Chapter - 4

Conduct Trade



There are many documents involved in international trade, such
as commercial documents, financial documents, transport
documents, insurance documents and other international trade
related documents. In processing the export consignment,
documentation may be executed in up to four contracts: the export
sales contract, the contract of carriage, the contract of finance and
the contract of cargo insurance. It is therefore important to
understand the role of each document and their requirements in the
international trade.

A. Commercial Documents

Document Functions Prepared
by
Quotation An offer to sell goods and should state
clearly the price, details of quality,
quantity, trade terms, delivery terms, and
payment terms.
Exporter
Sales
Contract
An agreement between the buyer and
the seller stipulating every details of the
transaction. It is a legally binding
document. It is therefore advisable to
seek legal advice before signing the
contract.
Exporter
and
Importer
Proforma
Invoice
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
importation specifications (weight, size
and similar characteristics). This is not
issued for demanding payment but may
be used when applying for an import
license/permit or arranging foreign
currency or other funding purposes.
Exporter

Commercial
Invoice
It is a formal demand note for payment
issued by the exporter to the importer for
goods sold under a sales contract. It
should give details of the goods sold,
payment terms and trade terms. It is also
used for the customs clearance of goods
and sometimes for foreign exchange
purpose by the importer.
Exporter
Packing List A list with detailed packing information of
the goods shipped.
Exporter
Inspection
Certificate
A report issued by an independent
surveyor (inspection company) or the
exporter on the specifications of the
shipment, including quality, quantity,
and/or price, etc; required by certain
buyer and countries.
Inspection
Company or
Exporter
Insurance
Policy/
Certificate
An insurance policy is an insurance
document evidencing insurance has
been taken out on the goods shipped,
and it gives full details of the insurance
coverage. An insurance certificate
certifies that the shipment has been
insured under a given open policy and is
to cover loss of or damage to the cargo
while in transit.
Insurer or
Insurance
Agent or
Insurance
Broker
Product
Testing
Certificate
A certificate to certify the products are
conformed to a certain
international/national technical standard,
such as product quality, safety and
specifications, etc.
Accredited
Laboratories
Health
Certificate
Document issued by the competent
country when agricultural or food
products are being exported, to certify
that they comply with the relevant
legislation in the exporter's country and
were in good condition at time of
inspection, prior to shipment and fit for
human consumption.
Exporter /
Inspection
Authority
B. Transport Documents

Document Functions Prepared
by
Shipping
Order S/O
A document to give details of the cargo
and the shipper's requirements. It is the
basic document for preparing other
transport documents such as bill of
lading, air waybill, etc.
Shipper /
Transport
Companies
Dock
Receipt D/R
or Mate's
Receipt
A receipt to confirm the receipt of cargo
on quay/warehouse pending shipment.
The dock receipt is used as
documentation to prepare a bill of lading.
It has no legal role regarding processing
financial settlement.
Shipping
Company
Bills of
Lading ( B/L)
An evidence of contract between the
shipper of the goods and the carrier. The
customer usually needs the original as
proof of ownership to take possession of
the goods. There are two types: a
STRAIGHT bill of lading is non-
negotiable and a negotiable or shipper's
ORDER bill of lading (also a title
document) which can be bought, sold or
traded while goods are in transit and is
used for many types of financing
transactions.
Shipping
Company
House Bill of
Lading
(Group age)
A bill of lading issued by a forwarder and,
in many cases, not a title document.
Shippers choosing to use a house bill of
lading should clarify with the bank
whether it is acceptable for letter of credit
purpose before the credit is opened.
Advantages include less packing, lower
insurance premiums, quicker transit, less
risk of damage and lower rates than
cargo as an individual parcel /
consignment.
Forwarder

