ST.

MARY’S UNIVERSITY
FACULTY OF BUSINESS
DEPARTMENT OF MARKETING MANAGEMENT

TEACHING MATERIAL
FOR THE COURSE IMPORT EXPORT POLICY AND PROCEDURE
COURSE CODE: MKMG 3031

GIRMA WORKNEH WOLDE

 TABLE OF CONTENTS

Topics Page

Unit One:

1. Import Export Policy and Procedures: Definition, Scope

1.1 International Trade: Overview

1.2 Theories of International Trade
Unit Two

2. INCOTERMS, Documents & IMPEX related terms and their Applications

2.1. Major commercial terms used in import &export

2.2. Incoterms and their applications

2.3.Documents used in import &export and their preparation

Unit Three Import and export in Ethiopia

3.1.Overview of import-export procedures in Ethiopia

3.2.Facilitators of import-export

3.3.Licensing of import-export enterprise

Unit Four : Customs Related Activities and Procedures

4.1. The purpose of custom clearing

4.2. Activities of customs clearance operation

4.3. Export-import customs clearing procedures

4.4. Filling export authorization certificate

4.5. Preparing the customs declaration form

Unit Five: Trade Fair ,Exhibition and Bazar

5.1. Trade Fair

5.2. Exhibition

5.3. Trade delegations

 Department of Marketing Management

Course Title: Import Export Policy and Procedures

Course Code: MkMg 3031

Credit Hrs: 2

Prerequisites: International Marketing

Co- requisites: Product Development and Brand Management

I. COURSE DESCRIPTION

The course is designed to familiarize students with policies and procedures involved in
processing import export business related activities in Ethiopia. Topics to be raised in the
courses includes the involvement of banks in regulating and facilitating import export
business related activities, shipment of imports and exports, custom clearing and duties,
quality standards control and other relevant issues related to imports and exports in
Ethiopia.

II. COURSE OBJECTIVES

Upon completion of this course, students will be able to:

o Identify licensing procedures for import export business

o Explain how banks and customs involve in import-export trade
o Explain banking procedures and documents for imports and exports
o Describe letter of credit, CAD and advance payment
o Describe the documents related to import-exports

III. COURSE CONTENTS

Unit One: Import Export Policy and Procedures: Definition, Scope

1.3 International Trade: Overview

1.4 Theories of International Trade
Unit Two

INCOTERMS, Documents and other IMPEX related terms and their Applications

2.1. Major commercial terms used in import &export

2.2. Incoterms and their applications

 2.3. Documents used in import &export and their preparation

Unit Three Import and export in Ethiopia

3.1.Overview of import-export procedures in Ethiopia

3.2.Facilitators of import-export

3.3.Licensing of import-export enterprise

Unit Four : Customs Related Activities and Procedures

4.1. The purpose of custom clearing

4.2. Activities of customs clearance operation

4.3. Export-import customs clearing procedures

4.4. Filling export authorization certificate

4.5. Preparing the customs declaration form

Unit Five: Trade Fair ,Exhibition and Bazar

5.1. Trade Fair

5.2. Exhibition

5.3. Trade delegations

IV. TEACHING METHODOLOGY

The principal teaching methods are lectures (including lectures of guests, if possible) with
power presentation as a teaching aid, discussion, off-campus visitations, and assignments
with /or without presentation. The lectures will be devoted to discussion of the topics
depicted on the course syllabus as detailed as necessary and possible. The students are
expected to come up with ideas and /or questions abut every class sessions’ lessons from
the recommended references and other related literatures (if any) and actively participate
in the class discussion. The lecture method is supplemented by debate, individual and
group assignment on different consumer behavior related issues from the web and articles
on magazines and newspapers

V. METHOD OF ASSESSMENT

1. Individual Assignment ............................................................................. 10%

2. Mid Exam… .............................................................................................. 30%

3. Group Assignment with presentation.................................................... 20%

❖ Seminar paper on Import and Export practice taking the following organization
visiting
- Custom Authority, Ethiopian Airlines, Shipping Lines, Rail way, Standard
and Quality Authority, ECX, Commercial Banks in Ethiopia/Gov’t and
private ),IMPEX firms.
4. Final Exam ........................................................................................... 50%

VI. TEXT BOOK

Belay Seyoum(2009).Export –Import Theory Practices and Procedures ,2nd Edition, New
York:The Haworth Press

VII. REFERENCES

Achrya and Jain (2003). Export Marketing. Mumbai: Himalaya publishing house

Materials and Commercial Banks Operations Manuals. Addis Ababa: SMUC

Balagopal, T.A., (2003). Export Marketing. New Delhi: Himalaya Publishing House.

Cherunailam, F. (2004). International Trade and Export Management. Mubai: Himalaya

Gopal, C.R. (2006). Export Import Procedures: Documentation and Logistics. New Delhi:
Age International Publishers

How to start Export in Ethiopia. Addis Ababa: AACCSA .(2016).

Biruck Tesfaye (2006). Custom and Bank Clearing Operations Teaching

 Chapter I

1. Import Export Policy and Procedures: Definition, Scope

1.1. International Trade: Overview

International trade is exchange of capital, goods, and services across international

borders or territories the world .This exchange gives rise to the worlds economy in which
prices ,or supply and demand affect and affected by global events. . In most countries, it
represents a significant share of gross domestic product (GDP). While international trade
has been present throughout much of history, it’s economic, social, and political importance
has been on the rise in recent centuries. Industrialization, advanced transportation,
globalization, multinational corporations, and outsourcing are all having a major impact on
the international trade system. Increasing international trade is crucial to the continuance of
globalization. International trade is a major source of economic revenue for any nation that
is considered a world power. Without international trade, nations would be limited to the
goods and services produced within their own borders.

International trade is in principle not different from domestic trade as the motivation and
the behavior of parties involved in a trade does not change fundamentally depending on
whether trade is across a border or not. The main difference is that international trade is
typically more costly than domestic trade. The reason is that a border typically imposes
additional costs such as tariffs, time costs due to border delays and costs associated with
country differences such as language, the legal system or a different culture.

Another difference between domestic and international trade is that factors of production such as
capital and labor are typically more mobile within a country than across countries. Thus
international trade is mostly restricted to trade in goods and services, and only to a lesser extent to
trade in capital, labor or other factors of production. Then trade in good and services can serve as a
substitute for trade in factors of production. Instead of importing the factor of production a country
can import goods that make intensive use of the factor of production and are thus embodying the
respective factor. An example is the import of labor-intensive goods by the United States from
China. Instead of importing Chinese labor the United States is importing goods from China that were
produced with Chinese labor. International trade is also a branch of economics, which, together with
international finance, forms the larger branch of international economics.

1.2. The Concept of International Trade

Definition of Export and Import

Export: The process of selling/forwarding/sending goods and services to other countries.

Import: The process of buying/bringing in goods and services from another countries.

Balance of Trade: The difference between a country’s imports and exports .It is the largest
component of the balance payments for all nations. Balance of payment is one of the indicators of
the Economy.

It has two components

1.Debit :- a. Foreign aid ,

b. import and domestic spending &

c. investment abroad

2.Credit:- a. Exports,

b. Foreign spending’s

c. investment in domestic economy

Importance of balance of trade.

• It shows how a country competes in a global market place

• It determines the health of the economy & its relationship with the rest of the world.
• It includes physical goods and intangible services.
• It is very important piece of understanding the global puzzle of the international trade.
Positive and negative balance of trade

Positive/favorable/ balance of trade: Exists when the exports of a given nation is greater than its
imports. But if the exports of a given country is less than its import the balance of trade is said
to be negative or unfavorable. Hence trade deficit occurs while balance of trade is negative and
trade surplus occurs when it is positive.

Why International Trade?

1. From companies’ point of view, there are various reasons for entering in to international
trade. These are:
o Companies export their products to increase their profitability through increased
sales and reduced cost of production.
o To pursue growth in other countries after domestic market has reached maturity.
o To follow foot step of customers when they move overseas in order not to loose
business
o To enjoy business stability
o To defend local product or check advance of foreign competitors in to own
country.
2. From nationals point of view
o A nation must export in order to import
o To develop good relationship with other nations
1.3. Theories of International Trade

International theories of trade tell us why international trade benefits those who engaged in. Popular
theories advanced so far are the following ones:

o Absolute cost advantage theory

o Comparatively cost advantage theory
o Factor endowments theory
o Product life cycle theory

1.3.1. Absolute Cost Advantage Theory

This theory is propounded by economics named Adam Smith in his book of 1976 titled the wealth
of nations. The theory says that a country is said to have an absolute cost advantage when it is
more efficient than any other country in producing a given product. According to Adam, countries
should specialize in the production of goods in which they have an absolute cost advantage and then
trade these goods for the goods produced by other countries. By doing so, both countries benefits
from trade.

1.3.2. Comparative Cost Advantage Theory

In view of absolute cost advantage theory, a country that has absolute cost advantage in the
production of all goods may not benefit from international. In his 1817 book of principles of political
economy David Ricardo showed that this wasn’t the case. By taking Adam smith’s theory one step
further, he introduced the theory of comparative cost advantage. Ricardo’s theory stresses that
comparative advantage arises from differences in productivity. Thus, whether Ghana is more
efficient than South Korea in the production of cocoa depends on how productively it uses its
resources. Ricardo stressed Labor productivity and argued that differences in labor productivity
between nations underlie the notion of comparative advantage.
 • Swedish economists Eli Heckscher (in 1919) and Bertil Ohlin (in 1933) put forward a
different explanation of comparative ad-vantage. They argued that comparative advantage
arises from differences in national factor endowments. By factor endowments they meant
the extent to which a country is endowed with such resources as land, labor, and capital
Nations have varying factor endowments, and different factor endowments explain
differences in factor costs. The more abundant a factor, the lower its cost. The Heckscher-
Ohlin theory predicts that countries will export those goods that make intensive use of
factors that are locally abundant, while importing goods that make intensive use of factors
that are locally scarce. Thus, the Heckscher-Ohlin theory attempts to explain the pattern of
international trade that we observe in the world economy. Like Ricardo’s theory the
Heckscher-Ohlin theory argues that free trade is beneficial. Unlike Ricardo’s theory,
however, the Heckscher-Ohlin theory argues that the pattern of international trade is
determined by differences in factor endowments, rather than differences in productivity.
The Heckscher-Ohlin theory also has commonsense appeal. For example, the ‘United States
has long been a substantial exporter of agricultural goods, reflecting in part its unusual
abundance of arable land. In contrast, China excels in the export of goods produced in labor-
intensive manufacturing industries, such as textiles and footwear. This reflects China’s
relative abundance of low-cost labor. The United States, which lacks abundant low cost
labor, has been a primary importer of these goods. Note that it is relative, not absolute,
endowments that are important; a country may have larger absolute amounts of land and
labor than another country, but be relatively abundant in one of them.
1.3.3. Factor Endowment Theory

This is a theory, which was originally put forward by Swedish Economics Eli Heckschar (1919) and
Bertil on line (1993) and further reinforced by Micheal Porter of Harvard business school in 1990.
They argue that the pattern of international trade is determined by differences in factor
endowment such as land, labor, and capital basic factors. Other very important factors
(advanced factors) determining international trade is:

• Common infrastructure
• Sophisticated and skilled labor
 • Research facilities
• Technological know how

1.3.4. Product Life Cycle Theories

Raymond Vernon initially proposed the product life-cycle theory in the mid-1960s. Vernon’s theory
was based on the observation that for most of the 20th century a very large proportion of the world’s
new products had been developed by U.S. firms and sold first in the U.S. market (e.g. mass-produced
automobiles, televisions, instant cameras, photocopiers, personal computers, and semiconductor
chips). To explain this, Vernon argued that the wealth and size of the U.S market gave U.S. firms a
strong incentive to develop new consumer products. In addition, the high cost of U.S. labor gave
U.S. firms an incentive to develop cost-saving process innovations.

Just because a new product is developed by a U.S. firm and first sold in the U.S. market, it does not
follow that the product must be produced in the United States. It could be produced abroad at some
low-cost location and then exported back into the United States. However, Vernon argued that most
new products were initially products were initially produced- in America. Apparently, the pioneering
firms believed it was better to keep production facilities close the market and to the firm’s center of
decision making, given the uncertainty and risks inherent in introducing new products. Also, the
demand for most new products tends to be based on non price factors.

