Foreign trade zone

Trade enlarges the potential market for the goods of a particular economy. It usually refers to export trade and import trade. Basically there is no difference between home trade and foreign trade. Home trade arises out of regional specialization. For the same reason foreign trade arises. Political boundaries do not or cannot bring about any great change in the nature of trade. When a country trades with other countries it is called foreign trade.

Foreign Trade, the exchange of goods and services between nations. Goods can be defined as finished products, as intermediate goods used in producing other goods, or as agricultural products and foodstuffs. International trade enables a nation to specialize in those goods it can produce most cheaply and efficiently. Trade also enables a country to consume more than it would be able to produce if it depended only on its own resources. Finally, trade enlarges the potential market for the goods of a particular economy. Trade has always been the major force behind the economic relations among nations.

When Trade is affected within the political boundary of a country, is known as home trade. On the other hand trade with other countries outside the political boundary of a country is called foreign trade.

Foreign trade has now been controlled for various reasons. Even after the First World War, Laissez Faire or free trade policy was followed by almost all the countries.

Exporter means a person who exports or intends to export and holds an Importer-Exporter Code number unless otherwise specifically exempted.

Export Obligation means the obligation to export the product or products covered by the license or permission in terms of quantity, value or both, as may be prescribed or specified by the licensing or competent authority. Exporters are generally classified in to three classes-Manufacturing Exporter, Merchant Exporter and Government Export agency.

Importer means a person who imports or intends to import and holds an Importer-Exporter Code number unless otherwise specifically exempted. There are three classes of importers namely- Manufacturing Importer, Merchant Importer and Government Import agencies.

Essential documents are recommended for foreign trade

Commercial invoice: Three copies of the commercial invoice are required. Two copies of the commercial invoice must accompany air cargo and parcel port shipment; additional copies should be sent to the consignee. The invoice must contain full particulars of the shipment, including names of buyer, and seller, quantities, weight, value of the goods per unit and all necessary charges to establish CIF value, shipping terms, shipping marks, country of origin unless a separate certificate of origin is required, and a statement that the goods are in accordance with the pro forma invoice.
Certificate of origin: Three copies, when required by the letter of credit, or the importer, should be provided on a general form sold by commercial printers. The certificate of origin must be certified by a recognized chamber of commerce; 
Bill of lading: Three copies are required. A bill of lading customarily shows the name of the shipper, the name and address of the consignee, port of destination, description of goods, the listing of the freight and other charges, the number of bills of lading in the full set, and the date and the signature of the carrier’s official acknowledging receipt on board of the goods for shipment. The information should correspond with that shown on the invoices and the packages; 
Packing list: Although not required, a packing list generally expedites clearance of shipment through customs, particularly when the shipment consists of items of different customs classifications or numerous small items.

EXPORT PROCEDURE

"Exporter" means a person who exports or intends to export and holds an Importer-Exporter Code number unless otherwise specifically exempted. For exporting goods from Bangladesh to foreign countries an exporters is required to follow the under mentioned procedure:-
Indent or order: first of all, an exporter is to receive an indent or order from the foreign importer. Indent means a buying order to an agent or an order placed directly on foreign seller to supply certain goods. It may be ‘open’ or ‘closed’. When details in respect of goods and prices to be paid are not mentioned it is an ‘open indent’. An order usually contains quantity, value, description of goods, method of payment, instruction for shipment etc.
Securing license: after receiving the order the exporter is required to get license from the controller of export and import. If the goods are under O.G.L it is not necessary to secure any license.
Arrangement for the letter of credit: if the exporter does not know the foreign importer or if he has no confidence about the credit worthiness of the foreign importer, he requests the importer to arrange for the letter of credit from a bank. A letter of credit is an advice issued for undertaking given by a bank that bills drawn on the banker by the exporter, according to the terms of letter of credit, will be honored. All importers usually request the bank to issue a letter of credit in favor of the exporter.
Procuring goods: after receiving the orders the exporter arranges for the procurement of goods from different sources. If he is a manufacturer, the question of procuring goods does not arise.
Packing and marketing: packing and marketing of goods are very important for foreign trade. Goods are packed properly for ensuring safety and marked with the name of the exporter or the importer and the port of destination.
Shipping order: after this the exporter arranges for the reservation of ship’s space and contacts a shipping company for this purpose. If the shipping company agrees, the company issues a ‘shipping order’ to the exporter. Shipping order signifies an order to the captain of the ship directing him to receive exporter’s goods on board of the ship.