Sea Waybill A receipt for cargo which incorporates
the contract of carriage between the
shipper and the carrier but is non-
negotiable and is therefore not a title
document.
Shipping
Company
Airway Bill
(AWB)
A kind of waybill used for the carriage of
goods by air. This serves as a receipt of
goods for delivery and states the
condition of carriage but is not a title
document or transferable/negotiable
instrument.
Airline
House Air
Waybill
(HAWB)
An air consignment note issued by an air
freight agent to provide the cargo
description and records. Again, it is not a
title document.
Forwarding
Agent
Shipping
Guarantee
Usually a pre-printed form provided by a
shipping company or the bank, given by
an importer's bank to the shipping
company to replace the original transport
document. The consignee may then in
advance take delivery of goods against a
shipping guarantee without producing the
original bill of lading. The consignee and
the importer bank will be responsible for
any loss or charges occurred to the
shipping company if fault is found in the
collection. It is usually used with full
margin or trust receipt to protect the
bank's control to the goods.
Importer's
Bank /
Shipping
Company /
Consignee
Packing List
(sometimes
as packing
note)
A list providing information needed for
transportation purpose, such as details of
invoice, buyer, consignee, country of
origin, vessel/flight date, port/airport of
loading, port/airport of discharge, place
of delivery, shipping marks / container
number, weight / volume of merchandise
and the fullest details of the goods,
including packing information.
Shipper
C. Financial Documents

Document Functions Prepared
by
Documentary
Credit D/C
A bank instrument began (issuing or
opening bank), at the request of the
buyer, evidencing the bank's undertaking
to the seller to pay a certain sum of
money provided that specific
requirements set out in the D/C are
satisfied.
The Issuing
Bank upon
an
application
made by the
Importer
Standby
Credit
An arrangement between customer and
his bank by which the customer may
enjoy the convenience of cashing
cheques, up to a value. Or a credit set
up between the exporter and the
importer guaranteeing the exporter will
pay the importer a certain amount of
money if the contract is not fulfilled. It is
also known as performance bond. This is
usually found in large transactions, such
as crude oil, fertilizers, fishmeal, sugar,
urea, etc.
Exporter /
Issuing
Bank
Collection
Instruction
An instruction given by an exporter to its
banker, which empowers the bank to
collect the payment subject to the
contract terms on behalf of the exporter.
Exporter
Bill of
Exchange
(B/E) or Draft
An unconditional written order, in which
the importer addressed to and required
by the exporter to pay on demand or at a
future date a certain amount of money to
the order of a person or bearer.
Exporter
Trust Receipt
(T/R)
A document to release a merchandise by
a bank to a buyer (the bank still retains
title to the merchandise), the buyer, who
obtains the goods for processing is
obligated to maintain the goods distinct
from the remainder of his/her assets and
Importer


to hold them ready for repossession by
the bank.

Promissory
Note
A financial instrument that is negotiable
evidencing the obligations of the foreign
buyer to pay to the bearer.
Importer

D. Government Documents

Document Functions Prepared by
Certificate
of Origin
(CO)
A certificate to certify the place of
manufacture, the nature/quantity/value of
the goods.
Trade and
Industry
Department
and five
Chambers of
Commerce
Certificate
of Origin
Generalized
Systems of
Preferences
(GSP) Form
A

(or as Form
A)
A C.O. to support the claim for
preferential tariff entry (a reduced or zero
rate) of the exporting country's products
into the GSP donors under the GSP they
operate. In general, a Form A is issued
only when the goods concerned have
met both the origin rules of the
preference receiving country as well as
the origin criteria of the respective donor
country's GSP. Hong Kong is now a
beneficiary under the GSP schemes
operated by Canada and Norway, while
China is beneficiary to countries like
Australia, Canada, Czech Republic,
European Union, Japan, Poland, Russia,
and Slovakia.
See Above
Import /
Export
Declaration
A statement made to the Director of
Customs at port of entry/exit, declaring
full particulars of the shipment, e.g. The
nature and the destination/exporting
country of the ship's cargo. Its primary
use is for compiling trade statistics.
Exporter/
Importer
Import / A document issued by a relevant Trade and

