A world of opportunity

An introduction to Export / ImportMarketing, administration and procedures AVOIDING SOME COMMON PROBLEMS

A stepwise workshop based presentation

by Dr Fred Key, HDBA, MRSC, MIFST, MIEx

Businessman with 35 years working experience of international commerce. Revised Nov. 2014

Composition, text and photography - Copyrights of Fred Key - 2012 and 2014 except where indicated.

Forward

This latest draft serves as an introduction to the administration and mechanics of Export-Import normally operated in International Commerce and gives an overview of specific marketing considerations. The work is based on my own training and working experience in this field for over 35 years. It eventually became my turn to train new employees, some graduates in business disciplines.

This course will be delivered by a series of PowerPoint aided presentations within workshop situations.

Though this draft includes comprehensive Lecturers Notes, it is intended that only the bullet points (in Blue print usually) will be projected from a simplified version, during live presentations.

The treatise is adaptable for delivery to student of different age and ability levels, also for Distance Learning. Handouts of larger format documents such as specimen commercial agreements may be provided to students on paper during workshops. These are included with this work as Annexes, for the sake of convenience.

The course culminates with business projects both in Export and in Import, whereby the student can put learning gathered into virtual practise.

Fred Key 22 January, 2013

2

.1 Cover pageForward.Table of contents

4Part 1: IntroductionValue of Britains Exports and Imports.Where U.K. exports go to.7Exporting Do you have a U.S.P. ?8Photo: producing Fry-Light for export.Importing.Illustration of Innovation seeking World Markets.

Part 2: Moving Cargo Pallets, Containers etc. Containerised shipments FCL / LCL14-19Photos of different shipping / transport modes

20Part 3: Export/Import Marketing, Exploration - Finding your Golden Nugget. Finding your overseas market.Apply the principles of Marketing23Typical export marketing structure diagram.24Costing: Competing in foreign markets.25Protecting you intellectual property.26Sourcing from abroad.27Speak INCOTERMS 28INCOTERMS in action.

29Part 4: Export-Import Administration:Import duties, levies, carbon duty. VAT (added 3 slides)VAT in international commerce - ExportsVAT in ImportsCHIEFPart 5 Financial cautions:35Checking Credit worthiness of client (now 55-56). 36Getting paid and Banking procedures, Barter or Offset Agreements 37Protecting currency exchange fluctuations.38Inspection: Survey reports on cargo.39-41Part 6: Insurance: business, marine, credit insurance.

42 Part 7: Documentation and Standard Correspondence43The Export Quotation.44The Export invoice type A. 45The Export invoice type B. covering letter.The invoice covering letter.47Bill of Exchange (Standard). The American Bill of Exchange

49Part 8: Understanding Transport Documentation50Bill of Lading 51 Airfreight instructionsAirway Bill

Part: 9 London Chamber of Commerce: Certificates of Origin54-55ATA Carnet and ATA Member countries56-58EUR1 Certificate59ATR Movement Cert. for Turkey

60Part 10: Customs Procedures: Customs Freight Simplified Procedures (CFSP)The National Export System and CHIEF Customs Harmonised Import-Export Freight

62-64Costing for ExportCompeting effectively in Export markets

66-69Part 11: The Agreement between Exporter and Importer

70Getting paid and Bank Procedures71Cautionary guide to documents72Debt recovery abroadFactoring

74-75Part 12: Documentary Credits example - 76Avoiding snags with your L/CDocumentary Collections: Sight Draft and C.A.D. (Printed handouts will be supplied). Avoiding problems.

78-83Import-Export controls, licensing and Controls

84-86 Modern Piracy

Outward Project: Research Export Market and Distributor for product X. may combine with e commerce. Agency/Distribution Agreement, Protect I.P., Admin of export (payment by bank collection, cover marine Insurance, obtain Certificate of Origin), Follow up support (P.R., Advertising, budgeting etc.).

88Inward Project: Source product Y for import. Inward, market research, Investigate distribution channels, retailer base, e commerce. Agreement with Principal including I.P. Admin of import (Cover Marine Insurance if needed, Pay by L/C and customs duties/levies). Product support programme (P.R., Advertising and budget)

89Useful names and contacts

Contents

Exporting: Selling and shipping goods out of the country in which you are based to another country.

Importing: Buying and receiving goods from another country into the country in which you are based.Re-export: Export to other countries of products already imported into your country.

Other forms of Export and Import:Invisible Exports such as the income Britain receives from: Insurance and Reinsurance: operated by brokers and agents of Lloyds of London and the International insurance companies. Intellectual Property licensing to firms in other countries (Patents, Registered Design, Copyright,) relating to technical and design innovations, software developments, performing and other kinds of art, literature. Also Trade Marks (Coca-Cola, Starbucks, etc.).

Tourism, Education, Consultancy, Licensing (technology, photography, Films,etc.), and more 4

Introduction: Part 1

(2008)IMPORTS: 645,700,000,000

EXPORTS: 468,700,000,000

5UK Import/Export statistics

Where the UKs exports go

Is your product in one of these categories?

Technical innovationDesign innovationNiche speciality productTypical regional productBranded or Label productBritish product of premium qualityA subsidised agricultural productOther? Collectables, second hand items etc

Do your Market Research and Consumer Research: Japanese people dont need cheese gratersbecause they dont generally eat cheese and you cant sell fridges to Eskimos!

7

Exporting: Do you have a USP?

Significant contributor to turnover and profitability.

The ways and means:Utilising plant and staff spare capacity.

Increased production leads to automation.

Automation leads to reduced product unit cost.

Effective Export Department.

Effective Imports of vegetable oils and raw materials by competent Import Department.

Production of Fry-Light cooking oil sprayfor export Markets -

10ImportingSo many products we buy ortouch, with the exception ofmost processed foodproducts, are importedtoday. Illustration by Marko

Many products originally designed in the West, are produced in the Far East and other cheap labour countries, at lower cost than we can achieve in the West, usually because their production cannot be highly automated.

THE RIDE-ON-CARRY-ON CHILD SEATDesigned by an American air-hostess Seeking Distributors

Bulk Carriers or Tankers: For fuels, minerals and grain.Specialised tankers for small deliveries of liquid fuel (gazoline) or liquefied butane/propane (LPG).

Containers onto containerships: For goods which can be conveniently loaded into shipping container 12ft. or 24ft. Length, usually then loaded on flat bed lorries which are then winched onto seagoing ships or on adapted flat-bed railway carriages to travel through undersea tunnels (the ChannelTunnel) and onward to city destinations, then reloaded onto lories for delivery to client warehouse.There are specialised containers for carrying perishable goods requiring refrigeration or freezing and liquid carrying storage-tank containers and so on.

Roll-on-Roll-off: goods loaded on lorries/trailers driven onto ferries for short sea journeys or loaded on railway trains which can go through undersea tunnel. Conveniently the lorry/trailer is driven from loading point to delivery point in a faster and more continuous process.There are rear loading trailers and side-curtain side loading trailers which are easier to access with pallets.

Air-Freight: Usually for High individual value items, or urgently required goods, or some deep inlanddestinations. Parcels are usually stuffed into one or more containers which are then loaded on aircraft.

Couriers (D.H.L., U.P.S., etc.) or Post Office: By surface or by air when sending samples andgenerally high value items and individual/personal orders, such as via online shopping.

DANGEROUS GOODS: such as explosives, flammable liquids, harmful chemicals, radioactive materials REQUIRE SPECIAL HANDLING AND MUST BE NOTIFIED AND AGREED WITH TRANSPORTERS. 11

Part 2: Moving cargo

The Pallet: Standard British pallet 1m x 1.2mEuropean pallet 1m x 0.8m

Containers:Standard shipping container 6m (20 ft) x 2.4m (8 ft) - or - 12m(40 ft) x 2.4m (8 ft)

Specialised container types:

Temperature controlled insulated and refrigerated containers: Same external size as above but smaller inner dimensions due to thickness of walls.

- Flat bed containers/platforms such as for steel rods.- Tankers fitted within a container frame, to carry bulk liquid cargo.

To calculate the number of pallets or packs you can stuff into a container or trailer, websites suchas sea-rates.com will assist. Visualise a loaded pallet to be one large parcel for the purpose ofcalculation. Seek assistance from logistics operators and forwarding agents such as Corten (cortenltd.com).Loading limit for road transport in the U.K. is 20 MT axle weight, about 18MT of goods. 11

Pallets, containers and other platforms

FCL: (Full Container Load) - If you are filling an entire shipping container with your goods. You will be issued with a full Bill of Lading.

LCL: (Less than Container Load) - If you are sending a small amount (volume) of goods to only take up part of the space of a shipping container. The vacant space normally being taken up by goods from another exporter/importer. You will be issued with a Certificate of Shipment.LCL is is sometimes referred to a Grouppage

Containerised Shipments:

IMPORT - EXPORTINSTRUCTION AND WORKSHOP Container ship sailing towards the Black Sea ports

Roll-on-Roll-off Ferry carrying vans, trailers

Bulk carrier for minerals, grain, crude oil etc.

Bulk carrier (Coalier unloading at Piombino Steel Works)

OIL (LIQUID FUEL) TANKER

Air transport gets from Liverpool toNew York in 6 hours, whereas a shipsjourney would last 7-10 days.

