This section describes the various documents in detail and provides samples of each.
Certificate of Origin
The certificate of origin is a document that certifies to the buyer the country in which the goods were produced. A recognized chamber of commerce usually performs the certificate of origin of the merchandise.
Some countries require a separate certificate, sometimes countersigned by a chamber of commerce and possibly even visaed by the resident con- sul at the port of export. These statements are required to indicate pref- erential rates of import duties such as “most favored nation.” Often, as little as 35 percent of a nation’s materials and/or labor can qualify it for favorable duties. Some nations require special forms, while others accept a certification on the shipper’s own letterhead. See Figure 5.11 for an example of a certificate of origin.
Following is a checklist for a certificate of origin that can be used as a guide:
• The letter or form should originate from the address of the manufacturer of the product.
Figure 5.11 Certificate of Origin
Our Company, Inc.
Hometown, Wherever Date ______________
Your Company Hometown, Wherever
Point of Origin Declaration
For the purpose of positively identifying certain components as being manufactured in ________ and therefore qualifying for
(Country) entry under _________________________.
(Tariff code identification)
Component(s) description: _______________________________________ _
Part number: ____________________________________________________
The manufacturer __________________________ w arrants and repre- sents that the articles supplied to __________________________________
(Company) and described above are articles of ________.
(Country)
The articles were manufactured at ______________________________
(Address of location of plant) . Authorized signature and date
Title
• A responsible and knowledgeable person within the manufacturing company (an officerof the corporation) must sign the letter.
• The letter or form will not be accepted if it is from an outside sales office or distributor. It cannot be signed by a salesperson.
• The letter should clearly state where the product in question was manufactured.
Commercial Invoice
The commercial invoiceis a bill that conforms in all respects to the agree- ment between the importer and the exporter. It could have the exact terms of the pro forma invoice first offered in response to a quotation, or it could differ in those terms that were the result of final negotia- tions. In any case there should be no surprises for the importer. The commercial invoice should (1) itemize the merchandise by price per unit and any charges paid by the buyer, and (2) specify the terms of payment and any marks or numbers on the packages. See Figure 5.12.
Consular Invoice
This invoice is not required by all countries. It is obtained from the commercial attaché or through the consular office of the country in question in the port of export. When required, it is in addition to a commercial invoice and must conform in every respect to that docu- ment, as well as to the bill of lading and any insurance documents. Its purpose is to allow clearance of your shipment into the country that requires it. See Figure 5.13.
Commercial attaché.The commercial expert on the diplomatic staff of his or her country’s embassy or large consulate in a foreign country.
Certificate of Manufacture
This document certifies that the goods ordered by the importer have been produced and are ready for shipment. For example, it might be used in those cases in which the manufacturer has moved ahead in
production with only a down payment, thus allowing the importer to avoid allocation of the full amount too far in advance. Generally, invoices and packing lists are forwarded to the importer with the certificate of manufacture. See Figure 5.14.
Figure 5.12 Commercial Invoice
XYZ Foreign Co.
2A1 Moon River Yokohama, Japan
Purchase Order:
Invoice Number: 00012 Invoice Date:
Sold To: Our Company, Inc. Ship To: Our Company, Inc.
Hometown, U.S.A. Hometown, U.S.A.
Forwarding Agent:
Via: Country of Origin: Japan
Quantiy Part No. Description Price Each Total Price 10 A2Z Machines $100.00 $1,000.00 Inland freight, export packing and forwarding fees $ 100.00 Free alongside (FAS) Yokohama $1,100.00
Estimated ocean freight $ 100.00
Estimated marine insurance $ 50.00
Packed in 10 crates, 100 cubic feet Gross weight 1,000 lbs.
Net weight 900 lbs.
Payment terms: Confirmed irrevocable letter of credit confirmed by a U.S. bank. Shipment to be made two (2) weeks after receipt of firm order.
Additional conditions of sale: XYZ Foreign Co. to provide:
Certificate of Origin Consular Invoice
Certificate of Manufacture Insurance Certificate Inspection Certificate
(Continued)
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Figure 5.13 Consular Invoice (Continued)
Export Licenses
Export licensing procedures are described in detail in Chapter 7 as one of the six topics unique to exporting. These licenses are of two basic varieties: general and validated. Validated licensesrequire careful atten- tion because they apply to products that the government wants to control closely for either strategic or economic reasons. The commod- ity control list (CCL) sets forth items such as certain weapons, tech- nologies, and high-tech products. Export administration regulations set forth all licensing requirements for commodities under the jurisdiction of the Office of Export Administration (OEA), International Trade Administration. Once it has been determined that a license is needed, the Application for Export License must be prepared and submitted to the OEA. See Figure 7.1 in Chapter 7.
Figure 5.14 Certificate of Manufacture
DATE:
REFERENCE: ACCOUNT NAME AND ADDRESS PURCHASE ORDER NO. AND/OR CONTRACT NO.
BANK NAME AND LETTER OF CREDIT NO:
MERCHANDISE DESCRIPTION:
CERTIFICATE OF RECENT MANUFACTURE WE HEREBY CERTIFY THAT THE HEREIN DESCRIBED MER- CHANDISE IS OF RECENT MANUFACTURE, IN THIS CASE NOT OLDER THAN _____ YEAR(S) FROM THIS DATE.
NAME AND ADDRESS OF MANUFACTURER:
BY: ____________________________________
(Original signature)
Insurance Certificates
Insurance certificatesprovide evidence of coverage and may be a stipula- tion of a contract, purchase order, or commercial invoice in order to receive payment. These indicate the type and amount of coverage and identify the merchandise in terms of packages and identifying marks.