Consequently, firms can charge relatively high prices for new products, which obviate the need to
look for low cost production sites in other countries. Vernon went on to argue that early in the life
cycle of a typical new product, demand is starting to grow rapidly in the United States, demand in
other advance countries is limited to high income groups. The limited initial demand in other
advanced countries does not make it worthwhile for firms in those countries to start producing the
new product, but it does necessitate some exports from the United States to those countries. Over
time, demand for the new product starts to grow in other advanced countries (e.g., Great Britain,
France, Germany, and Japan). As it does, it becomes worthwhile for foreign producers to begin
producing for their home markets. In addition, U.S. firms might set up production facilities in those
advanced countries where demand is growing. Consequently, production within other advanced
countries begins to limit the potential for exports from the United States. As the market in the United
States and other advanced nations matures, the product becomes more standardized, and price
becomes the main competitive weapon. As this occurs, cost considerations start to playa greater role
in the competitive process. Producers based in advanced countries where labor costs are lower than
in the United States (e.g., Italy, Spain) might now be able to export to the United States.

If cost pressures become intense, the process might, not stop there. The cycle by which the United
States lost its advantage to other advanced countries might be repeated once more, as developing
countries (e.g., Thailand) begin to acquire a production advantage over advanced countries. Thus,
the locus of global production initially switches from the United States to other advanced nations
and then from those nations to developing countries.

The consequence of these trends for the pattern of world trade is that is over time the United States
switches, from being an exporter of the Product to an importer of product as production becomes
concentrated in lower-cost foreign locations.
 CHAPTER II

Common mode of payments , incoterms and documents used in Import

Export

2.1. Mode of Payments

Documentary Credits

Goods can be bought & sold with payment of price in various forms, like ready cash, cash
against delivery of goods mail or telegraphic transfer or transfer by any other electronic
mode in vogue, “cash against documents”, such as, cash against acceptance of “bills of
exchange”, post dated cheques, Promissory Notes etc1.

When, however, an international sale transaction is contemplated, the seller does not want
to commit to give up control and/or possession over the goods unless he is certain to be paid
on fulfilling his terms of the contract such as quality, quantity and the timing of
delivery of the goods etc. Similarly, the buyer wants to pay the price only when he has
gotten the contracted goods as agreed upon or at least when they are out of the possession
and control of the seller. In view of this conflict of interest Documentary Credit comes to
the rescue of the parties and promotes international business.

So, in case of a letter of credit, the buyer (Applicant of Credit) requests the bank in his
(importing) country which is called the “Issuing Bank” to open and issue in favor of the
foreign seller (beneficiary) a letter of credit and to pay the beneficiary (exporter/seller) such
amount on his fulfilling the terms and conditions specified in the letter of credit also
mentions the period for which the credit is open and invariably the beneficiary is required
through it‟s bank (Confirming Bank) to submit to the Issuing Bank specified documents
such as Invoice, Insurance Policy, Bill of Lading, Certificate of origin, weight, Inspection
and the like, to convince the Issuing Bank (on behalf of the buyer) that he has fulfilled his
part of the contract and is entitled to the price. The “Confirming Bank” of the seller in the
Seller’s country acting as an agent of the “Issuing Bank”, independently confirms
payment to the Seller – beneficiary of the conditions as specified in the letter of credit are
fulfilled.

In order to bring uniformity in matters pertaining to documentary credits the International

Chamber of Commerce (I.C.C.) Paris has published a set of rules called “Uniform Customs
and Practice For documentary Credits” U.C.P.D.C. The latest revised version is U.C p.500
(w.e.f. 01-011994) which updates and consolidates the previous U.C p.400. It has also been
subscribed by India. There are different expressions which basically means the same thing
“documentary letter of credit” “Commercial letter of credit” “simple letter of credit”. There
are different types of letters of credit. A letter of credit may be “back to back”
(countervailing) ; clean or documentary, “confirmed or unconfirmed” “fixed or revolving”,
“real clause anticipatory”, “revocable or irrevocable”, “sight or acceptance”, “transferable
or divisible” and with or without recourse.
Letter of credit is/are separate transactions from the main contract.

A Letter of Credit & a Loan Application

There is virtually no difference, except while issuing an letter of credit bank lends only its
name without any disbursement of funds. It must, however, be ready to meet its
commitments viz a viz the confirming bank.
A Letter of Credit & a Bank Guarantee.
A letter of credit is almost like a Bank Guarantee. An issuing or confirming Bank‟s liability
is independent of the main contract between the owner and the contractor or in this case
between the Buyer and the Seller. On this point an ultimate & final judgment has been given
by the Honourable Supreme Court in the case of “Shipyard Demen vs. Karachi Shipyard”
cited as PLD 2003 S.C. page 191 in which judgment the Supreme Court has equated an
Irrevocable Letter of Credit with that of a Bank Guarantee and has restrained the lower
courts not to give injunction/stay order in the cases of encashment except if the case falls
under very strict exceptions such as happening of irretrievable injustice or helping a fraud.
The lower courts have been stopped to look into the main contractual matter(s) between the
Buyer and the Seller and have been instructed to strictly adhere to the language of the
guarantee or and irrevocable letter of Credit itself.
If a bank is asked to open a Letter of Credit in favour of a foreign seller, if it uses the
services of a “correspondent bank” located in foreign Seller‟s place. This second bank is
also called “advising bank”. It forwards the Credit (not hard cash/money) of the issuing
bank to the beneficiary/seller. After receipt, the beneficiary checks whether he can meet the
conditions mentioned in the credit and whether they agree with those conditions contained
in “purchase agreement”, if no, the conditions can be modified, and if yes, the exporter will
start manufacturing and/or transporting/delivering. Following shipments the beneficiary
will assemble the required documents and present them to the “advising bank”. “The
advising bank” after having checked the documents that they are in accordance with the
terms and conditions agreed upon shall make payment and transmit those documents to the
“issuing bank”. The latter reimburses the advising bank the amount specified by the
documents.

TYPES OF LETTERS OF CREDIT

Revocable/Irrevocable
It should be indicated in the letter of credit, otherwise, the credit will be treated as
Irrevocable as per Article-(c) of U.C.P-500 contrary to U.C.P400. The inherent weakness
of revocable credit is that it may be cancelled or modified without prior notice by the issuing
bank to the beneficiary and may have recourse to the drawer. Irrevocable credits are
“confirmed” for obvious reasons. An “unconfirmed” irrevocable letter of credit
constitutes an irrevocable commitment of the issuing bank. In this case, the issuing bank
has no recourse to the drawer in the even of non-payment.
When the beneficiary insists on a bank in his own country to add undertaking to pay against
presentation of proper documents, the credit is deemed to bear “Confirmation” of the
advising bank and the credit is called “Confirmed Credit”. The credits are confirmed under
the express authority or request of issuing bank. By adding its confirmation, the advising
bank steps into the shoes of the issuing bank. The advantage to the beneficiary under a
confirmed letter of credit is that, even if he does not know the standing of the “opening
bank”, he may rely solely on the confirming bank in his country and thus, beneficiary is
relieved from “Sovereign risk” or
“transfer risk”
An unconfirmed credit may be a credit not even confirmed by the opening bank and
if so it is in fact a revocable credit. It is normally however, a credit which is irrevocable
on the part of the opening bank but not confirmed by the advising bank in the Seller’s
(beneficiary) country.
Transferable Credit
A letter of credit is not a negotiable instrument and is not transferable by delivery or
endorsement except under express authority of the opener. When the business is transacted
through a middle man, credits are sometime marked “transferable” and/or “assignable”
and/or “transmissible”. A transferable credit permitting part shipments may even be
“divisible” in which case the amount of the credit can be split in favour of more than one
beneficiary against separate shipments with or without recourse credit.
Revolving Letter of Credit
It is automatic restoration of the amount already drawn under the credit, thus, omitting the
necessity of opening new letter of credit for each dispatch/shipment. It may revolve with
reference to amount and/or validity
Period. Further kinds of letters of credit are as follows:- Bank to
Bank Credit.
• The Sight Credit.
• The Credit Available Against Time Drafts.
• The Deferred Payment Credit.
• Acceptance Credit.
• Anticipatory Credits.
• Credits Available by Installments.
• Restricted & Unrestricted Credits.
• Fixed Credit.
• Clean Credit.
• Standby Letter of Credit.
Benefits of Documentary Credit to “Exporter”
i) The bank pays, as specified, in the credit, independent of the buyer.
ii) The buyer cannot withhold the payment under any pretence.
iii) If buyer wishes to complain about the goods, he must do this
separately from the documentary credit, which gives the exporter a stronger
negotiating position.
iv) In case of credits in foreign currencies, the exchange risk can be
eliminated by means of a forward sale of foreign exchange.

Which Kind of Credit “Exporter” should demand

It is better to open irrevocable credit, not confirmed by the advising bank or may be
confirmed by the advising bank, it depends on the extent of security the exporter needs.
An Irrevocable, Unconfirmed Credit
If the buyer‟s country is stable having good banking system and the goods are capable of
being sold to some one else, if necessary. An Irrevocable, Confirmed Credit.
If the position is not as stated above, and the goods are such as
“custom made” or very few potential customers exist, then, this kind of credit will be better.
As a term of the credit, the exporter should also prescribe that the documents will be
presented in his country and also payable there. Otherwise, the possibilities of loss of
documents in the mail or delay transmission of them may occur. As a rule, it is impossible
to confirm a credit payable in other countries.

2.2. CONTRACT NEGOTIATIONS

It is purely a business matter and the terms and conditions of the contract shall depend upon
the nature of goods, while the buyer will try to ensure the quality of goods according to
specifications, at the same time the seller shall try his best to ensure the payment through
the terms and conditions of the letter of credit.
What the Exporter should do at Contract Closure
The supply contract should contain the main date of the credit to be provided by the buyer,
e.g.
i) Issuing Bank.
ii) Confirmation by the Exporter‟s Bank.
iii) Time allowed for payment. iv) Validity period.
v) Bearer of the documentary credit expenses.
Specimen Clause
“To secure payment, the buyer shall have Bank open an irrevocable
credit (which is to be confirmed by Bank). The credit must remain
 valid for months (corresponding to the delivery period) after issuance
and be available at sight against presentation of the following documents.

The cost of the credit shall be borne in full by the buyer.”

The documents prescribed can vary considerably depending upon the import regulations of
the buyer’s country.

Precautions
1. An exporter should never work on a revocable letter of credit.
2. The name of the exporter should be very correctly given in the letter of
credit, otherwise, importer can create many pretexts for not receiving
goods or for non-payment. The exact name and address as written in the
letter of credit should be written in all other documents like Invoice, Bill
of Lading, Insurance Policy, G.R.Form, Certification of origin etc. The
difference in name and address between Head office, branch office,
Factory etc. may create a very big problem.
3. It is very important that as to whom do we declare as the consignee on
the Bill of Lading. It should always be the letter of credit Opening Bank
and not the customer. If you make the customer as consignee, he can get
the shipment released without even collecting documents from the Bank
which means without payment.
 4. Expiry date of letter of credit must be mentioned, otherwise, the last
date for negotiating of documents will be considered as expiry date.
5. Value of letter of credit should be the full value of goods and currency
should also be mentioned.
6. Correct quality and quantity should appear on letter of credit. The
quality, depending upon the kind of good should be in as much detail as
possible and accompanied by Lab Text (if applicable). Most of the
disputes arise on the quality of goods ordered and the goods supplied.
7. A letter of credit may provide for shipping particulars, legalized
invoice, Consular Invoice etc. The invoice of the exporter should be
certified by the custom authorities.
8. A letter of credit should the same terms & conditions as in the original
contract of sale.

2.3. Incoterms

Incoterms rules or International Commercial Terms are a series of pre-defined

commercial terms published by the International Chamber of Commerce (ICC) that are
widely used in International commercial transactions or Procurement processes. A series of
three-letter trade terms related to common contractual sales practices, the Incoterms rules
are intended primarily to clearly communicate the tasks, costs, and risks associated with the
transportation and delivery of goods.

The Incoterms rules are accepted by governments, legal authorities, and practitioners
worldwide for the interpretation of most commonly used terms in international trade. They
are intended to reduce or remove altogether uncertainties arising from different
interpretation of the rules in different countries. As such they are regularly incorporated into
sales contracts[1] worldwide.

First published in 1936, the Incoterms rules have been periodically updated, with the eighth
version—Incoterms 2010—having been published on January 1, 2011. "Incoterms" is a
registered trademark of the ICC.Incoterms are only part of the contract for sale. However,
they are an integral part of the international transaction. Incoterms deal with the questions
related to the delivery of the products from the seller to the buyer. This includes the carriage
of products, export and import clearance responsibilities, who pays for what, and who has
risk for the condition of the products at different locations within the transport process.
Incoterms are always used with a geographical location and do not deal with transfer of
title.

