Ex.4. Read the following statements. Say whether they are true, if not correct them.

1. If you export explosives, you should have Customs Entry Forms.

2. When you send freight by air you have to obtain a Way Bill.

3. When you export dangerous cargo you must declare that it is safely packed.

4. Fibre-board cases are used for safety.

5. When you receive the Shipping Application you should sign the Customs Entry Form on the back.

6. If your licence has expired you should apply for a new one.

7. The Certificate of Value and Origin should be signed only by the supplier.

8. There should be three copies of the Commercial Invoice and two copies of the Consular Invoice to release the goods from Customs.

9.  If the government didn’t keep changing the regulations, overseas trade would be easier.

 

Read and translate the following texts:

Each country has to import the articles and commodities it does not itself produce, and it has to earn foreign exchange to pay for them. It does this by exporting its own manufactured articles and surplus raw materials. Thus the import and export trades are two sides of the same coin, and both can have beneficial effects on the home market. Imports create competition for home-produced goods; exporting gives a manufacturer a larger market for his products, so helping to reduce the unit cost. In each case the effect is to keep prices in the home market down.

But there may be factors that compel governments to place restrictions on foreign trade. Imports may be controlled or subjected to a customs duty to protect a home industry, or because the available foreign exchange has to be channelled into buying more essential goods. And exports, too, may be restricted to conserve a particular raw material required by a developing home industry.

These factors mean that importing and exporting are subject to a lot of formalities, such as customs entry and exchange control approval, from which the home retail and wholesale trades are free. They also mean that foreign trade involves specialized knowledge and highly-trained personnel.

 

Answer the questions:

1. Why does a country import goods?

2. What can be exported?

3. What effect do import and export have on the home market?

4. Why do governments place restrictions on foreign trade?

5. What formalities are import and export subject to?

 

The most important shipping document is the bill of lading. It is: firstly, a contract between the shipper and the shipping company; secondly, a receipt for the consignment; and thirdly, a document of title. A document of title is proof of ownership, so the person who owns the B/L may claim the goods. A B/L is negotiable — it can be sold. If you sell the goods you give the buyer the B/L so it can be used to claim the goods. The advantage of this is that the importer can sell the goods while the ship is still at sea. The buyer then presents the B/L and collects the goods when the ship arrives at the port of destination. The first importer has the money to start another transaction. This was very important when voyages took many months.

A bill of lading doesn't only contain a full description of the consignment—numbers and weights and marks of packages—but a lot of other information as well. It quotes the name of the shipper and the carrying vessel, the ports of shipment and destination, the freight rate, the name of the consignee and the date of shipment, which is very important from a contractual point of view.                                                    

It may also contain a number of other clauses. Some bills of lading are marked " freight paid", when a shipper is selling C.I.F. or C. and F., others may allow transhipment, which means that the cargo may be transferred from one ship to another at some intermediate port. Normally four copies of a bill of lading are issued. Two copies will be signed by the ship's master or his agent, two remaining unsigned. The shipper then sends one signed and one unsigned copy to his consignee by airmail, and the other by sea-mail. He can ask for extra copies for his files.     

 

Answer the questions:

1. Why is a Bill of Lading the most important shipping document?

2. What are the main functions of a Bill of Lading?

3. What does this document contain?

4. Is a Bill of Lading negotiable? What does it mean?

5. How many copies of a Bill of Lading are issued?

 

ROLE PLAYS

1. Your task is to transport some dangerous cargo from Lipetsk (the RF) to East London (South Africa). Speak on the phone with a representative of the Freight Forwarding Agency and discuss any problems you have with filling in the forms and other formalities.

2. You sell your product abroad, but you have some problems with the Customs. Discuss them with your colleague and find the way(s) out.

 

Problem-solving

Two years ago your company, which produces food products invested in new machinery. For health reasons, the product which was made on this machinery is now banned in your country. It is not yet banned in Third World countries.

Would you continue manufacturing this product and export it or would you write off this machinery? What might be the consequences of choosing either of these possibilities?

 

Answer the questions on the topic:

 1.Name and characterise all the export-import documents.

 2.What is the difference between two types of invoices: Commercial and Consular?

 3.What are the duties of the Chamber of Commerce?

 4.What does a freight forwarding agency do?

 5.What can happen if one of the documents is not prepared or prepared wrongly?

 

 

Unit 5

Methods of Payment

PART 1

DIALOGUE 1

Ann and Derek work in the Export Department of a large company. They are discussing two methods of securing payment from overseas customers — Banker's Transfer and Letter of Credit.

 

ann Something's come up, Derek, I've got to go to Madrid tonight. I’ll probably be away for the rest of the week.                                    derek That's rather sudden.

ann  Mm. It's about that deal we're negotiating with Senor Gonzalez. Our Managing Director seems to think I should be over in Spain to keep an eye on things. So, you'll be in charge here for a while.

DEREK That's OK. I can cope.

ann  I'm sure you can. While I’m away, I'd like you to look after one or two matters for me.

DEREK Sure.

ann Do you remember writing to Heinz Zimmermann a week or so ago?

derek Of course. It was about the kitchen units he ordered. We advised him of shipment and asked to be paid by Banker's Transfer.

ann  Exactly. It was to be a standard Bank Transfer of three thousand two hundred pounds (£ 3.200). Well, as far as I know, the money hasn't been credited to our account yet.

