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Chapter 15

Exporting and Logistics: Special Issues for Business


© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter Learning Objectives 1. The additional steps necessary to move good across country borders 3. How the Canadian government helps exporters 2. How various import restriction are used politically .

How various import restriction are used politically 4. The main instruments of foreign commercial payments 6. How the Canadian government helps exporters 2. The logistics and problems of the physical movement of goods . The mechanics of export documents and their importance 7. Means of reducing import taxes to remain competitive 5.Chapter Learning Objectives 1. The additional steps necessary to move good across country borders 3.

and other barriers to the free flow of goods between countries The rules and regulations that cover the exportation and importation are discussed in this chapter • • • .Introduction • Exporting is an integral part of all international business Goods manufactured in one country and destined for another must be moved across borders to enter the distribution system of the target market It is important to be knowledgeable about the export and import documents. tariffs. quotas.


Import Restrictions • Import regulations may be imposed to protect health. conserve foreign exchange. or provide revenue in the form of tariffs • The most frequently encountered trade restrictions include: • • • • • • • Tariffs Exchange Permits Quotas Import Licenses Standards Boycotts Voluntary Restrictions . protect home industry. serve as economic reprisals.

that is. countries often require import licenses 3. Quotas: 4. a stipulated amount per unit weight or some other measure of quantity. Tariffs: • • • Custom duties are based on value or quantity or a combination of both and are classified as follows: ad valorem duties. specific duties. and a compound duty.Exchange Permits To conserve scarce foreign exchange many countries impose restrictions on the amount of their currency they will exchange for the currency of another country Countries may also impose limitations on the quantity of certain goods imported during a specific period As a means of regulating the flow of exchange and the quantity of a particular imported commodity. a tax per pound plus a percentage of value 2.Import Restrictions 1. Import Licenses: . which are based on a percentage of the determined value of the imported goods. which combines both specific and ad valorem taxes on a particular item.

Import Restrictions (contd …) Health standards. Boycotts: 7. Voluntary Restrictions: . safety standards. or trade of specific goods Countries may themselves impose restrictions on firms exporting to specific countries 5. and product quality standards are necessaryto protect the consuming public from imported A boycott is an absolute restriction against trade with a country. Standards: 6.

It includes the cost of the goods and transportation costs to the named place of debarkation. It includes the costs of goods. The cost of insurance is borne by the buyer 3. insurance.S. insurance. CIF (cost. The price includes cost of goods and charges for delivery of the goods alongside the shipping vessel. C&F (cost and freight) to a named overseas port. and insurance . and all transportation and miscellaneous charges to the named place of debarkation 2. transportation. FAS (free alongside) at a named U. port of export.Terms of Sale 1. The buyer is responsible for the cost of loading onto the vessel. freight) to a named overseas port of import.

. FOB (free on board) at a named inland point. EX (named port of origin). at a named port of exportation.. The price quoted covers costs only at the point of origin (example.) 4. or at a named vessel and port of export. EX Factory). All other charges are the buyer’s concern. The price includes the cost of the goods and delivery to the place named 5.Terms of Sale (contd .


Bills of Exchange 3. Cash In Advance 4.Getting Paid: Foreign Commercial Payments The five basic payment arrangements for exported goods include: 1. Forfaiting . Letters of Credit 2. Open Accounts 5.


2. 5. 6. 4. and Licenses . 3. Export Declarations Consular Invoices or Certificates of Origin Bill of Lading Commercial Invoice Insurance Policy or Certificate.Export Documents • Each export shipment requires many documents to satisfy government regulations controlling exporting as well as to meet requirements for international commercial payment The most frequently required documents are: 1.



such as commodity classifications.Foreign Freight Forwarder • The foreign freight forwarder arranges for the shipment of goods as the agent for an exporter • The forwarder is an indispensable agent for an exporting firm that cannot afford an in-house specialist to handle paperwork and other export trade mechanics • A freight forwarder double-checks all assumptions made on the export declaration. and will check the list of denied parties and end uses .