How much do you know about international trade? This fall’s PARCEL Forum Monday preconference session will provide a seminar that addresses development of international trade skills. Tom Stanton will present a new seminar discussing basic skills in the first hour and more advanced skills the remaining three hours. In this introductory article we will discuss some of the topics that will be covered in the international trade seminar.
Basics It is important to have a solid foundation in the basic concepts of international trade in order to move into discussions of more complicated and detailed topics. Here are some of the basic foundational concepts a “journeyman” practitioner should know.
Price: Terms of sale: International trade happens when two persons or two companies agree to sell or buy merchandise from a foreign country. One of the first things discussed is the price to be paid. One of the clearest ways to define what the terms of sale are is called Incoterms. Incoterms help define who will pay for what in an international transaction. The price paid can include payment for the goods as well as international transportation. A detailed layout of current Incoterms can be found at the international chamber of commerce website http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/
Price: Currency Another factor in the price is the conversion rate from one currency to another. For example on August 12, 2015 the US Dollar was worth 1.3 Canadian dollars. Last year at this time the two currencies were closer to equal. Currency can be stated two ways, depending on which currency is the first one compared to or the base number. Stated with Canadian currency as the base number the conversion rate was .77 on August 12th.
Price: Value for Customs Typically most foreign countries charge duty against the value of the goods as they enter or the value of the goods plus transportation costs. The United States computes duty against the value of the goods at time of sale exclusive of international transportation costs. In some circumstances there are additions to the price for Customs because the costs for development of a product were paid for separately. Additions to the invoice value for Customs purposes are discussed in more detail in the latter part of the international trade seminar. Reference material on additions to the price paid or payable for Customs purposes are available at the US Customs and Border Protection websitewww.cbp.gov.
Classification Most Western countries have agreed to classify merchandise involved in international transactions according to the Harmonized Codehttps://en.wikipedia.org/.../Harmonized_Tariff_Schedule. The United States applies a ten digit harmonized code to all imported and exported goods. Import codes are a little more detailed than export codes in order to give better statistics on imports of products competitive to US products. The classification of a product is central to the balance of trade and assignment of duties. US Customs and Canadian Customs both provide rulings on what is the proper classification of products. In some cases two or more classifications might appear to apply.
Duties and Taxes: Duties and taxes are typically applied by a government to protect domestic industries and ensure adequate revenue for government. Most duties are computed as a percentage of value but on some products the value and the weight or some other factor are both considered for duty calculation.
Summary: Price, Classification and Duty are just some of the topics to be covered in the first hour of the International trade seminar at the Parcel Forum this year. Each of these topics will be discussed in further detail in the remaining three hours of the seminar along with transportation services, and restrictions by other government agencies such as Food and Drug. Hope you can join us!