The difference in time is greater proportionately for longer distances

The very high cost of air-freight compared to that of sea/ocean freightMakes it only logical for urgent deliveries or expensive and delicateitems such as luxury watches.

Air Freight20Library photo

Finding your golden nuggets!

Market research: For consumer products, your client must be convinced that you have done your market research in his/her territory and that there is proven demand for your product in the territory (the target market) at the retail price you have pre-calculated for the territory and that you will adapt your product as necessary for the target market. A reputable market research agency can help you. Clients may recommend an agency.

If you are Exporting or Importing you must demonstrate to the chosen Importer-Distributor or your Client how your sales have progressed on the home market. Unless for example you are only manufacturing a product for export (cholesterol-free liquid egg is in great demand in the U.S.A. but not in the U.K.).Agree a convincing promotional package: apart from a good website, give examples of media advertising (show images, clips) including product demonstrations (in store), articles prepared to get the press/TV interested, personality endorsement, sampling allowance, etc. The Social Media: Face Book, Twitter, etc. Discuss Promotional spend.

Ensure that you/your distributor will engage in P.R. directly or through the Advertising or P.R. Agency who will organise advertising, to get the maximum editorial article coverage. Consumer and Trade magazines will always have features such as What is New (in the market), New Gadgets, etc. Advertisers get priority in editorial departments.

As alternative to a Distributor or in addition for the Distributor to handle (for suitable products) is Online Marketing: particularly via the distribution networks of Amazon, EBay, Alibaba and others, can be the sole or complementary channel of sales in many territories for certain categories of products. Best to back this up with selectively directed advertising. 20

Part 3 Import/Export Marketing

DESKTOP SEARCHING:Seek Importer-distributors or groups ofretailers in the target market. Or you mayseek contract manufacturers or licenseesto make or market your product.

Search engines: Google, Yahoo etc. (British) Consulates Commercial Attaches.(U.K.) Business Link T.0845 600 9006UK Trade & Industry T. 0207 215 5000or equivalent in the country of export.(British) Chambers of Commerce in theCapital of the country.

Intelligence: For example, by contacting as anIndividual British or American famousfood/confectionery/tea product exporters offamous brands, asking them how you could findtheir products in a certain market, they will giveyou the details of their importers and ask you tocontact them. VISIT THE MARKET:

Exhibit at Trade Fairs - seek (U.K.)government assistance.

Travel to the capital of the country or theregion of interest (skis may sell best in mountainous regions) and visit retailersand wholesalers of your type of product.

Get to speak to the people on the groundand let them pass you to their managers.These may lead you to their own head office or to importers they know. Meet your countrys commercial attache: DiscussImporters/distributors to contactLook in outlets or with users for products in yourfield of interestCertain relevant (imported) products likeimported food products may have the importersname and address displayed on the package. There may be a similar Product imported orlocally made which your chosen Distributor hasnot bothered to look for (meaning you could be wasting your time and money advertising). 21 First do Market Research to establish local taste, preferences and customs.You cant sell fridges to Eskimos or cheese graters to Japan

Finding your overseas market

Apply the principles of Marketing -(the classic book stuff) lets discuss:THE CLASSIC 4 Ps:ProductPrice (affordability + competition)Place in position and enablement to effect. For shops: address, position, situation.Promotion (design, packaging advertising, Public relations.------------------------------------- You can think of more Ps:Patent (Intellectual Property)Perception (design, packaging )Process (Sales, Transport, Distribution, Display)Participation (Agent, Distributor, )Personalisation

PESTLE ANALYSIS:

Political factors (embargo?)Economic (can they afford it?)Social (local taste, customs)Technological Have electricity? 115 or 230 volts? Irrigation pumps for Bangladesh - best power by (integral) solar cells.Environmental: (No market for snow-boots in Egypt. Coats sold in Siberia are thicker than those sold in Cyprus).

TYPICAL EXPORT MARKETING STRUCTURES22

Eg: Competing against a French producer on the French market

If you are a U.K. manufacturer, one of your heaviest costs will be your generaloverheads and in particular your fixed overheads and any advertising budget.

I have found in my own food manufacturing business, that I could effectively compete abroad, say in France, by reasoning as follows:

Consider adjusting the product to suit the taste, labelling regulations and other compliance requirements.

We gave our product a desirable edge better presentation, more nutritional, more allergy friendly and adapted it to the markets taste and labelling languageSince current fixed overheads are covered (rent, rates, Insurance,) by our Home Trade, we could afford to export at minimal (close to zero) fixed overhead cover and reduce our export price, Supplementing your national sales by exports will also keep your suppliers of components busier and they should give you lower unit prices for larger order quantities, thus improving your margins. For example if you are a food or sauce sauce manufacturer using: bottles, cans, jars, lids, labels, mostly produced in Britain; enabling you to gain quantity discounts, reduce overall unit shipping costs and reduce costs for larger imports of raw material and so again improve your margins.

Exports kept our machines running constantly and our staff happier!

See slide 57 for Example see Annex 4 slide 58 and for details see Annex 5 Slide 48.

Costing: Competing in markets

Before venturing with innovations into export markets, endeavour to apply for patent registration or design registration in that territory within the time allowed to you, usually within 12 months of your first application to the Intellectual Property register in your base country. Unfortunately, this can be expensive!Register your brand and company name as web addresses in your markets.

Consider Having your invention, innovative design manufactured under license in the target territory such as the U.S.A. or if a labour intensive product, manufactured in a cheap-labour country and shipped out from there.

Agree in writing with your agent or importer distributor (and get them to obtain further written agreement from any sub-agents/importers/distributors) that they will hold and consider at all times your companys name, identity, brands, designs, technology, whether or not registered, including your web address - as your property and that they will assist you in every way in protecting such property. 24 Protect your intellectual property and identity

So many consumer product we buy or touch, with the exception of most processed food products are imported nowadays, even products originally designed in the West, because they can usually be produced in the Far East and other cheaper labour countries (often also less regulated), at far lesser cost than we can achieve in Britain. It is up to you have to find new opportunities.

How do you get into this trade?Look for innovation overseas: in any field and in any product such as the suit case mounted baby seat Ride-on-carry-on. Seek innovative products you may have encountered on overseas journeys. Visit Trade Fairs abroad. The U.S.A. is a great source of new ideas. Visit their shops, view their TV ads., etc.Identify a need and then Google-search for the product.

Look for regional speciality which has become popular with British tourists such as the Spanish spiced sausage Chorizo or their wonderful Manchego cheese. Turkey is becoming a popular tourist playground and visitors get to like their cheeses and other foods, jewellery, household ornaments etc.

Register with foreign consulates, informing them of your competence and availability to act as agent or distributor for a certain category of products. Eventually ask your principal (the exporter) for an exclusivity agreement and what promotional budget they can allocate (see specimen agreement in following slides 33-34. 25Sourcing from abroad

Speak INCOTERMSThe most commonly used terms -based on the rules of the International Chamber of Commerce:

For any mode of Transport:Ex W Ex Works specify the place like Greenwich (place of works).FCAFree Carrier Stratford container terminal.CIPCarriage and Insurance Paid to Les Halles Paris (or Your warehouse, Greenwich).DAT Delivered at Terminal .. (Stratford Container Terminal London).DAP Delivered At Place ..DDPDelivered Duty Paid your warehouse - Dusseldorf.(common also FOT = Free on Truck .)

Rules for sea and Inland Waterways Transport:FASFree Alongside Ship Felixtowe such as FAS FelixtoweFOB Free on Board - such as FOB San FranciscoCFRCosts and Freight such as CFR Hamburg (or commonly also as C & F Hamburg)CIFCost, Insurance and Freight such as CIF New YorkThe full list and rules are obtainable from the International Chamber ofCommerce or by looking up INCOTERMS on Wikipedia.

27

Incoterms in action

Export and Import administration procedures are similar. You could say that one works in reverse of the other.

Exporter and Importer interact in handling mostly he same documentation.

Example: The Exporter sends Importer an Invoice and a Certificate of Shipment for goods and the Importer has to administer, check and deal with the documents received.

Duties: Importer have to concern themselves with either import duties and sometimes levies and import licenses and conversely the Exporters have to get involved in knowing the duties in export markets and may need export licenses and can claim Agricultural Refunds.

- Exporter has to get Export-Clearance of goods and documents through port and Customs at origin.

-Importer has to get Import-Clearance for the goods through port and customs at receiving end.

Lets start with Export administration procedures since they encompass most of the reciprocal import admin procedures28

25Part 4: Export/Import admin

IMPORT DUTIES:

Have to be established and calculatedinto the cost of importation of aProduct by studying the website:

www.gov.uk/trade-tariff

Which helps you classify in several steps theTariff of product as for example that of: Orange Juice 20% sugar content (20 Deg. Brix)

Search for Processed foods Chapter 20Then findJuices ..Heading 09Then look up Orange juice not exceeding 20Brix (20% Total sugars) 111110

Thus Commodity No. is 20 09 111110

From U.S.A. Import Duty 35%

IMPORTS: VAT IS CHARGED ON LIABLE IMPORTS (FOOD NORMALLY ZERO RATED).

