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For growth opportunities, look beyond the borders. According to the U.S. Department of Commerce, more than 1.6 trillion in goods are exported annually to dozens of countries, while nearly 2.4 trillion are imported. Thats big business for anyone who can navigate the complicated rules and mitigate the risks surrounding international trade. Filled with stepbystep instructions, costeffective strategies, and readytouse forms, this third edition of Mastering Import Export Management walks you through every key areafrom handling logistics to building a global team to complying with post911 security measures to clearly documenting shipments using Incoterms. Completely updated, the guide simplifies the latest regulations and gathers best practices in an evolving field, including: Strategies for reducing risk and spend in global supply chains New documentation, operations, and procedures Trade compliance SOPs Guidance on managing transportation service providers Ecommerce in international trade For managers and operating personnel with the knowledge and tools to overcome challenges, the world of exporting and importing offers lucrative new frontiers.
MASTERING IMPORT & EXPORT MANAGEMENT SECOND EDITION MASTERING IMPORT & EXPORT MANAGEMENT SECOND EDITION Thomas A Cook with Rennie Alston and Kelly Raia ® M ajor Issues in G lobal Supply Chain M anagem ent • M ain Features of the Incoterm sđ 2010 N ew TSA Regulations D ocum ents, O perations, & Procedures • Risk A ssessm ent & M itigation • Im port & Export M anagem ent Tools AMACOM American Management Association New York •Atlanta •Brussels •Chicago •Mexico City ♦ San Francisco Shanghai ■Tokyo » Toronto •Washington, D C Bulk discounts available For details visit: www amacombooks.org/go fspecialsales Or contact special sales: Phone: 800-250-5308 Email: specialsls@amanet.org View all the AMACOM titles at: zvww.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service I f legal advice or other expert assistance is required, the services o f a competent professional person should be sought Library o f Congress Cataloging-in-Publication Data Cook, Thomas A Mastering import & export management / Thomas A Cook with Rennie Alston and Kelly Raia — 2nd ed p cm Includes bibliographical references arid index ISBN-13: 978-0-8144-2026-3 ISBN-10: 0-8144-2026-5 Exports— Management Export controls Foreign trade promotion Imports — Management International trade Exports— United States— Management Export controls— United States Foreign trade promotion— United States Imports— United States — Management Alston, Rennie II Rata, Kelly III Title IV Title: Mastering import and export management HF1414.4.C665 2012 658,8’4— dc23 2011035514 © 2012 Thomas A Cook All rights reserved Printed in the United States o f America This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission o f AMACOM, a division o f American Management Association, 1601 Broadway, New York, NY 10019 American Management Association (www.amanet.org) is a world leader in talent development, advancing the skills o f individuals to drive business success Our mission is to support the goals o f individuals and organizations through a complete range o f products and services, including classroom and virtual seminars, webcasts, webinars, podcasts, conferences, corporate and government solutions, business books and research AMA's approach to improving performance combines experiential learning— learning through doing— with opportunities for ongoing professional growth at every step o f one's career journey Printing number 10 Contents Foreword ix Preface xi Major Issues in Global Supply Chain Management Today Section One: The Global Supply Chain 37 Purchasing Management Skill Sets in Foreign Markets 39 Freight, Logistics, and Specialized Transportation Issues for Import/Export Managers 47 Risk Management in International Business 102 Technology in Global Trade 132 Global Personnel Deployment and Structure 146 Developing Resources in the Import/Export Supply Chain Management 155 Essential Overview of Import/Export Compliance and Security Management: Post 9/11 169 Section Two: Export Operations 10 185 Export Issues 187 Export Management: Incoterms, Documentation, Compliance, Operations, and Export Supply Chain Skill Sets 200 v iii C on ten ts Section Three: Import Operations 233 11 Future Import Issues 235 12 The Import Supply Chain: Purchasing, Operations, Documentation, and Compliance Management 252 Import Strategies in Maintaining a "Compliant and Secure" Inbound Supply Chain 268 Bureau of Customs and Border Protection: Compliance and Security Expectations: Post 9/11 275 Getting on Top of the Regulatory Challenges of the Future 280 Concluding Remarks 286 13 14 15 16 Appendix 289 Index 665 Foreword Tom Cook continually impresses me As a leader in the field of global supply chain management His ability to identify the issues and offer "hands-on” solu tions to corporate America is outstanding Tom's delivers the message and motivates each one of us to execute our import and export responsibilities carefully and professionally This book is just one of a series of written communications that teaches us all the "skill sets" we need to manage our business responsibilities and provides thoughtful insight into post 9/11 security and compliance management concerns Mastering Import & Export Management fills an important void in the informa tion required to succeed in the field of global supply chain management Neither prior to nor since September 11, 2011 has a book covered all the old and new supply chain import/export management issues and offered an array of costeffective options in bringing competitive advantage and reducing global risks In my role as the New York District Export Council's Chairman, I have the opportunity to work with many professionals in global trade Tom ahs great knowledge of current issues in importing and exporting He brings a comprehen sive and articulate message to this book I can speak first hand, as a colleague, and friend of Tom—this is a "m ust" read book and a "key" addition to every supply