DEREK Are you sure?

ann  Pretty sure. The bank always notify us promptly when transfers are made. We haven't heard a word from them.

DEREK You want me to check it out with them, I suppose.

ANN Yes. Could you call the bank? See if the transfer has been carried out? If not, telex Zimmermann and find out what's going on.

DEREK OK. I'll sort it all out while you're away.

ANN There's something else I want you to look into, Derek. You recall making that deal with Francisco Lopez...

DEREK Lopez? Oh, the Brazilian importer. He bought some refri­gerators and cookers from us. A big order. Thirty thousand pounds (£ 30.000) worth, wasn't it?

ANN  Uh-huh. He agreed to pay by Irrevocable Letter of Credit. His bank got in touch with their correspondent bank over here - that's Lloyds International — and the credit was established in our name. Lloyds advised me of this two weeks ago.

DEREK What's the problem then?

ANN The L/C is only valid until April the eighth (April 8th).

DEREK Goodness! We'll have to get moving.

ANN Mm.

DEREK It expires in three days' time.

ANN Yes, if we want to get our money, we've got to present all the documents to Lloyds right away.

DEREK I'll get on to it immediately. Let's see, I’ll need a set of clean Bills of Lading, erm, five copies of the Commercial Invoice, a Consular Invoice, plus the Insurance Certificate.

ANN We also have to make out a Sight Draft, drawn on Lloyds for thirty thousand pounds (£ 30.000). The contract specified that.

DEREK Leave everything to me. I'll make sure all the documents are in order.

ANN Double check everything, would you? The documents must meet the terms of the Letter of Credit.

DEREK I know. If they aren't exactly as the LC requires, we don't get our money. Banks are very fussy about that sort of thing, aren't they?

Answer the questions:

1. What was the purpose of Ann’s visit to Madrid?

2. Why did the company write to Heinz Zimmerman?

3. What method of payment was proposed by the sellers?

4. What were the problems with the payment?

5. What should be done to get the money?

6. What deal was made with Francisco Lopes?

7. How did the customer agree to pay?

8. What was the problem with the L/C?

9. What documents should be presented to get the money?

10. Why must the documents meet the terms of the Letter of Credit?

 

 

PART 2

DIALOGUE 2

 

Ann and Robert, export executives in a large company, talk to their Managing Director about a Belgian customer.

 

M.D. I’d like your opinion about one of our customers, Mr. Laurier, from Brussels. How do you rate him, Ann?

ANN He's very reliable. We've been dealing with him for five years now. Our sales to his company have steadily increased. Last year, I think, they were worth about a hundred and fifty thousand (150, 000). We've never had any trouble getting payment from him.

M.D. Robert? Do you agree with that assessment?

ROBERT Up to a point, yes. But I’ve heard one or two things about Laurier lately — on the grapevine, mind you, nothing official.

M.D. Oh, what were these rumours, exactly?

ROBERT Well, he is said to be having financial problems at the moment. One of his biggest customers has gone bankrupt — right out of the blue. They owe Laurier's company a lot of money.

M.D. Are you suggesting Laurier may be having cash flow problems?

ROBERT It's certainly possible.

M.D. Mm... remind me, Ann. How has Laurier been paying us in the past? By Letter of Credit?

ANN No. By Bill of Exchange — always. In the beginning it was documents against payment. We drew on him at sight. That meant we sent the draft and other shipping documents to Brussels. And the documents were handed over to Laurier as soon as he paid for the goods.

M.D. We changed the method later on, didn't we?

ANN Yes. Later we gave him more time to pay. We drew on him at sixty days. The drafts were sent with the other documents to his Belgian bank for collection. The bank accepted our bills on Laurier’s behalf.

M.D. The bills were always met then?

ANN Yes. He always paid on the nail.

M.D. Mm, interesting. You see, I got a call from Laurier early this morning. He asked if he could deal with us on an open account basis. He'd like a hundred and eighty (180) days credit.

ANN Ah, so he wants to settle with us every six months, does he?

M.D. Mm, he'd send us a Banker's Draft drawn on a London bank. What do you think? Should we offer him open account terms?

ANN Mm... I would think so. He's never let us down before.

M.D. How do you feel about it, Robert?

ROBERT I don't like the idea. It’d be risky. If I were you, I'd put him off for a while.

M.D. I think I'll go along with you there, Robert. Perhaps we should be a little careful at this stage. When a company loses a major customer, it can get into financial difficulties. I’m not saying it'll happen with Laurier, but you never know.

 

Answer the questions:

1. What are Ann and Robert’s positions in the company?

2. How does Ann rate their Belgian customer, Mr. Laurier?

3. What rumours did Robert hear about Mr. Laurier?

4. What problems may Mr. Laurier be having at the moment?

5. How did Laurier use to pay?

6. Why was the method of payment changed later?

7. On what terms does Laurier want to deal with the sellers now?

8. How does he want to settle?

9. How do Ann and Robert feel about Mr. Laurie’s suggestion?

10. Why did the Managing Director agree to put Laurier off for a while?

 

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