EXPORTS: NORMALLY ZERO RATED. IF YOU RE-EXPORT PRODUCT ON WHICH YOU PAID VAT, YOU CAN RECLAIM THE VAT PAID, FROM CUSTOMS HMRC . (Explained further on following slides)

- Exporters and Importers should be registered for VAT - Forwarding and Clearing Agents also register with customs, and learn to operate the CHIEF system

For assistance on such classifications telephone:Telephone:0300 200 3700Textphone:0300 200 3719Outside UK:+44 2920 501 261 Continued on next slides -

These rules apply in the European Union and may apply in other ways in other countries:

LEVIES : C.A.P. Common Agricultural Policy -On Agricultural Goods such as any foodstuff(solid or liquid), check if any Levy is applicable, which you must also add to cost (see C.A.P. LEVIES) or deduct from cost (see C.A.P.subsidies). You may need to apply for an import license for certain basic agricultural goods eg: sugar and other materials. Check first.Also check: Packaging Waste Regulations.EQUIVALENT CARBON PRICE LEVIES:Example: Import levy and carbon price component forSynthetic greenhouse gases eg: CFC (ChlorinatedFluorocarbons) and blends thereof. Which are used toPressurise some aerosols and fire extinguishers etc. Visit hmrc.gov.uk defra.gov.uk. Check also Packaging Waste Regulations tax on wasted packaging Etc. SUBSIDIES:If you are exporting agricultural products theLevies usually work in reverse, as Subsidies.Again check in RPA (Rural Payment Agency) or phonefor guidance.Rates of Levy/Subsidy are normally reported next to the Commodity No. in gov.uk/trade-tariff.Rates change daily- so check!

Visit: http://rpa.defra.gov.uk/rpa/index.nsf/vDocViewOr visit: defra.gov.uk and go to RPA Index

Guidance by telephone: 0191 2265050, 0345 603 7777 26

Import duties, levies, VAT

.VAT IN INTERNATIONAL TRADE - EXPORTS

Supplies of goods and services to, from and within a free zone are taxable in the normal way. If you need more information you should read Notice 702/9 Warehousing and free zones. Explained in online UK Customs publication HMRC VAT notice 700:HELPLINE 0300 200 3700 PARAG. 5.5Exported goodsIf you export goods to a customer outside the EU, your supply is normally zero-rated provided that you meet the appropriate conditions.There are a number of notices which deal with exports. You will find out more about these, and the conditions which you must meet to zero-rate your supplies, in Notice 703 Exports and removals of goods from the United Kingdom.PARAG. 5.6Exported servicesSome supplies of services to overseas customers are zero-rated, but many are standard-rated. You will find more about this inSection 29.PARAG. 5.7Intra-EU supplies of goodsIf you supply goods to a VAT-registered customer in another EU Member State and the goods are removed from the UK to another EU country, your supply may be zero-rated provided you meet the appropriate conditions.You will find out more about the VAT treatment of supplies of goods within the Single Market, and the conditions you must meet to zero-rate your supplies, in Notice 725 The Single Market.PARAG. 5.7.1 EC Sales ListUK traders registered for VAT who make supplies of goods or services to traders registered for VAT in the other Member States are required to send in lists of their EC supplies. The EC Sales Lists are used to control the taxation on supplies within the EC.You will find more details on EC Sales Lists in HMRC Notice 725 The Single Market.

.. VAT IN ITERNATIONAL TRADE IMPORTS

5.2Imported goodsWhen goods are imported into the UK from outside the EU, VAT is normally due at the same rate as on a supply of those goods in the UK.VAT must be paid when you import the goods or, if you or your agent is approved for duty deferment, you can defer payment with any duty.If you import goods into the UK from outside the EU, you should read Notice 702 Imports and Notice 101 Deferring duty, VAT and other charges.5.3Warehoused goodsSimilar arrangements to those above apply if you remove goods from an approved warehouse.You should read the following Notices:Notice numberTitle197Excise goods: Holding and movement179Mineral (Hydrocarbon) Oils: Duty and VAT: Warehousing and related procedures, or232Customs warehousing, and702/9Warehousing and free zones5.4Services received from outside the UKIf you are the customer and you receive from outside the UK any services subject to theB2Bgeneral rule for the place of supply of services, the services are treated as if you supply them, and you must account for any output tax due on them. You can recover the VAT on these services as input tax, subject to the normal rules.If you think that you might receive services of this kind from outside the UK, please read Notice 741A Place of supply of services.If you receive from outside the UK anyB2Bgeneral rule services, their value counts towards your taxable turnover. This applies even if the only supplies you make in the UK are exempt.It is simpler if you are registered for VAT in the UK, which most businesses are.

.CHIEF Customs Handling of Import and Export Freight USUALLY, ONLY OPERATED BY YOUR FORWARDING OR CLEARING AGENT:

Changes to legislation means the handling system for imports and exports needs to change. Find out about the CHIEF replacement programme.Contents:Documents https://www.gov.uk/chief-trader-import-and-export-processing-systemIf you import or export goods you, or an agent acting on your behalf, will already use the Customs Handling of Import and Export Freight (CHIEF) service to track these goods through ports and airports, and to complete customs requirements electronically.Future process and procedure changes to European Union (EU) legislation under the Union Customs Code (UCC) can not be accommodated within the existingCHIEFservice. HM Revenue and Customs (HMRC) is therefore planning to replace the currentCHIEFservice.This new service will need to:identify and collect the right duties and taxesrelease goods through inter-operation with port and airport inventory systemsallow frontier and inland freight controls within the UK to be used by the nominated agency or authorityelectronically process all the required customs declarationsrecord trade and transport statisticsaccommodate theUCCchangesHMRCis looking at other changes needed under the Union Customs Code and theirEUwide implications.More information will be added to this page as the Replacement Programme moves on.

Part 5: Cautions, Insurance, Inspection, Currency fluctuation.

CHECKING THE CREDIT WORTHINESS AND REPUTATION OF YOUR FUTURE CLIENTIt is customary to ask your considered future client, to let you have the name and address of their bankers and two or three suppliers as references.You should also seek regular financial reports (at least yearly), from Credit Checking Companies such as Dun & Bradstreet, Credit Check etc.) or your bank or accountants.Bank reference: Write to your bank to enquire as per Annex 1. Business ManagerHSBC Bank38 Dartford High StreetDartford

Dear Sir/Madam,CREDIT REFERENCE:Would you please obtain reference on the Status and Reputation, current credit worthiness and ability to settle additional business to usual commitments worth Euros .. per month with . days credit terms of:

Zographos Surgical product Distributors S.A.232 Olympus Street, Athens 412, Greece.Bankers: National Bank of GreecePergamon Place, Athens, Greece. Yours Faithfully,

Supplier references:

Dear Sirs

We have been given your name as supplier by Zographos Surgical of Olympus Street, Athens as we are considering starting trading with them in the near future.We are writing to enquire about your trading experience with them and would appreciate your assistance in giving us the following information:

- Number of years of trading.- Annual volume of business.- Credit terms.- Average credit taken.- Present/current credit situation.

If you are pleased with their achievements in marketing your products and any other information which could assist us in our plans.Yours faithfully, 30Check it out!

Protect yourself from fraud by opening an Export Bank Account which receives payments for exports but does not pay anyone else but you. These are the usual forms settlement and finance.

SAFEST MODES:

Payment in advance: effected by client to your exportbank account: particularly if the client is an unknown. A small discount encourages advance payment.

Bankers Guarantee: basically assuring you that a bankpays you on presentation of invoice etc.

Irrevocable Letter of Credit or Documentary Credit: or Irrevocable L/C or Irrevocable Documentary Credit. This guarantees that the issuing bank pays you whenyou submit all requested documents and requirements. For example of application form Google your banks Foreign Collections, e.g.: NATWEST application for letter of credit.

Refer to annex 3 slide 47 for important information Small transactions: such as in mail-order business -Credit Cards and Pay Pal are normally used.

Factoring and Insuring debt (Credit Insurance) is discussed later in this programme (past slide 50).

SECOND BEST:

a) Letter of Credit (not Irrevocable):.

b) Cash Against Documents (C.A.D): ..

d) Sight Draft Collection:

e) Dated Draft Collection:

Forms examples of application forms Google your banks ForeignCollections, e.g.: NATWEST application for Documentary Credit,Application for foreign collection etc.

TRUSTWORTHY ?

OPEN ACCOUNT: Such as Account 60 days, or Monthly Account.Refer to annex 3 slide 47 for important information ...

BARTER (Offset Agreements): practised in someCases, usually in government defence material purchase and the aerospace industries in exchange for a related service or goods (raw materials) or shares etc.See Wikipedia: Offset Agreements

FINANCE AND EXPORT CREDIT RISK INSURANCE :Finance can be arranged through mostly the main U.K. banks.

Credit Insurance is arranged by some insurers and for exports there is the U.K. Export Credit Guarantee. Refer to annex 3 slide 55 for important details 30

Getting paid

Your older colleagues will have known times of remarkable currency stability but recent times have seen sudden currency relationships changes which caneat up your profit or produce a loss if you are working on thin margins,whether you are Exporting or Importing.

A FORWARD CURRENCY CONTRACT allows you to fix a rate of exchange inadvance, which then determines the price you will pay for Imports of themoneys you will receive for Exports in your own national currency (PoundsSterling for example if you are U.K. based).

MAJOR BANKS AND CURRENCY MERCHANTS normally operate these contracts.

EXPORTING: Then you would sell currency forward to coincide with the maturity date ofsay a Documentary Credit in you favour, paying in a foreign currency.