You should make certain that the information on this certificate agrees exactly with invoices and bills of lading. See Figure 5.15.
Inspection Certificates
These are documents that protect the importer against fraud, error, or quality performance. The inspection is most often conducted by an independent firm, but it is sometimes accomplished by the shipper. An affidavit that certifies the inspection is often required under terms of a letter of credit. For example, a Taiwanese firm wanted to import used diesel generators from the United States. That company insisted that an independent engineer certify satisfactory operation of each genera- tor, at specifications, prior to shipment. See Figure 5.16.
Packing Lists
A packing list accompanies the shipment and describes the cargo in detail. It includes the shipper, the consignee, measurements, serial numbers, weights, and any other data peculiar to the shipment. When correctly completed, it is placed in a waterproof bag or envelope with the words, “Packing List Enclosed” and attached to the outside of the container. See Figure 5.17.
Shippers Export Declaration
The shipper’s export declaration (SED) is prepared by the exporter or freight forwarder for the U.S. government (other countries may have a similar requirement). It is a data collection document required on all exports in excess of $2,500. It is prepared for purposes of providing statistical information to the Bureau of Census and to indicate the
(Continued)
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Figure 5.15 Certificate of Marine Insurance (Continued)
proper authorization to export. It is the basis for measuring the volume and type of exports leaving a country. The document requires complete information about the shipment, including description, value, net and gross weights, and relevant license information, thus closing the licens- ing information loop back to the OEA. See Figure 5.18.
Bills of Lading
A bill of ladingis a contract between the owner of the goods (exporter) and the carrier. It is both evidence that the shipment has been made, and the receipt for the goods that have been shipped. Figure 5.19 is a bill of lading for an air carrier, called an air waybill. Figure 5.20 is an ocean bill of lading. While e-commerce has not yet reached the bill of lading process, it is getting close and will soon be a reality. Several ship Figure 5.16 Inspection Certificate
DATE:
REFERENCE: ACCOUNT NAME AND ADDRESS PURCHASE ORDER NO. AND/OR CONTRACT NO.
BANK NAME AND LETTER OF CREDIT NO.
MERCHANDISE DESCRIPTION:
INSPECTION CERTIFICATE
WE HEREBY CERTIFY THAT THE HEREIN DESCRIBED MER- CHANDISE HAS BEEN INSPECTED AND FOUND TO BE OF HIGHEST QUALITY AND IN GOOD WORKING ORDER.
PORTER INTERNATIONAL INC.
BY: ______________________________________
(Original signature)
lines have already automated part of the process, and there are indica- tions that a system to replace paper bills of lading with electronic communications will soon be marketed.
Straight Bills of Lading
These are nonnegotiable bills that consign the goods to an importer or other party named on the document. Once consummated, the seller Figure 5.17 Packing List
To XYZ Foreign Co.
2A1 Moon River Yokohama, Japan
Date: __________________
Gentlemen:
Under your order No. 123 the material listed below was shipped 1/1/18 via Truck and vessel
To Yokohama Via:
Shipment consists of: Marks:
___ Cases ___ Packages XYZ Foreign Co.
2A1 Moon River Yokohama, Japan ___ Crates ___ Cartons
___ Bbls ___ Drums Made in U.S.A.
___ Reels #7235
Package Weights Dimensions Quality Contents Number (Lbs or Kilos)
Gross Legal Net Ht. Wth. Lth.
7235 45 40 35 25 15 Toys
(Continued)
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Figure 5.18 Shipper’s Export Declaration (Continued)
(Continued)
141
Figure 5.19 Air Waybill (Continued)
Figure 5.20 Ocean Bill of Lading
and/or the seller’s bank loses title control because the goods will be delivered to anyone who can be identified as the consignee.
Order Bill of Lading
This is a negotiable bill; unlike the straight bill, it represents the title to the goods in transit, and the original copy must be endorsed before it is presented to the bank for collection. In other words, the order bill can be used as collateral in financing—as documentation to discount or sell a draft. L/C transactions specify to whom the endorsement is to be made. Typically, they are made “in blank” or to the order of a third party, a bank, or a broker. Air bills of ladingare usually “straight”
(i.e., non-negotiable). Ocean shipping companies can issue “straight” or
“to order.”
Clean on Board
To verify shipping performance, the carrier indicates the condition of the goods upon acceptance. You should prefer to ship on a bill of lad- ing marked clean on board. That means that the carrier accepted the cargo and loaded it on board the vessel without exception.
Foul Bill
A foul bill indicates an exception—that some damage is noted on the bill of lading. Discuss this with your carrier or freight forwarder to make sure that you have an opportunity to exchange any damaged goods and obtain a “clean” bill.
The next chapter explains, from A to Z, how to set up and build your company. It discusses how to decide on a name, how to go about get- ting start-up funds, and most importantly how to think through and write a business plan.
How to Set Up Your Own Import/Export Business
“How do I start my own import /export business?”
T
hat question is universal. The language might be different, but in any country in the world you will hear the same words. The answer depends on these questions: Have you done your homework?What is your product? Who will buy it? Is it profitable? Do you have contacts? Do you have a marketing plan?
By incorporating what you’ve learned in Chapters 2 through 5 about the fundamentals of import /export with the methods to be explained in this chapter, you should be ready to start your own import /export business.
The first part of this chapter describes the mechanics of start-up.
The second part shows you how to develop a business plan so that you can raise capital and grow.
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