THỦ TỤC HẢI QUAN

INTERNATIONAL TRADE TRANSACTIONS

COURSE OVERVIEW
 Course aims
The course aims to
• provide concepts and characteristics of international trade
transactions;
• present and discuss issues related to negotiating, drafting,
signing and implementing contracts for international sale of
goods
• present characteristics, contents and ways to execute
current main methods of international trade transactions
Course learning outcomes
  Course Learning Outcomes

1 An ability to analyze concepts and charateristics of import & export business

2 An ability to draft terms of contracts for international sale of goods

3 An ability to execute export and import contracts

4 An ability of team-work, planning and problem solving, presentation and debate

Course outline
Overview of International Trade Transactions

Contract for International Sale of Goods

Incoterms 2020

Execution of contracts and documents in international sale of goods

Assessment
Items Assessments Pct Due day & time Remark
 
1a Individual assignment/test 10% Week 5 - 12

1b In-class contribution and class 10% From week 1 to week 15  

attendance
 
2 Group assignment 20% Week 8-15

3 Final exam 60%  

multiple choice
Materials
Course books

CB1. Lecture notes provided by lecturer

CB2. Import-Export Operations, Đại học quốc gia Thành
phố Hồ Chí Minh Publisher (2016)
https://nxbvnuhcm.edu.vn/san-pham/import-export-opera
tions
/
CB3. “International Trade Transactions” (Pham Duy
Lien, 2012)
Materials
Reference materials
- RB1. Incoterms 2020; ICC rules for the use of domestic and international trade terms;
- RB2. Vietnamese legal documents: Foreign trade management law 2017; Decree 187/2013/NĐ-CP; Civil law 2015;
Customs law 2014; Commercial arbitration law 2010;
- RB3. United Nation Convention On Contracts for The International Sale of Goods 1980, UCP 600, URC 522
- RB4: International rules of payment: ICC Uniform Rules for Collections Publication No 522; the Uniform Customs and
Practice for Documentary Credits 600; Institute cargo clause 2009
- RB5. Arbitration and selection methods of dispute resolution; International Arbitration Centre of Vietnam; Finance
Publisher (2008).
 CHAPTER 1
OVERVIEW OF
INTERNATIONAL TRADE TRANSACTIONS
CONTENTS
Main concepts in international trade transactions

Characteristics of international trade transactions

Understanding Vietnam regulations of international trade transactions

Process of international trade transactions

Definitions
 International sales contracts are contracts of the sale of goods
between parties whose places of business are in different countries
(CISG 1980 – United Conventions on International Sales of Goods)
 “Foreign trade activities” means activities related to the international
exchange of products in the forms of export and import; temporary
importation; temporary exportation; merchanting trade; transit and
other activities (Law on foreign trade management, 2017)
 International purchase and sale of goods shall be conducted in form of
export, import, temporary import for re-export, temporary export for re-
import and transfer through border-gates. (Commercial Law 2005)
Definitions
According to Commercial Law, 2005
 Export is an act of taking goods out of territory of the Socialist
Republic of Vietnam or bringing goods into a special zone located in
the territory of Vietnam which is considered an exclusive customs
area as stipulated by law.
 Import is an act of bringing goods into the territory of the Socialist
Republic of Vietnam from a foreign country or from a special zone
locating in the territory of Vietnam which is considered exclusive
customs areas as stipulated by law.
 Company A – buyer
(headquarter located
Sign
in Taiwan) Company C – seller
purchase
contract (headquarter located in
Vietnam)
Authorize
Deliver On-spot exporter
goods
Company B
(subsidiary of company
A in Vietnam)

