Below are some commonly asked questions about international trade. For more information, contact Adam Boltik, program manager.
How do I find out which countries are now buying products like mine?
Should I participate in a trade show?
What is a carnet?
How should I respond to a foreign inquiry?
Do I need to know a foreign language to be involved in international trade?
How do I find an agent or distributor?
Should I offer an exclusive distributorship for my products?
Do I need a license to export?
Do I need to adapt my product to different standards for exporting?
Are there quotas on how much I can ship?
Do I need a Certificate of Origin?
How do I protect my patent trademark, or copyright?
What is a Pro Forma invoice? What is a commercial invoice?
Who pays for insurance on shipments?
Does the seller or buyer pay the duty on a shipment?
What is the best way to ship my product? Do I need a freight forwarder?
How will I be paid? Is payment guaranteed?
What is a Letter of Credit?
Is there financial assistance available for support of my international trade?
What do CIF and FOB mean?
How do I find out which countries are now buying products like mine?
Finding potential customers can be a daunting task, however, there are country-specific resources available from many sources such as trade associations, and the U.S. Department of Commerce, which help companies in finding the right markets. The U.S. Department of Commerce’s USA Trade
website is also a valuable tool.
Should I participate in a trade show?
A trade show can gain exposure for products internationally, help locate foreign buyers and provide a firsthand account of how the product will fare in the international target market. Participants will be able to personally assess the competition and meet potential distributors/agents for their product and/or services. To make participation productive, research the trade show ahead of time by reviewing past ones, looking over their attendee list to see that their audience in your target audience.
What is a carnet?
A carnet (pronounced car-nay) is a customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration, or similar purposes without paying duties or submitting the normal customs documents. The United States is a member of the ATA (Admission Temporaire) Carnet System, which enables it to issue a carnet valid for one year, allowing a business traveler's product sample access into countries of fellow signatories to the ATA Convention. For more information, visit
www.uscib.org.
How should I respond to a foreign inquiry?
Always respond to all inquiries from potential buyers in a clear and prompt manner. Standards vary greatly from nation to nation, so do not make the mistake of disregarding correspondence simply because it is not in English, or because it contains grammatical or typing errors, or is on inferior quality stationery. When replying to correspondence, provide information about the company, product information, and information on export policies (do not send any banking information even if requested). When writing, be sensitive to international business practices and cultural differences.
Do I need to know a foreign language to be involved in international trade?
English is considered the language of international business. However, that does not eliminate potential problems in international transactions when communicating with your foreign counterparts. When engaging in foreign correspondence, remember the following:
- Use short and simple sentences.
- Avoid idiomatic expressions and slang.
- Be polite.
- Re-read correspondence objectively to check for potential misunderstandings.
Although it is not necessary to know a foreign language, it is polite to learn how to say ‘thank you’ and ‘pleased to meet you’ in the business partner's language. To avoid verbal miscommunications, summarize the main points often, speak slowly, enunciate, be aware of body language, avoid Informalities, utilize professional titles, and listen closely.
How do I find an agent or distributor?
Agents and/or distributors may be identified through a variety of sources, including trade shows, professional trade organizations, foreign chambers of commerce, industry-specific trade publications, and other organizations. The OIC provides a computerized listing of agents and distributors in the International Trade Data Network and Kompass,in addition to hard copy listings in our library. The U.S. Department of Commerce can provide a customized list of agents and distributors and set up one-on-one meetings in-country.
Should I offer an exclusive distributorship for my products?
An exclusive distributorship can be beneficial and even mandatory in some markets. The necessity of exclusivity will depend upon the product being exported, the customer base, and the country of destination. Before signing an exclusive agreement, conduct a thorough onsite and in-country assessment of the distributor's background and capabilities and considering opting for a mutually agreeable trial period with exclusivity.
Do I need a license to export?
Licenses are required in certain situations involving national security, foreign policy, short supply, nuclear non-proliferation, missile technology, chemical and biological weapons, regional stability, crime control, or terrorist concerns. License requirements are dependent upon an item's technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user.
The Department of Commerce, Bureau of Industry and Security (BIS) is the primary licensing agency for dual use exports (commercial items which could have military applications). Other departments and agencies have regulatory jurisdiction over certain types of exports and reexports. For example, the
State Department licenses the export defense articles and services, while certain nuclear materials and equipment are licensed by the
Nuclear Regulatory Commission. Of those exports and reexports subject to the Export Administration Regulations (EAR), a small percentage require the submission of a license application to the Department of Commerce. License requirements are dependent upon an item's technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user. The following five facts to determine a company’s obligations under the EAR: What is the item to be exported or reexported?