IMPORTING: You would purchase currency forward to coincide with the maturity date ofa debt, say an 180 days Draft (a written promise to pay a supplier, via the banks, an agreed amount atan agreed date - See examples of drafts on slides 42 and 43).

You can also buy or sell currency forward if you speculatively predict that there will be a currency fluctuation you can take advantage of by building a reserve in a certain currency, e.g.: U.S. Dollars,say to pay for future expected imports of goods from the U.S.A.

THE COSTS: Apart from exchange charges/commissions, expect to pay for interest charge on theextended credit if for example buying Australian Dollars 180 days forward.It is worth talking to your bank and/or specialists in the field such as FC EXCHANGE tel. 0207 989 0000. They should give you all the details. 31

Protecting against currency fluctuation

If you are not completely sure of your suppliers competencereliability and compliance you can use surveying and/or inspectionagencies to ensure that you obtain the product you want, producedand inspected the way you want and that it complies with yourrequirements, and specification or an internationallyrecognised standard such as I.S.O. 9001, ISO 200, EN 16001.

Conversely, your client may require the same inspections to be carried out onyour process and goods as is often the case with government agencies purchase orders.

- Cargo Inspection and testing organisations such as Intertek- Production monitoring and quality control orgs. such as Bureau Veritas- Marine Insurance surveyors such as Lloyds Marine Surveyors, who will ascertain that the tanker or bulk carrier for example is fit for the journey, task and purpose.

Search engines, such as Google will give you much more detail and contacts.Lloyds Marine Surveyors. Also other firms who run courses and qualifications in thosespheres. 31Inspection and certification

INSURANCEINSURANCE -

INSURE IF YOU ARE A MANUFACTURER AND IF YOU ARE EXPORTING OR IMPORTING GOODS or make sure that the shipment will be insured by your counterpart.

MARINE INSURANCE General Average: Ancient tradition in the shipping world and one of the conditions of carriage on board dictate that: A deliberate jettison of merchandise in the face or a peril example having to dump goods overboard for the sake of the safety of the vessel (the whole) and other goods The cost is shared proportionately by the owners of the saved merchandise under the General Average rule.

All Risks It is always advisable to cover marine Insurance for ALL RISKS INCLUDING WAR, LOCK OUTS SRCC (Strikes, Riots & Civil Commotions) from the nearest point you are not covered to the farthest delivery point for which you are not covered, ideally you should take cover WAREHOUSE TO WAREHOUSE. Normally you would cover C.I.F. value plus lets say 10% to cover the loss of profit you would suffer by not being able to sell the lost or damaged goods. Your insurance package should also cover you for default goods in transit insurance in the country where you operate, as you are unlikely to be fully compensated for any related loss.

Ensure that your counterpart has covered Marine Insurance If you are selling or buying Ex Works or F.O.B., basis etc. for the same extent of risks as you would AND you must take your own Default Insurance, in case the Importer client fails to insure. Note that you are liable to pay for goods sold to you (Ex Works, F.O.B. etc.) if they are lost or damaged in transit. Therefore insurance matters either way.

-Claims payable in London: If your foreign counterpart covers insurance, make sure that the policy enables claims to be payable in London, giving the name of the London office to be contacted in the event of loss or damage.

The shipping and air cargo companies will only give you very small compensation for loss or damage to your goods. Therefore taking up appropriate insurance is vital.

Piracy: Insurers are reluctant to give cover for sailings into or through regions known for incidents of Piracy. So check ! ( for further discussion).39

Insurance

MORE CAUTIONSon Insurance and Limited liability. WHO CAN ADVISE ? Best insure with firms which give a comprehensive range of business insurance products and the best advice.

If you are just starting with Exporting or Importing, or only do so occasionally, your Forwarding Agent or the shipping company can advise and can effect Marine Insurance Cover for specific shipments(s). Some Banks (foreign documentation departments) can also advise upon and effect for you Marine Insurance Cover for individual shipment(s)If you are or become a regular exporter/importer a good business insurance broker (sometimes your current business insurance broker) and some insurance companies can arrange an Open Marine Policy for your company or a comprehensive cover for your estimated annual value of Goods in Transit (nationally) and Imports/Exports.

Your importer will probably require you to have Product Liability cover with international cover (including USA if possible)naming the Exporter as Interested Party and the Importer on this basis can obtain Default Product Liability Insurance. This in case a product of yours which he imports causes injury or loss and he has to make a claim on the Exporter but something goes wrong.

BUSINESS INSURANCE - Public/Product Liability: As part of your insurance package, if you are a manufacturer you should normally have Product Liability and Public Liability insurance and you should also have corresponding cover for (at least) the territory you are exporting to.

If you are a Trader (Exporter or Importer) you must consider Default Insurance for at least the territory you are trading in in case your suppliers do not meet any liabilities which your company may have to face because of their faulty products.

- WHY GO LIMITED? Trading as a Limited Company, shelters Directors personal exposure to financial risks and certain liabilities.

AND MORE CAUTIONS. BUSINESS INSURANCE - Public/Product Liability: As part of your insurance package, if you are a manufacturer you should normally have Product Liability and Public Liability insurance and you should also have corresponding cover for (at least) the territory you are exporting to.

If you are a Trader (Exporter or Importer) you must consider Default Insurance for at least the territory you are trading in in case your suppliers do not meet any liabilities which your company may have to face because of their faulty products.

WHY GO LIMITED? Trading as a Limited Company, shelters Directors personal exposure to financial risks and certain liabilities.

Protect your innovations: Patent registrations, Design registration, Trade Marks and Copyright if necessary in at least your main present and future main markets. Capture your internet domain in such territories and ensure that your agents and distributors undertake to keep your IP and your domain as yours and to defend you onm their territory.

Part 6: standard correspondence

Abacus Foods Ltd.Unit 5 Greenwich Industrial EstateGreenwich, London SE10 1RET. +44 (0) 208 304 9467 F. +44 (0) 208 304 5678sales@abacusfoods.co.ukRegistered in England No. 234567 V.A.T REGISTRATION NO. 1234561st August 2012

Eurofoods ImportersEuro BuildingsDurbanSouth AfricaOFFER / QUOTATION REF. YOUR ENQUIRY OF 15 Jul. 2012Dear Sirs,

We thank you for your enquiry and are pleased to offer as follows:

20 pallets each 100 cartons 24x500g tins BOBs Tomato Soup @ 4.00/CTN Ex Works Greenwich . 8,000.00(State Estimated when you guess at a figure and dont have a fixed price for the item)Estimated F.O.B. Charges 500.00Sea Freight(containerised on pallets) 1000.00Marine Insurance (if required) 100.00Survey Charges 600.00Certif. of origin (if required) 40.00Estimated Bank Charges 50.00

TOTAL CI.F. DURBAN11,590.00

EXPORT; VAT ZERO RATED V.A.T REGISTRATION NO. ( to enable recovery of V.A.T.)

MARINE INSURANCE COVERED FOR 110% of CIF value for all risks including War, and SCRC (meaning: Civil Insurrection and Commotion, Strikes, Lockouts), Claims payable in Durban (certain goods such as frozen foods can specially covered for freezers not working, therefore enquire with Broker)

Payment by Irrevocable Documentary Credit in our favour payable at SIGHT (or at 60 days from date of shipment) confirmed by (our bank or A First Class London Bank)Permitting partial shipment and transhipment

Our bankers: Greenwich Commercial bankGreenwich High Road BranchLondon SE10 4YZSort code . Account IBAN (Ensure that you have opened an Export bank account which only pays your main account)

*Particularly important when dealing with clients you do not know by reputation.

Subject to our standard conditions of business printed on the reverse (or herewith attached ) and any variation agreed between the parties made in writing.38

Export quotation or offer

Normally only effected if you can ship a complete order as specified by your offer and/or the requirements of a Documentary Credit or bank guarantee.

Abacus Foods Ltd5 Church Industrial Estate, Greenwich, London SE10 7HLT. +44 (0) 208 304 9467 F. +44 (0) 208 304 9468sales@abacus.co.ukEurofoods Importers INVOICE NO. 2456Euro BuildingsACCOUNT NO. 012Cape TownDATE 1 Oct. 2012South AfricaYOUR ORDER NO. 5042 DATED 3 Sept. 2012TO Shipment of containerised canned foodstuff as specified below: Shipped on M/V ANTONIASailed from Felixtowe 30 Sept 2012 with destination Cape Town Voyage No. 342, Bill of Lading of Blue Line No. 48924:

To:20 pallets each 100 cartons 24x 500g tins BOBS Tomato SoupC.I.F. Cape Town 11,550.00Details as per our offer/quotation of 1st August, 2012, copy attached.MARINE INSURANCE COVERED FOR 110% of CIF value for all risks including War,and SCRC (meaning: Civil Insurrection and Commotion, Strikes, Lockouts, - Claims payable in Durban

EXPORT; VAT ZERO RATED V.A.T. REGISTRATION NO. .(to enable recovery of V.A.T you may have paid).

