Chapter 9Import and export procedures2focusfocusProcedures In exportingProceduresIn importingOthers and assignmentMain documentsimport and export procedure3Shipping space, shipping adviceCustoms declaration, tax rebateEffect insuranceCommercial invoice, C/OKey wordsKey wordsimport and export procedure4China held a forum on Sunday to commemorate the 10th anniversary of its accession to the world trade organization, Xinhua reported. President Hu Jintao attended the forum. The past decade had witnessed Chinas trade volume in the worlds total rise from 4.3% to 10.4%. Chinas trade in goods surged from $509.8 billion in 2001 to nearly $3 trillion in 2010. In 2009, China became the worlds largest exporter and second largest importer.http:/kankan.xunlei.com/vod/mp4/60/60421/158682.shtml?id=731009中国入世首席谈判代表 news related China in WTO for 10 years import and export procedure5Comments on Chinas WTO entryChina became the world trade organizations 143rd member on December 11, 2001. Sunday makes the 10th anniversary of Chinas entry into the WTO. Foreign media and exports applaud Chinas achievements in the past decade and its contribution to the world economy. Joining the WTO helped turn China into the worlds biggest economy after the US. Companies and consumers worldwide have benefited from Chinas emergence as a top trading partner.纽约时报So celebrate Chinas 10 years in the WTO: we are all richer because of it.英国经济学人 From a legal standpoint, China has a good track record at the WTO, whose main function is to ensure global trade flows smoothly, and provides a dispute settlement process aimed at easing trade frictions. 法新社WTO director-general Pascal Lamy has given china A+ for its performance in the multilateral trade system.China is growing more comfortable with the WTO machinery. They have learned the ropes and become more proactive”, said Nicholas Lardy of the Peterson Institute, a Washington think-tank. http:/jingji.cntv.cn/20111211/120575.shtml http:/www.iqiyi.com/zongyi/20111204/7a4115fdfe115879.htmlNews related China in WTO for 10 years import and export procedure6the sellerthe buyerpurchase contract4.send shipping advice before shipment of goods1.apply for import license2.apply for issuance of L/C3.book shipping spaces and urge shipment.5.effect insurance6.check documents and make payment7.declare at the customs8.clear at the customs9.inspect and take delivery10. supervise foreign exchange payment and verification in import trade11.claimProcedures in importing: FOBimport and export procedure71. Apply for Import License 申请进口许可证申请进口许可证 If goods are restricted by government, the buyers need to submit license application to relative authority for obtaining the import license document. The application form usually includes description of goods, quantity, unit price and total value, etc. Once the authority examines the application and finds it practicable, then it will issue a form to the buyer. In China, Quota and License Affairs Bureau (QLAB) is in charge of authorizing import license. Importing procedures 1. apply for import licenseimport and export procedure83.1.2 Apply for Issuance of L/C 申请信用证申请信用证According to the import contract, if the payment should be made by L/C, the importer should fill in an application form as per the contract for issuance of a letter of credit within agreed time. The applicant usually has a deposit percentage depending on the trustworthy between the banker and the applicant. Some banks require the new applicant should have 100% funds deposit in the bank and then open a letter of credit. The applicant also should pay a fee to open a L/C. The content of the L/C must conform to the articles in the contract. If the beneficiary finds any discrepancy, he may require for amendment, and then the buyer needs to request the opening bank to make amendments to that effect without delay. The buyer either accepts all the discrepancies or refuses to amend them. Once the amendment notice is accepted by the beneficiary, all parties involved must be binding upon the new amendment notice. Importing procedures 2. apply for L/Cimport and export procedure93.1.3 Book Shipping Spaces and Urge Shipment订舱、催装订舱、催装Under FOB term, the buyers are responsible for booking space. Once receiving the estimated time of shipment from the sellers, the buyers should contact the carrier or freight forwarder to ascertain the shipping matters. After having signed the shipping contract, the buyers should inform the seller the name of the vessel, estimated time of arrival to the port of shipment etc, so that the seller can prepare for shipment. Meanwhile, the buyers should also push for shipment so that the vessel can load on time. Importing procedures 3. Book Shipping Spaces and Urge Shipmentimport and export procedure103.1.4 Send Shipping Advice 发装船通知发装船通知After signing the shipping contract and booking spaces, the buyers need to send out a shipping advice stating the name of the vessel, voyage number, and estimated time of arrival of port of shipment, etc. to