does not know the estimated amount for these fees.
(2) Banking fees are
usually known in advance of the sale and are added to the price quotation/proforma
invoice to the buyer as a separate item. They are usually for processing
of shipping and financial documents. Banks act as financial intermediaries
between the buyer and seller in export transactions. The buyer knows the
amount of the banking fees prior to placing the order. (The Export Institute,
Ask the Experts, Category Five.)
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Q:
What is a Customs Broker?
A: A Customs Broker
acts as an agent for U.S. Customs for all companies importing goods into
the United States. Customs Brokers provide all necessary paperwork to
the appropriate government agencies for clearance into country, they classify
the goods to determine the most favorable duty rates, and they consult
with importers on various international trade issues. Whether you import
or export goods regularly or occasionally, your Customs Broker should
be a valuable partner on your business...saving you time and money.
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Q:
What are the charges for using a Customs Broker?
A: A Customs Broker
charges a "brokerage fee" for each shipment. This is generally
based on the value of the shipment in U.S. dollars, but the actual amount
can vary depending on the type of goods and so forth.
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Q:
How do I pay Duties and Taxes?
A: Once you have an
account with your Customs Broker, they will pay the appropriate fees on
your behalf, all monies owing for duties and taxes, and then they will
send you an invoice. You usually have a period of 15 days to remit.
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Q:
What can I import into the United States?
A: Certain products
and goods are restricted by quotas and legislation. These restrictions
are on a product by product basis.
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Q:
What is NAFTA?
A: On December 17,
1992, Prime Minister Brian Mulroney in Ottawa, President Carlos Salinas
de Gortari in Mexico City, and President George Bush in Washington, D.C.
signed the North American Free Trade Agreement (NAFTA). These three ceremonies
marked the end of a process that begun on February 5, 1991 when the three
leaders announced they would negotiate the NAFTA.
As a result of the
successful conclusion of these negotiations the NAFTA entered into force
on January 1, 1994. One of the main results of the Agreement is the elimination
of tariffs between Canada, Mexico, and the United States on nearly all
qualifying goods by the year 2003. Chapter 5 of the Agreement attempts
to ensure that customs procedures will facilitate trade flows as much
as possible.
Objectives:
The objectives of this Agreement, as elaborated more specifically
through its principles and rules, including national treatment, most-favored-nation
treatment and transparency, are to:
- eliminate barriers
to trade in, and facilitate the cross-border movement of, goods and
services between the territories of the Parties;
- promote conditions
of fair competition in the free trade area;
- increase substantially
investment opportunities in the territories of the Parties;
- provide adequate
and effective protection and enforcement of intellectual property rights
in each Party's territory;
- create effective
procedures for the implementation and application of this Agreement,
for its joint administration and for the resolution of disputes;
- establish a framework
for further trilateral, regional and multilateral cooperation to expand
and enhance the benefits of this Agreement.
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Q:
What is PROSEC?
A: The Program of
Sectoral Promotion (PROSEC) is a program designed by Mexico to address
the negative impact of NAFTA Article 303 on manufacturers in Mexico. The
program is open to exporters as well as producers for the National market
and the lowering of duties is not conditioned on export. It effectively
lowers duties to 0-5% on materials and machinery imported by companies
authorized for this program. The program is available in more than 20
industrial sectors. The program is designed to cover those imported materials,
components, and equipment that cannot be adequately sourced from NAFTA
member countries. For obvious reasons, the basis for including an industrial
sector in this program is subjective and political. It could adversely
affect the revenue from import duties, because the program is open to
procedures for the National market.
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Q.
What is Article 303?
A: As of January 1,
2001, when NAFTA Article 303 went into effect - no NAFTA member country
can waive, reduce, or refund duties conditiond on export to another NAFTA
member country. This effectively eliminates the temporary imports for
eventual export that have characterized the Maquiladora industry. The
industry has been aware of this for seven years, but its implementation
has caused difficulties and uncertainty.
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Q:
What is the difference between the PROSEC Decree, the Maquiladora Decree,
and the PITEX Decree?
A: The PROSEC Decree
unlike the Maquiladora and PITEX decrees was designed based on the NAFTA.
Any manufacturer authorized for an export program can also take advantage
of PROSEC. PROSEC was created to offset the negative effects of Article
303.
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