Documents Used in International Trade -HOWTO

Documents Used in International Trade – Introduction

Why is the topic Documents Used in International Trade so important? Why should an article be dedicated to it?  All shipments need documents. So why highlight the topic? As most of the articles on this site, this one, too, is kept as simple as possible. Written for shippers and consignees. It is a small concise  howto or how-to, whichever you tend to write it.

It is true that (almost) all shipments are accompanied by documents. Commercial invoices, packing list, conformity certificates, certificate of origin, consular invoices etc are some of the documents that are used widely.

However, experience has shown that many of these documents are not always drawn up  in the way they should be. True, they contain information. It is, therefore, taken for granted that the story ends there.

An Objective View

The simple principle is that a shipment needs to be accompanied by documents. However, they should help both the export and the import procedures to run as smooth as possible. Between the shipper and the consignee, we have three entities :

  1. Freight forwarder: exporting cargo agent
  2. Airline
  3. Freight forwarder: cargo agent and/or broker

Air freight, being a fast mode, is  expensive. Saving time is of utmost importance. Export and import clearance are to move smoothly without any hitch. The documents are important for all the three parties mentioned above.

documents used in international trade

All goods that are being exported have to go through several stages. Time is the factor that is common to all of them. Documents used in international trade consume their own amount of time. It goes without saying that care should be taken in creating these papers. The processing time is to be kept as low as possible. Not all documents used in international trade have identical formats. Readability and visually helpful layout are important. Official documents ( issued by government offices) should not have corrections on them and if they do have some amendments, rules must be followed, such as a correction approved stamp or the necessary stamp required by the issuing authority.

As a manufacturer one clearly knows the product well. The aim is to sell as effectively and as fast as possible.  In a fast moving world one has to be not only necessarily but also effectively fast . However, in this fast lane, keep documentation simple and concise but without breaking any rules. Provide as much relevant information as possible without cluttering the pages.

The customs officer looks for information, which will help him identify the product. The faster he can identify, the faster his processing. If the document only shows abbreviations and code numbers, he will need more time to decide and clearance will take a longer time.

In a typical exports control procedure, the customs officer wants to know what is being exported and to where. He will then check if the export of that product is permissible. He will also check if there is any embargo in place. Hence, the clarity of the document will help save time.

A short list

  • Identifiable name(s) of the product(s)
  • Quantity with unit
  • Weight with unit
  • Type of packaging: carton, pallet, crate etc.
  • Dimensions with unit: Length x Width x Height  cm/in/mm
  • Total number of pieces
  • Total gross weight of the consignment

Below the same list is repeated in a different way.

Not all documents can be covered here. However, the most important points are highlighted below

Commercial Invoice and Packing List

These two documents should, ideally, carry the following information

  1. Title (Commercial invoice/Pro-Forma Invoice/Packing List)
  2. Date
  3. Name and address of the shipper and the consignee
  4. Description of goods (not codings or abbreviations)
  5. Serial numbers of the products (if applicable)
  6. Currency
  7. Packaging information: number of pieces, type of packaging (cartons, pallets etc), dimensions and units (cm, in)

Item 4 is a must if the product is to be temporarily imported. When the product is re-exported after the set time, the customs authorities will demand the identification based on serial numbers.  The customs documents will carry the original serial number.

Caution : Exporting items that will return to the country of export:

Keep in mind these important aspects

There is a time limit for importing under “returning after temporary import”, a process which is used to import goods, without duties being applicable. Ask the relevant customs office!

To avails of exemption of duties applicable to reimporting of goods, it must be be borne in mind that the such goods may not have undergone any physical change. In other words, the import of goods must comply with the principle of “unprocessed goods”. Example: A machine exported may be used for demonstration purposes abroad. However no changes are to be made to the machine. That includes changing any parts, “updating” it with new parts etc. 

In addition to the above, before exporting, make documentary evidence of the goods. This is achieved by  serial numbers  embossed on the item. The number is then mentioned on the accompanying documents such as packing list, commercial/pro-forma invoice etc. 

The import after the demonstration abroad must be done within the relevant period set by customs.

Certificate of Origin

This is issued by an authorised office and most customs offices will demand the original during import processing. Hence, do not delay! You may send the document to the consignee in advance. Do not use standard postal service! Instead use a courier service. Always keep a clear digital copy on hand. A digital copy should be sent to the consignee by mail.

ATA Carnet

Some offices attach a seal to the Carnet! Do NOT damage this! No pages are to be removed.

ATA Carnet is to be kept safely. It will accompany the shipment until the return to the station of origin, where the document will be officially cancelled.

A very clear copy is to be sent to the consignee(or his cargo agent) to help prepare the customs bill of entry.

Veterinary Certificate

If you are exporting dairy products, meat etc, get in touch with the corresponding government authority or the chamber of commerce. Prepare all the necessary documents without any mistakes.

Make clear digital copies of the certificate and send it to the forwarder (cargo agent) at the airport of destination. He may need to consult with the local veterinary officer to know if anything more is needed or if the certificate is OK. Move the goods ONLY AFTER the approval has been received.

The consignee will also need, in most cases, a permit from a government office to import such goods. Not all airports will have a serving veterinary officer. Hence, confirmation regarding the airport of arrival must be obtained prior to export.

Think ahead. Successful tendering to the airline is not the end of the story. When the consignment arrives at the airport of destination, the customs need to release the goods. This can happen only after clearance. What happens if the customs offices declares your documents as insufficient or inadequate or incomplete? What happens, if the customs officer demands further documents?

Special Note: Explained again in a different paragraph here.

