International Commercial Documents

© 2007 Thomson, a part of the Thomson Corporation. Thomson, the Star logo, and Atomic Dog are trademarks used herein under license. All rights reserved.

International Commercial Documents


Documentation Requirements

Invoices

Export Documents

Import Documents

Transportation Documents

Electronic Data Interchange

Document Preparation as a Marketing Tool




Invoices

Export Documents

Import Documents







• An international shipment requires many different types of documents.

• Each of these documents must be filled in a very specific fashion, often depending of the country of destination of the goods, the type of goods, the method of transportation, the method of payment chosen by the exporter and importer, the bank(s) involved, and so on.

• Each of these documents must also contain very detailed information and specific statements, and must be often be filed in a certain time frame with a specific administration.

• It is common to have to issue more than one original for some of these documents, as well as a multitude of copies.



Invoices

Export Documents

Import Documents






InvoicesCommercial Invoice• Refers to a specific shipment

• Tells exactly what the importer is billed for. It must include: A precise product description An accurate Harmonized System number The terms of trade (INCOTERMS) A detailed list of the items that the exporter has pre-paid The terms or payment The currency of payment The complete shipping information (itinerary, shipping carrier, etc.) The customary information (names, addresses, etc.)


InvoicesPro-forma Invoice• Not an invoice, but a quote

• Must be carefully written: if it is used to obtain a Letter of Credit, it should match the actual invoice exactly to avoid discrepancies.

Consular Invoice• Necessary for exports to decreasing number of Latin American

countries.

• Commercial invoice printed on stationery of importing country’s Consulate, and stamped by Consulate.

• Considered a trade barrier.



Invoices

Export Documents

Import Documents






Export DocumentsExport License• Export license is the express authorization by a country’s

government to export a specific product before it is shipped.

• Reasons for a country requiring an export license: Government is trying to exert some control over foreign trade for

political or military reasons. Government is attempting to control the export of natural resources. Government is attempting to control the export of national treasures

or antiques.


Export DocumentsU.S. Export Controls • U.S. export policy has been based on denying some countries

access to certain [military or dual-use] technologies.

Individual Validated Export License • The express authorization, granted by the United States

Government, to export a particular product to a particular individual in a particular importing country.


Export DocumentsU.S. Export Controls• The Bureau of Industry and Security publishes a Commodity

Control List, which lists products that cannot be exported.

• The BIS publishes lists of persons and companies that cannot import from the United States, called the Entity List and the Blocked Persons List.

• The BIS publishes a list of U.S. persons who are no longer allowed to export, called the Denied Persons List.


Export DocumentsU.S. Export Controls• Destination Control Statement

A formal statement that an exporter has to print on its invoice and on the Shipper’s Export Declaration if the goods shipped are subject to a validated export license:

“This merchandise licensed by U.S. for ultimate destination [name of country]; diversion contrary to U.S. law prohibited.”


Export DocumentsShipper’s Export Declaration (U.S.)• A document collected by U.S. Customs designed to keep track

of the type of goods exported from the United States, as well as their destination and their value.

• The Shipper’s Export Declaration (SED) is required for: Exports valued at more than $2,500 ($500 for parcels sent through

postal system) for each HS number. Shipments requiring an Individual Validated Export License.

• Other countries have similar data-gathering requirements.


Export DocumentsExport taxes• Several countries tax exports of certain commodities.

• May be justified when goods are natural resources in short supply or when product has been heavily subsidized by government.

Export quotas• A limit, set by the exporting country’s government, on the

quantity of a specific commodity that can be exported in a given year.

• May be justified to control scarce resources or prices of products for which country has a monopoly.



Invoices

Export Documents

Import Documents






Import DocumentsImporting countries require certain documents in

order to:• Ensure that no shoddy quality goods are imported.

• Help determine the appropriate tariff classification.

• Help determine the correct value of imported goods.

• Help determine the correct country of origin for tariff purposes.

• Protect importers from fraudulent exporters.

• Limit (or eliminate) imports of products that the government finds inappropriate for whatever reason.


Import DocumentsCertificate of Origin• A document provided by the exporter’s Chamber of Commerce

that attests that the goods originated from the country in which the exporter is located.

• Used by importing country to determine tariff of goods.

Certificate of manufacture• A document provided by the exporter’s Chamber of Commerce

that attests that the goods were manufactured in the country in which the exporter is located.


Import Documents

Certificate of Inspection• A document provided by an independent inspection company

that attests that the goods conform to the description contained in the invoice provided by the exporter.

• A Certificate of Inspection also attests that the value of the goods is reflected accurately on the invoice.

• A Certificate of Inspection is always obtained by the exporter in the exporting country, before the international voyage takes place.

• The Certificate of Inspection is the result of a Pre-Shipment Inspection (PSI).


Import Documents

Pre-Shipment Inspection• A Pre-Shipment Inspection is requested by the importer or by the

importing country: A Certificate of Inspection protects the importer using a Letter of

Credit or Documentary Collection since these methods are based on the documentation for payment; the inspection makes sure that the goods are conform.

The inspection is conducted at the request of the importing country’s government to ensure that the invoice reflects accurately the type of goods shipped by the exporter and their value.


Import Documents

Certificate of Certification • Also known as Certificate of Conformity. • A document provided by an independent inspection company

that attests that the goods conform to the manufacturing standards of the importing country.

