Frequently Asked Questions about Exporting from the U.S.

GENERAL EXPORT INFORMATION

How do I start an export business?

Any legitimately organized business can export. However, the ins and outs of exporting are sometimes confusing. If you are considering exporting for the first time, you should enroll in a basic international trade course, offered by the local community colleges or international organizations. While opening a business is not difficult, understanding the export process and its rules may be more complicated. In most cities, a firm is required to have an occupational license in order to do business. You should check with your local county or city government to ascertain how to apply for an occupational license. In addition, you may want to check with an attorney and an accountant for the legal ramifications of starting a business in the U.S. which will ultimately do exports.

How do I find out about duties and taxes for exporting to certain countries?
The Department of Commerce Trade Information Center can assist you with obtaining this information. The Center can be reached on 1-800-USA-Trade (872-8723) or visit: http://www.ita.doc.gov/TICFrameset.html

What does Value for Customs Purposes Only mean?

The U.S. Customs Service defines "value for Customs purposes only" as the value submitted on the entry documentation by the importer which may or may not reflect information from the manufacturer but in no way reflects Customs appraisement of the merchandise.

What does the term "maquiladora" mean?

The maquiladora program allows foreign manufacturers to ship components into Mexico duty free for assembly and subsequent re-export. The word "maquiladora" comes from the word maquilar, which means "to submit something to the action of a machine." The word is also applied to the production facility that processes or assembles components into finished products. A maquiladora assembly or manufacturing operation can be partly or entirely owned and managed by non-Mexicans. A maquiladora uses competitively priced Mexican labor to assemble, process or perform manufacturing operations. Maquiladoras temporarily import component parts from the U.S. or other countries and then exports the product, either directly, or indirectly, by selling them to a another maquiladora or exporter.  In addition, Mexican law allows operations to bring in most capital equipment and machinery from abroad. The maquiladoras were created in 1965 by the Border Industrialization Program (BIP). This program allowed U.S. companies to assemble their products in Mexico. Later, companies from other countries began to establish maquiladora plants along the northern border of Mexico. With the implementation of the North American Free Trade Agreement (NAFTA) in 1994, maquiladora plants have taken on increased importance. The maquiladoras have since increased their exports, total production value, and the size of their work force. There are currently about 2,150 maquiladoras producing a wide array of products. Most maquiladoras are located around the Mexican border, however, it is possible for them to locate anywhere in Mexico. For more information send an E-mail to AskStella@AskTrade.com

What are Matchmaker Events?

Matchmaker trade delegations are organized and led by the International Trade Administration to help new-to-export and new-to-market firms meet prescreened prospects who are interested in their products or services in overseas markets. Matchmaker delegations usually target two major country markets and limit trips to a week or less. This approach is designed to permit U.S. firms to interview a maximum number of prospective overseas business partners with a minimum of time away from their home office. The program includes U.S. embassy support, briefings on market requirements and business practices, and interpreter services. Matchmaker events, based on specific product themes and end-users, are scheduled for a limited number of countries each year.. For more information visit: www.usatrade.gov

What is NAFTA and what does it do for the U.S. Exporter?

The North American Free Trade Agreement, NAFTA, which entered into force in January 1994, is a free trade agreement comprising Canada, the United States and Mexico. NAFTA exceeds 360 million consumers and a combined output of $6 trillion, approximately 20 percent larger than the European Community. NAFTA's consumer population is slightly smaller than the European Economic Area which has over 380 million consumers. The Agreement provides the following:

ü Progressively eliminates almost all U.S.-Mexico tariffs over a 10-year period, with a small number of tariffs for trade-sensitive industries phased out over a 15-year period. Mexico-Canada tariffs are also phased out over a 10-year period. Tariff reduction schedules between the United States and Canada negotiated in the Canadian Free Trade Agreement are retained.

ü Eliminates other barriers to trade such as import licensing requirements and Customs user fees.

ü Establishes the principle of national treatment, for ensuring that NAFTA-origin products trade between NAFTA countries will receive treatment equal to similar domestic products.

ü Guarantees service providers of the three countries equal treatment in the NAFTA area, including the right to invest and the right to sell services across borders.