Incoterms 2010

The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing
the 13 used in Incoterms 2000 by introducing two new rules ("Delivered at Terminal", DAT;
"Delivered at Place", DAP) that replace four rules of the prior version ("Delivered at
Frontier", DAF; "Delivered Ex Ship", DES; "Delivered Ex Quay", DEQ; "Delivered Duty
Unpaid", DDU).[2] In the prior version, the rules were divided into four categories, but the
11 pre-defined terms of Incoterms 2010 are subdivided into two categories based only on
method of delivery. The larger group of seven rules applies regardless of the method of
transport, with the smaller group of four being applicable only to sales that solely involve
transportation over water.

Any mode of transport

The 7 rules defined by Incoterms 2010 for any mode(s) of transportation are:

EXW – Ex Works (named place of delivery)

The seller makes the goods available at his/her premises. The buyer is responsible for
uploading. This term places the maximum obligation on the buyer and minimum obligations
on the seller. The Ex Works term is often used when making an initial quotation for the sale
of goods without any costs included. EXW means that a seller has the goods ready for
collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The
buyer pays all transportation costs and also bears the risks for bringing the goods to their
final destination. The seller does not load the goods on collecting vehicles and does not clear
them for export. If the seller does load the goods, he does so at buyer's risk and cost. If
parties wish seller to be responsible for the loading of the goods on departure and to bear
the risk and all costs of such loading, this must be made clear by adding explicit wording to
this effect in the contract of sale.

FCA – Free Carrier (named place of delivery)

The seller delivers goods, cleared for export, to the buyer-designated carrier at a named and
defined location. This is used for any mode of transport. The seller must load goods onto
the buyer's carrier. The key document signifying transfer of responsibility is receipt by
carrier to exporter.

CPT – Carriage Paid To (named place of destination)

The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first
carrier at place of shipment in the country of export.
This term is used for all kind of shipments.

CIP – Carriage and Insurance Paid to (named place of destination)

The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and
insurance to the named destination point, but risk passes when the goods are handed over to
the first carrier.

DAT – Delivered at Terminal (named terminal at port or place of destination)

The Seller delivers when the goods, once unloaded from the arriving means of transport, are
placed at the Buyer's disposal at a named terminal at the named port or place of destination.
"Terminal" includes any place, whether covered or not, such as a quay, warehouse, container
yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the
goods to and unloading them at the terminal at the named port or place of destination.

DAP – Delivered at Place (named place of destination)

DDP – Delivered Duty Paid (named place of destination)

Seller is responsible for delivering the goods to the named place in the country of the buyer,
and pays all costs in bringing the goods to the destination including import duties and taxes.
The seller is not responsible for unloading. This term is often used in place of the non-
Incoterm "Free In Store (FIS)". This term places the maximum obligations on the seller and
minimum obligations on the buyer.

Sea and inland waterway transport

To determine if a location qualifies for these four rules, please refer to 'United Nations Code
for Trade and Transport Locations (UN/LOCODE)'. [Link below]
The four rules defined by Incoterms 2010 for international trade where transportation is
entirely conducted by water are:

FAS – Free Alongside Ship (named port of shipment)

The seller must place the goods alongside the ship at the named port. The seller must clear
the goods for export. Suitable only for maritime transport but NOT for multimodal sea
transport in containers (see Incoterms 2010, ICC publication 715). This term is typically
used for heavy-lift or bulk cargo.

FOB – Free on Board (named port of shipment)

The seller must load the goods on board a vessel designated by the buyer. Cost and risk are
divided when the goods are actually on board of the vessel. The seller must clear the goods
for export. The term is applicable for maritime and inland waterway transport only but NOT
for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The
buyer must instruct the seller the details of the vessel and the port where the goods are to be
loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This
term has been greatly misused over the last three decades ever since Incoterms 1980
explained that FCA should be used for container shipments.

It means the seller pays for transportation of goods to the port of shipment, loading cost.
The buyer pays cost of marine freight transportation, insurance, uploading and
transportation cost from the arrival port to destination. The passing of risk occurs when the
goods are on board the vessel.

CFR – Cost and Freight (named port of destination)Seller must pay the costs and freight
to bring the goods to the port of destination. However, risk is transferred to the buyer once
the goods are loaded on the vessel. Insurance for the goods is NOT included. This term is
formerly known as CNF (C&F, or C+F). Maritime transport only.

CIF – Cost, Insurance and Freight (named port of destination)Exactly the same as CFR
except that the seller must in addition procure and pay for the insurance. Maritime transport
only.
 Incoterms 2010
GROUP TERM RISK MOD
TRANS

GROUP E Ex Works Risk Transfers when shipper makes Any mode:

Main goods available to buyer at seller's EXW Air, Ocean,
Carriage: facility. such as Rail
“Freight Carrier
Collect”

Free Alongside Risk Transfers to Buyer upon Delivery Vessel:

GROUP F Ship Alongside Vessel. FAS Ocean port t
Main Free On Board Risk Transfers to Buyer upon Vessel:
Carriage: Crossing Ship’s Rail. FOB Ocean port t
“Freight Free Carrier At Risk Transfers to Buyer upon Delivery Any mode:
Collect” as agreed by seller & buyer. FCA Air, Ocean,

Cost & Freight Risk Transfers to Buyer upon Vessel:

GROUP C Crossing Ship’s Rail. CFR Ocean port t
Main Cost, Insurance & Risk Transfers to Buyer upon Vessel:
Carriage: Freight Crossing Ship’s Rail. CIF Ocean port t
“Freight Carriage Paid To Risk Transfers to Buyer upon Delivery Any mode:
Prepaid”
to the first carrier. CPT Air, Ocean,
or
Carriage & Risk Transfers to Buyer upon Delivery Any mode:
“Freight
Insurance Paid To to the first carrier. CIP Air, Ocean,
Paid”
 Delivered at Risk Transfers to Buyer upon Delivery DAT Any mode:
GROUP D Terminal to the “named terminal at port or place Air, Ocean,
Main of destination.”
Carriage: Delivered at Place Risk Transfers to Buyer upon Delivery DAP Any mode:
“Freight to the “named place of destination.” Air, Ocean,
Prepaid” Delivered Duty Risk transfers at named Any mode:
or Paid destination consistent with DDP Air, Ocean,
“Freight delivering carrier practices &
Paid”
buyer/seller agreement
&
Exporter
Promises a
Delivery date.

2.4. Overview of Documentation

Why is Documentation Important? A Company is only as good as its documentation.

KEY PLAYERS IN THE INTERNATIONAL TRANSACTION

➢ SELLER (EXPORTER PRINCIPAL PARTY IN INTEREST)

➢ BUYER (IMPORTER OR FOREIGN PRINCIPAL PARTY IN INTEREST)
➢ FREIGHT FORWARDER
➢ PRE-SHIPMENT INSPECTION COMPANY
➢ SELLER’S BANK OR OTHER BANK – RECEIVE DOCUMENTS FOR LETTER
OF

CREDIT, DRAFT OR OTHER METHODS OF PAYMENT

➢ CUSTOMS & B ORDER PROTECTION OR U.S. DEPT. COMMERCE
ENFORCEMENT
➢ PERSONNEL FROM TRANSPORT MODES: AIR, OCEAN,
CONSOLIDATION
 (WAREHOUSE OR DOCK PERSONNEL; STEAMSHIP LINES PERSONNEL;
TRUCKERS, RAIL
& OTHER CARRIERS)

Shipment Arrives at Destination

➢ Air, Steamship lines, dock, truck and/or rail personnel

➢ Foreign Customs
➢ Buyer’s Customhouse broker
➢ Buyer’s Bank

If Documents are Not Properly Prepared

➢ Shipments will have problems clearing Customs border.

Enforcement may detain or seize the shipment.
➢ Payments under a letter of credit will be delayed and discrepancy
charges
will apply.
➢ Customers will have problems clearing the shipment when it arrives
in their
country.
➢ Destination country customs agents may detain or seize shipment.
➢ Either party in the transaction could be fined.

Basic Documents
Formal quote: A follow-up quotation to an inquiry.
This document is not required, but is often used to follow up on a request for
a quotation from a potential buyer. Detailed information is given to inform
the potential buyer of all aspects of the transaction.

Proforma Invoice: A quotation in invoice format.

This document is not always required, but is often used by buyers to support
an application for a Letter of Credit and/or import license.

Commercial Invoice: The basic agreement and payment term from seller to buyer.
This document contains all pertinent information related to the transaction.
Customs officials use this document to determine duties and taxes on goods
in the shipment.

Consular Invoice: A special country invoice.

Certain countries require an invoice with a special format. This document
must be purchased from the consulate of the country of importation or a
freight forwarder will have this form.
Certificates of Origin: States the origin of the products being exported.
This document is required by certain countries or by the terms of a letter of
credit to verify the country of origin. A local Chamber of Commerce may
certify and stamp this form, if required. A standard document exists, but
certain countries have a specific form that is required for existing free trade
agreements.
Packing List: This itemizes the contents of each package (box, pallets, skids, etc.)
This document includes weights, measurements and detailed contents of
each package. It should be attached to the outside of a package and/or
included inside the package. This document is used by shippers and
forwarders to determine freight costs. It is also used by and/or foreign
customs officials to check the contents of any specific package.

Bill of Lading: Contract between shipper and carrier.

The bill of lading can be either a straight bill of lading (nonnegotiable), or
negotiable – sometimes called a shipper’s bill of lading. The customer
typically needs the original or a copy as proof of ownership to take
possession of the goods.

Shipper's Letter of Instruction: Company instructions to their freight forwarder.

This is typically a multiform used to give instructions to the freight forwarder
and to partially fill out the SED.

Tips and Suggestions

1. Although a specific document may not be required by the customs

agency
in the importing country, there may be additional documentation
required
by a letter of credit or for other reasons. Always consult with the
importer for instructions on the required documentation and number
of
copies needed.
2. Never make erasures or corrections on documentation.

3. Many countries require that the origin of the products be placed on

the invoice in lieu of a formal certificate of origin. It is generally
recommended that all invoices contain a statement as to the origin of the
products.

4. Although not required, it is a good idea to place the HS number to

six digits on invoices. This helps foreign customs officials identify the
products more quickly.

5. Many countries require special signed statements/affidavits on the

invoice regarding the accuracy of the invoice. Sometimes this statement is
combined with the statement of origin.
6.When certification and/or legalization is required, call for precise
instructions, amount of fees, and courier instructions. In addition, ask for the
proper number of copies and determine how many copies must be stamped.
In some cases fees are charged by the number of documents that must be
stamped and in other cases fees are based on the commercial invoice value.
The chamber or consulate’s file copies do not need this stamp. Many
consulates also require that the documents be presented in a particular order;
paper clipped - not stapled. Any non-conforming documents will often be
returned. There are private companies that provide consular services such as
hand-carrying the documents, waiting for them to be stamped, paying the
fees and returning the documents to the shipper. Ask your forwarder for
more information.
Proforma Invoice
A proforma invoice is a quote in an invoice format that may be required by the buyer to
apply for an import license, contract for pre-shipment inspection, open a letter of credit or
arrange for transfer of hard currency.
A proforma may not be a required shipping document, but it can provide detailed
information that buyers need in order to legally import the product.

Proforma invoices basically contain much of the same information as the formal quotation,
and in many cases can be used in place of one. It should give the buyer as much information
about the order as possible so arrangements can be made efficiently. The invoices inform
the buyer and the appropriate import government authorities details of the future shipment;
changes should not be made without the buyer’s consent.