the seller for the arrangement for shipment on time. Importing procedures 4. Send Shipping Advice import and export procedure113.1.5 Effect Insurance 投保投保 According to Incoterms 2000, for some terms, the risks of goods have been transferred from the sellers to the buyers once the goods have been effectively passed the ships rail at the port of shipment 1. Under such circumstances, it is imperative for the seller to give prompt notice to the buyer right after shipment of goods to enable the buyer to insure the goods without delay under FOB or CFR terms. Failure to give shipping notice to the buyer by the seller, the sellers will bear any risks or damages due to that. 1 refer to charter 5-1. Importing procedures 5. Effect Insurance import and export procedure123.1.6 Check Documents and Make Payment 凭单付款凭单付款 FOB contract is a symbolic delivery1 as per Incoterms 2000. The buyer makes payment against right documents. In this case, the examination of sellers documents becomes crucial to the buyer before payment. Under L/C payment, the opening bank checks the documents firstly and then the buyer reexamine them scrutinizingly. The greatest risk in this case is the sellers cheat by forged documents. Anyhow, if the opening bank finds out discrepancies in the documents, it may contact the buyer to negotiate with the beneficiary. If the documents are correct and complied, the opening bank will pay the beneficiary and then the buyer pays the opening bank for obtaining whole set of documents to take delivery of goods. 1 refer to chapter 5-5.1.3. Importing procedures 6. Check Documents and Make Payment import and export procedure133.1.7 Declare at the Customs 海关申报海关申报Once the goods reach the port of arrival, the buyer should start customs declaration and receiving the goods. When declaring import goods at the customs, the buyer shall fill in the declaration form for import, declare at the customs and hand in invoices, packing lists and other related documents for examination. They shall also hand in import license for commodities if required according to state regulation. Importing procedures 7. Declare at the Customs import and export procedure143.1.8 Clear at the Customs 清关清关Import goods must be checked in agreed time and in designated warehouse or place within the scope of the customs supervision by the customs. For dangerous or bulk cargoes, they can be checked alongside the vessel. The customs will check the goods and give clearance if the goods are complied with documents. Only after the customs stamps on the transport documents, can the consignee or its agent take delivery of import goods. Importing procedures 8. Declare at the Customs import and export procedure153.1.9 Inspect and Take Delivery 检验取货检验取货Usually the buyers have reasonable chance to re-inspect import goods to see whether they are complied with contract. If goods are found not complied, the buyers have the right for compensation, or even reject the goods. However, if the buyer has accepted the goods, or has re-inspected the goods without indicating rejection of goods, the buyers then cannot reject goods. Importing procedures 9. Inspect and Take Delivery import and export procedure163.1.10 Supervision Foreign Exchange Payment and Verification核销换汇核销换汇In order to strengthen the administration of foreign exchange, to prevent evasion of foreign exchange and illegal procurement of foreign exchange, China has been carrying out the policy of supervision of foreign exchange payment and verification in import trade since 1994. It is a measure to examine the background of import trade authenticity by supervising over the statistics of the import payment of foreign exchange afterwards. After clearing at the customs, the buyers may purchase foreign exchange by submitting following documents such as contract, application form of issuance of L/C, invoices, declaration form for import, bill of lading, verification certificate of import payment, etc. Importing procedures 10. Supervise Foreign Exchange Payment and Verificationimport and export procedure173.1.11 Claim and Indemnity 索赔和赔偿索赔和赔偿Claiming for an indemnity often happens in cases when the carrier, the seller or insurer fails to fulfill his obligations and causes damages or losses to the buyer. For example, the seller fails to deliver right goods, or the carrier fails to deliver goods on time, or quality, packaging, etc, do not comply with those prescribed in the contract. Importing procedures 11. Claim and Indemnity import and export procedure18In Chinas foreign trade, most of the cases are based on CIF basis with terms of payment by L/C. With the development of containerization, FCA, CPT and CIP also are more and more used in practice. In this part, focus will be put on the trade on CIF and negotiating credit payment. Procedures in importing can be illustrated by the following flow chart on CIF basis, ocean transportation and payment by L/C.Procedures in exporting: CIFimport and export procedure19Procedures in exporting: CIFthe