Export-Import Theory, Practices, and Procedures

Export-Import Theory, Practices, and Procedures Second Edition Belay Seyoum, PhD O Routledge jjj^ Taylor & Francis Croup NEW YORK AND LONDON CON...
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Export-Import Theory, Practices, and Procedures Second Edition

Belay Seyoum, PhD

O Routledge jjj^

Taylor & Francis Croup

NEW YORK AND LONDON

CONTENTS About the Author Preface Strengths and Features of this Book Changes in the Second Edition Acknowledgments

xiii xv xv xv xvii

Introduction: A Brief History of International Trade

1

Ancient Period Colonial Period (1500-1900) 1900 toJhe Present

1 2 3

SECTION I: OVERVIEW OF INTERNATIONAL TRADE Chapter 1. Growth and Direction of International Trade

7

Importance of International Trade to the Global Economy Determinants of Trade Volume and Direction of Trade Important Developments in Trade Chapter Summary Review Questions Case 1.1. The Limitations of Export-Led Growth

7 9 9 10 14 15 15

Chapter 2. International and Regional Agreements Affecting Trade The GATT and WTO Regional Integration Agreements (RIAs) The North American Free Trade Agreement (NAFTA) The European Union Chapter Summary Review Questions Case 2.1. The Benefits and Costs of Free Trade

19 19 22 25 32 36 37 37

SECTION II: EXPORT MARKETING AND STRATEGY Chapter 3. Setting Up the Business Ownership Structure Business or Trade Name Bank Accounts, Permits, and Licenses Location and Use of Professional Services Organizing for Export: Industry Approach General Principles of Taxation Taxation of Export-Import Transactions International Transfer Pricing Chapter Summary Review Questions Case 3.1. Globalization and the Shrinking Tax Base Chapter 4. Planning and Preparations for Export

41 41 48 49 49 50 52 54 61 65 66 66 69

Assessing and Selecting the Product International Market Research International Market Assessment Developing an International Business Plan Export Counseling and Assistance Overseas Travel and Promotion Chapter S ummary Review Questions Case 4.1. Developing Export Markets

69 72 75 77 78 83 91 92 92

Chapter 5. Export Channels of Distribution

95

Indirect Channels Direct Channels Locating, Contacting, and Evaluating Agents and Distributors Contracts with Foreign Agents and Distributors (Representatives) Major Clauses in Representation Agreements Maintaining and Motivating Overseas Representatives Chapter Summary

99 105 108 110 110 115 115

Review Questions Case 5.1. Export Channel Decisions of Two U.S. Companies Case 5.2. The Internet and Exporting: A Focus on Developing Countries Chapter 6. International Logistics, Risk, and Insurance International Logistics External Influences on Logistics Decisions Typical Logistics Problems and Solutions The International Logistics Process Logistics Functions Risks in Foreign Trade Marine and Aviation Insurance Claims and Procedures Chapter Summary Review Questions Case 6.1. Marine Insurance Case 6.2. Marine Insurance: Inchmaree Clause

116 117 118 121 121 123 125 126 129 131 135 140 145 147 147 148

SECTION III: EXECUTING THE TRANSACTIONS Chapter 7. Pricing in International Trade

153

Determinants of Export Prices Pricing in Export Markets Terms of Sale Chapter Summary Review Questions Case 7.1. Incoterms (CIF) Case 7.2. Incoterms (C&F)

154 156 158 174 176 177 177

Chapter 8. Export Sales Contracts

179

Harmonization of Contract Law CISG: Essential Elements Pertinent Clauses in Export Contracts Chapter Summary

179 180 185 193

Review Questions 194 Case 8.1. CISG 195 Case 8.2. China National Products versus Apex Digital Inc. 195 Chapter 9. Trade Documents and Transportation Documentation in Export-Import Trade Transportation Air Transportation Ocean Freight The Role of Freight Forwarders in Transportation Chapter Summary Review Questions Case 9.1. What Constitutes a Package Under COGS A? Case 9.2. The Container Revolution

197 197 201 201 205 214 217 219 220 221

SECTION IV: PAYMENT TERMS AND PROCEDURES Chapter 10. Exchange Rates and International Trade Foreign Exchange Transactions Protection against Exchange Rate Risks Chapter Summary Review Questions Case 10.1. Will the U.S. Dollar Maintain Its Key Currency Status? Chapter 11. Methods of Payment Consignment Sales Open Account Documentary Collection (Documentary Draft) Documentary Letter of Credit Cash in Advance Other Letters of Credit Chapter Summary Review Questions Case 11.1. Dishonoring Letters of Credit Case 11.2. The Independent Principle in Letters of Credit