As mentioned for the quotation, the points to be included in the proforma are:

1. Seller’s name and address

2. Buyer’s name and address
3. Buyer’s reference
4. Items quoted
5. Prices of items: per unit and extended totals
6. Weights and dimensions of quoted products
7. Discounts, if applicable
8. Terms of sale or Incoterm used (include delivery point)
9. Terms of payment
10.Estimated shipping date 11. Validity date
 CHAPTER III

IMPORT & EXPORT in Ethiopia

3.1. Overview of Export- Import Procedures in Ethiopia

3.1.1. Export Procedure

An Ethiopian exporter shall follow export procedures in order to be successful in order to
be successful in exporting his/her commodities to foreign countries. The export procedures
are broadly classified into three major stages as pre-shipment, shipment and post-shipment
stages. Each of these stages are discussed in detail in the following section.

i. Pre-Shipment Stage
Pre-shipment stage consists of the following steps:

a. Approaching Foreign Buyers: - In order to secure an export order, a new exporter can
make use of one or more .of the techniques, such as,' advertising in international media,
sales promotion, public relation, personal selling, publicity and participation in trade fairs
and exhibitions.

b. Inquiry and Offer: - An inquiry is a request from a prospective importer about

description of goods, their standard or grade, size, weight or quantity, terms of payments,
etc. On getting an inquiry, the exporter must process it immediately by making an offer in
the form of a Performa invoice.
c. Confirmation of Order: - Once the negotiations are completed and the terms and
conditions are finalized, the exporter sends three copies of Performa Invoice to the importer
for the confirmation of order. The importer signs these copies and sends back two copies to
the exporter.

d. Opening Letter of Credit: - The documentary credit or letter of credit is the most
appropriate and secured method of payment adopted to settle international transactions. On
finalization of the export contract, the importer opens a letter of credit in favor of the
exporter, if agreed upon in the contract.
e. Arrangement of Pre-shipment Finance: On securing the letter of credit, the exporter
procures a pre-shipment finance from his bank for procuring raw materials and other
components, processing and packing of goods and transfer of goods to the port of shipment.

f. Production or Procurement of Goods: - On securing the pre-shipment finance from the

bank, the exporter either arranges for the production of the required goods or procures them
from the domestic market as per the specifications of the importer.

g. Packing and Marking: - Then the goods should be properly packed and marked with
necessary details such as port of shipment and destination, country of origin, gross and net
weight, etc..

h. Pre-shipment ‘Inspection’ - If the goods to be exported are subject to compulsory

quality control and pre-shipment inspection then the exporter should contact the quality and
standard authority of Ethiopia for obtaining an inspection certificate.
I. Custom Duty Clearance- in Ethiopia exporters are totally exempted from the payments
of customs duty.
j. Obtaining Insurance Cover: - The exporter must take appropriate policies in order to
insure risks such as Marine risks as per the terms of sales contract such as CIF.
k. Appointment of C&F Agent: - Since exporting is a complex and time consuming
process, the exporter should appoint a Clearing and Forwarding (C&F) agent for the
smooth clearance of goods from the customs and preparation and submission of various
export documents. This of course is compulsory in Ethiopia Customs Authority
Regulations.

ii. SHIPMENT STAGE

Export cargo can be exported to the overseas buyer by sea, air or land. However, shipment
by sea is the most popular and generally resorted to, as it is comparatively cheaper. Besides,
the ship's capacity is far greater than other modes of transportation. Nevertheless,
transportation by air is utilized for export of expensive items like, diamonds, gold, etc. The
shipment stage includes the following steps:

a. Reservation of Shipping Space: - Once the export contract is finalized, the exporter
reserves the required space in the vessel for shipment. On accepting the exporter's
request, the shipping company issues a Shipping Order. The original copy of the
shipping order as given to the exporter and the duplicate is sent to the commanding
officer of the ship that the goods as per the details given should be received on
board.

b. Arrangement of Internal Transportation up to the Port of Shipment: The

exporter makes necessary arrangements for transportation of goods to the port either
 by road or railways. On loading goods into the railway wagon, the railway
authorities issue a 'Railway Receipt', which may be either 'freight paid' or 'freight
to pay'. It serves as a title to the goods. The exporter endorses the railway receipt in
favor of his agent to enable him to take delivery of the goods at the port of shipment.

c. Preparation and Processing of Shipping Documents :- As the goods reaches the

port of shipment, the exporter should issue detailed instructions to the C&F agent
for the shipment of cargo along with a complete set of the documents listed below:-

▪ Letter of credit along with the export contract or export order.

▪ Copies of commercial Invoice (2 copies)
▪ Packing List or Packing Note.
▪ Certificate of Origin
▪ Customs Declaration Annex Form (CDAF)
▪ Certificate of Inspection, where necessary (original copy)
▪ Marine Insurance Policy.

d. Customs Clearance: - The cargo must be cleared from the Customs before it is
loaded on the ship. For this, the above mentioned documents, along with five copies
of shipping bill, are to be submitted to the Customs Appraiser at the Customs House.
The Customs Appraiser ensures that all the formalities relating to exchange control,
quality control, pre-shipment inspection and licensing have been complied with by
the exporter. After verification, all documents, except the original GR, original copy
of Shipping Bill and one copy of Commercial Invoice, are returned to the C&F
agent.
e. Obtaining 'Carting Order' from the Port Trust Authorities: - The C&F agent,
then, approaches the Superintendent of the concerned Port Trust for obtaining the
'Carting Order' for moving the cargo inside the dock. After obtaining the Carting
Order, the cargo is physically moved into the port area and stored in the appropriate
shed.

f. Customs Examination and Issue of 'Let Export Order’: - The Customs Examiner
at the port of shipment physically examines the goods and seals the packages in his
presence. The same can be arranged for at the factory or warehouse of the exporter
by making an application to the Assistant Collector of Customs. The Customs
Examiner, if satisfied, issues a formal permission I' for the loading of cargo on the
ship in the form of a 'Let Export Order'.

g. Obtaining 'Let Ship Order' from the Customs Preventive Officer: - 'Let Export
Order' must be supplemented by a 'Let Ship Order' issued by the Customs
Preventive Officer. The C&F agent submits the duplicate copy of Shipping Bill,
duly endorsed by the Customs Examiner, to the Customs Preventive Officer who
endorses it with the 'Let Ship Order'.

h. Obtaining Mate's Receipt and Bill of Lading: - The goods are then loaded on board
the ship for which the Mate or the Captain of the ship issues Mate's Receipt to the
Port Superintendent The Port Superintendent, on receipt of port dues, hands over
the Mate's Receipt to the C&F Agent. The C&F Agent surrenders the Mate's
Receipt to the Shipping Company for obtaining the Bill of Lading. The Shipping
Company issues two to three negotiable and two to three non-negotiable copies of
Bill of Lading.
iii. POST SHIPMENT STAGE
The post-shipment stage consists of the following steps:
a. Submission of Documents by the custom clearing agent to the Exporter: - On the
completion of the shipping procedure, the agent submits the following documents to
the exporter:-
o A copy of invoice duly attested by the Customs,
o Drawback copy of the shipping bill,
o Export promotion copy of the shipping bill
o A full set of negotiable and non-negotiable copies of bill of lading,
o The original L/C and,
o Export order or contract

b. Shipment Advice to Importer: - After the shipment of goods, the exporter intimates
the importer about the shipment of goods giving him details about the date of
shipment, the name of the vessel, the destination, etc. He should also send one copy
of non-negotiable bill of lading to the importer.

c. Presentation of Documents to Bank for Negotiation: - Submission of relevant

documents to the bank and the process of getting the payment from the bank is called
"Negotiation of the Documents" and tile documents are called 'Negotiable Set of
Documents'. The set normally contains:
▪ Bill of exchange, sight draft or Unsane draft
▪ Full set of bill of lading or airway bill
▪ Customs invoice
▪ Commercial invoice including one copy duly certificated by the customs,
▪ Packing list
 ▪ Foreign exchange declarations form i.e. customs declaration annex form in
duplicate
▪ Certificate of origin and
▪ Marine Insurance Policy, in duplicate
d. Dispatch of Documents: - The bank -negotiates these documents to the importer's bank
in the manner as specified in the L/C. Before negotiating documents, the exporter's bank
scrutinizes them in order to ensure that all formalities have been complied with and all
documents are in order. The bank then sends the bank certificate and attested copies
commercial invoice of the exporter.

e. Acceptance of the bill of exchange: - bill of exchange accompanied by the above

documents is known as the Documentary Bill of Exchange. It is of two types:

o Documents against Payment (Sight Drafts): - In case of sight draft, the drawer
instructs the bank to hand over the relevant documents to the importer only against
payment.
o Documents against Acceptance (Usance Draft): - In case of usance draft, the
drawer instructs the bank to hand over the relevant documents to the importer against
his 'acceptance' of the bill of exchange.

f. ‘Letter of Indemnity: - The exporter can get immediate payment from his bank on the
submission of documents by signing a letter of indemnity. By signing the letter of indemnity
the exporter undertakes to indemnify the bank in the event of non-receipt of payment from
the importer along with accrued interests.

(g) Realization of Export Proceeds :- On receiving the documentary bill of exchange, the
importer releases payment in case of sight draft or accepts the usance draft undertaking
 to pay on maturity of the bill of exchange. The exporter's bank receives the payment
through importer's' bank and is credited to exporter's account.

(h) Processing of CDAF Form: - On receiving the export proceeds, the exporter's bank
intimates the same to the RBI by recording the fact on the duplicate copy of CDAF with,
the, original copy of CDAF received from the Customs. If the details are found to be in
order then the export transaction is treated to be completed.

(i) Realization, of Export" Incentives: - If the exporter is eligible for export incentives,
then he should submit claim for the same accompanied by the bank certificate to the
appropriate authority. In Ethiopia, the types of incentives meant for industries engaged
in production of export goods include:
• Removal of export duties i.e. Proclamation number 68/1985
• Export price decontrol
• Duty free importation i.e. proclamation number 69/1993
• Income tax holiday (grace period) i.e. Investment proclamation
• Customs warehouse facility i.e. proclamation number 60/1997
• Foreign currency retention scheme i.e. The retention and utilization of export
earnings and inward remittance directive number FX/11/1998.

3.4.2. Import Procedures

Importer refers to an organization or a person who imports or intends to import and holds
an import license from the federal or regional trade industry bureau.
Importers can be divided into two categories:

i. Actual User
Actual users can also be further classified into industrial user who utilizes the imported
goods for manufacturing in his/her own industrial unit or manufacturing for his/her own use
in another unit including a jobbing unit. On the other hand, non industrial users who utilize
the imported goods for his/her own use in:
• Any commercial establishment carrying on business, trade or profession; or
• Any laboratory, scientific research on business, trade or profession; or university or
the other educational institution or hospital
• Any service industry

ii. Non-Actual Users

Non-actual users may include those importers for stock and sale; or personal imports; or
imports of gifts, etc.

When an importer intends to import goods to Ethiopia, he/she has to strictly consider the
following four sub-procedures of import customs clearing procedure.

I. PRE- IMPORT PROCEDURE

(a). Selecting the Commodity: - An importer should select the commodity for import after
considering various commercial factors as well as legal considerations including the
regulations contained in the import-export trade policy. Imports may be made freely except
to the extent they are regulated by the provisions of the Policy. Prohibited goods cannot be
imported at all. Import of restricted items is permitted through licensing only.

(b). Selecting the Overseas Supplier: Imports can be made from any country of the world
except countries with which Ethiopia get into trade and/or political disputes.
 The information regarding overseas suppliers can be obtained from various trade directories,
consulate generals, international trade fairs and exhibitions and chamber of commerce.
(c) Capability and Creditworthiness of Overseas Supplier: Successful completion of an
import transaction mainly depends upon the capability of the overseas supplier to fulfill his
contract. Therefore, it is advisable to verify the creditworthiness of the overseas supplier
and his capacity to fulfill the contract through confidential 'reports about him from the banks
and Ethiopian embassies abroad. It is advisable to finalize contract through indenting agents
of overseas suppliers situated in Ethiopia.

(d) Role of Overseas Suppliers' Agents in Ethiopia: Some reputed overseas suppliers have
their indenting agents stationed in Ethiopia. These agents procure orders from the Ethiopian
parties and arrange for the supply of goods from their principal abroad. It is advisable to
import through such agents as they can be readily contacted in case there is any dispute
regarding quality or quantity of goods imported, receipt of payment, documentation
formalities, etc.

(e) Inquiry; Offer and Counter-offer:- It is advisable that before finalizing the terms of
import order, one should call for the samples or catalogue and other relevant literature and
the specifications of the items to be imported. Import of samples of goods is exempted from
import duties under 'Geneva' Convention of 7th November 1952. If the importer is satisfied,
he/she should proceed to finalize the terms of the contract to be entered into.

II. LEGAL DIMENSIONS OF IMPORT PROCEDURE:-

(A). Finalization of the Terms of Contract: - The import contract should be carefully and
comprehensively drafted incorporating therein, precise terms as well as all relevant
conditions of the trade deal. There should not be any ambiguity regarding the exact
specifications of the goods and terms of the purchase including import price, mode of
payment, type of packaging, port of shipment, delivery schedule, license and permits,
discount and commission, insurance, arbitration, etc
.
(b) Mode of Pricing and INCOTERMS: - While finalizing terms of import contract, the
importer should, inter-alia, be fully conversant with the mode of pricing and the manner of
payment for the imports. As regards mode of pricing, the overseas supplier should quote the
terms prevailing in international trade. International Chamber of Commerce (ICC), Paris,
has given detailed definition of a few standard terms popularly known as 'INCO TERMS'.
These terms have almost universal acceptance.

C. Mode of Settlement of Payment: There are mainly three modes of settling international
transactions depending upon the creditworthiness of the importer or exporter, demand for
the commodity in the international market, exchange control regulations prevailing in the
importer or exporter countries and other relevant factors:
▪ Advance Payment.
▪ Payment or Acceptance against Documentary Collections.
▪ Payment under Letter of Credit.

d. Obtaining Import License

If the item to be imported falls in the prohibited list, then such item cannot be imported at
all. However, if it falls in restricted list then the necessary clearance must be obtained from
appropriate licensing authority.

