International Commercial Documents

International Commercial Documents

Documentation Requirements Invoices

Export Documents
Import Documents Transportation Documents

Electronic Data Interchange

Document Preparation as a Marketing Tool

The Mechanics of Import and Export

The Mechanics of Import and Export

The Bank as the Import-Export Intermediary

The Trade Transaction Timeline and Structure

Steps in a Typical Trade Transaction

Documentation Requirements
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
Commercial 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.)

Invoices
Pro-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 countrys Consulate, and stamped by Consulate.
Considered a trade barrier.

International Commercial Documents

Documentation Requirements Invoices Export Documents Import Documents

Transportation Documents
Electronic Data Interchange Document Preparation as a Marketing Tool

Export Documents
Export License
Export license is the express authorization by a countrys 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 Documents
U.S. Export Controls
U.S. export policy has been based on denying some countries access to certain [military or dual-use] technologies.

Export Documents
U.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 Documents
U.S. Export Controls
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. Destination Control Statement

A formal statement that an exporter has to print on its invoice and on the Shippers Export Declaration if the goods shipped are subject to a validated export license: [name of

This merchandise licensed by U.S. for ultimate destination country]; diversion contrary to U.S. law prohibited.

Export Documents
Shippers 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 Shippers 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 Documents
Export 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 countrys 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.

International Commercial Documents

Documentation Requirements Invoices Export Documents

Import Documents
Transportation Documents Electronic Data Interchange

Document Preparation as a Marketing Tool

Import Documents
Importing 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 Documents
Certificate of Origin
A document provided by the exporters 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 exporters 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 PreShipment 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 countrys 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 countrys 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.

International Commercial Documents

Documentation Requirements

Invoices
Export Documents Import Documents Transportation Documents Electronic Data Interchange

Document Preparation as a Marketing Tool

Transportation 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

Transportation Documents
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.

Transportation Documents
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 carriers representative.

Transportation Documents
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.

Transportation Documents
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 consignees 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).

Transportation Documents
Other 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.

Transportation Documents
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).

Transportation Documents

International Commercial Documents

Documentation Requirements

Invoices
Export Documents Import Documents

Transportation Documents
Electronic Data Interchange Document Preparation as a Marketing Tool

Electronic Data Interchange

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.

International Commercial Documents

Documentation Requirements Invoices Export Documents Import Documents

Transportation Documents
Electronic Data Interchange Document Preparation as a Marketing Tool

Document Preparation as a Marketing Tool

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.