Documents required to export goods from Pakistan

Introduction

The export process is made more complex by the wide variety of documents that the
exporter needs to complete to ensure that the order reaches its destination quickly,
safetly and without problems. These documents range include those required by the
Pakistan authorities (such as bills of entry, foreign exchange documents, export permits,
etc.), those required by the importer (such as the proforma and commercial invoices,
certifcates of origin and health, and pre-shipment inspection documents), those required
for payment (such as the Pakistan state Bank forms, the letter of credit and the bill of
lading) and finally, those required for transportation (such as the bill of lading, the
airwaybill or the freight transit order). Documentation requirements for export shipments
also vary widely according to the country of destination and the type of product being
shipped. Most exporters rely on an international freight forwarder to handle the export
documentation because of the multitude of documentary requirements involved in
physically exporting goods and it is strongly recommended that you also make use of a
freight forwarder to help you work your way through the maze of documentation. Click
here for a list of freight forwarders that you can approach to help you.

The benefits of documentation

Documentation is a key means of conveying information from one person or company to

another, and also serves as permanent proof of tasks and actions undertaken
throughout the export process. Documentation is not only required for your own
business purposes and that of your business partner, but also to satisfy the customs
authorities in both countries and to facilite the transportation of and payment for goods
sold.

One value of documentation is that copies can be made and shared with the parties
involved in the export process (although you should always ensure that you make
identical copies from an agreed-upon master - it is no use making changes without the
other party's agreement and then presenting these as the "latest" copies). If the
documentation is complete, accurate, agreed upon by the parties involved and signed
by each of these of these parties (or their representatives), the document will represent
a legally binding document.

Function of export documentation

Export documentation may serve any or all of the following functions:

 An attestation of facts, such as a certificate of origin

 Evidence of of the terms and conditions of a contract if carriage, such as in the
case of an airwaybill
 Evidence of ownership or title to goods, such as in the case of a bill of lading
  A promissory note; that is, a promise to pay
 A demand for payment, as with a bill of exchange
 A decalaration of liability, such as with a customs bill of entry
 A receipt for goods received.

Broad categories of export documentation

There are five broad categories of documentation you will encounter when exporting.
These are:

1. Documents involving the importer

• The Performa invoice

• The export contract
• The commercial invoice
• The packing list
• Letter of credit
• Certificate of origin
• Certificates of health
• Fumigation certificate
• Pre-shipment inspection certificate
• Transport documents

2. Documents required exporting goods from Pakistan

• Exporter registration form

• Letter of credit
• Commercial invoice
• Bill of entry export
• Form F178
• Form NEP (no foreign exchange proceeds)
• Form E (repatriation of foreign exchange earnings)
• Export permit

3. Documents required for transportation

• Bill of lading
• Air waybill
• Freight transit order
• Road consignment note
• Export cargo shipping instruction

4. Documents required for payment

• Commercial invoice
• Letter of credit
• Transport documents
5. Insurance documents

• Marine insurance

Documents required by the importer

Documents required by the importer

The export process is encumbered by the amount of documentation the exporter faces
around every turn. These documents can be broken down into four groups; (1) those
required by the importer (and for customs clearing in the target market), (2) those
required to export the goods from Pakistan, (3) those required for payment and (4)
those required to transport the goods (i.e. the transport documents). In many instances,
the documents may be the same (for example, the commercial invoice may be required
in more than one instance as may the bill of lading/airway bill). In this section, we deal
with the documents required by the importer and for clearing the goods through
customs in the target market.

• Documents involving the importer

• The quotation
• The proforma invoice
• The export contract
• The commercial invoice
• The packing list
• Letter of credit
• Certificates of origin/health/fumigation/pre-shipment inspection
• Transport documents
• Documents required to export goods from Pakistan
• Documents required for transportation
• Documents required for payment
• Marine Insurance

What is the difference between a proforma invoice and a quotation?

In reality, there is very little difference in function between the two and the proforma
invoice is really a quotation in invoice form; in other words. the difference really comes
about in terms of the structure and layout of the proforma invoice/quotation. A quotation
appears more like a business letter describing a written offer, while a proforma invoice
appears exactly the same as a invoice (except with the words "proforma invoice" written
on the document). The proforma invoice essentially serves as a 'quotation' that sets the
road to further negotiations. Some exporters choose to prepare an 'official' quotation,
while others prefer to use the proforma invoice as their quotation. In fact, the quotation
can contain the same information as a proforma invoice.
The role of the proforma invoice in the negoiation process

Assuming that an importer e-mails you - an exporter - asking you to submit a proforma
invoice (or a quotation) for the supply of 100 pumps according to a set standard. You
would then prepare and submit a proforma invoice to the potential importer outlining a
desciption of the product, what the price is, what the delivery terms will be, what the
payment terms will be, as well as any other information that may be pertinent to the
sale. The importer will most likely reply to your proforma invoice requesting/negotiating
different requirements such as a lower price, longer terms of payment, different
methods of payment, a different delivery schedule and may even request changes to
the product specifications. Based on these requests from the importer, you may choose
to comply or to refer back to the importer (probably via telephone, fax or e-mail) to
discuss or negotiate compromises to these requirements. When you and the importer
finally come to an agreement, a second (sometimes even third or fourth) proforma
invoice will be exchanged between the two parties. This final proforma invoice -
accepted by the importer - sets the stage for the further processing of the order. You
should be aware that the importer may use the proforma invoice to request foreign
exchange within his/her country if his/her currency is not freely convertible. The
proforma-invoice can also help the importer apply for a letter of credit at his/her bank.

In other instances where the exporter and importer have met before and have already
discussed and thrashed out an agreement perhaps in a face-to-face meeting, only one
final proforma invoice is necessary to confirm that the two parties are indeed in
agreement. Every proforma invoice should be as precise and as explicit as possible to
ensure that both parties understand each other. If the importer is satisfied with this final
proforma invoice, he/she will request their bank to issue an L/C on the strength of
information stipulated in the proforma invoice. For this reason, it is essential that the
proforma invoice be extremely accurate, clear and concise. Any errors or
misunderstandings will be transferred to the L/C and will cause problems, frustrations
and delays down the line. What is more, the proforma invoice is also important to the
importer for the purpose of obtaining an import permit and foreign exchange allocation
within his country. At the same time, the exporter may use the proforma invoice and
acceptance of the order from the importer to obtain funding to pay for the manufacturer
of the goods concerned.

Details pertinent to the proforma invoice

The following details are pertinent to the setting up of the proforma invoice and need
careful attention:

 A complete and clear description of the goods in question

 The quantity of goods in question including the number and kinds of packaging
involved
 The total price of the goods (and unit price where applicable)
 The currency in which the goods will be sold (e.g. US dollars or rands)
 The likely delivery schedule and delivery terms
  The physical addresses of both the exporter (referred to as the shipper) and
importer (sometimes referred to as the consignee)
 The payment methods, for example cash in advance or L/C
 The payment terms, for example 30 days on sight
 The Incoterm to be used
 Who is responsible for the banking fees and other related costs (insurance and
freight costs are covered by the incoterm in question)
 The exporter's banking details
 The country of origin of the goods
 The expected country of final destination
 Any freight details such as the port of loading and discharge
 Any trasshioment requirements
 Any other information relevant to the order

An export contract (also referred to as a sales contract) is essentially an agreement

between you and a foreign importer to do business. The export contract can take many
different forms. For example:

1. A telephonic offer to sell, covering essential issues such as the product details,
quantities offered, price per unit, delivery particulars and payment terms, made
by the exporter to the foreign buyer (or an offer to buy from the importer to the
exporter) and confirmed by the second party is one example of a legitimate
export contract. Such an agreement may or may not be confirmed in writing.
Telephonic contracts are somewhat risky and are not that common in
international trade. They may occur, however, between long-standing trade
partners or between reputable firms dealing in commodities that are subject to
rapid price fluctuations.
2. Similarly, any written offer (quotation), either contained in a formal written
contract and posted or couriered to the importer, or sent by e-mail, fax, telex or
cable to the importer, and confirmed (usually also in writing) by the importer, is
another form of legitimate contract. Again this could also be a written offer to buy,
initiated by the importer, which is then confirmed by the exporter, although this is
seldom the way it works unless it is a long-standing customer.
3. A proforma invoice sent by fax, e-mail, courier or post to the importer (usually on
his/her request) and confirmed by the importer, is another common form of
export contract. The confirmation could be as simple as the importer writing "I
agree to these terms and conditions" on the proforma invoice and signing it or
perhaps the importer may generate a separate, signed document agreeing to the
proforma invoice which is then attached as reference. Alternatively, the importer
may indicate that (s)he is happy with the proforma invoice, but may request a
formal contract containing the terms and conditions stipulated in the proforma
invoice to be drawn up and signed by both parties.

The first offer is seldom accepted

It is seldom the case that the importer will accept the first offer made by the exporter
and normally this first offer will be followed by a series of counter-offers sent back and
forth between the exporter and the importer until each party is satisfied with the terms
and conditions outlined in the final offer and agree to abide by it.

You need to be clear and precise

Whatever form the export contract takes, you need to be careful in formulating this
document as they are drawn up between companies from countries which may have
very different legal systems, regulations and attitudes to doing business. These
differences may cause disputes even when trading with other fairly developed nations.
The challenge is to make your export contracts as clear, precise and comprehensive as
is possible.

The provisions in the contract

The basic provision of any contract for the sale of goods is that you, the seller (in this
case, the exporter), will transfer ownership of the goods to your buyer (the importer) in
exchange for payment (which, in international trade, made be made in a foreign
currency). The export contract needs to specify the terms and conditions for doing this,
and should at least describe:

 Who is party to the contract

 The validity of the contracts
 The goods being sold (usually described in some detail)
 The purchase price of the goods and the currency in question
 The terms of payment
 Inspection of the goods if required
 Where the goods should be delivered
 At what point transfer of title to the goods takes place
 Any warranty and/or maintenance conditions associated with the sale
 Who is responsible for obtaining import or export licenses, if these are required
 What supporting documentation and/or certificates are required
 Who is responsible for paying import duties and other taxes
 Any contract performance security requirements, such as bank letters of
guarantee
 What will happen if either of the parties defaults or cancels
 The provisions for independent mediation or arbitration to resolve disputes, and
whether this would take place in Pakistan or the importer's country, or elsewhere
 The contract's completion date

The role of Incoterms

To provide a common terminology for international shipping and minimize

misunderstandings over contract terms, the International Chamber of Commerce has
developed a set of terms known as Incoterms. These are the basic terms used in
international sales contracts, and you can learn more about them at the Incoterms 2000
Web site or in the Glossary of International Trade Terms in Appendix A.

Intellectual Property (IP)licensing contracts are particularly tricky

If the contract involves the licensing of proprietary information or technology, be very

sure that it's precise about the licensee's rights. Vagueness about these rights can
create serious problems and can lead to the loss of your intellectual property. If the
licensee uses your technology to create other technologies, for example, this can
severely undermine the value of your asset.

Make sure the contract is signed by all contracting parties

Also - and this would seem obvious, but it's sometimes overlooked - be sure that all
parties to the contract have signed it. For instance, if you're working through a
representative, be sure that the actual buyer signs the contract. The representative's
signature is not necessarily enough, because without the buyer's signature, there is no
written evidence that the buyer owes you money. Last but certainly not least, have the
contract examined by a lawyer familiar with the export market

After the pro-forma invoice is accepted, the exporter must prepare a commercial
invoice. The commercial invoice is required by both the exporter (to obtain the
necessary export documents to enable the consignment to be exported, to prove
ownership and to enable payment) and importer (who requires the commercial invoice
to facilitate the import of the goods in question). In exporting, the commercial invoice is
considered a very important document as it serves as the starting document that
underpins an export transaction.