(e) Obtaining Foreign Exchange: In Ethiopia, all foreign exchange transactions are
regulated by the Exchange Control Department of the National Bank of Ethiopia. Therefore,
every importer is required to make an application to the National Bank of Ethiopia. Of
course, this application form (i.e. customs declaration annex form) is obtained from any
commercial bank which has international banking divisions and where letter of credit is
opened for getting and making overseas payments. The Exchange Control Department
scrutinizes the application for approval.
(g) Arranging Finance for Import: It is advisable that the financial planning for imports
should be done in advance in order to avoid huge demurrages on the imported goods lying
uncleared for want of payment. Banks normally do not extend any fund based assistance to
importers. However, they enable industrial units and others to have access to imported
inputs and machinery by establishing letters of credit in favor of the overseas suppliers.

(h) Obtaining Import L/C Limit:- Import L/C limits are sanctioned by the banks on
submission of complete loan proposal as in the case of other types of credit facilities. This
requires advance financial planning so as to retire import bills under L/C on time. Any delay
in retirement of bills not only strains the relations is of the importer with his bank but also
results in additional costs by way of extra commission, penal interest, demurrage charges,
etc.

(i) Dispatching Letter of Credit :- If the' term of payment agreed between the importer and
the overseas supplier is a letter of credit then the importer should obtain the letter of credit
from his bank and forward it to the overseas supplier well within the time agreed for the
same. The importer must see to it that the letter of credit has been prepared in the strict
conformity of the import contract entered between them.

III. RETIREMENT OF IMPORT DOCUMENTS

(a) Loading of Goods and Receipt of Shipment Advice: On loading of goods the overseas
supplier dispatches the shipment advice to the importer informing him about the shipment
of goods. The shipment advice contains invoice number, bill of lading, airways bill number
and date, name of the vessel with date, the port of export, description of goods and quantity
and the date of sailing of the vessel.'

(b) Retirement of Import Documents- After shipping the goods, the exporter prepares the
necessary documents as per the terms of contract' and letter of credit and hands them over
to his bank for their onward negotiation to importer in the manner as specified in the L/C.
The set normally contains bill of exchange, commercial invoice, bill of lading, packing list,
certificate of origin, marine insurance policy, etc.
.
For the retirement of documents, the importer is required to submit the following documents
to his/her bank:
o A letter authorizing his bank to debit the equivalent Ethiopia birr to the value of
documents including bank charges.
o Copy of the import license, if applicable
o Customs declaration annex from (CRDF0 duly completed for the remittance in
foreign exchange

c) Acceptance of the Bill of Exchange :- Bill of Exchange accompanied by the above

documents is known as the Documentary Bill of Exchange. It is of two types:-
.
o Documents against Payment (Sight Drafts) :- In case of sight draft, the drawer
instructs the bank to hand over .the relevant documents to the importer only against
payment.
□ Documents against Acceptance (Usance Draft):- In case of usance draft, the
drawer instructs the bank to hand over the relevant documents to the importer
against his 'acceptance' of the bill of exchange.
(d) Scrutiny of Documents Received under L/c :- After receipt of import documents from
the exporter's bank, the importer's bank will scrutinizes the documents as to their correctness
as per the terms and conditions of L/C and hands over them to the importer after payment.
The importer should also scrutinizes the documents and ensure that there are no
discrepancies.
(e) Appointment of Freight Forwarders or Customs Agent: - In Ethiopia, the procedure
for clearance of imported goods is very lengthy, time consuming and involves lots of legal
formalities. Therefore, it is advisable to hire the services of C&F agents who are well versed
with such formalities. The C&F Agent prepares the bill of entry containing details of goods
to be cleared from the customs.

IV. CUSTOM CLEARANCE PROCEDURE FOR IMPORTED GOODS

Under the Ministry of finance and economic development (MOFD), there are three revenue
collection authorities. These are:
o Ethiopian Customs Authority (ECuA)
o Federal Inland Revenue Authority and;
o National Lottery Administration

All goods imported in Ethiopia have to pass through the customs clearance after they cross
the Ethiopian border. The goods so imported are examined, appraised, assessed, evaluated
and then allowed to be taken out of customs station for use by the importer.
The procedure for customs clearance in general for goods imported, in India is as follows:

(a) Import Manifest: is a list of all of items a conveyance carries on board, including those
to be transshipped and those to be carried to the subsequent ports of call.
b. Presentation of Bill of Entry for Appraisal: - After the Bill of Entry is noted in the
import department, the same should be presented to the Appraising Counters along with the
following necessary documents:
o Import license, if necessary.
o Commercial Invoice
o A copy of Letter of Credit.
o Original Bill of Lading and its non-negotiable copy.
o Two copies of Packing List. '
o 'Weight specifications.
o Manufacture’s Quality test certificate
o Certificate of Origin.
o Delivery order issued by Shipping company or its, agent.
o Freight and insurance amount certificate if the import is on FOB terms
o Catalogue/drawing, etc for machinery imported.

In addition to the above, the following documents are also required to be submitted wherever
necessary:-

If the above documents furnished by the importer are found to be adequate for acceptance
of the declared value and determination of classification and acceptance of License, the
customs declaration form (CDF) is completed by the appraiser. It is then countersigned by
the concerned customs officer and sent to the license section with an order to Dock Staff for
examination of goods before clearance.

(d) Clearance of Goods ;- After payment of duty (the original copy of Bill of Entry is
retained in the Customs House) the importer should obtain the duplicate copy of Bill of
Entry on which order for examination of the goods is given by Customs and get the goods
examined. If the description of goods is found to be correct, on the basis of declared and
accepted particulars, clearance of goods is allowed by the appraiser.

(e) Warehousing the Goods;- The imported goods can be warehoused at the port of
shipment without the payment of duty by presenting a "CDF for warehousing’’. Initially
the facility is granted for specified period of time. The warehoused goods can be cleared in
one or more installments.

F. Import Follow-up; - Once an importer is allowed to remit foreign exchange out of the
country he has an obligation to import the permitted goods of equivalent value in the
country. If no goods or goods for lesser values are imported, it would lead to leakage of
foreign exchange.

3.2. Facilitators of International Trade

There are several participants in facilitation of international trade, especially when the goods
are shipped by sea. The following parties are among the active participants of international
trade.

I. Banks

Involvement of banks on both side to regulate the transfer of money from goods sold on
Letter of Credit (L/C).
▪ The bank in the side of the Buyer (Applicant) is called the Issuing / Opening Bank.
▪ The bank in the side of the Seller (Beneficiary) is called the Advising or Confirming
Bank
The Export Credits Guarantee Department (i.e. Bank) provides insurance against risk on
commercial basis. Cover can be provided to related risks such as:
▪ The insolvency of the buyer;
▪ The failure of the buyer to pay for the goods which he/she has accepted;
▪ A buyer default on a contract before acceptance of the goods but after they have
been shipped;
▪ The imposition of import restriction; or
▪ Civil disturbance in the importing countries

Generally, banks provide a security for means of payment to a designated beneficiary who
could be exporter and/or seller who found at far-away from the importer and/or buyer.
II. International Transport
There are five mode of transport involved in the international transportation of goods. These
modes include:
▪ Water/Sea transport: is the least costly form of transport per-ton mile, and, although
considered slow transport system. It is still an important location factor for
companies involved in the import-export business. Managers of companies, which
produce or buy heavy, bulky, and low-value-per-ton commodities, still consider
water transport to ship the products.
▪ Railroad transport: it is an important form of transport for areas inadequately served
by water routes. It adds a great deal of flexibility to transportation networks. The
cost per ton-mile is grater than that of water transport, but this is offset by flexibility
and speed of shipment.
▪ Motor Vehicle/Road transport: trucks have the advantage of flexibility over
railroads. In terms of intra-city transport, trucks can be moved quickly and flexibly
over many alternative routes, and arrival and departure times can vary.
 ▪ Air transport: is the most recently developed method of transport of industrial
products. Airlines are the fastest, and the most expensive, of all means of transport.
▪ Pipelines transport: are used extensively for the transport of natural gas and
petroleum. In recent years, pulverized materials such as coal have also been shipped
via pipelines. Pipelines, like water transport, have the advantage of a low cost per
ton-mile.

III. Ports

Ports are an area where ships are loaded with and/or discharged of cargo. It is also include
the usual places where ships wait for their turn. These are two ports: -

▪ Ports of Shipment: a place where export products will be loaded from exporting
country to transship into importing country.
▪ Ports of Destination: a place where imported products will be unloaded to enter
into importing country.

IV. Freight Forwarder (Customs Clearing Agent)

For the smooth flow of Customs clearing activities in Ethiopian Customs Authority/ House,
fright forwarders or Customs Clearing Agent (CCA) play critical roles. In the coming
section, we are going to define what we mean by fright forwarding and fright forwarder and
its respective functions in the process of Customs clearance.

Freight forwarding means the representation of a consignor or consignee locally

or internationally in fulfilling Customs, port and other formalities for import and
export cargo at port includes the transportation and delivery of same.
 Freight forwarder means a person who is licensed to carry out freight
forwarding. In other words, freight forwarder refers to a service provider
working from his/her premises and taking care of a range of operations
relating to his/her clients’ goods: transshipment, handling, storage and
various commercial and administrative formalities. He/she is generally
also a Customs broker.
The Functions of the Freight Forwarder

The functions of the freight forwarder include the following:

🖝 Port clearance;
🖝 Customs clearance;
🖝 Groupage/consolidation;
🖝 Warehousing and delivery services;
🖝 Cargo handling equipment services;
🖝 Transport services, where the freight forwards provides such services himself/herself;
🖝 Transport the cargo using other transporters, where himself/herself or cargo owner do
not have transport services;
🖝 Fumigations services;
🖝 Packing services;
🖝 Preparation and issuance of relevant documents;
🖝 Compliance with foreign trade regulation and Letter of Credit instructions;
🖝 Choice of the most suitable carrier and conclusion of the contract of carriage;
🖝 Follow up movement of cargo; and
🖝 Consultancy services in freight forwarding.

Liability of Freight Forwarder

Bill of Lading (B/L) or Receipt for Shipment (Dock receipt) issued to forwarder bind
shipper and/or forwarder in the following conditions:
 ▪ Surrender of the cargo through its agent (forwarder) in exchange of Receipt for
Shipment (Dock receipt), the shipper becomes bound to terms of the Bill of Lading
(B/L), which were incorporated by reference in Dock receipt. The freight forwarder
as an agent of the shipper is also bound by the terms of the Bill of Lading (B/L)
including those liabilities.
▪ Freight is paid by shipper through freight forwarder: if freight forwarder does not
pay the freight to the carrier can bring a legal action against the shipper. In this case
the freight forwarder is liable for whatever damage happened to shipper.

Generally, the freight forwarder represents the shipper. The shipper handovers the goods to
the freight forwarder. The agent (freight forwarder) after fulfilling all the necessary
requirements and load the goods on board of the ship.
How to become a Fright Forwarder
To obtain a Clearing License from Ministry of Trade and Industry (MoTI), a certificate of
proficiency after attending a training course and taking an examination at Ethiopian
Customs Authority (ECuA). Previously, all importers could clear their own goods. Now-a-
days Customs deal exclusively with clearing agents.

When an importer employs a clearing agent he/she in effect gives up the right to deal directly
with Customs. The importer may be unable to approach Customs directly in event of a
dispute concerning the authenticity of documents relating to values, or the nature and correct
tariff classification of specialized goods, and negotiations may be left in the hands of an
agent who is not familiar with the origin of the documents or the nature of the goods. With
regard to Government importers, they have to use Marine Transit Service Enterprise
(MTSE) as a clearing agent, but private importers are free to choose.
To use the service of clearing agent, the importer completes a Clearance Instruction and
supplies the necessary documents:
🖝 Exporter’s Chamberized Invoice;
🖝 Original Bill of Lading endorsed to the agent;
🖝 Insurance Certificate and debit note;
🖝 Certificate of Origin;
🖝 Forex permit;
🖝 Packing list; and
🖝 Ocean Freight invoice.

V. Shipping Agency
Shipping agency means the representation of an owner, charterer or operator of a ship in
canvassing and booking cargo or passenger and providing services to the ship inland and at
port as necessary and includes the coordination of stevedoring and shore handling services.