ü Establishes five basic principles to protect foreign investors and their investment in the free trade area: (a) nondiscriminatory treatment, (b) freedom from performance requirements, (c) free transference of funds related to an investment, (d) expropriation only in conformity with international law, and (e) the right to seek international arbitration for a violation of the agreement's protections.

The Agreement contains special provisions for sensitive economic sectors, including agriculture, automotive products, energy, and textiles and apparel. The Agreement also created a Border Environment Cooperation Commission and a North American Development Bank. For more information visit: www.nafta-customs.org/

What is the difference between a Trade Fair and a Trade Show?

A trade fair is a stage-setting event in which firms of several nationalities present their products or services to prospective customers in a pre-formatted setting (usually a booth of a certain size which is located adjacent to other potential suppliers). A distinguishing factor between trade fairs and trade shows is size. A trade fair is generally viewed as having a larger number of participants than other trade events, or as an event bringing together related industries.

What is a Trade Mission?

Generically, a trade mission is composed of individuals who are taken as a group to meet with prospective customers overseas. Missions visit specific individuals or places with no specific stage setting other than appointments. Appointments are made with government and/or commercial customers, or with individuals who may be a stepping stone to customers.

EXPORT LICENSING

Do I need a license to export?

You might, depending on the product. You need to be in compliance with the Export Administration Regulations (EAR) as it requires that all merchandise exported from the U.S. display the type of license required according to the product. For most exporters selling general merchandise and services, the No License Required (NLR) symbol may be used when the value of the export shipment exceeds $2500. This license must be displayed in the Shipper’s Export Declaration (SED) document required for exports. Certain products are restricted for export if they are classified by Commodity Control List (CCL), and these require a Validated Export License. A listing of these products and the type of licenses required may be found at the U.S. Dept. of Commerce. It is highly recommended that prior to choosing a product for export you check with this organization. For more information visit: www.bxa.doc.gov/factsheets/ExporterAssistance.html

What is a Validated Export License?

A document issued by the U.S. government authorizing the export of commodities for which written export authorization is required by law. Two types exist: an Individual Validated License (IVL) and a Special License. (See Commerce Control List (CCL) below)

What is a Commodity Classification, when do I need one, and how do I get one?

All commodities, technology or software subject to the licensing authority of BXA are included in the Commerce Control List (CCL) which is found in Supplement 1 to Part 774 of the Export Administration Regulations. On the CCL, individual items are identified by an Export Control Classification Number (ECCN). To determine licensing requirements, you must first classify your item against the CCL. To classify your product, you should begin with a review of the general characteristics of your item. This will usually guide you to the appropriate category on the CCL. Once the appropriate category is identified, you should match the particular characteristics and functions of your item to a specific ECCN. You can also request an official commodity classification from BXA. A commodity classification request requires the submission of an application and technical specifications of your commodity, software or technology to BXA. To submit a classification request use Form BXA-748P or via the internet using the Simplified Network Application Process (SNAP). 

Do I need a license to export to Puerto Rico?
No. A shipment to Puerto Rico is not defined as an export or re-export under the Export Administration Regulations (EAR), so no license is required (NLR). However, the exporter is required to fill out a Shipper's Export Declaration (SED) issued by the Bureau of the Census. If the shipment is going through Puerto Rico and the final destination is a foreign country, the exporter must follow the required procedures for obtaining an Export Control Classification Number (ECCN) in order to ascertain whether a license is required for the shipment. The same rules apply for shipments to the Commonwealth of the Northern Mariana Islands or any territory, dependency, or possession of the United States. See: EAR section 734.2(b)(8).

What is a Re-export?

For export control purposes: It is the shipment of U.S. origin products from one foreign destination to another. For statistical reporting purposes: They are exports of foreign-origin merchandise which have previously entered the United States for consumption or into Customs bonded warehouses for U.S. Foreign Trade Zones.

What is a Pre-license Check for an Export License?

Pre-License Checks are conducted by the Bureau of Export Administration (BXA) to determine that dual-use items on an export license application are destined for a legitimate end-use by a reliable end-user. Firms or individuals representing the licensee (the applicant), the consignee, the purchaser, the intermediate consignee, or the end user may be subject to inquiries pertaining to the pre-license check. As part of the process, BXA forwards a cable to the U.S. embassy or consulate in the respective geographical location to conduct an inspection or meet with company representatives to conduct inquiries on BXA's behalf. For more information visit: www.bxa.doc.gov

EXPORT DOCUMENTATION

What is a Shipper's Export Declaration?