225 225 229 236 236 237 239 239 241 242 247 258 259 265 268 269 270

Chapter 12. Countertrade Origins of Countertrade Benefits of Countertrade Theories on Countertrade Forms of Countertrade Countertrade and the WTO Countertrade and the International Monetary Fund Governments' Attitudes Toward Countertrade Chapter Summary Review Questions Case 12.1. The Bofors-India Countertrade Deal Case 12.2. Offsets in U.S. Defense Trade

271 271 273 274 276 284 285 286 287 290 290 291

SECTION V: FINANCING TECHNIQUES AND VEHICLES Chapter 13. Capital Requirements and Private Sources of Financing Capital Sources for Export-Import Businesses Private Sources of Export Financing Chapter Summary Review Questions Case 13.1. Tadoo's Sales to Belgium

297 299 306 314 316 316

Chapter 14. Government Export Financing Programs

319

Export-Import Bank of the United States (Ex-Im Bank) Small Business Administration Overseas Private Investment Corporation (OPIC) Private Export Funding Corporation U.S. Department of Agriculture Chapter Summary Review Questions Case 14.1. Trade Finance for Small and Medium-Sized Enterprises in Transition Economies Case 14.2. Ex-Im Bank Financing: Selected Cases

320 332 334 337 337 338 340 341 342

SECTION VI: EXPORT REGULATIONS AND TAX INCENTIVES Chapter 15. Regulations and Policies Affecting Exports Export Licensing and Administration Antiboycott Regulations Foreign Corrupt Practices Antitrust Laws and Trade Regulation Incentives to Promote Exports Chapter Summary Review Questions Case 15.1. Export Trade Certificate of Review Case 15.2. Enforcement of Export Regulations

347 347 360 363 368 373 377 380 381 383

SECTION VII: IMPORT PROCEDURES AND TECHNIQUES Chapter 16. Import Regulations, Trade Intermediaries, and Services Import Restrictions in the United States U.S. Free Trade Agreements U.S. Trade Preferences Trade Intermediaries and Services Chapter Summary Review Questions Case 16.1. Tax Deduction for Processing in Maquilas: Mere Assembly or Fabrication

389 389 394 396 398 403 404

Chapter 17. Selecting Import Products and Suppliers

407

Types of Products for Importation Finding the Product What Determines Import Volume? Selecting the Supplier International Sourcing Pricing the Imported Product Import Marketing Channels

406

407 409 411 412 414 417 417

Financing Imports Chapter Summary Review Questions Case 17.1. The ATA Carnet: Unlocking Customs for Temporary Entry of Goods Case 17.2. Maytag's Triad Strategy Chapter 18. The Entry Process for Imports The Entry Process The Harmonized Tariff Schedule of the United States Customs Valuation Rules of Origin and Other Marking Requirements Chapter Summary Review Questions Case 18.1. Deemed Liquidation by Customs Case 18.2. Product Classification Chapter 19. Import Relief to Domestic Industry Antidumping and Countervailing Duties Antidumping and Countervailing Duty Proceedings Other Trade Remedies Chapter Summary Review Questions Case 19.1. Similar Products and Dumping Chapter 20. Intellectual Property Rights

419 420 421 421 423 425 428 432 433 438 439 441 444 445 447 447 453 456 461 462 463 465

What Are IPRs? IPRs and International Trade Protection of IPRs International/Regional Protection Chapter Summary Review Questions Case 20.1. Patents and Access to Lifesaving Drugs

465 468 469 473 476 476 477

Appendix A: Trading Opportunities in Selected Countries

479

Appendix B: Importing into the United States

521

Appendix C: Trade Profiles of Selected Nations (2004) (Million U.S. Dollars)

531

Appendix D: Average Tariff Rates of Selected Countries (2002-2004)

535

Appendix E: Ex-Im Bank Programs

537

Appendix F: Sample Export Business Plan: Donga Michael Export Company . Appendix G: Sample Import Business Plan: Otoro Import

561

Company

567

Appendix H: Export Sales Contract (Basic Clauses)

573

Appendix I: Sample Distributorship Agreement

585

Appendix J: Sample Sales Representative Agreement

593

Appendix K: North American Free Trade Agreement

601

Appendix L: Trade Documents References

619 627

Index

649

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