Third Country

Consistency in Sales

Peaks and valleys in the business cycle are inevitable. When the economy of one country is on an economic downturn, the economy in other nations may be in a relatively prosperous phase. If you have customers in countries other than your own, your business profits tend to become more consistent from year to year.

Product Cycle Extension

When you export your product, the end of the product cycle is postponed. When the market in your own country is saturated, exporting allows you to introduce your product into other countries.

Considerations

Licensing

Since most goods require no licensing, you can export them freely. If your goods are not on the Commerce Control List (CCL) and there are no other restrictions, such as embargoes or your customer being listed on a sanctioned party list, you can generally trade freely without any government licensing required. Generally speaking, the only merchandise that requires a license includes

• Weapons
• High-technology products that might be used against your government
• Goods in short supply in your own country

 

Delivery Quantity

Large quantities may require international sales agreements, special packaging and handling procedures or a particular method of payment. Additionally, special export limitations and quotas may also affect export procedures, documentation and manufacturing decisions.

Partial Deliveries to the USA

A special consideration for exporting to the USA concerns partial deliveries. A billing document for partial delivery can only be accepted if

1. a contract for the entire shipment is available,
2. the partial delivery is sent from the same shipper to the same consignee, and
3. the import is completed within 10 days at the same customs entry point.

 

The Product

The product that you plan to export may also affect the documentation and procedures necessary to comply with government requirements. For example, are you shipping raw materials or a finished product? Will it be used as a component in a manufacturing process? Does it need to be modified to be sold in a foreign market?

Required Information

In addition to the data normally required for shipment, the following information must be properly documented when you export goods:

• Country of origin
• The port of entry
• Detailed description of each item of goods shipped

This includes the description of the merchandise, goods classification, brand name and numbers and symbols under which the goods will be sold in the country of import.

• Number of pieces packed and packaging type
• Value of each item of merchandise in the shipment
• (In some cases) Total cost of shipping the goods from the exporter’s place of business to the port of entry in the country of import.

 

Export Process

The export process illustrated and described below answers the following questions:

• What must the exporter do?
• What must the importer do?

For information about the process of exporting merchandise involving a letter of credit, see

1. The importer first requests a quotation for the desired merchandise.
2. You (the exporter) provide a quotation for the merchandise to the importer including costs based on the terms of sale requested by the importer (usually, EXW or CIF).
3. The importer sends you a purchase order based on your offer.
4. You issue a sales order based on the purchase order and send it to the importer.
5. (Optional) You may also send an advanced shipping notification to inform the importer of the exact date and quantities of merchandise to be delivered.
6. You ship the merchandise to the customer.

Also, you need to provide documentation based on the terms of sale and your agreement with the importer. Documents may include some or all the following:

• Bills of lading
• Commercial Invoice
• Export packing list
• Shipper’s Export Declaration (SED) (Required in the USA for formal entry valued at $2501 or more)
• Shipper’s Letter of Instructions (SLI) (applies only to the USA)
• Single Administrative Document (SAD) (applies only to the EU)
• Certificate of Origin
• Insurance certificates
• Licenses (when necessary)

Note

With the exception of the insurance certificates, you can create the above documents using the SAP Foreign Trade (FT) application.

1. The importer transfers funds directly to your company or your bank in accordance with your agreement.
2. The importer receives the merchandise, files a declaration and pays customs duties due to the responsible authorities.
3. You file a customs declaration for the exported goods.

 

Document Requirements

Certificate of Origin: The certificate of origin is an official declaration, which certifies the country in which a commodity originated or was manufactured. In most cases, the importer and exporter must keep this document on file and provide it to the government only if requested. Shipper’s Export Declaration (SED): In the USA, the SED is only required for shipments valued at more than US$ 2500 (formal entry). If you are shipping goods out of the USA, the SED does not go to the importer. You must send it to the US Government before the shipment leaves the US. With the Automated Export System (AES), you can file this document electronically. Export vessel movement summary sheet: If you export by ocean from the USA, you must file this document with the Customs Service.