Import and export procedures

1. ‘PROMOTING GENDER EQUALITY IN TRADE’ EXPORT AND IMPORT PROCEDURES TRAINING OF TRAINERS

2. Introduction Make Your Name Tag and Place it in Front of Yourself

3. Introduce yourself, your designation and assignment What are your expectations from this workshop? Introduction

4. Time Schedule For Each Day Workshop Timings: 3 Full Days 15 Minutes – 1st Half 60 Minutes– Lunch 15 Minutes – 2nd Half No Smoking / Cell phone etiquette Restrooms / Emergency Exits

5. Learning Methods

6. “What people really want is not knowledge but certainty.” ~ Bertrand Russell The Quest For Knowledge { }

7. Basic of Delivering Training

8. Why? This Training of Trainers Objectives to be acquired and determined from and by the participants

9. Basic Training Delivery • Introduction • Planning your training • The training sequence • Creating effective visual aids • Effective presentation techniques

10. INTRODUCTION

11. Why Give A Presentation on Training? Three Main Reasons Inform Persuade Educate

12. Effective Presentation Presentation • “Something set forth to an audience for the attention of the mind “ Effective • “…producing a desired result”

13. #1 Fear • Feared more than death! • THE FACTS: Shaky hands, blushing cheeks, memory loss, nausea, and knocking knees • NORMAL!

14. Causes of the Anxiety • Fear of the unknown OR loss of control • Fight or flight mode • No backup plan • No enthusiasm for subject • Focus of attention

15. Effective Presentations • Control anxiety – Don’t fight it • Audience centered • Accomplishes objective • Fun for audience • Fun for you • Conducted within time frame

16. PLANNING YOUR TRAINING

17. Planning Your Training Determine purpose • What do you want to accomplish? Know your audience !!! • Success depends on your ability to reach your audience • Size • Demographics • Knowledge level • Motivation • Why are they attending? • What do THEY expect? Plan space • Number of attendees and seats • Seating arrangement • Lighting, and lighting controls • Audio/Visual equipment • Distracters What day and time • Morning • Afternoon • Evening • Work day versus weekend • Any day! Organization • Determine main points (1- 5) • Evidence • Transitions • Prepare outline • Prepare a Storyboard Rehearsal • In the actual room if possible • Work to a script and time your presentation • Practice Q & A • Check equipment – load your slides in advance • Make contingency plans

18. Organizing Your Training – Possible Organizational Patterns Topical Chronological Problem/Solution Cause/Effect

19. Presentation Outline Keyword Reminders Conversational Flow Flexibility More responsive to audience

20. Storyboarding

21. THE TRAINING SEQUENCE

22. #1: Build Rapport • … relation marked by harmony or affinity – Audience members need to trust you and feel that you care about them • Start before you begin – Mingle; learn names – Opportunity to reinforce or correct audience assessment – Good first impression • People listen to people they like

23. #2: Opening Your Presentation • Introduce yourself – Why should they listen • Get attention, build more rapport, introduce topic – Humor – Short story – Startling statistic – Make audience think – Invite participation • Get audience response

24. #3…Completing the Opening • Clearly defining topic • If informative… – Clear parameters for content within time • If persuasive… – What’s the problem – Who cares – What’s the solution • Overview

25. #4: Presenting Main Points • Make point-transition,…make point- transition,…make point-transition, etc… • Supporting evidence • Examples • Feedback & questions from audience • Attention to, and focus on, audience… are they listening?

26. #5: Concluding Your Presentation Goal • Inform audience that you’re about to close • Summarize main points – “Tell ’em What You Told ‘em.” • Something to remember, or call-to-action • Answer questions

27. CREATING EFFECTIVE VISUAL AIDS

28. Designing Good Slides • Content – If it doesn’t add value, don’t say/use it • Unveiling – Is drama useful or necessary? • Color – Know your room and lighting • Dark room – use light font on dark background • Bright room – use dark font on light background • Subliminal messages – Consider your audience and use carefully

29. Content • Purpose – Complement speaker – Talk ≠ technical report • Density – 7-10 lines/page – 4-8 words/line – Test: Project a sample in the room, or in a room of approximately the same size as will be used in the real presentation

30. Visual Aids To make, explain or identify a point To emphasize, clarify or reinforce a point To remind, summarize or review a point

31. We Remember… 10% of what we read 20% of what we hear 30% of what we see 50% of what we see and hear

32. Visual Aids • Enhance understanding • Add variety • Support claims • Lasting impact Used poorly, however, they can be a distraction and lead to an ineffective presentation Some of them are: • PowerPoint slides • Overhead transparencies • Graphs/charts • Pictures • Web links • Films/video • Flip charts • Sketches • Chalk or white board

33. Visual Aids Should… • Outline, explain, support main points • Serve audience’s needs, not speaker’s • Be simple and clear • Supplement and support… • NOT DOMINATE!... the presentation

34. Be Visible • Use Sans Serif fonts (fonts without feet) – e.g. Arial, Tahoma, Trebuchet, Verdana, etc. • Titles should be 32-44 pt. font size, BOLD • Text should be as large as possible – First level 24-32 pt font size – Second level 20-28 pt font size – Etc. • Use color wisely – Contrasting colors

35. Red/Blue Conflict Red letters on blue background creates “flicker effect” Blue letters on red background just as bad

36. Low Contrast White on yellow Yellow on white Black on blue Blue on black

37. “Fly-In” vs “Wipe” • Could you read this? • How about this one? • Maybe the third time is the charm! ALWAYS • Less distracting • Reduce eye movement • Increase readability

38. • Upper left to Upper right to Lower left to Lower right Eye Movement The “Z” Rule

39. EFFECTIVE PRESENTATION TECHNIQUES

40. What Makes an Effective Speaker? • Control of information • The voice used • The right words • Use of body language • Prompts, scripts and notes • The right location • Useful and meaningful visual aids

41. Vocal Techniques • Loudness – Will you be using a microphone? • Pitch – Vary to make points • Rate – Watch your audience • Pause for effect – Allow time for message to “sink in” • Deviate from the norm for emphasis

42. The Voice - CLAP C • C: Clear – the use of simple, easily understood words and phrases L • L: Loud (enough) – it is important that everyone can hear you A • A: Assertive – a bright and confident air born of knowledge of the subject and good preparation P • P: Pause – it is essential to allow the listeners time to digest what you have said

43. Use the Rights Words - PREPare What you say, and how you say it, is the key to a successful presentation: P – state your position or point R – explain your ideas E – use examples P – restate your position or point

44. Use of Body Language • Make eye contact • Use your hands, but don’t go crazy • If possible move around, but slowly! • DON’T speak with your back to the audience • Make eye contact,…but move focus around the audience • Use your hands,…but don’t go crazy • If possible move around,…but slowly! • Maintain good posture • Make sure everyone can see you • DON’T speak with your back to the audience

45. Scripts and Notes • Learn and use a script for formal presentations to large groups • Small note cards, or PPT notes page, can be used, but FIRST write a script • Underline key words that will best remind you what you want to say • Use one card for each slide or topic • If possible, have someone else advance slides for you

46. Speaker Reads Slides • A speaker may put his entire presentation on his slides. He turns his back to the audience and reads the slides aloud. Perhaps he feels this approach guarantees all the information will get to the audience. • This may be the most annoying way to give a presentation. Audience members feel insulted: they already know how to read! They wonder why the lecturer doesn’t simply hand out a copy of the slides. • The visual presentation dominates the presenter. The presenter is not adding any value to what is on the slides. Psst! This slide is way too busy!