The SED includes complete particulars on individual shipments and is used to control exports and act as a source document for the official U.S. export statistics. SEDs must be prepared for shipments through the U.S. Postal Service when the shipment is valued over $500. SEDs are required for shipments, other than by the U.S. Postal Service, where the value of commodities classified under each individual Schedule B number is over $2,500. SEDs must be prepared, regardless of value, for all shipments requiring a validated export license or destined for countries prohibited by the Export Administration Regulations. SEDs are prepared by the exporter and the exporter's agent and delivered to the exporting carrier (such as: post office, airline, or vessel line). The exporting carrier presents the required number of copies to the U.S. Customs Service at the port of export. The Foreign Trade Statistical Regulations (15 CFR, Part 30) provide the statistical requirements for use by exporters, freight forwarders, and ocean carriers concerning preparation and filing of SEDs. For information on how to fill an SED visit: http://www.census.gov/foreign-trade/correct/corway3.txt

What is an Ocean Bill of Lading and what types are there?

It is a receipt for the cargo and a contract for transportation between a shipper and the ocean carrier. It may also be used as an instrument of ownership which can be bought, sold, or traded while the goods are in transit. To be used in this manner, it must be a negotiable "Order" Bill-of-Lading. There are 3 types:

ü A Clean Bill-of-Lading is issued when the shipment is received in good order. If damaged or a shortage is noted, a clean bill-of-lading will not be issued.

ü An On Board Bill-of-Lading certifies that the cargo has been placed aboard the named vessel and is signed by the master of the vessel or his representative. On letter of credit transactions, an On Board Bill-of-Lading is usually necessary for the shipper to obtain payment from the bank. When all Bills-of-Lading are processed a ship's manifest is prepared by the steamship line. This summarizes all cargo aboard the vessel by port of loading and discharge.

ü An Inland Bill-of-Lading (a waybill on rail or the "pro forma" bill-of-lading in trucking) is used to document the transportation of the goods between the port and the point of origin or destination. It should contain information such as marks, numbers, steamship line, and similar information to match with a dock receipt.

What is a Through Bill of Lading?

It is a single bill of lading covering receipt of the cargo at the point of origin for delivery to the ultimate consignee, using two or more modes of transportation.

What export documents do I need?

Depending on your terms of sale you may need to provide specific documents required by the importer. However for a general export you will need the following documents: a) Commercial Invoice, b) Certificate or Origin – U.S. or NAFTA, c) Packing List, d) Shipper’s Export Declaration, e) Shipper Letter of Instruction (if using a freight forwarder), and f) a transportation document (Bill of Lading, or Air Way Bill). Most of these documents can be prepared by the shipper or freight forwarder.

What is a NAFTA Certificate of Origin and where can I find it?

It is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter’s Certificate of Origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made. You can find Customs Form 434 at any U.S. Customs office or visit: www.customs.gov/nafta/docs/pdf/434.pdf

What is the Schedule B number and where can I get it?

There are millions of trade transactions occurring each year. These transactions are classified under approximately 8,000 different products leaving the United States. Every item that is exported is assigned a unique 10-digit identification code. Every 10-digit item is part of a series of progressively broader product categories. For example, concentrated frozen apple juice is assigned a 10-digit identifier that is aggregated into a broader category assigned a 6-digit identifier described as apple juice. The 6-digit identifier described as apple juice is aggregated into a broader category assigned a 4-digit identifier described as fruit juices and vegetable juices, etc. The 4-digit identifier is further aggregated into a broader category assigned a 2-digit identifier described as Preparations of Vegetables, Fruit, Nuts etc. You can find a list at : http://www.census.gov/foreign-trade/schedules/b/index.html

What's the difference between the Schedule B codes (for exports) and the Harmonized Tariff Schedule (HTS) codes (for imports)?

