Global Trade and Economic Development -Part 1

Process

A collaborative strategy that blends the logistics of global trade with the financial facilitation of forfaiting banks would simplify and make accessible global trade finance in an e-commerce world.?

E-Commerce, QR Codes, EDI and geolocation have indelibly changed the way that commerce and global trade are transacted and financed. The difference in financial and logistics cultures has impaired collaboration and there is little understanding of how such collaboration would work.?

"Culture eats strategy for breakfast" - Peter Drucker?

We can change this mindset with education and Correlation.?

Correlation*

“Fair Winds and Following Seas”

With Correlation, the principal product of The Following Sea (https://thefollowingsea.com/?) the buyer and seller communicate with their respective banks the distinctive QR or Quick Response Manifests and Invoices, representing both what was ordered (P.O.) by the buyer and what was manufactured and shipped by the seller (Invoice).?

An automated system for financing and paying trade transactions based on such matches was developed by Guy Tozzoli of World Trade Center Associates in 1979:

This process was turned into Trade Card and Bolero and has evolved in America into Infor/GT/Nexus?

owned by Charles Koch.?

The “secret sauce” of Infor/GT/Nexus is composed of CI, ECI and Stright-Through Processing. CI or Credit insurance is used to mitigate the domestic Risk of non-payment, whereas ECI or Export Credit Insurance is used to mitigate the cross-border Risk of non-payment.?

Geolocation and EDI are used to determine the actual location of the shipment, the truck, aircraft or vessel the goods are laded aboard.?

Distinctive QR encoded manifests are sent to the lending/forfaiting bank upon wheels up of an aircraft or upon a vessel leaving the port of embarkation.

Settlement and Payment?

Payment, financing or settlement are determined by the underlying terms of the sales agreement or contract. The seller’s and buyer’s banks are able to communicate their respective manifests and invoices to be matched or reconciled by the TSU of the Lending/Forfaiting bank:

A successful match results in Payment or Acceptance, as occurred in the past with the commercial bank documentary foreign collections process:

A Failure to Innovate

The U.S. Customs Bureau, DHS and the U.S. Dept. of Commerce will adapt the QR-encoded logistics manifest and geolocation, communication through EDI in order for the?U.S.?to gain an enormous global trade advantage by fully automating the AMS (Automated Manifest System) and ISF (Importer Security Filing) Systems with QR coded manifests?

SCF and DD

Supply Chain Finance and Dynamic Discounting will then be applied to the basic agreement between buyer and seller so that both the seller's vendors and buyer benefit. The sellers benefit through the early payment of their invoices through SCF and Dynamic Discounting, while the buyers benefit by getting a discounted price on goods purchased.?

Payment/ Acceptance would be effected by the matching of invoices and Purchase Order manifests (Distinct and QR-encoded) in the TSU or Trade Services Utility:

of the lending/forfaiting bank. These will be the mechanisms and processes whereby trade transactions are financed, paid and settled.?

The ICC’s Incoterms would continue to describe the roles of all parties in a trade transaction and provide the basis for resolving trade disputes through arbitration - as it always has. Global trade is not a disorganized Wild West Show. It is a well-crafted and disciplined process based in law, Incoterms and contractual agreements.?

The American Advantage?

In order to ensure the security of the United States, the AMS (Automated Manifest System) and the ISF (Importer Security Filing) must be filed at wheels up or embarkation, departure of the transporting vessel heading to the U.S. These filings together with the C-TPAT or Customs-Trade Partnership Against Terrorism process ensure our homeland security.?

This also provides the basis for the accelerated matching and financing which will provide the U.S. a considerable advantage in conducting global trade, by empowering its SMEs into the world’s largest enterprise.?

The Obstacle

The great obstacle to the achievement of U.S. global trade success are the usual suspects, thry are:

• ?the divergent cultures of bankers and logisticians
• a lack of communication. 22 U.S. government agencies have the objective of compelling U.S. global trade success, but “what we have here is?a failure to?communicate”: