Belay Seyoum, PhD - Glendale Community College

1 Belay seyoum , PhDExport-ImportTheory, Practices,and ProceduresSecond EditionPre-publicationREVIEWS,COMMENTARI ES,EVALUATIONS .. This book covers a number of sig-nificant gaps that are not ad-dressed elsewhere. By focusing specifi-cally on trade rather than other formsof international expansion, Dr. Seyoumhas achieved the near-impossible in-depth and thorough coverage of boththe theory and the practice of export -ing, and significantly broader coverageof importing than is the norm, thus of-fering the most complete coverage ofall facets of trade that I have seen. It ex-cels by integrating theory with practiceand exports with imports. The fact thatthis book starts with a brief history ofinternational trade and concludes witha sample distributorship agreement,speaks to the singular achievement ofthis book: true cover-to-cover, and top-to-bottom, coverage of all relevant is-sues in exporting and importing.

2 Dr. Nicolas Papadopoulos, PhDProfessor of Marketing and InternationalBusiness; Associate Dean (Research);Director, International Business StudyGroup, Eric Sprott School of Business,Carleton University, Ottawa, CanadaMore pre-publicationREVIEWS, COMMENTARIES, EVALUATIONS .. International Trade has always beena hands-on subject and the fewbooks that are out there do not addressanywhere near the width and depththatExport-Import Theory, Practices, andProcedures: Second Edition,does. Each ofthe twenty chapters in this book closeswith a great summary. The studenthere is also provided with enough ref-erences, case studies, and internationalperspectives on the subject matter cov-ered within the chapter. There are evenreview questions for further chapters on import regulations isespecially valuable to the student of in-ternational trade and the section on ex-port licensing and regulations of theCommerce Department is a boon toany new or seasoned export useful presentation of typical im-port and export transactions as well assamples of distributor agreements andbusiness plans put this book wayabove any other in its class.

3 Ashok Sadhwani, BCom, GDMM, CHBP resident and CEO, ASMARA USA INC.;Instructor, Business and Legal Programs,UCLA Extension, Los Angeles;Associate Professor, International Trade,Chulalongkorn University,Bangkok, Thailand;Consultant for the Governmentof The Philippines, Airport CargoOperationsExport-ImportTheory, Practices,and ProceduresSecond EditionExport-ImportTheory, Practices,and ProceduresSecond EditionBelay seyoum , PhDFirstpublished2000by The HaworthPressThiseditionpublished2009by Routledge270 MadisonAve, New York,NY 10016 Simultaneously publishedin the UKby Routledge2 ParkSquare, MiltonPark,Abingdon,Oxon OX144 RNRoutledge is an imprint of the Taylor & Francis Group, an informa business 2000 The HaworthPress 2009 Taylor& FrancisAll partof this bookmay be reprintedor reproducedor utilisedin any form or by any electronic,mechanical, or othermeans,now known or hereafterinvented, includingphotocopyingand recording.

4 Or in any informationstorage or retrieval system,withoutpermissioninwritingfrom the : Productor corporate namesmay be trademarks orregistered trademarks, and are usedonly for identification and explanationwithoutintentto designby JenniferM. GaskaLibraryofCongressCataloginginPublic ation DataSeyoum, Belay , 1953 export -import theory, practices, and procedures / Belay Seyoum, editor. 2nd :978-0-7890-3419-9(hard: alk. paper)ISBN:978-0-7890-3420-5(soft: alk. paper)1. Exports. 2. Imports. 3. Internationaltrade. 2007382 dc222007034264 ISBN10:0-7890-3419-0 (hbk)ISBN10: 0-7890-3420-4 (pbk)ISBN10: 0-2038-8930-4 (ebk)ISBN13:978-0-7890-3419-9(hbk)ISBN13 : 978-0-7890-3420-5(pbk)ISBN13: 978-0-2038-8930-5(ebk)This edition published in the Taylor & Francis e-Library, 2008.

5 To purchase your own copy of this or any of Taylor & Francis or Routledge scollection of thousands of eBooks please go to ISBN 0-203-88930-4 Master e-book ISBNCONTENTSP refacexvStrengths and Features of this BookxvChanges in the Second EditionxvAcknowledgmentsxviiIntroduction : A Brief History of International Trade1 Ancient Period1 Colonial Period (1500-1900)21900 to the Present3 SECTION I: OVERVIEW OF INTERNATIONAL TRADEC hapter 1. Growth and Direction of International Trade7 Importance of International Trade to the Global Economy7 Determinants of Trade9 Volume and Direction of Trade9 Important Developments in Trade10 Chapter Summary14 Review Questions15 Case The Limitations of export -Led Growth15 Chapter 2. International and Regional AgreementsAffecting Trade19 The GATT and WTO19 Regional Integration Agreements (RIAs)22 The North American Free Trade Agreement (NAFTA)25 The European Union32 Chapter Summary36 Review Questions37 Case The Benefits and Costs of Free Trade37 About the AuthorxiiiSECTION II: export MARKETING AND STRATEGYC hapter 3.

