Imports Exports Procedures PDF

# Chapter 05 - Imports Exports Procedure ## Imports Procedure - **Finding a suitable supplier** - The Chamber of Commerce magazines and publications - Embassy offices - Trade exhibitions - Web sites - **Issuing a price inquiry** - After selecting a suitable supplier, the price...

# Chapter 05 - Imports Exports Procedure ## Imports Procedure - **Finding a suitable supplier** - The Chamber of Commerce magazines and publications - Embassy offices - Trade exhibitions - Web sites - **Issuing a price inquiry** - After selecting a suitable supplier, the prices of the goods to be imported are inquired. - The selected supplier will be requested for a price list. - **Receiving a price quotation** - The supplier (exporter) will submit a quotation that includes the prices at which he is willing to supply the goods, and other terms and conditions, to the importer with response to the price inquiry. - **Obtaining an imports license** - When certain products are imported, it is necessary to obtain an import license. - The Import and Export Control Department issues the license. - The products for which the import licenses are required is decided by the Commissioner of Import and Export. - **Issuing an indent (purchase order)** - If the importer is in agreement with the quotation he has received, he should submit a purchase order. - This purchase order is also known as an indent. - **Arranging with regards to the exporter** - Most probably Letter of Credit and Credit cards are used for making payment to the exporter. - **Clearing the goods** - After the relevant payment is made, the goods can be cleared by producing the relevant documents. ## Reasons for Foreign Trade 1. **Inequality in distribution of natural resources** - Because some countries have been endowed with natural resources significantly the products associated with those resources can be produced only by those countries themselves. 2. **Relative cost advantage** - If a particular country is able to manufacture a product at a low cost relatively to import then it must be manufactured by them in order to export and where a product can be imported at a low cost relatively to manufacturing, such products must be imported. - Example: Sri Lanka - Garment industry 3. **Retaining a legal monopoly in some countries with regard to some products** - Patents and Copyrights The required competency and technology for some products being unavailable in some countries or limited to some countries. - Example: - Robotic technology, Motor vehicle technology 4. **Goods promotion** - Using various sales promotion strategies to gain a worldwide market for one's own products. 5. **Trade barriers being minimized** - The removal of many sanctions/embargoes, that exists as tariff and no-tariff barriers to trade. ## Benefits of International Trade - A country can engage in foreign trade and gain many benefits as follows: - Ability to export the surplus of production - Ability to import products that cannot be manufactured locally - Ability to earn foreign exchange - Ability to obtain economic gains - International trade relations and international co-operation being enhanced and strengthened. - New technological and management skills being upgraded. - Becoming a support for economic development - E.g: Employment opportunities, Upliftment of living standards of the people Obtaining maximum benefits of resources ## Payment Methods in Foreign Trade 1. **Through opening a letter of credit** 2. **Through bank order** - This is the statement of order given to the bank of the receiver of the money or to the agent bank of the receiver by the bank of the sender stating to pay the mentioned money to the mentioned recipient according to the given conditions. - This can be used for foreign trade payment as well as for home payment 3. **Electronic payment methods. ** - This includes the modern techniques of settling payments using internet facilities. gepaid - Examples: - **Credit cards** - This is the most frequent method used to make payments. Visa, master, American Express are some types of cards that can be obtained from the banks and are used as a payment method through the internet. - **Internet prepaid cards** - Internet pre-paid cards can be used on a temporary basis by depositing a sum of money to be used for a particular purpose. - **Internet prepaid facilities** - Payments are made through one's own bank account and required directions are provided with internet banking. Most of the banks at present facilitate their accounts holders in this manner. Those who are in need of this service can get registered and access the relevant website using the user name and the password. - **Payment through electric payment entities** - Without making direct payments to the institute from where particular product was purchased the relevant payment is made through a recognized payment making institute in this method. - Example: www.paypal.com - Before making payments in this manner it is necessary to register with the PayPal portal and provide with information about the bank account and credit cards. In this manner external parties do not have access to the credit card information. ## Free Trade - Free trade is having the necessary space for various parties to engage in the import and export of goods without any barriers. ## Barriers to Free Trade - Barriers to free trade can be classified as tariff barriers and non-tariff barriers. - **Tariff barriers** - The barriers created with the human involvement, such as the intervention of the government is meant by this. - Ex: import quota, export quota, import duties - **Non-tariff barriers** - These are the barriers created through natural reasons. - Ex: Language barriers, Cultural barriers. ## Documentation in Imports Trade 1. **Import License** - The products for which a license is required in importing trade are announced (published) by the export, import controller. 2. **Indent/Order** - If the importer is in agreement with the quotation provided by the exporter and willing to purchase the goods from him, an order should be placed with the relevant supplier (exporter). - This order is known as an Indent. - Placing of this order can be done through the internet. - This indent which is sent to the foreign supplier by the importer contains the details of the goods required, price, relevant shipping conditions etc. 3. **Letter of Credit (L/C)** - This is a confirmatory document issued by the importer's bank stating that payment for the goods shipped by the exporter will be made definitely. 4. **Import Entry** - This is the document that must be submitted to the customs by the importer or his agent confirming the importer's ownership to the goods that have been received at the port of destination. - This is prepared using the bill of lading or invoice. 5. **Warehouse Certificate** - The storage in close proximity to the port is known as Warehouse. - A warehouse certificate is issued by the warehouse authority to the importer to confirm that the goods have been stored there. - While the goods are in the warehouse they may be transferred to another party by transferring the ownership of the Warehouse Certificate. - Therefore, the Warehouse Certificate is a transferable document. ## Export procedure 1. **Getting registered as an exporter** 2. **Finding a foreign purchaser** 3. **Obtaining an export license if necessary.** 4. **Responding to the price inquiry received from the importer by submitting a quotation** 5. **Obtaining the indent from the importer.** 6. **Reservation of shipping space and preparing the necessary documents.** 7. **Packing the goods in an appropriate manner for shipping** 8. **Insuring the batch of goods to be exported.** 9. **Obtaining the bill of lading once the goods have been handed over to the shipping agent.** 10. **Making necessary arrangements for the receipt of the consideration.** ## Documentation in Exports Trade 1. **Export License** - When exporting certain goods from Sri Lanka a license should be obtained from the department of imports exports. - For certain products additional license should be obtained - Examples: - Tea - Sri Lanka Tea Board, Gem and Jewelry - State Gem and Jewelry Authority, Vegetables, spice and betel - Department of import and export control. 2. **Bill of Lading(B/L)** - This is issued to the exporter by the ship owner or his agent on behalf of a shipping company. - A copy of the Bill of Lading is sent to the importer by the exporter and this becomes an essential document for the importer to confirm that he is the rightful owner of the goods when the ship reaches to the port of destination. - This contains details such as a description of the goods, exporter's name, importer's name, the name of the ship and the port of discharge etc. 3. **Invoice** - The invoice contains details of goods that are being exparted. - This includes pricing details, conditions of payment shipping route, and terms for rejection of goods.