The Functions of the Shipping Agency

The functions of the shipping agency include the following:
🖝 Contact various ship owners and obtain advance information of sailing schedule of
cargo discharging and loading vessels;
🖝 Prepare daily fleet position and distribute to shippers and importers;
🖝 Provide cargo canvassing, booking and coordination services;
🖝 Organize the arrival and departure arrangements of ships and ensure that the country’s
foreign trade cargo be transported by sea-worthy vessels;
🖝 Follow that export goods have arrived at port before arrival of loading vessel and
ascertain that the goods are properly loaded;
🖝 Notify importers of the arrival of their goods to effect delivery;
🖝 Assist the appropriate bodies in order to avoid or minimize congestion of port and delay
of services;
🖝 Assist in chartering sea-worthy ships;
🖝 Collect freight, prepare statement of account and disbursement account;
🖝 Coordinate stevedoring and provide cargo super-intendancy services;
🖝 Provide or arrange ships husbandry services like provision of food, water, etc., to the
ship;
🖝 Provide crew change and repatriation services;
🖝 Issue Bill of Lading (B/L), delivery order and prepare other shipping documents;
🖝 Facilitate settlement of claim by cargo owners;
🖝 Provide protective agency service; and
🖝 Monitor movements’ of containers.
3.2.1 Ethiopian Customs and Revenue Authority (ERCA) Objectives

As it is promulgated in Federal Negarit Gazeta Proclamation no. 60/1997 issued on its 3rd
year No. 18 February 15th 1997, the Ethiopian Customs Authority (ERCA) is given judicial
responsibility by the House of Representative to fulfill the following three major objectives:
1. Collect duties and taxes on goods imported or exported;
2. Implement laws and international convections related to its objectives; and
3. Control the importation or exportation of prohibited or restricted goods.

ERCA Duties and Responsibilities

To achieve the aforementioned objectives, the Ethiopian Customs Authority (ERCA) has
specific duties and responsibilities. These are:
i. To assess duty paying values, collect duties and taxes, collect license and service
charges;
ii. To examine documents of importers or exporters so as to enforce Customs law;
iii. To establish Customs Stations in any Customs Port frontier post and transit routes;
iv. To approve the place for the deposit of import and export goods, establish
warehouses, give license for those who establish Customs warehouse, supervise the
proper handling of deposited goods; suspend or revoke warehouse license;
v. To prevent and control the importation or exportation of goods in contraband;
vi. To search any goods and means of transport entered into or departing from Ethiopia
through Customs Ports, Frontier Posts and other Customs Stations;
vii. To detain prohibited, restricted or uncustomed goods; and take the necessary
measure;
viii. Under the authority given by and supervision of the attorney general, to investigate
customs offences; institute criminal proceeding; and follow up the case in court;
ix. To collect, organize and disseminate import and export data;
x. To carry out studies as to the levying, assessment and collection of customs duties,
device ways of combating and repression of contraband activity and implement same
upon approval;
xi. To sell or dispose otherwise goods without owner, abandoned or forfeited;
xii. To issue or revoke Customs clearing license;
xiii. To prepare forms and brochures necessary for customs activity;
xiv. To prepare and implement systems for the assessment, and collection of duties,
financial accounting and other related activities;
xv. To arrange for trainings and workshops to upgrade the efficiency of Customs
Officers;
xvi. To own property, enter into contract, sue and be sued in its own name; and
xvii. Perform such other related activities required for the attainment of its objectives.
1.2.2 Customs Authority Control & Obligation on Import and Export Goods

1. For the implementation of the objectives of Customs the following goods shall be under
the supervision and control of Customs:
a. Imported goods from the time they get at Customs Port until the completion
of customs formalities and received by the importer;
b. Goods under drawback procedure from the time of drawback claim until
exportation. The term “drawback”, herein, is used in the Customs regulations
in the sense of allowing a person or a business to drawback or get a refund
of, subject to some conditions on import duties paid earlier. For instance if
duty is paid on raw materials used in the production of commodities while
imported is refunded back upon exportation of the processed commodity.;
c. Goods, entered into Customs Warehouse until removed from the warehouse;
d. Goods of export from the time they entered into Customs Port until the
completion of customs formalities and be exported;
e. Goods in transit, from the time their movement is allowed until the
completion of transit procedure; and
f. Goods found without owner, abandoned, forfeited or contraband goods until
they are sold or disposed otherwise.

2. Without prior authorization no one is allowed to enter into customs warehouse in which
goods are deposited or; open or do any acts on those goods controlled and supervised
by Customs.

3. The Authority shall be responsible for the damage on goods under its control and
supervision caused by its employees while discharging their official duties.
ERCA Responsibilities Regarding Customs Control
Measures applied to ensure compliance with the laws and regulations which the Customs
are responsible for enforcing. The measures may be general, e.g., in relation to all goods
entering the Customs territory, or may be specifically related to, For example:
(a) The location of the goods (customs surveillance zone, etc.);
(b) The nature of the goods (liable to a high rate of duty, etc.);
(c) The customs procedure applied to the goods (customs transit, etc).

3.2.2 Quality and Standard Authority of Ethiopia (QSAE) Objectives

As it is promulgated in Federal Negarit Gazeta Proclamation no. 102/1998 issued on its 4th
year No. 26 March 3rd 1998, the Quality and Standard Authority of Ethiopia (QSAE) is
given judicial responsibility by the House of Representative to fulfill the following stated
major objectives:
1. To promote and assist the establishment of appropriate Quality Management practices
as an integral and yet distinct management function in the social and economic sectors;
2. To assist in the improvement of quality of products and processes through the
promotion and application of Ethiopian Standards;
3. To promote and coordinate standardization at all levels in the country;
4. To establish a sound National Meteorological System as a basic structure for economic
development; and
5. To strengthen, promote and enhance the reliability of testing laboratories nation-wide.

3.2.3 QSAE Duties and Responsibilities

To achieve the aforementioned objectives, the Quality and Standard Authority of Ethiopia
(QSAE) has specific duties and responsibilities. These are:
i. To solely approve, and declare Ethiopian Standards as well as maintain National
Etalons;
ii. To formulate, approve, declare and issue Ethiopian Standards for a general or
specific application as may be necessary;
iii. To recognize an Ethiopian Standard, and standard established by a national, regional
or international standardizing body as may be necessary;
iv. To formulate quality promotion and standardization policy and strategy in line with
the development program and objectives of the country and implement and follow
up the same;
v. To establish a sound National Meteorological system thorough:
a. The maintenance of National Etalon and Certified Reference Materials and their
dissemination;
b. The introduction of the International System of Units (SI) as the sole system of
measurement of physical quantities; and
c. Verification and/or calibration of measuring instrument.
vi. To establish and operate a National Conformity Assessment System;
vii. To establish and operate testing laboratories for the purpose of assisting
conformance of products to relevant requirements, assisting industrial and
agricultural researches and supporting quality promotion and standardization efforts
at all levels in the country.
viii. To specify a Quality Mark and Certification of Conformity which shall be of such
design and contain such particulars as may be prescribed;
ix. To grant, renew, suspend or cancel a license for the use of the Quality Mark or
Certificate of Conformity;
x. To order, subject to prior notice, the closure of the factories or business undertakings
or the cessation of operations or ban the movement of products where the products
and/or processes do not conform to the relevant compulsory Ethiopian Standards;
xi. To establish documentation and information center for the provision of quality and
standards related information;
xii. To popularize the need and importance of quality and standards among users and
the general public;
xiii. To represent the government and participate in all conference, seminars or meetings
regarding standardization;
xiv. To establish and maintain working relationships with quality promotion and
standardizing bodies such as International Standards Organization (ISO),
professional association and quality societies, certification bodies and other similar
organizations in the exercise its functions;
xv. To delegate its powers and duties, in part to domestic and foreign organizations as
necessary to the extent necessary for efficiently implementing Ethiopian Standards;
xvi. To collect fees and charges for the service it renders;
xvii. To own property, enter into contract, sue and be sued in its own name; and
xviii. To carry out such other similar activities necessary for the attainment of its
objectives.

Brief History of the Development of Nomenclature

The Brussels Tariff Nomenclature was first introduced into the UK on 1 st January 1958 as
a result of a conference of the Customs Co-operation Council (CCC) who agreed to use a
common Customs tariff. The idea of a common tariff was first mooted just after the First
World War. The basic idea being that if there was an internationally agreed way of
describing goods this would help to avoid ambiguities. The Second World War caused the
idea to be shelved although quite a good deal of work had been done on a decimally based
system of identifying goods.

In the early 1950s the idea was again considered. Interested parties worked together in
Brussels to formulate a workable nomenclature so that anybody describing goods in one
country could be sure that somebody in another country would be able to identify those
goods within prescribed limits by consulting their own copy of the nomenclature. The
Brussels Nomenclature was completed by 1957 and was accepted by all members of the
Customs Co-operations Council (and also by most non-members) as being an ideal system
of internationally identifying goods for tariff purposes.
Brussels Tariff Nomenclature (BTN)
Specific duty was popular among the importing nations before the Second World War. But
ascertainment of duty was complicated, particularly in Europe and Latin America. After the
war, ad valorem duty becomes popular. Tariff earlier was complex to calculate when the
product item is made of different components. Classification of component was also
complicated which resulted in the variation in the rate of duty to be charged.

An International committee of experts was formed in Brussels called Customs Co-operation

Council (CCC). This council produced a Nomenclature convention, at Brussels and the
convention. The system adopted in the convention is called BTN system. About 2/3 of
World Trade is now conducted under BTN system.

Under this system articles are classified by the material of which they are made and it is
easy to identify them. Hence, a common basis of classification of all goods entered in to
foreign trade. It enables the countries to make comparison of duty and simplify negotiations
for duty.

Brussels Tariff Nomenclature (BTN) ultimately provides maximum uniformity in

the classification of goods for duty purpose.

Uniform tariff schedule is prepared by all countries for charging the duty uniformity. In case
of new items introduced to international trade its classification of which does not find place
in BTN system, the case may be referred to Customs Court or to a Tariff Board which are
set up for this purpose by the importing country. CCC can also provide direction in the
matter. BTN therefore provides useful classification of goods for the purpose of bringing
uniformity in the tariff charges throughout the world.

Importance of Nomenclature
The nomenclature tariff contains a great deal of information, useful to importers, exporters
and their agents, relating to:
Basic procedures;
Contains information relating to relief from duties, preferential rates of duty,
suspensions from duty etc.;
As a basis for customs tariff;
As a basis of collection of international trade statistics;
As a basis for Rules of Origin;
For the collection of internal taxes
As a basis for trade negotiation (E.g., the WTO schedules of tariff concessions);
For transport tariffs and statistic;
For monitoring of controlled goods (i.e., waste, narcotics, chemical weapons, ozone
layer depleting substances, endangered specious); and
As a vital element of core Customs process areas of Customs controls and procedures,
including risk assessment, Information Technology and compliance.

In many cases, where information given in the tariff is not fully comprehensive, it gives
sources for further reading. Because of its importance and the vast amount of information
contained within it, one cannot emphasize too strongly the need for all those involved in
importing or exporting to familiarize themselves with its contents. Incorrect tariff
description is one of the most frequent causes for rejection of documentation by Customs.
How one can correctly identify an Item Tariff Number

Many years ago Conan Doyle made his best-known character, Sherlock Holmes say, ‘If you
first eliminate the impossible, whatever is left, however, improbable, must be the answer.’
The identification of the appropriate tariff number works very much on this principle – by
first eliminating what the goods are not, we are eventually, with care, left with the correct
identifying number.

The 2002 version of the Brussels Nomenclature is divided into 21 Sections, subdivided into
96 Chapters, 1,244 headings and 5,224 groups. By glancing through the list of chapters, it
is possible to see that each chapter covers a particular type of commodity, for example.

Chapter 01 – Live animals Chapter 73 – Iron

39 – Plastics 84 – Machinery

44 – Wood 94 – Furniture

48 – Paper 97 – Toys and Games

It is not an easy section to correctly identify goods against a particular tariff number even
with this information. The best method is to set about it in a systematic fashion by first
identifying the approximate position of the goods and then using the process of elimination
to arrive at the final answer.

To put in a nut shell, the Harmonized System comprises:

General Rules for the interpretation of the system;

Section and Chapter Notes, including subheading Notes; and
A list of headings arranged in systematic order and, where appropriate subdivided into
subheadings.
3.3.Licensing Import and Export Enterprises

Export Licensing
Exporters must be registered with Ministry of Trade and obtain export license. Agricultural
commodities, live animals and other non-value added export products are allowed only for
domestic investors.