47. Common Problems • Verbal fillers – “Um”, “uh”, “like”, “you guys” – Any unrelated word or phrase • Swaying, rocking, and pacing • Hands in pockets • Lip smacking • Fidgeting • Failure to be audience-centered

48. Pauses • Useful – Awaiting thought – Switching gaze – Reading slide – Reinforcing point • Powerful • Difficult

49. Control of Information • Know your subject well • Know what you are talking about • Practice • More practice • More rehearsals - in front of the mirror - in front of colleagues or friends - in front of family members • Believe in yourself • Know your opening by heart

50. Closing Summary • Audience is always attentive at the begining • Somewhat less attentive in the middle • Generally more attentive at the end • Tell them what you are going to say • Then say it • At the end, say it again • Allow time for questions

51. Questions and Answers Opportunities • Welcoming gestures • Focusing gaze • Body language • Getting point • Reinforcing message • Including audience Pitfalls • Hostile gestures • Wandering gaze • Body language • Missing point • Seeking approval • Excluding audience

52. 5 Training Tips Smile

53. Guide audience gently Design slides carefully Use pauses effectively Answer questions inclusively Summary

54. End of the brief on training and presenting skills required of a SAARC trainer

55. LUNCH – DAY 1

56. WHAT IS GENDER EQUALITY IN TRADE?

57. Gender Equality – What is it? The creation of an environment where women: • Can freely contribute • Can have access to their desired education • Are able to empower themselves • Have equal opportunity alongside men • Can be as good a breadwinner as their opposite gender counterparts • Have access to everything that the opposite gender has

58. MDG 1 • "Eradicate extreme poverty and hunger" • Includes a gender‐specific target, namely "Achieve, full and productive employment and decent work for all, including women and young people" MDG 3 • "Promote gender equality and empower women” • Does not make an explicit reference to trade but includes a specific reference to women's economic empowerment MDG 8 • "Develop a global partnership for development” • Promotes cooperation on development assistance and debt sustainability and the further development of trade and financial systems Millennium Development Goals – Gender Specific

59. Gender Perspectives in Trade Policy • The effect of trade policy on economic and social activities tends to be different between men and women as they have different economic and social roles and different access to and control over resources. This is due to – socio‐cultural factors – political factors – economic factors • Women tend to be more affected by the negative side effects of trade liberalization and are facing bigger challenges than men when it comes to taking advantage of the opportunities trade offers • This situation is due to – gender biases in education and training – gender inequalities in the distribution of income and command over resources – unequal access to productive inputs such as credit, land, and technology, which translate into significant gender differences in occupational distribution

60. Pre‐existing Gender Imbalances At The Macro, Meso And Micro Levels Sector Level •Where trade can augment or reduce employment and income opportunities for women, depending on whether the sectors where women work, expand or contract as a result of trade liberalization and import competition Governmental Level •Where fiscal revenues and public expenditures ‐ modified by trade liberalization in accordance to the relative importance of tariff revenues in government financing have an impact on public investments in social infrastructure and services that particularly benefit women, such as •health •education •electricity •water •sanitation and other infrastructure to meet household needs Household Level •Where expenditures may decrease or expand according to the effects of trade on consumer goods prices

61. Impact Of Gender Inequalities On Trade And Economic Growth • Greater accumulation of human capital of women and girls • This is a crucial factor for the development of national productive capacity • Recent evidence on the links between girls' improved education and economic growth has shown that enhanced gender equality increases the level of investments in a country • Greater gender equality in employment and education, increases the rates of return on investments and attracts more investors • In addition, the cases in which girls’ education had the greatest impact on growth were in areas where: (I) Employment opportunities were readily available for women (Ii) Countries had a sizeable export‐focused manufacturing sector (Iii)Their economies had already reached the middle‐income status

62. Gender Responsive Trade Policies Better understanding the specific challenges and opportunities that women and men face from trade policy Designing and implementing trade and other macro‐economic policies to maximize opportunities for all Facilitating the successful integration of women into more technologically advanced and dynamic sectors of the economy Avoiding the increase of gender disparities and mitigating the existing Facilitating women's empowerment and well‐being

63. Trade liberalization agreements Unilateral liberalization – for example, unilateral reduction of tariffs on intermediate inputs in productive sectors with high female employment Multilateral development assistance frameworks Tax incentives ‐ for example to encourage exports from women‐owned enterprises Policy measures in trade to mainstream gender issues

64. Fiscal policies Education Labor Training Innovation Financing Areas to address when framing gender‐sensitive policies

65. Barriers to women seizing trade related employment opportunities Women are relatively disadvantaged, as they tend to face more constraints than men in labour mobility Women and girls' have limited access to education and skills, including in cutting‐edge educational fields de jure and de facto discrimination against women in the control over economic and financial resources Productive assets and access to financial services Limited access to new technologies for production, training, information and marketing Occupational segregation leaves women in lower‐paying positions and provides them with limited upward mobility This is coupled with the erroneous perception that women's income is supplementary rather than central to households’ wellbeing

66. Three ways to ensure a gender specific trade polity •Ensure that the labour force, especially women, acquire the skills sought by expanding sectors First Way •Eliminate the exploitation of workers and protect their labour rights through fully enforcing national legislation on labour standards and promoting decent working conditions Second Way •If women are to play a greater role in the global economy, then household responsibilities need to be more equally shared between women and men Third Way

67. Good Practices for Gender Responsive Trade Policies • Assessing gender‐related impacts of a trade agreement before adoption • Gender analysis in the configuration of trade agreements • Incorporating gender components for assistance mechanisms

68. What Should Be Done Next? Support developing countries' capacity to assess the gender dimensions of trade policies through country case studies and training of policy makers and trade negotiators Produce sound and reliable data to evaluate the gendered impacts of different trade measures and instruments. Gather evidence on possible trade and other complementary policies and measures necessary to enable women to benefit from trade, or to reduce the negative impacts that trade may have on them Provide inputs for the elaboration of gender assessments of such agreements, as part of a broader human development impact assessment Support countries' national and/or regional efforts to increase coherence among different but interlinked policies, such as trade, development, employment, migration and gender equality Support advocacy platforms of women informal traders for promoting an enabling environment for their business and access to better services Support the inclusion of gender considerations into multilateral development cooperation frameworks Develop specific training programmes for women entrepreneurs to enhance their participation in world trade Support countries in collecting and analyzing sex‐disaggregated data, including those related to informal traders, and on designing appropriate questionnaires and evaluating the information gathered

69. Women's empowerment and participation • Support broad‐based effective participation of women and women’s groups in trade consultations and negotiations as well as in trade policy‐making and related implementation • Facilitate the exchange of views and experiences among women engaged in trade negotiations and policy formulation and implementation • Facilitate contacts, coaching and sharing of experiences among women entrepreneurs • Facilitate the linkages between women‐owned / managed micro and small enterprises and larger national or multinational firms.

70. GENDER BASED CONCESSIONS

71. Concessions for Women • Women require specific assistance, especially in the areas of trade development, policy and regulation • This will fill the gaps in their knowledge of the rules governing international trade transactions and standards for specific export-market access • Entrepreneurship promotion, fair trade and market-access initiatives therefore also need to mainstream a gender perspective to ensure that women are able to take up the opportunities they offer • At times, women-focused initiatives such as women’s business associations and organizations of women workers can support women in situations where their involvement in mainstream organizations may be problematic • These organizations can also be good starting points for subsequent gender mainstreaming within broader institutions • However, even if such initiatives are orientated specifically to women, they must ensure that they build in an understanding of women’s gender roles rather than replicating mainstream organizations or programmes.

72. THE CONTENT TO BE DISSEMINATED The following slides contain the whole content that needs to be understood and delivered with ownership and confidence. It requires a certain mastery of the subject. There is no need to take notes. We will be handing over the related handouts throughout. Your attention is sought. THANK YOU!

73. Import and Export Rules This section needs to be memorized. The objective is to disseminate “one word” throughout and everywhere. Standardization and consistency is the key!!

74. Focus areas • Legal and financial aspects of international trade • Export Quotation Worksheet/s • Pro Forma Invoice • International sales contracts • Negotiation skills • Rules of sale - Incoterms • Methods of payment • Import/export financing • Letter of credit payment process • Settlement of disputes • Preferential trading • E-commerce • Logistics and import/export procedures • Commercial and legal documents • Customs related exports • Cargo insurance carriers liability • Transport and freight forwarding - related documentation • Duty-free access to imported inputs • Export packaging and air cargo procedures • BOI (Board of Investment) procedures • Gender based concessions (if any) • Conclusion

75. LEGAL & FINANCIAL ASPECTS OF INTERNATIONAL TRADE

76. Learning Objectives • Discuss the complexity of the legal forces that confront international business • Recognize the importance of foreign law • Explain contract devices and institutions that assist in interpreting international contracts • Recognize the need and methods to protect your intellectual properties • Discuss enforcement of antitrust laws • Explain the risk of product liability legal actions, which can result in imprisonment for employees or fines for them and the company • Discuss laws that affect international business operations

77. Getting Started

78. Basic Considerations Business Structure Business Contacts Business Contacts /Structure generally is tremendously determined by your role in the importing and exporting of goods

79. The 4 Major Players Importer •Person or entity that brings in foreign goods or services into the country for its own use, but more often for resale Exporter •Person or entity that sells their own goods or services to foreign buyers Import / export merchant •Person or entity who buys goods or services from one country for the purposes of resale in another country Import / export management company •Essentially a person or entity that serves as the middleman in deals between importers and exporters

80. EMCs, IMCs and IEMCs • The person or entity may serve as an import management company (IMC) by setting up deals between domestic businesses and foreign suppliers • Alternatively, the person or entity may serve as an export management company (EMC) by setting up deals between domestic suppliers and foreign buyers • Finally, this person or entity may serve as an import/export management company (IEMC) by setting up deals in both directions • The IEMC offers advantages particularly for the small business since there is little need to spend huge amounts of capital to purchase goods first, and then to tie up the capital waiting to sell these goods • The IEMC functions exclusively as the middleman in deal negotiations and profits only when a deal is closed • In this respect, the IEMC must be knowledgeable about trade, good at negotiators, and have an extensive contact list.