All of the imports and export codes used by the United States are based on the Harmonized Tariff System (HTS). The HTS assigns 6-digit codes for general categories. Countries which use the HTS are allowed to define commodities at a more detailed level than 6-digits, but all definitions must be within that 6-digit framework. The U.S. defines products using 10-digit HTS codes. Exports codes (which the U.S. calls Schedule B) are administered by the U.S. Census Bureau www.census.gov/foreign-trade/schedules/b/. Import codes are administered by the U.S. International Trade Commission (USITC) www.usitc.gov/taffairs.htm

What is a Pro Forma Invoice?

It is a "preview" of an invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, and similar characteristics).

What is Ultimate Consignee?

The ultimate consignee is the person located abroad who is the true party in interest, receiving the export for the designated end-use.

What is Table of Denial Orders?

It is a list of individuals and firms that have been disbarred from shipping or receiving U.S. goods or technology. Firms and individuals on the list may be disbarred with respect to either controlled commodities or general destination (across-the-board) exports. Denial Orders designated either "standard" or "non-standard" in the column headed "Type of Denial Order ". The March 1996 revision of the Export Administration Regulations (EAR) adopted "standard" text for denial orders. This text was similar to language that BXA had been using previously. All denial orders issued after March 1996 are either "standard" (conforming to the standard language in the EAR) or "non-standard." The EAR say that "...denial orders issued prior to March 25, 1996 shall be construed, in so far as possible, as having the same scope and effect as the standard denial order." [paragraph (a)(1) of Supp. No. 2 of part 764] In this table, all orders, both pre- and post-1996 are listed as either "standard" or "non-standard." If you want to consult the text of a pre-1996 order, go to the Export Administration Regulations Web site maintained by the Government Printing Office where you can find the Federal Register citation of the order itself. For more information visit: www.bxa.doc.gov/DPL/StandardOrders.htm

MARKETING/SELLING OVERSEAS

Is it important to have an export plan?

It is vital to your export business as it can help you communicate your export ideas to others clearly and easily. An international business plan is a written strategy for how you anticipate marketing your products internationally over a period of at least one year to three years, involving costs and revenues. The objective in having an international business plan is to guide management once the decision to export has been accepted.

Should I hire someone abroad to sell my goods?

Experience teaches that having a local representative usually enhances sale possibilities. Indeed, in many nations having a representative is required. Generally transactions with foreign retailers occur only with consumer products. The method relies mainly on traveling sales representatives who directly contact foreign retailers, although results may be accomplished by mailing catalogs, brochures, and other literature. (See agent)

What is defined as Selling, General and Administrative (Expenses)?

The Selling, General and Administrative (expenses) is the sum of: a) General and administrative expenses (such as: salaries of non-sales personnel, rent, heat, and light); b) Direct selling expenses (that is, expenses that can be directly tied to the sale of a specific unit, such as: credit, warranty, and advertising expenses); and c) Indirect selling expenses (that is, expenses which cannot be directly tied to the sale of a specific unit but which are proportionally allocated to all units sold during a certain period, such as: telephone, interest, and postal charges).

What is an agent?

An agent is a representative who normally has authority, perhaps even power of attorney, to make commitments on behalf of the firm he or she represents. Firms in the U.S. and other developed countries have stopped using this term and instead rely on the term representative, since “agent’ can imply more than intended. Any contract should state whether the representative or agent does or does not have legal authority to obligate the firm. Agents or representatives are usually paid on a commission basis. You should seek legal council prior to entering into any agreement for representation overseas. For more information send an E-mail to AskStella@AskTrade.com to request a list of agents.

What is a foreign distributor?

The foreign distributor is a merchant who purchases merchandise from a U.S. exporter (often at substantial discount) and resells it at a profit. The foreign distributor generally provides support and service for the product, relieving the U.S. company of those responsibilities. The distributor usually carries an inventory of products and a sufficient supply of spare parts and maintains adequate facilities and personnel for normal servicing operations. The distributor typically carries a range of noncompetitive, but complementary products. End users do not normally buy from a distributor; they buy from retailers or dealers.

What does Without Reserve mean?

A term indicating that a shipper's agent or representative is empowered to make definitive decisions and adjustments abroad without approval of the group or individual represented.

How do I work out an after-sales service agreement with distributors who sell my product?