chain manager's library Spencer Ross P residen t National Institute for World Trade New York, New York ix Preface Mastering Import & Export Management is a timely publication as companies scramble to maintain open import and export supply chains with an everincreasing level of government scrutiny and compliance and security changes Corporate America is redeploying its personnel, resources, and infrastructure to manage supply chains that have greater foreign purchases and expanding global markets Executives engaged in importing and exporting are being tested daily with challenges requiring new and enhanced skill sets These new challenges include: cost-effective logistics; better inventory management; more skilled vendor ser vices; compliance and security management; and a changing political, economic, and regulatory climate in a global environment Corporations are recognizing that in order to be competitive in world trade, a company must reduce its cost of logistics This book provides information on how to lower costs in shipping, inventory management, import/export order process ing, and manpower, and how to avoid fines and penalties This book outlines all the historical legacy issues of world trade and interfaces the new world order, post 9/11 Today's supply chain managers must confront the movement of goods and services timely, safely, and cost-effectively But that alone is not enough They must incorporate import/export supply chain strategies that include post-9/11 compliance and security regulations that are both new and evolving This means that corporate America must initiate a vigil to keep current and be flexible enough to implement revisions A key trait of successful global supply chains will be the ability to modify and change import/export logistics, communications, suppliers, vendors, and all interface parties The book makes an excellent argument that developing resources, managing change, and affecting short-term supply chain strategies is an integral foundation for importers and exporters While some concepts and methodologies of the past have validity, the truly successful and competitive company engaged in imports and exports will in tan dem bring a whole new skill set to the "deal" that will have safe, secure, and compliant supply lines in their global make-up Mastering Import & Export Management is a compendium for the serious import and export supply chain manager to develop internal standard operating proce dures to ensure that their global supply chains stay open, operate cost-effectively, and adhere to all the old and new regulations facing importers and exporters Global trade requires numerous skill sets of the corporate executive in manag ing their import/export supply chains This book provides the "ultimate guide" to managing these skill sets, developing tactical resources, and planning execu tion strategies to conquer all the obstacles xi Major Issues in Global Supply Chain Management Today The book opens with a view of current world events that impact global supply chains, import and export operations, and the entire responsibilities that business executives have in trade compliance management 2011 and into 2012 have seen a number of shifts in world politics, Middle East stability, and major physical occurrences that have huge short-term impacts on global trade, and these impacts may extend into the future for years to come Overview P hysical Events The earthquake in Japan has rocked the world in a number of ways Perhaps most important, the long-term utilization of nuclear power is very much in jeopardy The impact of the devastating tsunami that followed goes far beyond the tragic loss of life that occurred The insurance community who insured the risks involved with both events will have to pay hundreds of million in claims, poten tially in excess of several billion dollars This will impact insurance costs and the availability of certain types of insurances in risk-prone centers of the globe as well as for freight that moves on certain trade lanes Cost and availability will become major issues Personnel involved in international shipping and logistics who had freight coming in and out of Japan are witnessing great delays in transit times, limited access to transportation infrastructure, and increases in freight charges Shipping managers worldwide have looked at this disaster in Japan and have already begun to access risk management alternatives not only in earthquakeprone areas, but in all corners of the globe where there are significant physical risks such as but not limited to: • • • • • • Earthquakes Floods Tornadoes Hurricanes Harsh changes from winter to summer weather patterns Tsunamis Mastering Import & Export Management, Second Edition These are but a few of the major physical exposures that companies who oper ate globally are now assessing, and they are reevaluating their supply chain deci sions to avoid exposure and mitigate risk Econom ic Events As of this writing, most professional assessments and benchmarks in world trade have shown a betterment in most market segments in the overall economy Most manufacturing, inventory, and trade indexes have shown increases of to per cent in 2011 into 2012 While most sectors have shown improvement, there is still serious concern over the following areas: • • • • Stability of global banking and financial infrastructure Housing and unemployment in the United States Political instability in the Middle East Financial issues in an array of countries, such as but not limited to Greece, Poland, Brazil, Venezuela, and the United States • The rise in government bailouts and increase in debt worldwide All of this impacts global supply chains It impacts cost, risk, and choice of global sourcing and offshore manufacturing, and it potentially retards the growth of globalization A good example of this in the United States is shown by the number of compa nies who had sent manufacturing overseas to Asia and the Near East but have moved some or all of it back here to America or to Mexico or Canada (referred to as "near-shoring") Near-shoring makes a huge statement to the world It