81. The IEMC’s contacts Customs Broker • This contact is particularly important to establish for importers since the broker’s job is to have special professional knowledge about customs regulations and tariff schedules and to file the necessary paperwork, and as such to ensure that imported goods pass through customs with minimal tariffs, delays and problems Freight Forwarder • This is an in-house person at a manufacturer, independent shipper, or contracted shipping line company whose job is to ensure that the delivery of goods arrives intact. • The freight forwarder must have special knowledge of shipping options and prices Commercial Bank • It is essential to establish a banking relationship with a commercial bank that has familiarity with international trade, deal structuring, and deal financing. • Make sure your bank has a letter of credit department Manufacturer’s Representative • For importers, they function essentially as independent salesmen who promote and sell your imported good to retailers. • Manufacturer’s representatives function more so as their name implies in exporting. • Often, these people representing domestic manufacturers seeking to expand into the international market will approach exporters

82. Intellectual property includes Patents • Patents (Protection) • International Convention for the Protection of Industrial Property • European Patent Organization (EPO) • The World Intellectual Property Organization (WIPO) Trademarks • Trademarks • Protection varies by country, 10 to 20 years • Madrid Agreement of 1891 • General American Convention for Trademark and Commercial Protection • Bilateral basis in friendship, commerce, and navigation treaties Trade names • Trade Names • Protected in countries that adhere to the Convention for the Protection of Industrial Property Copyrights • Copyrights • Protection provided under the Berne Convention of 1886 adhered to by 77 countries • Universal Copyright Convention of 1954 adopted by 92 countries Trade secrets • A trade secret is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information which is not generally known or reasonably ascertainable by others, and by which a business can obtain an economic advantage over competitors or customers

83. Taxation • Nonrevenue tax purposes – To redistribute income, discourage consumption of products such as tobacco and alcohol, and encourage purchase of domestic rather than imported products • Tax Treaties or Conventions • Treaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement, often called tax conventions • For e.g. U.S. has tax treaties with over 50 countries

84. National Tax Approach Differences • Tax Levels – Range from relatively high in some countries to zero in tax havens – Some countries have capital gains taxes, and some do not • Capital gain is realized when an asset is sold for an amount greater than its cost

85. National Differences of Approach Capital gains tax Income tax Common in industrialized countries Value-added tax Tax based on the value of goods and services Used in Europe Unitary tax

86. Antitrust Laws • Antitrust laws – Laws to prevent price fixing, market sharing, and business monopolies • Japan’s Fair Trade Commission – Japanese companies are incorporating antitrust thinking into strategy • National Tax Jurisdiction – A tax system for expatriate citizens of a country whereby the country taxes them on the basis of nationality even though they live and work abroad • Territorial Tax Jurisdiction – Expatriates are exempt from their country’s taxes

87. Tariffs, Quotas, and Other Trade Obstacles • Purposes of tariffs • To raise revenue for government • To protect domestic producers • Quotas limit the number or amount of imports • For protection • Other trade obstacles include • Health requirements • Packaging requirements • Language requirements • Weak patent or trademark protection • Quarantine periods • Voluntary Restraint Agreements

88. Accounting Law • Sarbanes-Oxley Act (SOX) – Brings major changes to the regulation of corporate governance and financial practice • New reporting requirements • Officer and director responsibilities • Auditor independence – Applies to any company, domestic or foreign, that has securities registered or is required to file reports under the Securities Exchange Act of 1934

89. EXPORT QUOTATION WORKSHEET

90. Sample Export Quotation Worksheet Form Filling Activity

91. THE PRO FORMA INVOICE

92. Sample Pro Forma Invoice Form Filling Activity

93. END OF DAY 1

94. NEGOTIATION SKILLS

95. Introduction • Negotiating and negotiations are a constant feature of everyday life • We do it all the time with family, friends and a range of people and organisations

96. Formal Bargaining • Collective bargaining is a formal and highly developed form of negotiating • It is very similar to diplomacy • Doing it successfully requires analytical skills, forethought, preparation, presentational skills, realism and detachment • The purpose of negotiations is to secure an outcome as close as possible to your objectives • The aim of the people you are negotiating with is to secure an outcome as close as possible to their objectives

97. 4 Pre-Steps for Successful Negotiation •Determining and evaluating the objectives carefully and objectively Forethought •Determining the credibility of the objectives and the strength of the supporting evidence Key tests •Means being well briefed and knowledgeable about what you are seeking to achieve and how that can be justified Preparation •How you can present your case in an accessible and persuasive way to the audience Presentation

98. Skills and Techniques • Try to imagine yourself as the other side to the negotiations and consider how they might view or react to your proposals and arguments • There is no one perfect style of negotiating. • Different people do it equally successfully in different styles and manners • To be successful your individual style has to be the one you are most comfortable with and which matches your individual personality • Successful negotiators range from colourful charismatic performers to quiet, calm and methodical people

99. The Collective Bargaining Response • Collective bargaining negotiations are a ritual process, a stately minuet, a symphony or a novel • There are different stages the sequence of which is essential to the whole process • The opening presentation of the claim should set the scene and seek to define the parameters for the subsequent stages of the negotiations • It is a strategic exercise setting out the case and the supporting evidence • It should not be too long or too detailed as that can obscure and weaken the case • Dealing with detail comes later

100. Initial Response • The next stage is the audience response – again it should be strategic and address the arguments • It may make counter proposals, make an offer for an agreement, and/or give a broad indication of what they might offer • You need to listen carefully and closely to that response • Take a written note of the key parts of the response • Evaluate and analyse the language, the precise words used and their body language • Assess the extent to which any of their counter arguments do or do not weaken your case

101. Countering the Response • Do not feel obliged to respond immediately other than in a preliminary way ,or to seek clarification-but not necessarily too much at that stage • Have a break/adjournment of the plenary joint negotiations to consider their response in more detail and depth with your colleagues • The employer/government first response is unlikely to be their final response • Usually they will be prepared to offer more particularly if they believe an agreement between the two sides is possible • Consider how you can respond and show how your arguments and supporting evidence have not been properly addressed or, hopefully, seriously weakened • Look for weaknesses and inconsistencies in their response which you can objectively demonstrate and exploit • Look for any clues or indications of how or where they might move closer to your objectives • On return to plenary negotiating meeting answer their response – normally in a logical, firm and not insulting way

102. • Try to show a willingness to consider more favourably an improved offer – if possible with some indications of what might be acceptable in general terms • Do not make explicit threats unless you are confident they can be delivered and that they would be effective • Consider using more general expressions of potential adverse consequences of the initial offer if not improved upon • Present the response in the resumed plenary in a calculated and persuasive way emphasising the strong parts of your case • Try to avoid immediate subsequent exchanges becoming too confrontational. Encourage them to have an adjournment to consider your response carefully and in depth • At such an adjournment review your position, identify possible employers responses and how you might respond but avoid getting into an interminable hypothetical maze of speculation Countering the Response

103. Final Stage • Third session onwards are likely to be key session(s) • Final or near final response from audience very likely if negotiating seriously and constructively • Do not summarily reject it unless it really is a deliberately poor and provocative offer • Withdraw to consider it with your side. If it is a deliberately poor and provocative offer respond quickly by asking them to go away and reconsider their position and come back to a future meeting with an improved offer • If it is a sensible offer consider what modest further improvements might be possible and decide which are the priority issues • Consider without prejudice/informal/behind the chair meetings between a small number of key representatives from both sides - generally the smaller the better but start with a minimum of two • Consider possible improvements through staging a settlement- some now- more later - end loading a pay award – continued negotiations on unresolved issues while reaching agreement on those that can be agreed by both sides

104. Sealing the Deal If there is an agreement acceptable to both sides go through it in detail jointly before resuming any talk session in order to be sure that both sides have the same understanding If an informal agreement has been reached, one side should make the offer formally and the other side should accept it Try to have a written agreement at this stage to prevent future arguments about what has been agreed Conclude on good terms. Remember collective bargaining trade negotiations are a long term business – circumstances will vary and at different times in the future will favour one side or the other

105. RULES OF SALE - INCOTERMS

106. Introduction • Universally recognised set of definitions of international trade terms • Recognised by courts and other authorities • Define the trade contract responsibilities and liabilities between buyer and seller • Updated regularly to keep pace with changes and developments in international trade

107. 13 Terms spread among 4 groups E: Departure • EXW- Ex Works F: Main carriage unpaid • FCA- Free Carrier • FAS- Free Alongside Ship • FOB- Free On Board C: Main carriage paid • CFR- Cost and Freight • CIF- Cost, Insurance and Freight • CPT- Carriage Paid To • CIP- Carriage and Insurance Paid To D: Arrival • DAF- Delivered At Frontier • DES- Delivered Ex Ship • DEQ- Delivered Ex Quay • DDU- Delivered Duty Unpaid • DDP- Delivered Duty Paid • Devised an published by the ICC • WBO ICC introduced Incoterms in 1936 • Incoterms 2012 • 4 groups E, F, C and D and in all 13 main terms

108. Contractual Obligations The Seller’s Obligations A1 Provision of goods in conformity with the contract A2 Licenses, authorizations and formalities A3 Contract of carriage and insurance A4 Delivery A5 Transfer of risks A6 Division of costs A7 Notice to the buyer A8 Proof of delivery, transport document or equivalent electronic message A9 Checking – packaging – marking A10 Other obligations The Buyer’s Obligations B1 Payment of the price B2 Licenses, authorizations and formalities B3 Contract of carriage B4 Taking delivery B5 Transfer of risks B6 Division of the costs B7 Notice to the seller B8 Proof of delivery, transport document of equivalent electronic message B9 Inspection of goods B10 Other obligations

109. Scope of Incoterms Incoterms: • Limited to rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold • Do not deal with the consequences of breach of contract • Are primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms • Can be used in contracts for sale of goods directly

110. Structure of Incoterms E •EXW Ex Works (.....…........named place) F •FCA Free Carrier (....….........named place) •FAS Free Alongside Ship (........….named port of shipment) •FOB Free On Board (............named port of shipment) C •CFR Cost and Freight (...........named port of destination) •CIF Cost, Insurance & Freight (.....named port of destination) •CPT Cost Paid To (...........named port of destination) •CIP Carriage and Insurance paid to (…… .named place of destination) D •DAF Delivered at Frontier (.....………………….....named place) •DES Delivered Ex Ship (...........named port of destination) •DEQ Delivered Ex Quay (....…....named port of destination) •DDU Delivered Duty Unpaid (…...named place of destination) •DDP Delivered Duty Paid (.........named place of destination)

111. The Terms • The “E” Term is the term in which seller’s obligation is at its minimum • The “F” Term requires the seller to deliver as instructed by the buyer • The “C” Term requires the seller to contract for carriage at his expense • The “D” Term signifies arrival contracts

112. E Group EXW Ex-Works •Goods available only at seller’s premises •Buyer loads the goods on truck or container at the seller’s premises, and takes into account the subsequent costs and risks

113. F Group FCA - Free Carrier • Delivery at the specified point of departure: the seller’s premises or a named cargo terminal / railroad station • Buyer pays main carriage/freight, cargo insurance and other costs and risks FAS - Free Alongside Ship • Seller: places the goods alongside the ship at the named port, loaded at his expense • Buyer pays loading fee, main carriage/freight, cargo insurance and other costs risks FOB - Free On Board • Delivery of goods on board the vessel at the port of origin is at the seller’s expense • Buyer is responsible for loading fee, main carriage/freight, cargo insurance and other costs risks

114. C Group CFR - Cost and Freight •Seller: pays the costs and freight to bring the goods to the port of destination •Risk: transferred once the goods have crossed the ship’s rail CIF - Cost Insurance and Freight •Used exactly the same way as CFR except that •Seller: must in addition procure and pay for insurance for the cargo insurance and delivery of goods to the port of destination •Buyer: responsible for the import customs clearance & other costs and risks CPT - Carriage Paid To •Seller delivers the goods at the named place of destination at his expense •Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. •Risk transferred at the delivery of goods CIP - Carriage & Insurance Paid To •Seller delivers the goods on the ship. On board, the risk is transferred to the buyer. •Buyer is accountable for the import customs clearance, payment of customs duties and taxes, and other costs and risks until goods reach their final destination

115. D Group DAF - Delivered At Frontier • Delivery of goods is done at the specified point at the frontier at the seller's expense. • Buyer is responsible for the import customs clearance, payment of customs duties and taxes. The transfer of risk is made at the frontier DES - Delivered Ex Ship • Seller assumes expenses linked to the delivery of goods. At the arrival of the ship, the risk is transferred to the buyer • Buyer is accountable for the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs DEQ - Delivered Ex Quay • Delivery of goods is done to the quay of the port at the seller's expense. He is also responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. • Buyer assumes the cargo insurance and other costs and risks DDU - Delivered Duty Unpaid • Delivery of goods and the cargo insurance to the final destination, which is often the project site or buyer's premises, is done at the seller's expense. • Buyer is responsible for the import customs clearance and payment of customs duties and taxes DDP - Delivered Duty Paid • Seller is responsible for the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or the buyer's premises. • It is a “door to door” delivery. • Risk is transferred when the goods are delivered

116. Incoterms – International Commercial Terms… • ...cannot be applied by themselves to a variety of situations, of medium of transports, technologies • ...must be supplemented by additional details adapted to these particular cases • ...define the geographical points where the transfers of risks and expenses will take place

117. METHODS OF PAYMENT

118. Payment Methods Cash in Advance Open Account Documentary Collections Letters of Credit

119. Risks vs. Methods of Payment Open Account Documentary Collection Letter of Credit Cash in Advance Buyer Risk Lowest Lower Low High Seller Risk Highest Higher High Low

120. Payment Methods Explained Cash in Advance •Time of Payment •Before Shipment •Goods Available to Buyer •After Payment •Risks to Seller •None •When Appropriate •Seller has negotiating strength to demand cash in advance Open Account •Time of Payment •As agreed; i.e. 30 days •Goods Available to Buyer •Before Payment •Risks to Seller •Buyer defaults on payment obligation •Delays in availability of foreign exchange and transferring of funds from buyer’s country •When Appropriate •Seller has absolute trust that buyer will accept shipment and pay at agreed time •Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment •Seller has sufficient liquidity or access to outside financing to extend deferred payment terms Documentary Collection •Time of Payment •On presentation of sight draft by a bank to buyer •Goods Available to Buyer •After payment •Risks to Seller •Buyer’s non-acceptance of shipment •Payment delays due to unavailability of foreign exchange in buyer’s country •Payment blocked due to political actions in buyer’s country •When Appropriate •Seller is confident that buyer will accept shipment •Seller is confident that importing country will not impose regulations deferring or blocking transfer of payment Letter of Credit (LC) •To be discussed at length in the coming slides

121. Letter of Credit • A letter of credit substitutes the credit of a bank for the credit of an applicant • It is a written instrument issued by banks stating that payments will be made on behalf of applicants to beneficiaries, provided that the beneficiary fulfills all of the conditions described in the letter of credit • The typical bank customer for a letter of credit is someone engaged in international trade and who is a purchaser of international goods

122. Letter of Credit – Key Parties Applicant - Buyer/Importer Beneficiary - Seller/Exporter Issuing Bank - Guarantees payment Advising Bank - Authenticates LC Confirming Bank - Guarantees payment if Issuing Bank defaults

123. Commonly Used Documents for LCs • Commercial Invoice • Transport Document – Ocean Bill of Lading – Air Waybill • Packing Lists/Weight Lists • Insurance Policy or Certificate • Draft or Bill of Exchange • Other Documents – Inspection Certificate – Special Customs Invoices – Certificate of Origin

124. TheLCFlowchart

125. ______________________________________ ________________________________ NO.___________ (CITY) (DATE) AT _____________________________________________________ SIGHT OF THIS BILL OF EXCHANGE PAY TO THE ORDER OF ________________________________________ ___________________ (AMOUNT IN FIGURES) THE SUM OF___________________________________________________________________________ ______________________________________________________________________________________ DRAWN UNDER ________________________________________________________________________ LC NO. ________________ DATED __________ TO ________________________________________ ______________________________________ DRAWER _________________________________________ _________________________________________ ______________________________________ DRAWEE BY: AUTHORIZED SIGNATURE Draft or Bill of Exchange