The documents required for the issuance of an export license are:

• An application,

• The principal registration certificate,

• A passport size photographs,

• An investment permit and residence permit if there is foreign investment,

• A memorandum and articles of association or contract of partnership,

• A certificate of professional competence in testimony of the fulfillment of the

requirements provided by the relevant government office,

• A document evidencing the capital allocated for the commercial activity,

• A taxpayer registration certificate,

• A recommendation given by concerned government office, which

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Department of Marketing Management (2011EC) By. Girma W.

testifies that the business premises in which the business is to be conducted is suitable for
the intended business and

• Where the application is submitted by an attorney, an authenticated power of attorney and

photocopies of the attorney’s identification card or passport

The export license covers a duration of not less than twelve months, and should be renewed not
later than two months before the end of the duration.

Export of some agricultural commodities is banned and controlled by means of licenses, however,
many items are permitted to be exported freely. Lists of banned items can be obtained from the
Ministry of Trade.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Chapter Four
Customs Clearing Activities and Procedures
4.1.1. What is Customs Clearing?
Federal Negarit Gazetta in its 4th year issue no. 46 under Proclamation no. 37/1998 defined
Customs clearance and customs clearing as follows:

“Customs Clearance” means a process of fulfilling Customs’

formalities for import and export cargo on behalf of consignor
or consignee within customs station.

Customs clearing is a system set by the government to make importers

and/or exporters or individuals and/or groups pay revenue taxes and follow
legal procedures when they sell/take out goods to abroad and buy/bring

To have full understanding about the definition of customs clearance it is better to define some of
the jargons associated with it. These are the following:
➔ “Customs Formalities” means any Customs operation carried out in connection with
importation, exportation or transit of goods from the time of arrival at the customs port
until released from the customs control.
➔ “Port Clearance” means a process of fulfilling port’s formalities for import and export
cargo on behalf of consignor or consignee within port area until the import cargo is brought
out from the port or the export cargo is loaded onto the ship.
2.1.2. Functions of Customs Clearing
It must be borne in mind that ‘Customs’ have to cope with various requirements both at export and
at import. These are listed as follows:
2. The provision of a record of exports and imports, which will provide the Government
with sufficient information to assess, and in turn, control the ‘balance of trade’.
3. To ensure that no goods liable to duty or levy enter or leave the country without that
duty or levy being brought to account.
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4. To ensure that temporary imported goods which have been relieved of duty are re-
exported within the time allowed for relief or, if not exported, that the appropriate duty
is paid on them.
5. By collecting revenues due and to provide a valuable source of income for the
Government working under the general control of the Treasury, the Customs and Excise
Department is responsible for collecting revenue from three sources: Customs duties,
Excise duties and Value Added Tax (VAT).
In addition to its main functions of assessing, collecting and safeguarding the revenue, the Customs
and Excise Department/Authority is often called upon to perform non-revenue functions for other
Government Customs and Excise Authority/departments. Consequently, at all ports and airports
of any appreciable size the Customs and Excise Authority exercise control over goods and persons
entering or leaving the country.
Thus, the non-revenue functions include such items as:
➔ The control of goods entering or leaving the country requiring a license from the
Department of Trade or other Government departments (for example, Ministry of
Agriculture, Fisheries and Food etc.);
➔ Work for Receiver of Wreck and Registrar of Shipping;
➔ The collection of statistical information for the Department of Trade;
➔ Work for the Ministry of Defense (Admiralty) and Department of Transport;
➔ Health control of passengers and crews (in conjunction with the Ministry of Health).
2.1.3. What are Custom Duties/Tariffs?
Tariff is a tax/import duty on the goods which are being imported from abroad. Tariffs are in the
form of Customs duties (imposed by the importing country) and operate through price mechanism.
They raise the prices of imported goods and thereby restrict their sales as well as imports.

Tariff refers to the taxes/duties imposed on internationally traded

commodities when they cross the national boundaries.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Tariffs are imposed by the Government on imports and not on exports as all countries are interested
in export promotion and if tax burden is imposed on exports, the exports will reduce. Tariffs make
imported goods costly and discourage their imports. High tariffs provide additional revenue to the
government and also give protection to home industries by providing domestic markets to them.

The aim of tariffs is to raise the prices of imported goods in domestic market,
reduce their demand and thereby discourage their imports.

High tariffs are rarely imposed on export for such policy will make the goods costly in foreign
markets and discourage their exports. High tariffs on imports and concessions and subsidies on
exports are normally common in several countries.
Kinds of Tariffs
Tariffs may be classified according to:
i. The purpose of taxes, and
ii. How they are levied.
i. According to the Purpose of Taxes
According to the purpose of taxes, tariffs may be further classified into two categories: (a) Revenue
tariff, and (b) Protective tariff.
a. Revenue Tariffs: these intended to raise the Government revenue without protecting any
industry of the country. It is levied at a fairly low rate. It does not obstruct the free flow of
imports.
b. Protective Tariffs: these aims at protecting the domestic industries. These are generally levied
at a very high rate; therefore, these obstruct the free flow of imports. Their main purpose is not
to increase revenue but to provide a safeguard to the domestic industries against foreign
competitions in the local market. Tariffs are sometimes levied to discriminate between
countries. For example, Preferential tariffs are imposed on certain goods having certain
specifications which are imported from a particularly country.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

ii. On the Basis of Method

Tariff may also be put into two categories based on the method of levying on imported or exported
commodities i.e. (a) Specific tariffs, and (b) Ad valorem tariffs.
a Specific Duties or Tariffs: these are imposed on the basis of per unit of any identifiable
characteristics of merchandise such as per unit of weight, volume, length, number or any
other unit of quality of goods. These duty schedules must specify the rate of duty as well as
the determining factor such as weight, number etc. and the basis of arriving at determining
factor such as gross weight, net weight etc.
b Ad valorem Tariffs: these are based on value of imports and are charged in the form of a
specific percentage of the value of goods. The schedule should specify how the value of the
imported goods would be arrived at. Most of the countries follow the practice of charging
tariffs on the basis of cost of a product or cost mentioned in the invoice (FOB). As tariffs,
under this method are levied on CIF or FOB price sometimes unethical practices of under-
invoicing are adopted whereby the custom revenue is affected. In order to eliminate such
malpractices, some countries adopt a fair value given in the schedule or the current domestic
value of the goods as the basis for the computation of customs duty.
iii. Other Tariffs
In order to protect these domestic industries, against competition, some other tariffs are also
imposed. Among them are anti dumping duty and Counteracting duties are popular one.
a. Anti-dumping Duties: generally exporters from developed countries are eager to sell their
products in the foreign markets with a view to capture a large market, at a very low price not
proportionate to their cost of production. This method to introduce their products in a large
quantity into foreign market at a very low price, even lower than cost, is called ‘dumping’.
This duty is known as ‘anti-dumping duties’ which are charged in addition to the normal
Customs duty on the product. This additional charge would cover at least the differences
between the export price and the normal price or market price in the exporting country.
b. Counteracting Duties: similar to the anti-dumping duties, these are charged on goods
imported from countries where the manufacturer exporter is paid, directly or indirectly a
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

subsidy as an incentive for export. The amount of Counteracting Duty normally does not
exceed the estimated amount of subsidy. Common types of Counteracting Duties may include:
▪ Preferential Tariff: this type of duty is of discriminatory nature. The importing country
may charge lower duty to the imports of friendly countries and higher duty to the imports
of non-friendly countries.
▪ Alternative Duty: in case of some imports ad valorem as well as a specific duty are made
applicable whichever is appropriate. Always the higher duty is imposed when protection
is required to local industries from the low priced imports. In some imports lower rate of
duty is imposed. Such duty is called the alternative duty.
▪ Compound or Mixed Duty: in respect of some imports both the duties are imposed, the
specific duty as well as ad valorem duty. Firstly, the duty of specific rate is imposed and
then on the same imports the ad valorem duty is imposed. Suppose the import of cloth is
charged at the rate of 25 cents per meter and also 2% per meter and also 2% on the total
value of import of cloth. That is why it is also called the mixed duty.
▪ Seasonal Duty: in some seasonal period higher duty is charged upon the imports. During
off-season the normal rate of duty is charged. During particular season the higher rate of
duty is charged to protect domestic seasonal product. During agricultural crop season the
higher duty may be imposed on agricultural imports.
▪ Single-Column and Multi-Column Duty: in case of single column duty the same rate of
duty (standard rate) is imposed upon the imports of all countries. No discrimination against
goods of any country is made. However certain countries charge different rate upon the
imports of different countries. Lower rate may be charged upon the imports of friendly
countries and higher rate upon the imports of unfriendly countries.
▪ Other Charges: in addition to the duties stated above the importing countries are free to
levy other charges such as the licensing fees, stamp duty, sanitary inspection fees, etc.,
are also charged upon the important commodities by certain countries.
Advantages or Benefits of Tariff Barriers
The usual benefits available from different types of tariffs are as noted below:
i. Imports from abroad are discouraged or even eliminated to a considerable extent.
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ii. Protection is given to home industries and manufacturing activities. This facilities increase in
the domestic production.
iii. Consumption of foreign goods reduces to a considerable extent and the attraction for imported
goods is brought down considerably.
iv. Tariffs give substantial revenue to the government. In addition, they also create employment
opportunities with in the country as there is encouragement to domestic industries and
production activities.
v. Tariffs remove or at least reduce the deficit in the balance of trade and balance of payments.
vi. Tariffs encourage Research and Development (R&D) activities within the country. They
create favorable atmosphere for industrial development and generation of employment
opportunities.
vii. Tariffs may be used to influence the political and economic policies of other countries. A
country, for example, may raise its tariffs to protect against tariffs raised by other countries.
viii. Tariffs avoid competition from foreign manufacturers and this may lead to monopolistic
tendencies among domestic industries.
Other Taxes Collected by ECuA
i. Excise Tax
It is believed that excise tax should be imposed on luxury goods and basic goods, which are
demand inelastic. It is also believed that imposing the tax on goods that are hazardous to health
and which are causes to social problems will reduce the consumption thereof such as alcoholic
drinks, tobacco, chat, etc.

Excise tax shall be paid on goods mentioned under the schedule of “Excise Tax Proclamation No.
307/2002” as (a) when imported and (b) when produced locally at the rate prescribed in the
schedule. Computation of excise tax is applied:
i. In the case of goods locally, production cost, and
ii. In the case of imported goods, it is based on Cost, Insurance and Freight
(CIF).
Payment of excise tax for locally produced goods is by the producer and for imported goods by
the importer. Time of payment of excise tax for imported goods is at the time of clearing goods
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from the Customs area, where as for locally produced goods it is not later than 30 days from the
date of production.

Excise duties are taxes levied and collected by Central Government. The
proceeds of excise duties are divisible between the Central Government and
Regional Government.
In general, excise duties constitute an important source of revenue to Central Government in most
countries. It encourages flow of resources into priority sectors of the economy of a country and
prevents them from flowing into non-priority sectors. Therefore, excise duties are used to
encourage the diversion of capital towards goods production sectors. To encourage productive
sectors of the economy, capital goods should be exempted as this will reduce the cost of production
and promote the growth of investment in these sectors.
ii. Value Added Tax (VAT)
Value Added Tax (VAT) is a sales tax based on the increase in value or price of product at each
stage in its manufacture and distribution. The cost of the tax is added to the final price and is
eventually paid by the consumer. The rate of VAT is 15% of the value for every taxable transaction
by a registered person, all imported goods other than an exempt import of goods and an import of
service.
In the case of export, in Ethiopia, it is applied zero tax rate as per the following conditions:
🖝 The export of goods or services to the extent provided in the regulation;
🖝 The rendering of transportation or other services directly connected with international
transport of goods or passengers, as well as the supply of lubricants and other consumable
technical supplies taken on board for consumption during international flights;
🖝 The supply of gold to the National Bank of Ethiopia (NBE); and
🖝 A supply by a registered person to another registered person in a single transaction of a
substantially all of the assets of a taxable activity as a going concern, provided notice in
writing, signed by the transferor and transferee, is furnished to the authority within 21 days
after the supply takes place and such notice includes the details of the supply.
Note: Administrative feasibility considerations limit the registration of persons under Value-
Added Tax to those with annual transactions to the total value exceeding 500,000 Birr.
4.2 Import Customs Clearing Documentation
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Types of Import Customs Clearing Documents

An importer should handovers documents that are listed under “Presentation of Customs
Declaration Form (CDF) for Appraisal” in the previous section. Few of them are discussed in
brief as follows:

1. Import License

Before obtaining an import license, the business of the importer must first be registered. If
appropriate, the importer must also register the trade name being used. An importer may obtain a
general import license or one limited to named commodities. A general license does not however
cover a list of commodities which are subject to special controls, e.g. pharmaceutical products for
which a Ministry of Health Competence Certificate is require.