On-spot importer
 Custom-controlled areas/ Free zones
• Industrial zones/parks
• Export processing zones
• Export processing enterprises
• Duty free/Tax suspension warehouse
• Custom bonded warehouse
 Industrial zones/parks
• https://plf.com.vn/map-of-industrial-zones-in-vietnam
 Industrial zones
• Specialized in production of industrial goods and
provision of services for industrial production
• Having fixed geographical boundaries
• Being established pursuant to the conditions, order and
procedures stipulated in these Regulations. (Decree No.
29-2008-ND-CP)
Export Processing Zones
 Export Processing Zones
• Specialized in production of export goods and provision of
services for production of export goods and export
activities,
• Having fixed geographical boundaries
• Being established pursuant to the conditions, order and
procedures applicable to industrial zones stipulated in
these Regulations. (Decree No. 29-2008-ND-CP)
 Export Processing Enterprises
- Being established and operating in an export
processing zone
- Or enterprises which export all of their products and
operate in an industrial zone or economic zone.
 Tax suspension warehouses
• For preservation of imported raw materials, for which tax
has not yet been paid, for the production of exports of
enterprises having such warehouses.
(Decree 154/2005/ND-CP)
 Customs bonded warehouses
• A storehouse or storing yard area separated from the
surrounding area for temporary storage and preservation of, or
for provision of services for, goods taken from overseas or the
country under a bonded warehouse-hire contract between the
bonded warehouse’s owner and the goods owner.
• Established in international seaports or civil airports,
international railway or land border-gates; Industrial parks, hi-
tech parks, export-processing zones or other special economic
zones. (Decree 154/2005/ND-CP)
Characteristics of International sales of goods

Brainstorming: (10 minutes)

Compare the characteristics of international sales of goods with

domestic sales of goods.
Characteristics of International Sales of Goods

1. Buyers and Sellers

- International sales contracts are contracts of the sale of goods between parties whose
places of business are in different countries
- Traders include lawfully established economic organizations and individuals that
conduct commercial activities in an independent and regular manner and have
business registrations. (VN Commercial Law 2005)
- For Vietnamese traders having no foreign direct investment capital (below referred to
as traders): Traders may import and export goods regardless of their registered
business lines, except goods on the List of goods banned from export or suspended
from export and goods on the List of goods banned from import or suspended from
import provided in this Decree and other legal documents.
Traders’ branches may import and export goods as authorized by traders. (Decree
187/ 2013/ ND-CP)
Characteristics of International Sales of Goods

2. Commodity

- Must conform with the Law of exporter’ country; importer’

country, and also international conventions and rules. For
example: the Convention on International Trade in
Endangered Species of Wild Fauna and Flora (CITES)
- Movement of goods
Over customs boundary => customs procedures
Long distance => high cost of transportation
Subject to risks and uncertainties => buy insurance
Characteristics of International Sales of Goods

3. Currencies & payment

- May involve payment in foreign currency (to 1 or 2 parities)  national law
on payment in foreign currency, foreign exchange risks
- Payment risk when dealing with foreign customers
- Methods of payment? A variety of methods: Open account, Remittance,
Clean/Documentary Collection, Letter of credit => consider the risks to
choose the suitable methods of payment

4. Law
- One or both parties may deal with different legal systems => legal risks
- Need to follow different law documents and trade practices from national to
international.
Legal frameworks for international trade transaction

Legal framework underlines

Korean seller the trade transaction
Vietnamese buyer
between Korean seller and
20/1/2021 Vietnamese buyer?
Going to Korea for making a purchase order of 1000
pieces of clothing
30/2/2021
Goods delivered to HaiPhong port
Legal frameworks for international trade transaction

The The
Trade
international movement of
disputes
sales contract goods
Vietnamese buyer
Korean seller
Legal frameworks for international trade transaction
International sales
contract

 Which laws are applicable for the international sales contract?