Payment by Irrevocable Documentary Credit in our favour payable at SIGHT (or at 60 days from date of shipment) confirmed by (our bankers or a First Class London Bank)Permitting partial shipment and transhipment

Our bankers: Greenwich Commercial Bank, (Ensure that you have an Export bank account which only credits your main account)Greenwich High Road Branch,London SE10 4YZSort code . Account . IBAN

Subject to our standard conditions of business (normally given with initial offer/quotation and any modification agreed between the parties).39

Export invoice type A: CIF

A standard export invoice which leaves you the flexibility of supplying and pricing for a lesser (or greater) number of goods if permitted by the client and any documentary credit document. You may ask the client to amend his documentary credit to permit a lesser or greater quantity of products Partial Shipment Permitted as long as charged pro rata on an ex works or F.O.B. basis for example. Abacus Foods Ltd5 Church Industrial Estate, Greenwich, London SE10 7HLT. +44 (0) 208 304 9467 F. +44 (0) 208 304 9468sales@abacus.co.ukCompany registered in England No.123456 V.A.T. Reg. No. 6789101st August 2012

Eurofoods ImportersEuro BuildingsDurbanSouth AfricaYOUR ORDER / INDENT NO. 1234 OF 25 August. 2012Dear Sirs,

We confirm shipping of your order as follows:

19 pallets each 100 cartons 24x500g tins BOBs Tomato Soup @ 4.00/CTN ( THE PRICE QUOTED) Ex Works Greenwich . 7.600.00F.O.B. Charges 500.00Sea Freight(containerised on pallets) 1000.00Marine Insurance 400.00 Survey Charges 600.00Estimated Bank Charges 50.00If you can only only find out actual bank charges and other at some later time state EstimatedTOTAL CI.F. DURBAN10,150.00EXPORT; VAT ZERO RATED V.A.T REGISTRATION NO. 678910 (to enable you to reclaim V.A.T.)

Payment by Irrevocable Documentary Credit in our favour payable at SIGHT (or at 60 days from date of shipment) confirmed by (our bank or A First Class London Bank)Permitting partial shipment and transhipment

Our bankers: Greenwich Commercial bankGreenwich High Road BranchLondon SE10 4YZSort code . Account . IBAN (Ensure that you have opened an Export bank account which only pays your main account*)Subject to our standard conditions of business printed on the reverse (or herewith attached ) and any variation agreed between the parties made in writing.*Particularly important when dealing with clients you do not know by reputation. 38Export invoice type B: Ex Wks / FOB

Abacus Foods Ltd5 Church Industrial Estate, Greenwich, London SE10 7HLT. +44 (0) 208 304 9467 F. +44 (0) 208 304 9468sales@abacus.co.uk

Eurofoods ImportersDate 21 Oct. 2012Euro BuildingsDurbanSouth AfricaYour order/indent No. 1234Shipped on M/V Mantova Sailed 21 Oct. 2012Destination Cape Town Voyage 34 Estimated arrival 30 Nov. 2012Certificate of Shipment of Blue Line No. 48924

Dear Sirs,

We thank you for your valued business and have pleasure in announcing the shipment of your above mentioned order as follows:In case of Collection through Bank:a) We enclose the following copy documents, originals submitted though ...Bank for presentation to you C.O.D. (or against acceptance of our draft at sight, 30, 60, 90days (as pre-agreed):In case of negotiation against Letter of Credit:ORb) We enclose the following copy documents, originals being submitted to .Bank for negotiation against your letter of credit:In case of Open Account:ORc) We enclose original documents as follows: (in the case of business conducted on Open Account / Account 30,60,90 days etc.)Invoice in 3 copiesCopies Bill of Lading / Certificate of ShipmentCertificate of Origin EUR1 (as and if required)Health Certificate / Surveyors Report etc. (as and if required)

The invoiced food products fall under Harmonised Customs Tariff 2405 5000 (this is optional information).

We wish you safe and timely arrival of the goods, and look forward to being of service again in the near future.

Yours faithfully, 39

Invoice covering letter

Sometimes referred to as DRAFTNormally supplied by Commercial Stationers as Books of Bills of ExchangeFRONT OF BILL No. At sight pay this sole/ first/ second of exchange ------/ second / first unpaid for the sum of .................................................................................................................................................................................................................................

To the Order of: (drawer) Normally the seller Name of Bank: (of drawer) the sellers bankAbacus Foods LtdGreenwich Commercial Bank 5 Church Trading EstateHigh StreetLondon SE10 4YZGreenwich, London SE10 2XYReference: Order No. ..,, L/C of HSBC No. .._______________________________________________________________________________________________BACK OF BILL On the reverse: The drawee normally the Buyer or Client accepts this Draft by writing:To Bank of Transvaal, Liberty Road, Cape Town. The Buyers bank usually issuing bank in case of L/C

Authorised signatory signature ... Date. For: CAPE IMPORTS PTY LTD. and applying company stamp over signature

42The bill of exchange

FRONT OF DRAFT (BILL)

$ 25,000 Date 10 October 2012 No. .

TENOR (course of time) 90 days after sight

PAY TO THE ORDER OF (the Seller) Abacus Foods Ltd., Church Trading Estate, Greenwich, London SE10

with Account at:(Bank of Seller) Greenwich Commercial Bank, High St. Greenwich, London SE10 A/c 40-42-25 406090

The sum of Twenty five thousand only ---------------------U.S. DOLLARS (the total invoiced -normally)

REFERENCE: Drawn under Letter of Credit (details and date)Issued by Bank of New York

DRAWN ON: Bank of America (the Buyers bank and in the case of L/C the bank issuing the L/C)22-24 Lexington Ave.New York, U.S.A.... Abacus Authorised signatory-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------BACK OF DRAFT (BILL)

The Buyer (the Drawee or Payee who banks with Bank of America, given as example, must endorse draft (sign date and apply company stamp over signature) on reverse to confirm acceptance.

43American bill of exchange

Transport or Transit documents take the form suitable for the mode of shipment: From an exporters and an Importers view points:

1. Bill of Lading (Connaissement): is issued by the sea/ocean shipping companies for conventional shipments of full container loads or fully compartmentalised goods.

2. Certificate of shipment: is issued by sea going container operators for goods from different exporters which are grouped in the same container for shipment to the same port for different respective importers. This method of grouping consignments is termed Grouppage.

3. Way Bill: is issued by international road transport operators, the vehicles are big lorries or vans usually referred to as trailers and articulated trailers or artics as a short description.

4. Airway Bill: issued by Air Freight operators much in the same form.

The transport or transit document not only serves as a Delivery Note but is considered as a DOCUMENT OF TITLE (entitlement to ownership) for the goods it described on it, in the name of the CONSIGNEE. The document should fully detail the goods, their weight and dimensions and any Shipping Marks Marking of parcels is usually specified by the recipient of the goods.

When the original document has to be channelled through a bank, to be released against a promise of payment, the Seller instructs his Forwarding Agent to ask the Shipping Company or container operator to write in the CONSIGNEE box of the document such as the bill of lading TO ORDER with the eventual recipient of the goods mentioned in the NOTIFY box andthe supplier of the goods then BLANK ENDORSES the bill of lading on the back with his stamp and signature. See Transit Documents on slides 45-46. and Letter of Credit (Documentary Credit) slides 53-54 44

Bon voyage!

Part 8: Transport documents

Part 9 - Bills of Lading

Airway Bill

Airway Bill

.LONDON CHAMBER OF COMMERCE SERVICESwww.londonchamber.co.uk

Apart from general Certificates of Origin:LINKS TO OTHER EXPORT DOCUMENTATION SERVICES:

European Community EC Certificate of Origin Arab-British Certificates of Origin EUR1 Movement Certificates ATR Movement Certificates Export Documentation Price ListMay 2014Members receive up to 50% discount on most export documents. For more information on Certificates of Origin, EUR1 and ATR Movement Certificates or any other export documentscontact us onT:+44 (0)20 7203 1852orE:Export Documentation.To speak to our team about how LCCI membership can help you connect with other businesses, influence on your behalf and provide practical support; contact us onT:+44 (0)20 7203 1881orE:membersales@londonchamber.co.uk. Alternatively you can give us a few detailshereand we'll call you backor complete anonline application form.

.ATA Carnet

"Istanbul Convention" redirects here. For the Council of Europe Convention on preventing and combating violence against women and domestic violence, sometimes referred to as "Istanbul Convention", seeConvention on preventing and combating violence against women and domestic violence.

Jointly administered by theWorld Customs Organization(WCO) - www.wcoomd.org and theInternational Chamber of Commercethrough its World Chambers Federation, the ATA Carnet is an international customs document that permits the tax-free and duty-free temporary export and import of goods for up to one year.

The Carnet eliminates the need to purchase temporary import bonds. So long as the goods are re-exported within the allotted time frame, no duties or taxes are due. Failure to re-export all or some of the goods listed on the Carnet results in the payment of applicable duties and taxes.

Failure to remit those duties results in a claim from the foreign customs service to the importer's home country.

The acronym ATA is a combination of French and English terms "Admission Temporaire/Temporary Admission.".

..ATA Member countries:

The ATA Carnet System is currently in force in the following 73 countries and regions:

Albania, Algeria, Andorra, Australia, Austria, Belarus, Belgium/Luxembourg, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China*, Cte d'Ivoire, Cyprus, Czech Republic, Croatia, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Hungary, Iceland, India, Iran, Ireland, Israel, Italy, Japan, Republic of Korea, Latvia, Lebanon, Lithuania, Macau, Macedonia, Madagascar, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, Senegal, Serbia, Singapore, Slovak Republic, Slovenia, South-Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom and United States of America.

In China, India and the UAE, the use of Carnets is limited to fairs and exhibitions.