Warranting products for after-sales service, and returns, need to be evaluated and decided upon prior to selling a product overseas as the cost of repairing or replacing a product could be quite costly if it has to be brought back to the U.S. as most distributors do not cover these costs. Prior to entering in agreements for sale, caution should be exercised when choosing a distributor or agent. In the negotiations with the local representative or agent you hire, you will want to conclude agreements on after-sales service. These agreements should be written by an attorney who is familiar with the targeted country's laws. For more information send an E-mail to AskStella@AskTrade.com to request a list of legal counsels.

What is the best way to communicate with overseas clients?

Having a local representative who is familiar with the language and local customs to communicate with your buyers is the most efficient way. It is a good idea to periodically visit your major buyers in the country and including your local representative in those meetings to ensure that that the quality of service delivered is what you want.

How can I find background information on overseas clients who contact me?

Background checks and credit reports on international companies are available through a number mercantile credit agencies and other private sector sources. A fee is usually charged for this service. For more information send an E-mail to AskStella@AskTrade.com to request a list of companies.

How can I learn about another country’s cultural practices?

Business executives who hope to profit from their travel should learn about the history, culture and customs of the countries to be visited. Flexibility and cultural adaptation should be the guiding principles for traveling abroad on business. Business manners and methods, religious customs, dietary practices, humor, and acceptable dress vary widely from country to country. Most libraries have books available on other countries, their culture and more. In addition, you may contact the country's consulate office in the U.S. for guidance. While it is unlikely that you can become an expert in another country’s practices without living there for an extended period of time, the important thing is to demonstrate your sensitivity to the fact that people in other societies often have different customs and values than those found in U.S. society.

Do I need to know another language to export?

While it is not necessary to learn another language to export, it is an invaluable tool in ensuring that the chances of miscommunication are reduced. It also tells your overseas buyer that you are serious about developing a commercial relationship that will endure.

Are there any resources that can assist you in finding buyers overseas?

Yes. If you have a product that qualifies as “Made in the U.S.A”, the Department of Commerce has several programs to assist you in exporting the product. They include the Matchmaker Trade Delegations, the Gold Key Matching Service, the International Partner Search and other programs. If you have a product that is foreign made, it may not qualify for these services. For more information visit: www.usatrade.gov

Should the packaging of my product be translated or adapted?

To enter a foreign market successfully, a U.S. company may have to modify its product to conform to government regulations, geographic and climatic conditions, buyer preferences, or standard of living. The company may also need to modify its product to facilitate shipment or to compensate for possible differences in engineering or design standards. Translating the packaging into the local language makes it easier for consumers to understand what you are selling. Certain countries, like Mexico, require bi-lingual description of all products prior to importation.

How should I market my products overseas?

The decision of how you market your products overseas depends on whether you want to sell directly abroad or indirectly. Selling directly means often traveling to the overseas market and overseeing all of the aspects of sales. Selling indirectly means relying on an Export Management Company, an export trade consultant or distributors/agents to market your products abroad. The decision of which method to use is often a function of the way business is conducted in the overseas market, the amount of resources a business can commit to exporting and your personal knowledge of the international trade. The principal advantage of indirect marketing for a smaller U.S. company is that it provides a way to penetrate foreign markets without the complexities and risks of direct exporting. The advantages of direct exporting for a U.S. company include more control over the export process, potentially higher profits, and a closer relationship to the overseas buyer and marketplace. These advantages are available at a price, however; the U.S. company needs to devote more time, personnel, and corporate resources than are needed with indirect exporting.

What is an EMC?

An abbreviation for Export Management Company. An EMC is a private firm that serves as the export department for several manufacturers, soliciting and transacting export business on behalf of its clients in return for a commission, salary, or retainer plus commission. An EMC maintains close contact with its clients and is supply-driven. An EMC may take title to the goods it sells, making a profit on the markup, or it may charge a commission, depending on the type of products being handled, the overseas market, and the manufacturer-client's needs. For more information send an E-mail to AskStella@AskTrade.com to request a list of companies.

Should I advertise in overseas publications?