Forwarding of goods and booking of exchange: goods are then forwarding to the port directly by the exporter or may be arrange for forwarding of goods by a forwarding of goods by a forwarding agent who undertakes all responsibilities in the respect on behalf of the exporters. Besides these, an exporter is to book in advance the exchange rate to guard against unfavorable fluctuations in times of payment.
Customs Requirements: exporter is to prepare many copies of shipping bill or customs challan mentioning there in quantity, quality, weight, measure, price of the goods, the ports of destination, the name of the ship etc. then  the exporter is to fill in export application forms and these are submitted to the shipping office. The office collects shipping charges and returns the copies of the shipping bill and application forms. After this exporter is to observe some other customs formalities. He is to submit to the customer’s authority shipping bill, export application forms export license and the other documents, if any.
Shipping procedure: packed goods are then forwarded to the dock and a dock’s receipt is obtained. When goods are delivered to the ship, the captain of the ship issues a certificate known as Mate’s Receipt. After this the exporter places the mate’s receipt to the shipping company and gets a bill of landing. This bill is given to the exporter on payment of freight charges. The bill of landing may also be marked with ‘Freight Forward’ which means that the freight will be paid by the importer. A shipping company also charges Prim age or supervision charges for supervising loading of goods.
Marine Insurance: the exporter then contacts a marine insurance company to insure the goods against all risks of sea transport. The company undertakes to pay compensation to exporter for less or damage of goods in transit.
Preparing invoice: the next task of the exporter is to prepare several copies of the invoice to be sent to the importer through the bank. The invoice contains the prices to be paid, quantity and quality of goods etc. several copies of the invoice are sent to the importer both directly and through bank along with other documents, namely, bill of lading, marine insurance policy, consular invoice, certificate of origin etc.
Receiving payment: After the goods are dispatched, the exporter is to receive the amount of the goods. For this, he draws bill of exchange in sets of three and sends all these bill to an exchange bank having branch or agent at the importing country along with other documents, namely, bill of lading, trade invoice, consular invoice, certificate of origin, insurance policy etc. This bill may again be D/A (document against acceptance) or D/P (document against payment) bill. In case of D/A bill documents are handed over to the importer on his acceptance of the bill. In that case the exporter must wait till maturity of the bill for securing payment. For this, the banker demands from the exporter a ‘letter of Hypothecation’ which empowers the bank to sell the goods in case the importer dishonors the bill. In the case of D/P bill the documents are given to the importer when the payment is made.
Closing the transaction: when the importer is satisfied as to the quantity, quality etc. of the goods delivered to him, the transaction is closed. On the other hand, if the goods are not up to the standard and the importer is dissatisfied, the transaction is closed after further negotiation.