sellerthe seller11.send shipping advice of goodssales contract1.prepare for goods2.urge the issuance of L/C, receive and check it3.entrust freight forwarder to make shipment4.book shipping spaces5.confirm booking spaces and signs S/O7.deliver goods from warehouse to dock, warehouse or CFS6.effect insuranceapply for inspection12.make documents8.clearance at the customs9.release goods by the customs10.load goods on board the vessel13. submit documents to bank for negotiation14.collect verification and writing-off export proceeds in foreign exchange15.apply for tax rebate 16.settle disputesimport and export procedure203.2.1 Prepare Goods 备货备货Preparation of goods is the first step in performing contract. In order to fulfill a sale contract, the seller must prepare goods according to the time limit stipulated in the contract and in accordance with the latest date of shipment in L/C. When preparing goods, the seller should pay much attention to quality, specification, quantity, packing, inspection 1 etc. No matter the quality is higher or lower than the stipulation of contract, it is regarded as breach of contract. 1 Refer to chapter 4. Procedures in exporting- 1. Prepare Goods import and export procedure213.2.2 Urge, Examine and Modify L/C 催证、审证、改证催证、审证、改证In international trade, it is usually the buyer who is under the obligation to establish a letter of credit with his bank within limited time stipulated in the contract. Once L/C doesnt reach the seller on agreed time, the seller may urge the buyer to ascertain the matter. All letters of credit shall be examined by the sellers bank and the seller himself. If there are any discrepancies, the seller may point out them by sending advice and ask the buyer for modification. The sales contract is the legal document which binds upon both the buyer and the seller, while the L/C is the document which binds upon the opening bank and the beneficiary. Procedures in exporting- 2. Urge, Examine and Modify L/C import and export procedure223.2.3 Arrange for Shipment 安排装运安排装运After receiving relevant L/C, the seller should entrust the ships agents (freight forwarder) or shipping company for booking shipping spaces and prepare for the shipment in accordance with the buyers shipping instruction. Chartering is required for goods of large quantity which needs full shipload. For goods in small quantities, space booking and liners are good choices.Procedures in exporting- 3. Arrange for Shipment import and export procedure233.2.4 Book Shipping Spaces 订舱订舱In international trade practice, the exporter often book shipping spaces through his freight forwarder instead of doing it by himself which becomes a common practice. Some big shipping companies do not deal business with individual exporters. The freight forwarder looks through information of shipping including route, schedule, carrier, name of port of call, name and nationality of vessel, etc. Once the freight forwarder chooses the right vessel and carrier, he will book shipping spaces with the carrier by submitting booking note. Procedures in exporting- 4. Book Shipping Spaces import and export procedure243.2.5 订舱确认订舱确认The carrier confirms the shipping arrangement, stamps on the shipping order (S/O) and returns it to the freight forwarder. Thus the shipping contract between the carrier and freight forwarder becomes effective.Procedures in exporting- 5. Confirm Booking Spaces import and export procedure253.2.6 Effect Insurance 投保投保Under CIF term, the seller should cover insurance for goods with the insurer before goods are leaving warehouse or other storage places. The seller should fill in an application for foreign transportation insurance. The insurer then issues an insurance certificate or insurance policy to the insurant (insured) as per instructions in the application. Procedures in exporting- 6. Effect Insurance import and export procedure263.2.7 Take Delivery of Goods 发货发货The freight forwarder now takes delivery of goods from the warehouse or factory to dock warehouse or container yard for shipment. Procedures in exporting- 7. Take Delivery of Goods import and export procedure273.2.8 Make Declaration to the Customs 海关申报海关申报Before shipment, the seller should fill the customs declaration for export and submit it to the customs together with the shipping order, copy of the contract, copy of the L/C and other required documents such as commercial invoice, packing list, inspection certificate, export license, verification and writing instrument of foreign exchange receipts on export, etc. Procedures in exporting- 8. Make Declaration to the Customs import and export procedure283.2.9 Release Goods by Customs 海关放行海关放行After goods being examined by customs, the customs shall sign and seal on the shipping order if the goods are in conformity with the L/C and other legal documents. Thus the goods can be loaded on board the vessel. Meanwhile, the customs will also stamp with “proof seal” on the verifying and writing-off instruments, with which the seller applies