How to talk to companies about

exportingCommon examples in small business

Dean Stewart◦ Dean of Corporate Training and Economic

Development – NWTC

Common challenges faced by small Wisconsin businesses ◦ Fred Monique

Introduction

North American Free Trade Agreement (NAFTA) Certificate of Origin◦ Majority of questions◦ Canada

Challenge 1

Homeland Security (HS) Tariff Classification◦ The procedure of classifying goods for import or export◦ Organized in chapters: 1 – 97; 98 and 99 in US◦ Need to use the importing countries classification code

Schedule B numbers US Census Bureau www.census.gov The same as HS tariff classification up to the first 6 digits Use schedule B numbers to approximate

Canadian Customs Classification◦ Similar to US classification◦ www.statcan.gc.ca/trade-commerce/cec/index-eng.htm

Challenge 1

Schedule B:

48Paper and paperboard and articles (includes paper pulp articles)

4801.00.00.02 Newsprint, in rolls or sheets.

CCC:

48Paper and paperboard; articles of paper pulp, of paper or of paperboard

4801.00 Newsprint, in rolls or sheets.

Company◦ Foundry located in NE Wisconsin (Green and Gold Inc

GGI) manufactures metal casting components for HVAC systems

◦ Two scenarios:1. GGI has started to sell and ship products to a company

located in New York (Acme). Acme uses the components in the assembly of their finished products, which are then exported into the Canadian marketplace

2. GGI ships replacement parts for service work directly to a Acme customer in Canada

◦ In each case, ACME is asking GGI to complete a NAFTA Certificate of Origin

Challenge 1

Scenarios1. Component to New York2. Service part to Canada

Questions◦ Is ACME correct in asking GGI to fill out the

Certificate of Origin in each scenario?◦ Why?◦ If not GGI, what party should be responsible for

filling out the Certificate of Origin?◦ Why?

Challenge 1

Scenarios1. Component to New York

Answer: Acme is responsible for filling out the paperwork for two

reasons. Although the final destination of the finished product is

Canada, the components’ final destination is New York. In addition, the CCC code is different for a metal casting than

it is for a finished HVAC system. (Chapter 72 vs Chapter 85)

2. Service part to Canada Answer:

Since the part is being shipped directly to Canada, GGI is responsible for completing the certificate with the appropriate Canadian Customs Classification.

Challenge 1

INCOTERMS (international commercial terms)◦ 1936 – International Chamber of Commerce◦ Uniform way of interpreting the terms of trade

Tasks, costs and risks◦ Intended to reduce or remove uncertainties

arising from the interpretation of rules from country to country.

◦ Integral part of any international sales contract◦ Assumes layers of risk and obligation to both

buyer and seller.◦ 3 letter code

Challenge 2

Any mode of transport◦ EXW (Ex works)

Buyer pays all transport costs from sellers factory◦ FCA (Free carrier)

Seller pays to deliver goods to a carrier nominated by buyer◦ CPT (Carriage paid to)

Seller pays to deliver goods to an overseas airport◦ CIP (Carriage and Insurance paid to)

Seller pays to deliver goods to an overseas airport and pays insurance

◦ DAT (Delivered at terminal) Seller pays to deliver goods to an overseas airport except for costs

associated with import clearance◦ DAP (Delivered at place)

Seller pays to deliver goods to buyers plant excluding duties◦ DDP (Delivered duty paid)

Seller pays to deliver goods to buyers plant excluding duties

Challenge 2

Sea and inland waterway transport◦ FAS (Free along ship)

Seller is responsible for placing the goods alongside the ship at named port and for their clearance.

◦ FOB (Free on board) Seller pays to deliver goods on an ocean vessel

◦ CFR (Cost and Freight) Seller pays to deliver goods to an overseas port

◦ CIF (Cost, Freight and Insurance) Seller pays to deliver goods to an overseas port and

pays insurance

Challenge 2

Incoterm Export-

Customs declaration

Carriage to port of export

Unloading of truck in

port of export

Loading charges in

port of export

Carriage (Sea

Freight/Air Freight) to

port of import

Unloading charges in

port of import

Loading on truck in port of import

Carriage to place of

destinationInsurance

Import customs

clearance

Import taxes

EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FCA Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer

CFR Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer

CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Seller Buyer Buyer

CPT Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

CIP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DAT Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DAP Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Challenge 2 Questions

◦ GGI agrees to sell product to PRC Industries in China. PRCI will pick up the product at GGI’s plant in Green Bay. What terms will be used?

◦ GGI agrees to sell product to PRC Industries in China. The product will be sent in an intermodal container on an oceangoing vessel. GGI pays for all transport and unloading costs at destination. PRCI assumes all costs after that including insurance. What terms will be used?

◦ GGI agrees to sell product to PRC Industries in China. GGI ships the product to Chicago, where the product is loaded as air freight to China. GGI pays for transportation costs to China, excluding insurance; PRCI pays for all costs upon arrival. What terms will be used?

Challenge 2 Questions

◦ GGI agrees to sell product to PRC Industries in China. PRCI will pick up the product at GGI’s plant in Green Bay. What terms will be used? EXW

◦ GGI agrees to sell product to PRC Industries in China. The product will be sent in an intermodal container on an oceangoing vessel. GGI pays for all transport and unloading costs at destination. PRCI assumes all costs after that including insurance. What terms will be used? CFR

◦ GGI agrees to sell product to PRC Industries in China. GGI ships the product to Chicago, where the product is loaded as air freight to China. GGI pays for transportation costs to China, excluding insurance; PRCI pays for all costs upon arrival. What terms will be used? CPT

Thank you

Dean StewartDean of Corporate Training and Economic Development

Northeast Wisconsin Technical Collegedean.stewart@nwtc.edu

920.498.6995