How to select?
…. Based on the negotiation between two parties. Maybe law of
Vietnam, Korea or even third country
…. Vietnam and Korea are members of CISG
…. In case two parties did not agree on applicable law? Courts,
Arbitrators will do
Legal frameworks for international trade transactions

Movement of goods

 Customs Law of Korea

 Customs Law of Vietnam
….. Korea and Vietnam are members of WTO 
 Other trade practices:
Incoterms for the delivery of goods
UCP600, or URC522 for international payment methods
Legal frameworks for international trade transactions
Trade disputes
 Which law is applicable when there is dispute over quality of the
goods? Where to resolve the dispute?
…..based on the negotiation between two parties
….. Arbitrators or Court of Vietnam, Arbitrators or Court of Korea

 If Korean sellers failed the lawsuit by arbitrator in Vietnam? Is there

recognition or enforcement of the arbitral awards in Korea? How
about in case the disputes are resolved by Court of Vietnam?
…. Actually Vietnam and Korea are members of New York Convention on
the recognition and enforcement of arbitral awards 1958
…. Depends on the bilateral agreements on recognition and enforcement of
foreign judgement between two countries
Legal frameworks for international trade transactions

• CISG 1980 (Vienna Convention)

International • New York Convention
•
Treaties
WTO agreements
• ….

• For example: The Civil Code, Commercial Law, Arbitration Law, Customs
Law, Intellectual Property Rights Law ….
National Laws

International • Incoterms
• UCP600
Trade • URC522 ….

Practices
What is CISG 1980?
- To bridge the gap between the different legal systems of the world (civil law and
common law) by creating a uniform law for the international sale of goods
- The CISG is deemed to be incorporated into any otherwise applicable domestic law(s)
with respect to a transaction in goods between parties from different Contracting
States  allows exporters to avoid choice of law issues,
- Contracting States: http://iicl.law.pace.edu/cisg/page/cisg-list-contracting-states
What is CISG 1980?
The Convention consists 101 articles with the following structure:

PART I: SPHERE OF APPLICATION AND GENERAL PROVISIONS

PART II: FORMATION OF THE CONTRACT
PART III: SALE OF GOODS
Chapter I: General provisions
Chapter II: Obligations of the seller
Chapter III: Obligations of the buyer
Chapter IV: Passing of risk
Chapter V: Provisions common to the obligations of the seller and the buyer
PART IV: FINAL PROVISIONS
Why CISG?
• cost savings in negotiating applicable law provisions,
• reduction of costs and difficulties of applying foreign law to transactions as
there will no longer be a need to research foreign law in order to comply to
foreign counterparties’ demands,
• elimination of the need to analyze conflict of laws at an international level
during dispute resolution processes as CISG will automatically apply in
most cases,
• provision of access to modern rules drafted with modern issues in mind,
• equalization of the playing ground as both parties have to deal with a
“foreign” or international law rather than giving one party the advantage of
their own jurisdiction’s rules, and
• CISG was designed to balance equality and justice between the buyer and
seller and thus the rules are more fair than many country’s contract laws.
When to apply CISG?

• When both parties are located in countries that are members of

CISG,
• When according to the principles of private international law the
rules of a country that is a member of CISG apply,
• When the parties to the contract agree that CISG will apply, or
• When the organ resolving a dispute decides to apply CISG.
What’s next?
Discussion on:
- Analyze definitions of the 4 types of foreign trade activities: Temporary Importation;
Temporary Exportation; Merchanting Trade (Border-gate transfer of goods) and
Transit of commodities (Commercial Law 2005, Law on Foreign Trade Management)
- How to distinguish them?
- Identify fraud risks related to Temporary Importation
What’s next?
Chapter 1: (Continued)

- Freedom of export & import business in Vietnam

- Export prohibitions, restrictions and permissions

Legal documents involved:

- Law on Foreign Trade Management, 2017
- Decree 69/2018/NĐCP
UNDERSTANDING VIETNAM
REGULATIONS IN INTERNATIONAL
SALES OF GOODS
Foreign Trade activities
 Temporary import, Reexport:
Definition: Article 29 Commercial Law 2005
Government measures: Article 39, 40, 41 Law on Foreign Trade Management
Customs Clearance: Article 82, 83, 84 in consolidated documents 25/VBHN-BTC(2018)
 Temporary export, Reimport
Definition: Article 29 Commercial Law 2005
Government measures: Article 42 Law on Foreign Trade Management
Customs Clearance: Article 47, 48 in consolidated documents 24/VBHN-BTC(2018)
 Merchanting Trade (Border-gate transfer of goods)
Definition: Article 30 Commercial Law 2005
Government Measures: Article 40, 43 Law on Foreign Trade Management
Customs Clearance: Article 89 in Consolidated documents 24/VBHN-BTC(2018)
 Transit of Commodities
Definition: Article 241 Commercial Law 2005
Customs Clearance: Article 44, 45, 46, 47 Law on Foreign Trade Management
Foreign Trade activities
  Temporary import Temporary export Merchanting trade
Purpose For sale to another country or Warranty, maintenance, repair, For sale to another country or
exclusive customs area production, construction, lease, territory outside the Vietnamese
Warranty, maintenance, lease or borrowing, display or exhibition territory
borrowing or other purposes or another purpose

Import/ Yes Yes No

Export
Customs
clearance
Customs Yes Yes No
inspection/
Custom Yes Yes Yes
supervision
Foreign Trade activities
  Temporary import
Routes From country A export to
Vietnam, then Vietnam export to
country B
Note: B=A if purpose is
warranty, maintenance, lease,
borrowing ….
Period 60 days + 2 times of extension
(30 days each)
Temporary export Merchanting trade
From Vietnam  export to 1/ From export country 
country A  then import to import country (not through
Vietnam Vietnam)
2/ From export country 
Vietnam border gate (import
border gate)  import country
3/ From export country 
Vietnam border gate (import
border gate)  customs
bounded warehouse, or special
customs areas  import country
Depends on purpose of 30 days maximum
temporary export
Foreign Trade activities
  Temporary import
License Need license in case of goods
required banned from export or import;
goods suspended from export or
import; goods not yet permitted
for circulation or use in Vietnam;
goods subject to management
based on export quota, import
quota, tariff quota, or export or
import permit.
Temporary export Merchanting trade
Need permit for goods banned Similar to temporary import re-
from export or import; goods export, unless in case the goods
suspended from export or are transferred not via
import; or goods subject to Vietnamese border gates.
management based on export
quota, import quota, tariff
quota or export or import
permit, traders must possess a
permit for temporary export for
re-import;
Trade fraud risks related to temporary import

 Wrong declaration of commodities

 Withdraw goods from container for domestic consumption
 Change the registered routes of transfer, turn off GPS, break down customs-seal,
not transferring goods into bonded-warehouses  no re-export
 Smuggle
 http://hanoitimes.vn/new-regulations-to-stop-temporary-import-frauds-4573.html
Freedoms to import and export in Vietnam

1. For Vietnamese traders

Traders may conduct export and import business and carry out other related
activities REGARDLESS OF THEIR REGISTERED BUSINESS SECTORS OR
TRADES, except the goods on the List of goods banned from export or import
and goods suspended from export or import.
(Article 5, Law on Foreign Trade Management)
Freedoms to import and export in Vietnam
2. For foreign-invested organizations or VN-based branches of
foreign traders
- The right to export does not cover the right to organize a network to purchase
goods in Vietnam for export;
- The right to import does not cover the right to organize or participate in a
network to distribute goods in Vietnam.
- Traders may exercise the right to export through purchasing goods in VN for
export abroad/ import goods from abroad into VN by undersigning export/import
declarations in order to carry out and take responsibility for export/import-
related procedures.
(Article 5, Law on Foreign Trade Management)
Export prohibitions, restrictions and permissions

LIST OF PROHIBITED IMPORTS AND ANNEX I DECREE 69/2018/ND-CP

EXPORTS
LIST OF EXPORTED OR IMPORTED BY ANNEX II DECREE 69/2018/ND-CP
DESIGNATED TRADERS
LIST OF EXPORTED OR IMPORTED ANNEX III DECREE 69/2018/ND-CP
GOODS REQUIRING LICENSES OR UNDER
GIVEN CONDITIONS
Process of international trade transaction
International market
Selecting business
research Business objectives
partners
(selecting goods, market…)

Enter into transaction

Negotiation

Sign contract

Executing the contract