126. Letter of Credit • Time of Payment • When LC calls for a sight draft - at time documents are presented to negotiating bank • When LC calls for a time (usance) draft - at maturity of accepted time draft • Goods Available to Buyer • When LC calls for a sight draft - after payment • When LC calls for a time draft - after draft has been accepted by bank • Risks to Seller • Discrepancies in the documents • Buyer’s Bank (opening bank) defaults on its payment obligation • Payment blocked due to political events in buyer’s country • When Appropriate • Seller is unsure of creditworthiness of buyer

127. Standby Letter of Credit • Commercial documents generally flow outside the letter of credit (between buyer and seller) • Funds generally flow outside of a letter of credit (between buyer and seller) • These credits are “Standing By” for an event of default or non-performance before they can be drawn on • Financial - Assures account party’s performance of a financial obligation, i.e., to pay an invoice by a certain date • Performance - Assures account party’s performance of a non-financial contract obligation, i.e., to deliver products under a contract

128. Other Financing Options • Countertrade – i.e. barter, counter-purchase, compensation • Factoring – Outright sale of short term receivables • Forfaiting – Outright sale of medium term (large) obligation

129. LUNCH – DAY 2

130. IMPORT/EXPORT FINANCING

131. Introduction • Both large and small firms can benefit from exporting • The volume of export activity in the world economy is increasing as exporting has become easier thanks to – the decline in trade barriers under the WTO – regional economic agreements

132. Firms wishing to export must • Identify export opportunities • Avoid a host of unanticipated problems associated with doing business in a foreign market • Become familiar with the mechanics of export and import financing • Learn where to get financing and export credit insurance • Learn how to deal with foreign exchange risk

133. The Promise and Pitfalls of Exporting • The benefits from exporting can be great--the rest of the world is a much larger market than the domestic market • Larger firms may be proactive in seeking out new export opportunities, but many smaller firms take a reactive approach to exporting • Many novice exporters have run into significant problems when first trying to do business abroad, souring them on following up on subsequent opportunities

134. Common Pitfalls For Exporters • Poor market analysis • Poor understanding of competitive conditions • A lack of customization for local markets, poor distribution arrangements, bad promotional campaigns • A general underestimation of the differences and expertise required for foreign market penetration • Difficulty dealing with the tremendous paperwork and formalities involved

135. Improving Export Performance • To improve their success, exporters should – acquire more knowledge of foreign market opportunities – consider using an export management company – adopt a successful export strategy

136. An International Comparison • Many firms fail to consider export opportunities simply because they lack knowledge of the opportunities available – both Germany and Japan have developed extensive institutional structures on promoting exports • Japanese exporters can also take advantage of the knowledge and contacts of sogo shosha - the country’s great trading houses

137. Utilizing Export Management Companies • Export management companies - export specialists that act as the export marketing department or international department for client firms • EMCs 1.start exporting operations for a firm with the understanding that the firm will take over operations after they are well established 2.start services with the understanding that the EMC will have continuing responsibility for selling the firm’s products

138. Export Strategy • Exporters – can hire an EMCs to help identify opportunities and navigate paperwork and regulations – start by focusing initially on just one or a few markets – enter a foreign market on a fairly small scale in order to reduce the costs of any subsequent failures – recognize the time and managerial commitment involved in building export sales – devote attention to building strong and enduring relationships with local distributors and customers – hire local personnel to help the firm establish itself in a foreign market – keep the option of local production

139. Lack of Trust • Exporters and importers have to trust someone who may be very difficult to track down if they default on an obligation • Each party has a different set of preferences regarding the configuration of the transaction – exporters prefer to be paid in advance, while importers prefer to pay after shipment arrives • Problems arising from the lack of trust can be solved by using a third party who is trusted by both - normally a reputable bank

140. A Typical International Transaction

141. Letter of Credit • A letter of credit is issued by a bank at the request of an importer and states the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents • This system is attractive because both parties are likely to trust a reputable bank even if they do not trust each other

142. Draft • Most export transactions involve a draft, also called a bill of exchange • A draft is an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time • A sight draft is payable on presentation to the drawee while a time draft allows for a delay in payment - normally 30, 60, 90, or 120 days

143. Bill of Lading • The bill of lading is issued to the exporter by the common carrier transporting the merchandise • It serves three purposes – it is a receipt – it is a contract – it is a document of title

144. The Incidence of Countertrade • In the 1960s the Soviet Union and the Communist states of Eastern Europe, whose currencies were generally nonconvertible, turned to countertrade to purchase imports • Many developing nations that lacked the foreign exchange reserves required to purchase necessary imports turned to countertrade during the 1980s – there was a notable increase in the volume of countertrade after the Asian financial crisis of 1997

145. Types of Countertrade •Barter - a direct exchange of goods and/or services between two parties without a cash transaction •the most restrictive countertrade arrangement used primarily for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy Barter •Counter-purchase - a reciprocal buying agreement occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made Counter- purchase •Switch Trading - when a specialized third-party trading house buys a firm’s counter-purchase credits and sells them to another firm Switch Trading •Offset - similar to counter-purchase insofar as one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale •the difference is that this party can fulfill the obligation with any firm in the country to which the sale is being made Offset •Compensation or Buybacks - occurs when a firm builds a plant in a country—or supplies technology, equipment, training, or other services to the country—and agrees to take a certain percentage of the plant’s output as a partial payment for the contract Compensation Or Buyback

146. The Pros and Cons of Countertrade • Countertrade is a way for firms to finance an export deal when other means are not available – firms that are unwilling to enter a countertrade agreement may lose an export opportunity to a competitor that is willing to make a countertrade agreement • A countertrade arrangement may be required by the government of a country to which a firm is exporting goods or services • Countertrade is unattractive because – most firms prefer to be paid in hard currency – it may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably • Countertrade is most attractive to large, diverse multinational enterprises that can use their worldwide network of contacts to dispose of goods acquired in countertrading

147. SETTLEMENT OF DISPUTES

148. The Dispute Settlement Body (DSB) - An international jurisdiction, a legal value - Rules and procedures defined by the Understanding on Rules and Procedures Governing the Settlement Disputes (1994) - ”the central element in providing security and predictability to the multilateral trading system” (art. 3.2 of the Understanding). - Distinctive feature: possibility to impose economic sanctions against a country. - More restrictive and efficient than the GATT system.

149. The Rules and Procedures Governing the Settlement of Disputes – WTO Model First stage: the consultation •Discussion between the countries in dispute to settle their differences by themselves (60 days). Second stage: the panel •If consultations fail, the complaining country can ask for a panel to be appointed (30 days). •Delivery of the panel's rapport (180-270 days). •Adoption of the panel's final report (panel's report can only be rejected by consensus in the DSB) (60 days). Third stage: the implementation of the conclusions •Possibility to appeal. •Examination of the appeal by the Appellate Body (60 days). •Acceptance or rejection of the appeals report (90 days). •Implementation of the recommendations (reasonable period of time). •If recommendations not followed: •The complaining country can ask the BSD for permission to impose limited trade sanctions against the other side

150. SAFTA - DISPUTE RESOLUTION WAYS

151. Some Abbreviations Abbreviation Expanded COE Committee of experts SMC SAFTA Ministerial Council SAFTA South Asian Free Trade Agreement

152. Dispute Resolution - SAFTA • Article 10 of the SAFTA agreement provides the dispute resolution framework available to Contracting States by establishing a Committee of Experts ("COE") as its primary dispute settlement body • Article 10 further establishes the SAFTA Ministerial Council ("SMC"), which is the highest administrative body concerned with implementation of the agreement • Similar to the SAPTA, Article 20 of the SAFTA agreement stipulates the dispute settlement mechanism for disputes arising from the "interpretation or application" of the agreement and its related instruments • In laying out the scope and framework for the adjudication of disputes, the SAFTA agreement includes provisions relating to consultations, timely COE review of a dispute, and the procedures for seeking appellate review of a decision by the SMC

