C20u—Intro to U.S. Export-Import Basics: Transaction Negotiation, Incoterms, Payment Terms

Subscriber price: $265.00, Non-subscriber price: $339.00
Estimated total study time: 21 hours 2 minutes

This course is designed for an entry-level person to gain basic understanding of the process of importing goods into the United States, including:

The relationship between foreign supplier and the U.S. importer
Negotiating an export-import transaction
Benefit and use of Incoterms, including:
- What Incoterms do and do not specify
- The particulars of each Incoterm
- Problems that can arise with Incoterms, and resolution
Payment terms used in international trade and respective risk to the seller vs. buyer

The Export-Import Transaction

(Estimated study time: 1 hour 3 minutes)

Why Export/Import?
- The Question
- Trade Economics
Essential Facts for an Export-Import Transaction
The Transaction Cycle and Intermediaries
Functional Components vs. Integrated Process
Seller-Buyer Negotiation, Allocating Transaction Risk
Price and Trade Terms (Delivery Terms)
Seller-Buyer Negotiation and Transaction Commitment (Purchase/Sale Contract)

Transaction Time Schedule vs. Risk

(Estimated study time: 1 hour 3 minutes)

Transaction Time Schedule vs. Risk
- Time vs. Risk Elements
  - General—The Marketing Cycle
  - Payment Schedule & Associated Types of Risk
  - Production/Availability Schedule
  - License/Permit Schedule
  - Shipment Schedule & Shipping Costs
  - Post-Delivery Risks (Installation/Use/Consumption)
- Payment/Financial Risk
  - General; Competing Objectives
  - Financial Risk Reduction
  - Financial Cost Reduction
- Physical Risks to Cargo During Shipping

Identity of Actual Supplier; Origin and Destination Country Requirements/Restrictions

(Estimated study time: 52 minutes)

Identity of Actual Supplier
Origin Country Export Requirements
Destination Country Import Requirements

Arranging Cargo Transportation; Risk Reduction through Cargo Insurance

(Estimated study time: 40 minutes)

Risk Reduction through Cargo Insurance
Responsibility for Arranging and Paying for Needed Transportation and Services; Preview of Incoterms "Trade Terms"

Contract Essentials; Need for Standards; Trade Terms

(Estimated study time: 52 minutes)

A Contract = "A Meeting of the Minds"
The Need for Standards
- The Challenge of Communication
- Universal Issues/Needs
- Language-Independent Symbols/Codes
- Adopted Language/Terminology
- "Standards," Trade and Global Development
"Trade Terms"
- General
- Delivery and Passage of Risk vs. Passage of Title
- Summary—Key Trade Terms Issues
Why Incoterms?
What Incoterms Do NOT Address
History

Summary of Incoterms

(Estimated study time: 1 hour 0 minutes)

Summary of Incoterms
- Direct Reference to Incoterms Publication
- "E" Term (EXW)
- "F" Terms
- "C" (Cost Paid to) Terms
- "D" (Delivered) Terms
- Summary Chart of Seller and Buyer Responsibilities Under Each Trade Term

Seller and Buyer Obligations Common to All Incoterms

(Estimated study time: 41 minutes)

Seller and Buyer Obligations Under All Incoterms
- SELLER's Obligations Under All Incoterms
- BUYER's Obligations under All Terms

Passage of Risk; Responsibility for Arranging Primary Transportation

(Estimated study time: 52 minutes)

Passage of Risk Coincides with Delivery of Goods
- General Passage of Risk
- Passage of Risk If Buyer Fails to Take or Accept Delivery
Responsibility for Arranging Primary Transportation and Contract of Carriage

Required Notices under Incoterms; Trade Term Citation Particulars

(Estimated study time: 1 hour 5 minutes)

Required Notices Between the Parties
- Summary of Required Notifications
- Notices Vary For Each Trade Term
- Notices Must Be Timely
- Consequences of Missed Notices
General—Specify Current Terms
Four Basic Items of Information Required
Place Specification

Trade Term Citation Particulars, cont.

(Estimated study time: 33 minutes)

Place Specification
Incoterms Date/Time Specification
Further Specification of Incoterms Particulars

EXW – Additional Requirements and Concerns General

An importer should generally avoid buying foreign goods on EXW ("ex factory") terms. Here is why.

(Estimated study time: 1 hour 8 minutes)

EXW—Additional Requirements and Concerns
- General
- Passage of Risk under EXW
- Loading Conveyance under EXW
  - Buyer Responsible for Loading
  - "EXW Loaded"
  - Transportation Mode Considerations
  - Intermodal Containers
  - Practical Considerations—MHE Assistance
- Export Formalities
- Incoterms 2020 Discourages Use of EXW Terms for International Shipments.

"F" Terms – Delivery in Origin Country

(Estimated study time: 52 minutes)

"F" Terms—General
Passage of Risk
FCA Delivery Concerns
- Usage
- "FCA Origin" (Named FCA Point is Seller's Facility; Seller Loads Buyer's Carrier)
- FCA (Named Place other than Seller's Premises; Buyer Unloads Seller's Carrier)
- Arranging Transportation and Contract of Carriage under FCA
FAS and FOB Terms

"C" Trade Terms – Delivery at Origin Port, Airport or Frontier, Freight Prepaid to Foreign Destination

(Estimated study time: 42 minutes)

"C" Terms—Additional Requirements and Concerns
- "C" Terms Usage
- Passage of Risk
- Shipping Insurance under CIF and CIP

"D" Terms – Delivered in Destination Country

(Estimated study time: 52 minutes)

"D" Terms—Additional Requirements and Concerns
- Distinguishing Among "D" Terms
- Pros and Cons of "D" Terms
  - Buyer's Benefit
  - Seller's Benefit
  - Seller's Concerns
- Passage of Risk
- Import Formalities

Detailed Comparison of Respective Costs and Responsibilities For Each Trade Terms

This lesson provides practice in understanding exactly which party, seller or buyer, must perform responsibilities and pay for each shipping-related cost under respective trade terms.