for verification at the State Administration of Foreign Exchange (SAFE). Procedures in exporting- 9. Release Goods by Customs import and export procedure293.2.10 Load Goods on Board the Vessel 货物装船货物装船On CIF and container liner transport basis, the seller or freight forwarder will arrange the sealed containers on designated yard before arrival of the vessel and make preparation for shipment. After goods being on board the vessel, the master or mate of the vessel will issue the mates receipt which indicates that the shipment has been received in good condition. This is a temporary receipt which must be exchanged for a regular bill of lading before the vessel sails. The mates receipt is a temporary title of ownership to the cargo given to the seller. The seller surrenders it to the agent who in turn issues the bill of lading. Procedures in exporting- 10. Load Goods on Board the Vessel import and export procedure303.2.11 Send Shipping Advice 发装船通知发装船通知After the shipment, the seller shall immediately send out the shipping advice to the buyer by telecommunication according to the stipulation of the L/C. Under CFR trade term, the seller must send out the shipping advice in time so that the buyer may take out insurance on time, otherwise, once suffering losses during the transport, the seller shall be responsible from them. See appendix: shipping advice. Procedures in exporting- 11. Send Shipping Advice import and export procedure313.2.12 Make Documents for Settlement 制单结汇制单结汇After shipment, according to the stipulation of the L/C, the seller shall draw up or prepare all kinds of documents required and present them to the bank for negotiation and settlement within the agreed time in L/C. All document must correspond with the stipulations of L/C to assure collecting payment from bank. When making documents, in order to get payment, all the documents should be correct, complete, prompt, concise and clear. Procedures in exporting- 12. Make Documents for Settlement import and export procedure323.2.13 Submit Documents for Negotiation 交单议付交单议付Presentation of documents means the seller assembles all required documents to a designated bank within the stipulated presenting time in the credit. The bank will make payment by documents if it carefully examines the full set of documents. In China, the commonly used credit is negotiating credit. The negotiating bank purchases the drafts and documents under a complying presentation by advancing or agreeing to advance funds to the beneficiary. After negotiation, the negotiating bank reimburses from the opening bank or reimbursing bank. Procedures in exporting- 13. Submit Documents for Negotiation import and export procedure333.2.14 Collect Verification and Writing-off Export Proceeds in Foreign Exchange 核销收汇核销收汇Since foreign exchange restrictions on current account transactions were lifted in 1996, cases of fraud of foreign exchange have increased significantly. To address such problems, the State Administration of Foreign Exchange (SAFE) has taken enforcement actions. To enforce the surrender of export proceeds, SAFE and its local branches undertake to verify collection of export earnings. When exporting goods abroad, domestic sellers are required to undergo the verification procedures. The customs offices shall accept and handle declaration for export based on verifying and writing-off instruments within validity period. Only after no mistakes are found in the examination can customs permit clearance.After goods have been shipped out of Chinas territory, the customs shall write their opinion and stamp with “proof seal” on the verifying and writing-off instruments, with which the seller applies for verification at SAFE. The seller must submit the relevant declaration forms, duplicates of drafts, invoice and counterfoils of verifying and writing-off instruments to the local department for foreign exchange control for the verifying and writing-off of export proceeds. The export earning is then surrendered to designated banks or entered the sellers foreign exchange account. Procedures in exporting- 14. Collect Verification and Writing-off Export Proceeds in Foreign Exchange import and export procedure343.2.15 Apply for Tax Refund出口退税出口退税Compared with domestic sales, the export trade of China is different in the aspect that the indirect taxes such as value-added tax and consumption tax should be returned or rebated to the exporter after a conclusion of foreign business to encourage exporting and earning foreign exchange. The seller shall go through the tax refund registration procedures with the local tax authorities in charge of tax refund within 30 days starting from the date of approval by presenting the document of approval for export.When declares the export goods with the customs and enters into accounts as sales, the seller shall fill in “Export Tax Refund (Exemption) Application Form” on the monthly basis and provide related documents to foreign trade departments in charge, which shall submit them