How to talk to companies about exporting

1. How to talk to companies about exporting Common examples in small business

2. Introduction • Dean Stewart • Dean of Corporate Training and Economic Development – NWTC • Common challenges faced by small Wisconsin businesses • Fred Monique

3. Challenge 1 • North American Free Trade Agreement (NAFTA) Certificate of Origin • Majority of questions • Canada

4. Challenge 1 • Homeland Security (HS) Tariff Classification • The procedure of classifying goods for import or export • Organized in chapters: 1 – 97; 98 and 99 in US • Need to use the importing countries classification code • Schedule B numbers • US Census Bureau • www.census.gov • The same as HS tariff classification up to the first 6 digits • Use schedule B numbers to approximate • Canadian Customs Classification • Similar to US classification • www.statcan.gc.ca/trade-commerce/cec/index-eng.htm

5. Challenge 1 • Company • Foundry located in NE Wisconsin (Green and Gold IncGGI) manufactures metal casting components for HVAC systems • Two scenarios: • GGI has started to sell and ship products to a company located in New York (Acme). Acme uses the components in the assembly of their finished products, which are then exported into the Canadian marketplace • GGI ships replacement parts for service work directly to a Acme customer in Canada • In each case, ACME is asking GGI to complete a NAFTA Certificate of Origin

6. Challenge 1 • Scenarios • Component to New York • Service part to Canada • Questions • Is ACME correct in asking GGI to fill out the Certificate of Origin in each scenario? • Why? • If not GGI, what party should be responsible for filling out the Certificate of Origin? • Why?

7. Challenge 1 • Scenarios • Component to New York • Answer: • Acme is responsible for filling out the paperwork for two reasons. • Although the final destination of the finished product is Canada, the components’ final destination is New York. • In addition, the CCC code is different for a metal casting than it is for a finished HVAC system. (Chapter 72 vs Chapter 85) • Service part to Canada • Answer: • Since the part is being shipped directly to Canada, GGI is responsible for completing the certificate with the appropriate Canadian Customs Classification.

8. Challenge 2 • INCOTERMS (international commercial terms) • 1936 – International Chamber of Commerce • Uniform way of interpreting the terms of trade • Tasks, costs and risks • Intended to reduce or remove uncertainties arising from the interpretation of rules from country to country. • Integral part of any international sales contract • Assumes layers of risk and obligation to both buyer and seller. • 3 letter code

9. Challenge 2 • Any mode of transport • EXW (Ex works) • Buyer pays all transport costs from sellers factory • FCA (Free carrier) • Seller pays to deliver goods to a carrier nominated by buyer • CPT (Carriage paid to) • Seller pays to deliver goods to an overseas airport • CIP (Carriage and Insurance paid to) • Seller pays to deliver goods to an overseas airport and pays insurance • DAT (Delivered at terminal) • Seller pays to deliver goods to an overseas airport except for costs associated with import clearance • DAP (Delivered at place) • Seller pays to deliver goods to buyers plant excluding duties • DDP (Delivered duty paid) • Seller pays to deliver goods to buyers plant excluding duties

10. Challenge 2 • Sea and inland waterway transport • FAS (Free along ship) • Seller is responsible for placing the goods alongside the ship at named port and for their clearance. • FOB (Free on board) • Seller pays to deliver goods on an ocean vessel • CFR (Cost and Freight) • Seller pays to deliver goods to an overseas port • CIF (Cost, Freight and Insurance) • Seller pays to deliver goods to an overseas port and pays insurance

12. Challenge 2 • Questions • GGI agrees to sell product to PRC Industries in China. PRCI will pick up the product at GGI’s plant in Green Bay. What terms will be used? • GGI agrees to sell product to PRC Industries in China. The product will be sent in an intermodal container on an oceangoing vessel. GGI pays for all transport and unloading costs at destination. PRCI assumes all costs after that including insurance. What terms will be used? • GGI agrees to sell product to PRC Industries in China. GGI ships the product to Chicago, where the product is loaded as air freight to China. GGI pays for transportation costs to China, excluding insurance; PRCI pays for all costs upon arrival. What terms will be used?

13. Challenge 2 • Questions • GGI agrees to sell product to PRC Industries in China. PRCI will pick up the product at GGI’s plant in Green Bay. What terms will be used? EXW • GGI agrees to sell product to PRC Industries in China. The product will be sent in an intermodal container on an oceangoing vessel. GGI pays for all transport and unloading costs at destination. PRCI assumes all costs after that including insurance. What terms will be used? CFR • GGI agrees to sell product to PRC Industries in China. GGI ships the product to Chicago, where the product is loaded as air freight to China. GGI pays for transportation costs to China, excluding insurance; PRCI pays for all costs upon arrival. What terms will be used? CPT

14. Thank youDean StewartDean of Corporate Training and Economic DevelopmentNortheast Wisconsin Technical Collegedean.stewart@nwtc.edu920.498.6995