says that from a competi tive standpoint there may be better places to locate operations than Asia and the Near East (primarily India and Pakistan)—reversing a major trend of the past thirty years In logistics, these economic woes have reduced capacity in the ocean freight market, causing pricing instability and difficulties in locating available containers and chassis for timely, reliable, and consistent bookings Companies relying on the ocean freight mode to fulfill a time-sensitive supply chain have been hugely disappointed in 2011 and have had to make major com promises in risk, cost, and choice of carriers P olitical In stability The events in the Middle East— in Tunisia, Libya, Egypt, and Bahrain to name a few—have rocked the traditional world of dictatorship and kingdoms in terms of historic attitudes in the Muslim community in that part of the globe The West, led by the United States, has taken a fairly aggressive role in support ing the move to democratic governments, including militaiy action There are costs to supporting these uprisings that add to the economic turmoil, tied into the instability which has caused the price of crude oil to climb in excess of $100.00 US This will impact every aspect of the supply chain cost models, from manufac turing, to plastics, freight, and security surcharges due to gasoline increases Major Issues in Global Supply Chain Management Today The threat of an increase in terrorism promised from the more radical corners of that circle will place additional stresses on security and oil costs Many security analysts also see the West's proactive engagement in these Mus lim democratic turnovers as another reason for terrorists to mount more aggres sive and frequent attacks, which will include exposure for global supply chains The continued presence of the United States and its allies in Iraq and Afghani stan has also increased political stress among the West and the Muslim countries These stresses impact politics—here and in those countries—which in turn impact the decision-making process as to where and how to ship, source, deliver, and partner These issues increase risk and cost A irfreight: TSA/Transportation Security A dm inistration and Hazardous M aterials 100 percent cargo screening, not just for Americans anymore! The screening rules of 2010-2012 affected all air cargo destined for a passenger aircraft originating in the United States or being shipped from overseas to the United States The TSA was charged with this daunting task While the shipping community doubted the TSA would be able to accomplish the 100 percent screen ing rule by the initial 2010 deadlines, the TSA proved us wrong They have accom plished this task and have done it without too many hiccups in the process This process is still a work-in-process and is being tweaked and modified as we enter 2012 The fear and overall concern were mainly twofold: the issue of higher costs and the issue of serious delays in the movement of air cargo While there has been a cost increase due to the additional layer of security that has been imposed, it has not been dramatic Nor have the anticipated delays been as serious as we first thought they would be The program seems to be a success so far As the air freight community just began to breathe easy again, here comes another directive All foreign origin inbound air cargo must be screened at 100 percent This issue of screening foreign air cargo is not a new development The primary goal of the US government was to enact the rule for screening of cargo that originates in the United States, and then to ultimately include foreign origin air freight, with a deadline of Y2013 for such foreign origin freight movement Then it happened! While we were focused heavily on cargo originating in America that was booked to fly aboard a passenger aircraft, terrorists were focus ing on freight originating in a foreign country that was intended to fly on an all cargo aircraft UPS and FedEx both recently discovered explosive devices in cargo shipments that were ultimately addressed to a synagogue in Chicago Fortu nately, these devices were found prior to the final flight to the United States Packages with explosives were found in Dubai and in the United Kingdom The Prime Minister of England stated that it appears the device they discovered was intended to go off in midair, en route to the United States The publicity, hype, and exposure of the 100-percent passenger air cargo screening rule was a clear indicator to terrorists that there is a big black hole in the screening program: foreign-origin air cargo coming into our country is not subjected to rigorous screening While U.S Customs and Border Protection con trols the security of inbound cargo through the C-TPAT program (Customs Trade A ppendix N o v e m b e r, 2012 USA Pavilion at 2012 Taipei International Travel Fair - Travel and Tourism Industries Location/D ate: Taipei, Taiwan 11/1/2012 - 11/30/2012 Contacts: Wendy Tien, Taipei Commercial Specialist Phone: 886-2-2720-1550 ext 324 Wendy.Tien@trade.gov N o v em b e r, 2012 U S Community College Fair in Thailand - 2012 •• L ocation/D ate: Chiang M ai, Thailand Bangkok Thailand 11/3/2012 - 11/3/2012 11/4/2012 - 11 /4/20 J2 Hat Y Thailand ] 1/ /2 12 - 11/6/2 12 Contacts: Nalin Phupoksakul, Bangkok Senior Commercial Specialist Phone: 662-205-5275 Nalin Phupoksaku]@trade gov N o v em b e r, 2012 World Travel Market —Travel and Tourism Industries Location/D ate: London, United K ingdom 11/5/2012 -1 /S/2012 Contacts: Danny Dumon, Brussels Commercial Specialist Phone:+32-2-811-5476 DannyJ3umon@trade.gov Stewart Gough London Commercial Specialist Phone: +44 (0) 20 7894 0459 Stewart.Gough@trade.gov November ,2012 Industrial Fabrics Association International, IFAI, 2012 multiple industry sectors L ocation/D ate: Boston M A , United States 11/7/2012- 11/9/2012 C ontacts: Amanda Ayvaz, Trade Event Programs International Trade Specialist Phone: 202-482-0338 Amanda Ayvaz@ trade.gov This International B uyer P ro g ram will be led by T odd L indem ann, Vice President of Conference Management Phone: N o v e m b e r, 2012 Showcase USA-Jtaly 