153. In the initial 1992 Framework Agreement establishing the AFTA, the dispute settlement provision in Article 9 provided for the amicable resolution of disputes between the parties It also mentioned the possibility of setting up an ad hoc body to oversee the settlement of disputes, but did not address any other rules or procedures for dispute resolution A few years later, acknowledging the inadequacy of this provision, the ASEAN Ministers adopted a Protocol on Dispute Settlement Mechanism ("DSM") to implement the AFTA agreements Most recently the ASEAN Protocol superseded the DSM and further detailed the dispute settlement mechanism available to parties under the AFTA and other agreements Pursuant to the ASEAN Protocol, all disputes arising under the existing and future AFTA agreements are within the purview of the mechanism. The Senior Economic Officials Meeting ("SEOM") and the ASEAN Secretariat are the primary bodies that oversee the dispute settlement process After exhausting alternative dispute settlement methods, namely consultations, good offices, conciliation, and mediation, the parties may refer their disputes to the SEOM to set up panels as well as review, implement, and monitor the decisions regarding the breach of a party's obligations under the agreement The ASEAN Protocol also provides more extensive provisions on the role and functioning of the panels, timelines for deliberation and rendering recommendations, a comprehensive appellate review process administered by the ASEAN Economic Ministers ("AEM"), and procedures for compensation and suspension of concessions The Mechanism

154. Although the SAFTA agreement's dispute settlement mechanism is a significant improvement over the SAPTA, it is still too ambiguous and imprecise to meet the dispute resolution needs of the member states There are several lacunae not addressed by the mechanism One problem is the ambiguity in the scope and jurisdiction of the SAFTA agreement, which could be a major threshold issue in determining when and what disputes member countries could refer for resolution Another obstacle is the lack of procedures for the operation of the COE, as well as the largely undefined qualifications of its members Still more issues are left open-ended include: •The enforcement of decisions, •Procedures for withdrawing and reinstating concessions •The catch-all provision allowing contracting states to opt-out of the SAFTA agreement at any time, without due cause or penalty Analysis

155. PREFERENTIAL TRADING

156. Preferential Trading Area / Agreement • A preferential trade area (also preferential trade agreement, PTA) is a trading bloc that gives preferential access to certain products from the participating countries • This is done by reducing tariffs but not by abolishing them completely • A PTA can be established through a trade pact. It is the first stage of economic integration • The line between a PTA and a free trade area (FTA) may be blurred, as almost any PTA has a main goal of becoming a FTA in accordance with the General Agreement on Tariffs and Trade • These tariff preferences have created numerous departures from the normal trade relations principle, namely that World Trade Organization (WTO) members should apply the same tariff to imports from other WTO members

157. END OF DAY 2

158. E-COMMERCE

160. Brief History  Early 1970s saw introduction of Electronic Fund Transfers (EFT)  Limited to large organizations, financial institutions, few daring small business  Late 1970s and early 1980s – Electronic data interchange(EDI)for e- commerce within companies  Used by businesses to transmit data from one business to another  to include other transaction processes besides financial; included manufacturers, retailers, services, etc  1990s- the World Wide Web on the Internet provides easy to use technology for information publishing and dissemination  Cheaper to do business (economics of scale)  Enable diverse business activities (economics of scope)  Between 1997 and 2000, more than 12000 Internet-related business were started

161. What is e-commerce? "The conducting of commercial transactions (the exchange of merchandise, services, information, and/or money between suppliers and receivers for the commercial transfer of goods between economic actors) through electronic mediation using Internet technology." -Ministry of International Trade and Industry of Japan "Electronic commerce (e-commerce) is business transactions conducted over the public and private computer networks. It is based on the electronic processing and transmission of data, text, sound and video. E-commerce includes transactions within a global information economy such as electronic trading of goods and services, on-line delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of lading, commercial auctions, collaborative design and engineering, on-line sourcing, public procurement, direct consumer marketing and after-sales services. It involves the application of multimedia technologies in the automation and re-design of transactions and workflows, aimed at increasing business competitiveness." - Inter-Agency Task Force on Electronic Commerce (IATFEC), Malaysia

162. Buyer and Seller Roles In Commerce

163. Communication on the Web • Mass media – One-to-many model – Flows from one advertiser to many customers – Seller is active, buyer is passive • Personal contact – One-to-one model – Interchange within a framework of trust – Seller and buyer are active • Web – Many-to-one/many-to-many model – Buyers can communicate with many sellers – Buyer actively searches, and controls the length, depth and scope of the search

164. Communication Channels

165. 166 Levels of Trust

166. Types Of E-commerce • 2 types of e-commerce: – B2C – B2B – B2G (business to government)

167. B2C & B2B B2C  B2C means e-commerce transactions between business and consumer  Commerce between companies and consumers  Involve customer gathering information; purchasing physical goods (tangible such as books or consumer products) or information goods (goods of electronic material or digitized contents such as software or e-books  2nd largest and earliest form of e- commerce  Example of B2C business:  Retailing business: Amazon.com, pizzahut.com,  Information goods: cuticuti.com  With the use of online banking tools (example: Maybank2u) B2B  B2B means e-commerce transactions between business and business  E-commerce between companies  Example: IBM, HP, Dell  B2G means e-commerce between companies and public sector  involves borderless transactions.  Internet for public procurement,  Example: myeg.com.my, e-tender by JKR, licensing procedures and other government related operation

168. Advantage/Disadvantages to Business Advantages  Help increase profits and decrease costs  Wide base for customers – internationally geographically scattered; areas not previously reached  Identify new suppliers and business partners  Ability to create highly specialized businesses  Lower communication costs  Buyers have wide range of choices of vendors and products  Availability 24/7  Competitive market causes decrease in prices, discounts or “freebies” thrown in  Customers receive relevant and detailed information in seconds, as opposed to days or weeks  Allows individuals to work from home, do less travel Disadvantages • Some businesses processes may not work using e-commerce – Perishable goods • Difficult to calculate return-on-investment (ROI) • Potential cultural and legal obstacles – Legal environment still unclear and have conflicting laws • No “touch-and-feel” aspect – Loss of ability to inspect products from remote locations

169. E-commerce infrastructure  Information superhighway infrastructure  Internet, LAN, WAN, routers, etc  Telecom, cable TV, wireless, etc  Messaging and information distribution infrastructure  HTML, XML, email, HTP, etc  Common business infrastructure  Security, authentication, electronic payment, directories catalogs, etc  Web architecture  Client/server model  N-tier architecture; e.g. web servers, application servers, database servers, scalability

170. The process of e-commerce  Attract customers  Advertising, marketing  Internet with customers  Catalog, negotiation  Handle and manage orders  Order capture  Payment  Transaction  Fulfillment (physical good, service good, digital good)  React to customer inquiries  Customers service  Order tracking

171. Trust Issues • How do I know who you say you are? • How can I guarantee that you will supply me with the products you offer within the timeframe you gave? • Established companies, especially those with offline presence, have easy time creating trust on the Web • New companies face difficulties due to anonymity that exists – Visitors won’t just buy from anyone, especially if they have never heard of the company before

172. Language Issues • “Think globally, act locally” • Providing local language conversions of a site – Customers more likely to buy products or services from a site in their own language • About 60% of content on Web is in English; more than 50% of current Internet users do not read English

173. Culture Issues • Common language and common customs provide an easier time for consumers to determine how companies will react in situations of misrepresentation of quality, etc • Laws and business practices vary between countries • Wine.com (not suitable for Muslim culture) • Use of icons and terms to depict common actions – Shopping carts used in US; shopping baskets used in Europe; shopping trolleys used in Australia – The OK symbol seen as an obscene gesture in some countries

174. Infrastructure Issues • Local connection costs in developing countries high; some countries require payment for time spent online • This could lead to people spending less time online • Introduction of flat-rate access required • More than half of businesses on web turn away international orders as do not have capacity or processes in place to fill them

175. Obstacles, problems and issues faced by companies in engaging e-commerce • Lack of awareness and understanding of the value of e- commerce  Many think that e-commerce suited only for big companies  Additional cost that will not bring any major returns to investment • Lack of knowledge and skills  Shortage of skilled workers especially in small and medium companies  Limited capabilities in design, distribution, marketing and post sale support • Financial cost  Initial investment to adopt new technology is proportionately heavier for small than for large firm  Firms will need to undertake investment in an appropriate computer system to implement e- commerce.  High cost of computer and internet access • Infrastructure  Many developing countries have poor telecommunication infrastructure • Security  Ensuring security on payment and privacy of online transaction  Lack of trust to use internet to make online payment