Whether you advertise in overseas publications depends on how comparable products are marketed. However, the particular marketing strategy you adopt depends on the traditional ways firms market their products in the overseas market. Today, with the use of the Internet, you may display all your products on-line. One of the most popular publications is Export America, a publication by the U.S. Department of Commerce which provides a medium for U.S. companies to advertise overseas. For more information visit: http://www.trade.gov/exportamerica/

How can I test my product in an overseas market?

Test marketing can be expensive overseas. Depending on the recognition of your product (brand name) it may require customized research. Alternative methods may be making an agreement with an agent, attending a trade show, or advertising in the local market. It all depends on your product and your resources committed to exporting.

Do I need a different advertising/marketing approach in each country I sell in?

It is very likely that you will. A marketing approach that may work in one market is unlikely to duplicate that success exactly in another market as all markets are no homogeneous. It is important that you understand each country's custom practices and requirements of importation prior to designing a product for export.

How should I set my price for my exported goods?

There are a number of considerations in establishing your product price. Many firms use a cost-plus method. This starts with the domestic production cost and adds administration, research and development, overhead, freight forwarding, distributor margins, custom charges and profit. However, this may mean that the product is not competitively priced. Therefore, a firm needs to evaluate what comparable products are selling for in that overseas market and strategize accordingly. The best way is to understand your product’s industry, its competition and what price the market overseas will bear. This task may require a trip to the country you are trying to target or to attend a trade show in the targeted country.

What standards do products exported overseas have to meet?

There is no one source to evaluate all of the varying standards that U.S. products would have to meet in each overseas market. The best way of learning what standard your product may have to meet is to discuss the regulations with your potential buyer. For information about foreign standards, you can contact National Institute for Standards and Technology (NIST), Administration Building, A629, Gaithersburg, Maryland 20899, or telephone them at (301) 975-NIST (6478), or for more information visit www.nist.gov.

What does the term New-To-Market mean?

As defined by the International Trade Administration, a reportable new-to-market export action is one that results from documented assistance to an exporter that facilitates a verifiable sale in a new foreign market. Either the company has not exported to that market during the past 24 months or previous exports to that market have resulted from unsolicited orders or were received through a U.S. based intermediary.

What is a Purchasing Agent?

It is an agent who purchases goods in his/her own country on behalf of foreign buyer.

What is an Orderly Marketing Agreement?

It is a bilateral agreement between governments by which one government limits exports to the other. Similar to a voluntary export restriction agreement or a voluntary restraint agreement, used to address injury to a domestic industry. Contracts negotiated between two or more governments, in which the exporting nation undertakes to ensure that international trade in specified "sensitive" products will not disrupt, threaten, or impair competitive industries or workers in importing countries.

EXPORT FINANCING AND INSURANCE

How can I finance my export sales?

There are a variety of financial tools available to the exporter. Most banks with international departments will consider working capital loans, or the government through the U.S. Small Business Administration or other agencies may provide loan guarantees, which make it easier for commercial banks to lend. The Agency for International Development) ) assists U.S. firms to enter into joint ventures with local companies in developing countries. The Agency does not provide direct financial assistance, but acts as a catalyst between less experienced U.S. exporters and governments and entrepreneurs in third world markets. For more information visit www.USAID.gov or www.sba.gov. In Florida, the Florida Export Finance Corporation can also assist you with export financing once you have a confirmed order. For more information visit http://www.dos.state.fl.us/fefc/

What kind of insurance should I have?

Most businesses carry general business liability insurance. However, exporting firms should have Export Cargo Insurance. It protects you and your overseas customer in case of theft, loss, or damage to your shipment. It is recommended to have this type of insurance as the liability of carriers is very limited for international shipments. For more information send an E-mail to AskStella@AskTrade.com to request a list of companies.

Can I get insurance against currency devaluation?

Not really. If you come to terms with your trade partners that you will be compensated in U.S. dollars, you do not need to be concerned about currency devaluation as it usually affects the buyer. However, payment in U.S. dollars may not be acceptable to the potential buyer, and you may lose a lucrative export sale to a more aggressive competitor who is willing to except foreign currency as a payment. (You should know that in certain countries, U.S. dollars are not readily available and the buyer has no alternative but to pay in local currency or another foreign currency). You can do this with a bank once you have established your foreign credit line. The bank will purchase most foreign currencies that you receive from your export sales at a fixed price in U.S. dollars against future delivery.