2012 -■ Travel and Tourism Industries L ocation/D ate: TBD Italy, Italy C ontacts: Simonetta Busnelli Milan Commercial Specialist Phone: Direct +39-02-62688505 or Main +39-02-6268851 Simonetta3usnelli@ trade.gov 11/8/2012 - 11/9/2012 661 662 Appendix N ovem ber , 2012 U Ü Power-gen Technology Showcase at APPrO 2012 Conference and Trade Show • multiple industry sectors L ocation/D ate: Toronto, Canada 11/ 12/ 0)2 - 11/ 14/2012 Contacts: Stefan Popescu, Toronto Commercial Specialist Phone: 416 /5 -5 * 223 StefanPopescu@ trade.gov N ovem ber , 2012 Electronica 2012 ■■ Electronic Components Location/D ate: Munich, Germany 11/ 13/ 2 - 11/ 16/ 20)2 Contacts: Dagmar Winkler-Helmdach Munich Commercial Specialist Phone: 49-89-2888-769 Dagmar.WinkJer-Helmdach@trade.gov Moritz Holst, Munich Commercial Assistant Phone: 49-89-2888-754 Moritzi4o3st@trade.gov Sabine Kallup, Munich International Trade Fairs GACC Phone:646-437-1012 skallup@munich-lradefairs.com N o v em b e r, 2012 Eurotier/BioEnergy Decentra) 2012 —multiple industry sectors Location/D ate: Hanover, Germany 11/ 13/ 2 - 11/ 16/2012 Contacts: Andrea Stahl, Frankfurt Commercial Specialist Phone: 49-69-7535-3157 A ndrea5tahl@ trade.gov Bettina Capurro, Munich Commercial Specialist Phone: 49-89-288-8751 Bettina.Capurro@trade.gov N ovem ber ,2012 The 9th China lnt'1 Aviation & Aerospace Exhibition - multiple industry sectors Location/D ate: Zhuhai, China 1)/l S/2012 - 11/18/2012 C ontacts: Lena Yang, Guangzhou Senior Commercial Specialist Phpne: 86-20 8667-4011 ext.612 Lena.Yang@trade.gov ' N o v em b e r, 2012 MED1CA 2012 —multiple industry sectors Location/D ate: Contacts: James Sullivan, Seoul Senior Commercial Officer Phone: 82-2-397-4535 Jim Sullivan® trade gov Yoon Shil Chay, Seoul Senior Commercial Specialist Phone: 82-2-397-4439 YoonShil.Chay@trade.gov Düsseldorf Germany 11/14/2012- 11/17/2012 Appendix N ovem ber ,2012 MEDICA 2012: USDOC Business Center Showcase Globa] and Exhibitor Outreach Event multiple industry sectors L ocation/D ate: Düsseldorf, Germany 11/14/2012- 11/17/2012 Contacts: Amelia K ooistra,North Texas international Trade Specialist Phone: 817-310-3744 Amel ia.Goeppinger@urflde.gov Anette Salama, Düsseldorf Senior Commercial Specialist Phone: 49-211-737-767-60 Anette.Salama@trade.gov Nils R o t her, Düsseldorf Commercial Specialist Phone: 49 211 737 767 20 Nils J? oebei@trade.gov Uta Kirst, Düsseldorf Commercial Specialist Phone: 49 J 1-737-767-80 UtaXirst@1rade.gov Ryan Klemm, Messe Düsseldorf North America Phone: 3I2-781-5180 rklemm@mdna.com N ovem ber ,2012 Medica * multiple industry sectors L ôcation/D ate: Düsseldorf, Germany 11/14/2012 - 11/17/2012 C ontacts: Danny Dumon, Brussels Commercial Specialist Phone:+32-2-811-5476 Danny.Dumon@trade.gov N ovem ber , 2012 Greater New York Dental Meeting 2012 multiple industry sectors Location/D ate: New York, NY, United Slates 11/23/2012- 11/28/2012 Contacts: Aditi Pa]li Trade Event Programs International Trade Specialist Phone: 202-482-3334 AditiPaIli@ trade.gov Novem ber , 2012 Offshore South East Asia 2012 (OSEA2012) - multiple industry sectors Location/D ate: S ingapore, S ingapore Contacts: Kevin Haley, Trade Event Programs Ser.ior International Trade Specialist Phone: 202-482-6434 KevinJ4aley@trade.gov Yin Kei Chan, Singapore Commercial Specialist Phone: (65) 6476-9029 YiuKei.Chan@trade.gov Emily Cantwell IMEX Management Inc Phone: 704.365-0041 emilyc@imexmanagment.com 11/27/2012- 11/30/2012 663 664 Appendix D ecem ber , 2012 Aeromart Toulouse 20] Aircraft/Aircrafi Parts Location/D ate: Toulouse, France 12/4/2012- 12/6/2012 C ontacts: Cara Boulesteix Paris Commercial Specialist Phone: [33] (0)1 43 12 70 79 Cara Boulesteix® trade gov Alain Ngoie, Advanced Business Events Phone: 33 (0) 41 ] 5! A Ngoie (S' ad vbe com D e c e m b e r, 2012 POWER-GEN International 2012 multipJe industry’ sectors Location/D ate: Orlando, FL, United States 12/11/2012- 12/13/2012 C ontacts; Mark WeJIs, Trade Event Programs Senior Internationa] Trade Specialist Phone: (202) 482-0904 Mark Wells® trade.gov M elanie M cGuire, PennWell Corporation Phone:(918)831-9180 melaniem@pennwell.com D e c e m b e r, 2012 U.S A Pavilion at 2012 Taipei International Building, Construction & Decoration Exhibition multiple industry sectors Location/D ate: C ontacts: Allen Chien, Taipei CommerciaJ Specialist Phone: 886-2-27201550 ext 331 A 1Jen.Chien@trade eov Taipei Taiwan 12/19/2012- ] 2/23/2012 Index abandonment, 291 acceptance, 291 accessorial charges, 60 Account Management Program, 276-277 action plan, trade compliance, 153 administrative elements, of EMS, 448 ad valorem, 291 Advance Electronic Cargo Data Reporting rule, 208 Advance Passenger Information System (APIS), 170 advising bank, 291 Affirmation of Compliance (AoC) codes, 240-241 Agency for International Development (AID) shipments, 291 agent programs, 89-92 Agricultural Quarantine Inspections, 279 airfreight consolidators for, 52-54 C-TPAT recommendations for, 598 forms for exports using, 307-323 forms for imports using, 347-352 ocean- vs., 76-80 rates of, 54-56 screening of, 3-7 air waybill, 305 all-inclusive (term), 291 allowance, 291 all-risk cargo insurance, 72-73, 291 Animal Plant Health Inspection Service (APHIS), 82-83 antiboycott requests, 215-216, 230-231 Anti-Dumping Agreement (WTO), 525-528 Arab League, 230-231 arbitration, 291 arrival notice, 291 “as is" condition, 291 assignments under letters of credit, 509 assist value management, 235-237 audits by CBP, 280, 473-480 Focused Assessment, 243-245 mock, 18-20, 84 self-, 244-245 automated broker interface (ABI), 291 Automated Commercial Environment (ACE), 172 automated documentation, 134-135 Automated Export System (AES), 135, 170, 188-189, 206-207, 291 automated manifest system (AMS), 291 awareness, of compliance issues, 153 back to back letter of credit arrangement, 508 balance of trade, 292 banks, 158 barter, 292 bill of lading, 292, 297, 298, 306 Bioterrorism Act (2002), 273-274, 279 BIS Update conference, 191-192 bonded warehouse, 292 bonds, 68-69, 292, 396-397, 469-471 Border and Transportation Security (BTS), 176,177 border