176. Impact of e-commerce  E-commerce will eliminate mediation process as producers can sell direct to consumers  Firms will have fast knowledge of what customers want  Firms can use this knowledge to guide the development of their product lines and to identify new growth areas at their earlier stages  E-commerce will also help small- and medium-sized enterprises (smes) to gain greater market reach for their products and services  In fact, e-commerce can be an efficient and economical way for many smes to enter an export market  E-commerce offers consumers a wide range of new opportunities to do direct shopping and banking using the convenience of a home computer or other communication devices  Consumers will also benefit in terms of lower final prices due to lower transaction costs as described above  E-commerce consumers will have a wider and direct access to producers of goods and services without intermediaries  With a wider choice of products and services offered to them, they can cast their preferences by describing what they want  In this environment, e-commerce will hasten the shift of market power of consumers, from a "product taker" to a "product maker"  As a result, this process will lead to greater competition among firms to protect their market share  E-commerce will result in higher investment by the government, firms and consumers  Coupled with higher investment in IT, e-commerce will result in higher efficiency and productivity of the economy  E-commerce will contribute to higher total factor productivity of the economy which is needed to sustain economic growth in the long term  E-commerce will create new activities and a variety of new industries which utilize it  This will lead to the creation of new job opportunities

177. LOGISTICS AND IMPORT/EXPORT ACTIVITIES

178. Logistics & Physical Distribution Activities 1. Logistics management refers to all activities involved in physically moving raw material, in-process inventory, and finished goods inventory from the point of origin to the point of use or consumption 2. A physical distribution system involves: (1) transportation mode (2) inventory quantities, and (3) packing 3. A decision involving one activity affects the cost and efficiency of one or all others 4. Total cost of the system is defined as the sum of the costs of all these activities 5. It is important to reduce the total cost instead of reducing the cost of each component of the logistics system

179. COMMERCIAL AND LEGAL DOCUMENTS

180. Documentation Requirements • Most international transactions require numerous documents • It is important that each of these documents be filled correctly and within a specific time frame • Each document has different requirements • It is common to issue more than one original document – one for each of several parties • Most countries still require documents to be printed on paper and not submitted electronically

181. Invoices • Commercial invoices for transactions conducted in an international environment are much more complete and detailed than in a domestic environment. They must include: 1. A detailed description of the goods, with HS number 2. The Incoterm of the transaction 3. Details on the costs of domestic transportation, loading, insurance, etc. so as to help determine the dutiable value of the goods 4. Details on the weight and dimensions of the goods 5. Details on the itinerary of the shipment 6. The terms of payment

182. An International Invoice

183. Invoices Pro forma invoice • A quote (preview of the commercial invoice) provided by the exporter to the importer for the purpose of obtaining a letter of credit. Consular invoice • A commercial invoice that is printed on stationery provided by the consulate of the country in which the good will be imported. Specialized commercial invoices • Some countries require that invoices be printed on special forms.

184. Export Documents Export License Destination Control Statement Shipper’s Export Declaration Certificate of End-Use Country’s Regulations

185. Export License • What types of products need an export license? Depending on the country of export, it could be: • National treasures, antiques, or works of art • Products put under control for political or military purposes • Scarce natural resources What it is • An export license is an express authorization by a given country’s government to export a specific product before it is shipped.

186. Shipper's Export Declaration • The Shipper’s Export Declaration (SED) is a data-collection document. It is used to tabulate what products are exported from the seller, and to which countries they are exported • Most other countries have a similar data- gathering export requirement

187. Shipper's Export Declaration

188. • An End-Use Certificate is a document required by some exporting countries in the case of sensitive exports, such as ammunition, to ensure that the product is used for acceptable (to the exporting country’s government) purposes End-Use Certificate

189. Export Taxes & Quotas • Some countries require exporters to pay an export tax on certain commodities. • Export quotas are a limit, set by the exporting country’s government, on the quantity of a specific commodity that can be exported in a given year. Fact • Few governments attempt to hinder exports, but some do.

190. Import Documents Import License Phyto-Sanitary Certificate Certificate of Free Sale Certificate of Inspection Import Forms Certificate of Insurance Certificate of Origin Consular Invoice Certificate of Manufacture Certificate of Insurance Certificate of Certification Other Certificates

191. • A Certificate of Origin is 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. Certificate of Origin

192. • A Certificate of Inspection is 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. Certificate of Inspection

193. • A Phyto-Sanitary Certificate attests that the goods conform to the agricultural standards of the importing country. Phyto-Sanitary Certificate

194. • A Certificate of Insurance is a document provided by the exporter’s insurance company that attests that the goods are insured during their international voyage. Certificate of Insurance

195. Other Import Documents Certificate of Certification •A document provided by an independent inspection company, or by the Agricultural Department of the exporting country’s government, that attests that the goods conform to the agricultural standards of the importing country. Certificate of Free Sale •A document that attests that the product exported conforms to all of the regulations in place in the exporting country and that it can be sold freely in the exporting country. •Some importers use this certificate as a guarantee of quality. Consular invoice •A commercial invoice that is printed on stationery provided by the consulate of the country in which the good will be imported Import license •The express authorization, granted by the government of the importing country, to import a particular product in a given country. Import forms •All countries have specific administrative forms that have to be submitted by the importer in order to clear Customs.

196. Transport Documents Ocean Bill of Lading Air Waybill Intermodal Bill of Lading Uniform Bill of Lading Charter Parties Aircraft Leases Packing List Manifest

197. Bill of Lading - It is a contract between the and the shipper. •The carrier agrees to transport the goods from A to B for a given price. •It can be called an “ocean bill of lading” for transportation by ocean, an “air waybill” when the goods travel by air, an “intermodal bill of lading” when the goods travel on more than one mode of transportation under a single contract, and a “uniform bill of lading” when the goods travel by road or rail. •The shipper (the firm that enters the contact with the carrier) is either the exporter or the importer, depending on the Incoterm used. It is a receipt for the goods. •Signed by the carrier, it signifies that the goods were received in good condition. •If the goods are received in good condition, the carrier just signs the bill of lading, without any other annotation. Such a bill of lading is called a clean bill of lading. •If the goods are received in a condition that concerns the carrier (dirty, wet, poorly packaged, rusty, leaking, etc.), the shipper makes an annotation of the issue, then signs. Such a bill of lading is called a soiled bill of lading. •Letters of credit always call for a clean bill of lading. It is a certificate of title. •Whichever party has the original bill of lading is the owner of the goods. •On a bill of lading, there is a box called “consignee,” in which the shipper identifies the firm that will take delivery of the goods from the carrier. There are two alternative ways to fill this box: •If the box is left blank or the words “to order” are used, then the bill of lading is said to be negotiable, and the owner of the goods in the destination port is the entity with the original bill of lading. The goods can be sold while they are being transported. •If the name of the consignee is entered, then only that firm can pick up the goods from the carrier. Such a bill of lading is called a straight bill of lading. •Traditionally, only ocean bills of lading are ever negotiable.

198. • An ocean bill of lading is a contract of carriage between an ocean shipping line and the shipper. • It can be straight or negotiable. Ocean Bill of Lading

199. • An air waybill is a contract of carriage between an airline and a shipper. • It is always straight. Air Waybill

200. Miscellaneous Transport Documents Uniform bill of lading •A bill of lading used in the transportation of goods on trucks and trains, either domestically or internationally Intermodal bill of lading •A bill of lading used in the intermodal transportation, domestic or international, of goods Packing list •A document that lists out what a shipment contains, in great detail. A packing list always accompanies every shipment Manifest •A document, internal to the shipping company (the carrier), which lists all cargo onboard the transportation vehicle. There is a manifest for every voyage undertaken by the carrier Shipper’s Letter of Instruction •A document in which the shipper spells out how it wants the carrier to handle the goods while they are in transit.