6 Setting Up the Business41 Ownership Structure41 Business or Trade Name48 Bank Accounts, Permits, and Licenses49 Location and Use of Professional Services49 Organizing for export : Industry Approach50 General Principles of Taxation52 Taxation of export -Import Transactions54 International Transfer Pricing61 Chapter Summary65 Review Questions66 Case Globalization and the Shrinking Tax Base66 Chapter 4. Planning and Preparations for Export69 Assessing and Selecting the Product69 International market Research72 International market Assessment75 Developing an International Business Plan77 export Counseling and Assistance78 Overseas Travel and Promotion83 Chapter Summary91 Review Questions92 Case Developing export Markets92 Chapter 5. export Channels of Distribution95 Indirect Channels99 Direct Channels105 Locating, Contacting, and Evaluating Agentsand Distributors108 Contracts with Foreign Agents and Distributors(Representatives)110 Major Clauses in Representation Agreements110 Maintaining and Motivating Overseas Representatives115 Chapter Summary115 Review Questions116 Case export Channel Decisions of Two The Internet and Exporting: A Focuson Developing Countries118 Chapter 6.

7 International Logistics, Risk, and Insurance121 International Logistics121 External Influences on Logistics Decisions123 Typical Logistics Problems and Solutions125 The International Logistics Process126 Logistics Functions129 Risks in Foreign Trade131 Marine and Aviation Insurance135 Claims and Procedures140 Chapter Summary145 Review Questions147 Case Marine Insurance147 Case Marine Insurance: Inchmaree Clause148 SECTION III: EXECUTING THE TRANSACTIONSC hapter 7. Pricing in International Trade153 Determinants of export Prices154 Pricing in export Markets156 Terms of Sale158 Chapter Summary174 Review Questions176 Case Incoterms (CIF)177 Case Incoterms (C&F)177 Chapter 8. export Sales Contracts179 Harmonization of Contract Law179 CISG: Essential Elements180 Pertinent Clauses in export Contracts185 Chapter Summary193 Review Questions194 Case CISG195 Case China National Products versus Apex Digital Inc.

8 195 Chapter 9. Trade Documents and Transportation197 Documentation in export -Import Trade197 Transportation201 Air Transportation201 Ocean Freight205 The Role of Freight Forwarders in Transportation214 Chapter Summary217 Review Questions219 Case What Constitutes a Package Under COGSA?220 Case The Container Revolution221 SECTION IV: PAYMENT TERMS AND PROCEDURESC hapter 10. Exchange Rates and International Trade225 Foreign Exchange Transactions225 Protection against Exchange Rate Risks229 Chapter Summary236 Review Questions236 Case Will the Dollar Maintain Its KeyCurrency Status?237 Chapter 11. Methods of Payment239 Consignment Sales239 Open Account241 Documentary Collection (Documentary Draft)242 Documentary Letter of Credit247 Cash in Advance258 Other Letters of Credit259 Chapter Summary265 Review Questions268 Case Dishonoring Letters of Credit269 Case The Independent Principle in Letters of Credit270 Chapter 12.

9 Countertrade271 Origins of Countertrade271 Benefits of Countertrade273 Theories on Countertrade274 Forms of Countertrade276 Countertrade and the WTO284 Countertrade and the International Monetary Fund285 Governments Attitudes Toward Countertrade286 Chapter Summary287 Review Questions290 Case The Bofors-India Countertrade Deal290 Case Offsets in Defense Trade291 SECTION V:FINANCING TECHNIQUES AND VEHICLESC hapter 13. Capital Requirements and Private Sourcesof Financing297 Capital Sources for export -Import Businesses299 Private Sources of export Financing306 Chapter Summary314 Review Questions316 Case Tadoo s Sales to Belgium316 Chapter 14. Government export Financing Programs319 export -Import Bank of the United States (Ex-Im Bank)320 Small Business Administration332 Overseas Private Investment Corporation (OPIC)334 Private export Funding Department of Agriculture337 Chapter Summary338 Review Questions340 Case Trade Finance for Small and Medium-SizedEnterprises in Transition Economies341 Case Ex-Im Bank Financing: Selected Cases342 SECTION VI: export REGULATIONS AND TAX INCENTIVESC hapter 15.

10 Regulations and Policies Affecting Exports347 export Licensing and Administration347 Antiboycott Regulations360 Foreign Corrupt Practices363 Antitrust Laws and Trade Regulation368 Incentives to Promote Exports373 Chapter Summary377 Review Questions380 Case export Trade Certificate of Review381 Case Enforcement of export Regulations383 SECTION VII:IMPORT PROCEDURES AND TECHNIQUESC hapter 16. Import Regulations, Trade Intermediaries,and Services389 Import Restrictions in the United Free Trade Trade Preferences396 Trade Intermediaries and Services398 Chapter Summary403 Review Questions404 Case Tax Deduction for Processing in Maquilas:Mere Assembly or Fabrication406 Chapter 17. Selecting Import Products and Suppliers407 Types of Products for Importation407 Finding the Product409 What Determines Import Volume?