International Trade Procedures: A Comprehensive Guide to Customs, Documentation, and Regulations

Posted on May 30, 2024 in Economy

Customs and Immigration

Customs authorities in each country control the entry and exit of people, animals, and goods. They inspect items and animals to ensure compliance with import/export regulations, which may be based on national laws or international agreements. Tariffs may apply depending on the product or animal.

Immigration authorities oversee the movement of people across borders.

Customs clearance grants permission to move goods in or out of a country after fulfilling customs requirements.

Customs classification uses numbered categories in a country’s tariff schedule to determine applicable duties and taxes on goods.

Trade Barriers

Trade barriers are government-imposed restrictions on the free exchange of goods or services. Examples include:

  • Embargoes
  • Administrative barriers
  • Quotas
  • Ad valorem tariffs
  • Discriminatory tariffs
  • Local content requirements

Reasons for Trade Barriers

  • Protecting domestic employment
  • Protecting infant industries in developing economies by increasing the price of imported goods to encourage domestic consumption
  • National security, such as protecting defense industries
  • Retaliation against trading partners that have violated trade rules

Customs Taxation

Customs authorities collect taxes on imports and some exports to generate state revenue. In the EU, VAT is paid in the destination country to avoid double taxation. Relevant tax identifiers include NIF-IVA or IVA-VAT.

Trade Documents

Proforma Invoice

A proforma invoice serves multiple purposes:

  • Quotation document
  • Payment tool
  • Customs document
  • Supporting document for import licenses
  • Part of a sales agreement
  • Order confirmation
  • Document for banking and insurance purposes
  • Information confirmation

Customs Invoice

A commercial invoice used for customs purposes, including details like product description, quantity, selling price, freight, insurance, packing costs, delivery terms, payment terms, weight, and volume to determine customs value.

Consular Invoice

A document certifying a shipment of goods, stating the consignor, consignee, and shipment value.

Certificate of Origin (CO)

  • Preferential CO: Issued for exports eligible for tariff reductions or exemptions under free trade agreements.
  • Non-preferential CO: Issued for goods not receiving preferential treatment.

Transport Documents

  • CMR: Road transport
  • B/L: Sea transport
  • AWB: Air transport
  • CIM: Rail transport
  • FBL: Multimodal transport

SOIVRE (Spanish Official Export Control Authority)

Objectives

  • Facilitate fair trade
  • Prevent low-quality products from entering the market
  • Align production with demand
  • Support Spanish exports

SOIVRE enhances product trustworthiness and buyer confidence.

Functions

  • Agro-alimentary product control (food, agriculture, fish, olive oil, canned goods): Inspection, control, and issuance of commercial conformity certificates.
  • Industrial security item control (toys, protective equipment, electrical equipment, clothing, shoes)
  • Voluntary certification: Upon company request to demonstrate product quality
  • Technical assistance to traders: Consultations, comparative studies, collaboration with destination countries to prevent inspection issues
  • Management of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) duties in Spain: Information provision, import/export inspection of CITES species, legalization of CITES species, control of captive breeding and artificial reproduction of CITES-listed animals and plants

Other Food Certificates

  • Kosher: Jewish dietary standards
  • Halal: Islamic dietary standards

Phytosanitary Certificate

An official document issued by a National Plant Protection Organization (NPPO) certifying that inspected plants or plant products are free from quarantine pests according to the importing country’s regulations.

Regulated Articles

  • Plants
  • Bulbs
  • Seeds
  • Fruits and vegetables
  • Cut flowers and branches
  • Grain
  • Growing medium

Incoterms

Internationally recognized commercial terms that define the responsibilities of buyers and sellers in international trade, including cost allocation for each transportation segment, loading/unloading responsibilities, and risk of loss during shipment.