A system similar to the ATA Carnet System operates on the basis of bilateral agreements between Chinese Taipei and a certain number of ATA Carnets including the EU Member States, Australia, Canada, Israel, Korea, Malaysia, New Zealand, Norway, Singapore, South Africa, Switzerland and the United States of America.

.. EUR.1 movement certificate

Thisis a form, which is used in international commodity traffic. The application of this form is based on application of variousbi- andmultilateralagreements within the Pan-Europeanpreference system(theEuropean Union Association Agreement).

In the free trade agreements goods are defined, which apply to cheaper rates of duty or to be completely duty-free introduced, on the condition that they were completely manufactured in a member country or in such were so far worked on that they become on an equal footing in accordance with the agreements of the origin of the products. In order to profit from the preferential rate during acustoms clearance, a EUR.1 movement certificate, in short EUR.1, must be handed over to the competent authority (usually a customs administration), in which the manufacturer certifies the origin of the goods.

The EUR.1 is recognized also as acertificate of originin the external trade in legal sense. In place of a movement certificate also adeclaration of originon the invoice can be provided by the manufacturer or sender of the goods, if the amount of items with EUpreferential originof a single shipment does not exceed6,000 -If it concerns anapproved exporter, the delimitation of 6,000 Euro applies. If it is not anapproved exporterit does not apply, The creator of such a movement certificate or declaration of origin must be able to prove the origin characteristics of the goods with a possible check on supplier declarations.

The exporter fills in the form and then hands it over or sends it in to the competent authorities, usually customs, who stamp it and send it back to the exporter.

.AfricaTunisiaSouth AfricaAlgeriaEgyptMoroccoAmericaChileColombiaMexicoRepublica DominicanaEuropeAlbaniaBosnia and HerzegovinaGeorgiaIcelandLiechtensteinSerbia/KosovoMacedoniaNorwaySerbiaSwitzerlandMoldova, Republic ofUkraineMiddle EastIsraelJordanLebanonSyriaACP countriesRegulated through theCotonou-agreement, which is not a traditionalFTA, but rather a non-reciprocal agreement(ACP| African, Caribbean, and PacificGroup of States)

African, Caribbean and Pacific Group of States. Features documents, mission statement, information on membercountries, agendas and press releases. www.acpsec.orgList of countries with which the EU has a Free Trade Agreement where the EUR.1 is used:

ATR MOVEMENT CERTIFICATE FOR TURKEY

WHAT IS AN ATR MOVEMENT CERTIFICATE AND WHY DO I NEED ONE?

The ATR Certificate entitles goods, which are in 'free circulation' in the EU (i.e. the goods are EU-originating, or on importation into the EU all the relevant duties and taxes have been paid) to receive preferential import duty treatment when shipped to Turkey. This applies to all eligible goods except agricultural goods, minerals and steel which require an EUR1 Movement Certificate.When completing an ATR form it is advisable that the exporter or authorised agent consults HM Revenue & CustomsNotice 812 HOW LONDON CHAMBER OF COMMERCE CAN HELP

ELECTRONICALLY.

Over the counter from London Chamber of Commerce, 33 Queen Street, London EC4R 1AP or at one of the Chambers export document branch offices

By post

HOW DO I APPLY FOR AN ATR MOVEMENT CERTIFICATE? Obtain a Blank Original ATR Form from the London Chamber of Commerce Read the Guidance Notes below Apply over the counter, by post or electronically

Part 10- Customs Freight Simplified Procedures (CFSP)

Administered by HM Revenue & Customs (HMRC), is an electronic customs system for imported third country goods.

It allows faster release of goods from countries that are not members of the European Community (EC) at the frontier or inland, the use of simpler customs declarations and cash-flow benefits to importers.CFSPisnt compulsory but you may find it useful.

There are twoCFSPprocedures. The Simplified Declaration Procedure (SDP) is used for releasing goods at the frontier to most customs procedures. This may be useful if you are importing perishable goods. The Local Clearance Procedure (LCP) is used for moving goods from the frontier to storage and then releasing them to acustoms procedure. This guide shows you how to become authorised forCFSP, how its accountingsystems and customs procedures work, whether an agent could help you, and how to find expert help.

CFSPeligibility and restrictionsCFSPare electronic customs declaration processes for speeding up the importation of goods from third countries. You can opt to use either theSDPorLCP. In both cases you submit the declaration in two stages. Either of these procedures can be used independently or they can be combined to suit your purpose.

Eligibility of goods forCFSPCFSPis suitable for most goods from third countries. However, controlled goods may only be released from the frontier usingSDP- ie you cannot useLCPto release controlled goods inland, with certain exceptions.

Licensing - controlled goods andCFSP (More to follow, so look up and read on, please )

The National Export System

(NES) is a computer-based system which enables export declarations to be made electronically, replacing manual processing. Use ofNESis mandatory for exporters, who must be authorised to use it.NESoperates within the nationwide electronic Customs Handling of Import and Export Freight system (CHIEF) which controls the movement of international cargo.

The EUs Export Control System (ECS), electronically controls indirect exports and was built ontoCHIEFin the UK so there is usually no requirement to submit a separate safety and security declaration, as aCHIEFexport declaration contains the additional ECSfields.

Re-Exports etc. : Goods under a transit procedure within the EU prior to export to a third country are also covered in this document.

The National Export System and how to use it:The electronicNESmust be used by exporters to declare to customs their intention to export goods to third countries - ie countries outside the EU.

Gaining access toNES:NESoperates viaCHIEF, the nationwide computer system that electronically controls and records the UKs international cargo movements. All export declarations must be submitted electronically toCHIEF. SeeCHIEF: trader import and export processing system.Two export simplified procedures are available underNES: the Simplified Declaration Procedure (SDP) or the Local Clearance Procedure (LCP). For authorisation to use one of these you should complete and return theNESapplication form. Access theNESapplication form C&E 48 from theHMRCwebsite.So please, Google search and read on.

COST PER UNIT OF SALES ABROAD:Subtract your U.K. sales and marketing costs to find -Your Net Export Ex Works price per per unit of sale. Then to arrive at the end user product cost abroadyou have to add the following: Cost of shipping per sales unit from your warehouse to clients warehouse including marine insurance (120% of C.I.F. value?) and shipping/forwarding agents charges also any special packaging, pallets and treatment. Cost of interest on credit and bank charges. Add a 1 - 5% margin for possible currency fluctuation if invoicing in other than Pounds Sterling.

Cost of any Credit Protection Insurance.Cost of any fixing of currency exchangeCost of obtaining any certificates of origin and consular legalisation, If required by Importer etc.Import duties if any and Sales Tax (V.A.T.) in importing country. Specially if you are selling Delivered Duty paid (Franco): Obtain information on import duties and other taxes as well as any E.E.C. export levy/rebate from H.M. Customs & Revenue on Harmonised Tariff of your product and relative import duty and import license and quota conditions in country of import. Your Importer should also assist you. See H.M.R.C. website.Importer Margins: Get your importer/distrubutor to agree to a reasonable gross margin and add that.Retail margins: Get a good idea of retail margins and any regional sales taxes and add those to come to your final estimated retail price.Marketing costs: advertising, commissions. All to be calculated per unit of sales. SOME INTERNATIONAL COMMERCIAL TERMS:(Memorise these and their meanings)For complete description see INCOTERMS:

Ex Works: Cost of your product at your factory or warehouse gate.F.A.S. Felixtowe: Normally means delivered Free Along Side of ship at port of departure or sea going container at container terminal eg: Startford London Container Terminal.F.O.B. Sheerness: Normally means delivered free on board a ship at Dover, (usually nowadays packed in sea going container).CFR NEW YORK Covers cost of export clearance, delivery to port of exportation and forward transport (Freight) to port of destination, sometimes this term is stretched to cover freight all the way to an inland address). You must ensure that the importer has covered Marine Insurance with claims payable in London if appropriate out of your control AVOID.

C.I.F. SAN FRANCISCO: Covers the same as C & F plus (includes) the cost of Marine Insurance.

FRANCO or DELIVERED say DELIVERED NEW DELHI, or FRANCO NEW DELHI (can specify DUTY PAID): delivered to a point specified by importer: Covers in addition to C.I.F. the cost of import customs clearance work (not the import duty unless specified) in import country and onward cartage to specified INLAND address/warehouse (New Delhi) - See INCOTERMS for full definition.

58

Costing for export

Costing Example:This is not intended to be a full cost exercisePRODUCT: Example spray cooking oil in 250ml plastic bottles fitted with a spray device.Let us say that our accountants have calculated that our mainly national total overheads in the last financial year corresponded to 25% of our total sales. It would not be fair to assume the same for our exports, rendering us uncompetitive overseas.

