INTERNATIONAL TRADE: PROCESS & ORGANIZATION

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Virginia Robertson
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1 - CA2E UNIVERSITY OF FIANARANTSOA INTERNATIONAL TRADE: PROCESS & ORGANIZATION...A fascinating reality... 1

2 But first, a quick introduction of myself... Born in Bergamo (Italy) European Citizen Passionate about: - International & European Law - Global Economics & Development - Import / Export In TWO words: INTERNATIONAL TRADE

3 Where has this passion come from? (ACADEMIC BACKGROUND) Liceo Scientifico University of Bergamo (Italy) Bachelor Degree in International Company Law De Montfort University Leicester (UK) University Diploma in English Law University of Groningen (Netherlands) LLM Master Degree in International and European Law University of Bergamo (Italy) Advanced Training Course for International Managers 3

4 Where has this passion come from? (PROFESSIONAL BACKROUND) 2013 Chamber of Commerce of Bergamo 2014 Legal Confartigianato Bergamo 2015 Visiting Lycée St. Pierre Chanel (Ihosy) Business English Trainer International ZINI S.R.L Work in Progress (M a d a g a s c a r) *** CURIOSITY*** 4

5 INTERNATIONAL TRADE definition International trade is the exchange of capital, goods and services between the different countries of the world. It consists of imports, exports and entrepot. International trade basically takes place for mutual satisfaction of wants and utilities of resources. 5

6 - VIDEO - Your comments please! 6

7 "different countries" Any country??? By definition/potentially: YES In truth, int. trade exists only between THOSE COUNTRIES that HAVE commercial relations with each other. 7

"different countries" TRADE BARRIERS Government-induced restrictions Government Sovereignity a) Tariffs (financial barriers) Taxes imposed on

8 "different countries" TRADE BARRIERS Government-induced restrictions Government Sovereignity a) Tariffs (financial barriers) Taxes imposed on imports/exports b) Non-Tariff Barriers Technical Historical/Political Others e.g. Labelling e.g. Embargo e.g. Currency Devaluation Quotas Subsidies, etc... 8

9 FROM NATIONALISM TO PROTECTIONISM TO TRADE WARS Nationalism: promotion of the interests of a Nation. Protectionism: using restrictions such as tariffs to boost one Country's industry, and shield it from foreign competition. Trade War: when Countries attack each other's trade with taxes and quotas. 9

It is a forum for governments to negotiate trade agreements.

10 NEED FOR A REFEREE W O T From WTO website: There are a number of ways of looking at the World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. 10

11 164 MEMBERS 23 OBSERVERS 11

12 OTHER BODIES MULTILATERAL REGIONAL FINANCIAL INSTITUTIONS AGENCIES 12

13 "imports, exports and entrepot" Import: the activity of purchasing goods or services from foreign countries and bringing them into domestic territory.* Export: the activity of selling goods or services to foreign countries.* **WHETHER BY AN INDIVIDUAL OR AN ORGANIZATION Entrepot: the activity of purchasing goods from one country and then selling them to another country after some processing operations. That is also known as re-export(ation). 13

Indirect Import: purchase from an authorized agent or distributor (=intermediary) of

14 DIRECT VS INDIRECT...What s better?! Direct Import: purchase from manufacturer. Direct Export: sales directly to the final consumer. Indirect Import: purchase from an authorized agent or distributor (=intermediary) of the manufacturer. Indirect Export: sales to an agent/distributor on [the exporting or] importing country. Debated definition. 14

15 IMPORT What do I need to know before importing? 1) Local Market / Demand 2) Legal Restrictions / Rules of Origin / Compliance with the Law 3) Costs (including taxes, customs duties, bank fees, etc.)! 4) Risks on Commodity / Services and Currency (fluctuation) 5) Exporting Country: stability, bilateral-multilateral agreements, culture 6) Reliable Supplier 7) Customs Requirements and Procedures (e.g. Import License) 15

16 EXPORT What do I need to know before exporting? 1) Foreign Market / Demand 2) Legal Restrictions / Rules of Origin / Compliance with the Law 3) Costs (including: taxes, customs duties, bank fees, etc.) and my Margin! 4) Liability and Risks on Payments 5) Importing Country: stability, bilateral-multilateral agreements, culture 6) Reliable Customer 7) Customs Requirements and Procedures (e.g. export USA-MDG: commercial invoice, packing list, bill of lading / airway bill, cargo follow-up doc.) 16

17 CALCULATION OF THE CUSTOMS DUTY _Tariff = % _Customs Duty = amount I pay to the customs (Almost) synonyms Preferential Treatment Preferential Origin 17

18 PREFERENTIAL TREATMENT Examples of FREE TRADE AREA: COMESA ; SADC ; TFTA (COMESA+SADC+EAC) Example of CUSTOMS UNION (FTA with a common external tariff): EUROPEAN UNION Example of Preferential Arrangement: ECONOMIC PARTNERSHIP AGREEMENT EPA (EU ACP Countries) DEVELOPMENT 18

external nations to win trade, and then re-exports the same product to another partner in the trade agreement, but

19 ENTREPOT: TRICK OR TREAT? Entrepot trade / Re-exportation, may occur 1) when one member of a free trade agreement charges lower tariffs to external nations to win trade, and then re-exports the same product to another partner in the trade agreement, but tariff-free. 2) Re-exportation can be used to avoid sanctions by other nations. e.g. Product X: EU-Iraq Tariff=50%cif-price EU-Turkey Tariff=0%cif-price Turkey-Iraq(Kurdistan) Tariff=0%cif-price EU Turkey Iraq But... 19

20 RULES OF ORIGIN [RoO] Why is it important to identify the origin of a product? PREFERENTIAL ORIGIN BENEFITS: - TARIFFS CONCESSIONS - QUICKER PROCEDURES NON-PREFERENTIAL ORIGIN NON-PREFERENTIAL RULES PURPOSES: QUOTAS, ANTIDUMPING, ANTI-CIRCUMVENTION, STATISTICS & LABELLING 20

21 RULES OF ORIGIN [RoO] How do we identify the origin of a product? - VIDEO - Jeans: denim from Benin... sewn in Mauritius Software: concept from Switzerland... developed in India Have your say! 21

22 RULES OF ORIGIN [RoO] How do we identify the origin of a product? KYOTO CONVENTION Annex K Chapter 1 Goods produced wholly in a given country shall be taken as originating in that country. Where two or more countries have taken part in the production of the goods, the origin of the goods should be determined according to the substantial transformation criterion. 22

23 satisfaction of wants & utilities of resources ULTIMATE GOAL VALUE UTILITY RESOURCE PROFIT Remember?... A Fascinating Reality... 23

24 100% GASY-INTERNATIONAL SUCCESSFUL STORY 24

25 THANKS Q U E S T I O N S? A N Y *A special Thank You goes to the University of Fianarantsoa for their invitation and support! 25

The significance of RoO in international trade

United Nations Conference on Trade and Development Division for Africa, Least Developed Countries and Special Programmes ( ALDC ) The significance of RoO in international trade Stefano Inama 1 Rules of