IMPORT PROCEDURE

"Importer" means a person who imports or intends to import and holds an Importer-Exporter Code number unless otherwise specifically exempted. A business man or a manufacture may import commodities directly from abroad or contact an agent or an indent firm. In any case the following procedures are to be followed:
Import license: first of all, an importer is to procure a license from the Trade controller. If the commodities to be imported are listed under open general license, permit or license is not required to be obtained.
Issuing order or Indent: the next task of the importer is to issue order or indent to the foreign exporter specifying there in the quantity, quality, prices of goods, mode of payment, shipping procedure, date of deliver etc. in the case of closed indent, quality, brands and price of goods are specified. But in the case of open indent, sources of purchase and prices are not mentioned.
Letter of credit: If the importer is unknown or not an established firm arrangement is made with an exchange bank having branch in the exporting country so that the bank can issue a letter of credit in favor of the exporter. By this arrangement, the bank undertakes to honor bills drawn on the importer by the exporter. An importer may sometimes be required to pay full amount and in the case of an established or reputed firm a mere bank reference may be sufficient.
Booking of Exchange: Importer must secure foreign currencies, as he is to pay for the goods. Exchange rates very often fluctuate and hence a prudent importer always fixes exchange rates before hand so that he may not suffer from unfavorable rates in times of payment.
Advice Note from Exporter: after this the importer waits for the advice in respect of shipping from the exporter. The exporter send information or advice note intimating that the goods have been dispatched and also furnishes documentary bills through the bank.
Paying for Bills: the importer will not get the documents until he accepts or pays for the bill. In the case of D/A bill documents are handed over to the importer when he accepts the bills and in the case of D/P bill documents are given on payment.
Customs Formalities: after getting the documents the importer proceeds to take delivery of the goods. Before that he is to observe certain formalities required by the customs authority. After arrival of the ship, the captain submits a ship’s report to the customs authority. And the importer fills in bill of entry in triplicate incorporating there in every detail in respect of the goods. In case the importer is not in a position to give detailed information concerning goods, he is required to fill in bill of sight declaring his inability to furnish any thing about the goods.
Again, if the goods are not free from duties, the importer is to pay for import duties after getting the goods appraised by an appraising officer. He examines the documents and determines the value of the import duty. Te importer fills in a memo and pays for the import duty. Then the Bill of writes the word “Appraise and pass” and signs the bill of entry. This is the permit for unloading the goods. Then all the documents are sent to the jetty and the appraiser of the jetty examines the goods and writes on the document that duty has been appraised.
Closing the Transaction: when the importer is satisfied as to the quantity and quality of goods, the transaction is closed. On the other hand, if he is dissatisfied on account of inferior quality or shortage of goods, the transaction is closed after further negotiation between the exporter and importer.

OBLIGATIONS OF FOREIGN TRADE

Lack of smooth export policy: The one of the major problem of export trade in Bangladesh is the lacking of smooth export policy. Because of short-term trade agreement, export policy is often changed. Because of this, the exporters fall in great trouble.
Limited exporting products: As the number of exporting products is short, the profit of export trade is also short in Bangladesh. The main exporting products of Bangladesh are jute; jute made products, tea, hides, and made garments. These are very less number of products, which are not sufficient for exporting trade of a country.
Reduction the demand of jute made products: In past 80% of the foreign currency was earned by the jute and jute made products. But now the demand of Jute and jute made products have fallen terribly because of the use of synthetic fiber in many countries. This is one of the problems of export trade.
Lower quality of exporting products: In the competitive market to get the it is essential to have the good quality of products. But the quality of products of Bangladesh is not so good so the demand of these products in world market is very less.
Increase of production cost: The cost of Bangladeshi products is increasing for various matters such as: labor discourage, load shedding etc. So the Bangladeshi products are not going to be existed in the competitive market
Lacking of publicity: Product market have to be created by its publicity but the publicity of Bangladeshi products is limited.
Shortage of ship: There are not enough ships in Bangladesh for exporting products. So they have to depend on foreign ships. Therefore, the transportation cost increases and the good cannot be sent in time. So the export trade is hampered.
Wants of the stability of price: Because of the Sudra price of products do not remain stable. So the demand of Bangladeshi product is decreasing.
Smuggling: Every year a great deal of exporting products is passing to the neighboring countries by smuggling. This is one of the problems of export trade.
Classification & sample: The products have to be classified and specified for exporting in the international market. There are not enough efficient measures to classify and specify Bangladeshi products.

FOREIGN TRADE LOGISTIC

Foreign Trade, the exchange of goods and services between nations. International trade enables a nation to specialize in those goods it can produce most cheaply and efficiently. International trade arises on account of territorial specialization. All countries are not endowed with the same types of natural resources. Importance of international trade lies on the advantages a country gets from it. A country gets various benefits by doing trade with foreign countries. A country trades with other countries for various reasons like, Territorial specialization, Comparative cost, Availability of resources, Foreign exchange, Price difference etc.
Though it have some disadvantages but it also have many advantages like, Specialization, Benefit to consumers- Best Allocation of World Resources, Widens the Market, Increased Production, Promotes International Peace, Exchange of Culture, Import of Rare Goods, Necessary for Developing Countries.