Export
License
government department authorizing the
imports and exports of certain controlled
goods.
Industry
Department,
Customs &
Excise
Department,
etc
International
Import
Certificate
(IIC)
A statement issued by the government of
country of destination, certifying the
imported strategic goods will be disposed
of in the designated country. In Hong
Kong, it is issued only to meet an
exporting country's requirement.
Trade and
Industry
Department
Delivery
Verification
Certificate
(DVC)
A statement issued by the government of
country of destination, certifying a
specific strategic commodity has been
arrived in the designated country. In
Hong Kong, it is issued only to meet an
exporting country's requirement.
Trade and
Industry
Department
Landing
Certificate
A document issued by the government of
country of destination, certifying a
specific commodity has been arrived in
the designated country. In Hong Kong, it
is issued by the Census and Statistics
Department. Application requirements
include letter stating the reason for the
application, import declaration & receipt;
bill of lading, sea waybill & land manifest;
supplier's invoice; and packing list (if
any).
Census and
Statistics
Department

Exporting Small Commercial Shipments

An overview of the regulations regarding small shipments to the
U.S. Covers formal vs. informal entry, non-controlled and non-
regulated shipments, and requirements for reporting, certificate of
origin, labeling and marking, packaging, etc.

The Criteria of Granting Exemption from Payment of Customs
Duty
The basic requirements for the importation of such effects to be
granted exemption from the payment of Customs duties and taxes
must be that such personal or professional effects are imported in
reasonable quantities, except motor vehicles, firearms and
ammunition and provisions, and that such used household effects are
accompanying the importer changing domicile and must be in
reasonable amounts.

The said items must be imported not earlier than one month
before or not later than six months after the arrival of the importer.

Documentation

For the clearance of goods the importer is required to prepare
the following documents:

1. Identity card
2. Passport (In case of personal effects and/or used household
effects)
3. Bill of lading
4. Delivery order
5. Invoice or Proforma invoice (if any)
6. In the case where the importer is unable to show up, a letter of
authorization is required for the agent.
7. In the case of foreigners changing domicile to Thailand either of
the following documents is required: Non-immigrant quota as
shown on the passport or resident book, or Proof of entrance
into Thailand as an expert, specialist or consultant to any
government agency in the form of a letter certifying that such a
person has received a non-immigrant visa issued by the
Immigration Bureau to work and reside in Thailand for at least 1
year, or
8. If the importer is a Thai, he must be a person, Thai Government
official who working abroad or a student studying abroad not
less than 1 year. Provided that these people have to return to
Thailand before a one year period. They must have certain
evidence to prove that such return is due to either the
termination of contract, reshuffle of posts, or graduate in his
relevant study.
Bill of Entry

A Bill of Entry also known as Shipment Bill is a statement of the
nature and value of goods to be imported or exported, prepared by
the shipper and presented to a customhouse. The importer clearing
the goods for domestic consumption has to file bill of entry in four
copies; original and duplicate are meant for customs, third copy for
the importer and the fourth copy is meant for the bank for making
remittances.

If the goods are cleared through the EDI system, no formal Bill
of Entry is filed as it is generated in the computer system, but the
importer is required to file a cargo declaration having prescribed
particulars required for processing of the entry for customs clearance.

In the non-EDI system along with the bill of entry filed by the
importer or his representative the following documents are also
generally required:-

Signed Invoice
Packing List
Bill of Lading or Delivery Order/Airway Bill GATT declaration
form duly filled in

Payment of Duty

Import duty may be paid in the designated banks or through
TR-6 challans.

Different Custom Houses have authorized different banks for
payment of duty and is necessary to check the name of the bank and
the branch before depositing the duty.

Prior Entry for Shipping Bill or Bill of Entry

For faster clearance of the goods, provision has been made in
section 46 of the Act, to allow filing of bill of entry prior to arrival of
goods. This bill of entry is valid if vessel/aircraft carrying the goods
arrive within 30 days from the date of presentation of bill of entry.