COSTING FROM PRODUCTION TO PORT OR POINT OF ARRIVAL per bottle: Sterling250ml of spray oil composition0.16Plastic bottle and spray-pump0.10Cost of outer case divided by 120.04COST OF MATERIALS0.30Direct Energy cost (pasteurisation, running machines, heat/light)0.01Direct labour cost0.02Amortisation of plant and maintenance costs0.01Other direct internal costs0.010.04 Advertising / promotional allowance 20% 0.350.69EXPORTERS PROFIT 10% 0.04If shipped to Russia, via sea ports Odessa or Murmansk, ultimate destination Moscow by full container or trailer loads or grouppage*: Aggregate of C.I.F charges, proportioned - =====TOTAL C.I.F. Russian Port0.73------IMPORT DUTIES into let us say Russia 20% on C.I.F.costconverted to St.0.09Inland transport to Moscow converted to St.. 0.05 0.14TOTAL DELIVERED Importers Warehouse duty paid (cost to the importer) convert. to St0.87-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------IMPORTERS AND RETAILERS ADDED COSTS: Note: Uplift of 25% on cost (or cost x1.333) gives a 25% gross margin. (See Annex Margins) Uplift by Importers 25% uplift on return** 1.16x100/75 = (1.16x1.333) Expressed in St. Wholesale list price1.16Uplift by Retailers 25% uplift on return** 1.54x100/75 = (1.54x1.333)Expressed in St. Net Retail price1.54Add Sales Tax, say 20% Expressed in St. Actual Ret. Price1.85CONCLUSION: Competition retail Price is 1.50, this gives the opportunity to increase our profit margin and or our advertising budget or remain keenly cheaper to kill off the competition. Our product may have the PATENTED advantage of a fixed 1Cal output per spray, vitamin E (as antioxidant) and using Sunflower lecithin which is non allergenic against soya lecithin with its allergenic connotation.

Annex 6EXPORT PRICE LIST BASIS Based on shipments of 10 pallets of combined goods. Shipping cost based on say 100 per 1000kg or per m whichever is the greatest. Marine insurance 1.5% cover for all risks including war and SCRC for CIF value + 10%

Competing effectively The Fry-Light example in the Irish Republic

PRODUCT: Fry-Light TM cooking oil in 250ml plastic bottles fitted with a spray-pump,dispensing exactly one Cal. of oil spray per spray actuation, so easy to count Cals.

CONSIDERATION: to compete against a cheaper to make Belgian made Flora brand aerosol cooking oil retailing in the Irish Republic at Euros. 2.29 for 200ml.

OVERHEADS: As manufacturer, our main consideration will be that of overheads (variable and fixed) which aggregate the annual costs such as total wage bill, rent, rates (recurring tax on premises), national advertising, power, water/sewerage, business insurance, waste collection, maintenance, depreciation and travel costs.

Since these overheads were already covered by our National business; for Exports I only used to allocate direct costs, meaning that I did not attach to exports the all office costs or the National (U.K.) Sales Directors salary and travel costs. In practice I covered the specific export related overheads by judgement, within the gross profit I was able to reach, and allowed for local Distributorss margin, freight charges, any import duties, etc. in order to compete in any export market.

EFFECT: We were able to make available a technically superior product at slightly better value than that of the competition on the supermarkets shelf:Fry-Light 1 Cal. sprayEur 2.57 for 250ml (Eur 1.03/100ml) Flora aerosol Eur. 2.29 for 200ml (Eur 1.14/100ml)and we made a nice little Export profit to add to our National Sales profits Thanks! The increases in production resulted in increased plant efficiency, also greater automationand increased quantities of imports = lower prices = bigger margins ! Thanks again !! More details on costing see slide 21 and handout slide 43 and photo slide 48. 57

THE AGREEMENT BETWEEN SELLER (the Principal)AND BUYER (sometimes known as the Distributor). The main points:

Name and address of Seller: Name and address of Buyer:

Purpose of the agreement: The Seller appoints the Buyer as Exclusive Distributor within the territory and for the products which the Seller manufactures as specified below.:

TERRITORY: South Africa (for example) -

Product(s) description: ....... Price(s): Delivery Terms: C.I.F.10% South African Port (meaning you insure the goods for C.I.F. value plus 10%).

Payment and Credit Terms: Irrevovable Letter of Credit at Sight confirmed by HSBC Bank , London, or other methods.

Duration of agreement: 1st June 2012 to 31st May 2013 Renewable automatically? Cancellation: reasons forGeneral conditions of Business: Each Seller will normally have its peculiarities in business. This should include for example that ownership of goods remains with the seller until invoice is fully paid for whilst responsibility for suitable transport and storage of the goods starts at Eg.:departure from the sellers control or warehouse. Also that Buyer must test the product to ensure suitability for purpose, before using it (in production, as example.DUTIES OF SELLER: To manufacture and supply the Product(s) as per agreed specification and effect deliveries as instructed and supply the following documentation (as needed):

- Detailed Invoice (showing cost of goods (Ex.Works, F.O.B, C.I.F.), and any calculations leading to total price.- Packing Note showing number and weight and measurements of goods and how assembled- Bill of Exchange: Sole, or in duplicate or in triplicate (Will be detailed later).- Bill of Lading or Certificate of Shipment. If via documentary collection: B/L in triplicate, BLANK ENDORSED, NOTIFY PARTY: (usually the name and address of Buyer), showing the goods exactly as described on the L/C accepted CLEAN ON BOARD for Containerised Shipment sailing within 30 days of receipt of order for direct sailing to South African Port (outlined in part 2).

- Certificate of origin: In this case a Eur1 certificate which you can complete yourself on the appropriate form (will be outlined in Part 2). Other cases require Chamber of Commerce certificate plus Consular Legalisation.

- Insurance policy or certificate of insurance: Covering all marine risks including war and civil disturbance or insurrection for C.I.F. value plus 10%, claims payable in London / Durban.

Survey/Inspection/Control certificate: This is only normally required for particular trades and goods. 64

Part 11- Agreements type A

THE AGREEMENT BETWEEN SELLER (the Principal)AND BUYER (sometimes known as the Distributor). Main points:

Name and address of Seller: Name and address of Buyer: Purpose of the agreement: The Seller appoints the Buyer as Exclusive Distributor within the territory and for the products which the Seller manufactures as specified below.:Territory: South Africa Product(s) description: ....... Price(s): Delivery Terms: C.I.F.10% South African Port (meaning you insure the goods for C.I.F. value plus 10%).Payment and Credit Terms: The seller will issue for every order (or for a certain contract of supply) an Irrevocable letter of Credit (could also be a Standby L/C) confirmed by a First Class London Bank (or the Buyers bank) in favour of the Buyer allowing part-shipment and trans-shipment for up to a St.amount (up to the maximum amount of cost of goods), shipping and insurance. Duration of agreement: 1st June 2012 to 31st May 2013Renewable automatically?/ by further mutual agreeable extension of term. Duties of Seller: To manufacture and supply the Product(s) as per agreed specification and effect deliveries as instructed by individual written orders from the Buyer and to deliver to specified container terminal (or suitable sea going vessel) within 30 days of receipt of order, furnishing the following documents:- Detailed Invoice (showing cost of goods (Ex.Works/F.O.B), cost of shipping, insurance, certificate of origin costs, surveyor/Test laboratory costs if applicable- Bill of Exchange: in duplicate or in triplicate (Will be outlined in part 2)- Bill of Lading or Certificate of Shipment IN TRIPLICATE, BLANK ENDORSED, NOTIFY PARY IN NAME AND ADRESS OF BUYER, showing the goods as described accepted CLEAN ON BOARD for Containerised Shipment sailing within 30 days of receipt of order for direct sailing to South African Port. (Outlined in part 2).- Certificate of origin: As U.K. exporters use an Eur1 certificate which you can complete yourself on the app (will be outlined in Part 2). Other countries can require Chamber of Commerce cert. of origin legalised by their consulate.- Insurance policy or certificate of insurance: Covering all marine risks including war and civil disturbance or insurrection for C.I.F. value plus 10%, claims payable in London / DurbanSurvey/Control certificate: This is only normally required for particular trades and goods. Should be effected by a specified survey organisation such as the Lloyds Maritime Surveyor whose duties should be specified such as tests and inspections before and during loading and sealing of container for example). Example: to ensure that a Bulk Carriers (oil-tanker) which has discharged crude oil is thoroughly cleaned and dried before loading it with grain (wheat / soya beans etc.) and quality control inspection/tests on the grain (quality For Food Products could include a Health Certificate issued by an appropriate authority such as the local Environmental Health Authority.

Agreements type B

Duties of Seller:

To manufacture and supply the Product(s) as per agreed specification and effect deliveries as instructed by individual written orders from the Buyer and to deliver to specified container terminal (or suitable sea going vessel) within 30 days of receipt of order, furnishing the following documents:- Detailed Invoice (showing cost of goods (Ex.Works/F.O.B), cost of shipping, insurance, certificate of origin costs, surveyor/Test laboratory costs if applicable

- Bill of Exchange: in duplicate or in triplicate

- Bill of Lading or Certificate of Shipment (for LCL) fir example: IN TRIPLICATE if L/C, BLANK ENDORSED, NOTIFY PARY IN NAME AND ADRESS OF BUYER, showing the goods as described accepted CLEAN ON BOARD for Containerised Shipment sailing within 30 days of receipt of order for direct sailing to South African Port. (Outlined in part 2).

- Certificate of origin: As U.K. exporters use an Eur1 certificate which you can complete yourself on the app (will be outlined in Part 2). Other countries can require Chamber of Commerce cert. of origin legalised by their consulate.

