In a series of posts, Gerry Ennis, Head of Global Trade Finance for Ulster Bank will talk through everything you need to know about exporting including developing an exporting strategy, managing the export, what products your bank can offer you and a global perspective on trade finance. In this post he talks about the basics of exporting…
What is an Export?
It is the consignment of goods, technical assistance and services from Ireland to another country, irrespective of ownership and regardless of whether the destination country is an EU member or not. The purpose of the export may vary from goods sold or services performed.
Are there differences between Export and Domestic sales:
There are some great differences between export and domestic trade and some of these are:
- Customs and duty formalities
- The regulations relating to goods
The geographical distance between the seller and the buyer can increase the physical risks of loss or damage to the goods. There are additional freight costs, timing issues and packaging requirements.
The distances involved can also interfere with normal trading relationships, e.g. visibility, credit rating, debt collection, business reputation, personal contact etc.
2. Customs and duty formalities
Shipments within the European Union (a customs union) generally speaking do not require a customs procedure at export or upon arrival at another member state. Yes, there are declaration issues and VAT formalities but these are easier than exporting outside the EU.
For destinations outside the EU it is a legal requirement for a customs declaration to be made before they leave Ireland and a customs declaration must be made when the goods arrive at the destination country. These declarations including legally binding statements relating to value, commodity or tariff code, customs procedure code etc and may involve the payment of customs duties and import taxes at the place of arrival. Customs declarations are usually made by the Freight Forwarder acting on behalf of the Importer or Exporter. However the information submitted is the legal responsibility of the Exporter. The contractual agreement between the Exporter and Importer will always define who is responsible for customs clearance and payment of duty and Incoterms 2010 is the bible here.
Please bear in mind that certain countries have specific documentary requirements and this can apply when exporting food and medicines. Many countries in the Middle East require that documents are legalised by their embassies in the exporter’s country.
3. Regulations relating to goods
While the regulations regarding the export of most goods are fairly straight forward please remember that there are very strict regulations concerning the export of military and dual use goods and technologies. Additionally any product that could be used in the construction of weapons of mass destruction (chemical, biological & nuclear weapons) and the means of delivering them may be caught by the dual use category.
There are also regulations concerning the export of agricultural and pharmaceutical products and also in relation to the transportation of hazardous goods by air, sea, road and rail.
Managing the differences
If export controls seem to pose a challenge think again as all of these regulations and requirements can be dealt with without having a nervous breakdown. The benefits of selling in to wider markets far outweigh the heartaches and help is at hand from many sources in Ireland. That help can come from your Freight Forwarder, exporter bodies, your local enterprise board, Government agencies, such as Enterprise Ireland or the international division of your bank.
We will look at some of the following over the next few months:
- Developing an Export Strategy
- Managing the Export
- What products can your bank offer you to assist you develop these new markets
- The role of an Invoice Finance department at a bank
- A global perspective on Trade Finance
- The role of Trade Finance in Working Capital
- The principal trade finance products
- Bringing it all together