- Where is it going?
- Who will receive it?
- What will they do with it?
- What other activities are they involved in?
The first step in determining license requirements under the EAR is to classify the product by determining its Export Control Classification Number (ECCN) on the Commerce Control List (CCL).
Do I need to adapt my product to different standards for exporting?
Unless marketing to international customers with the same characteristics and demands as domestic customers, a company may be required to adapt its product and marketing methods to comply with different regulations, customs, geographic and climate conditions, buyer preferences, or standards of living. Common considerations include:
- Re-engineering or redesign of your product.
- Packaging.
- Labeling.
- Branding or advertising.
- Ease of product installation.
- Warranty policies.
- Methods of after-sales service, perhaps including local technicians or distributors.
Are there quotas on how much I can ship?
A quota is a restriction on the quantity of goods of a specific kind that a country permits to be imported during a specified time before the imposition of added duties. Both a quota and tariff may be imposed by the importing country for a product or a service. To determine if a tariff will be imposed, contact
Export.gov at 1-800-USA-TRADE.
Do I need a Certificate of Origin?
Certificates of Origin are often required by the importing country and there are different certificates for certain countries. The receiver of a company’s goods will know if a certificate is needed or contact NH OIC for this and other necessary documents needed throughout the world.
How do I protect my patent trademark, or copyright?
First, conduct a copyright/patent search to determine whether a company’s patent or trademark may already be registered. If it is not already being used, investigate registering the copyright/patent/trademark in the foreign country. Requirements for different forms of intellectual property (e.g., copyright, patent, trademark) vary from country to country, as do registering requirements and levels of protection.
What is a Pro Forma invoice? What is a commercial invoice?
A pro forma invoice and a commercial invoice serve different purposes.
A pro forma invoice is provided by the seller prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications including weight and size. It is the document that outlines the terms of sale. It can be used by the importer to reserve foreign exchange, apply for a letter of credit, or to obtain pre-import clearance.
A commercial invoice is a complete record of the business transaction (itemized list of goods shipped) between the exporter and the importer. It is issued usually at the time of shipment.
Who pays for insurance on shipments?
Traditionally, the buyer pays for insurance on shipments. However, the seller may take responsibility to arrange for the purchase of insurance and bill it back to the buyer or importer by itemizing the cost separately. This is another responsibility defined by Incoterms.
Does the seller or buyer pay the duty on a shipment?
In most export shipments, the importer pays the duty on a shipment. In certain circumstances, the exporter may arrange with the customs broker to pay the duty. This is another responsibility defined by Incoterms.
What is the best way to ship my product? Do I need a freight forwarder?
As a rule, freight forwarders are needed to export products. Freight forwarders are among the best sources of information and assistance on U.S. export regulations and documentation, shipping methods, and foreign import regulations. Develop a relationship with a good freight forwarder who can advise on packing, proper documentation, when to use air or sea, and who to contact to make the necessary arrangements to move the product.
How will I be paid? Is payment guaranteed?
- Payment can be made in a variety of ways:
- Cash in advance.
- Letter of credit.
- Some form of documentary collection.
- Open account/credit terms for your foreign customer.
If not paid cash in advance, sellers need to learn from a trade finance professional what risk mitigation tools fit the situation. It is recommended that sellers invoice and request payment in U.S. dollars, rather than in foreign currency to protect from exchange rate fluctuations and obtain export credit insurance, protecting against both the political and commercial risk of default by the foreign buyer.
What is a Letter of Credit?
A Letter of Credit (L/C) is a document issued by a bank on behalf of the buyer to a seller in which the bank substitutes its own credit for that of the buyer. The bank assures payment to the seller upon fulfillment of the documentary conditions specified. A Letter of Credit is an internationally recognized instrument.
Is there financial assistance available for support of my international trade?
Financial assistance programs are available either through the Export-Import Bank of the United States or the Small Business Administration. Contact the OIC for an assessment.
What do CIF and FOB mean?
These are two of the internationally accepted commercial terms known as International Commercial Terms or incoterms used in international transactions. The terms specify and define the obligations for the buyer and seller, respectively, for delivering goods in international contracts. It is important to understand the meanings of the various incoterms when quoting and in subsequent transactions.
CIF stands for Cost, Insurance and Freight - Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port.
FOB stands for Free On Board - Risk passes to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller.
Download a PDF of other international trade acronyms.