delays, avoiding, 281-282 break bulk cargo, 292 Bretton Woods Conference, 292 broadcast industry, shipping issues in, 61-65 brokers, 28-30,103,118,126, 595 bunker adjustment fee (BAF), 292 Bureau of Citizenship and Immigration Services (USCIS), 176 Bureau of Customs and Border Protection (CBP), 12 audits by, 280, 473-480 CBP Officers and Agriculture Specialists in, 611-616 665 666 Index Bureau of Customs and Border Protection (continued) compliance and security expectations of, 275-279 guidelines from, 468 penalties of, 271 perishable shipment regulations of, 71-72 recordkeeping required by, 179-181 Bureau of Industry and Security (BIS), 12, 292 best practices from, 196 and BIS Update conference, 191-192 compliance of exports with, 210-211, 225-227 denied party lists of, 144 fines and penalties from, 16-17, 530-583 guidelines of EMS and, 434-447 license exceptions from, 213-214, 419-428 recordkeeping required by, 179-181 buy-back deductibles, 128 Canada Customs Invoice, 360 cargo screening, 3-7 Camet (ATA), 65-67, 292, 495-502 Carriage and Insurance Paid To (CIP), 203-204, 507, 522 Carriage Paid To (CPT), 204, 507, 522 carrier liability, 59-60 carriers integrated, 296 partnerships with, 64 for perishable shipments, 71 selecting, 61-62 selection of, by customers, 78-79 specialized, 74 trade compliance of, 193-196 cash against documents, airfreight export forms of, 307-313 ^CBP Agriculture Specialists, 612-613 ' CBP Officers, 611, 613-616 Census Bureau, 13, 529 certificat de livraison directe, 362 Certificate of Origin, 292, 305,356, 363-367 Certificate of Registration, 355 Certified Cargo Screening Program (CCSP), 5-6 chambers of commerce, 155 Chemical Facility Anti-Terrorism Stan dards (CFATS), 7-8 China, 79-80 claims procedures, for political risk insurance, 121 clingage, 292 collect freight arrangements, 61 colleges, 158,159 combi, 292 Commerce Control List (CCL), 211-212 Commerce Country Chart, 402-418 commercial banks, 157 commercial credits, parties to, 510-511 commercial invoices, 304 commission agent, 292 commitment, 147,192-193 commodity classification, 74 commodity specialist, 292 communication, 82,103,119 communications industry, 61-65 comparison method of export payment, 512 competitive advantage, 132-134 competitive bidding, 63-64 compliance and security management, 169-184,287 Advance Passenger Information System in, 170 AES in, 170 Automated Commercial Environment in, 172 and Bioterrorism Act (2002), 273-274 case studies, 271-272 Container Security Initiative, 171 C-TPAT, 171 and Customs' penalties, 271 and Department of Homeland Security, 174-178 education and training in, 269 and Four-Hour Advance Notification, 172-173 Free and Secure Trade Program in, 171 government contracts in, 179 Green Customs Project in, 178-179 Homeland Security Act in, 170-171 and 24-Hour Manifest Rule, 172 for importers, 268-274 Importer Security Filing Program in, 173 Index internal, 268 Operation Safe Commerce in, 173-174 overview of, 169-170 ownership of, 269 recordkeeping in, 179-182 senior management in, 268-269 structure for, 269-271 for supply chains, 182-184 and Trade Act (2002), 170 and Transportation Security Act (2002), 172 and USA Patriot Act, 173 Vehicle and Cargo Inspection System in, 172 see also trade compliance compliance managers, 151-152 confidential information, protecting, 34-36 confiscation, nationalization, expropri ation, and deprivation (CNE&D) coverages, 107 consignment, 292-293 consolidators, 52-54, 293, 601 consularization, 219-220 consularization stamp, 359 consultants, 158-159 container positioning, 60 Container Security Initiative (CSI), 171, 183, 279 contingency plans, for freight, 58-59, 81-82 contract frustration, 107 contracts government, 179 long-term, 60-61 for political risk insurance, 119 contracts of sale, 17-18 control of import supply chain, 255 and routed export transactions, 190 and trade compliance, 46, 269-270 control lists, 32 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), 178 copyright infringement, 281 corporate communication, 103 Cost, Insurance, Freight (CIF), 203, 293, 507,522 • Cost and Freight (CFR), 203, 507, 521 667 costs landed, 39, 43,147-148 of ocean- vs airfreight, 77 of purchasing from foreign sources, 39-40 countertrade, 293 country of origin marking, 263 credit risk insurance, 114-118, 293 Cuba, gift parcels to, 192 currency, 293 currency incovertibility, 107-108 custom-bonded warehouses (CBWs), 101 customers, carrier selection by, 78-79 customer service, 75-76 customhouse brokers, 253-255 customs bonds, 396-397, 469-471 customs business, 256 customs power of attorney, 385-386 Customs Trade Partnership Against Terrorism (C-TPAT), 279, 584-616 in compliance and security management, 171 convincing senior management to join, 248-251 enforcement of, 237-238 for import operations, 237-238, 594, 602-610 and import supply chain, 270 and ISF program, 248 and SarbanesOxley Act, 98 and selection of overseas suppliers, 44 damaged goods, 266-267 Declaration for Free Entry of Returned American Products, 395 Declaration for Importation or Expor tation of Fish or Wildlife, 387 deductibles, buy-back, 128 Deemed Export Rules, 183, 215 Delivered at Place (DAP), 204,507-508, 522 Delivered at Terminal (DAT), 204, 507, 522 Delivered Duty Paid (DDP), 204, 508, 522 Delivery Certificate for Purposes of Drawback, 393-394 delivery schedules, 40 deliveiy systems, EDI, 136-137 Delivery Verification Certificate, 368-371 Denied Party List (DPL) screening, 144-145,197, 214-215 663 ỉndex Department of Commerce, 156-157,193 Ex-Im Bank, 109,112-113 Department of Homeland Security (DHS), experienced companies, learning from, 7-8,11-12,174-178 150 Department of State License, airfreight Export Administration Regulations export forms of, 319-323 (EAR), 17, 198-199 Department of Transportation (DOT), 83, Export Assistance Centers, 302-303 86-89 Export Commodity Control Number destination control statement, 293 (ECCN), 211-213 destination issues, for freight carriers, 79 Export Councils, 147 DHL, 17,193 export credit, 120 distributor, 293 export credit insurance, 121-123, 514-519 diversification, in risk management, 105 Export