World Trade Matters - Winter 2019

WORLD TRADE MATTERS | The Professional Journal from the Institute of Export & International Trade

WORLD

Issue Seven : Winter 2019

TRADE MATTERS The Professional Journal from the Institute of Export & International Trade

Something to Declare -

How Cross Border Trade Really Happens Tips on Doing Business with: u Azerbaijan u Mongolia u Vietnam u Oman

Smart Borders – Lars Karlsson from KGH Customs looks at the future of border management Issue Seven : Winter 2019

Addressing the Global Trade Landscape going into 2020 – interview with Ana Boata from Euler Hermes

Incoterms® 2020 – Is your organisation ready for the rule changes?

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Welcome

Sam Pileggi IOE&IT Interim Director General

Welcome

Welcome to the seventh edition of World Trade Matters.

In this edition we look at the everyday realities of cross border trade. Customs processes and documentation have been in the news a lot recently, but the technicalities of completing them is relatively little known about in much of the business community and general public. This knowledge, however, is essential to the trading of goods over borders. u

Each quarter we will bring you new and interesting articles and we would like to hear from you, our members, as experts in your own fields. Contact editor@export.org.uk with your ideas or thoughts.

People with skills and an understanding of how to complete Customs and export processes in a compliant way are therefore the lifeblood of the UK economy. We are delighted to feature interviews with some of today’s most experienced global trade experts – including Sandra Strong MIEx (Strong & Herd), Tim Bailey FIEx (Chamber International) and Arne Mielken MIEx (our newly appointed Vice President) – as well as those who are currently studying with the IOE&IT and Customs Academy to become the experts of tomorrow.

Brexit remains the word on the tip of everyone’s tongue, but as we enter 2020 the impact of the trade dispute between the USA and China and the slowing of the global economy are giving businesses and governments everywhere pause for thought. Over 10 years on from the financial crisis, there is a growing feeling that further challenging times are not far off – something we discuss with Ana Boata (Euler Hermes) and report on in our London World Trade Summit writeup.

Cross border trade needn’t be difficult, of course. After all, goods have been moved over borders for millennia and we certainly recommend you read Christiaan de Lange’s excellent history of Customs on page 30 for more context. It does, though, require you to take the time to research the market you’re sending your goods to, as well as the documentary and compliance requirements you are obliged to meet. Wherever you’re selling to, whether it’s Latin America, Azerbaijan, Oman, Bahrain or Jordan – markets which are featured throughout this edition – research really is key.

The other key thing about cross border trade is that it is always changing. We feature some excellent articles here about smart borders, ecommerce and exporting on Amazon, and there is so much more going on beyond these pages that we will hopefully get to discuss in future editions and at events next year.

Finally, despite current uncertainties, there are so many businesses getting on with the task of exporting and importing, from large corporates to microbusinesses like the recent Open to Export winners ‘The Bshirt’, who we interview on page 54. Do not forget that if you’re intimidated or worried by the global trade landscape, there is a wealth of support out there. This includes the IOE&IT, of course, and we feature some of our own technical expertise throughout this journal, including updates on Incoterms 2020, the recently launched Customs Academy and on our regular Technical FAQs feature at the end.

We are ourselves undergoing a period of change, indeed, with Linda Middleton-Jones becoming the Chair of the Academic Board and Marco Forgione to join as our new Director General in January – you can read about all of our recent appointments in the next few pages.

For now, though, we hope you enjoy the seventh edition of World Trade Matters over your festive break and we look forward to meeting or seeing you again in 2020. n

www.export.org.uk : @ioexport : 3

37

Doing Business with Azerbaijan IOE&IT Interim Director General Sam Pileggi

Art Direction & Design Paul King / Claire King www.twistedgifted.co.uk creative@twistedgifted.co.uk

Editorial Directors William Barns-Graham Production Co-ordinators Ana Pintor Dawn Martin

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Call us on 01733 404400

The Professional Journal from the Institute of Export & International Trade is published four times a year.

The contents may not be reprinted or reproduced without prior written permission. The publishers are not liable for statements made and opinions expressed.

While every care is taken, prices and details are subject to change and the publisher can take no responsibility for omissions and errors.

Contact: The Institute of Export & International Trade, Export House, Minerva Business Park, Lynch Wood, Peterborough, PE2 6FT, United Kingdom Email: editor@export.org.uk General enquiries switchboard: 01733404400 For more information about the Institute please visit our website: Export.org.uk

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The Professional Journal from the IOE&IT

Highlights 8

IOE&IT announces new Director General Marco Forgione will be taking up the role in January 2020. u 16

Addressing the Global Trade Landscape going into 2020 We spoke with Ana Boata from Euler Hermes ahead of the London World Trade Summit about the global economy. u 20

Launch of the UK Customs Academy We celebrated the launch of this exciting new initiative back in September at an event held in the House of Commons. u 22

Why exporting matters Edward Winterton, CEO of Bibby Financial Services, addresses why businesses need to be aware of both the risks and the opportunities international trade presents. u 24

‘Smart Borders’ – the future of border management Lars Karlsson from KGH Customs Services looks at how technology and innovation is already changing cross border trade around the world. u 32

Incoterms® 2020 – is your organisation ready?

Our Vice President, Arne Mielken, assesses the recently launched changes to the Incoterm® rules and what businesses need to know about them. u 61

How ecommerce is changing cross border trade Tim Bailey FIEx from Chamber International looks at the regulatory challenges ecommerce is presenting organisations like the WTO. u www.export.org.uk : @ioexport : 5

82

Doing Business with Oman

CONTENTS 8

10

The Institute of Export & International Trade is pleased to announce the appointment of Marco Forgione as its new Director General.

NEWS Incoterms® 2020 officially released Brexit uncertainty holding back UK exports – new survey finds South West Export Champion Joins IOE&IT Academic Board Increase of UK exports to non-EU countries

14 16

London World Trade Summit Addressing the Global Trade Landscape going into 2020 - interview with Ana Boata from Euler Hermes

20

World’s first online Customs Academy officially launched at Parliament event

22

Why exporting matters

24

Smart Borders – the future of border management

26

A career in Customs: We talk to Sandra Strong - Managing Partner, Strong & Herd LLP

28

We talk to the Port of Inverness about AEO

30

“Who will purchase this quantity of merchandise for this amount of price?"

32

INCOTERMS® 2020: Is Your Organization Ready?

35

Get up to scratch with the new Incoterms rule changes

37

Market Profile: Doing Business with Azerbaijan

14

43

Cosmetics, Toiletries & Perfumery Association

46

Gearing up for cross border trade

48

How to reach a billion global customers (and not lose your shirt)

50

Birmingham World Trade Summit

52

The Bshirt win the Open to Export Action Plan Competition

55

Market Profile: Doing Business with Mongolia

61

New markets for businesses, new challenges for regulators

63

Following the money

66

Polkadoodles Ltd

67

Market Profile: Doing Business with Vietnam

74

Trading Across Borders – Increasing Complexity

76

Open Borders “It’s easy when you know how” or is it?

78

Latin America – Future Trade Opportunities?

80

Member focus: Linda Middleton Jones Chair of the Academic Board, Institute of Export & International Trade

82

Market Profile: Doing Business with Oman

88

Student Interviews

92

Reverend Richard Coles amuses Queen's Award winners at gala dinner

94

Calendar of events / training

97

Technical Help FAQs

28

80

92

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World Trade Matters

New Director General

Marco Forgione – Career so far .................................................................

2015-2020: Chief Executive – The British Antique Dealers Association 2014-2015: Chief Executive – EVCOM

2008-2015: Chief Executive – IVCA

2007-2008: Director of Enterprise and Communications – Canterbury College 2002-2007: Director of Marketing and Communications – Landscape Institute

8 : Membership : Training : Qualifications : Advice

The Professional Journal from the IOE&IT

New Director General

The Institute of Export & International Trade is pleased to announce the appointment of Marco Forgione as its new Director General.

Mr Forgione, currently the Chief Executive of the British Antique Dealers’ Association, will take up his post in January 2020.

Prior to his role as Chief Executive of BADA, Marco served as a government advisor, held senior positions in the education and communications sector, and led numerous Trade Missions to overseas trading partners including to China, the UAE, Qatar and India.

With a strong track record in successfully leading membership organisations, working with members and engaging with government and other stakeholders, Marco will bring energy, expertise and renewed leadership to the Institute as we enter a new era of considerable growth and opportunity.

Mr Forgione said upon his appointment:

“I am delighted and honoured to be appointed as the Institute of Export & International Trade’s next DG, particularly at this critical time for the UK. Export and international trade are absolutely fundamental to building the UK’s future. The Institute has a central role to play in helping businesses prepare for and exploit the opportunities this new landscape offers, through its world class suite of qualifications, training courses, membership offerings and events.” n

Terry Scuoler, Chairman of the IOE&IT, said:

“It will be a great pleasure to welcome Marco to the Institute and to work with him to deliver our future strategy, continually improve our service offering to members and to be ever more effective in helping companies to access export markets and trade more effectively.” n

www.export.org.uk : @ioexport : 9

World Trade Matters

News - Incoterms® 2020 live

Incoterms® 2020 officially released Incoterms® 2020 have now been officially released by the International Chamber of Commerce (ICC).

The Institute of Export & International Trade is an ICC licensed training partner, authorised to provide training on the new Incoterms® 2020 rules.

Our public one-day course, which can also be delivered in-house, provides a comprehensive overview of the new 2020 version of the terms and the differences between the 2010 version. It also enables UK businesses to be much more cost and risk aware when negotiating new business deals whatever the future international trade environment holds for the UK after Brexit.

More accessible and easier to use The new Incoterms® 2020 are easier to use and more accessible, according to the ICC. They include more detailed explanatory notes and graphics that enhance the responsibilities of the importer and exporter according to each Incoterms® rule.

Among some of the more specific changes are: •

Incoterms 2020 provides for demonstrated market needs in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms®

•

Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).

•

Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).

Setting the terms for Global Trade Incoterms® 2020 are the globally recognised trade terms for the sale of goods, providing certainty and clarity to businesses and traders everywhere. Incoterms® comprise some of the most widely used, but most misunderstood aspects within international trade; they can impact on a number of areas of a company’s operations, including sales, accounts, shipping, operations, compliance and customer service.

®

•

There is a change in the threeletter name for Delivered at Terminal (DAT) to DPU.

•

Incoterms® 2020 includes security-related requirements within carriage obligations and costs.

Upon the release of Incoterms® 2020, ICC Secretary General John W.H. Denton AO said: “Incoterms® 2020 rules make business work for everyone by facilitating trillions of dollars in global trade annually because they help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings. The rules form the language of international sales transactions, and help build confidence in our valuable global trading system.” n To discuss our training courses: Call +44 (0)1733 404400 Email: training@export.org.uk Read more about the rule changes on page 32. u

To be featured in the next edition of The Professional Journal from the Institute of Export & International Trade publication – please send your press release to us at: editor@export.org.uk

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NEWS

Brexit uncertainty holding back UK exports – new survey finds Brexit uncertainty, tariffs and exchange rate volatility are continuing to hold back the UK’s exporters, according to a new survey conducted by Bibby Financial Services (BFS) and the British Chambers of Commerce (BCC).

1,140 internationally active UK businesses were polled and uncertainty around Brexit was considered the top barrier to export by 47% of businesses, followed closely by specific concerns around tariffs (35%) and exchange rate volatility (33%).

Administrative requirements or regulation and a lack of free trade agreements, both of which could be connected to Brexit, also scored highly at 30% and 23%.

Only 7% said they are not facing significant barriers to exporting.

Businesses are also facing issues in relation to stockpiling, payments and the transportation of goods. Over the past 12 months: • •

•

around a third (31%) of businesses reported that they had increased the volume of inventory held; 15% reported that it already takes longer to transport goods to and/or from overseas, even before the UK’s exit from the European Union; and almost a third (29%) reported that it takes longer to get paid by customers.

The uncertainty around Brexit is also affecting businesses who are currently operating solely within the UK but who could be exporting, with 31% saying Brexit is their

top barrier to exporting. Only 7% of these domestic businesses are expecting to start exporting or importing within the next 3 years, with only 17% saying they are not facing any barriers to international trade at present.

Edward Winterton, UK Chief Executive, Bibby Financial Services, added: “Chronic uncertainty resulting from Brexit is undoubtedly stifling international trade amongst UK SMEs. Importers and exporters are in limbo, and many are postponing investment decisions, while they await further information. Many others are focusing resources on ensuring they’re prepared to deal with the potential impacts of a no-deal scenario.

“SMEs are telling us that they need clarity over the detail, and it’s imperative that the Government looks to provide this as soon as possible to enable businesses to trade with confidence, both domestically and internationally.” n Read the report at: https://www.britishchambers.org.uk/news/2019/10/ bcc-and-bibby-financial-services-uncertaintyaround-brexit-tariffs-and-exchange-ratesholding-back-uk-exports

South West Export Champion Joins IOE&IT Academic Board Linda Middleton-Jones LLB (Hons) MIEx, founder of International Trade Matters and a peerless champion of exporters in the South West region, has recently been appointed the Chairman of the Academic Board at the Institute of Export & International Trade (IOE&IT).

Linda is a welcome addition to the Board having already led the IOE&IT’s activities in the South West through regular member meetings and regional World Trade Summits. She has also been a key voice in the evolution of membership offerings from the IOE&IT. Upon her announcement she said: “The IOE&IT enhances the export performance of the UK by setting and maintaining professional standards. This is principally achieved by the provision of education, training and business support. The IOE&IT is committed to the belief that real competitive advantage lies in the competence of British businesses. The future export growth must be underpinned by a sound foundation of knowledge.” n Read more about Linda’s export career in our Member Profile on page 80. u

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World Trade Matters

NEWS

Increase of UK exports to non-EU countries New figures from the Office for National Statistics (ONS) reveal greater overall demand for British goods and services outside of the EU.

In the year ending June 2019, exports of goods and services to the USA have increased by 9.3% from £115.7 billion in the 12 months prior, to £126.4 billion – a promising show as trade talks continue.

Exports to non-EU countries are growing twice as fast as those to the bloc, driven in large part by major non-EU trading partners, including the USA and China, with total trade with the USA surpassing

£200 billion for the first time.

The latest trade figures from the ONS show a 4.2% uptick in exports to countries outside of the EU, in comparison to a rise of 1.6% to EU member countries.

Demand for UK goods and services in China have also seen a significant increase in this period of 13.9%, from £20.8 billion to £23.7 billion, as the Department for International Trade’s (DIT) presence at the Beijing Expo 2019 comes to a close.

In the lead up to the Rugby World Cup UK exports to Japan saw a rise of 9.2% from £13.1 billion to £14.3 billion in the year ending June 2019. UK firms such as Harrod Sport and Sports Travel Hospitality have made the most of the major sports event to export their goods and services to the country, securing contracts at the games for their products including hospitality packages and supplying rugby goal posts. n

4 new appointments to the Board of Trustee Directors The Institute of Export & International Trade is delighted to announce 4 new additions to its Board of Trustee Directors ahead of a vital year for the UK trade.

Sandy Gullis MBE MIEx (Grad), Caroline Gumble MIEx, Sangeeta Khorana MIEx and Allen Matty MBE MIEx have been appointed to the Board and will work under the Chairman, Terry Scuoler MBE, in directing the Institute as it looks to support UK businesses through the challenging years ahead.

The join incumbent members Marcel Landau FIEx (Grad),

Dominic Broom MIEx, Nicholas Clark FIEx, Robert Keller MIEx, Mark Lincoln FCILT MIEx, Maria Malinowski FIEx (Grad), Steve McQuillan MIEx, Sean Ramsden MIEx and Peter Ward FIEx. The new look board will be working closely with the Institute’s new Director General, Marco Forgione, who will be taking up his role in January 2020.

You can read more about who’s on the board at: https://www.export.org.uk/page/The_Board

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World Trade Matters

World Trade Summit

London World Trade Summit

The Institute of Export & International Trade hosted its annual World Trade Summit on 23rd October at The Law Society in London. The event took place amid growing speculation about the prospects of a winter General Election, following the Government’s defeat to its proposed timetable for the passing through of its EU Withdrawal Agreement Bill, and before a decision from the EU regarding a requested extension to the October 31st deadline for passing the deal. on SMEs. He cited Bibby’s recent research into business confidence relating to international trade, noting that 26% of businesses polled had delayed funding commitments due to Brexit. He stated that, regardless of Brexit, first-time exporters need clear and proper contracts when entering new markets and noted that a worrying number of smaller businesses aren’t fully aware of the myriad tasks and checks that international trade requires.

A gloomy mood around Brexit, but skilled traders will help us get through a difficult period Lord Empey, updating delegates about the debates and mood in Parliament at the time, noting that the continued delays of the bill were causing businesses continued uncertainty and, although a ‘No Deal’ would be more damaging, businesses desperately needed clarity about the UK’s trading terms with the EU. He was pessimistic about the prospects of an imminent resolution to the Parliamentary inertia around Brexit. He did note, however, that people with qualifications and skills around international trade will be key to ensuring businesses can deal with the ramifications of the UK withdrawing from the EU. Jim Davis, Managing Director for Export Finance at Bibby Financial Services, gave examples of the impact Brexit is already having

Lesley Batchelor OBE, speaking at her last public engagement as the Director General of the Institute, echoed this point and gave an overview of the training and qualifications that the Institute provides. Looking at the broader picture of global trade, Lesley noted that the UK needs to back the World Trade Organisation and the rules-based order of trade, whatever our path post Brexit.

Looking at the bigger picture Every year the London Summit features a panel discussion looking at the broader global trade landscape, although this year’s iteration again inevitably focussed on the impact of Brexit on the UK’s future trade position.

Chris Southworth, Secretary General at the International Chambers of Commerce UK, noted that Britain,

14 : Membership : Training : Qualifications : Advice

as an independent trading nation, will not be in the ‘premier league’ of states alongside China, the USA and the EU, but will need to act cleverly as a second-tier nation to retain influence. He said that UK engagement with organisations like the WTO is growing, recalling how UK representation at the WTO Public Forum has grown from a handful of 4 or 5 to a cohort of well over 100.

John Lucy, Manager for International Transport & Trade Procedures at the Freight Transport Association, noted how Brexit uncertainty means businesses and the logistics industry are not currently sure how they will be getting goods to the doors of customers in the near future and noted that new infrastructure will be needed should Brexit go through.

He also warned that businesses will need to be aware that the freight industry will be extremely busy once Brexit goes through.

Ana Boata, Lead Eurozone and UK Economist at Euler Hermes, further warned that the bigger picture is not particularly encouraging either, noting that global trade is currently contracting. Discussing the role that the USA-China trade war has had in the global economic slowdown she did offer some optimism, noting that trade flows are changing, with new flows starting to substitute US-China trade. u

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World Trade Summit

However, with the USA looking increasingly likely to turn its attention to the EU in terms of its increasing trade protectionism, the discussion gave the audience plenty of pause for sombre reflection on what has been and will probably continue to be a difficult period for global trade.

Furthermore, they noted that there is a wealth of support out there for exporters - a point that was echoed

by Ronan Quigley, Executive Director at the British Chamber of Commerce, who gave an overview of the support landscape for UK businesses.

Plenty of risk – but it can be managed

Queen’s Award Winners show that, despite the gloomy picture, exporting can boost profits

The second panel of the day went further into the specific risks that businesses encounter when entering new markets. Brook Horowitz, CEO of IBLF Global, spoke about how businesses need to embrace cultural variety in international markets but stay aware that certain acts could be construed as bribes or corruption. He warned that UK businesses need to comply with anti-bribery legislation, particularly the UK’s Bribery Act. Liz Ward, Principal of Virtuoso Legal, said that the biggest risk in international trade is not getting paid and argued that businesses need to view getting a contract properly drawn up as an investment that protects their business.

The London Summit this year certainly gave delegates plenty to mull over. The ongoing global economic slowdown and continued uncertainty around Brexit painted a picture full of risk and concern, but businesses can succeed with ambition, a plan and knowledge.

That was the message of the final panel discussion of the day, which featured winners in the International Trade category of The Queen’s Award in Enterprise. Chaired by Lord Popat, the Vice President of the Institute, the panel consisted of Mark Sharpe (UK Sales Director at Veolia), Carly Di Crescienzo (UK

Sales Manager at Helping Hand Environmental) and Paul Baker (Founder at St Pierre Groupe).

When asked what the main reason for starting to export was, each said profit, but added that international trade is also an exciting activity that broadens both horizons and minds.

A difficult period for global trade, but exporting is still doable and profitable Whether it’s Veolia selling robotics to the Japanese, Helping Hand Environmental running litter clearance campaigns in Belgium or St Pierre Groupe selling bakery products to the USA, businesses with a solid product and thoughtthrough approach to exporting will always find success overseas, whatever the trading landscape.

Alhough delegates would have left the Summit aware that this isn’t the easiest world to trade in right now, with decent training, planning and ambition, profits are there to be made in global markets. n

Michael McGowan, Managing Director at Bibby Foreign Exchange Ltd, then noted the impact of Brexit on the value of the Pound, which will likely be an ongoing issue for years to come. He traced back the impact it has already had since the 2016 referendum and anticipated some of the immediate events that could trigger further spikes and falls.

The panel concluded that although global trade does come with significant risks for exporters, there are ways for businesses to mitigate them and ensure that exporting is a profitable and cost-effective exercise – whether that be legal protections or measures to manage currency volatility. www.export.org.uk : @ioexport : 15

World Trade Matters

Global Trade Landscape

Addressing the Global Trade Landscape going into 2020 - interview with Ana Boata from Euler Hermes Ahead of the London World Trade Summit, we spoke to Ana Boata, the lead Eurozone and UK economist at Euler Hermes, about the global trade landscape heading into 2020.

Ana Boata Lead Eurozone and UK economist at Euler Hermes

The UK is at a crossroads now in terms of trade and there is likely to be continued economic uncertainty. What can businesses do to mitigate for this?

At the time of this interview, companies are preparing for a ‘No Deal Brexit’ ahead of the October 31st deadline. Businesses are stockpiling

and trying to get as ready as they can for a ‘Hard Brexit’. The problem with stockpiling is there are additional costs and it has a negative effect afterwards because the stock needs to be consumed and the domestic market will likely remain weak, as will the European landscape – we expect growth to be only around 1% with close to recession in some countries, while in the UK we’re expecting around 0.8%. The outlook in the European market is definitely lower than it was before.

There’s a risk of technical recession in the UK at the turn of the year because the contingency stockpiling will have a cost. One of the things companies can do to get rid of the stocks, which they will need to do more quickly than usual, is to offer some discounts. However, discounts mean a slowdown in turnover which is not great news. Discounts may also come about automatically due

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to the weakness of Pound Sterling but if there is a deal or extension, we expect Sterling should appreciate at the turn of the year to around 1.15 or 1.20. If businesses are not able to benefit from having a lower valued currency, they will need to lower their prices, but this means lower profitability for them, because the import cost was higher at a time when the pound was weak.