Items made out of wood will almost always require the scientific names of the trees from which the item has been manufactured. Provide the consignee with the official scientific name.

Items of animal origin (feather, hide etc) must be described with the corresponding scientific names.  If the item is a leather product, check for requirement of CITES certificates.  What is CITES? 

Demurrage

In such a case the consignment will remain under the custody of the customs office and after the expiry of the free time (between 24 hours and 72 hours calculated from the landing time) storage charges will start.

The usual demurrage is a rate per kg per day (A minimum price will apply). The rate is applicable on chargeable weight and if your shipment is a large one, the price for storage (demurrage) will be high.

Checking In Advance

Prevention is better than cure. The principle applies even to air freight! Documents in international trade need to be checked in advance.  This will help you to minimise the risks. This procedure will help you to keep a control on costs, to avoid unnecessary stress, to prevent wastage of time.

This should be an inseparable part of your quality control. Your customer needs to receive his order on time. You need to receive your payment on time.You also need to make sure that the customer is kept happy. Service goes beyond the airport.

Ask Yourself These Questions

  • Have you requested and received a list of documents your customer needs?
  • Have you passed on to your customer copies of the documents for his perusal and confirmation?
  • Have you received from your customer the go ahead regarding the documents?
  • Have you passed on very clear digital copies of the documents to the freight forwarder, at your end?
  • Can the freight forwarder (cargo agent) or broker at the airport of destination use, without any hitch, the documents to file the customs bill of entry? Remember: A commercial invoice, or for that matter, a packing list, which contains only abbreviations and codings is of no use to the broker. He needs to enter the nature and description of the goods into the bill of entry that he will sent to the customs office.
  • Does the consignee need an import licence?
  • If he needs one, has he applied for it? It is not to your advantage to say that the sales terms are EXW (ex works) and that it the importers job to think about that.  The more information you can give and the more help you can provide, the more satisfied will your client be.
  • Have you provided the shipment details, such as dimensions (with units please), weight etc. in your documents? The broker might be required to enter the nett weight (weight of the goods without the packaging) to the customs. If you say “one piece”, you are making it difficult for the broker to “guess”. A single carton might weight only one kilo, but a pallet might weigh 25 kilos.
  • Does the country of destination accept “pro-forma” invoice? Many do not!!
  • Have you entered the text “For custom purposes only” on your invoice? If you have, did you think that the country of destination might disqualify such a document? The same applies to ” No commercial value”.
  • In the case of a temporary import: have you entered the serial number of your product(s) on the commercial document or any other document, which will be used for re-export?
  • Have you placed your signature (in blue ink!!) on the commercial invoice AND the packing list? Some countries make it mandatory.
  • Have you spelt the consignee (and the address) correctly? (Some countries will give you sleepless nights, if there are “spelling mistakes” in the consignee’s name and address (speaking from experience)

There are more questions, but I do not wish to worry you. I am just speaking from experience and it is my wish that you export your goods with as less problems as possible. If you have a lot of exports and less time on your hands, let a professional manage it for you. After all Rome was not built in a day.

Documents in international trade are no cryptic puzzles. All that you need is good organisation and a good planing. Arm yourself with knowledge. Countries keep changing laws and that affects trade, as well. You know it, knowledge is power.

Special Papers – Extra Attention

Certain documents in international trade demand extra attention. This is not to frighten you. You just need to take care not to lose, damage or misplace certain very special papers. I shall name some of them here:

  • Certificate of Origin Form
  • EUR 1
  • ATR  (Turkey)
  • ATA Carnet
  • CITES Certificate
  • Veterinary Certificate
  • Documents relating to dairy and meat products

Wood And Animal Products

Does your export include products made of wood (that includes decoration articles) or of animal origin (bird feather)?

If it does, then remember to note the scientific name of the plant/tree or animal/bird on your documents. Most of the customs offices will demand the declaration in the binomial nomenclature format.

Before I close this article, I need to address a serious point.

May the Receiver of the Goods See the Commercial Invoice?

The shipper must answer this question. Who is paying for the goods? Who is receiving the goods? The party that is paying for the goods might be selling to the receiver with a profit margin. Hence, the receiving party may not see the commercial invoice.

documents used in international trade

Neutralisation

In many such cases, the goods are neutralised. This means that the consignment will be stripped of any paper or label that will show the original shipper. The shipment is delivered as an anonymous one. the receiving party knows only the company that sold the goods to him.

In such a case, do not pass on the commercial invoice to the freight forwarder. The forwarder at the airport of destination will be given a commercial invoice for the customs clearance.

Export Declaration

This is a document that is needed only up to the airport of exit. It is issued by the local customs authority of the shipper. In some cases, the goods are not in the custody of the shipper. It may be located in the warehouse run by another company.

In the latter case, the export declaration is issued by the local customs office of the location of goods. For example, the shipper is located in Paris but the goods are physically stored in Frankfurt, Germany. The local customs office, under whose jurisdiction, the warehouse is, needs to issue the declaration.

The local forwarder will know when the document is required. In Germany, when the commercial invoice(s) carries a value of 1000EUR or more, an export declaration is mandatory. The document carries an 18 digit (character) code called MRN (Movement Reference Number). The last digit is called a check digit.

The German export declaration (called ABD, the abbreviation for Ausfuhrbegleitdocument. It means “Document accompanying the goods for export) is valid for 90 days from the date of issue.

Conclusion

Draw up a check list of the documents required. Ask yourself the questions mentioned in the section above. Plan without loopholes. Keep your lines of communication open. Documents used in international trade have no short cuts.  You may get in touch with me here.