Finance Matchmaker (EFM), 433 dock receipt, 293 Export-Import Bank of the United States documentary collection, 503-504 (Ex-Im Bank), 294 documentation, 127-128,134-135, Export Initiative Program, 31-34 204-210 export license, 306 Domestic International Sales Corporation export management, 200-231 (DISC), 293 antiboycott requests in, 230-231 down payments, on insurance, 129 documentation for, 204-210 draft, 293 Incoterms in, 200-204, 224-227 drawback, 265-266, 282-283, 293 internal education and training in, Drawback Entry form, 391-392 227-230 drop-shipment certificate, 361 trade compliance in, 210-224 due diligence, 45 export management company, 294 dumping, 293 Export Management Systems (EMS) duty, 253-254, 259-260, 293 elements and objectives of, 448-449 duty preference claims, 280-281 guidelines of BIS and, 434-447 review module, 450-467 e-commerce, 140-141 export operations, 187-199 economic events, recent best practices for, 197 education, 227-230, 269 and BIS Update, 191-192 electrical appliances, equipment and foreign trade regulations for, 188-189 accessories, 429-432 future regulatory issues for, 282-285 electronic data interchange (EDI) facil and gift parcels to Cuba, 192 ities, 135-140 ITAR licenses in, 187-188 Electronic Export Information (EEI), reexport rules for, 197-199 206-207, 283, 305 routed transactions by, 189-191 embargo, 293 and tips for exporters, 192-193 Emergency Preparedness and Response trade compliance for, 193-199 (EPR), 176,177 exports, 294 emergency response procedures, 8, 84 comparison method of payment for, 512 enforcement documentation for, 304-306 of C-TPAT, 237-238 documents/.forms for, 353-383 of Export Initiative Program, 33 fines and penalties on, 530-583 engagement 46, 273-274 payment options for, 503-506 entertainment industry, shipping issues tracking of, 137-140 in, 61-65 export trading company, 294 Entry/Immediate Delivery form, 388 export transaction file, 304 Entry Summary form, 389 exposure, see risk exposure European Union (EU), 24-25, 293 Index Ex Works (EXW), 190-191, 203, 507, 521 Ex Works (EXW) from factory, 294 facilities review, for trade compliance, 153 fair trade, 294 Federal Maritime Commission (FMC), 294 financial guarantees, unfair calling of, 108 financing, 116,128-131 Focused Assessment audits, 243-245 Food and Drug Administration (FDA), 9-10,14, 240-241 Food Safety Modernization Act (FSMA), 9-11 force majeure, 294 Foreign Commercial Service, 294 Foreign Corrupt Practices Act (1977), 231, 294 Foreign Credit Insurance Association (FCIA), 108-109,112, 294 foreign markets, political risk insurance in, 113-114 foreign sales agent, 294 foreign sources, purchasing from, 39-43 Foreign Trade Division (Census Bureau), 529 Foreign Trade Regulations, 188-189 foreign-trade zones (FTZs), 25-27 forfaiting, 294 forwarders getting the best from, 47-52 specialized, 74 trade compliance of, 28-30,193-197 Four-Hour Advance Notification, 172-173 franchising, 294 Free Alongside Ship (FAS), 203, 295, 507, 521 Free and Secure Trade (FAST) program, 171 Free Carrier (FCA), 201, 203, 507, 521 free domicile, 295 Free on Board (FOB), 99-100, 203, 295, 507, 521 free port, 295 free trade, 295 free trade zone (FTZ), 100-101, 295 freight current issues with, 24-27 terms for, 94 see also specific types freight of all kinds (FAK), 295 669 freight rates, 54-61, 74-75, 79-80 for airfreight, 54-56 and commodity classification, 74 for inland transit, 74-75 negotiating, 56-61, 75 for oceanfreight, 79-80 of specialized carriers and forwarders, 74 freight vendors, 57, 81 future regulatory issues, 280-285 for exports, 282-285 for imports, 280-282 General Agreement on Tariffs and Trade (GATT), 295 Generalized System of Preferences (GSP), 295 gift parcels to Cuba, 192 global supply chain management issue(s), 1-36, 286-287 CFATS facility inspections as, 7-8 with contracts of sale, 17-18 emergency response procedures as, Export Initiative Program as, 31-34 in freight and logistics, 24-30 and MOVEMENT Act (2009), 30-31 with NAFTA, 20-24 overview of, 1-7 with technology, 34-36 trade compliance as, 9-20 Government Accountability Office (GAO), 14-15 government contracts, 179 Green Customs Project, 178-179 Harbor Maintenance Fee (HMF), 30-31 Harmonized Tariff Schedule of the United States (HTSUS), 481-495 definition of, 295 and import supply chain, 256-257 reasonable care standards of, 242-243 and Schedule B numbers, 208-209 Harter Act, 295 hazardous materials, 295 DOT inspections of, 86-89 export forms for, 314-318 handling issues with, 83-86 logistics for, 83-89 security rule for, 87-89 and TSA screening, 3-5 670 Index health and sanitary certificate, 358 hedging, 295 hold, 295 Homeland Security Act, 170-171 Homeland Security Transition Planning Office (TPO), 175 igloo, 295 Import Compliance Issues Review and Customs and Border Protection Guidelines, 468 Importer Security Filing (ISF) Program, 141, 279 compliance and security management with, 173 for C-TPAT members, 248 enforcement of, 239-240 import license, 295 import operations, 235-251 Affirmation of Compliance codes in, 240-241 assist value management for, 235-237 CPSC regulations for, 238-239 C-TPAT for, 237-238, 594, 602-610 Focused Assessment audit of, 243-245 future regulatory issues for, 280-282 Importer Security Filing program for, 239-240 invoices of, 245-251 reasonable care standards for, 242-243 trade compliance for, 241-242 imports, documents /forms for, 384-400 import supply chain, 252-267 compliance guidelines for, 252-253 and country of origin marking, 263 customhouse brokers in, 253-255 and customs business, 256 and drawback, 265-266 and duties/taxes, 253-254, 259-260 and goods damaged during inspection, 266-267 and HTSUS classification, 256-257 Informed Compliance standards for, 260 invoice requirements for, 258-259 and power of attorney, 263-264 reasonable care standard for, 261 record retention in, 261-262 returned merchandise in, 266 security management for, 257-258 supervision and control of, 255 ultimate consignee in, 264 valuation in, 262-263 import trade risk, 277-278 in bond, 295 Incoterm (s), 15-16 definition of, 295 in export management, 200-204, 