Globally, protectionism will remain an issue going into 2020. We expect high volatility in terms of trade talks between the USA and China, and we also factor in that the USA may turn to Europe soon – for instance, in November we expected Trump to announce 10% tariffs on European imports of cars after the import tariffs linked to the “Airbus affair” which concern aeronautics parts, agri-food products and luxury. u

The Professional Journal from the IOE&IT

Global Trade Landscape

There is no reason to believe that the global trade landscape will be positive in the year ahead, especially given the lack of major fiscal stimulus in the USA, China and Europe, monetary policy will not be able to substantially boost growth.

At best we see global trade volume growths as being around 1.5% this year and 1.7% next year, which is the lowest since 2009.

In terms of value, given the strength of the dollar, we expect other currencies to continue to depreciate (3 to 5% in the emerging markets).

We don’t really see how the global landscape could be profitable in the coming 18 months. Upside risks could come from a moratorium on the trade dispute following the 2020 US election and/or sizeable fiscal stimulus in Europe.

Could leadership changes in Europe affect global trade going forwards?

The change of the European Central Bank governance shouldn’t affect the monetary policy. In September we saw monetary policy was reactive to the stronger than expected economic slowdown and to help avoid recession in Germany. The signal there is that more can be done if needed. The change in the

ECB governance we therefore see as bringing about a continuation of what has already been announced.

Because we don’t expect any improvement in the economic outlook, we should see further support from monetary policy, two more rate cuts in the deposit rates in 2020 (to -0.7%) and higher quantitative easing (to EUR30bn per month) – it will need to be bigger in size to help stabilise the economic outlook, particularly because there is no fiscal stimulus in front of the monetary policy.

What does this mean for companies, especially given the strength of the dollar? The euro-dollar should remain low at around 1.11-1.12 at the end of 2019/20, so no big move. This will mean companies will have some competitiveness in Europe.

In the UK there is some pressure or more leeway for the Bank of England to also announce some rate cuts, as they can reduce it if they see an acceleration in the tightness of the credit conditions.

There are some surveys that have pointed out that the banks have been less keen to give out credit recently, particularly to SMEs. Factor in also that the Sterling rates could

be affected by a stabilised political situation, should some form of extension or a deal is reached, and we’d then also be expecting low inflation, giving leeway for an easing of monetary policy.

For European companies, the ramifications of the USA-China trade dispute are key because since the impact of that started to be felt at the start of the year, there have been increased opportunities in some European countries – the UK has exported more to the USA and China for instance. Lower flows between the USA and China have meant greater flows for Europe and China and Europe and the USA. 2020 looks set to be a really pivotal moment for Protectionism with Brexit, the US election, what’s happening in Italy and Brazil and so on. How much could a changing political landscape – for better or worse – change the economic one next year?

We look closely at this in terms of having alternative scenarios to our baseline ones. At the moment we have a relative equal probability for an upside and a downside scenario.

On the upside we’d have an election that leads to a President who has a less tough stance on u

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World Trade Matters

Global Trade Landscape

trade and to where Europe and China do more fiscal stimulus, so we then see sizable measures being implemented that help us to get through the muddling through we’re in at the moment. Remember we were in a similar position in 2015 when China was dramatically slowing down and there was strong correction in the stock market. At the time there was fiscal stimulus in China and the USA that got us out of that, which materialized into a synchronized economic growth acceleration across regions.

the US grows more than the Eurozone, the companies are indebted so we are not fully protected from a credit event. A company could default in the USA and this could have a chain effect throughout the supply chain - this is something we take into account in a downside scenario.

Beyond the Eurozone, China and USA axis, are there any other significant areas of growth or change that could affect the global economic landscape?

In the baseline scenario it’s too soon to claim there is a resolution to what’s going in Saudi Arabia, but if the shock of that lasts for 6 months, say, there will be an impact on oil prices. This would mean further liabilities to a global economic outlook which is already very weak. For the moment, though, we would not take into account an oil price above $70 per barrel; we’d say that the tensions this autumn will be resolved by the end of the year and then there would be a lower oil price.

On the downside there is an equal probability of an intensifying of the trade war where President Trump would introduce 25% tariffs on all Chinese imports and also implement tariffs on the car industry, which would bring the Eurozone and the USA into recession. There could also be a credit event in the USA. We should not forget that even if

The major drivers are the US-China trade dispute and the monetary reaction, but we also hear alarm bells ringing in the emerging markets, particularly Argentina, Turkey and South Africa. China slowing down quicker than expected definitely has an impact – especially on South East Asia markets – but there’s also oil prices.

Liability in the emerging markets is linked to oil prices, China and their politics. Some are clearly vulnerable to policy mistakes. This has improved in some emerging markets over the last year, but if you take the Turkey or Argentina cases, political risk is a key issue which pushed these two countries into recession and therefore strong adjustments. n

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World Trade Matters

UK Customs Academy

World’s first online Customs Academy officially launched at Parliament event Key initiative will bolster the Customs intermediaries sector ahead of Brexit The world’s first online Customs Academy was officially launched at the House of Commons, in September marking a vital step towards ensuring UK businesses can trade confidently over borders post Brexit.

Funded by government as part of its efforts in preparing the UK’s businesses and Customs intermediaries sector for post-Brexit trading, the Academy was established by KGH Customs, the Institute of Export & International Trade and the Centre for Customs and Excise Studies.

The Academy will enable individuals and businesses to gain the knowledge and skills around international

Customs that will be essential for trade post Brexit, whatever form it takes. It will become an essential resource for industry professionals that not only offers leading-edge training and education, but also a unique range of individual and business membership benefits to support the profession, providing invaluable business resources, advice on industry best practice, and a virtual community for industry professionals.

With a range of customs-specific qualifications ranging from an entry-level in Customs Practice and Procedure Award through to a Diploma in Advanced Customs Compliance, you can systematically

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build your customs knowledge and skills from novice to Accredited Customs Professional through the Academy. These qualifications lead to higher education degrees including a Master of Customs Administration.

All of the courses provided by the Academy can be fully funded by the £16m of grant funding being offered by the government to help businesses prepare for Brexit.

This funding is being provided to support businesses in training staff in completing customs declarations and to help businesses that support others to trade goods to make IT u

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improvements in order to complete customs declarations more efficiently.

Opening the event, Lesley Batchelor OBE, then Director General of the Institute of Export & International Trade, spoke of the need for professional skills in Customs to be treated more seriously.

She said: “As we do with lawyers and accountants, we should recognise that people working in Customs need professional skills and training in the vital work they do. This new Customs Academy is therefore an essential step towards bolstering professional skills in the sector at this critical time for international trade in the UK.”

Professor David Widdowson, Dean of the UK Customs Academy, added: “The digital academy is a landmark innovation and an important project for us with our strategy to become the leading training provider for the private sector in Europe. At KGH, we are proud to work with world-class partners to deliver this new platform and help companies to provide employees with the highest quality training available.”

Andy Robins, Head of Supply Chain at Aquila Air Traffic Management Services, who attended the event, said:

to the UK government that really need to work properly, there’s a lot of pressure. To have this support from organisations like HMRC, the Institute of Export & International Trade and KGH Customs Services is a great help.”

Clive Brady, the Chairman of the British Warehousekeepers Association, also said: “We’re highly supportive of today’s initiative as we’ve long seen a distinct lack of knowledge in Customs procedures in the UK. We really support these efforts to increase awareness and skills in the industry and we will promote it to our members.” n

“From my industry’s point of view, given we provide lots of services

The UK Customs Academy is already in operation and you can find out more on the website at https://ukcustomsacademy.co.uk

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World Trade Matters

Currency Focus

Why exporting matters

The global economy is becoming increasingly interlinked and businesses around the world are getting used to the specific risks and opportunities that brings. In the UK around a third of SMEs export or import goods; a figure that has remained broadly consistent for the last three years. We also see that typically it is the larger businesses on the SME scale that export and import the most.

Edward Winterton UK CEO, Bibby Financial Services

It is easy to understand why this might be the case – larger businesses are more likely to have the resources, cash and supply chains to make the most of international trade. But if the UK is to unlock the potential of the huge number of SMEs that drive our economy, then more SMEs need to understand how they can take advantage of global markets.

Ultimately, for all different types of SMEs, with the right tools and guidance, global trade is something that should be considered.

So, what is the opportunity for SMEs? Recent research from the government’s export credit agency, UK Export Finance (UKEF), found that over the last five years businesses with a domestic focus saw annual growth of around 8%. Growth of this scale is not to be downplayed, but compared to the 15% growth rates experienced by exporters, there is a clear margin for improvement.

Our own latest research found that a number of the challenges facing SMEs could, in part, be tackled by an increased focused on exports.

In fact, the greatest challenge identified by SMEs in Q3 is increased competition from other firms, with 16 per cent of the businesses we surveyed under increasing pressure to win business. Combined with their second biggest challenge, a lack of domestic demand (13%), it’s evident that SMEs will be looking at ways to reach new customers.

Looking at the UKEF’s figures on growth, the power of exporting to overcome the impact of competition cannot be underestimated. If demand in the UK is shrinking, then other markets may provide the answer that SMEs are seeking.

These challenges were further compounded by renewed external pressure on SMEs as the Government promised to leave the EU by 31st October. Despite a Government campaign to get ready for Brexit, our research found that over half of the nation’s SMEs (54%) did not do anything to prepare.

On the surface this may appear reckless or ill-advised, but the likelihood is that SMEs have become accustomed to the political uncertainty and many didn’t truly believe the UK would meet its deadline. There are other barriers that also come into play when it comes to Brexit

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preparations. Firstly, it’s expensive.

Many of the SMEs we work with are reliant on having a stable cash flow position to operate. Despite the recent publicity from the Government to get ready for Brexit with the goal posts constantly changing, not all SMEs have the cash, inclination or resources to dedicate to measures when there is no clear end date or outcome.

Following a trend we have seen since the beginning of the year, UK SMEs are responding to the continued economic uncertainty with defensive measures. In the third quarter this included, building up cash reserves (20%), stockpiling goods (15%), renegotiating agreements with suppliers (15%) and exploring options to manage currency volatility (14%).

These are all prudent measures as changes in the global political landscape have impacted currency markets significantly over the past year. For businesses that buy and sell overseas, currency fluctuations can increase input costs and reduce profitability. Therefore it’s vital that SMEs keep an eye on currency and market fluctuations to protect against such impacts. It’s encouraging that 14 per cent of SMEs are exploring Foreign Exchange services which can help them lock-in rates to protect against further currency movements. u

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Currency Focus

Brexit is a long-term concern for SMEs. We can only hope that in the coming months decisions are made that bring clarity for businesses, enabling them to plan for the future. This year, we have reconfirmed our support for SMEs by backing the Government’s SME Finance Charter as we recognise that access to finance is one of the many issues that SMEs may have to work through. To support businesses further, we have developed a range of educational resources including international trade workshops and regular market insight to guide them through the Brexit process and beyond.

While it’s sensible for SMEs to plan carefully in such uncertain times we remain firmly committed to supporting SME’s regardless of the economic conditions, as we have done consistently over the past 35 years. With a range of funding solutions including Trade and Invoice Finance, and services such as Foreign Exchange to provide peace of mind and Asset Finance to fund machinery and equipment, businesses can have the confidence they need to exploit the opportunities available to them. Whatever the outcome of Brexit, the current climate is likely to continue into 2020. SMEs should focus on growth - a robust business with profitable customers will be more resilient in the future, regardless of the economic outlook. n

www.export.org.uk : @ioexport : 23

World Trade Matters

Smart Borders

Smart Borders – the future of border management

We live in a world of globalization and international trade is going through major changes in several dimensions, changes that will redefine the way we manage borders in the future.

Lars Karlsson CEO & MD KGH Global Consulting KGH Customs Services

We are seeing trade wars, more elements of protectionism, environment activism and the reclaiming of national borders and trade policies like in the case of Brexit. However at the same time we trade and travel more than ever.

While we know that international trade is good and one of the best ways to foster development of our societies, create growth and fight poverty, we also know that International Cross-Border Crime is more organized and dangerous than ever, not acknowledging any national borders and using the fact that we are still organized by our national borders to its advantage.

How do we then “take back control over our borders”? Is it even possible in a time of globalism? Is it even desirable? Or can we meet the requirements of a new world in a different and more efficient way?

First of all, our perception of borders are shaped from the borders we have today, and these borders were designed, developed and implemented many years ago. When we design new borders today, we are doing so in a completely different environment. Trade has changed tremendously over the last five to ten years. Today the border is not a line on the ground but a series of transactions of interactive and integrated international value chains moving goods through advanced global supply chains. The national border used to be our first frontier and our first defense line but today it is our last.

This means that we do not produce goods in one place and sell it somewhere else, we produce everywhere and sell everywhere – it is a totally different world than before. Add in the complexity of other changes, like the extremely fast growth of e-Commerce, makes the challenge larger than ever.

The good news is that the solutions, techniques and technology of today and tomorrow offers different solutions as well.

We are starting to implement smarter borders. The idea of the smart border is to move customs and other border formalities away from the border, to be done electronically before and after the actual border crossing. To do so we need to make supply chains and value chains safe, secure and predictable.

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This model demands the involvement throughout all stakeholders of the entire chain and there is a need for an element of trust between the different parties. On the other hand, when that trust is established through structured and well defined models, we can also create trusted trade lanes that are cost efficient for everybody involved while at the same time compliance increases and risk are kept at a minimum.

We talk about compliance management, which today, together with risk management, is the overarching control methodology used by agencies involved in international cross border trade.

An international supply chain can’t anymore be managed and monitored efficiently in a traditional way, with repeated stand-alone checks at each national border.

In fact, this is not how the international supply chain works even today.

The international standard for customs compliance management is the Authorized Economic Operator (AEO) concept regulated in the SAFE Framework of Standards from the World Customs Organization.

The international standard also regulates how national AEO programmes can be inter linked for the supply chain through the Mutual Recognition Agreement (MRA) mechanism. u

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There are today almost one hundred countries, representing a large majority of global trade, with operational AEO programmes and Trusted Trader Programmes. We see a new AEO paradigm entering into force through broader, holistic and more dynamic Trusted Trader Programmes (TTP) that still are in line with the international standard.

I have written about this trend in an academic article in the World Customs Journal*.

This global trend is especially interesting from a border management perspective. The idea behind compliance management is that all stakeholders of the international

supply chain should collectively cooperate to minimize risks of the global supply and value chain. This connects people with goods and border management in new ways than before. A number of countries have in the last few years designed, developed and implemented new modern Trusted Trader Programmes where this has become evident.

Another example is Brexit. When the United Kingdom leaves the largest and most integrated Customs Union and Customs Territory (Single Market) the European Union, a customs border will emerge. This means that the United Kingdom becomes a third country and that there will be Customs formalities on both sides of the border.

Since the volumes of goods shipped between the EU and UK are extremely high, and since there are no border infrastructure between the EU and UK today, the new border will have to be designed as a new generation border – a Smart Border 2.0/2.1, utilizing the most modern customs techniques and technology available today, including AEO. The technology needed is no unicorn, it exists in operations already today.

We will soon see new operational Smart Borders all around the world.

So how can companies involved in international trade prepare for this new paradigm and use the developments to the advantage of trade and new business?

The best way is to make Customs a strategic topic within the company, seek strategic partners for the more advanced services and to make sure to have well educated and trained trade and customs professionals within the organization.

The future belongs to smart borders and companies ready to use the new trusted trade lanes that are emerging. n

*Back to the future of Customs: A new AEO paradigm will transform the global supply chain for the better: http://worldcustomsjournal.org/archive/volume-11-number-1-march-2017/

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World Trade Matters

Customs Professionals

A career in Customs: We talk to Sandra Strong Managing Partner, Strong & Herd LLP You’re known as one of the UK’s leading Customs experts but how did you get into the industry?

By accident in truth. I had been to university and was looking at what to do next when I saw an advert for a role in an import-export department and I thought that might be fun for a while. I joined that department and stayed with it as it was a fascinating role, with new challenges everyday and plenty of travel.

I was learning all the time and I’m still learning new things today. It took me completely by surprise what a fantastic job it was. It wasn’t a career I thought I’d get into, but I’ve now been doing it since 1983, which is over 35 years!

Congratulations on such a long career in Customs! Is it still the case that most people fall into Customs by accident?

Unfortunately, yes, it’s not viewed as a career path within schools and colleges, which it should be. A lot of people end up in international trade or Customs due to their living near a port or airport, or because their relatives are already involved in it.

What I’d really love to see, and a reason I’m proud to be involved

with the IOE&IT, is for Customs and global trade to be seen as offering a professional career path for people.

There’s more of a career path within the Customs authorities, but in regard to international trade, businesses usually put someone else in the job to look after their processes and Customs, whether that’s someone in dispatch, accounts or sales. The person responsible for Customs or export-import processes is doing something that they’ve not been employed to do.

People should be encouraged to see a career path in global trade and that needs to be worked on by trade associations, schools and Government.

How important is prior training and education for changing attitudes towards Customs and export roles?

It’s essential. You can enter any career and train within it, and that’s one of the best ways of learning about something as you’re able to apply your learning every day.

However, there needs to be greater awareness about trade in the school and college environment as well.

People need to recognise it as a profession, and this is something I’ve been passionate about for years.

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Global trade is far more in the forefront of people’s minds these days due to Brexit and the USChina trade wars. Is this moment in time an opportunity for increasing awareness about global trade?

Brexit and trade issues between China and the USA, Canada and the EU, are big news and this is positive for people seeking a career in trade.

Yet there’s still a significant gap.

There’s a lot of talk and money being put in to increasing the number of global trade professionals in the UK, but I don’t think there’s a joined-up understanding of what happens in a business, in relation to trade, and what it is that businesses need. u

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Customs Professionals

the compliance side or dealing with things like sanctions and licenses, your skills are more likely to be respected by businesses and there is a clearer career path for you.

In the UK, businesses don’t generally tend to have a department with a specific export focus. Instead, businesses just get on with exporting as and when orders come in. Though Brexit has increased awareness about Customs and international trade, a lot of the processes involved are being handled by intermediaries and external support. What we’re not yet seeing is businesses enhancing their internal knowledge about Customs and export processes.

To what extent do businesses need to have a clearer role for Customs within their organisational structure and strategy?

There also needs to be an understanding that companies and individuals who are involved in the logistics, freight forwarding, or intermediaries areas have distinct and different roles and skills to people who are involved in Customs, for instance. These roles cannot be easily grouped together and if you’re in a career global trade, you need to be clear on what your path or niche is going to be.

People who are just looking after Customs entries everyday aren’t going to see a significant pay rise because of Brexit as that role isn’t viewed as being particularly professional. However, if you’re in a business dealing with Customs more generally, being involved in

A business that doesn’t understand international rules and regulations will only get away with it for so long. The bottom line is that they’ll be losing money because you need to be aware of what’s happening globally and be able to make strategic changes.

In the 3 and a half years of Brexit negotiations we’ve seen that there are still businesses who have not yet considered what to do should the UK leave the EU without a deal.

That’s a difficult challenge for the government. We pride ourselves on being an exporting nation, but we don’t respect exporting. Businesses get orders from overseas, and that’s great, but they don’t think about how to develop it.

Many companies do have an export focus, but since Brexit we’ve seen so many who don’t, and they will struggle if the UK leaves the EU without a good trade arrangement.

There are obviously time restraints and political uncertainty makes it difficult to plan for unknown situations, but it’s endemic in some businesses that trade isn’t a focus.

Trade is something people do by default without thinking it through.

What are the major tips you would give to people embarking on a career in Global Trade in 2020?

Go for it and figure out which part of international trade you feel more comfortable with. There’s a lot of opportunities for travel which is exciting, but you may be more interested in the legal side or the practical side, from sales and purchases to completing customs entries.

It’s a fantastic career – every day really is different – but if you do go down this route, get yourself prepared. Take the qualifications and training that are out there and make sure you’re doing it with organisations who know what they’re doing.

We are in a transitional phase in the UK now, but for anyone who is interested in international trade, this is the time to do it. So, find your niche, and go for it! n

Sandra Strong Managing Partner, Strong & Herd LLP

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World Trade Matters

AEO Focus

We talk to the Port of Inverness about AEO We also had 8 visits from cruise ships last year, handling over a thousand passengers. All in all, there’s a lot going on!

What happens day-to-day at the ports?

Sinclair Browne Chief Executive, Port of Inverness

What sort of business does the Port of Inverness handle?

We’re a commercial port and we host the importing and exporting of a wide range of products. For example, we handle the import of fuel oil, the import and export for timber-based products like packaged timbers and round logs, we’ve handled several renewable energy components including on-shore wind turbines, and we import road salts, carbon blocks and other one-off large cargoes.

Our main function is to be a facilitator for the import or export of goods. We provide the infrastructure, including a weighbridge, quayside, open storage capacity for shipping and logistics companies to bring in and export their goods.

In addition to the overall infrastructure, we provide pilotage for any ships visiting the port. For ships over 50m in length, a pilot is compulsory.

We do not employ any stevedores directly, but we licence them to do specific jobs at the port. For those who don’t know, stevedores are the people who operate the cranes or take the cargo into hold.

What are the major challenges ahead for the Inverness Harbour Trust?

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Continuing to provide a first-class service and ensuring that we continue to provide state of the art facilities are important. We work closely with both existing and new port users to ensure that all our services are fit for purpose.

We need to convince people to think differently about exports and how they transport goods. Shortsea shipping – as an alternative means of transport to road and rail is by far the most environmentally friendly means of transporting goods, compared to all others.

The Scottish Government is keen to see a reduction in the number of goods being moved by road and we are encouraging people to see short-sea shipping as an alternative method.

Where do you primarily ship to?

The Scandinavian countries, the Baltics, the low countries – particularly Denmark – and the UK too.

On average, about 50% of our ship visits – arrivals and departures – u

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AEO Focus

are to and from UK ports; 35% are to EU. Last year was skewed in favour of the EU because we had a huge amount of wind turbines, so it was 46% UK and 47% EU. The impact of Brexit will depend on how we classify the EU in the future, but we still have a strong trading path with EU countries, and I think that will continue. There will be opportunities in other parts of the world, but the EU will remain the major destination outside of the UK. Why did you feel you needed to apply for AEO? We did it as part of our Temporary Wharf Renewal process as you’re not granted it anymore unless you have AEO status.

How did you find the process of applying?

Without the support of the IOE&IT we would have been lost. Our decision to apply for AEO came about when Kevin Shakespeare from the IOE&IT did a presentation at an event being run by Highland and Islands Enterprise and Scotland

Development International – Kevin was talking about Brexit, Customs and AEO. We had just started off the process and were addressing aspects like Customs guarantees, but we’re not experts in this field.

At the event I got hold of Kevin and asked what support the IOE&IT could provide. Holly Tonge then came up and she really did a fantastic job in supporting us. She went through the process, dealt with the HMRC personnel and spoke their language, and she allowed us to concentrate on our core business, which is running a port.

My biggest tip with AEO is, unless you know the process inside out, definitely go and get support. You wouldn’t re-wire your own house, you’d get someone in who has the expertise, and though it might cost you a bit, you’ll save yourself time and money in the long run. We wanted to go through the process quickly and to avoid any pain with it.

How long did it take?

About six months. Holly came up soon after I had met Kevin and she just got on with it – I couldn’t praise

her enough.

She came up initially to do a scoping exercise and to write a report for us, but when she got here, she had the approach to say, ‘let’s not waste any time, let’s just get on with it now’.

Her attitude was to get stuck in and get it done and dusted there and then.

How much of an advantage will AEO give you?

Now it’s in place we’ll be able to trade using it. I’m hoping that in these uncertain waters ahead it will help to demonstrate our capabilities and knowledge.

This time last year I wouldn’t have known what AEO was. When Kevin spoke at this conference, we learnt about it and we saw that we needed to be doing this.

So, it really is worthwhile going to export conferences and summits?

Absolutely. This one turned out to be invaluable and it was great meeting Kevin there. n

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World Trade Matters

Customs Valuation

“Who will purchase this quantity of merchandise for this amount of price?”

Next year is the 40th anniversary of the General Agreement on Tariffs and Trade (GATT) / World Trade Organization (WTO) Customs Valuation Agreement.

anniversary in 2010 the WCO Secretary General, said, “Valuation is a key Customs activity and the Agreement is one of our core Customs instruments”. It is the only ‘Customs instrument’ that transcends both pre-eminent international trade organisations.

Christiaan de Lange MCom (Economics), MPhil (Taxation), Master of Business Leadership (MBL), MIEx

The Arthasastra It is a flawed perception that Customs valuation has been in existence for all but 40 years, for its existence is much more distant.

An ‘Element of Taxation’ The European Commission (EC) Taxation and Customs Union website reminds us that there are three ‘elements of taxation’ that provides the basis for the assessment of the Customs debt, which is the technical term for saying the amount of Customs duty due. The ‘elements of taxation’ are Customs valuation, tariff classification, and the origin of the goods. Once the Customs value of the imported goods is determined, the Customs duty can be calculated.

The 40th anniversary of GATT/WTO Customs Valuation Agreement (Valuation Agreement) will no doubt be celebrated by both the World Customs Organization (WCO) Technical Committee on Customs Valuation, and the WTO Committee on Customs Valuation. At its 30th

The first reference to Customs valuation is found on the Indian subcontinent around 400 B.C. when the Arthasastra was written, establishing the practice of the valuation of imported goods. The Arthasastra articulates the duties and functions of administrative departments, amongst which is Toll, or Customs.

The Customs valuation practice described is for a merchant, on importation, to make his/her way to the flag of the tollhouse, and to cry out trice “Who will purchase this quantity of merchandise for this amount of price?" Should this result in a response “I (we) will” the merchant had to hand over the merchandise to the bidder at that price. The purchase price along with the toll was paid into the King’s treasury. In an instance where the

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merchant feared having to pay the toll, they would lower the quantity or the price, on detection it was either surrendered to the King or the merchant had to pay eight times the toll.

The Arthasastra Customs valuation is based on the actual value, which is in conformity with the spirit of the Valuation Agreement.

Customs Valuation What Oscar Wilde said about a cynic could well apply to the practice of Customs valuation – “We know the price of everything and the value of nothing”. As the EC on its Taxation and Customs Union webpage so eloquently summarises, “Customs Valuation is the determination of the economic value of goods declared for importation.”

An ‘economic value’ is a measure of the benefit provided by a good or service to an ‘economic agent’, whilst an ‘economic agent’ is a person, company, or organisation that has an influence on the economy by, in this instance, buying.

It is imperative that there is an international standard set of rules for establishing the Customs value, which is vital for: • proper collection of duties and taxes u

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• economic and commercial policy analysis • application of commercial policy measures • import and export statistics.

The Methods of Customs Valuation The Valuation Agreement defines ‘Six Methods’ that need to be applied in hierarchical order, with only Methods 4 and 5 reversable.

Where the Customs value cannot be determined based on Method 1, Transaction Value then follows: • Method 2 - Transaction value of identical goods • Method 3 - Transaction value of similar goods • Method 4 - Deductive method • Method 5 - Computed method or • Method 6 - Fall-back method (Based on previous methods, applied with greater flexibility) The Transaction Value Over 90% of imports are valued using Method 1 - The Transaction Value, defined as “the price actually

paid or payable”. It is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods, and includes all payments made as a condition of sale of the imported goods by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller.

HMRC’s “Notice 252: valuation of imported goods for Customs purposes, VAT and trade statistics” articulates the items that must be added to “the price paid or payable”: • • • •

Delivery costs Commissions Royalties and licence fees Goods and services provided free of charge or at reduced cost by the buyer • Materials, components, and parts • Tools, dies, and moulds • Materials consumed in producing the imported goods • Engineering, development, artwork, design work and plans and sketches • Containers and packing • Proceeds of resale • Export Duty and taxes paid in the country of origin or export

Although this article does not explore the remaining Methods of Customs valuation, you should consider these when if applying Method 1 you are not able to arrive at a Customs value.

Consideration It is impossible, in a single article, to do Customs valuation the justice that it deserves, for it is so rich in content, that it demands a more detailed assessment. This article, for instance, did not consider the interaction between Customs valuation and transfer pricing, and even whether transfer prices can be accepted as Customs value. It also didn’t consider the Customs valuation of rented goods, leased goods, lost goods, damaged goods or defective goods.

As Timothy Lyons, in the 3rd edition of “EU Customs Law”, concludes “Plainly valuation of goods is central to the assessment of Customs duty.” n

www.export.org.uk : @ioexport : 31

World Trade Matters

INCOTERMS® 2020

INCOTERMS® 2020: Is Your Organization Ready?

The revised set of eleven Incoterms® now apply and businesses trading cross borders are able to incorporate them into their sales contracts. Here we look at what they are, why they matter, how they have changed, and explain how, if applied correctly, they can expedite your cross-border shipments and enhance supply chain agility.

Arne Mielken Vice President, Institute of Export & International Trade 'ICC-certified trainer'

With great opportunity comes great responsibility Global trade has seen unpreceded growth over the last decade, providing extraordinary opportunities for companies to expand reach to markets around the world and sell more products to a broader customer base. Today, businesses sell more goods into more countries, in larger quantities, in greater variety, and at a faster pace.

However, moving goods internationally is no easy task and requires a carefully coordinated strategy from planning to execution and the efficient coordination of many actors across the global supply chain. These partners are required to operate in sync and with each other to avoid costly supply chain delays.

Clear instructions of who must do what, where and by when are, therefore, paramount. Such clarity can only be obtained where the two first parties to the initial sales contract, the buyer and the seller, can stick to agreed principles based on leading business-to-business practices and fix these in their contracts.

Successful principles in global trade So, what are these fundamental “agreed principles of B2B” that set international businesses up for success in global trade? We would argue that the important ones are: 1. Obligations: What are my obligations as a buyer or a seller?

Who arranges for transportation, carriage, insurance of the goods?

Who obtains the needed documentation, like import of export license?

2. Risk: When something goes wrong, who is responsible for providing a remedy (“sorting it”)?

More formally speaking, at what point in the international transaction does the risk transfer from the seller to the buyer?

3. Costs: Which party is responsible for which costs, like transport, packaging, loading or unloading, and security-related costs, for

32 : Membership : Training : Qualifications : Advice

example, the costs associated with a container inspection?

Who pays the customs duty?

Enter the powerful Incoterms® 2020 The International Chamber of Commerce (ICC) Incoterms® 2020 rules address exactly these fundamental principles and, in this way, facilitate the conduct of global trade.

Businesses that refer to Incoterms® 2020 as part of their contracts refer to rules which underpin the three principles mentioned above: the obligations, risks, and costs that sellers and buyers owe to each other under that contract.

More specifically, they indicate at what port, place or point the goods are to be delivered, where the risks are to be transferred, and they also detail who must arrange or provide carriage, insurance, trade documents, and import or export clearance.

Best of all, they do it through the use of simple, commonly-used three-letter abbreviations.

But I am jumping ahead of myself….

Incoterms® 2020 – streamlining international terms of trade for almost a century

The Professional Journal from the IOE&IT

INCOTERMS® 2020

Incoterms® 2020 look modern but are not new. Already in the last century, globally trading businesses realized that the interpretation of commercial trade terms varied from country to country, causing delays, misunderstanding, and costly lawsuits.

It was the ‘ICC’, which saw the need for a standard set of trade terms for importers and exporters everywhere. The first set of Incoterms® rules was published by ICC in 1936. Since then, ICC has periodically revised the rules to reflect changes in the international trade system up to the current version.

It’s not what you know; it’s what you don’t know Over the last decades, certain myths and misperceptions have impacted the effective use of Incoterms® in cross-border transactions and their movement of goods. Let’s bust some popular myths: Myth 1: Incoterms® 2020 transfer ownership or title of the goods sold No, they do not deal with the ownership and do not transfer the title of goods sold, this is a matter for the actual contract of sale.

Myth 2: Incoterms® 2020 can replace a contract of sale Of course not! Incoterms® 2020 are not in themselves a contract of sale and cannot function as a replacement for one. This is obvious when you understand that they omit many aspects essential to sales contracts such as the specifications, quantity or quality of the goods sold, the time, place, method, or currency of payment of the price.

Myth 3: From the Incoterms® 2020 I can determine if contract breaches have been committed.

for the transport of goods in international trade.

Incoterms® 2020 methodology

The Incoterms® 2020 do not comment on a potential violation of contract, for example, due to a delivery delay and does not mention any consequences or remedies which can be sought after.

Myth 4: The Incoterms® 2020 in my sales contract automatically applies to all other contracts I sign to fulfil it, such as letters of credit, carriage, or insurance contracts.

No, they do not form part of any other contract other than the sales contract and even then, they have limitations and can only sensibly operate within a properly drafted contract of sale.

Of course, both buyer and seller would want the auxiliary contracts – for example, with the carrier or the banks – to be aligned as much as possible to ensure an efficient movement of goods and rapid payment. So, while Incoterms® 2020 may not form part of other contracts, they surely have an impact on them.

Finally, we should clarify Incoterms® 2020 do not deal with the effect of sanctions, the imposition of tariffs, import or export prohibitions or restrictions, force majeure, or any intellectual property rights issues.

Ocean’s 11?

Not entirely, however, the reference to the 2001 movie may be a useful analogy to remember that the ICC Incoterms® 2020 Rules are abbreviated by eleven regularly used, standard three-letter trading terms, starting with one of the four letters E, F, C or D. Each term reflects a different B2B practice

So, what are they like? Well, as in 2010, the eleven trade terms continue to be organized in two ways: first, according to the means of transport used and second, by the point of delivery of the goods.

Let’s talk some more movies: Magnificent Seven The first class of Incoterms® 2020 is known as the “Multimodal” group, there are seven, and they can be applied to any mode of transport, including road, rail, sea, and air.

They are: EXW FCA CPT CIP DAP DPU DDP

(= Ex Works) (= Free Carrier) (= Carriage Paid To) (= Carriage and Insurance Paid To) (= Delivered at Place) (=Delivered at Place Unloaded) (= Delivered Duty Paid)

Four horsemen The four remaining terms belong to the second class of “maritime” Incoterms® 2020, they relate to sea and inland waterway transport only, or simpler, ports. They are FAS FOB CFR CIF

(= Free Alongside Ship) (= Free on Board) (= Cost and Freight) (= Cost, Insurance, and Freight)

10 Articles There is also an internal order within each Incoterm rule. These have been organized by ten “topics” (or “articles” in ICC lingo), broadly u

www.export.org.uk : @ioexport : 33

World Trade Matters

INCOTERMS® 2020

by order of importance, with each rule following the same sequence.

They provide an easily identifiable and holistic description of the obligations which befall on buyer and seller.

First, there are general obligations about goods & payments, followed by “delivery/taking delivery” and “transfer of risks.” The relationship with third parties is governed by the rules on “carriage” and “insurance.”

Next, there is a section on “delivery/transport document” and “export/import clearance,” which is followed by the obligations for “checking/packaging/ marking”.

Costs and the question of who pays what are then described, before finishing with the requirements to notify buyer or seller at specific points during the shipment.

The devil is in the details: What’s different from the 2010 version?

You may be forgiven if you think that not much has changed from the 2010 version. Some observers, who may have hoped for a radical shake-up – such as the elimination of EXW or the addition or a new mode of transport covering space travel – were disappointed.

They may argue that the simple re-ordering of the ten articles within each rule is only cosmetic.

They would be missing the point.

Pushing “delivery” to the top is smart as it is the most critical aspect to understand. Clearly defining this point means that the buyer cannot recover against the seller for the loss of or damage to the goods occurring after that point has passed.

There is in every Incoterms® rule a place of delivery, a place at which risk transfers from seller to buyer.

And, those eagerly seeking more substantial changes, rest assured that DAT has been changed to DPU (Delivered at Place Unloaded), stressing that the place of destination could be any place and not only a “terminal.”

Be precise with Incoterms® 2020 Given their impact on changes to the delivery of the goods on the one hand and the transfer to risk on the other, you should incorporate the Incoterms® rules as precisely as possible. The best practice is to name the location of the point of delivery in conjunction with the chosen Incoterms® rule.

Be as geographically specific as possible in calling the port, place or point. This is where the goods are “delivered” and this is where the risk transfers from seller to buyer.

Then sense-check what you are writing. CIP Austin, USA, Incoterms® 2020 can work, but FOB Las Vegas Incoterms® 2020 makes little sense, as Las Vegas does not have a maritime port.

Incoterms® and the sales price Incoterms® are frequently used as price indicators – i.e. “this or that is the EXW, CIF or DDP price,” – and they often refer to a specific formula used in the calculations of the overall price to be charged.

Does using the right Incoterms® 2020 matter that much?

As mentioned before, agreeing to the use of a certain Incoterm® in a sales contract requires a solid understanding of the obligations that a business takes on as a result of agreeing to them. Companies need to ensure they can meet the

34 : Membership : Training : Qualifications : Advice

obligations that come with it before signing any contract.

Can you arrange a carriage to the agreed destination? Have you added the costs of insurance and transport to the sales price? Are you able to customs clear the goods for import as a non-established, foreign seller? How will you get the necessary trade documentation to meet your compliance obligations?

These and many more questions must be answered engaging in international sales or purchases.

Failure to understand each term and merely to agree to it can have disastrous consequences for profit margins and order fulfilment, creating supply chain nightmares that must be avoided at all costs.

Why do Incoterms® 2020 matter in the global supply chain?

Incoterms® 2020 should be appreciated as a tool to improve business transactions worldwide. They can prevent disruptions and enhance global supply chain management.

They are helping global supply chains to operate smoothly by avoiding bottlenecks over who is responsible for the risks and transportation of purchased goods.

So, how ready are you?

Any organization selling or purchasing goods at a global level should have a clear and deep understanding of Incoterms® 2020. This is the only way to guarantee efficiency and speed in worldwide sourcing and shipping operations. Yet, this requires planning, training, and preparation. n

The Professional Journal from the IOE&IT

INCOTERMS® 2020

Get up to scratch with the new Incoterms rule changes

Our one-day course provides a comprehensive overview of the new 2020 version of the terms and the differences between the 2010 version.

The course will also enable UK businesses to be much more cost and risk aware, when negotiating new business deals whatever the future international trade environment holds for the UK after BREXIT. This course can also be delivered in-house at a location of your choice and if you can show that it would be of benefit

Training Dates We will be running courses in London on the following dates:

to your customs function, you can now claim government grant funding to cover the full cost.

Choosing an in-house version of one of our training courses will be more economical where several members of your staff will be attending the session. n

30th January 2020

30th July 2020

18th February 2020

27th August 2020

31st March 2020

30th September 2020

30th April 2020

29th October 2020

29th May 2020

25th November 2020

30th June 2020

16th December 2020

Order a copy of the book Order a copy of the Incoterms® 2020 book for £45 (plus p&p).

IOE&IT Members can receive a 20% discount and pay just £36 (plus p&p).

For more information visit https://www.export.org.uk/page/Incoterms2020 or contact training@export.org.uk

www.export.org.uk : @ioexport : 35

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Market Profile: Doing Business with Azerbaijan

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The Republic of Azerbaijan is located on the southern edge of the Caucasus Mountains in Transcaucasia, and borders Iran to the south, Armenia to the west, Georgia to the northwest, Russia to the north and the Caspian Sea to the east.

Azerbaijan’s economy expanded in the first half of 2018 with revived output in the services sector due to improved terms of trade.

Azerbaijan’s economic performance should strengthen, helped by natural gas exports and a moderate acceleration in domestic demand.

investment, with inflation remaining below 3%.

The UK is the single largest investor in Azerbaijan and UK companies are well placed to increase business.

There are currently more than 450 UK companies doing business in Azerbaijan.

If the oil price is maintained, the current account surplus is projected to average at 10% of the GDP until 2020. Non-oil sector growth is expected to average at 2.7% due to rising market confidence, which will allow improvements in the banking sector and a gradual recovery in

www.Azerbaijan.DoingBusinessGuide.co.uk : 37

Market Profile: Doing Business with Azerbaijan

James Sharp, HM Ambassador to Azerbaijan

The United Kingdom was among the first countries to establish diplomatic relations with the Republic of Azerbaijan in 1992 and marked a new beginning in an extraordinarily successful partnership that has flourished ever since. We now enjoy a strong and growing diplomatic and economic relationship and, through regular engagement, work together closely to increase co-operation in all areas of mutual interest.

I’m proud to say that the UK is the largest single foreign direct investor in Azerbaijan, with over 450 British companies and around 4,000 British nationals in country. BP’s significant participation in the Azerbaijan energy sector is helping the country to maintain its role as one of the world’s major energy suppliers and diversify European energy supplies.

I’m already struck by the scale of the UK/Azerbaijan commercial relationship, the number of British companies already competing here and the determined drive by the Azerbaijani Government to diversify the economy and to develop a number of key sectors outside of oil and gas.

It goes without saying that oil and gas will remain the focal point of the Azerbaijan economy for many years to come. The signing of the “Contract of the Century” between BP and SOCAR in 1994, was truly a landmark decision for both our countries.

The Southern Gas Corridor (SGC) network of pipelines is another extraordinary feat of engineering that, when complete in 2020, will export natural gas from the Caspian Sea to Italy.

However, our bilateral relationship is multi-facetted and thriving in many fields. Renewables, the environment, healthcare, culture, mining, agriculture, tourism and security are just some of the areas in which we are working together, ably supported by the British Council helping with educational reform and vocational and English language training and our Joint Intergovernmental Commission (JIC) providing a solid structure for taking forward the prosperity of our respective nations.

James Sharp HM Ambassador to Azerbaijan

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Declaration of Means of Transport This document is needed to notify the authorities of the arrival of a means of transport. It is mandatory and does not depend upon the specific purpose of arrival. This is to be prepared and submitted by the freight forwarder or his agent in Azerbaijani or to be entered into the electronic customs system in advance. In addition, the customs authorities must be notified of the arrival of a means of transport within one hour (of the official working hours) after entering the customs territory.

Cargo Manifest for Aircraft/ Təyyarə yük manifesti This is required for customs clearance and airport surveillance. This document is also a prerequisite for the Customs Import Declaration. This is to be submitted by the freight forwarder or his agent in duplicate. The application may also be forwarded electronically.

The Cargo Manifest for Aircraft is to be submitted within 24 hours from the time of arrival of the aircraft in Azerbaijani, English or Russian.

Customs Import Declaration/ Gömrük İdxal Deklarasiyası This is the official form for the customs clearance of goods. Required for customs clearance. The responsible authority is the State Customs Committee = phone number: +994 12 4042200. The application for customs clearance and, subsequently, the declaration is to be completed by the importer or his agent in Azerbaijani.

Nevertheless, the customs authorities may also accept the details to be provided in Russian. The declaration is to be submitted electronically under www.e-gov.az/en/login.

Declaration of Dutiable Value/ Bəyannaməsi əşyası gümrüğe dəyər This is a document containing all information for the assessment of the dutiable value of a shipment. Required for customs clearance, if the goods are not duty-free. To be completed by the importer in Azerbaijani. The Declaration of Dutiable Value is to be submitted in six copies.

Advice from our Technical Helpline

The Institute of Export & International Trade's 'Export Helpline' provides help for any international trade query, including documentation, export controls, customs & VAT procedures, payment terms, Incoterms, and much more. Members of the IOE&IT can access the helpline for free.

When exporting to Azerbaijan the following general requirements apply: Commercial Invoice/ Gömrük faktura A document containing the details of the transaction. Required for customs clearance. No specific form required.

The Commercial Invoice may be prepared in any language. However, a translation into Azerbaijani is recommended. To be submitted in duplicate.

Pro Forma Invoice/ Faktura proforma A document containing the details of the transaction made out prior to the proper invoicing and in addition to the Commercial Invoice. May be required by the importer or the competent authorities of the importing country.

No specific form required.

Packing List/ Qablaşdırma siyahısı A document containing the details of the shipment and serving as a basis for the customs treatment of goods. May be required for customs clearance. If the Commercial Invoice contains all the specifications usually included in a Packing List, a separate Packing List is not required. No specific form required.

The Packing List is to be prepared by the exporter in English according to standard business practice, including details of the content of the packages, description of the goods, marks and numbers. However, a translation into Azerbaijani may also be required. To be submitted in the original.

Certificate of Non-Preferential Origin/ Mənşə sertifikatı A document certifying the nonpreferential origin of the goods to be imported. Required for the customs clearance and/or market access of medicines (intended for human and veterinary use) and medical devices, fodder and dual-use goods as well as for commodities subject to veterinary control, including feed additives, and for the certification of designated imported products, e.g. telecommunications

equipment. The certificate is to be submitted by the exporter. Certificates of non-preferential origin are usually issued by the competent chamber of commerce.

Proof of Preferential Origin A document confirming the preferential origin of the goods to be imported.

Only required if preferential treatment under a free trade agreement or arrangement is claimed. Goods may be eligible for preferential treatment if they have been either wholly obtained or preferential origin has been conferred by sufficient working or processing as per the product-specific rules of origin.

The Proof of Preferential Origin is to be submitted by the exporter. A Proof of Preferential Origin may replace a Certificate of Non-Preferential Origin, subject to acceptance by the customs authorities in the country of import.

Air Waybill/ Hava qaiməsi A document containing the details of the international transportation of goods by air and proving the transport contract between the consignor and the carrier's company. Required for customs clearance. To be prepared by the carrier or his agent. No specific form required.

Usually issued in English. The Air Waybill consists of a set of forms, three of which are originals and the rest are copies.

One Air Waybill may be used for the multiple transhipment of goods.

Bill of Lading/Malların daşınmaşı ətraflı siyahısı (Konosament) A document containing the details of the international transportation of goods by sea. It serves as proof of receipt of goods by the carrier. Furthermore, it serves as a transportation contract obliging the carrier to deliver the goods to the consignee. The Bill of Lading is a document of title to goods, thus its bearer is the owner of the goods. If goods are shipped by sea

without a document of title to goods, a Sea Waybill is used instead. Required for customs clearance. If an unclean Bill of Lading is issued, the financing bank may refuse to accept the consignor's documents.

Rail Waybill Conforming to both COTIF and SMGS Agreements/ Dəmir yolu fakturası A document containing the details of the international transportation of goods by rail. The Convention Concerning International Carriage by Rail (COTIF) and the Organisation for Co-Operation between Railways (OSJD) use a unified bill as from 1 September 2006. Required for customs clearance. To be submitted in six copies.

Waybill/ Manifesto yolu ilə nəqliyyat A document containing the details of the international transportation of goods by road. Required for customs clearance. To be prepared by the carrier or his agent. Usually issued in bilingual or multilingual form. It is advisable to use a version containing all relevant information in English, or to enclose a translation into English. To be submitted in quadruplicate and signed by the consignor and the carrier. Usually, one Waybill covers the goods loaded in each vehicle.

Insurance Certificate/ Sığorta şəhadətnaməsi A document proving that a contract for the insurance of the goods has been signed. May be required for customs clearance. To be prepared by the insurance company of the exporter or the importer. No specific form required.

Usually issued in English. The certificate is to be submitted in the original.

The information is derived from the European Commission's Market Access Database with courtesy of the data provider and copyright holder Mendel Verlag GmbH & Co. KG. Any kind of further reproduction requires prior written consent of Mendel.

www.Azerbaijan.DoingBusinessGuide.co.uk : 39

General Overview Geography About the size of Scotland, the Republic of Azerbaijan is located on the southern edge of the Caucasus Mountains in Transcaucasia, and borders Iran to the south, Armenia to the west, Georgia to the northwest, Russia to the north and the Caspian Sea to the east. It also has a small exclave, Nakhichevan, to the southwest bordering Iran, Armenia and Turkey.

Economic overview Azerbaijan’s economy expanded in the first half of 2018 with revived output in the services sector due to improved terms of trade.

In the medium-term, Azerbaijan’s economic performance should strengthen, helped by natural gas exports and a moderate acceleration in domestic demand.

Sector-specific opportunities • Education – There are opportunities for joint programmes between higher, education institutions, Technical and Vocational Education and Training (TVET), upgrading of TVET institutions, consultancy services and overseas study.

If the oil price is maintained, the current account surplus is projected to average at 10% of the GDP until 2020. Non-oil sector growth is expected to average at 2.7% due to rising market confidence.

The total value of UK exports to Azerbaijan in 2017-18 reached nearly £464 million, with the main exports from the UK including services, technology, engineering equipment and oil machinery.

The UK is the single largest investor in Azerbaijan and UK companies are well placed to increase business.

[Source – DIT Trade and Investment guide: Azerbaijan, FCO Overseas Business Risk, gov.uk, president.az, World Bank, IMF World Economic Outlook Report]

•

Energy – In 2017, BP, together with SOCAR, signed the extension to 2049 of the Azeri Chirag Guneshli PSA Agreement, which will lead to significant new business for resident and new UK companies.

MARKET EXPERTS

40 : Membership : Training : Qualifications : Advice

•

Financial and professional services – This area of the economy was hit hard during the recession of 2016, this creates opportunities for UK companies to support development and share their experience and knowledge.

•

•

Global sports – Baku is one of 13 cities appointed by the UEFA to host games at EURO 2020, and there will be business opportunities when tenders are issued.

Information and communications technology (ICT) – The ICT sector in Azerbaijan is

Business etiquette, language and culture Azerbaijan is a largely secular society, and religion is usually considered a private matter.

Respect local traditions, customs, laws and religions at all times and be aware of your actions to ensure that they do not offend. Be aware that as Azerbaijan is a conservative, hierarchical society it is considered

being developed by a US $4 billion investment by 2020, and the Azerbaijani Government is looking for UK partners.

•

Infrastructure – The diversification strategy is opening up opportunities for UK companies across many industry sectors.

important to create a good impression, for example by dressing smartly and being punctual.

Arrange meeting schedules around two weeks before arrival, and confirm closer to the visit, reconfirming the day prior to the scheduled time.

•

Retail – There are a number of mid-range and high-end shopping malls in Baku, with opportunities for the supply of both luxury and mid-range brands in all areas.

[Source – DIT Trade and Investment guide: Azerbaijan, gov.uk]

bilingual. English is also quite widely spoken and understood in Baku.

[Source – DIT Trade and |Investment guide: Azerbaijan, gov.uk]

The official language is Azerbaijani.

However, Russian is also still widely used and most people in Baku are

For more information go to the Doing Business with Azerbaijan Guide website at: www.Azerbaijan.doingbusinessguide.co.uk or to request a copy of the guide email: institute@export.org.uk www.Azerbaijan.DoingBusinessGuide.co.uk : 41

Quick facts Location: Southwestern Asia, bordering the Caspian Sea, between Iran and Russia, with a small European portion north of the Caucasus range Area: 86,600 km2 Population: 9.94 million Urban population: 55.7% Capital city: Baku GDP per capita: US $4,722.3 Languages: Azerbaijani (Azeri) (official) 92.5%, Russian 1.4%, Armenian 1.4%, other 4.7% (2009 est.)

Religion: Muslim 96.9% (predominantly Shia), Christian 3%, other <0.1, unaffiliated <0.1 (2010 est.)

Government: presidential republic Legal system: civil law system Currency: Azerbaijani Manat (AZN) Climate: dry, semi-arid steppe Natural resources: petroleum, natural gas, iron ore, non-ferrous metals, bauxite Natural hazards: droughts Time difference: UTC+4 Internet country code: .az National holiday: Republic Day (founding of the Democratic Republic of Azerbaijan), 28th May (1918) National symbols: flames of fire; national colours: blue, red, green

[Source – FCO Economics Unit, CIA World Factbook (Nov 2019)]

The Professional Journal from the IOE&IT

Trade association focus

The Cosmetic, Toiletry and Perfumery Association The Cosmetic, Toiletry and Perfumery Association (CTPA) acts as the voice of the UK cosmetics industry, representing all types of companies involved in making, supplying and selling cosmetic and personal care products.

For more information, a full list of the CTPA members we represent is available online on our website - https://www.ctpa.org.uk/. u

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World Trade Matters

Trade association focus

For the UK cosmetics industry, the EU is noticeably the main trade partner with a share of 64.8% of all exported cosmetic and personal care products, and with a similar fraction for imported goods into the UK cosmetic market, according to 2018 trade data. Expectedly, North America and Asia are the other prominent trade areas worldwide, commanding a similar share of exported goods, with the United States and China being the leading countries in these regions for both imports and exports.

Cosmetic products are unique in their appeal to consumers, being able to have the opportunity for growth in markets which are already strong by introducing innovative, trend-led or recognisably branded products. Within Europe for example, there are still opportunities to grow in Eastern European markets, where there is an already solid and recognised manufacturing base for cosmetic products, but where the interest in UK products and brands is still strong.

The Western market in contrast might see better opportunities with the introduction of new technologies and innovations into the products, that would meet the latest trends in the cosmetics industry.

Globally, China is already a leading market for our exporting companies, however, we foresee that upcoming regulatory changes may provide greater opportunities for exporting companies to gain access to these markets. Similar opportunities are also available to UK companies intending to access the Middle Eastern market, where brands with a strong identity and products designed to meet the consumer profile for that specific market will be able to see a very positive result to their exporting efforts.

However, although the opportunities to access and grow in new markets are many, cosmetic products also come with a unique set of challenges.

From an international perspective, our work with UK companies has shown that most of the difficulties encountered while trying to access export markets come from existing and upcoming Technical Barriers to Trade (TBTs). Cosmetic products are regulated in most countries, and whilst sometimes there are some similarities between legislations, enough differences remain between most countries to have an impact on market entry.

For example, some products that are considered cosmetics in the UK, such as sunscreens or antiperspirants, are classified as over-the-counter drugs in the US. This classification requires adherence to more onerous regulation. Within the European Union, the overarching EU Cosmetic Products Regulation eliminates all TBTs, allowing for the free movement of goods.

Future political and economic developments might result in a separate regulatory framework for cosmetics within the UK and, if divergence from the EU occurs, the UK could face the same trade barriers with the EU as it currently faces with international markets.

To avoid trade barriers and ensure opportunities are created for businesses, regulatory harmonisation is therefore key.

CTPA provides best practice and support in key markets that are relevant for its membership. It is often difficult to find information on the regulatory frameworks for international markets, so at CTPA we have extensive online resources where we provide information and advice on how to ensure compliance to facilitate access to these

44 : Membership : Training : Qualifications : Advice

export markets. CTPA also engages with Government departments, trade associations and other relevant stakeholders in third countries to support and enable the resolution of technical trade issues and influence upcoming regulatory changes. Our work with international authorities is aimed at increased harmonisation, to lessen the regulatory burden and promote cooperation. CTPA also works locally with UK and EU Government Departments and Authorities, and other relevant stakeholders to highlight the relevance of the cosmetics sector and promote UK-based industry.

In the past, the Institute of Export and International Trade has assisted CTPA by taking part in our events, offering valuable insights on specific trade topics of relevance, providing direct help and access to pertinent courses. CTPA has always welcomed a close collaboration with the Institute and is looking forward to our continued joint effort.

Lastly, from the CTPA we would like to provide some tips for a smooth market entry: 1. Always check for product compliance on the destination market prior to attempting access.

2. Make use of available Government funds and resources provided to exporting companies.

3. If in doubt, seek advice from reputable and expert organisations such as the Institute of Export and International Trade or, if you are a member, CTPA, and let us know about your experiences. n

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World Trade Matters

SME Focus

Gearing up for cross border trade

Exports are a growth area for SMEs, particularly for businesses that have adapted their business models to suit this approach. However, international trade is becoming a more complicated system with ongoing questions over both the UK’s future trading relationship with Europe and the trade relationships of some of the world’s largest economies.

If you’ve recently travelled along Britain’s motorways you may have seen the message “Freight to EU may change November 1. Check papers". As things currently stand, we are still in the EU and freight continues to flow across borders, but this is a taste of the kind of changes we can expect when the UK leaves the EU. For now, the EU has agreed that (for a transitional period) UK hauliers will be able to continue using their existing licences to and from the EU. However, once the transition is over arrangements between the UK and EU are likely to change. u

46 : Membership : Training : Qualifications : Advice

The Professional Journal from the IOE&IT

SME Focus

SMEs trading with the EU adhere to, and currently work within, a relatively simple set of European-wide regulations including quality control and health and safety standards. It is likely that regulations are likely to become more complex over the course of the transition period.

SMEs should seek advice from the Government directly for advice on these changes.

This isn’t an easy process. Our latest research found an SME population that is under continuing pressure but determined to get on with business as usual. Most encouragingly, SMEs are continuing to trade across borders as a third (33%) exported goods in Q3 2019 and a similar amount (32%) imported from overseas – these figures have remained consistent throughout 2018 and the first three quarters of 2019.

The trend is important and highlights the pragmatism with which Britain’s SMEs approach problems.

It marks the second consecutive quarter of this number of SMEs investing in exports, with one in ten (10%) still investing in their exports, despite the political uncertainty from Brexit.

helping businesses through the Brexit process and beyond. We provide a number of services for importers and exporters as well as a range of educational resources designed to inform SMEs of the latest updates regarding Brexit and legislation.

We’ve worked with thousands of exporters and a common thread amongst those that have been successful is leveraging the support available. We will be focusing on how SMEs can reduce costs and grow their profits, this includes looking more closely at opportunities in the countries in which they already operate, as well as exploring new markets.

In the meantime, there are several things that SMEs can do to make sure they can continue to export to the EU. •

Review your finances – You may not realise that you can release funding tied up in invoices to improve your cashflow position or provide the funding you need to invest.

Export Finance is designed for SMEs who have customers overseas who may have extended payment terms or issues collecting payments from abroad. Continuing currency fluctuations may also affect your bottom line. So, it’s worth exploring FX options to mitigate any potential impact on profit.

•

Research your export markets – With Brexit expected to shake things up it is likely that your usual export markets may look a little different after the we have left the EU. The Government offers a paid service to research export markets for you as well

While the election has delayed a clear outcome on the Brexit question, by the time we come back from our Christmas breaks we should all have a much clearer idea of what will come next. SMEs would be advised to use that time to prepare.

Bibby Financial Services is committed to supporting businesses that trade both domestically and internationally, no matter what the economic outlook is. We’ve recently signed up to the SME Finance Charter reaffirming this commitment to

as extensive country guides. It may also be a good time to explore new markets outside of the EU. •

Your payments could change – SMEs will continue to be able to use the Single Euro Payments Area (SEPA) schemes to make credit transfers and direct debits in euros, however, you could be charged more. SMEs would be advised to forecast these potential changes to see what affect they will have on margin.

•

Start talking to your EU based customers – Remember that leaving the EU isn’t a one-way street. Demand for your goods may change after we leave the EU as B2B customers adjust their own supply chains.

•

Check if you need sector expertise – SMEs operate in many different sectors with little quirks and nuances in the rules.

Make sure you understand how you will be affected and seek out expert advice if you’re unsure. n

Jim Davis Managing Director of Export Finance, Bibby Financial Services

www.export.org.uk : @ioexport : 47

World Trade Matters

Trading on Amazon

How to reach a billion global customers (and not lose your shirt)

In business, the ability to spot an opportunity before others is highly-prized.

And then there’s James Averdieck, who commissioned an agency to develop the branding for his new range of luxury desserts only to be told that a new foreign competitor had launched with the same sophisticated high-end look and feel he was hoping for. But when he learned the story was a ruse to persuade him to buy the agency’s branding proposal - the same brand he thought belonged to a competitor - he was overjoyed, and Gü desserts was born.

All too often we only see the true value of an opportunity in the rear-view mirror. And whatever your politics, it is undeniable that Brexit has prompted businesses to re-examine their appetite for international expansion.

Yet a Cebr survey run after the 2016 Brexit vote found that only 5% of SMEs planned to export more over the next five years.

Why the reticence?

I’m reminded of US electronics engineer Ralph Baer, who pioneered the idea of playing games through a TV screen and who invented one of the first-ever video games, ‘Table Tennis’. But it was only when entrepreneur Nolan Bushnell adapted Baer’s idea, added sound, the ability to change the ball’s angle of return and a tall wooden case that the game - Atari’s ‘Pong’ - took off.

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Well, the number one barrier stopping UK businesses from exporting is "access to contacts, customers and the right networks", according to a recent Department of International Trade report.

For many firms, being able to test and make a success of new markets without having to build retail distribution, marketing, warehousing and logistics facilities first would provide a huge speed-to-market u

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Trading on Amazon

advantage that would allow you to find what works, quickly.

the site in a few days’ time. That’s not the difficult part.

So, what if I told you there was a platform that offered access to hundreds of millions of customers in over 50 countries? And that as well as offering a ready-made customer base, this platform will even market, store, pack and ship your products for you?

The real conundrum has always been how to kickstart success in order to quickly determine whether your investment in a new market is likely to pay off. That’s why Amazon’s decision to allow manufacturers to target advertising at the ready-to-buy consumers browsing Amazon’s site is so revolutionary.

Does that sound like something that would interest you? I’m not surprised.

And what’s more, you already know the platform’s name. Amazon.

Amazon is both the world’s biggest online marketplace and number one product search engine, ideal for those who want to get in front of in-market customers worldwide.

Amazon sellers can reach an addressable market of 1.2bn online consumers.

Today nearly a third of all of Amazon's global revenue comes from referral fees from third-party sellers, and that share is growing. This means Amazon is keen to find more businesses to partner with because when they grow, Amazon does too.

Amazon’s seller program has long been a way for exporters to establish a presence in new markets. For example, if an overseas firm wanted to start selling on Amazon.co.uk they could do so for around £25/month. All they would need to do is add and submit their inventory list and it would start to show up on

Amazon’s ongoing aim is to put users first, and to help with that they have developed the A9 algorithm.

A9 makes decisions about which products to show to prospective customers first. For example, a high-selling product with plenty of positive reviews will be shown to users before a new product with no sales or reviews history. That’s great news for established Amazon sellers, but not so great for exporters testing out a new market. But by using pay-per-click advertising on Amazon you can short-circuit the process.

•

Display ads - Amazon helpfully allows you to place these on a competitor's brand page annoying for them, but great for you.

And if you want to improve your chances of a successful ad campaign, a growing number of digital agencies, which includes ClickThrough Marketing, can set up and run them for you.

No-one gets into manufacturing because they love handling logistics, distribution or marketing.

We get into business because of the passion we have for the things we manufacture, and our desire to share them with the world.

Amazon advertising allows exporting manufacturers to test, build and dominate new markets and get back to what they do best creating products they love. n

There are three main options open to an Amazon seller: •

•

Sponsored products - delivers the greatest number of eyeballs and sales, and allows you to place your products prominently at the top of search results.

John Newton Group Marketing Director, Clickthrough Marketing

Sponsored brands - enables you to take over the space that appears above the search results.

To request a free insight report looking at the Amazon sales potential for your product on Amazon in one territory, visit https://www.clickthrough-marketing.com/free-amazon-insights

www.export.org.uk : @ioexport : 49

World Trade Matters

World Trade Summit

Birmingham World Trade Summit

The Institute of Export & International Trade (IOE&IT) ran its final World Trade Summit for 2019 in Birmingham on 28th November 2019, alongside the 12th Open to Export competition final.

Taking place during the weeks running up to the General Election in December, the summit speakers tried to look beyond the climate of political uncertainty to the opportunities that markets beyond the EU present UK businesses.

Representatives from the China Britain Business Council, the Russo-British Chamber of Commerce and the Greater Birmingham Commonwealth Chamber of Commerce each spoke of the

potential for UK businesses to grow through exports, regardless of the challenges Brexit currently presents.

Uncertainty is aďŹ&#x20AC;ecting UK businesses, but support is out there The summit was hosted by Bibby Financial Services (BFS) , who were also sponsors of the afternoon Open to Export showcase.

Jim Davis, Managing Director for BFS, drew on some of the

50 : Membership : Training : Qualifications : Advice

ďŹ ndings from their 2019 Global Business Monitor, noting that 26% of businesses polled said they had delayed funding commitments due to Brexit, with 66% saying Brexit was one of the top three threats to global economic growth. The political situation in the USA and interest rate rises were also listed as threats, though he argued that the rise of protectionism in global markets is also a serious concern for global trade in general. u

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World Trade Summit

Richard Bartlett, Director of Business Development at the IOE&IT and compere for the day, noted the practical impacts that Brexit could have for UK businesses, particularly around tariffs and rules of origin. He also gave an overview of the support the IOE&IT provides, including training, qualifications and our technical helpline.

Foreign exchange rates also continue to be a significant factor for exporters in the UK. Andrew Perris, UK Head of FX for Bibby Foreign Exchange Limited, gave an overview of the potential impacts of the likely results of the General Election and advised businesses on how they could manage potential future fluctuations.

A world beyond the EU The one certainty in global trade right now is that there will be opportunity somewhere, even if uncertainty remains for the UK’s traditional trading partners. The Commonwealth has long been touted as a future source of trade post Brexit and Keith Stokes-Smith, President of the Greater Birmingham Commonwealth Chamber of Commerce, spoke of the scale of opportunity it presents.

cultural differences when selling to China, particularly their increasing demand for high quality goods and services.

Sergei Averin, from The RussoBritish Chamber of Commerce, spoke about the prospects for UK businesses in Russia, allaying some concerns about the ease of doing trade transparently there, and he talked about the sizable network of chambers in Russia who are happy to support potential traders. He then gave the floor to Boris Obolenets, President of the Stavropol Chamber of Commerce and Industry, and Elena Blinskaya, who spoke specifically of the opportunities in the Stavropol region.

Online opportunities on Amazon and Open to Export John Newton, Group Marketing Director at Clickthrough Marketing, also spoke about the opportunities for businesses to tap into markets quickly and efficiently using Amazon.

He noted that Amazon is by far the largest ecommerce market in the world and gave an overview of the different models for sellers operating on it.

Shan Hassam, Managing Director at Veenak International, and Tony Allen, Founder of Age Check Certification Scheme, both spoke on a case study panel about the support they’ve had entering new markets.

Shan made particular reference to the proactive support BFS have provided and advised smaller businesses that having a clear focus is essential to export success.

Tony Allen spoke of the UK’s leadership role in world trade in regard to standards and certification. In a precursor to his role as a judge and the Open to Export Competition following the Summit and as a previous winner of the competition, he noted that his company had invested significantly in integrating international payment systems.

The Open to Export competition final that was to follow was an excellent showcase of SMEs continuing to look to international markets as a source of growth. The 8 SME finalists each impressed the judges with their coherent export plans, generated using the online planning tool on www.opentoexport.com, though only one winner could be announced. u

He noted that the Commonwealth includes young and growing markets, including half of the top 20 global emerging cities. While Australia, New Zealand and Canada were noted as prominent Commonwealth markets, he was keen to point out the significant growth opportunities in India, Nigeria and Kenya.

Stewart Ferguson, China Business Advisor at the China Britain Business Council, noted that the middle-income population of China is now the largest in the world at around 160 million. He warned of the www.export.org.uk : @ioexport : 51

World Trade Matters

Open to Export

The Bshirt win the Open to Export Action Plan Competition

The Bshirt - the UK's only ethical breastfeeding clothing brand dedicated to reducing clothing waste and empowering women to breastfeed with confidence – have won £3000 towards their international strategy following a showcase export planning final in Birmingham on 28th November.

They won the Open to Export Action Plan Competition with their pitch to expand sales into the Netherlands and Germany. They impressed the judges with their focussed plan to translate their website and marketing messaging for the Dutch and German markets, while also investing in social media campaigns to test each market.

The competition concluded with a showcase final at Bibby Financial Services’ (BFS) Birmingham offices.

8 SMEs pitched their international plans to a panel of expert judges for the chance to win the £3000 prize sponsored by BFS. All the finalists entered the competition by submitting export plans

52 : Membership : Training : Qualifications : Advice

generated using an online planning tool provided by the Institute of Export & International Trade on www.opentoexport.com Upon winning the competition, Lisa Lessware, Co-Founder of The Bshirt said: u

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Open to Export

product. We look forward to seeing the business grow and make the most of the opportunities that international trade can bring.”

A list of the judges and finalists is below.

Export Action Plan Finalists • • • • • • • •

Deakin and Blue Honey Corn Limited Industrial Textiles and Plastics Polkadoodles Ltd Quinola Mothergrain Sea Chips The Jacket Club Ltd The Bshirt

The judges “It was incredible. We’ve been working so hard for the last 3 years and it felt so good to get some recognition for how far we’ve come. To present to a panel of such accomplished business people was very daunting but it was such a great opportunity to showcase our amazing business and our export plans.

• •

• “We’re a small business with big dreams and we now have the support in place with prize money but also with the 1-year membership and training courses to gain the skills and expertise we need to make our exports a success. We’re very excited about what the next year will bring.”

• •

Kelly Hamill – Head of Sales, Bibby Financial Services [UK] Limited Richard Bartlett – Director of Business Development, Institute of Export & International Trade Keith Stokes-Smith – President, Greater Birmingham Commonwealth Chamber of Commerce John Newton – Group Marketing Director, Clickthrough Marketing Tony Allen – Founder and Head, Age Check Certification Scheme (and a previous Open to Export winner) n

Richard Bartlett, Director of Business Development at the Institute of Export & International Trade and a judge for the competition, also said: “The Bshirt company were worthy winners amongst an impressive field of entrants. Their plans were coherent, and they had a clear pitch for how they’d use the £3000 towards their international growth. We look forward to watching their progress with great interest.”

The competition was sponsored by BFS as part of their commitment to increasing the number of small businesses in the UK selling into overseas markets.

Jim Davis, Managing Director for Export at BFS, said: “We were blown away by all of the finalists’ pitches, but we were particularly excited by The Bshirt’s ambition to expand into new markets with such an innovative

To find out more about the Open to Export competitions, please visit: https://opentoexport.com/info/export-action-plan-competition/ www.export.org.uk : @ioexport : 53

World Trade Matters

Winner Case Study

Company name: The Bshirt using organic cotton and our garment bags are home compostable.

We have flexible working hours for all our employees and recognise and value the roles and responsibilities our staff have outside of their jobs (i.e.: family commitments). We’re expanding our range of products with an amazing and innovative feeding top scheduled for launch in Spring 2020. We’re also expanding our product range to include essential products that support a woman’s breastfeeding journey.

How did it feel to win the competition?

It was incredible. We’ve been working so hard for the last 3 years and it felt so good to get some recognition for how far we’ve come. To present to a panel of such accomplished business people was very daunting but it was such a great opportunity to showcase our amazing business and our export plans.

We’re a small business with big dreams and we now have the support in place with prize money but also with the 1-year membership and training courses to gain the skills and expertise we need to make our exports a success. We’re very excited about what the next year will bring.

What does your company do at the moment and what’s next?

We’re an ethical breastfeeding clothing brand that designs breastfeeding tops for women to either layer with their pre-pregnancy clothes or wear on their own as a pretty vest, short sleeved or longsleeved top. We believe in empowering women to express their own style and avoid the ‘mum uniform’ as well as reducing clothing waste.

Our products are ethically made

How are the exports going?

We have a UK website which sells mainly to UK customers, with a small percentage of sales going overseas.

We have a USA website and have sent stock to Amazon to be fulfilled

by Amazon in the States. We are now in the process of launching an EU version of our website to allow us to capture payments in Euros and start actively exporting to EU countries. We are planning to advertise this new website to the Netherlands, Germany, Spain & Belgium throughout the course of 2020.

How has the Export Action Plan helped with your exports?

The Export Action Plan greatly helped. When we first started this process, we knew we wanted to export but we weren't sure how, where or when. The action plan really helped us to focus our research into which new markets to target and how to target them. Based on this we set goals and we now have a detailed action plan to implement.

How have you found the experience of the final today?

The final was nerve wracking but fun! It was great to watch the other

54 : Membership : Training : Qualifications : Advice

finalists and to learn about how other SMEs are approaching similar challenges. The opportunity to network with other contestants and the judges was invaluable too.

We have come away with potential contacts to help with our Amazon advertising, trade finance, advice on trade shows and possible new collaborations.

To be selected as winners was truly the icing on the cake!!

What three tips would you give to other new exporters?

1. Do your research 2. Get help - there’s lots of great advice out there 3. Don’t be afraid to get it wrong, because it’s a learning curve About The Bshirt The Bshirt is the UK's only ethical breastfeeding clothing brand dedicated to reducing clothing waste and empowering women to breastfeed with confidence. Started by two mums who wanted to wear normal clothes while breastfeeding, the Bshirt is deceptively simple - it's a vest top that transforms a woman's existing wardrobe to become breastfeeding friendly. And it works - 83% of our customers say breastfeeding in their Bshirt makes them feel more confident than any other top. Now trading in its 3rd year, the Bshirt is going from strength to strength. Its customers simply love the simplicity of the product and the ethics of the brand. The Bshirt only uses organic cotton, fairtrade factories, and plastic-free packaging.

The Bshirt is leading the way in ethical consumerism while helping mums achieve their goals. n www.thebshirt.co.uk Twitter: @thebshirt

Market Profile: Doing Business with Mongolia

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Stretching over 2,390 km from west to east and 1,260 km from north to south, Mongolia is a landlocked country situated in east-central Asia between China and Russia, and is more than six times the size of the UK â&#x20AC;&#x201C; about the combined size of west and central Europe.

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Download the free Mobile App

Since 1991, Mongolia has transformed into a vibrant parliamentary democracy, with rule of law and a free, lively media, three times the level of GDP per capita and vast agricultural and mineral resources including major deposits of coal, gold, copper, iron ore and uranium.

With increasing school enrolments, dramatic declines in maternal and child mortality and an increasingly educated population, the World Bank predicts double-digit growth figures for some years. The Mongolian Government is keen to develop its industry, and there are opportunities for UK companies in many areas.

This growth has been supported by steady commodity exports (such as copper and coal) and a recovery in FDI, as well as the Mongolian Governmentâ&#x20AC;&#x2122;s effective implementation of an economic adjustment programme.

The outlook remains positive in 2019, supported by robust growth in private consumption as well as private investment in mining and manufacturing.

Mongolia's GDP growth rate increased from 1.2% in 2016 to 5.3% in 2017 and 6.9% in 2018.

www.Mongolia.DoingBusinessGuide.co.uk : 55

Market Profile: Doing Business with Mongolia

Mr. Philip Malone LVO, Her Majesty’s Ambassador to Mongolia,

Mongolia is a fascinating and in many ways, unique, country. It has come a long way in the last 30 years and has evolved from being an authoritarian and centrally-planned state into a vibrant democracy with a free market economy. Despite having a land mass roughly equivalent to the whole of Western Europe, it has a population of only 3 million, almost half of whom live in the capital, Ulaanbaatar. The legacy of Genghis Khan’s Great Mongol Empire can still be found throughout Eurasia.

As a lower middle-income and developing country, Mongolia is still a frontier market, though the economy has grown considerably since the early 2000s. The severe downturn of 2014-16 has passed, with growth in 2019 expected to be a healthy 7%. Mining remains the most significant part of the economy and represents around 90% of exports and 30% of GDP. Other UK investors are also active in Mongolia’s hugely valuable mineral resource sector.

It is not all about mining though. Mongolia is seeking to strengthen the agriculture and tourism sectors and, as in other parts of Asia, with increasing prosperity there are growing opportunities for example in retail, education, healthcare, and food and beverage. The UK is well represented in the financial sector with the big accounting firms all having a presence in Ulaanbaatar and a growing partnership between the London and Mongolian Stock Exchanges. Coupled with considerable goodwill towards the UK as the first Western country to establish diplomatic relations with Mongolia in the 1960s, there is great potential for UK trade and investment as we expand our horizons post-Brexit.

At the British Embassy Ulaanbaatar, we work hard to promote these interests and, with a four-strong DIT team, provide in-depth local expertise and support. So please get in touch as you explore the opportunities in the ‘Land of Eternal Blue Sky’!

Mr. Philip Malone LVO Her Majesty’s Ambassador to Mongolia https://www.gov.uk/world/organisations/british-embassy-ulaanbaatar

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Advice from our Technical Helpline

The Institute of Export & International Trade's 'Export Helpline' provides help for any international trade query, including documentation, export controls, customs & VAT procedures, payment terms, Incoterms, and much more. Members of the IOE&IT can access the helpline for free.

When exporting to Mongolia the following general requirements apply: Documentation Bills of Lading Three originals required, “freight prepaid” made out “to order”. As long as there are no payment or title (ownership) issues, check if the goods can move with an express bill or on express release to avoid potential delays that may occur when shipping with the full marine bill of lading (i.e. the cargo cannot be released until the original has been handed to the carrier in the buyer’s country).

Certificates of Origin An EC Certificate of Origin in one original form is required for all imports. The origin declared must correspond to the origin statement shown on the invoice.

Certificates of Origin are obtained from authorised Chambers of Commerce.

In the change to EU law (1 May 2016 — the Union Customs Code (UCC)), export origin for non-preference purposes is now subject to national standards and it may be necessary to obtain a declaration based on the rules of non-preference origin in the country of import.

For consistency in the UK, British Chambers of Commerce (BCC) standards are still based on EU customs law.

Special Certificates Some categories of items will need special certification, including: 1. Alcoholic beverages 2. Animal feeding stuffs 3. Animal products for human consumption 4. Live Animals 5. Chemicals 6. Cosmetics 7. Electrical and electronic devices 8. Mercury 9. Pharmaceutical and medicines

10.

11.

12.

13.

Plants and plant products Textiles and clothing Toys and games Wildlife and wildlife products (eg CITES) 14. General Declarations of Conformity Commercial Invoices No special format required but the invoice should contain the following information: supplier and customer details, full description of goods with quantity, the price of goods and (if applicable) freight and insurance costs, packing information and any relevant marks or numbers, the payment terms and the delivery terms (the Incoterms® 2020 rule, eg FCA, CIP, DAP).

A manufacturer’s quality and quantity/weight certificate in duplicate is required to support the invoice details.

Country of origin must be declared on the invoice with the following statement: “We hereby declare that the country of origin of the goods is …”

Facsimile signatures are not allowed.

Customs require three original invoices.

Packing List A packing list containing marks, weights and dimensions, and content details is recommended to assist customs clearance. No specific form required, though generally should be in two copies.

Air Freight Services from UK: to Berlin, Moscow and Beijing.

Useful Contacts & Information Financial Currency 1 Mongolian tugrik (MNT) = 100 mongo

Exchange Controls None as long as imports are approved Bank(s) Bank of Mongolia; Central Bank of Mongolia; National Investment Bank; Trade and Development Bank of Mongolia.

Embassy 8 Kensington Court London W8 5DL Tel: 020 7937 0150 Fax: 020 7937 1117 Email: office@embassyofmongolia.co.uk Web: www.embassyofmongolia.co.uk Office hours: Monday–Friday 0900–1300, 1400–1700.

British Embassy Peace Avenue 30 Bayanzurkh District PO Box 703 Ulaanbaatar 13381 Tel: 00 976 11 458133 Fax: 00 976 11 458036 Email: Enquiries.Mongolia@fco.gov.uk Web: www.gov.uk/government/world/ mongolia Chamber(s) of Commerce The Mongolian National Chamber of Commerce and Industry MNCCI Building Mahatma Gandhi Street 1st Khoroo Khan-Uul District Ulaanbaatar 17011 UB Post-101011001 Tel: 00 976 11 327176 Fax: 00 976 11 324620 Email: marketing@mongolchamber.mn Web: www.mongolchamber.mn

Exchange Rate 3282 MNT = £1 sterling (fluctuating rate)

www.Mongolia.DoingBusinessGuide.co.uk : 57

General Overview Geography Stretching over 2,390 km from west to east and 1,260 km from north to south, Mongolia is a landlocked country situated in east-central Asia between China and Russia, and is more than six times the size of the UK – about the combined size of west and central Europe. However, with a population of only 3.24 million, it is the most sparsely populated independent nation in the world, with approximately half living in its capital, Ulaanbaatar.

[Source – DIT Trade and Investment guide: Mongolia, gov.uk]

Economic overview The Mongolian economy suffered a sharp slowdown between 2014 and 2016, driven by a fall in commodity prices and declining FDI. However, it has since strongly recovered, with its GDP growth rate increasing from 1.2% in 2016 to 5.3% in 2017 and 6.9% in 2018. This growth has been supported by steady commodity exports (such as copper and coal) and a recovery in FDI, as well as the Mongolian Government’s effective implementation of an economic adjustment programme. The outlook remains positive in 2019, supported by robust growth in private consumption as well as private investment in mining and manufacturing. UK exports to Mongolia amounted to £36 million in 2018. The largest value UK exports are machinery and mechanical appliances, which make up approximately 20% of all UK goods exported to Mongolia. In addition, UK education, consultancy and financial services are also significant in Mongolia.

[Source – World Bank, DIT Trade and Investment guide: Mongolia, gov.uk]

Benefits for British businesses

•

Benefits for British businesses exporting to Mongolia include: •

a younger generation with an increasing number of English language speakers

•

Mongolia is expected to be one of the world’s fastest-growing economies in the next few decades the country has a freely convertible currency

[Source – DIT Trade and Investment guide: Mongolia, gov.uk]

MARKET EXPERTS

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Sector-specific opportunities •

Agriculture sector – There are opportunities for British companies with expertise in meat processing and marketing technologies.

•

•

•

•

Consumer goods sector – Disposable incomes of many Mongolians have risen bringing with it opportunities for manufacturers of consumer goods and retailers.

Education sector – Opportunities for UK educational organisations and companies include partnering for transnational education and student recruitment in all areas.

Legal and financial services sector – Demand has risen for legal and financial services as foreign investors have entered the market.

Mining sector – Opportunities for UK companies include mining exploration, extraction and production, supply of

mining equipment and technologies, engineering consultancy services and training services.

[Source – DIT Trade and Investment guide: Mongolia, gov.uk]

Business etiquette, language and culture The official language of Mongolia is Khalkha Mongolian, spoken by about 90% of the population. Some may also be able to speak some Russian too. A small number of Mongolian companies, such as those with an international outlook, may have English speakers on their staff.

time and effort into creating a rapport with your business partners.

When meeting and greeting, a handshake is usually the norm, together with the word “hatagtai” (meaning Madam) for women, or “noyen” (meaning Sir) for men, although just a nod of the head is not uncommon.

Business cards (translated into Mongolian on one side) should be offered and received with both hands.

[Source – DIT Trade and Investment guides, gov.uk]

Establishing personal relationships is essential in conducting business with Mongolia. You should invest

For more information go to the Doing Business with Mongolia Guide website at: www.Mongolia.doingbusinessguide.co.uk or to request a copy of the guide email: institute@export.org.uk

www.Mongolia.DoingBusinessGuide.co.uk : 59

Quick facts Location: Northern Asia, between China and Russia Area: 1,564,116 km2 Population: 3.24 million Urban population: 68.4% Capital city: Ulaanbaatar GDP per capita: US $4,017.2 Languages: Mongolian 90% (official) (Khalkha dialect is predominant), Turkic, Russian (1999) Government: semi-presidential republic Legal system: civil law system influenced by Soviet and Romano-Germanic legal systems; constitution ambiguous on judicial review of legislative acts Currency: Mongolian Tughrik (Tögrög) (MNT) Climate: desert; continental (large daily and seasonal temperature ranges) Natural resources: oil, coal, copper, molybdenum, tungsten, phosphates, tin, nickel, zinc, fluorspar, gold, silver, iron Natural hazards: dust storms; grassland and forest fires; drought; "zud," which is harsh winter conditions Time difference: UTC+8 Internet country code: .mn National holiday: Naadam (games) holiday (commemorates independence from China in the 1921 Revolution), 11th-15th July; Constitution Day (marks the date that the Mongolian People's Republic was created under a new constitution), 26th November (1924) National symbols: soyombo emblem; national colours: red, blue, yellow

[Source – FCO Economics Unit, CIA World Factbook (Nov 2019)]

The Professional Journal from the IOE&IT

Ecommerce - Regulatory Focus

New markets for businesses, new challenges for regulators How e-commerce is changing cross-border trade

“

We had the bearing in stock, agreed the sale and had the bearing with our customer within two days”, explained Simon Riley, managing director at the Leeds company, who in 2017 were named PD Ports Northern Powerhouse E-commerce Exporter of the Year.

Tim Bailey FIEx Director, Chamber International

Technology is shaping the future of international trade. The global explosion in cross-border parcel shipments driven by e-commerce was one of the many subjects on discussion at this October’s World Trade Organization Public Forum – an annual gathering of businesses, academia, law firms and international organisations held in Geneva.

Having a good website makes a business’s brand and products visible across the globe, and can connect them with new customers from the most unlikely places, as Leeds-based Quality Bearings Online discovered a few years ago when they received a phone call late one night from the Netherlands Antilles.

The caller had found them during a Google search and needed a specific bearing for a ferry that connected that person’s island with the South American mainland.

The ferry had broken down, leaving a large part of the island cut off.

"At that point, we didn't immediately think that exporting was the future, but the seed was planted.

"Fast-forward to today and we feel we are at the cutting edge of e-commerce by using geo-locating tools to ensure our customers get the right message at the right time. Our sales team use our website as their ‘silent salesperson’; the website attracts the customer in the first place and then they follow up and build relationships from there.

"Our whole team has fully bought in to exporting via our website. We strongly believe in the social media side of the web working in our favour, so we have a full strategy based on Twitter, Facebook and LinkedIn. "We are on an aggressive growth curve and this is simply down to being an e-commerce business.

”

Small and medium-sized businesses are five times more likely than others to export using the Internet.

E-commerce allows micro and small firms to appear big and established, enabling them to match larger business when it comes to geographical reach. u

Simon Riley, Director, Quality Bearings Online

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World Trade Matters

Ecommerce - Regulatory Focus

system that bridges the digital gap.

The growth in platform-enabled exporting is also allowing more firms to find their place in international trade and has seen Amazon create ‘market places’ in 170 countries. eBay categorise ninety percent of their commercial sellers as exporters.

However, the use of e-commerce in exporting has created new regulatory challenges and these are forcing policy makers to look at the need to update existing ‘bricks and mortar’ regulations, in order to create a more relevant trading

The Geneva-based Global Express Association (GEA), which represents the three biggest fast-parcel carriers (DHL, FedEx and UPS, together handling 30 to 40 million shipments daily), has seen growth of 23 percent in the last three years. Border stoppages also rose from 12 percent in 2017 to 13 percent in 2018, equating to seven million additional shipments being snagged each year.

Not surprisingly, GEA are keen advocates of the World Customs Organisation’s Immediate Release Guidelines. These form part of the Revised Kyoto Convention, adopted in 1999, and allow for the use of a ‘de minimis’ regime and automated assessments to avoid delays to small-value, small-size shipments – delays that can often ‘choke off’ trade.

The Organisation for Economic Co-operation and Development

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(OECD) measures the degree of simplification and streamlining of border procedures around the world, to assist governments in targeting priority areas for reform.

It aims to help increase trade flows and reduce trade costs by analysing various indicators including the level of automation, simplified procedures, charges, appeals procedures, governance, and impartiality at borders.

Chamber International’s advisors understand the ‘pain points’ and the issues that increase trade costs.

We appreciate that trade rules need to be clear and predictable, and that exporters are not always in a position to maintain inventory to allow for unexpected issues arising from changes to the rules.

The easier we make it to export, the more accessible trade becomes in this new era of micro-entrepreneurs exporting from their kitchen tables. n

The Professional Journal from the IOE&IT

International Payments

Following the money

Treasurers have played a key role in international trade for many years, either supporting the flow of money to support import or export activities or, in smaller companies, managing the end-to-end process.

Either way, making or receiving payments can be both key but also a time consuming and often frustrating activity.

• • •

Charges levied post receipt of monies; Incomplete payment information; and Opaque charging structure with multiple parties.

The consequences of these problems can include: Naresh Aggarwal Associate Director Policy & Technical, Association of Corporate Treasurers

•

• • • The range of challenges for the treasurer varies but can include: • •

Delayed receipt of incoming receipts for exporters; Charges levied from the gross proceeds;

Delays to shipments as exporters take time to process and allocate incoming receipts; Wasted time spent chasing down a receipt; Poor cash forecasting; and Extended use of borrowing facilities.

Cross-border payment transformation One of the most interesting developments in the last few years

has been an initiative by SWIFT (a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardised and reliable environment).

SWIFT gpi is a new standard that makes for payments with full transparency on accompanying costs, while providing on-thespot information on the status of transactions. Sometimes called “track and trace”, it provides a similar user experience to those of us waiting for a shipment from UPS or Amazon. It addresses a number of challenges from corporate treasurers including: •

When is the payment carried out? Payment is effective on the same day the payment process is initiated (as allowed by u

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World Trade Matters

International Payments

differences in operating hours), which helps strengthen commercial relations with suppliers.

•

•

How much does it cost to make the payment? The basic characteristic of the new initiative is transparency since it provides a breakdown of all of the costs involved in the payment, including exchange-rate costs.

Where is the payment? The status of the payment situation with respect to correspondent banks is available at all times.

This traceability is possible due to the Unique End-to-end Transaction Reference, (UETR) a unique reference associated with each payment that is kept and shared by the different banks involved in the operation.

The process finalises with confirmation the payment has been deposited in the beneficiary’s account.

process. That is, details provided by the issuer are the same as those received by the recipient as a result of the commitment established between the banks taking part in SWIFT gpi.

• How successful has SWIFT gpi been By the middle of 2019 - just over two years on from gpi’s full market launch, the figures below provide a measure of success: • • •

•

• •

How is the payment identified?

Information regarding the payment remains unchanged and homogeneous during the

•

US$40 trillion gpi payments sent in 2018 56%+ of all SWIFT payments are now sent on gpi 3,500+ financial institutions committed to joining the service, representing 480+ banking groups (including 60 of the top 60 banking groups) All payments on SWIFT are tracked end-to-end, thanks to the unique end-to-end transaction reference On average, 40% of SWIFT gpi payments are credited to end beneficiaries within five minutes, 50% within 30 minutes, 75% within six hours, almost 100%

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within 24 hours More than US$300 billion is carried over gpi every day across 1,200+ country corridors, representing 80% of all SWIFT cross-border payments Payments are tracked across 55 networks and market infrastructures

What else is happening One key initiative is extending gpi’s support for corporate services, by enabling all banks to provide tracking information to their corporate treasurer clients. The new gpi functionality allows multi-banked corporates to initiate and track gpi payments across all their banking portals through a single window integrated into their treasury management and ERP systems.

A further planned refinement will enable corporates to have visibility of incoming as well as outgoing payments and payment initiation services. In addition, SWIFT is working to add Request-for-Payment capabilities so corporate sellers can trigger cross-border payments from buyers. n

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World Trade Matters

Export Action Plan

Polkadoodles Ltd What does your company do at the moment and what’s next?

We make products for the paper crafting industry, which we sell worldwide through wholesale and retail outlets. We are expanding further into more retail and wholesale outlets in the USA in 2020.

How are the exports going?

Wholesale exports are 135% up in 2019 vs 2018 - so great!

How has the Export Action Plan helped with your exports?

The plan is a great resource which can be regularly updated to guide processes and focus on your export requirements. It’s been a huge help in identifying the key areas we need to address.

How have you found the experience of the final today?

Excellent! It was very interesting to hear relevant experts and insights at the Birmingham World Trade Summit before hearing about the experiences of other businesses in the final.

What three tips would you give to other new exporters?

1. Definitely use the Export Action Plan tool. Even if you’re an experienced exporter it can give real clarity to your strategy.

2. I’d also suggest attending as many trade shows as possible as you can make great contacts

3. Concentrate on one area until you achieve your goals. That way you won’t lose focus and waste opportunities by spreading yourself too thin.

About Polkadoodles Polkadoodles Crafts are based in York, manufacturing and selling products to Crafters and Retail stores worldwide through their website.

Formed in 2009, Polkadoodles designs and manufactures a range of products including photopolymer stamps, paper products, steel dies and digital artwork which are used by Papercraft hobbyists all around the world to create their own handmade greeting cards, crafts and home décor items.

In addition, Polkadoodles’ artwork is also sold digitally to crafters who download images they can print at home and use on their craft projects – meaning they have instant access to products 24/7 and can create something on their desk within 2 minutes of purchase – great for when they need a last minute birthday card!

Nikky is regularly seen demonstrating the latest products live on dedicated Craft TV shopping channels in the UK which has helped the brand become well renowned in the UK industry where they have a very loyal fan base of consumers and retailers, but in 2016, recognising the far reaching effects of Brexit, Nikky and Kris set ambitious goals to build a

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substantial global customer base by focusing on wholesale and distribution markets, concentrating mainly on Europe and the US. Using the Export Action Plan and guidance from the Institute of Export’s website, Nikky and Kris identified the areas of the business which needed improvement to achieve those business goals and targets, with the ultimate goal to have a substantially larger wholesale base by the Brexit deadline.

Wholesale orders increased gradually month on month, resulting in the appointment of 2 new European distributors in 2018 which helped double the Company’s turnover in 2019.

As a direct result of hard work and determination, Polkadoodles products are now found in Retail outlets across the US, Europe, Australia, Peru, Mexico and beyond, with exciting developments around the corner in 2020 which will reinforce their presence on the global Paper Craft market.

Market Profile: Doing Business with Vietnam

Vietnam overview Vietnam consists of five municipalities and 58 provinces. The country is made up of several geographical and climatic regions which all have their own distinct characteristics. The principal regions are the north, south and central areas of the country.

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Vietnam has quickly developed from a low-cost labour economy to an enterprise market containing high-value and high-quality products and services. Since 1986, when its first economic reforms were introduced, the countryâ&#x20AC;&#x2122;s GDP has doubled every ten years. Due to its vibrant consumer base, and demand for high-quality goods, Vietnam has experienced some of the fastest economic growth in Asia, second only to China.

market. An increasing number are joining them, including Mini, Rolls Royce and Marks & Spencer.

There are numerous high value opportunities (HVOs) for UK businesses in various sectors in Vietnam, including agritech, education and training, energy, financial and professional services, infrastructure, and mass transport sectors.

Many well-established UK brands such as HSBC, Karen Millen, Standard Chartered, Clarks, Dr. Martens, Warehouse, Topshop and Oasis already trade in the Vietnamese

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Market Profile: Doing Business with Vietnam

When exporting to Vietnam the following general requirements apply:

Foreword from Gareth Ward, British Ambassador to Vietnam Welcome to Vietnam!

2019 is proving to be another excellent year for the UKVietnam trade relationship. Strong economic growth and a stable policy environment in Vietnam led to a credit rating upgrade by Moody’s last year. Vietnam has also improved by 22 places in the World Bank’s ease of doing business index since 2016. This has enabled strong growth in UK export of goods and services. Vietnam is a consistent advocate of free trade. Large volumes of FDI have created new manufacturing supply chains, which have driven its transformation to middle income status. Plans for the next stage of reform are ambitious, and this will provide many new opportunities for UK business.

We recently launched new Prosperity Fund programmes in Vietnam which will support sustainable and equitable growth and create trade opportunities in areas such as green finance, healthcare, future cities and capital markets. The last two years have seen even stronger diplomatic relations between our two countries. We have had a record number of Ministerial visits in both directions leading large business delegations in areas such as education and financial services.

I hope to see continued progress towards ratification of the EU-Vietnam FTA. This will unlock enormous new potential for UK companies as Vietnam liberalises across a number of sectors. The UK will ensure continuity through adopting the agreement post Brexit.

On behalf of my colleagues at the Embassy in Hanoi and Consulate in Ho Chi Minh, please get in touch for export advice - there is something for everyone!

Gareth Ward British Ambassador to Vietnam

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Manifest for Aircraft A document notifying the authorities of the arrival of an aircraft and summarising the goods loaded therein. It is mandatory and does not depend upon the specific purpose of arrival. Required for customs clearance and airport surveillance. The document is also a prerequisite for the Customs Import Declaration.

To be submitted by the air freight forwarder or his agent in advance in English or Vietnamese. A system for the electronic submission of manifests is being implemented. The Manifest for Aircraft is usually to be submitted at least 24 hours before the expected time of arrival of the aircraft. In case of non-scheduled flights, the Manifest for Aircraft must be submitted at least one hour in advance.

Manifest for Vessels A document notifying the authorities of the arrival of a vessel and summarising the goods loaded therein. It is mandatory and does not depend upon the specific purpose of arrival. Required for customs clearance and port surveillance. The document is also a prerequisite for the Customs Import Declaration.

To be submitted by the freight forwarder or his agent in advance in English or Vietnamese. A system for the electronic submission of manifests is being implemented. The Manifest for Vessels is usually to be submitted at least eight hours before the expected time of arrival of the vessel.

Customs Import Declaration This is the official form for the customs clearance of goods. It also contains all information required for the assessment of the dutiable value of the shipment.

To be submitted to the customs office of entry. The declaration is to be completed by the importer in Vietnamese.

It is to be submitted in duplicate within 30 days of arrival or in advance either in

Advice from our Technical Helpline

The Institute of Export & International Trade's 'Export Helpline' provides help for any international trade query, including documentation, export controls, customs & VAT procedures, payment terms, Incoterms, and much more. Members of the IOE&IT can access the helpline for free.

paper form or via the electronic data processing system implemented by Vietnam Customs.

Declaration of Dutiable Value This is a document containing all information for the assessment of the dutiable value of a shipment. Required for customs clearance for goods subject to valuation on the basis of their transaction value, excluding goods imported without a sales contract, goods eligible for tax or duty exemption, goods imported for re-export and raw materials imported for export production. To be completed by the importer in Vietnamese.

Commercial Invoice This is a document containing the details of the transaction. Required for customs clearance. No specific form required. The invoice is to be prepared in English. To be submitted to the Vietnamese customs authorities in the original or electronically via the electronic data processing system implemented by Vietnam Customs.

Packing List This is a document containing the details of the shipment and serving as a basis for the customs treatment of goods. May be required for customs clearance, if the shipment contains goods from several categories or if the goods are heterogeneously packed. If the Commercial Invoice contains all the specifications usually included in a Packing List, a separate Packing List is not required. No specific form required.

The Packing List is to be prepared by the exporter in English or Vietnamese according to standard business practice, including details of the content of the packages, description of the goods, marks and numbers.

Certificate of Non-Preferential Origin A document certifying the nonpreferential origin of the goods to be imported. Only required if specifically requested by the importer, by the customs authorities or by other authorities

involved in import procedures. In particular, the customs authorities may demand the provision of the certificate if they have any doubt as to the origin of the goods. By way of example, it may be requested for potentially dangerous goods. The certificate is to be submitted by the exporter. Certificates of nonpreferential origin are usually issued by the competent chamber of commerce.

Proof of Preferential Origin A document confirming the preferential origin of the goods to be imported.

Only required if preferential treatment under a free trade agreement or arrangement is claimed. Goods may be eligible for preferential treatment if they have been either wholly obtained or preferential origin has been conferred by sufficient working or processing as per the product-specific rules of origin.

The Proof of Preferential Origin is to be submitted by the exporter. Formal proofs of origin are usually issued by the competent customs authorities. In case non-formal proofs of origin are foreseen by the relevant rules of origin, these are made out by the exporter.

Air Waybill A document containing the details of the international transportation of goods by air and proving the transport contract between the consignor and the carrier's company. Required for customs clearance. To be prepared by the carrier or his agent. No specific form required, provided that the document corresponds to the applicable conventions regarding both form and content, which in practice leads to a large-scale standardisation of the employed forms.

Usually issued in English. The Air Waybill consists of a set of forms, three of which are originals and the rest are copies. The customs authorities in Vietnam require one copy of the original waybill. One Air Waybill may be used for the multiple transhipment of goods.

by sea. It serves as proof of receipt of goods by the carrier. Furthermore, it serves as a transportation contract obliging the carrier to deliver the goods to the consignee. The Bill of Lading is a document of title to goods, thus its bearer is the owner of the goods. If goods are shipped by sea without a document of title to goods, a Sea Waybill is used instead. Required for customs clearance. To be prepared by the carrier or his agent as a clean or unclean Bill of Lading. Usually issued in English. Three full sets of the Bill of Lading are usually issued, each containing an original and several copies. The customs authorities in Vietnam require one copy of the original bill.

Insurance Certificate A document proving that a contract for the insurance of the goods has been signed. May be required for customs clearance. To be prepared by the insurance company of the exporter or the importer. No specific form required.

The certificate is to be submitted in the original.

Rail Waybill Conforming to both COTIF and SMGS Agreements A document containing the details of the international transportation of goods by rail. The Convention Concerning International Carriage by Rail (COTIF) and the Organisation for Co-Operation between Railways (OSJD) use a unified bill as from 1 September 2006. Required for customs clearance. To be prepared by the carrier or his agent.

Bill of Lading A document containing the details of the international transportation of goods

The information is derived from the European Commission's Market Access Database with courtesy of the data provider and copyright holder Mendel Verlag GmbH & Co. KG. Any kind of further reproduction requires prior written consent of Mendel.

www.Vietnam.DoingBusinessGuide.co.uk : 69

General Overview Geography Vietnam is a long, narrow, s-shaped country that at its narrowest point spans around only 50 km from east to west. From north to south, the country extends roughly 1,650 km and is located on the eastern Indochinese Peninsula between latitudes 8°N and 24°N and longitudes 102°E and 110°E. Vietnam shares a border with neighbouring China to the north, and with Laos and Cambodia to the west, the South China Sea to its east and the Gulf of Thailand in the southwest. Vietnam consists of five municipalities and 58 provinces.

[Source – DIT]

Economic overview Vietnam made progress towards becoming a full market-orientated economy in 2007 when it joined the World Trade Organization, which helped the country to cement domestic reforms. This had the additional effect of positively influencing foreign direct

investment (FDI), manufactured exports and property. As more sectors become available to FDI, it is likely that this beneficial impact will continue.

Sector-specific opportunities

•

Education and training sector – Due to the large market, there is room for further institutions to set up in the country.

•

Energy sector – Vietnam is the third-largest producer of oil in Southeast Asia, providing opportunities for UK companies.

•

Agritech sector – The demand for safe and traceable value chains with decreased losses has created a necessity for knowledge and technology in the field of smart agricultural planning.

The sustained economic growth that the country has recently experienced means that Vietnam

MARKET EXPERTS

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now has a GDP of US $241.3 billion, positioning it as a middle-income economy. This is largely due to the country’s transition into a marketorientated economy and away from central state control.

[Source – UKABC, World Bank, FCO Overseas Business Risk: Vietnam]

•

Financial and professional services sector – Foreign investors have been attracted to Vietnam due to the country’s participation within a number of FTAs.

•

Healthcare and life sciences sector – There is significant

potential for UK businesses in the medical equipment sector as only 5% of the market is accounted for by local production.

•

•

Infrastructure sector – The Vietnamese Government has prioritised transport infrastructure and has planned to increase investment from US $7 billion (20012008) to US $120 billion (2020).

Mass transport sector – The airline industry has potential for UK companies who could become involved in its operation.

[Source – DIT Trade and Investment guide: Vietnam, gov.uk, UKABC]

Business etiquette, language and culture Although some Vietnamese speak French, English, Chinese or Khmer as a second language, the official language of Vietnam is Vietnamese, and is spoken in business transactions and day-to-day meetings.

Vietnam’s national religion is Buddhism. Religious activities are tolerated in Vietnam, unless they interfere with the government’s political agenda.

If you intend to conduct business with Vietnam, you should be aware of the ways in which its culture

differs from that of the UK. As members of a collectivist society, the Vietnamese often prioritise the needs of the group over those of the individual.

In Vietnam, greeting people by shaking both hands, maintaining direct eye-contact and bowing your head a little is common in business environments.

In Vietnam, meetings are vital to the business process. Face-to-face encounters are preferred by the Vietnamese, who are less dependent on emails than Western business people.

For more information go to the Doing Business with Vietnam Guide website at: www.Vietnam.doingbusinessguide.co.uk or to request a copy of the guide email: institute@export.org.uk www.Vietnam.DoingBusinessGuide.co.uk : 71

Quick facts Location: Southeastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea, as well as China, Laos, and Cambodia Area: 331,210 km2 Population: 94.58 million Urban population: 35.9% Capital city: Hanoi (Ha Noi) GDP per capita: US $2,551.1 Languages: Vietnamese (official), English (increasingly favoured as a second language), some French, Chinese, and Khmer, mountain area languages (Mon-Khmer and Malayo-Polynesian) Religion: Buddhist 7.9%, Catholic 6.6%, Hoa Hao 1.7%, Cao Dai 0.9%, Protestant 0.9%, Muslim 0.1%, none 81.8% Government: communist state Legal system: civil law system Currency: Vietnamese Dong (VND) Climate: tropical in south; monsoonal in north with hot, rainy season (May to September) and warm, dry season (October to March) Natural resources: antimony, phosphates, coal, manganese, rare earth elements, bauxite, chromate, offshore oil and gas deposits, timber, hydropower, arable land Natural hazards: occasional typhoons (May to January) with extensive flooding, especially in the Mekong River delta Time difference: UTC+7 Internet country code: .vn National holiday: Independence Day (National Day), 2nd September (1945) National symbols: yellow, five-pointed star on red field; lotus blossom; national colours: red, yellow [Source – FCO Economics Unit, CIA World Factbook (Nov 2019)]

World Trade Matters

Complexity of Trade

Trading Across Borders – Increasing Complexity

Trade and politics go hand in hand; one facilitates the other with economic growth becoming an obsession for political leaders.

Ian Wakeling UK Commercial & Trade Compliance Director, Lockheed Martin

When Europe was last “united” under the Roman Empire, controlled import and export duties were first introduced with an enforcement regime to underpin it. The principles at that time are the same today: upholding the law, collecting appropriate duties and traders seeking the right of passage for them and their goods. What has changed, though, is the level of complexity and the manner in which goods can be traded across a global economy.

If we compare the trading environment back in the Roman times with today, the significant change – apart from the range of transportation methods – is with the underpinning of a worldwide regulator – the World Trade Organisation (WTO).

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The WTO plays an important role as the “backstop” in supporting economic growth and maintaining relationships between nations. It sets deminimus regulated tariffs and duties for various goods as a default – something we have heard a lot about during the Brexit debates.

However, superimposed over the WTO arrangements are Free Trade Agreements (FTAs), which set alternative terms under which specific countries agree to trade with each other on favourable terms.

As an example of the complexity of a global economy, multiple “countries of origin” play their part.

For instance, the F35 Lightning II, which Lockheed Martin makes out of its Fort Worth plant in the USA, u

The Professional Journal from the IOE&IT

Complexity of Trade

relies on parts from different countries. 15% of every aircraft sold is provided by the UK (a significant contribution to the UK economy with c£2Bn annually and 10,000 jobs supported).

has improved over the centuries.

Already various AI tools are now available to data mine, harvest and interpret information in aid of regulatory controls and payment of duty.

For military goods such as this, licencing arrangements come into play, with the emphasis on end users and what purpose such equipment will be put to. But not all countries deal with controlled goods or determine an export in the same way.

Anything that can improve the timeliness of bureaucracy will do a lot to improve the financial outcome of trading. For instance, the cost of import tariffs could be exceeded by the losses incurred through slow clearance procedures, heavily burdened documentary requirements and the lack of automation. Of course, over time technology has come online and has done a lot to improve the situation, but this has been slow to be adopted generally and, due to a demand on resources enforcement of regulatory policy has moved to a risk-based strategy with a reliance on self-assessment and a “trust but verify” approach.

For instance, for controlled goods and services, in the UK the export occurs when it leaves the UK border, whereas in the US the export occurs when it is given to, or shared with, a foreign national even if within the US borders.

Different foreign policies mean that one country can arbitrarily place a ban on certain exports, which impacts another’s sale of equipment because it relies on parts from that country. Such moves can be disruptive.

So, in the case of F35, for instance, if the UK banned goods from being exported to certain countries that the US continued to sell to, both sides would be impacted in the case of F35 if it was being sold to that country. This is another reason as to why trade and the politics of foreign policy are so interrelated.

As trade has increased and the determination of duty and tariffs has become more complex, some nations such as the USA and China are turning to technology to help with the complexity, insisting that goods shipped are also accompanied by electronic data to support the free movement across borders.

Technology will play an increasing role in the facilitation process, just as the improvement of physical interventions by Customs officials

the advent of AI and other innovations, will we be able to see seamless transactions where borders only exist in the ether and controls are policed by algorithms? n

A growing trend in today’s global economy, and one that further extends the range of responsibilities of a customs organisation, is the reliance on sanctions and embargoes, which is used effectively as an alternative to military intervention.

The imposition of an export ban can have repercussions for not only the country (or individual) but the exporter, especially if imposed part way through a transaction.

While economic growth relies on a healthy trading environment it has come a long way from those early days of the Roman Empire, although the risks involved in moving goods and having to accommodate tariffs and duties along the way has remained a constant. While the options for transporting goods and services has never been so varied, it comes with a bureaucratic burden.

And like most things, technology has taken time to catch up. With www.export.org.uk : @ioexport : 75

World Trade Matters

INCOTERMS® 2020

Open Borders “It’s easy when you know how” or is it?

It’s “easy when you know how” but in reality, it’s not when you are ultimately responsible for negotiating and correctly pricing products for import or export.

This is far from ideal, but the UK is a technology powerhouse and as a nation, has an immense amount of global trading experience - so harnessing a technology enabled way of trading plays to both of our national strengths.

Mark Heath Founder of start-up “Open Borders Direct”; and CEO of start-up “Acies”, an insurance Managing General Underwriter.

This is because it’s extremely difficult to have clear visibility and transparent over-sight of your product as it moves through an internationalised supply chain, (which is physically fragmented) until the product reaches the delivery point of final destination – passing through borders and customs, changing hands, accumulating risks on the way, being exposed to taxes, new surcharges, financial penalties and ever-increasing customer expectations. Throw into this mix a high element of paperwork and manual processes and suddenly any unbudgeted “surprises” can quickly materialise, wiping out margins, damaging cash flow and more.

This “harnessing” effect is happening right now and being made possible through the emergence of ecosystems – where technology platforms connect buyers, sellers, the payment processing industry, trade financiers and insurers together with forwarders and transportation companies – with accuracy and speed. An ecosystem’s (simple) business model is based on collaboration and ease of access, not control and isolation. It involves different commercial partners, who operate in different sectors to see the opportunity of linking up, creating a network and collectively offering a more compelling competitive advantage to the benefit of buyers and sellers – and in the process, simplifying and automating the process for customers. Ecosystems are not about contracting out or transferring problems from one party to another but finding a solution together. Nor are ecosystems complicated consortiums (which can be fraught with competing politics or differing competitive agendas).

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We don’t need any reminder about the importance of international trading agreements and forging new relationships – the media beam this news relentlessly into our living rooms every day. But the recently released (on 15th October 2019 in the UK) Incoterms® 2020 is a good reminder for companies to re-visit their commercial terms used in contracts for the sale of goods.

These Incoterms® rules, from the International Chamber of Commerce, are applicable for domestic as well as international trade but are arguably more valuable the longer the distance your goods travel.

However, despite these rules being globally recognised, many companies importing and exporting are completely unaware of Incoterms® or how to apply them in a “heads of agreement” with their trading partner (many companies only use commercial invoices or purchase orders without stating any reference to each others’ responsibilities) or companies continue to use the same Incoterms® year after year for historical continuity reasons even if the mode of transportation, costs and risks have changed over time.

Certain countries like China typically export using only FOB (Free on Board) or CIF (Cost Insurance and Freight) simply because of a lack of familiarity and awareness that u

The Professional Journal from the IOE&IT

INCOTERMS® 2020

other rules exist – this will change.

The USA clearly speak the same language as the UK but this common language can be a false sense of security and doesn’t help when one party (the USA) is thinking about a different law of sales (the Uniform Commercial Code) when they communicate with their UK counterparty. In the US, the term FOB can be used in relation to transportation of goods via airports and trucks but in the UK FOB is a marine terminology and only involves the transportation of goods by ships.

This miscommunication complicates trade and introduces friction but can be solved by mapping these languages together in a code, with the help of technology …..and then shared.

Banks providing traditional Letters of Credit insist on Bills of Lading because this document of title acts as security providing them rights over the goods (in the event of default) but also acts as collateral reducing their cost of capital. Digital alternatives will emerge.

Customs’ duties and tariffs clearly impact pricing decisions and for companies who have only ever traded with the EU to-date, they have effectively never experienced the complexity of crossing borders.

The importance of having your full documentation and having it easily accessible in one place is becoming increasingly necessary. Knowing that you have used the proper tariff classification and duty payable is more than just important - it is the responsibility of the company trading the goods to get this right (not the customs broker) and this would be one of the first enquiries in an HMRC audit.

This helps insurers quantify risks, improve prices and respond far quicker to pay claims for clients than ever before.

At a time when UK manufacturers are reporting a deterioration in sales and orders, this makes it even more important and timely to remove risks, give certainty around costs and make things fast, easy and safe for suppliers and buyers. Roll on ecosystems. n

In addition to the relevance of Customs duties relating to the rules of (country) origin, it has become increasingly critical to demonstrate the provenance and being able to certify or prove the origin of products – it matters for consumers, is a matter of quality, reflects safety standards and has become a competitive advantage for manufacturers and retailers whose products are traceable.

Technological systems, data and scanning make this certification process transparent and a reality.

IoT (the Internet of Things) sensors fitted to individual containers and shipments make it possible today to monitor the condition of goods (think temperature monitoring and food safety) and monitor whether goods have been interfered with or damaged, as well as tracking the location and movement of goods.

www.export.org.uk : @ioexport : 77

World Trade Matters

Regional Focus

Latin America – Future Trade Opportunities?

“Latin America offers many opportunities for UK exporters”. Each country has its own customs procedures and controls, but with existing and future preferential trade agreements in place, this region is one where conducting proper research now will benefit UK companies.

Currently we have many preferential trade agreements in place meaning that importers will pay reduced or zero duty. Even in a “no-deal” scenario several Latin American countries have signed up to “continuity agreements”, which means preferential trade will continue with them in a similar way it does under the current trade agreements.

These countries are: Chile, Ecuador, Colombia, Peru, Honduras, Nicaragua, Costa Rica, El Salvador, Guatemala and Panama.

In Latin America the business culture is very much based on “face-to-face” encounters and you may find spending hours on email marketing not as productive as it is for other regions.

Trade shows, trade missions or field visits will be a much better way for you to meet and get to know partners in this region.

Working with a Distributor or Agent

What are the benefits of a partner in Latin America?

A strong unique selling point (USP) in this region is to be able to supply from stock and this should be a key factor in any potential partner profile.

• • •

• • • •

One way to get market access in Latin America is to work with a distributor or agent. This approach will help accelerate the market development of your products.

