WHAT IS AN EXPORT?

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In this new weekly newsletter, I will share with you all the Export Best Kept Secrets that I have published in my Export Guide but you are also welcome to grab a book right here and keep it for your daily reference.

WHAT IS AN EXPORT?

?According to Wikipedia:

?“An export in international trade a good or service produced in one country that is bought by someone in another country. The seller of such goods and services is an exporter; the foreign buyer is an importer. Export of goods often requires the involvement of customs authorities. An export's reverse counterpart is an import.”

?For the purposes of this book, an export is:

?“The consignment of goods, technical assistance or services from a country X to another country Y. The purpose of the export may vary from goods sold or services performed to temporary exports for reasons of the exhibition, for repair, test, processing, etc.”

?How does export differ from simply selling goods commercially in the domestic market? Surely the principles are the same: to Sell, to Get Paid and to Move On. It would be wrong to generalise the differences since the export field is wide and enormously varied. Of course, there is a huge difference between sending a bag of nuts and bolts to Germany and selling oil production equipment to Venezuela. However, there are some very real differences between export and domestic trade, as well as the obvious currency, culture and language issues which remain constant and include:

a) Distance

b) Customs formalities and duty

c) Regulations relating to goods

?

a) Distance

?The geographical distance between the supplier and the customer increases the physical risks of loss or damage, adds freight costs regardless of which party is paying, adds to the delivery timescale and

may also influence the packing specification. The separation of supplier and customer by distance can also interfere with normal trading relationships e.g. visibility, credit rating, debt collection, business reputation, personal interface, etc.

b) Customs formalities and duty

Befoe Brexit, consignments to destinations within the European Union (which is a customs union) do not require to be presented to Customs (HMRC) at export from the UK or on arrival at another member state. There are exceptions to this rule, but it is generally the case for the majority of industrial goods. There are declaration issues and VAT formalities, but these are considerably easier than exporting outside of the EU. Similarly, for sales to the countries of the European Economic Area duty levels and formalities are much simpler and handled according to the free trade agreement.

For destinations outside the EU, it is a legal requirement for a customs declaration to be made before the goods leave the UK and a customs entry/declaration must be made when the goods arrive at the destination country. These declarations include legally binding statements relating to the value, commodity or tariff code, customs procedure code, etc. and may involve payment of customs duties and import taxes at the arrival point of entry in the overseas destination.

The responsibility for customs clearance and payment of duty is determined in your contractual agreement by Incoterms, assuming these are incorporated into the contract. The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. The first work published by the ICC on international trade terms was issued in 1923, with the first edition known as Incoterms published in 1936. The Incoterms rules were amended in 1953,1967, 1976, 1980, 1990, and 2000, with the eighth version - Incoterms 2010 - having been published on January 1, 2011. The ICC conducted consultations on a new revision of Incoterms, now called Incoterms 2020.

Customs declarations are usually made by the freight forwarder acting on behalf of the exporter or importer, but the information submitted to customs is the legal responsibility of you, the exporter, as principal.

The modern exporter looks at the supply chain in totality, not just the part that is his or her responsibility: every export becomes someone’s import. A competent exporter won’t ship goods to any overseas destinations without understanding whether there are any documentary requirements demanded by that country over and above the standard ones (e.g. Invoice, Packing List, transport documents such as Airwaybill, Bill of Lading etc.) For example, some EU countries require a health certificate for food and drinks imports and many Arab League countries require documents legalised by their embassies in the exporting country.

c) Regulations for particular types of goods

“Controlled Goods” form only a small proportion of UK export output but we need to define what we mean by the term. “Controlled” means that the goods or services (including certain technologies and intangible movements, e.g. emails) come under the statutory control of other UK bodies as well as HMRC. For example:

1. Export Control legislation, administered by BIS – the Department for Business, Innovation & Skills – controls the export of military and dual-use goods and technologies and additionally, any product that may be used in the construction of a weapon of mass destruction (chemical, biological and nuclear weapons) and the means of delivering same. Some seemingly innocuous goods may be caught by the dual-use category.

2. Agricultural products and pharmaceuticals – information are available from DEFRA and www.gov.uk website.

3. Various authorities in connection with the transportation of hazardous goods by air, sea, road and rail – information is available on www.gov.uk web site.

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