The commercial invoice is essentially a bill (i.e. invoice) from the seller (the exporter) to
the buyer (the importer) describing the goods to be sold and the terms involved. The
commercial invoice will normally be presented on the exporter's letterhead and will be
addressed to the importer. It should contain full details of the consignment, including
price and other related costs, in order to facilitate customs clearance. It must be signed
and dated. Freight and insurance, when included in the selling price, should be itemised
separately as these charges are not subject to duty in certain countries. There is usually
very little, if any, difference between the final proforma invoice accepted by the importer
and the commercial invoice, except that the one is titled "Proforma Invoice", while the
other is titled "Commercial Invoice".

Customs' and consular invoices

Some countries, however, may require the commercial invoice to be completed on their
own specified forms - such commercial invoices are known as "Customs' invoices" and
may be provided in lieu of or in addition to the standard commercial invoices referred to
above. In addition, a "consular invoice" is required by certain countries. The consular
invoice must be prepared in the language of the destination country and can be
obtained from the country's consulate, and often must be "consularised" (i.e. stamped
by an authorised Consul official in the exporting country).

From the proforma to the commercial invoice

Although the proforma invoice comes before the commercial invoice, the proforma
invoice really only serves as a means of negotiating the actual contract. We said
previously that the proforma invoice is the 'offer' put to the importer by the exporter. The
importer may accept the terms specified in the proforma invoice, but a more likely
scenario is that the importer will negotiate some of these terms with the exporter. There
may be some backward and forward communication between the exporter and importer
before the importer finally agrees to the transaction. Once the importer indicates that
(s)he is happy with the terms of the contract as outlined in the (final) proforma invoice,
the exporter will then be requested to provide the importer with a commercial invoice.
The commercial invoice should reflect the final (agreed-upon) profroma invoice exactly -
any deviances will result in problems executing the transaction and/or receiving
payment.

Based on the terms specified in this commercial invoice, the importer will instruct his/her
bank (referred to as the issuing bank) to issue a letter of credit. This letter of credit (or
the documentation associated with any other form of payment) will also need to reflect
the terms specified in the commercial invoice exactly, while all subsequent
documentation must reflect the terms of the L/C; there can be no exceptions. From this
explanation, it is clear that the commercial invoice plays a central role in an export
transaction.

What should appear in the commercial invoice

The following details need to appear in the commercial invoice:

• The name of the shipper/exporter and their contact details, including physical
address
• The name of the importer/consignee and their contact details, including
physical address
• An order number of reference to correspondence between the supplier and
importer
• A complete and clear description of the goods in question (including
brandmarks and the HS number)
• The packing details unless provided in a separate packing list
• The quantity of goods in question including the number and kinds of
packaging involved
• The external dimensions, cubic capacity, weight, numbers and contents of
each package shipped.
 • The total price of the goods (and unit price where applicable) usually quotes
as a CIF/FOB price
• The currency in which the goods will be sold (e.g. US dollars or rands)
• The type and amount of discount given
• The likely delivery schedule and delivery terms
• The payment methods, for example cash in advance or L/C
• The payment terms, for example 30 days on sight
• The Incoterm to be used
• Who is responsible for the banking fees and other related costs (insurance
and freight costs are covered by the incoterm in question)
• What the freight and insurance charges are
• The exporter's banking details
• A declaration of the country of origin of the goods
• The expected country of final destination
• Any freight details such as the port of loading and discharge
• Any trasshipment requirements
• Any other information relevant to the order

Commercial invoices are the basis for assessing duties and statistics

Commercial invoices are often used by governments to determine the true value of
goods when assessing customs duties and recording trade statistics. Governments that
use the commercial invoice to control imports, will often specify its form, content,
number of copies, language to be used, and other characteristics.

When you prepare your goods for shipment, you will be required to prepare a detailed
export packing list. This is a formal document that itemises quite a number of details
about the cargo such as:

 Your name and contact details

 The importer's/consignee's/buyer's name, address and contact details
 The gross, tare and net weights of the cargo
 The nature, quality and specifications of the product being shipped
 The type of package (such as pallet, box, crate, drum, carton, etc.)
 The measurements/dimensions of each package
 The number of pallets/boxes/crates/drums, etc.
 The contents of each pallet or box (or other container)
 The package markings, if any, as well as shipper's and buyer's reference
numbers

It is also important that the details on the packing list (such as shipper's/importer's
details, number of items involved, etc.), match what is stipulated on the commercial
invoice and bill of lading/airway bill. You can imagine that if there is a mismatch
between the packing list and the other transport/export documents that this may lead to
closer scrutiny of the cargo and may ultimately result in delays in the cargo arriving at its
destination! Note that pricing information is not required on the packing list

The purpose of the packing list

The packing list should be attached to the outside of a package in a waterproof

envelope or plastic sheath marked "Packing list enclosed". The list is used by the
shipper or forwarding agent to determine (1) the total shipment weight and volume and
(2) whether the correct cargo is being shipped. In addition, customs officials (both local
and foreign) may use the list to check the cargo. Packing lists come in fairly standard
forms and can be obtained from your freight forwarder.

Don't make mistakes with the packing list

It is essential that the packing list agree exactly with all the terms and conditions of the
export sale. It is important for you to realise that any mistake on the packing list may
cause a delay in clearance at the port of destination. Customs Authorities in the target
country have the right to delay the clearance of the shipment until the importer provides
a packing list reflecting the real contents of the container (should your packing list be
incomplete or incorrect). If all the information required for the packing list is already
stated in the commercial invoice, then the packing list may be unnecessary. Our
recommedndation is to provide it anyway - you don't want the consigment delayed
simply becuase a customs official demands to see a packing list (you can never provide
too much information).

Letter of credit

In this section we discuss the following topics and terminology within the area of
documentary credits:

• Sight credits
• Usance credits
• Transferable credits
• Revolving credits
• Transferable credits
• Standby credits
Sight credits

This is an easy enough term to explain. A sight credit or L/C is one which paid upon
presentation of the required documentation (as stipulated in the original L/C) to the
issuing or confirming bank. As exporter, you need to be careful however, as some L/Cs
state that payment will only be made at a specified branch counter of the issuing or
confirming bank (and won't necessarily be paid or transferred directly into your account).
The process of having to go to a particular branch and receive payment and then to
transfer this payment into your account will slow down the payment process and may
add further costs to the overall process. Thus, when working with sight L/Cs (or any
L/Cs for that matter) make sure where payment will be made.

Usance credits

An L/C can specify any credit period that you have negotiated with the importer. A letter
of credit that that incorporates a payment after a given term (e.g. 60 days) is known as a
usance credit (also referred to as a term or acceptance credit). The correct phrase is hat
the L/C is at usance, meaning that it will come into effect at some future date (also
referred to as maturity).

You should note that the maturity date may also have further stipulations associated
with it; for example:

 90 days sight
 120 days from Bill of Lading (B/L) date
 60 days and upon issuing of a FDA (US Food and Drug Administration)
clearance

Some of these provisos can have a significant impact on your receiving payment and
you should make yourself fully aware of any such provisos to your L/C. A usance/term
credit will require you, as exporter, to finance the gap between delivery and payment.

Transferable credits

An irrevocable L/C may also be transferable. In the case of a transferable L/C, the
exporter can transfer all or part of his/her rights to another party. Transferable letters of
credit are often used when the exporter is the importer's agent or a middleperson (i.e.
export agent) between supplier and importer, and not the actual supplier of
merchandise. With a transferable letter of credit, the exporter uses the credit standing of
the issuing bank and avoids having to borrow or use his own funds to buy goods from a
supplier. Hence, it is a viable pre-export financing vehicle. Before transfer can be made,
the exporter must contact, in writing, the bank handling the disbursement of funds - the
transferring bank. Transferable L/Cs can only be transferred based on the terms and
conditions specified in the original credit, with certain exceptions. Therefore, it may be
difficult to achieve flexibility and confidentiality with this finance method.
The transferring bank, whether it has confirmed the letter of credit or not, is only
obligated to make the transfer to the extent and in the manner expressly specified in the
L/C. Transferable L/Cs involve specific risks. When a bank opens a transferable letter of
credit for a buyer, neither party can be certain of who will be the ultimate supplier. Both
parties must rely upon the importer's assessment of the exporter's reputation and ability
to perform. To reduce overall risk and prevent the shipment of substandard goods, an
independent certificate of inspection may be required in the documentation.