However, while finding a partner is not that difficult, finding a proactive partner who will promote your goods can be, so it is important to profile the type of partner you require. It is very easy to accept the first company who comes along, however, if they do not fit your ideal profile then this could just be a waste of time and money.

• • • •

• •

Knowledge of the market Knowledge of the industry sector for your products Knowledge of competitors Existing customer base in the country – giving you a faster route to market Communication in the local language Better website ranking locally

You do need a plan to ensure your partner can offer the best service possible, hence things you may want to consider include:

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• •

•

•

•

Do they sell other products that compliment yours?

Do they list products from a direct competitor?

Do they offer local product support? This is really important in Latin America!

Do they install products or can they repair/re-furbish products?

How much of the country do they cover?

Do they have resellers in other countries?

Do they have a network of national sales reps?

Do they hold stock or have the facility to hold stock?

Do they have a legitimate financial status when you’ve done a Dun and Bradstreet check on them?

What is the function of the people who would be in regular contact with you, for technical enquiries or placing orders?

What is the level of understanding of English of the staff in each department?

Would employing a local language speaker be beneficial?

The Professional Journal from the IOE&IT

Regional Focus

Translation for Material/Instructions If you need to include any marketing material and instruction manuals, these need to be translated into Spanish. This would mean having it done correctly and not by Google translate.

Also, any products that operate via a software system need to have the text that would be displayed to a user-translated’ into Spanish.

When doing business in this region, the products need to be as userfriendly as possible, so instructions on how to use or install them need to be in a format that can be understood easily.

and should be a consideration as part of a long-term strategy.

Cost and Benefit Analysis A good thing to bear in mind is that each country’s listed import costs are based on the cost of getting the goods to the countries’ border. For example: Goods Value + Shipping Cost + Insurance = Value for Customs

should primarily focus on price and service to enable you to plan a long-term sales strategy and not just a short-term fix.

Understand Latin America has a different culture, Latin America is a long way from the UK, so you want to make sure you give yourself the best opportunity to get positive results from any marketing activities and visits the company undertakes. n

So, an export pricing review per region may be worth looking at, as well as FCL (Full Container Loads) shipments rather than LCL (Less than Container Loads) to possibly reduce the percentage cost of freight and insurance per shipment.

Visit the Region If you are going to travel to the region then ideally you will need some level of competence in Spanish. You will find that a lot of potential customers you may meet will be Spanish-only speakers.

This is where a partner is a huge advantage to help communicate to potential customers.

It is also worth remembering that internal land transport, in a lot of regions of Latin America, can cost more than the main sea or air freight cost to the region. Although this is not a dutiable value (in most cases), it does form part of the landed cost of your product, so it is good business sense to be aware of this.

Not attempting to communicate can be viewed negatively and could hinder sales. It is not going to stop companies doing business, however, in this region it does help a lot

To travel to the region, is a large capital expense for most companies, so to ensure that you do maximise the return on investment, do simple research before you go. This research

Jeff Lewis MBA BSc MIEx Trainer, Institute of Export & International Trade

www.export.org.uk : @ioexport : 79

World Trade Matters

Member focus

How long have you been involved with the Institute and why did you join at the time?

In 1989 I left my husband in Germany, who was a professional soldier, and arrived in Plymouth with my three children, with no friends or family to support me. I got a job as an assistant manager at a photographic company which has led to a lifelong interest in photography After I had been there for a year, I saw an advert in the paper saying, “Are you a true European? We’ve got a course for you”. My reaction was that, yes, I am a true European having lived in Germany and in Cyprus for several years. It was an advert for an Export Management course with the then-named Institute of Export and it was being run at the local college for further education.

To my surprise I was accepted on the course. I recall that on my first day a tutor, Fred Barker, stood up in front of the class and started talking about the World Bank. It was a truly seminal moment for me – somebody was talking about something that was really interesting for once.

I attended the course for a year, twinning it with courses in IT and Spanish. I learnt such a lot and felt for the first time that I was on the verge of something truly exciting.

Linda Middleton Jones

Chair of the Academic Board, Institute of Export & International Trade 80 :

Overall, that year ended up changing my life. From there I approached the University of Plymouth, where the IOE&IT course certainly helped to get me accepted onto a Law degree. I gained my 2:1 after focussing my degree on UK, European, Spanish and International Law (spending one year as an Erasmus Student in the Universidad de Barcelona). After some time with a leading exporter based in the South West, I was headhunted by the Plymouth Chamber of Commerce to be their International Trade Director. It was a really exciting u

The Professional Journal from the IOE&IT

Member focus

time for me, taking a couple of trade missions to Dublin and working with businesses throughout the region. It was at this time that myself and a colleague were the very first to pen the saying ‘Think Local, Act Global’ – which is now widely used around the world.

The next major role for me was with the Manufactory Advisory Service for whom I worked for 10 years, learning about the merits of Lean Manufacturing and Lean Office, which taught me how you can become more efficient. This, alongside my training at the IOE&IT, equipped me for my next role with Somerset Chamber as their Export and International Trade manager.

While there I tried really hard to get the IOE&IT more involved in the South West region, because they did not seem to have any presence down here at that time. I rang Lesley Batchelor and told her that we needed to get the IOE&IT known in the region and volunteered to help to do that.

Following that call I suggested we run a South West World Trade Summit on behalf of the IOE&IT, the first one being held a few years ago in Taunton. I’m very proud to say that this became the basis of the other regional World Trade Summits around the country.

I also set up some regional members meeting on a biweekly basis, where we have a sponsor who comes to talk to members in the region. Most recently I’ve done some work as a tutor and have recently been given the fabulous position of Chairman of the Academic Board.

I now have my own company, International Trade Matters, which is a small business member of the IOE&IT. The value it has given me in my professional career has been significant.

What advice would you give to people looking to get more involved with the IOE&IT today?

The IOE&IT is a great institution within the UK. As a membership organisation it brings together those with interests in international trading for networking opportunities, for technical advice and support.

Its aim is to raise professionalism in international trade, and this is achieved with a comprehensive array of education and a raft of training courses.

I would encourage anyone to join as a member. The team at Export House are approachable and the invitations to events are incredible opportunities to meet and share best practice and/or make new friends. From personal right through to corporate memberships, the opportunities are there to develop your career or your business.

One of the things I value above anything else is the fact that the Institute has a heart, it is my place to go.

Our main message, at the national level, is that exporting is easy if you take the time to learn how to do it.

How important is this message?

People don’t recognise that they’re in a global world. Businesses need to realise they’re part of global supply chains but often people’s eyes will glaze over when you start to say this.

Obviously, you can’t talk to people on the bus about Letters of Credit or Certificates of Origins, so it can be a lonely world for people involved in international trade. As a nation we are much more aware of tariffs now than we used to be, but companies need to realise their place in the world – if you’ve got a website, you’ve got a global audience.

What should the IOE&IT be focussing on in the years ahead?

We don’t have people speaking languages anymore, so we need to try to take the opportunity to influence education and we need to get international trade into the curricula so that it is seen as a proper profession. Once we have a recognition of the profession of ‘International Trader’, people will then know where to go to get information about what this profession involves. It’s about providing the roots of our future economic growth and security.

We also need to align to the sustainability agenda as well because this is relevant to the young people coming through now. We need to feed sustainability into our messaging and engage with the debates that are going on at the local and international levels.

For instance, we discussed sustainability at the International Trade Assembly session we ran at the Bristol World Trade Summit this year and we should encourage more of those interactive sessions.

When I was at the Manufacturing Advisory Services, I had regular workshops like this, where we listened to what businesses and individuals were saying, identifying the key trends. I devised, created and produced a ‘Manufacturing Barometer’ every quarter with a different focus, which was written into a concise report to underpin thought leadership articles. At one point we had 1,000 subscribers and, to my great surprise, David Cameron once referenced it during a speech from Davos!

The lesson is that he brought it up because it had genuine relevance.

We can do more on this. n

www.export.org.uk : @ioexport : 81

Market Profile: Doing Business with Oman

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82 : Membership : Training : Qualifications : Advice

Oman overview The Sultanate of Oman is the third-largest state in the Arabian Peninsula, and is a founding member of the Gulf Cooperation Council (GCC). It is a stable, and relatively prosperous, business-friendly country in what is sometimes a difficult, but strategically important, region. The capital, Muscat, is a commercial centre and major port in the north, with traditional and modern architecture overlooking the Gulf of Oman.

Quick facts Location: Middle East, bordering the Arabian Sea, Gulf of Oman, and Persian Gulf, between Yemen and the UAE Area: 309,500 km2 Population: 4.18 million (2019) Urban population: 84.5% Capital city: Muscat GDP per capita: US $18,970 Languages: Arabic (official), English, Baluchi, Swahili, Urdu, Indian dialects Religion: Muslim 85.9%, Christian 6.5%, Hindu 5.5%, Buddhist 0.8%, Jewish <0.1%, other 1%, unaffiliated 0.2% (2010 est.)

Government: absolute monarchy Legal system: mixed legal system of Anglo-Saxon law and Islamic law Currency: Omani Rial (OMR) Climate: dry desert; hot, humid along coast; hot, dry interior; strong southwest summer monsoon (May to September) in far south Natural resources: petroleum, copper, asbestos, some marble, limestone, chromium, gypsum, natural gas Natural hazards: summer winds often raise large sandstorms and dust storms in interior; periodic droughts Time difference: UTC+4 Internet country code: .om National holiday: National Day, 18th November; note - coincides with the birthday of Sultan Qaboos, 18th November (1940) National symbols: khanjar dagger superimposed on two crossed swords; national colours: red, white, green

[Source – FCO Economics Unit, CIA World Factbook (Nov 2019)]

Market Profile: Doing Business with Oman

When exporting to Oman the following general requirements apply:

Hamish Cowell CMG, Her Majesty’s Ambassador to the Sultanate of Oman

The UK and Oman enjoy a special and long-standing friendship dating back hundreds of years, and which spans the whole of our respective societies – from political to defence to economic, and of course, to trade. Iconic British brands have had a long affinity with Oman; HSBC have been here for 70 years and are one of the largest banks in the country; BAE Systems have been here for 60 years and are a major supplier to the Omani Ministry of Defence; BP and Shell are leading players in the oil and gas sector; and British engineering and construction companies have built key national infrastructure, including the Sultan Qaboos Grand Mosque and Royal Opera House in Muscat.

The UK has a very close commercial relationship with Oman, and we are proud of our market share here. Bilateral trade reached £1.6 billion in 2018. Oman is our 52nd largest export market and 65th largest trading partner. The UK also accounts for nearly 50% of all foreign direct investment (FDI) into Oman, with large recurring investments in the oil and gas sector.

Oman and the UK have developed particularly strong links in oil and gas, defence, financial and professional services, education, healthcare, and retail. Oman is a politically and economically stable country, which enjoys good relationships with all of its neighbours in the region. With an expansive Indian Ocean coastline, as well as its Gulf one, Oman offers a strategically advantageous place to do business in the Middle East and beyond – outside the Strait of Hormuz, on the open ocean, and in very close proximity to major east-west global shipping routes. Oman offers excellent opportunities for companies with high-quality products looking for long-term relationships.

Hamish Cowell CMG Her Majesty’s Ambassador to Oman

84 : Membership : Training : Qualifications : Advice

Ship Pre-Arrival Notification Report A document notifying the authorities of the arrival of a vessel and indicating its specific needs at the port of arrival. Required for port and cargo surveillance. The notification report is to be handed in by the carrier or his agent to the authorities of the port of arrival at least 48 hours prior to the estimated time of arrival (ETA). To be completed in English. To be submitted in the original.

Master's Report A document reporting the arrival of a vessel at the port of destination, summarising the cargo loaded and to be discharged, as well as enlisting the services required by the master of the vessel. Required for cargo surveillance and port services. The report is to be handed in by the master of the ship or his agent to the responsible pilot at the port upon arrival of the ship. To be completed in English. To be submitted in the original.

Manifest A document notifying the authorities of the arrival of a vessel and summarising the goods loaded therein. It is mandatory and does not depend upon the specific purpose of arrival. Required for customs surveillance. The responsible authority is the Royal Oman Police (ROP), Directorate General of Customs, P.O. Box 131, OMMuscat, phone and fax number: +968 24349000. No specific form required.

Customs Import Declaration Official form for the customs clearance of goods. The responsible authority is the Royal Oman Police (ROP), Directorate General of Customs, P.O. Box 131, OM-Muscat, phone and fax number: +968 24349000. To be completed by the importer in English or Arabic. Risk assessment is performed on imported goods in the framework of the abovementioned electronic procedures.

Commercial Invoice A document containing the details of the transaction. Required for customs clearance. No specific form required. The invoice is to be prepared in English or Arabic. Usually to be submitted to the Omani customs authorities in the original. Further copies may be required depending on the importer's requirements and/or stipulations by the authorities responsible for importrestricted items, as applicable.

Advice from our Technical Helpline

The Institute of Export & International Trade's 'Export Helpline' provides help for any international trade query, including documentation, export controls, customs & VAT procedures, payment terms, Incoterms, and much more. Members of the IOE&IT can access the helpline for free.

Pro Forma Invoice A document containing the details of the transaction made out prior to the proper invoicing and in addition to the Commercial Invoice. May be required by the importer or the competent authorities of the importing country, e.g. for the importation of ozone-depleting substances (ODS).

No specific form required. The Pro Forma Invoice usually contains the same information as the final Commercial Invoice but may be more concise.

Packing List A document containing the details of the shipment and serving as a basis for the customs treatment of goods. Usually required for customs clearance. The requirement of a Packing List may be waived by the customs authorities at the respective customs office of entry in Oman, e.g. the list is usually only required at air or sea customs offices of entry. No specific form required. The Packing List is to be prepared by the exporter in English or Arabic. To be submitted to the authorities at the customs office of entry in Oman in the original.

Certificate of Non-Preferential Origin A document certifying the non-preferential origin of the goods to be imported. Usually required for customs clearance. The Omani customs authorities are entitled to waive the requirement of a Certificate of Non-Preferential Origin. For designated goods, e.g. agricultural commodities, the certificate is mandatory in any case. The certificate is to be submitted by the exporter. The certificate may be submitted in any language. A translation into English or Arabic may, however, be required.

Proof of Preferential Origin A document confirming the preferential origin of the goods to be imported. Only required if preferential treatment under a free trade agreement or arrangement is claimed. Goods may be eligible for preferential treatment if they have been either wholly obtained or preferential origin has been conferred by sufficient working or processing as per the product-specific rules of origin. The Proof of Preferential Origin is to be submitted by the exporter.

Air Waybill A document containing the details of the international transportation of goods by air and proving the transport contract between the consignor and the carrier's

company. Required for customs clearance.

To be prepared by the carrier or his agent.

No specific form required, provided that the document corresponds to the applicable conventions regarding both form and content, which in practice leads to a largescale standardisation of the employed forms. Usually issued in English.

Bill of Lading A document containing the details of the international transportation of goods by sea. It serves as proof of receipt of goods by the carrier. Furthermore, it serves as a transportation contract obliging the carrier to deliver the goods to the consignee.

The Bill of Lading is a document of title to goods, thus its bearer is the owner of the goods. If goods are shipped by sea without a document of title to goods, a Sea Waybill is used instead. Required for customs clearance.

Insurance Certificate A document proving that a contract for the insurance of the goods has been signed. May be required for customs clearance. To be prepared by the insurance company of the exporter or the importer.

No specific form required. To be issued in English or Arabic. The certificate is to be submitted in the original.

Manufacturer's Declaration A document specifying the manufacturer of the goods. May be required for customs clearance. No specific form required. To be prepared by the exporter on a company letterhead in English or Arabic. To be submitted in the original. To be certified by the chamber of commerce or any other appropriate authority and subsequently to be legalised by the Oman Embassy in the country of export on the importer's demand.

Delivery Order A document containing the formal obligation of its issuer to deliver the denominated parts of the shipment to its bearer. Usually required for customs clearance. The Omani customs authorities are entitled to waive the requirement of a Delivery Order, e.g. the certificate is usually only required at air or sea customs offices of entry. No specific form required. To be issued by the bearer of the Bill of Lading, e.g. the shipping agent. The document is usually issued in English. To be submitted in the original.

Customs Code Registration A document certifying that a company intending to engage in the importation of goods is registered with the Directorate General of Customs in Oman and has received an identification code for customs purposes. The assigned code is to be indicated on all documents presented to the Directorate. Required for customs clearance. The registration is to be applied for at the Royal Oman Police (ROP), Directorate General of Customs. The application is to be obtained upon personal request at one of the customs offices and is to be completed in Arabic. To be submitted in the original.

Commercial Registration A document proving that merchants and companies are registered for particular trade activities with the Commercial Register of the Ministry of Commerce and Industry (MOCI). Required for customs clearance and market access. The registration is to be applied for at the Ministry of Commerce and Industry (MOCI). Alternatively, the procedure may also be conducted through the one-stop-shop of the e-government system, i.e. the "Invest Easy" portal. The application is to be either completed as a hardcopy version in Arabic (please see below), or online in Arabic or English.

Registration with the Chamber of Commerce and Industry A document confirming the registration of companies and individuals with the Oman Chamber of Commerce and Industry (OCCI). Required for customs clearance and market access. The registration is to be applied for at the Oman Chamber of Commerce and Industry (OCCI), P.O. Box 1400, OM-Ruwi 112, phone numbers: +968 24763700, 24763798, fax number: +968 24708497.The application is to be completed in English or Arabic. In addition, a signature form, which is to be obtained from the OCCI, must be enclosed. To be submitted in the original, or electronically.

The processing time is approximately one week. The processing, i.e. annual membership fee, ranges from 33 OMR to 625 OMR, depending on the type of business and the company's capital. The membership must be renewed annually. A valid Commercial Registration certificate must be presented to renew the membership.

The information is derived from the European Commission's Market Access Database with courtesy of the data provider and copyright holder Mendel Verlag GmbH & Co. KG. Any kind of further reproduction requires prior written consent of Mendel.

www.Oman.DoingBusinessGuide.co.uk : 85

General Overview Geography The Sultanate of Oman is an Arab country about the size of the British Isles, located on the eastern coast of the Arabian Peninsula, bordered by Saudi Arabia to the west, the United Arab Emirates (UAE) to the northwest and Yemen to the southwest. It is strategically located at the confluence of the Persian Gulf and the Arabian Sea, close to major Indian Ocean shipping lanes, and shares marine borders with Pakistan and Iran. Most of the country’s interior is a dry, treeless and sandy desert, peopled mainly by Bedouin nomads and criss-crossed by oil and gas pipelines, whereas the verdant coastal Dhofar region in the south and the north coastal area between mountains and sea, are famous for their produce.

Economic overview 121 projects/initiatives were identified as part of Oman’s National Programme for Enhancing Economic Diversification (Tanfeedh), approved in 2016, which aim to accelerate diversification in targeted sectors such as manufacturing, tourism, and logistics.

Oil and gas wealth has given prosperity to Omanis – nominal GDP in 2018 was US $82.2 billion and GDP

per capita was relatively high at around US $19,000 in 2018.

Whilst Oman’s key economic priority investment is still in the oil and gas sector, its main economic goals — set out in the long-term strategy, ’Oman 2020: Vision for Oman’s Economy’ (Vision 2020) — are to create employment for Omanis by way of more private-sector jobs, and to diversify the economy away

Sector-specific opportunities •

Education and training sector – The UK remains one of the preferred destinations for Omanis studying overseas and British standards are widely applied in the education system, resulting

in many UK affiliations with private local universities and colleges as well as the use of British standards for vocational training.

•

Energy sector – Oman proactively encourages foreign in-

MARKET EXPERTS

86 : Membership : Training : Qualifications : Advice

from reliance on hydrocarbons by developing other sectors. Oman is now one of the UK’s largest export markets in the GCC, receiving £1.9 billion of goods plus £880 million of services from the UK in 2018.

[Source – Government of Oman, DIT Trade and Investment guide: Oman, World Bank, FCO Overseas Business Risk: Oman, GAFTA, gov.uk]

vestment in the oil and gas sector and there are opportunities for UK companies throughout the supply chain as Oman is the largest producer of oil and natural gas in the Middle East, and is the 26th largest dry natural gas producer in the world.

•

•

•

Healthcare sector – The healthcare market in Oman is estimated to be worth US $2 billion due to the growing population, as well as the rising numbers of lifestyle -related diseases and the increase in health insurance.

Infrastructure sector – Under its ‘Vision 2020’, Oman has a massive infrastructure development programme underway, in cluding large developmental projects worth about £50 billion, in various stages of development, creating opportunities.

Tourism sector – Oman’s tourist industry is growing at a fast rate and the Omani Government is hopeful that

the country will have 12 million visitors by 2020, a significant increase from the 2.1 million in 2013.

[Source – Ithraa, DIT Trade and Investment guide: Oman, gov.uk]

Business etiquette, language and culture Although Oman is one of the most progressive GCC states and is open-minded and tolerant, many Omanis are conservative. Islam is the national culture and, together with local traditions, customs, laws and religions, should be respected.

spoken throughout the country and it is common for written correspondence to be in English.

Omanis prefer to do business with people they know and trust. Personal contact with potential and existing partners/clients and regular visits to Oman are of the utmost importance and it is natural for a business relationship to be built over time.

[Source – DIT Trade and Investment guide: Oman, gov.uk]

Arabic is the official language of Oman, although English is widely

For more information go to the Doing Business with Oman Guide website at: www.Oman.doingbusinessguide.co.uk or to request a copy of the guide email: institute@export.org.uk

www.Oman.DoingBusinessGuide.co.uk : 87

World Trade Matters

Student Interviews

Meet the Students logistics and marketing to International Markets, which was why the Diploma in International Trade course appealed to me.

How are you finding the course?

Has it enabled you to contribute more to the company you work for?

Mark Bolt EMEA Sales Manager, CyDen

Why did you decide to take one of our courses?

Working as a Sales Manager for a new tech company, I have seen fast and exciting growth challenges for our business. We are focused on bringing our own branded range of electronics devices initially to the UK and then subsequently to International markets around the world.

My background is in strategic marketing and project management, but international trade was new to me and I needed to ‘deep dive’ into the theory and tactics of successful export strategies.

Although we had already started partnerships in some International Markets including Australia and Japan, we had no strategic direction and were very much in a ‘reactionary’ mode.

I was also aware that the Brexit referendum would cause huge complications and I needed to learn more about the technical and strategic elements of trade,

Since embarking on the Institute’s Level 5 Diploma, I have become much more confident with our distributor and retail partners, and also internally with the Executive team when making strategic decisions.

At first, I did find the format of the course and the ‘remote’ side of the syllabus difficult to navigate. I rarely had time to join any calls and it wasn’t clear how to get around the online campus.

That said, the feedback on my first assignment was excellent and helpful. Furthermore, I was lucky enough to win top marks on my International Marketing module.

What's next and how is the course contributing towards your career?

Our export success has been recognised with a Queen’s Award for Enterprise in the International Trade category and we also achieved 5th place in The Sunday Times’ ‘International Track 200’.

I am now convinced that with the advent of Brexit, in whatever shape it takes, becoming an ‘expert’ in export will stand me in great stead for any future development and growth.