224-227 FOB as, 99-100 and other supply chain terms, 92-97 standard, 506-508, 521-522 Information Analysis and Infrastructure Protection (IAIP), 176-178 information technology, 34 Informed Compliance standards, 260 inherent vice, 296 inland transit, 74-75 inspections, Haz-mat, 87-89 insurable interests, 126-127 insurance, 62 all-risk cargo, 72-73,291 credit risk, 114-118, 293 export credit, 121-123, 514-519 financing for, 128-131 and Incoterms; 202-203 liability, 116 marine, 121,124-128, 296 for perishable shipments,.72-73 terms for, 94-95 see also political risk insurance insurance certificate, 306 Insurance Services Office, Inc (ISO), 106-108 integrated carrier, 296 intermodal transportation, 75,296 internal compliance and security management, 268 internal education, 227-230 International Chamber of Commerce (ICC), 15 international import/export compliance, managers, 151-152 international networking, 149-150 International Plant Protection Convention (IPPC), 83 International Traffic in Arms Regulations OTAR), 187-188, 217-219, 284 international world trade clubs, 157 inventory, of hazardous materials, 85 Index invoices commercial, 304 of import operations, 245-251,258-259 for imports, 471-473 pro forma, 304 irrevocable confirmed letter of credit, 508 irrevocable letter of credit, 296, 508 irrevocable unconfirmed letter of credit, 508 ISO 9000, 296 joint venture, 296 known shipper, 296 labeling, of freight, 62-63 landed costs, 39, 43,147-148 land transportation, 600 legalization, 219-220, 518-519 less than container load (LCL) freight, 52 letters of credit (L/C), 296,506-511 in export management, 205-206 for oceanfreight exports, 334-346 other forms of payment vs., 504 leverage, 66, 68 liability insurance, 116 license exceptions, from BIS, 213-214, 419-428 licenses export, 306 ITAR, 187-188 • reexport, 198-199 licensing, 32-33, 296 limits of liability, 296 lithium batteries, 86 logistics, 47-104, 296 agents for, 89-92 current issues with, 27-30 with custom-bonded warehouses, 101 customer service in, 75-76 for free-trade zones, 100-101 and freight rates, 54-61, 74-75, 79-80 for hazardous materials, 83-89 and Incoterms, 92-97, 99-100 key telephone numbers for, 301 and ocean- vs airfreight, 76-80 and Sarbanes-Oxley Act (2002), 97-99 service providers for, 47-54 and Solid Wood Packing Material certificates, 82-83 671 and specialized shipping, 61-74 and transportation services strikes, 80-82 logistics counseling services, 49 London market, for political risk insurance, 110,112 long-term contracts, 60-61 loss control options, 103,110-111, 120-121 mala fide, 296 Management directorate, 176 management information, EDI for, 139-140 manufacturers, C-TPAT for, 596 manufacturing drawback, 265 maquiladora, 296 marine insurance, 121, 124-128, 296 marketing, 148-149 marketplace marine insurance, 127-128 political risk insurance, 103,108-110, 112-114 market research, 296 marks and numbers, 297 material safety data sheets (MSDS), 83, 84 merchandise descriptions, for HTSUS, 242-243 MID certificates, 72 mock audits, 18-20, 84 MOVEMENT Act (2009), 30-31 Multipurpose Application form, 374-380 negotiations, on freight rates, 56-61, 75 networking, 149-150 no license required (NLR), 297 nonvessel operating common carrier (NVOCC), 52-54, 297, 601 North American Free Trade Agreement (NAFTA), 297 Certificate of Origin of, 363-367 and NAFTA Certificate, 20-24, 220 and truck export forms, 324-327 Notice of Intent to Export, Destroy, or Return Merchandise for Purpose of Drawback, 390 Obama, Barack, 31 ocean bill of lading, 306 672 Index oceanfreight air- vs., 76-80 consolidators for, 52-54 C-TPAT recommendations for, 599 forms for exports using, 328-346 and inland transit, 74-75 Ocean Shipping Reform Act (1998), 59 ocean transportation intermediaries, CTPAT for, 601 Office of Foreign Asset Controls (OFAC), 13, 216-217,297 denied party lists of, 144-145 penalties from, 10-11,16-17, 573-583 Office of Inspector General, 177 One Face at the Border program, 613-616 On The Line series, 279 open account, 297, 503 Operation Safe Commerce, 173-174 order bill of lading, 297 order processing systems, of EMS, 448-449 origin issues, for freight carriers, 79 Other Regulated Mail-Domestic (ORM-D) materials, 85-86 overseas interests, protecting, 116-117 Overseas Private Investment Corporation (OPIC), 109,112, 297 overseas sales activity, risk exposure from, 114-115 overseas suppliers, 44 ownership, of compliance and security management, 269 packing, of freight, 62-63, 73-74, 92 packing lists, 304-305 paperless release, 297 payment terms, 60, 94,105, 201-203 peak season surcharges (PSS), 80 performance standards, 51-52, 91 periodicals, 159 perishable freight, 69-74 personnel, 146-155 attracting qualified, 150-152 landed costs of, 147-148 learning from experienced companies about, 150 marketing by, 148-149 networking by, 149-150 resources and networks for, 147 risk exposure for, 115 sales executives as, 146-147 trade compliance issues for, 152-154 physical exposures, 1-2 phytosanitary, 297 Pipeline and Hazardous Material Safety Administration (PHMSA), point of shipment, 201 political instability, 2-3 political risk, 105-106,117-118, 297 political risk insurance, 103-124 coverage analysis for, 118-121 current issues with, 103-111 evaluating, 102-103 and export credit coverage, 121-123 and exposure to political risk, 117-118 history of, 104 providers of, 111-114 for small and medium-size enterprises, 114-117 specialists for, 121-123 for transporters and exporters, 123-124 political risk intelligence, 120 political risk management, 102-103 power of attorney, 209-210, 263-264, 270, 297, premium, 297 prima facie, 297 Private Sector Office, 176-177 product registration, 297 product specification, 40 proforma invoice, 297 pro forma invoice, 304 protectionism, 297 purchasing, 39-46 choosing overseas suppliers for, 44 from foreign sources, 39-43 trade compliance in, 44-46 purchasing agent, 297 quality certificate, 306 quality control systems, 91 quote sheets, 58 radioactive cargo, 178 reasonable care, 45, 242-243, 469-480 reasonable care standard, 261 recordkeeping, 179-182,197, 216 record retention, 