For simplicity's sake, many banks prefer single transfer and discourage multiple
transfers, but will do multiple transfers if conditions are right. Partial transfers can also
be made to one or several suppliers if the terms of the original L/C allow for partial
shipments. The processing of this type of letter of credit can become complicated and
tricky, requiring logistics coordination and the highest level of precision. Incomplete
and/or ambiguous information on the transferable letter of credit almost always leads to
problems. Furthermore, the beneficiary of the transferable letter of credit must be
available throughout the entire negotiation process to assist the transferring bank.

Revolving credits

The term "revolving" is used to describe a letter of credit, which, incorporates a

condition whereby the credit amount is to be renewed or reinstated automatically
without the need for a specific amendments to the credit. This type of credit is used
when regular trade is conducted between an exporter and an overseas buyer. A
revolving credit can be irrevocable or confirmed. Although a credit may, in theory,
revolve in relation to amount, in practice this is rare, as it would mean that there might
be no limit to the number of times a specific amount could be drawn. A credit, which
revolves in relation to time, is a much more common form of a revolving credit. For
example, a revolving credit could be made available for an amount of US$ 10 000 per
month (irrespective of whether any sum was drawn during the previous month) with an
overall validity of six months. A revolving credit may be:

 Cumulative, i.e. any sum not utilised during the first period is carried over and
may be utilised in the subsequent period.
 Non-cumulative i.e. any sum not utilised during the first period ceases to be
available in subsequent periods.

Back-to-back credits

Back-to-back L/Cs are another common occurrence in the world of international trade.
When an exporter, who is not a manufacturer, but obtains goods from a supplier by
acting as an export agent for the supplier for example, has received an L/C from an
importer, the exporter, in turn, may request his bank to open a L/C in favour of his
supplier on the strength of the existing L/C. These two credits are said to be "back-to-
back", that is to say the one is issued on the security of the other. A bank will only
consider opening a second credit if the same goods are involved in both credits. In
terms of the back-to-back L/C, the exporter is both the beneficiary/exporter of the first
credit and the applicant/buyer for the second credit.

Standby credits

A standby L/C is one which is issued in favour of the exporter for the purpose of
"backing-up" certain specified obligations of the importer. A standby letter of credit
requires the exporter's presentation of documents which indicate that importer has not
met the obligations which the standby letter of credit backs-up. A standby letter of credit,
therefore, is not intended to be drawn upon by the standby letter of credit beneficiary
unless the standby letter of credit applicant does not meet its obligations as specified by
the standby letter of credit.

Pre-shipment inspection certificates

It is not uncommon for importers to want to confirm that the to-be-exported

goods meet their requirements. This is particularly so in instances where it is
essential that the goods meet certain standards. These same importers
unfortunately cannot always fly to all the countries from where they are
buying their products and for this reason, they may:

a. Require that the shipment be inspected just before loading by an

independent third-party arranged and generally paid for by the
importer. The exporter will need to indicate an approximate time and
place for this inspection to take place.
b. Ask the exporter to obtain the pre-shipment inspection certificate from
an independent third-party inspection firm which is then forwarded to
the importer. In this instance either the exporter or the importer may
pay for the inspection, depending what was negotiated in the contract.

The independent contractor - usually a recognised firm in this field - will

undertake a detailed inspection of equipment or materials after manufacture,
but prior to shipment. The scope of the inspection includes quantity and
quality, packing and marking and supervision of loading. A Certificate of
Inspection can be provided against a Letter of Credit and may be authorised
by a Chamber of Commerce. Occasionally, the importer may ask a trusted
individual to undertake the inspection on their behalf.

Furthermore, some countries may require certification for selected products

(this is independently from the importer) and in these instances a pre-
shipment inspection is a necessary step to receive an import certificate for the
shipment. Without this certificate the shipment will not be able to clear
customs in the country of destination.
 Transport Documents

 Bill of lading
 Air waybill
 Freight transit order
 Road consignment note
 Export cargo shipping instruction