201. Dangerous Goods • Shipments of dangerous goods are regulated by the: – International maritime organization’s international maritime dangerous goods code, – The international civil aviation transport association’s dangerous goods regulations, – The international civil aviation organization’s technical instructions for the safe transport of dangerous goods by air – Or by local shipment codes • All require different documents

202. Electronic Data Interchange • Electronic Data Interchange (EDI) is the electronic exchange of documents, from computer to computer • The sender and the recipient have to agree to a technical EDI understanding – the specific technology used for the exchange • The United Nation’s Working Party on the Facilitation of International Trade Procedures of the Committee on Trade of the Economic Commission for Europe is the most likely to prevail as the international standard, although there is currently no official international standard • There also needs to be a legal agreement between the parties defining the responsibilities, timing, liabilities for errors, the “evidentiary value” of messages, and other legal issues

203. Documents as a Marketing Tool • The pro forma invoice must be a perfect preview of the actual invoice • The commercial invoice must be clear, detailed, and precise. It must include all the information that is necessary for the importer to clear Customs and minimize the duty that it has to pay • All the certificates requested have to be provided, in the manner requested • The correct number of originals and copies of all documents must be prepared or collected • The packing list must be prepared carefully and precisely. An incomplete or imprecise packing list increases the probability of a Customs inspection • The export paperwork must be prepared and filed correctly and in a timely manner

204. LUNCH DAY 3

205. CUSTOMS RELATED ISSUES

206. Customs-Privileged Facilities • To facilitate export trade, countries designate areas called customs-privileged facilities, where goods can be imported for storage and/or processing with tariffs and quota limits postponed until the products leave the designated areas. They include: – Foreign trade zones (also known as free trade zones) – Free ports, and – In-bond arrangements

207. Export Restrictions • Export regulations may be designed to conserve scarce goods for home consumption or to control the flow of strategic goods to actual or potential enemies • To comply with various regulations, the exporter may have to acquire export licenses or permits from the home country • To alleviate problems of exporting, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations (EAR)

208. Import Restrictions Tariffs •Custom duties are based on value or quantity or a combination of both and are classified as follows: •ad valorem duties •specific duties •a compound duty Exchange Permits •To conserve scarce foreign exchange many countries impose restrictions on the amount of their currency they will exchange for the currency of another country Quotas •Countries may also impose limitations on the quantity of certain goods imported during a specific period Import Licenses •As a means of regulating the flow of exchange and the quantity of a particular imported commodity, countries often require import licenses Standards •Health standards, safety standards, and product quality standards are necessary to protect the consuming public from imported Boycotts •A boycott is an absolute restriction against trade with a country, or trade of specific goods Voluntary Restrictions •Countries may themselves impose restrictions on firms exporting to specific countries

209. CARGO INSURANCE CARRIERS LIABILITY

210. Liabilities

211. DUTY-FREE ACCESS TO IMPORTS

212. Duty Free Access – Possible Incentives • 100% write off on R&D costs • Duty free importation of machinery and equipment, raw materials (15% - Intermediate goods, 25% - Finished goods) • After care services: RDB facilitates investment projects even after registration • Investment allowance- Accelerated depreciation • Duty free importation of EAC products due to the common external tariff • Additional fiscal incentives in strategic sectors (e.g. energy, IT) • Duty free importation of one personal vehicle • No restriction on repatriation of capital and profits • Work permits: 3 automatic and free work permits for 3 expatriates

213. EXPORT PACKAGING AND AIR CARGO

214. Packaging - Why • Proper packaging is essential to contain and protect products while offering a means of conveniently handling them • Each package design has the goal of protecting the product from the assembly line to the user • There are many hazards even in domestic distribution, and international transport and distribution can increase the times products are handled and the probability of damage • Poor packaging leads to damage, decay, low prices (for damaged or incomplete shipments), or in extreme cases, rejection of the shipment by the buyer. • The method of packing or shipping will depend on your product and the infrastructure in the country of destination • Before agreeing to a letter of credit, ensure that the necessary infrastructure is in place in your destination • Pack your goods to avoid unnecessary loss during shipment • Research the refrigeration, loading, and storage facilities of the destination to ensure that they are adequate for your product.

215. Air Cargo Insurance • Cargo insurance protects the cargo owner's financial interests while the cargo is in transit • Air and ocean carriers provide very limited coverage while a shipment is in their possession • Cargo insurance requires a bill of lading, which states the liability assumed by the carrier • When an exporter files a claim against a carrier, it has to prove that the carrier is directly responsible for the loss • Outlets for obtaining cargo insurance are a freight forwarder or a company specializing in ocean and air cargo insurance

216. BOARD OF INVESTMENT SERVICES

217. What is a BOI? • Body charged with attracting investment into the country • Provides information on investment opportunities, government policies and facilities available • Makes sure that ease of doing business is provided to new entrants

218. BOI – Sample Mission • Policy advocacy Achieve Steady improvements in the investment environment by: – Proposing measures to create a steadily improving investment friendly environment – Removing and simplifying outdated unnecessary procedures, approvals and legislation – Facilitating greater private sector role in industrial zone development • Investment promotion Provide exemplary leadership as the apex investment promotion body by: – Implementing proactive cost effective responsive and targeted promotion strategies – Delivering effective investor facilitation services on behalf of the individual investor – Creation of a centralized databank • Coordination Strengthen linkages between public / private sectors by: – Developing effective working relationships with other federal organizations, provincial governments, district governments and the country’s missions in target areas. – Promote unit and consistency in implementing shared policy objectives – Stimulate public - private partnership to attract investment

219. NON TARIFF MEASURES

220. Most Common NTMs used by Countries • Sanitary and Phytosanitory Measures • Technical Regulations • Import Licensing • Export Price Restraints • Variable Charges • Safeguards • Anti-dumping and Countervailing Actions • Charges on Imported Goods • Customs Procedures • Minimum Import Price • Market Labeling Practice • Port Restrictions • Quantitative/Marketing Restrictions • Rules of Origin • Preferential Access • Packaging Requirements

221. Why Countries have NTMs • Most of the non-tariff measures are the result of the rules and regulations, which countries apply at the border to imported products and to the sale of such products in the domestic markets • Non-tariff measures are considered necessary for the attainment of national policy objectives • However, the way they are applied may in practice result in the creation of barriers to trade

222. NTMs Affecting Trade in SAARC Countries • Technical Barriers to Trade (TBT) • Agreement on Sanitary and Phytosanitory Measures (SPS) • Safeguards Anti-dumping and Countervailing Actions • Customs Procedures • Port Restrictions • Rules of Origin (ROO) • Preferential Access • Packaging/labeling Requirements

223. Technical Barriers to Trade (TBTs) • These are severe obstacles to exports to developed countries whose technical regulations, standards and conformity assessment procedures may effectively serve as border-protection instruments • SAARC countries have to spur new competitive advantages and investment in technological capability if they are to overcome this problem effectively • This scenario is less likely to materialize in developing countries, given the significant technological and financial constraints they face

224. NTMs and SAFTA Objectives and Principles Article 3(2)(d) • SAFTA shall involve the free movement of goods, between countries through, inter alia, the elimination of tariffs, para tariffs and non- tariff restrictions on the movement of goods, and any other equivalent measures Components Article 6 • SAFTA may, inter-alia, consist of arrangements relating to: – Tariffs; – Para-tariffs; – Non-tariff measures – Direct trade measures

225. Trade Liberalization Programme Article 7.4 • The Contracting States shall notify the SAARC Secretariat all non-tariff and para-tariff measures to their trade on an annual basis • The notified measures shall be reviewed by the Committee of Experts, established under Article 10, in its regular meetings to examine their compatibility with relevant WTO provisions • The Committee of Experts shall recommend the elimination or implementation of the measure in the least trade restrictive manner in order to facilitate intra-SAARC trade Article 7.5 • Contracting Parties shall eliminate all quantitative restrictions, except otherwise permitted under GATT 1994, in respect of products included in the Trade Liberalization Programme.

226. Constraints and Irritants • Infrastructure  Intra Regional Connectivity- land locked countries, comprehensive motor vehicular agreement for seamless movement across border  Poor quality of Communication Network  Airlines Connectivity, Frequency and Cost  Intra Regional Rail and Energy Grid • Others  Customs Procedure - Detailed Goods Examination/ No Computerized Processing  Lack of Reliable Banking Network- no action on LC’s dishonored  Cumbersome procedure for travel and business visas  Barriers to Intra SAARC investments

227. Possible Suggestions for Improvement •Allow transit facilities to third countries •Harmonize tariff and Customs documents •Allow pre-filing of documents •Introduce electronic data interchange •Upgrade warehousing facilities •Align Customs working hours •Establish joint Customs stations

228. NTMs in SAFTA Trade • Hard data on NTBs for this trade segment are scarce • Intra-SAARC agriculture trade is large and growing. NTBs mostly are pervasive here all over the world. These are also very difficult to identify and remove • Trade/industry has an important role to play in identifying non- transparent measures, all of which may not necessarily turn to out to be barriers • Importance of NTBs will be more pronounced once the tariff liberalization takes place. • Cost of compliance associated with NTBs will also become more pronounced. • If we do not tackle this aspect of NTBs, there is a potential danger that unofficial trade remain unofficial and benefits of SAFTA are not reaped. • Tariff reduction will not be enough of an incentive

229. The Way Forward Free Trade! Free Trade! Free Trade!

230. CONCLUSION

231. Feedback!

232. Please, do not forget to sign and complete the evaluation form & hand it over to the trainer(s) before you leave  THANK YOU 

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