261-262, 270 red clause credit, 508 reexports, 197-199 Index registration forms, for oceanfreight exports, 328-333 regulatory exposure, 90-91 rejected merchandise drawback, 265 relationships with agents, 91-92 with carriers and forwarders, 64, 74 in international sales, 147 remarketers, 298 reports, EDI for, 140 Request for Information form, 398-400 Research and Special Programs Adminis tration (RSPA), 87 resources, 220-221, 401-432 Restriction of Use of Hazardous Substances (RoHS), 229-230 retention, 103 retiming shipments, 82 returned merchandise, 266 revenue recognition, 95-96 revocable letter of credit, 298, 508 revolving credit, 508 risk exposure, 1-2, 90-91,114-118 risk management, 102-131 and CBP, 277-278 and credit risk insurance, 114-118 and financing for insurance, 128-131 and marine insurance, 124-128 political, 102-103 and political risk insurance, 103-124 specialists in international, 121-123 and spread of risk, 104-105 risk(s) combining, in political risk policies, 119 spread of, 104-105 routed export transactions, 189-191 Rules of Origin Agreement (WTO), 523-524 Safe Explosives Act, 279 sales executives, global, 146-147 samples, of perishable freight, 70 Sarbanes-Oxley Act (2002), 97-99 Schedule B, 208-209 Science and Technology (S&T) directorate, 176,177 screening elements, of EMS, 449 security endorsement, 298 security management for import supply chain, 257-258 673 technology for, 134 see also compliance and security management security plans, Haz-mat, 86 security rule, hazardous material, 87-89 seizure of goods, avoiding, 283-284 self-audits, 244-245 senior management, 153, 248-251, 268-269 September 11 terrorist attacks, 275-279, 286 service providers, 47-54 consolidators as, 52-54 forwarders as, 47-52 service requirements, of political risk insurance, 118-119 settling fees, 128 shipment size, 78 Shipper's Export Declaration Form 7525V, 135, 357 shipping for entertainment, communications, and broadcast industries, 61-65 to European Union, 24-25 international, on a temporary basis, 65-69 of perishable freight, 69-74 shipping information electronic transfer of, 138 and freight rates, 57-58 situation analysis, 103 small and medium-sized enterprises (SMEs) financing insurance for, 128-131 insurance specialists for, 121-123 political risk insurance for, 114-117 Small Business Administration (SBA), 157 Société Generali Surveillence (SGS) inspection, 220,298, 520 Solid Wood Packing Material (SWPM) certificates, 82-83, 220 standard operating procedures (SOPs), for trade compliance, 154,180 stand by letter of credit, 509 state governments, 155-156 Statement by Ultimate Consignee and Purchaser, 372 Statement of Registration, 381-383 storage rules, Haz-mat, 85 straight bill of lading form, 306 674 Index strikes, in transportation services, 80-82 supervision, 46, 255, 269-270 suppliers, overseas, 44 supply chain management resource(s), 155-168 banks as, 158 chambers of commerce as, 155 colleges and universities as, 158,159 consultants as, 158-159 periodicals as, 159 in state and federal government, 155-156 for trade compliance, 164-168 trading companies as, 158 on websites, 159-156 world trade centers as, 158 tariff, 242-243, 298 taxes, 253-254 team approach to trade compliance, 153 technology, 132-145 and automated documentation, 134-135 and competitive advantage, 132-134 current issues with, 34-36 for denied party screening, 144-145 and e-commerce, 140-141 and EDI facilities, 135-140 of forwarders, 197 future impact of, 141-144 temporary basis, international shipping on, 65-69 temporary import bonds (TIBs), 68-69 10+ rule, 282 terminal handling charge, 298 terms and conditions of marine insurance, 125-126 of political risk policies, 103,120 terms of sale, in risk management, 105 third-party logistics providers, 27-28, 92 through bill of lading, 298 time draft, 298 time or usance credit, 509 time-sensitive freight, 64-65, 77-78 timing of shipments, in risk management, 105 title, terms for, 95 tracking of shipments, 70-71,138-139, 298 trade acceptance, 298 Trade Act (2002), 170 trade associations, 149-150 trade compliance case studies in, 221-223 current issues in, 167-168 for exporters, 193-199, 210-224 for global personnel, 152-154 as global supply chain management issue, 9-20 for import operations, 241-242, 252-253, 468 and Incoterms, 96 and international logistics, 28-30 in purchasing, 44-46 resources for, 164-168 technology for, 134,141-144 trade disruption, 108 trade events, 622-664 ,trademark infringement, 281 trading companies, 158 training, 227-230, 269 transferable letter of credit, 508 transfer risk, 298 transmittal letter, 298 Transportation Security Act (2002), 172 Transportation Security Administration (TSA), 3-7, 284-285 transportation services strikes, 80-82 truck export forms, 324-327 twenty-foot equivalent (TEU), 298 24-Hour Manifest Rule, 172 ullage, 298 ultimate consignee, 264 Uniform Customs and Practice, 298 United Nations Convention on Contracts for the International Sale of Goods (CISC), 17-18 United Parcel Service (UPS), 80-82 United States Agency for International Development (USAID), 298 United States Coast Guard (USCG), 176 United States Principal Party in Interest (USPPI), 183,190, 208 United States Secret Service, 176 universities, 158,159 UN specification packaging, 84 unused merchandise drawback, 265 U.S Consumer Product Safety Commission (CPSC), 238-239 m aex U.S government contact list for, 617-621 Export Assistance Centers, 302-303 regulatory agencies of, 11-14 supply chain management resources in, -156-157 US market for political risk insurance, 108-110,112-113 USA Patriot Act, 173 validation processes, 269 valuation, 209, 262-263, 473 value-added services, from forwarders, 50-51 value-added tax (VAT), 298 Vehicle and Cargo Inspection System (VACIS), 172 t>/^ volume weight, 513 warehouse receipt, 299 warehouses, 101, 597 war risk exclusion, 106-108 websites, 159-156,165-167 weight shipping, 82 volume vs gross, 513 weight breaks, 299 wharfage, 299 with average, 299 world trade centers, 158 World Trade Organization (WTO) Anti-Dumping Agreement, 525-528 Rules of Origin Agreement, 523-524 zone, 299