What is Soft Currency?

The currency of a nation in which exchange may be made only with difficulty. Soft currency countries typically have minimal exchange reserves and deficits in their balance of payments.

What is a Soft Loan?

Commonly, a loan from a government or multilateral development bank with a long repayment period and below-market interest.

What is the World Bank and what does it do?

The World Bank is an integrated group of international institutions which provides financial and technical assistance to developing countries. The World Bank includes the International Bank for Reconstruction and Development and the International Development Association. World Bank affiliates, legally and financially separate, include the International Center for Settlement of Investment Disputes, the International Finance Corporation, and the Multilateral Investment Guarantee Agency. World Bank headquarters are in Washington, D.C. For more information visit: www.worldbank.org

SHIPPING/LOGISTICS

What is a Freight Forwarder?

An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade. Export freight forwarders are licensed by the International Air Transport Association (IATA) to handle air freight and the Federal Maritime Commission to handle ocean freight. Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. The cost for their services is a legitimate export cost that should be included in the price charged to the customer.

What is Cargo Preference?

Cargo preference is the reservation, by law, for transportation on U.S.-flag vessels, of all or a portion of ocean borne cargo, which is sponsored directly or indirectly by the Federal Government.

Where do I get information on cargo preference laws and issues?

The Maritime Administration (MARAD) and advises and assists the Secretary of Transportation on commercial maritime matters, the U.S. maritime industry, and strategic sealift. The Maritime Administrator also maintains liaison with public and private organizations concerned with the U.S. maritime industry. MARAD's Office of National Cargo and Compliance can supply information on cargo preference. Call (202) 366-4610 to obtain information on civilian cargoes, military cargoes and agricultural cargoes falling under cargo preference laws. For more information visit: www.marad.dot.gov

Who can tell me if a commodity that I am shipping is a hazardous material and possibly subject to certain restrictions or regulations?

Contact the Office of Hazardous Materials Safety at 1-800-467-4922 Monday through Friday from 9:00 am to 5:00 pm (EST) or visit the information center at http://hazmat.dot.gov/infocent.htm

What is Ocean Freight Differential?

It is the amount by which the cost of the ocean freight bill for the portion of commodities required to be carried on U.S. flag vessels exceeds the cost of carrying the same amount on foreign flag vessels. When applied to agricultural commodities shipped under Food for Peace, OFD is the amount paid by the Commodity Credit Corporation.

What is a Post-Shipment Verification?

Post-shipment Verifications are conducted to determine that a commodity is being used for the purposes for which its export was licensed. Firms or individuals representing the end user, intermediate consignees, or the purchaser may be subject to inquiries pertaining to the post-shipment verification. As part of the PSV process, the Bureau of Export Administration (BXA) forwards a cable to the U.S. embassy or consulate in the respective geographical location to conduct an on-site inspection to ensure that the commodity is physically present and used as stated in the application. Post-shipment verifications are usually conducted six-to-eight months subsequent to export of the commodity.

What is a Trans-shipment?

Transshipment refers to the act of sending an exported product through an intermediate country before routing it to the country intended to be its final destination. It is also known as pass-through.

What is an RMA?

An abbreviation for Return Merchandise Authorization. It is an authorization number or reference given by the supplier or seller to the buyer to return merchandize previously purchased which may be returned for repair, exchange or to stock. It is also known as Merchandize Authorization.

What is a Ship's Manifest?

It is a list, signed by the captain of a ship, of the individual shipments constituting the ship's cargo.

What is considered as Shipping Weight?

Shipping weight represents the gross weight in kilograms of shipments, including the weight of moisture content, wrappings, crates, boxes, and containers (other than cargo vans and similar substantial outer containers).

What does the term With Average mean?

A marine insurance term meaning that a shipment is protected from partial damage whenever the damage exceeds 3 percent (or some other percentage). If the ship is involved in a major catastrophe, such as a collision, fire or stranding, the minimum percentage requirement is waived and the insurance company pays for all of the damage.

What is Wharfage?

A charge assessed by a pier or dock owner for handling incoming or outgoing cargo.

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