(Estimated study time: 1 hour 7 minutes)

Division of Incoterms Responsibilities and Costs (Matrices)
- Responsibilities and Costs Matrix, Primary Transportation via Vessel (Ocean or Inland Waterway)
- Responsibilities and Costs Matrix, Primary Transportation Via Aircraft (Air Freight)
- Responsibilities and Costs Matrix, Primary Transportation via Truck, Rail (Ground Transport)

Introducing Trade Terms into the Sales-Purchase Contract Negotiation Process

(Estimated study time: 55 minutes)

Delivery Arrangements Intrinsic to an International Sales Contract
- General
- When to Negotiate Trade Terms
- Use of Incoterms in a Sales Contract; Limitations
Introducing Trade Terms into the Sales Negotiation Process
- With Initial Quotation/Offer
- Before Concluding a Sale-Purchase Contract
- Before Fulfillment of Sales Contract
  - General
  - Trade Terms under Letters of Credit
- Immediately Prior to Shipment
- Upon Shipment

Sales-Purchase Contract Negotiation Concerns, cont.

(Estimated study time: 1 hour 17 minutes)

Which INCOTERM to Offer?
- Seller Expediency
- Buyer Preferences & Delivered Terms
Recognizing and Dealing with Obsolete Terms
- Interpreting Obsolete Terms
- Risks of Using Obsolete Terms
Special Situations; Turn-Key Projects & Installation
Cargo Insurance Concerns When Negotiating a Sales Contract
- Proper Insurance of Cargo
- Additional Incoterms-Related Cargo Insurance Issues

Typical INCOTERMS Interpretation Issues and Problems

(Estimated study time: 57 minutes)

Typical INCOTERMS Interpretation Issues and Problems
- Incomplete Terms; Failure to Name a Specific Delivery Location
- What Does "FOB" Mean?
- Seller Cooperation with Buyer's Freight Forwarder
  - General
  - Export Declaration and Export License Requirements
    - Trade Terms Determine Responsibility
    - Export Declaration by Buyer's Forwarder
  - EXW and "F" Terms under an L/C
    - The Problem
    - Buyer's Forwarder and Routed Shipments Under a Letter of Credit
Dispute Resolution
- Dispute Resolution Should be Determined in Advance
- ICC Arbitration Services

Export/Import Payment Terms, Collections, Letters of Credit Basic Concepts

(Estimated study time: 58 minutes)

Basic Concepts
- Goods in Exchange for Money
- Currencies, Currency Exchange
  - General
  - Risk of Currency Fluctuation
  - Currency Risk Reduction
- Time Value & Cost of Money
  - General, "Net Present Value"
  - Financing Export Sales
  - Use-Value of Goods
- Payment Terms
  - General
  - Performance Risk
  - A Sensitive Competitive Factor; Risk vs. Reward
    - Seller Motivation
    - Buyer Motivation
  - Relationship between Payment Terms and Trade Terms (Delivery Terms)

A Spectrum of Import Payment Alternatives

(Estimated study time: 1 hour 0 minutes)

A Spectrum of Payment Alternatives
- Seller Risk vs. Buyer Risk
- Chart 1: Overview of Payment Options vs. Risk
  - Traditional Payment Options
  - Automated Payment Options
- Negotiating Payment Terms
  - General
  - Government Influence over Payment Terms
    - Positive Influences
    - Negative Influences
  - Evaluating Payment Risks for Foreign Customers
    - Sources of Information
    - Fraud and Corruption
  - A Forwarder's Role vis-à-vis Payment Terms

Common Export/Import Payment Terms/Options

(Estimated study time: 1 hour 17 minutes)

General
Open Account Credit
Payment in Advance with Order
Deposit with Order, Partial Payment(s) Prior to Shipment
Payment via Letter of Credit
More on Letters of Credit
Collection via Bank Draft (Documentary Draft)
- Funds Collection via Banks—General
- Bank Collections and Currency Exchange
- Documentary Drafts—A Balanced Share of Risk
More on Documentary Draft Collection
Open Account Credit
Electronic Payment Options for Imported Goods
Reduction of Open Account Credit Risk
- Credit Application & References
  - General
  - Credit Application Form
  - Reference/Credit Checks
  - The Credit Decision, Options

Overview of Destination Country Importation Requirements

(Estimated study time: 1 hour 17 minutes)

Forms of Government Intervention in Trade
- Laws
- Executive Authority/Policy Prerogatives
- Process and Procedures
- Legal Compliance & Enforcement
- Human Factors
- Informal Trade Control Methods/Objectives
The "Customs Entry" Process
- Customs Entry/Release Procedures
- Key Commercial Documents
- Product-Based Documents
Components of National Import Regulation
- Laws & Customs Regulations — General
- Importer Level Controls, Licensing
- Transaction Level Controls; Import Licenses/Permits
- Foreign Exchange Controls
Country-Specific Documentation & Requirements
Commercial Invoice
- General
  - U.S. Requirements
- Source Document for Commodity Description and Other Multi-Purpose Information
- Commodity Description for HTS Classification Purposes
- Import License/Import Permit
- Destination Country Information/Invoice Requirements
- Other Uses of the Commercial Invoice