Phyto-Sanitary Certificate• A document provided by an independent inspection company, or

by the Agricultural Department of the exporting country’s government.

• Attests that the goods conform to the agricultural standards of the importing country.


Import Documents

Certificate of Free Sale• Attests that the goods sold by the exporter can legally be sold in

the country of export; such a certificate is designed to prevent the export of products that would be considered defective in the country of export.

Import License• A document issued by the importing country, and designed to

prevent import of non-essential or overly luxurious products in developing countries short of foreign currency supply.

Certificate of Insurance• Some Incoterms (CIF, CIP) require that the exporter provide

insurance. A certificate of insurance offers proof of coverage.



Invoices

Export Documents

Import Documents







Bill of Lading • A generic term used to describe a document issued by the

carrier to the shipper.

• A bill of lading is: a contract between the carrier and the shipper

- the carrier agrees to transport the goods from point of origin to point of destination for a given amount.

a receipt for the goods- the carrier certifies that the goods were received in good condition at the

point of origin a Certificate of Title

- the carrier will only deliver the goods to the party that has the original bill of lading



Different types of Bill of Lading• Ocean Bill of Lading

A bill of lading used in international transportation of goods on ocean-going vessels.

• Air Waybill A bill of lading used in the transportation of goods by air,

domestically or internationally.

• Uniform Bill of Lading A bill of lading used for inland transportation.

• Intermodal Bill of Lading A bill of lading used for intermodal or multi-modal shipments, i.e.

shipments that take more than one mode of transportation.



Bill of Lading as a Receipt for the goods• Clean Bill of Lading

A bill of lading that certifies that the goods were received by the carrier in good condition.

No annotation are made on the BOL, other than a signature for receipt of the goods.

All Letters of Credit and Documentary Collections require a clean BOL.

• Soiled (or Fouled) Bill of Lading A bill of lading that reflects the fact that the carrier received the

goods in anything other than good condition. It is characterized by the presence of additional comments or notes

in addition to the signature of the carrier’s representative.



Bill of Lading as a Certificate of Title• Straight Bill of Lading

A bill of lading on which the name of the consignee has been entered.

Such a bill of lading is non-negotiable, which means that the ownership of the goods cannot change while the goods are in transit.

The party named on a bill of lading is called the consignee. The consignee is the owner of the goods upon arrival or the party to

whom the goods should be surrendered at their destination. The consignee will have the original bill of lading at the point of

arrival of the goods.



Bill of Lading as a Certificate of Title• Negotiable or “To Order” Bill of Lading

A bill of lading on which the name of the consignee has been left blank, or where the words “to order” have been entered where the consignee’s name is expected.

A negotiable BOL allows the owner of the goods to sell them while they are in international transit.

The transfer of ownership to the new owner is done with the bill of lading, since it is a Certificate of Title to the goods.

Whoever has the original bill of lading when the cargo arrives in the port is the owner of the goods.

Only Ocean Bills of Lading can be negotiable (air waybills, uniform bills of lading and multimodal bills of lading are all straight).



Charter parties• A type of contract of carriage between a ocean carrier and a

shipper.

• The shipper uses all or most of the carrying capacity of the ship to transport commodities such as oil, ore, grain or polymer pellets.



Aircraft leases• Wet Lease

A wet lease agreement is one under which the owner of the aircraft provides the airplane, insurance, maintenance services and a flight crew to the lessor, who has to cover all of the other variable costs, such as fuel and airport fees.

• Dry Lease The owner provides only the aircraft, and no other services.

• Damp Lease The owner provides some services in addition to the aircraft itself: it

could include the aircraft, maintenance and insurance, but not provide the crew. Damp leases vary in the services included.


Transportation DocumentsOther Shipping Documents• Packing List

It documents what each shipment contains: how the goods are packaged, marked, what merchandise is in each container, and their respective weight and dimensions.

• Shipper's Letter of Instruction Delivered to shipping company if shipper wants specific directions

followed during transport. It can be critical in livestock shipments.

• Manifest Shipping document that is internal to the carrier, but is often

examined by government entities. A list of the entire cargo that a vessel, aircraft or container

transports, as well as the ownership, port of origin, port of destination, specific handling instructions of that cargo.



Dangerous Goods• The shipment of dangerous goods is regulated by a number of

organizations and rules: International Maritime Organization's International Maritime

Dangerous Goods Code. International Air Transport Association's Dangerous Goods

Regulations. Local shipment codes, such as the United States' Code of Federal

Regulations, Title 49 (abbreviated 49CFR).


9-5 Transportation Documents



Invoices

Export Documents

Import Documents







Electronic Data Interchange • A method to send documents (invoice, certificates, packing list,

and so on) from one company to another, using electronic means.

• EDI is different from fax (fac-simile transmission) in that it does not transfer a copy of a sheet of paper, but sends the information it contains in digital form, which is then used by the recipient to create a document.

• SWIFT is an example of a proprietary EDI system used by the banking industry to transmit Letters of Credit and other financial information.

• The United Nations’ EDIFACT is a growing international standard for EDI transmissions.



Invoices

Export Documents

Import Documents







• The pro forma invoice is a perfect preview of the actual invoice.

• The commercial invoice is clear, detailed and precise.

• All required certificates are provided right away.

• The correct number of originals and copies of a multitude of documents are prepared and delivered to the importer.

• The packing list is prepared carefully and precisely.

• The export paperwork is prepared and filed correctly and in a timely manner.