- Insurance policy or certificate of insurance: Covering all marine risks including war and civil disturbance or insurrection for C.I.F. value plus 10%, claims payable in London / Durban

Survey/Control certificate: This is only normally required for particular trades and goods. Should be effected by a specified survey organisation such as the Lloyds Maritime Surveyor whose duties should be specified such as tests and inspections before and during loading and sealing of container for example). Example: to ensure that a Bulk Carriers (oil-tanker) which has discharged crude oil is thoroughly cleaned and dried before loading it with grain (wheat / soya beans etc.) and quality control inspection/tests on the grain (quality For Food Products could include a Health Certificate issued by an appropriate authority such as the local Environmental Health Authority. 50

Agreements Duties of Seller

Duties of the Buyer: To pay the seller for the goods ordered and shipped as instructed by the Buyer.To exercise maximum efforts in the marketing and promotion of the Sellers product(s). To always hold and consider the Sellers brands and other Intellectual property and technology/design whether registered or not as the Sellers property and to assist the Seller in defending its intellectual property registered or assumed (such as the passing off of brand or design).Buyers distribution margins and selling price structurePromotion and Advertising budget: The Seller will advance . OR The Seller and the Buyer will share 50/50 a mutually approved promotion/advertising programme for the first 12 months of launch to a minimum of . and a maximum of ..Termination: At any time after the first 6 months of trading either party can terminate this agreement by giving the other side 90 days notice by registered air mail letter/ fax/ email.Breach of agreement: Should one side breach agreement, the second side has the right to terminate the agreement unless the fist side corrects the breach within 3 working days of notification by any means from the second side and if breach not rectified by that time or by further agreement within the 3 working days, it will enable the offended party to terminate this agreement by giving 14 days notice.Delivery of notices: Delivery of notices can be effected by email or by fax and will be deemed as received by the intended recipient during the morning (9am to 12 noon) of the working day received by the recipient or the next working days morning and will count as the first day of receipt of notice.Jurisdiction, Interpretation and Disputes: This agreement will be governed by the laws of England and if translated in other languages, the English language version will prevail. If either side cannot agree on any matter including interpretation of this agreement and cannot resolve it mutually , then either party can refer the matter to an independent arbiter appointed by the English court of arbiters, and if still unresolved to the English Courts of justice whose ruling will prevail.Conditions of Business and Liabilities: as per standard conditions of business of the Seller copy attached unless otherwise stated in this agreement which will override.

SIGNED AND DATED BY SELLERSIGNED AND DATED BY BUYER 51Agreements Duties of Buyer

Protect yourself from fraud by opening an Export Bank Account which receives payments for exports but does not pay anyone else but you. These are the usual forms settlement and finance.SAFEST MODES:Payment in advance in Green Notes or to your export bank account: particularly if the client is an unknown. A small discount encourages advance payment. Bankers Guarantee basically assuring you that a bankpays you on presentation of invoice etc.IRREVOCABLE letter of credit also termed IrrevocableL/C or Irrevocable Documentary Credit, stipulating that:The bill of lading to be drawn up in the Consignee box:CONSIGNED TO ORDER and BLANK ENDORSED, With the descriptions of all details: nature and number ofgoods and terms of payment exactly as written on yourquotation (as banks check everything to the letter and do not easily accept mistakes):To permit partial shipment and transhipmentTo be CONFIRMED through your own bank and giveaddress. Your own bank should give you more leniencyon discrepancies than other banks - or at worse, a First Class London Bank normally meaning an old established British Bank, (not the Bank of Baroda). Stipulate PARTIAL SHIPMENT PERMITTED, alsoTRANSHIPMENT PERMITTED. All this will be explained. If you are an Agent for a Supplier/Manufacturer you canhave a TRANSFERABLE L/C.An L/C can be used as collateral to obtain finance.

Credit Cards and PayPal are normally used for small value transactions.

SECOND BEST:

a) Letter of Credit (not Irrevocable):.b) C.O.D. = Cash Against Documents: ..d) SIGHT DRAFT: e) DATED DRAFT: For all the above methods follow your banks instructions and complete their forms.

TRUSTWORTHY ?

OPEN ACCOUNT: Such as Account 60 days, or Monthly Account (settlement at end of month followingshipment).To proceed with such OPEN accounts you have to knowand trust your client implicitly and check at least yearlythat they remain profitable through creditchecks by agencies such as Dunn & Bradstreet, your bank or directly through the equivalent of Company House in the country of the client.BARTER (goods exchange): practised in some cases.

FINANCE AND EXPORT CREDIT RISK INSURANCE :Finance can be arranged through mostly the main U.K. banks and those banks who have entered into the governments scheme (M.G.A.) for certain countries or for others directly with UK Export Finance. An L/C can be used as collateral. Usual min. invoice value 25,000.Credit Insurance is arranged by some insurers and for exports there is the U.K. government Export Credit insurance Guarantee scheme (ukexportfinance) 52

Getting paid and banking procedures

CAUTIONARY GUIDE TO DUPLICATE DOCUMENTS and their allocation:

ADVANCE PAYMENT: If you are paid in advance, you can in practice give up the three originals of the B/L or Cert of Shipment and any insurance docs. to the importer. Always send sets of docs by registered airmail or by air courier on three different days to meet different aircraft.

2. L/C: IF YOU WILL BE PAID VIA CONFIRMED IRREVOCABLE L/C, In theory, you should give over all documents of title (Originals of B/L or Cert of Shipment) against the L/C via the bank. However, in practise, I insist to keep one original out of the 3 until I got paid, because if for some reason the buyer changes his mind, or he or his bank protest any item of documents and no compromise can be reached, the goods have to be returned to you. Then you hold a document which will enable you to get the goods back with less complications. You also keep one orig. of the Insurance Policy/Certificate.

3.D/C and C.A.D.: Normally, you send two originals of the B/L via the bank and hold onto one original of all the documents for the same reasons.

DEBT RECOVERY ABROADWhilst it is relatively easy to recover debt from a liquid company or firmwithin the UK, by threatening court action or starting court action, what do wedo when the Debtor is abroad?

My way was to ask my UK patent agent to ask their counterpart abroad torecommend a local debt collector. Usually the client was in financial troubleand I was only able to obtain partial satisfaction.

If you dont have this connection, you can telephone your embassy orconsulate abroad to recommend a lawyer.

You can also contact international law firms based in London or your capitalcity but they are so costly and will only deal with big debts.

Nobody told me that there are established International Debt collectors,such as the Maidstone, Kent based STA International debt collection agency.I also discovered the Credit Services Association who can put you in the rightDirection with members sucs as Atradius and Coface. Intrum Justitia specialise in debts from South America and Portugal. In Turkey debtors taken to court can get away with a fine and not pay the debt.

PREVENTION IS BETTER THAN CURE SO CHECK YOU CLIENT OUT AT THE START AND THEN AT LEAST YEARLY.

The trouble and expense you incur should be relative to the sums involved.

.FACTORING MEANING INVOICE OR DEBT FACTORING

This means you get a bank or similar to finance the sale or an order and thereforeFactor the invoice.

In some instances if agreed, the Factor also takes the risk or any bad debt and normally insures against it.

They check the financial position and reputation of your client before they agree to factor.

As example Bibby Financial Services offers a comprehensive funding and collectionService and have a multilingual team and a global network of companies.

Others are Close Finance, Squire Capital and GE Finance.

Avoiding snags with your L/C.The Banks standard forms for Letter of Credit Application as the one of HSBC with have printed suggestions for your instructions such as:Part shipment: Not allowed Transhipment: Not Allowed Time for presenting documents to the bank: 15 days (after ship sailing).

To avoid sometimes unpredictable problems, this is what I have practised:

However, if you are manufacturing an order of 2000 cases of ketchup for the client andparticularly if a special formula with a special brand labelled in let us say Arabic etc. Youmay need to ask for: the L/C to allow partial shipment at pro-rata FOB price basis; or for the L/C to allow Ordered quantity +/- 10% charged at pro-rata FOB price basis.

If your ship which is intended to sail from Southampton England to Mumbai India has mechanicalproblems or is damaged during the sailing, it may out of necessity be diverted to the nearest harbouralong its journey at the time of the problem. If sailing through the Suez Canal, the ships captain findsit appropriate to anchor for repairs at Port-Said and the goods to be TRANSHIPED to another vesselin order to complete the voyage to Mumbai. Therefore stipulate: Transhipment Allowed.

Time for presentation: If the goods you are shipping are for one of those countries such as Iran whorequire Certificate of Origin LEGALISED by their consulate in London, you may need more time for presentation of documents and I insist for at least 21 days. This will not cause inconvenience for or incur Demurrage costs to the importer, because the sailing time to such destinations may be will be of at least 21 days.

Notre that once the London bank has your documents they then send them to the importers local bank by air courrier, and soon after they are passed to the Importer after his acceptance of the draft (the Bill of Exchange).

Documentary Collection (D/C) or commonly, Sight Draft:Printed handout available: As Exporter, an application to your bank enclosing transaction documents appertaining to goods shipped, including Bill of Lading (first and Second only) with draft(s) (bill of exchange) sole or first and second, giving instructions for the documents to be released by the banks correspondent abroad to the Importer upon his acceptance of the draft (which could be at SIGHT or at 60 days, 180 days etc.

Cash Against Documents:Printed handout available: As Exporter, an application to your bank enclosing transaction documents relating to goods shipped, with instructions to the bank for the documents to be released to the banks correspondent abroad upon receiving monetary settlement for the invoice for transmission to you the exporter. Therefore here no Bill of Exchange (draft) required. The Importer must pay promptly.

CAUTION:The Exporter should keep one of the three Originals of the Bill of Lading or Certificate of Shipment and one of the Marine Insurance copies. This is just in case the Importer fails to honour the d