I.

Basics of Exporting and Importing

1. Exporting
Exporting means selling goods or services made in one country to buyers in another. It helps
companies enter international markets, boost sales, spread risks, and make use of extra
production capacity.
a. Trade surplus
A trade surplus occurs when a country exports more than it imports, indicating economic
strength and contributing to a positive balance of payments.
b. Reasons for Exporting
- Extending to a global scale
- Market expansion: access new market => increased sales, competitiveness and
market share
- Competitive advantage => profitability
- Utilizing excess capacity: use surplus production capacity without major
additional costs => economies of scale
- Diversification: reduce reliance on domestic markets and spread economic risk
- Learning and innovation: gain insights into new technologies and practices from
global market.
- Economic growth: create jobs and boost national income.
c. Exporting phases
- Pre-export: conduct market research and develop entry strategy.
- Initial export: identify buyers, negotiate terms and set up logistics
- Growth: expand market share and optimize supply chains
- Mature: consolidate position and explore new markets
d. Types of exporters
- Direct exporters: sell directly to foreign buyers
- Indirect exporters: use intermediaries for the export process
- Domestic intermediaries: include export management and trading companies
- Global firms: multinationals with extensive export operations
e. Essentials of exporting
- Market research: understanding demand, competition, and regulations
- Export documentation: accurate paperwork like invoices and certificates
- Compliance: Adhere to trade regulations and customs laws
- Logistics and distribution: manage goods movement efficiently
- Payment and financing: use secure payment methods and financial arrangements
- Cultural awareness: respect cultural differences to improve relations
2. Importing
Imports are goods and services produced in one country and brought in by another country
(Rugman and Collinson, 2006).
 - Japan is a major importer of petroleum because it must rely on outside suppliers
for all of its energy needs.
- For the UK, the City of London generates exports of financial services that are
‘invisible’ in the British balance of payments.
a. Trade deficit
Occurs when imports exceed exports, indicating a country buys more than it sells, which
may reflect economic problems like high domestic consumption or weak local industries.
b. Reasons for importing
- Access to resources: obtains scarce or unavailable materials
- Cost efficiency: lower production costs abroad can reduce expenses
- Quality and innovation: foreign goods may offer superior quality or features
- Meeting demand: fulfills local shortages
- Diversification: reduces reliance on domestic production and mitigates supply
risks
c. Phases of importing
- Pre-import: market research, understanding regulations, assessing product quality
and cost
- Initial import: contract negotiations, logistics arrangements, documentation
- Import operation: managing customs clearance, warehousing and distribution
- Post-import: evaluating supplier performance, managing inventory, addressing
issues
d. Types of importing
- Direct importing: companies handle the entire import process themselves
- Indirect importing: uses intermediaries like agents or trading companies
- Domestic intermediaries: import management or trading companies facilitate the
process
- Global firms: multinational corporations manage importing as part of their global
operations
e. Essentials of importing
- Market research: identify and evaluate suppliers and market conditions
- Import documentation: prepare necessary documents like licenses and customs
declarations
- Compliance and regulations: follow trade regulations, tariffs, and quotas
- Logistics and distribution: coordinate transportation and warehousing
- Payment and financing: secure payment methods and financing options
- Quality control: ensure products meet standards and manage quality issues.
II. Export - Import Community
1. Government Agencies
Regulate and facilitate international trade, provide guidelines, enforce compliance
with trade laws, and offer support for exporters and importers
2. Exporter
 A business or individual that sells goods or services to foreign markets, responsible
for shipping products abroad and managing export documentation
3. Importer
A business or individual that buys goods or services from foreign markets,
responsible for bringing products into the domestic market and managing import
documentation.
4. Intermediaries
Entities like export agents, import agents, or trading companies that assist in the
buying and selling processes, handling tasks such as negotiation, documentation, and
logistics.
5. Financial service providers
Banks and financial institutions that offer services such as letters of credit, trade
finance, and currency exchange to facilitate international transactions.
6. Logistics service providers
Companies that manage the transportation, warehousing, and distribution of goods
across borders, ensuring efficient and timely delivery.
III. Export – Import Processes
1. Export processes
 2. Import processes

Pre - Import Planning Documentation Preparation Tranportation Arrangements

Supplier Selection Purchase Order (PO) Mode of transport (Air, Sea, Rai,
Import Documentation Roas)
Contract Negotiation
(Commercial Invoice, Packing Freight Forwarding
list, Bill of Lading, Requires
certificates (e.g., Certificate of
Origin)

Distribution & Delivery Post - Import Activites

Customs Clearance Arrival & Unloading
Transport to warehouse Invoice Reconciliation
Import Declaration Port/ Airport Handling Supplier Evaluation
Inventory Management
Duty & Taxes Payment Customs Inspection
Distribution to final
Cargo Unloading destination
 IV. Documents of International Trade
1. Letter of Credit (L/C)
A financial document issued by a bank guaranteeing payment to the seller upon
presentation of specific documents, reducing payment risk.
2. Bill of Lading
A transport document issued by a carrier acknowledging receipt of cargo and
outlining the terms of the transport contract.
3. Documents related to cargoes
Includes packing lists, invoices, certificates of origin, and inspection certificates that
provide details about the cargo
4. Documents related to cargo delivery at the port of loading
Includes the booking confirmation and export declaration that are required for loading
cargo onto the transport vehicle or vessel.
5. Documents related to cargo receipt at the port of unloading
Includes delivery receipts, cargo arrival notices, and import customs clearance
documents needed to receive and process cargo at the destination port.
REFERENCES
- U.S. Customs and Border Protection (CBP): cbp.gov
- International Chamber of Commerce (ICC): iccwbo.org
- World Trade Organization (WTO): wto.org
- Export-Import Bank of the United States (EXIM): exim.gov