88 : Membership : Training : Qualifications : Advice

With the future of global trade looking to become more insular and protectionist, a technical detail and deeper understanding of logistics, customs barriers, trading terms and so on will help me ensure I remain a key member of the International Sales team.

What tips would you give to other people studying with the IOE&IT? For anyone looking to expand their knowledge of trading internationally, membership and involvement with the Institute is essential. The courses are relevant and essential to any business looking to expand their reach into foreign markets.

Becoming a member also brings other benefits, such as getting involved in the many events they host and the information and tools they provide too - I particularly enjoy the daily briefing, for instance.

In summary, being involved and doing training with the Institute has been a great value investment for the company but also me personally. It cannot be underestimated how important international trade is to the growth and indeed survival of the UK’s economy as we head into troubled waters. n

The Professional Journal from the IOE&IT

Meet the Students What sort of work do you currently do in relation to Customs?

applying the learnings in real life, and not just on a theoretical level.

I work at the Co-op and we import wine from all over the world, toys and other non-food products from China and so on. We therefore need to make sure we’re following the necessary Customs compliance procedures properly. In my role as the Imports and Exports Compliance Manager, I work with a small team to ensure everything we’re importing is Customs-compliant. We also do a small amount of exporting, including to branches on the Channel Islands and in Iceland, but the imports account for much more than our exports.

Customs Professionals have often learnt on the job, but how useful can qualifications and training be for people in these roles?

Co-op also have the Nisa wholesale distribution network, which services Nisa partners all over the UK and also Ireland, so if the UK leaves the EU then servicing our Irish partners would be classed as exporting and will require any relevant Customs compliance.

What are the main challenges you face in this line of work?

When we have new colleagues in the team, the challenge is to ensure the whole team understands all the current legislation we need to be following and how we can practically ensure we’re doing everything we can to follow this in our day to day work. When you go to the HMRC website, it can be a little bit difficult to read through and clearly understand all the documentation. This is why I think the Customs Academy is such a great idea. It’s easy to read and learn from the materials and you learn from real life examples.

Further, you’re getting knowledge from people who fully understand what you need to consider when

Student Interviews

What major tips would you give to fellow Customs Academy students?

There’s always going to be an element of learning on the job but having some sort of formal training is good because you can capture everything end-to-end. When you’re just learning on the job, you might miss certain things or not see the whole picture as you’re seeing your role in isolation without seeing the wider context of how what you’re doing fits in.

Understand what learning styles work for you, whether you’re someone who needs to write everything down to learn it or if you’re fine to just read it through.

Find a way for the content to properly sink in long-term. It’s one thing to remember it for 10 minutes for a test that you do later that day, but it’s not just a tick-box exercise, it’s knowledge that will help in the long run. You need to find ways to retain the knowledge and you should consider refreshers you can do at a later time to ensure you still know it.

Since you’ve been doing the course, have you been able to input more into the company’s broader strategy?

Finally, how have you found balancing the course with your day-to-day work?

It’s enabled us to have a bigger understanding of what the legislation requires and that’s helped us to have better conversations with our freight forwarders about how we can enhance our compliance regime, what we should be looking out for, what pitfalls we need to spot and it’s helped us to mitigate and correct things, allowing us to be more proactive.

I’ve tended to do it at the weekends when I’m not at work because then I can properly concentrate on it.

My colleagues have found times in the day at work when they’ve done it. Either way, whether you do it at work or at home, it’s really important to find clear periods of time to do it, without the distraction of meetings or colleagues asking you questions. n

How have you found studying with the Customs Academy so far?

It’s good that it’s done in bitesize chunks so you can explore specific topics and then can come back to it later and easily review what you learnt. You take tests as you go along which encourages you to ensure that the knowledge properly sinks in. It starts at a good level too – it doesn’t require you to have loads of expertise beforehand as you can start from a beginner’s level.

Lucy Masters Imports and Exports Compliance Manager, The Co-op

www.export.org.uk : @ioexport : 89

World Trade Matters

Student Interviews

Meet the Students time-consuming process trying to locate the correct document and, often, one guide directs you to one or more other guides for further information. Working out the correct tariff classification and knowing the correct procedure to use has also been a challenge.

Carole Carrie Administration Manager, STAR-Dundee Ltd

What courses are you taking with us currently?

I have completed the Level 2 Customs Practice & Procedure Award and Level 3 - Certificate in Customs and Compliance and I am now working on Level 4 – Certificate in Advanced Customs Compliance.

What sort of work do you currently do in relation to Customs?

A high volume of our customers are outside of the EU, which means we have to complete Customs documentation on a regular basis.

I am involved in these processes, which also includes arranging for items to be returned to the UK for various reasons and temporary exports for exhibitions and conferences.

What are the main challenges you face in this line of work?

The main challenge I have found is trying to understand the proper procedures you need to follow, especially as some areas of International Trade can be quite complex.

There are a lot of guides provided

by HMRC, however, it can be a

Customs Professionals have often learnt about Customs on the job.

You're going about this differently by taking one of our courses. Why? As the company has grown, so has our involvement in International Trade which means I have become more involved with Exporting and Shipping. In the past, I have attended seminars and requested information from different sources, however, it can be the case that the information received can often be contradicting and confusing.

This was the main reason I decided to sign up for the Customs Academy, so that I can reiterate the basics as well as learn about the more complex areas of Customs. As I work full-time, the online distance learning has been perfect for me to fit in my studies around my work.

To what extent do you think people in similar roles to you should follow your approach?

From my experience, I would definitely recommend the Customs Academy to others in a similar role.

The courses are easy to follow, full of content and provide excellent information and examples for putting the knowledge gained into practice.

After completing Level 2, I recommended the course to a colleague, who has now also signed up to the

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Customs Academy and is currently working through Level 2.

How have you found studying with the Customs Academy so far?

I have really enjoyed studying with the Customs Academy and have gained a lot of knowledge and understanding, although I am still in the early stages. I have found it very beneficial starting with the basics at Level 2, as although I have hands-on Customs experience through my job, I find that studying at the same time has provided a much clearer picture of the correct procedures and guidelines.

As a member of the Academy, I have also benefited greatly with the links provided for HMRC Guides, Glossary of Terms and other resources. We have recently been awarded the status of being an Approved Exporter and I found the course a great help when completing certain sections of the application form, especially in relation to Tariff codes.

What major tips would you give to fellow Customs Academy students?

Try to put aside a set amount of study time each week and take the time to look through the extra resources and links provided throughout the courses. n

The Professional Journal from the IOE&IT

Meet the Students What course are you taking with the Customs Academy?

I have completed the Level 2 Customs Practice & Procedure Award and I am now moving on to complete Level 3 Certificate in Customs Compliance.

What sort of work do you currently do in relation to Customs?

At the moment I work in the European logistics department. I arrange the importation of goods from the European Community (EC) and arrange delivery to customers premises/warehouses. I also keep in mind all Customs procedures and additional documentation for any non-EC goods arrive, such as goods from Turkey (i.e. ATR documentation). I also liaise with border force and Customs when goods are selected for certain Customs holds upon importation – this can involve a paper work check or a full examination.

Previously and going forwards, I have worked in the Customs Entry Department, processing all import and export entries for goods arriving into the UK from out with the EC. This role requires you to be trained in Customs procedures, checking every shipment for duty/vat, any duty reliefs/restrictions and any licencing requirements.

What are the main challenges you face in this line of work?

There is a lot of information to remember when it comes to Customs legislation. I always double check if am unsure about something, especially when it comes to declaring information on a Customs entry.

It also helps to keep up-to-date with current affairs. For example, at the moment Brexit is on everyone’s mind and will affect our industry massively, so staying abreast with the latest information helps with future planning.

Customs Professionals have often learnt about Customs on the job.

You're going about this differently by taking one of our courses. Why? Having worked in this industry for over 10 years I also learnt about Customs on the job. I believe these courses will be helpful to confirm the knowledge I have already gained whilst also expanding that knowledge.

I also like to learn by having clear information to read and learn which is not always available when learning from senior colleagues or in a busy office environment.

Student Interviews

How have you found studying with the Customs Academy so far?

I enjoyed studying with the Customs Academy – I found the website easy to use and the coursework easy to follow. I particularly liked checking my understanding with the end-of-unit tests and the fact incorrect answers are shown and explained to help you learn further.

What major tips would you give to fellow Customs Academy students?

Take your time, especially if you have limited customs experience.

Take notes and relate back to them.

Most of the time, if you are still a little unsure of a certain topic, the course will cover it again later in the unit so don’t panic. n

To what extent do you think people in similar roles to you should follow your approach?

I believe, in this ever-changing industry, that people in similar roles to myself should complete a course such as the above as it helps with understanding some of the very complex areas within Customs whilst also allowing you to check your understanding of the subjects covered by completing end-of-unit quizzes.

Lisa Meikle Customs & Logistics Clerk, W Knight Watson & Co Ltd

This approach also allows you to see some procedures in action through examples and in-depth explanations – something you may not experience learning on the job.

www.export.org.uk : @ioexport : 91

World Trade Matters

Queen's Awards

Reverend Richard Coles amuses Queen's Award winners at gala dinner The Institute of Export & International Trade (IOE&IT) hosted the annual Queen’s Award Winners Gala Dinner at the Fishmongers’ Hall in London in September. The showpiece event celebrates the achievements of winners in the International Trade category of The Queen’s Awards for Enterprise – the most prestigious accolade for businesses in the UK. Reverend Richard Coles – the British reverend, radio presenter and speaker, who also had three top ten hits with pop group The Communards in the 1980s – returned as guest speaker having previously spoken at an IOE&IT Members Dinner. He regaled his intriguing career path from pop star to reverend, fondly recalling his hometown, Northampton’s, previous manufacturing might and amusing the audience with various anecdotes.

Terry Scuoler and Lord Green, the Chairman and President of the IOE&IT, also spoke, welcoming the award-winning businesses and praising them for leading the UK’s efforts to export more around the world. The winners are all an inspiration to fellow businesses looking at Global Trade for the first time and, with Brexit around the corner, their influence has never been more important.

The venue was truly befitting of the occasion. One of the Twelve Great Livery Companies of the City of London, and among the most ancient of the City Guilds, the Fishmongers’ Hall is situated in a magnificent riverside position next to London Bridge.

The Hall provides one of London’s finest settings where decorative splendour is matched by a flair for contemporary cuisine.

Attending the dinner, Nick Ravenhall, Managing Director at Atom Brands, told us: "As a British spirits distiller it’s not very often that you get to sit down and break bread with exporters from outside the industry. Therefore, getting the time to take a moment to share an evening with fellow British traders was fantastic. Not only to celebrate each other's success but also to share conversation on the challenges that face us all today. A very special evening for all!" u

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The Professional Journal from the IOE&IT

Queen's Awards Katie Doherty, CEO of the International Meat Trade Association, also said: "All credit to the Institute of Export for organising a splendid evening at Fishmongers’ Hall for the Queens Award Dinner. In his speech Lord Green commented that the UK is not self-sufficient and therefore international trade is key, something that particularly rings true for the meat sector where two-way trade is essential for consumers and producers." n

The IOE&IT has long been proud to support The Queen’s Awards and we encourage our members to apply next year.

The deadline to enter is usually early September and you can find more information about how you can apply at: https://www.gov.uk/queens-awardsfor-enterprise/how-to-apply

www.export.org.uk : @ioexport : 93

World Trade Matters

Forward Look

Our latest round-up of recommended shows and exhibitions, as well as our training courses.

JANUARy ------------------------------------------------------------------------Introduction to Exporting 15 January 2020 / Manchester ------------------------------------------------------------------------Understanding Rules of Origin, Free Trade Agreements & Export Preference 15 January 2020 / London ------------------------------------------------------------------------Advanced Exporting 16 January 2020 / Manchester ------------------------------------------------------------------------Post Brexit Documentation & Compliance 16 January 2020 / London and Manchester ------------------------------------------------------------------------Customs Procedures and Documentation 21 January 2020 / London ------------------------------------------------------------------------Introduction to Importing 22 January 2020 / London ------------------------------------------------------------------------Advanced Importing 23 January 2020 / London ------------------------------------------------------------------------Introduction to Importing 23 January 2020 / Birmingham ------------------------------------------------------------------------Advanced Importing 24 January 2020 / Birmingham ------------------------------------------------------------------------Customs Procedures and Documentation 28 January 2020 / London ------------------------------------------------------------------------Make UK National Awards Gala Dinner 29 January 2020 | London https://www.makeuk.org/news-andevents/events/allevents/make-uk-nationalawards-gala-dinner ------------------------------------------------------------------------IncotermsÂŽ 2020 30 January 2020 / London ------------------------------------------------------------------------94 : Membership : Training : Qualifications : Advice

FEBRUARy ------------------------------------------------------------------------Customs Procedures and Documentation 05 February 2020 / Manchester ------------------------------------------------------------------------Understanding Rules of Origin, Free Trade Agreements & Export Preference 11 February / Birmingham ------------------------------------------------------------------------North West World Trade Summit 12 February 2020 / Manchester As part of our commitment to build competence in British businesses, the Institute produces a series of Regional Trade Summits that bring together experts and leading authorities to speak on the key issues of the day.

These one-day events explore the increasingly complex international trade environment, looking at the many opportunities and a few challenges currently facing those working in international trade.

------------------------------------------------------------------------Post Brexit Documentation and Compliance 13 February 2020 / London ------------------------------------------------------------------------Customs Procedures and Documentation 18 February 2020 / London ------------------------------------------------------------------------Introduction to Exporting 18 February 2020 / Edinburgh ------------------------------------------------------------------------Post Brexit Documentation and Compliance 18 February 2020 / Manchester ------------------------------------------------------------------------IncotermsÂŽ 2020 18 February 2020 / London ------------------------------------------------------------------------Customs Procedures and Documentation 19 February 2020 / Edinburgh -------------------------------------------------------------------------

The Professional Journal from the IOE&IT

Forward Look

Introduction to Importing 19 February 2020 / London ------------------------------------------------------------------------Advanced Importing 20 February 2020 / London ------------------------------------------------------------------------2020 National Manufacturing Conference 25 February 2020 | London https://www.makeuk.org/news-andevents/events/allevents/2020-nationalmanufacturing-conference ------------------------------------------------------------------------Step by Step Guidance on completing Customs Declarations 25 February 2020 / Manchester ------------------------------------------------------------------------Introduction to Exporting 25 February 2020 / Birmingham -------------------------------------------------------------------------

MARCH ------------------------------------------------------------------------12th Advanced Conference on Customs Compliance 24-25 March 2020 | London https://www.c5-online.com/customscompliance/ ------------------------------------------------------------------------MAy ------------------------------------------------------------------------Save the Date! Graduation & Prizegiving Ceremony 2020 18 May 2020 | London https://www.export.org.uk/events/Event Details.aspx?id=1272493&group=

ICC yAF: ConďŹ dentiality vs Transparency 26 February 2020 | London https://2go.iccwbo.org/icc-yaf-confidentialityvs-transparency.html ------------------------------------------------------------------------Advanced Exporting 26 February 2020 / Birmingham ------------------------------------------------------------------------Post Brexit Documentation and Compliance 26 February 2020 / Edinburgh ------------------------------------------------------------------------Step by Step Guidance on completing Customs Declarations 27 February 2020 / Edinburgh ------------------------------------------------------------------------Post Brexit Documentation and Compliance 27 February 2020 / Birmingham -------------------------------------------------------------------------

Open to Export Partner Events IOE&IT Events

IOE&IT Training

www.export.org.uk : @ioexport : 95

Data provider of the European Commission’s MADB* for more than 20 years!

<Mendel is the leading European foreign trade information service and data content provider on applied global tariff and non-tariff measures. We specialise in the research, provision and updating of this information for numerous destination countries all over the world.> <Our portfolio comprises customs tariff data, i.e. international commodity and customs nomenclatures as well as tariff measures, non-tariff measures, export control data, sanctioned party lists and rules of origin.> <Besides corresponding information services in different formats, including our foreign trade portal MendelOnline, we also offer customised research and data compilation for individual needs.> <We regularly supply data and web services to a multitude of international corporations and official institutions, including the European Commission, Enterprise Singapore, Innovation Norway or Switzerland Global Enterprise.> <Our publications and services are consulted by thousands of clients and users every workday.> <All data content is available in various formats and for different solutions, especially for designated customs software such as SAP GTS, MIC, AEB, dbh, etc.> <For more information, please see our website: www.mendel-content.eu>

Content C ontent byy M b MendelContent endelContent

*T The he E European u ro p e a n C Commission’s ommission’s M Market arket Access Access Database Database m may ay b be e cconsulted onsulted under: under: http://madb.europa.eu http://madb.europa.eu M Mendel e nd el V Verlag erlag GmbH GmbH & C Co. o. K KG G | info@mendel-verlag.de info@mendel-verlag.de | w www.mendel-content.eu ww.mendel-content.eu

The Professional Journal from the IOE&IT

Technical Help FAQs

Technical Help FAQs

Our Exporters Helpline service comes as part of your membership package.

Giving you access to our team of experts who can provide help with questions on all aspects of international trade.

To submit a question simply log in to your Member Account at www.export.org.uk and click on ‘Helpline Enquiry’ under the ‘Quick Links’ heading.

Below are a few of the most Frequently Asked Questions to our Exporters Helpline: What is cross border trade?

There are many definitions for cross border trade which can be summarised as the shipment of goods and services across international borders. In this case our focus is on the shipment of goods. The improvement of global communications, mainly due to the internet, has allowed companies to research and find more overseas business opportunities and has enabled many companies to start to trade across international borders.

However, this has actually increased the requirements for products to undergo physical declarations and inspection processes at the export and import borders.

The UK has significantly increased its cross border trade, which has brought with it a requirement to understand what this declaration process entails. This, in many cases, is due to the fact that in the UK we have adopted a more “reactive” approach to the shipment of products; in other words, we tend to rely more on the customer providing information about the documents required rather than proactively being aware of the import/export requirements prior to orders being confirmed.

Todays’ current trade environment and the impending changes to the

way the UK will trade in the international market have prompted an increased demand in companies wanting to understand the cross border trade or import/export process. IOE&IT has many training courses and educational programmes to help companies understand the different processes of cross border trade, which you will find more information about from publications like this and the Institute’s website.

What do I do if I have something to declare?

To understand this process, it is important to understand the current classification of cross border trade.

If we refer to an export this is defined as goods being shipped from the UK to a destination outside the European Union. A shipment to the European Union from the UK is known as a dispatch. There are various differences between the two types of shipments, but one of the most important is the fact that shipments that are exported have to go through a Customs declaration process in the United Kingdom.

When a Freight Forwarder collects the goods, they will declare the goods to the UK Customs system known as the Customs Handling of Import Export Freight or ‘CHIEF’.

This includes information such as who is the exporter, the customer, the goods and the value are all entered into the system.

This is a very simplistic description, but once Customs have checked the shipment information, then the goods are allowed to be moved onto the importing country. At the time of writing a shipment of products going to the EU from the UK does not have to be declared to Customs, even though you could argue is cross border trade as well.

How will cross border trade change for shipments from the UK to the EU after BREXIT and how should I prepare?

What you need to do now is to make sure your business has an EORI number or Economic Operator Registration Identification Number, which in most cases is your VAT number with “000” on the end. For example, a UK EORI will look like: GB123456789000 It may also be worthwhile checking that your EU partners have EORI numbers to be able to import products where their EORI number will be prefixed with their own EU country code, for example in Germany the code will start DE. Then there is the issue of the export declaration. As previously described, this is information about your shipment given to customs who will then release the products. What you will need to consider is who will make the export declarations.

You can hire someone to deal with Customs for you, or you can do it yourself. Most will go with the former idea at the moment, but the u www.export.org.uk : @ioexport : 97

World Trade Matters

Technical Help FAQs

new CDS system should make access to doing your own declarations easier in the future.

The other issue is the cost of your products into the different EU markets. Your importer in the EU may need to pay duty and tax on the goods you send to them after Brexit.

Why is the UK changing the Customs system for imports and export declarations?

HM Revenue and Customs (HMRC) began a phased launch of the Customs Declaration Service (CDS) in August 2018. CDS will replace the existing Customs Handling of Import and Export Freight (CHIEF) system, once the phased launch and test period has been completed.

CHIEF currently processes declarations to facilitate the international movement of goods between the UK and non-EU countries. Due to the potential increase in import and export declarations, CHIEF will continue to run for a time to aid the transition to CDS. However, the implementation of the new CDS systems has had issues, so CHIEF has had its capacity increased to be able to cope with the increase declarations on a no-deal Brexit.

The decision to replace CHIEF with CDS was made before the UK referendum and will be able to be accessed using a Government Gateway account or traders can opt to use a Customs declaration software system.

CDS will offer several new and existing services in one place, for example, traders will be able to view previous import and exports, check the tariff, apply for new authorisations and simplifications, check their duty deferment statement plus it will include guides and checklists

Is product classification required for cross border trade?

Product classification is an essential part of cross border trade. This is the allocation of a numerical code to a product based on pre-determined descriptions set out within the tariff.

The tariff or commodity code for a product is then used by importing countries’ customs to set the rate of duty for the goods being imported.

The most common method is by allocating a percentage rate of import duty to be applied to the declared value, however, some products are assessed at import by their weight or volume, dependent on the product type and the country’s import Customs requirements.

The process of classification will impact on the value of duty being paid by the importer of the products.

In other words, when you sell your products, then this cost is in addition to the sales price, hence it has a significant bearing on the landed cost of your products to the companies importing them.

Therefore, incorrect classification can impact on the competitiveness of your products if not researched correctly. Always check codes suggested by customers as there are instances where a code is being asked to be used just so that lower tariffs are levied on products to purposely reduce the rates applied.

The checking of codes should always be part of cross border trade preparation as to deliberately change codes to reduce import duty, can be considered as fraudulent activity.

What are Export Licences?

The export of some goods and services is controlled and may need

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a licence to be shipped. The product groups may require a licence for cross border trade. Agricultural products and processed foods usually need a Common Agricultural Policy Licence from the Rural Payments Agency. Valuable antiques and works of art may need a licence from the Export Licensing Unit of the Arts Council.

Exports of dangerous chemicals outside the EU may require special documentation and live animals, meat and plants may need licensing and health inspection from various UK-based government agencies before your goods reach their destination.

Other products subject to export controls or licensing requirements include medicines and controlled drugs and the chemicals used in their manufacture, rough diamonds being exported out of the EU, exported waste and certain species of fish, which may be subject to a ban or quota.

There is also a requirement for military items and dual-use products, for which guidelines can be found in the UK Strategic Export Control Lists, which form the basis of determining whether any products, software or technology require an export licence.

Failure to comply with any licence requirements will result in goods being held and in some cases fines for the exporter. n Note: These answers are intended to provide guidance in relation to commonly occurring issues faced by members. Many international regulations can be complex and variable, depending on specific products, circumstances, or details of transactions. Members should seek specific advice if their particular circumstances differ from the above, or if they are unsure about the detail of individual answers.

The Professional Journal from the IOE&IT

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