to the tax authorities in charge of export tax refund after examination and affixing their seals. State Administration of Taxation (SAT)5 announced that applicants who fail to meet the application deadline of tax refund and exemption on export would be treated as those of domestic sales, unless otherwise specified. Procedures in exporting- 15. Apply for Tax Refundimport and export procedure353.2.16 settle disputes 争端解决争端解决 Only a rare part of business has disputes. They are likely to be caused by various reasons such as more or less quantity, wrong goods delivery, poor packing, inferior quality, discrepancy between the samples and the goods which actually arrived, and delay in shipment. Complaints and claims arise from these. Once disputes arise, it is advised to find out the party to whom the claims are against and evidence of claims within valid time. As to dispute settlement, conciliation is better than arbitration, and arbitration is better than litigation.Procedures in exporting- 16. Settle Disputesimport and export procedure363.3 Main Documents 主要单据主要单据1 Commercial Invoice 商业发票商业发票2 Packing List 包装单包装单3 Certificate of Origin 原产地证书原产地证书4 Inspection Certificate 检验证明检验证明5 Insurance Policy or Certificate 保险单、保险证明保险单、保险证明 6 Bill of Lading 提单提单7 Bill of Exchange (draft) 汇票汇票8 Import and Export License 进出口许可证进出口许可证Main documents in exportingimport and export procedure373.3.1 Commercial Invoice 商业发票商业发票A commercial invoice is the key accounting document describing the commercial transaction made out by the seller in the name of the buyer. All the contents of it should be strictly in accordance of that in the contract and Letter of Credit. The copies of commercial invoice must comply with requirements in L/C. See appendix 2: commercial invoice. Main documents in exporting commercial invoiceimport and export procedure383.3.2 Packing List 包装单包装单A packing list is a document made by the seller listing the kinds of quantities of goods in a particular shipment. It is a more detailed version of the commercial invoice but without price information. Main documents in exporting packing list import and export procedure393.3.3 Certificate of Origin（C/O） 原产地证书原产地证书there are two types of certificates: general certificate of origin and Generalized System of Preference certificate of origin. China Council for the Promotion of International Trade （CCPIT）or the Entry-Exit Inspection and Quarantine Bureau under General Administration of Quality Supervision, Inspection and Quarantine of P.R.C. Generalized System of Preference certificate of origin is required by the customs authorities of many developed nations to prove eligibility of imported goods under duty-free import programs. 补充材料： 1 CCPIT ,Established in May 1952, China Council for the Promotion of International Trade (CCPIT) comprises VIPS, enterprises and organizations representing the economic and trade sectors in China. It is the most important and the largest institution for the promotion of foreign trade in China. http:/www.ccpit.org/. 2 http:/ www.aqsiq.gov.cn/. http:/english.aqsiq.gov.cn/. 3 See appendix 2: certificate of origin. Main documents in exporting certificate of origin （C/O） import and export procedure403.3.4 Inspection Certificate 检验证明检验证明In inspection, the certificate should state exactly the scope of inspection as stated in the letter of credit. It should be signed the inspector of his representative. The date of inspection should be stated prior to or the same as the date of shipment. Main documents in exporting Inspection Certificate import and export procedure413.3.5 Insurance Policy or Certificate 1 保险单、保险单、保险证明保险证明No matter who covers what kind of risk, the insurance document is a necessity in shipping of commodities. One thing must be sure, that is, the insurance must be prompt. 1 Refer to chapter 8. Main documents in exporting Insurance Policy or Certificateimport and export procedure423.3.6 Bill of Lading 提单提单 marine bill of lading is most commonly used.Bill of lading is one of the most important documents needed to get payment because it has three important functions: contract, transport certificate and most importantly, title of goods which means anyone who has the bill of lading owns that batch of goods. Main documents in exporting Bill of Lading import and export procedure433.3.7 Bill of Exchange (draft) 汇票汇票Most bills of exchange are documentary drafts which is used together with letter of credit. Main documents in exporting Bill of Exchange (draft) import and export procedure443.3.8 Import and Export License 进出口许可证进出口许可证This document may be required for most or all exports to some countries or for other countries only under special circumstances. In addition, there are many other different documents required according to the laws and rules of different requirements and countries. Both the seller and the buyer should know specifically the ideal country before conducting business. Main documents in exporting Import and Export License import and export procedure