International Trade Practice

Chapter 3
The Process of
International Trade
3.1 International trade-related institutions and
industries (Taiwan)
1. Bureau of Foreign Trade, Ministry of Economic Affairs
經濟部國貿局
2. Bureau of Standards, Metrology and Inspection, Ministry of
Economic Affairs 經濟部標準檢驗局(BSMI)
3. Department of Foreign Exchange, Central Bank
中央銀行(CBC) 外匯局(FED)
4. Customs Administration, Ministry of Finance
財政部(MOF) 關稅署
5. Customs 海關(Custom House)
6. Appointed bank指定銀行

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7. Bureau of Animal and Plant Health Inspection and Quarantine,
Council of Agriculture, Executive Yuann
行政院農委員動植物防疫檢疫局(BAPHIQ)
8. Taiwan External Trade Development Council
中華民國對外貿易發展協會 (TAITRA)
9. Carrier 運送人
10. Insurer保險公司
11. Export-Import Bank of the Republic of China
中國輸出入銀行 (Eximbank)
12. Customs Broker報關行
13. Surveyor公證行
14. Industrial union, chamber of commerce 產業公(工)會、商會
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3.2 The Processes of Export & Importer
 Export process
 The flowchart involves the flow of goods from the seller

to the buyer, and the flow of the payment from the buyer
to the seller.

 In the example, we suppose

 mode of transportation – Ocean transportation

 price term – CIF (Cost, Insurance and Freight)

 payment term – Letter of Credit, L/C

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 1. Get to Know each other and Contracting
(1) Promotion/Introduction letter
(2) Letter of Inquiry
(3) Quotation/ offer prices
(4) Purchase Order
(5) Sales Contract

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2. Issuance of L/C
 Letter of Credit, L/C

 A letter from a bank promising to pay an amount of

money.
 An instrument issued by a bank, at the request of

the applicant, promising to pay the beneficiary

upon his presentation of stipulated documents in
accordance with the terms and conditions of the
credit.

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 (6) Apply for a Letter of Credit
 importer
 authorized foreign exchange bank
 import settlement
 apply LC with full LC amount (issued by full
amount)
 apply LC with a percentage of LC amount
(issued by financing) ~ 1st settlement

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 (7) Open a letter of credit
 issuing bank/ opening bank

(8) Notify the LC

 SWIFT (Society for Worldwide Interbank Financial
Telecommunication)
 advising bank/ notifying bank
 exporter

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3. Export arrangement
(9) Book the shipping space
 Shipping order, S/O

(10) Apply for Export Inspection

 Pre-shipment Inspection
 Notarizing or Surveyer Independent Inspection
(11) Collect the Certificate of Inspection
(12) Purchase cargo insurance
 CIF and CIP
(13) Collect the insurance documents

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4. Export clearance
(14) Delivery
container yard/ container freight station
 warehouse
(15) Send message to Customs
customs/ customs house


(16) Apply for export clearance

customs broker


(17) Submit the export declaration form

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 (18) Cargo Examination
 C1 (Channel 1) : Free of paper and cargo examination.
 C2 (Channel 2) : Subject to document scrutiny
 C3 (Channel 3) : Subject to cargo examination prior to
tariff classification & valuation

(19) Release of the Cargo

 The goods can be shipped for export after being
released by the customs

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5. Shipment
(20) Loading on Board
 After the customs inspection and release, the
goods can be exported and shipped.

(21) Customs broker delivers the export clearance

documents to exporter and collect the service
charge and the prepaid for exporter

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 (22) Issue the Bill of Lading (B/L)
 carrier
 shipper
 transport document

 The functions of transport documents

(1) an Evidence of Contract 運送契約證明
(2) a Receipt of goods 貨物收據
(3) a Document of Title to the goods 物權憑證
(Negotiable B/L only)

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6. Export Negotiation and Payment Claim
(23) Apply for export negotiation
 negotiating bank
 Shipping Documents
 Bll of Exchange/ Draft
(24) Negotiating bank pays in advance to exporter
 Documents examination
(25) Negotiating bank airmails the shipping documents
to issuing bank or paying bank
 payment reimbursement

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 (26) Issuing bank/paying bank reimburses negotiating
bank (after documents examination)

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 7. Retirement of Documents (importer)
(27) Documents Retirement-- 2nd settlement
 apply LC with full LC amount : importer collect the
shipping documents from issuing bank
 apply LC with a percentage of LC amount:
 sight credit: collect documents with payment

 usance credit: collect documents with signing

Trust Receipt, T/R

(28) Collect the shipping documents from issuing bank

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(29) Return B/L to ocean transport company
 After the goods arrive at the port, the carrier
will notify the importer that the goods have
arrived
 The importer must return the original B/L to the
ocean transport company in exchange for a
D/O (delivery order)

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 (30) Exchange B/L for D/O
 After the consignee returns the original B/L and

pays the ocean freight, the shipping company will

hand over the D/O to the consignee for claiming
the goods.

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8. Import Clearance & Taking Delivery
(31) Entrusted customs broker for import declaration
(32) Submit import declaration form to customs
(33) Customs Issues tax statement
(34) Pay the import tax
 Usually the customs broker will pay the tax and

other charges in advance for importer, and then

collect together with service fee from importer

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 (35) Gargo Examination
 Usually the customs broker will pay the tax and

other charges in advance for importer, and then

collect together with service fee from importer
(36) Release of Cargo
(37) Customs broker delivers the import declaration
documents to exporter and collect the service
charge and the prepaid.
(38) Take delivery of the goods
 After the goods have been inspected and released

by the customs, the importer can claim the goods

with the original D/O.
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 Exporter (on CIF & by LC )
12. Load and transport
the goods
7. purchase the marine
1. Sales letters & catalog cargo insurance
13. collect all shipping
2. offer price documents required by
8. Export Inspection
LC

3. Sign Contract 9. Deliver the goods to 14. Negotiate with bank

the place appointed by
customs 15. Advise the importer
4. Receive the L/C the goods has been
shipped
5. Arrange Production 10. Send shipping advice
to importer
16. Complete the process
6. Book shipping space 11. Export declaration
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Importer (on FOB & by LC)
7. Receive shipping 12. pay the freight &
advice exchange B/L to D/O
1. Inquiry letters
8. Purchase cargo 13. Import declaration
2. Accept the quotation & insurance
place an order
14. Pay the import tariff &
3. Purchase the marine 9. Receive the duplicate tax
insurance copies of shipping
documents from exporter 15. Take delivery of
4. Apply for L/C
goods from carrier
10. Receive documents
5. Book shipping space
arrival notice from
opening bank 16. Complete the
6. Advise exporter the process
shipping details
11. Settle the payment 3-22
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