FORM THREE COMMERCE – INTERNATIONAL TRADE

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THE CLEARING AND FOWARDING OF GOODS.

When the goods finally arrive they are discharged and temporarily stored in the harbour premises waiting pending clearance.

The activity of clearing and forwarding of goods are done by specially licensed firms, known as clearing and forwarding agent’s as we have seen before.

The following documents must be submitted to a clearing and forwarding to enable him to prepare an appropriate entry documents.

1. Suppliers/ sellers official invoice
   
2. Bills of lading
   
3. Import license
   

 

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As soon as the agent has arrived those documents be prepare the entry forms, there are three kinds of entries documents, which are

1. Import free entry: if goods are duty free
   
2. Import duty entry: if goods are liable on advalorem duty or specific duty.
   
3. Ware house entry: when the importer does not want to pay imports duty immediately the goods can be cleared and stored in a trended ware house.
   

 

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RESTRICTIONS ON INTERNATIONAL TRADE
Every country must take some measure to control her imports in order to protect her home industries from cut-throat competition with imported goods.

• The followings stapes are usually taken to control imports which are:-
• Imposing heavy import duties
  

  It means that a government levies a tax called import duty on any goods imported. This will led to an increment of the price of the imported goods and a trader will prefer buying the local products instead of imported goods.
  

• Fixing import quotas
  

  A country can provide a fixed or limited maximum quantity of a certain goods to be imported. Such a limit is called QUOTA.
  

• Total ban, Prohibition or Embargo
  

  A country can avoid or forbid on importation of a particular type of goods. Total Ban = completely not allowed. Total Ban aim to protect the home industry
  

• Devaluation
     This is the reduction in the value of a domestic currency in terms of foreign currency, When a currency is devalued Export become cheaper while import become more expensive therefore devaluation disnglish-swahili/courage” target=”_blank”>courage import.
  
  Exchange Control.
     In this measure the central bank provides a limited amount of foreign currency to importers to limit them from importing larger quantities of import.

 

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NOTE:

Restriction = Prohibition = Embargo

BOARD OF INTERNAL TRADE (B.I.T)

This is organizations which supervises and control the importing companies.

It coordinates the working of the internal trade and links it to the government through the ministry of trade.

CHAMBER OF COMMERCE

This is an association of all the business in an area. A chamber of commerce represents of all business even the statutory board and government owned companies.

The following are the services provided by chamber of commerce which are:-

1. They are usually the only organization authorized by the government to issue certificate of origin.
   
2. They keep members informed on all legislation affecting them
   
3. They deal with the government on behalf of businessmen
   
4. They provide a forum where business can discuss their problems. Some even publish their journals
   
5. They organize trade shows in the country to help the members secure export orders. Now days known as TCCIA (Tanzania Chamber of Commerce Industry and Agriculture)
   

 

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BOARD OF EXTERNAL TRADE (B.E.T)

This is an organization set up by the government with the specific aim of encouraging exports and assisting traders to increase their export sales.

INTERMEDIARIES IN IMPORT TRADE

International trade is not simple to conduct as home trade because it involves a large amount of money. The following intermediaries or middlemen play an important role in import trade.

• Import merchant
  

  These are traders who buy goods from abroad on their own and sell them locally. Their profit consists of the deference between the cost and selling price of goods imported. They resemble with wholesalers.
  

• Import Commission Agents
  

  These are people who imports goods on behalf the overseas sellers and are paid commission. They are sent consignment by overseas sellers and they use their knowledge of local market conditions in disposing of the consignment at best prices.
  

• Import Brokers
  

  These are people who do not buy or sell goods themselves but arrange deals between buyers and sellers.
  

  They posses expert knowledge of technical details and offer their services to importers. They are paid “brokerage”. Therefore Brokerage is the payment of a Broker.
  

  EXPORT TRADE
  

 

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Export Trade means selling goods and services to other country.

THE IMPORTANCE OF EXPORT TRADE

1. Enable a country to dispose her surplus goods.
   
2. Enable a country to specialize in field on which she has the comparative advantage i.e. to produce goods which can easily produce and bought by foreigners.
   
3. Promote international understanding because it allows the movement of people from one country to another.
   
4. Promotes healthy competition among local and foreigners products.
   

 

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ORGANIZATION OF EXPORT TRADE

As we have seen that export trade is the selling of goods and services to foreign country. There are two types of exports with their respective organization, these are:-

• Direct export:
  

 

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It means that manufacture or producer forms export their own commodities. In this case they do not use exporting agents.

Organization: manufacturer and producer forms  organization involved in direct exporters.

• Indirect exports:
  

 

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It means that the producer or manufacturer do not export the goods they produce they sell their products to local exporter or to the appointed agents who in turn exports the goods.

Organization: local exporters or the agents are the organization involved in direct exports.

EXPORT PROCEDURES

If a trader wants to export goods he/ she should:-

1. Open an account especially cement account
   
2. Have a trade license from board of external trade(B.E.T)
   
3. Apply and get an export registration from (B.E.T)
   
4. Filling of a number of documents like:-
   

   Bill of lading
   

   This is the document which contain the details of goods loaded on to the ship, the term and conditions under which they have been accepted by the shipper and the shipping charges.
   

   As soon as this documents is signed by the captain of the ship. It became the evidence of the receipt of goods by the supplier.
   

   A bill of lading has three functions which are:-
   

 

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• It is a contract of carriage
  
• It is a receipt for the goods by the shipper
  
• It is a document of title to the goods i.e. a person named in this document can claim the goods.
  

 

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A seller/ exporter usually gets the bill of lading from the shipping company and send it to the buyers along with his invoice and insurance certificate to enable him to receive the goods when the ship docks to enable him to receive the goods when the ship docks at the port of destination.

Air way bill

This is similar to the bill of landing only that its issued when goods are set by air and it is not a document of title.

Consular invoice

The document signed by the consulate or embassy of the buying country in the selling country.

Certificate of insurance

This is a document which acts as an evidence of insurance of the export goods in case of the risk occur on the way

Shipping note.

This is the document requested to the port authority. It tells the authority what goods are to be transported, the port of destination and the ship they are sent.

Certificate of origin

Document stating the originality of the exported goods. It shows where those goods are made.

Letter of Hypothecation

A letter from an exporter to his bank, authorizing the bank to sell goods being exported for the best price it can get if the bank cannot obtain payment on a B.E (Bill of Exchange) drawn on the importer, that it has already discounted for the exporter.

The exporter undertakes to make any deficit between the amount of the discounted bill and the proceeds of the sale less expenses (any excess is paid to the exporter)

      PROBLEMS OF INTERNATIONAL TRADE OR PROBLEMS FACED BY EXPORTERS AND IMPORTERS

• Language
  
• Difference in currencies
  
• Distance
  
• Poor infrastructure in some countries.
  
• Documentation
  
• Misunderstanding
  
• Deteriorating term of trade and fluctuation of prices foreign exchange difficulties.
  

 

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NOTE:

ACCOMODATION BILL

-This is a document signed without receiving the  same value.

-It is a bill of exchange written to a drawer without selling him any goods. 

RETIRED BILL

This is a bill of exchange which is met by the drawer before maturity.

It means that a drawer receive money from the drawee before the maturity of that cheque written by the drawer to the drawee or debtor.

POSTAL REMITTANCE

These are post office methods of remitting or sending or paying money E.g.

• Post orders
  
• Money orders
  
• Cash on delivery (C.O.D)
  

 

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BANKING REMITTANCE

These are bank methods of remitting or sending or paying money E.g.

• Cheques
  
• Credit transfer
  
• Bill of exchange
  
• Standing orders etc
  

 

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