InternationalTrade
Ask Alan Q3 Many of our overseas customers ask us to show our tariff number for each different item on our invoice. As we sell so many different items, this can lead to me spending hours of my time searching in the tariff book, time which I cannot always spare. Is it compulsory for my company to supply Tariff numbers and what is the reason for this request? A
First of all it is not compulsory, it’s just a request made by your overseas buyer. The reason for this request is usually for Custom declaration formalities in the country of importation. A word of caution, the commodity code you show on your commercial invoice most likely will not be IDENTICAL to the corresponding commodity code in the country of importation so by quoting an EU commodity code you may inadvertently be holding up your customer’s custom clearance. The first four digits, the chapter heading will be the same, but the remainder digits making up the complete commodity code could be different.
Example Commodity. Bicycle Chain EU (UK) commodity code USA commodity code Canada commodity code
73 15 11 10 00 73 15 11 00 10 73 15 11 00 19
To protect yourself, I suggest you print the following statement on your commercial invoice. Any EU tariff codes shown on this invoice at the request and risk of the buyer and may not correspond to the tariff number of the importing country. If your buyer requests their tariff number(s) to be shown on your commercial invoice, they should supply you with their tariff numbers. A very handy website to have on hand is www.madb.europe.eu where you will find worldwide tariffs listed.
Q4 We are a small trading company with limited funds and bank support. We are going to bid for a supply only contract in Djibuti. We have a very good chance of procuring the contract on price, delivery and quality. Our problem is raising sufficient funds to purchase the material. Any suggestions please?
A
Sorry but there’s no magic answer to your question!! In this financial climate many businesses are finding it very difficult getting support from banks. However there is light at the end of the tunnel. I assume that you will request payment by a Letter of Credit (L/c), sight or term. If payment is by L/c you could request an Irrevocable TRANSFERABLE letter of credit. A transferrable L/c is one which allows you to set up an independent L/c with your supplier using the proceeds of the transferrable L/c to finance your letter of credit with your supplier.
For this transaction to work a) your buyer in Djibouti has to agree to ask their bank to issue a transferrable L/c b) your supplier has to agree to sell to you against a L/c From my experience in requesting a transferable L/c, the buyer was always in agreement if they see that buying from you has advantages of price, delivery and quality likewise most suppliers today welcome any method of payment as long as it is secure. Finally, if you are trading with a buyer in Djibouti for the first time I suggest you request the Irrevocable Transferrable L/c to be CONFIRMED by your UK bank.
A confirmed L/c gives you added protection as the confirming bank in the UK takes on the responsibility of the bank of first payment and will arrange reimbursement from the bank in Djibouti. There will be bank charges for your account in this transaction such as confirmation and advising fees with UK bank, opening fees with your bank to establish second L/c on your supplier. I suggest you sit down with the International division of your bank who will explain to you in more detail how a transferrable and confirmed L/c works and if they are willing to confirm the L/c.
INSPIRE
25