A completed Application Form, Commercial Registration Certificate, Articles of Association; and

two photographs are required. If the importer is foreigner, Investment Certificate and Residence
Permit are required. The charges vary from ETB 25 to 200 according to the capital of the business.
Licenses are issued within 2 days of application. Licenses are valid for one year and renewable
annually at the same issue fee. There is penalty for late renewal. The license does not impose any
restriction on the quantity or quality of goods that may be imported.

2. Import Permit

The import permit is usually issued by the concerned government departments or Chambers of
Commerce thereby authorizing import of a specific commodity. It is a means of regulating the
flow of specific commodity imports and the funds associated with them.
3. Purchase Order

When terms have been agreed, the importer may order and obtain Proforma Invoice by fax.
Importers are sure of obtaining foreign exchange (Forex) and do not have to wait for a Forex
allocation before ordering. Orders are placed by telephone, fax, and e-mail. Exporters sometimes
start to process transactions for regular customers after initial enquiries without waiting for the
formal order.

4. Foreign Exchange (Forex) Permit

Importers no longer bid in the Forex auction. The commercial banks now participate on their
behalf. Commercial banks obtain Forex from NBE Forex auction which are held every week. On
Fridays, NBE advertises the amount available through television, radio and newspapers and bids
have to be in by 4 PM. Only commercial banks and investors can bid. Minimum bid level is USD
500,000.00
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The importer applies for Forex Permit at the commercial bank with application form, Proforma
Invoice, and Import (Trading) license. The Import License may be needed every time although
Forex applications are frequent. There may be slight variations in commercial bank procedures,
e.g. one bank asks to see original Trading License and then keeps photocopy. The importer has to
produce a certificate from NBE that there are no unclear Forex commitments.

Forex application form has five copies [i.e. 1. Original - white; 2. Customs copy (original) – pink;
3. Customs copy (duplicate) – pink; 4. Import control copy -white, and 5. File copy – yellow]. The
commercial bank returns Forex application copies 1, 2 and 3 to the importer duly stamped. Copy
no. 4 is NBE’s Copy that helps it to follow-up whether importers have cleared what they have
given to import products.

5. Commercial Invoice

The exporter has to send the Commercial Invoice to specified importer as per their agreement. It
could be verified by the Chamber of Commerce in the export country for imported products which
requires so.

6. Certificate of Origin

The importers in several countries require a Certificate of Origin without which clearance to import
is refused. The Certificate of Origin states that the goods exported are originally manufactured in
the country whose name is mentioned in the certificate. Certificate of Origin is required when:
i. The goods produced in a particular country are subject to Preferential Tariff Rates in the
foreign market at the time of importation, and
ii. The goods produced in a particular country are banned for import in the foreign market.

7. Customs Declaration Form (CDF)

This is the Customs document that gives all the particulars about an export shipment. The form
can be obtained from Ethiopian Customs Authority (ECuA) or any Customs Clearing Agent
(CCA). The importer should fill the Customs Declaration Form (CDF) accurately or can be filled
by his/her Agent.

When all the details have been entered on the Customs Declaration Form, it should be submitted
together with other relevant documents to the CCA for final submission to the Customs Authority
to clear out the imported product from the Customs Station.

8. Cargo Insurance Policy / Certificate

It is most important to have insurance cover against loss or damage that may occur during
shipment. The export sales contract with the importer must clearly state who is responsible for
arranging the insurance at all stages from the time the merchandise leaves the exporter’s premises
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(warehouse) until the importer takes possession. If the trade term is Ex-Warehouse, the importer
is responsible for risk related to Transportation of the goods to the seaport, airport, or inland
clearance depot; The period during which the merchandise is stored awaiting shipment or loading;
The periods whilst the goods are on board of the ship, aircraft or other conveyance such as the
through international road transport, The off-loading and storage on arrival, and finally
Transportation to the importer. This involves primarily ‘INCOTERMS’.

The cargo insurance policy may only be issued by the insurer and is usually in a standard form
covering the customary risk for any voyage or flight. Individual policies for single shipment are
rarely used by regular exporters because a new policy would have to be obtained for each shipment.
However, insurance certificates based on the overall policy may be issued and are far more
common than the policy.

The insurance certificate must contain the same details as the policy with the slight difference that
it will carry a shortened version of the provisions of the policy under which it is issued and should
be signed by the policyholder.
1) The name and signature of the insurer;
2) The name of the assured;
3) The endorsement of the assured when applicable so that the rights to claim may be transferred;
4) A description of the risk covered;
5) A description of the consignment;
6) The sum or sums to be insured; and
7) The place where claims are payable together with the name of the agent to whom claims may
be directed.

Basically, the insurance policy/certificate must embrace the following relative to the processing
of the international consignment:

🗸 Cover the risk detailed in the credit arrangements. The types of marine risks are listed in the
following section;
🗸 Be in a completed form;
🗸 Be in a transferable form;
🗸 Be dated on or before the date of the document evidencing dispatch, for example, Bill of
Lading; and
🗸 Be expressed in the currency as that of the credit.

Types of Risks to be covered by Marine Insurance Policy

An insurer undertakes to indemnify the Marin Insurance Policy holder against losses caused due
to perils of the sea. Here perils of the sea include:
1. Sinking of the ship
2. Damage to the ship and cargo due to dashing of the waves
3. Dashing of the ships on the rock
4. Fire explosion on the ship
5. Spoilage of cargo due to sea water
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6. Destruction of the ship and cargo by the crew or captain of the ship
7. Piracy and such other risk.

9. Certificate of Health

A certificate of health is usually required when agricultural/animal products are imported. The
certificate is issued and signed by the Health Authority in the supplier’s country. It states that the
country’s health requirements should be satisfied at the time of shipment. For instance, if the
products are imported from Canada, the issuing authority will be the Ministry of Agriculture based
in Canada.

10. Certificate of Inspection

Some countries insist on pre-shipment inspection of the goods by independent surveillance

companies. The certificate confirms that the goods are being supplied in accordance with the
contract.

11. Dock Receipt

This may be issued by a Port Authority to confirm receipt of cargo on the quay/warehouse pending
shipment. It has no legal role regarding processing financial settlement of international
consignments.

12. Bill of Lading

This certificate is issued by Shipping Agent and is merely a document confirming the goods have
been shipped on a specified vessel and date. It is often associated with groupage or consolidated
container shipments and is also known as the ‘in-house Bill of Lading’ under groupage
arrangements.

The document confirms the specific consignment has been shipped in accordance with the
instructions detailed on the certificate. It contains details of the exporter, consignee, receiving
dates, dock/container base, name of vessel, port of loading, port of discharge, place of delivery,
shipping marks, container number, number of packages, full description of goods, gross weight of
goods and cubic measurement.

2.4 Settling Payments to Customs Authority

Customs Clearance Payments

There are five types of Customs clearance payments made to Ethiopian Customs Authority. The
following section briefly discusses about each type of the Customs payments.

1. Customs Duties: custom duties are levied and/or imposed on goods imported into a country
(Import duties) from foreign countries and on goods exported from the country (export duties) to
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other countries. Import duties are used as a protectionist measure to protect domestic industries
and also to earn foreign exchange from foreign countries. There are two types of Customs duties,
namely import duties and export duties

I. Import Duties

Import duties are levied on commodities that entered into a given country. The reason of import
tariffs/taxation on imported commodities is mainly due to three roles it plays in the economic
development of a country in particular to underdeveloped countries. The three major roles are:

A. Import Duties as an Instrument of Development Finance for the Public Sector:

Import duties as an instrument of development finance may be used when heavy import tariffs are
imposed on articles of luxury of restrict the consumption of high-income groups. The function of
import duties in this regard is to divert a portion of resources being spent on consumption into
public savings.

B. Import Duties as an Instrument of Protection of Domestic Industries:

Protectionism is an instrument of fostering industrial growth in undeveloped countries. Import
duties are imposed on imports to provide protection to the domestic industries so they may flourish
and develop behind protective tariffs. But protection should be granted to those industries which
possess possibilities of future expansion and reduction of costs.

C. Import Duties as an Instrument of Commercial Policy Designed to Restrict the Imports

ofLuxuries:
Import duties are also imposed to discourage the import of luxuries and consumption goods.
Imports tariffs are used to restrict the imports of foreign luxuries and consumption goods and to
utilize the foreign exchange resources so saved for imports of capital goods and investment goods.
This would increase the rate of capital formation, which would leads to the economic development
of the country.

Types of Commodities on which Import Duties Levied on

There is a long list of commodities which are imported on which duties are imposed. In Ethiopia
there are several types of commodities on which import duties are levied on. To name few: (1)
Petroleum oils; (2) Mineral; (3) Animal or Vegetable fats and oils, (4) Inorganic chemicals, (5)
Organic chemicals, (6) Photographic goods, (7) Pulp and paper; and paper boards etc., (8) Steel,
(9) Machinery, (10) Machine tools, (11) Infrastructure items, (12) Medicines, (13) Plastic and
article thereof, (14) Rubber articles thereof, (15) Electrical Machinery, (16) Clock Watches and
parts thereof, and so on.

II. Export Duties

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Some countries levied exports duties on the commodities that are needed for domestic
consumption and for adjusting the burden of various taxes. In Ethiopia, before the government has
introduced export incentives scheme to encourage exporter, export duties were imposed on various
export commodities. These commodities were: (1) Coffee; (2) Hides and skin; (3) Live animals
(such as ox, ship, goat, etc); (4) Leather and leather products; (5) Oil seeds; (6) Cut flowers; (7)
Traditional products are major ones. Now-a-days, however, such duties have lifted up to promote
exporters and benefited from export incentives schemes.

Objectives of Export Duties

➔ Export duties are levied for various purposes such as earning revenue from commodities
which enjoy a strong position in international market.
➔ Export duties are also used for productive purposes. Export duties may be imposed on raw
materials in order to give an advantage to a country’s industries using those raw materials.

2. Excise Duties: a levy imposed by the government on all excisable items as specified by it.
Excise duty is usually collected at sources, i.e. at the manufacturing state. As soon as the
manufactured products are ready for dispatch from the factory they attract the levy. The products
can be removed from the factory premises only after the excise is paid. However, products meant
for export are exempted from the imposition of excise duty. In case of import, it is levied on FOB
or CIF price of a given product.

3. Value Added Tax (VAT): belongs to the family of sales tax. In its comprehensive form, it is a
tax to be paid by all sellers of goods and services, except those specifically exempted, on the basis
of the value added by firms to the thing or service sold. VAT is a tax not on the total value of the
commodity being sold; it is a tax levied only on the value added to its by trader or manufacturer.
The manufacturer is not, therefore, liable to pay the tax on the gross value of the commodity, but
only of the net value added by him/her in the process of production i.e. the gross value of the
manufactured product minus the value of the commodities (used as raw materials) purchased from
the other firms.

VAT is the difference between a firm’s receipts from the sale of a product and
the payment made for the various inputs or raw materials used in producing it.

VAT equals a firm’s payments made to the factors of production such as land, labor, capital and
enterprise in the form of rent wages, interest and profits. The value of the thing is added because
of these expenses. Therefore, these payments represent the “base” to which a value added tax is
applied. (For more information refer back section “5”)

4. Customs Warehouses Fee: customs procedure under which imported goods are stored under
Customs control in a designated place (a Customs Warehouse) without payment of import duties
and taxes for some period of time till they are cleared out from the Customs Station and/or
premises. Otherwise if the goods stay unreasonably long time before clearance, they will subject
to warehouse fees. How it will be calculated is discussed as follows.
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Calculation of Warehouse Fee

Storage fees for the goods deposited in the Authority Customs Warehouse shall be calculated in
the following manner:
🢥 Goods entered in Customs Warehouse; from the date of entry until released upon
accomplishing Customs Formalities; and/or
🢥 Goods transferred from licensed warehouse; from the date of transfer until released upon
accomplishing Customs Formalities; and/or
🢥 Goods seized by reason of contraband, or contravention of laws that are enforced by the
Customs Authority; from the date of sales until the importer collects them.

5. Freight and Transit fees: freight fees are payments made to a transporter for the shipment of
goods. Transit fees, on the other hand, are payments made to a Customs Clearing Agent for the
services he/she extended in processing Customs formalities.

4.3.Processing Import and Export Customs Clearing Documents

4.3. Filling Customs Declaration Annex Form (CDAF)

What is Customs Declaration?

Customs declaration is any statement or action, in any form prescribed or accepted by the Customs,
giving information or particulars required by the Customs. This term includes declarations made
through automatic data processing and communication techniques and also covers action required
on the part of passengers under the dual-channel (red/green) system.

Declaring

Any natural or legal person who makes a customs declaration or in whose name such a declaration
is made. In some countries, the term “declarant” is confined to the person who actually make a
customs declaration.

The declarant is any natural or legal person who makes a Customs declaration
whether in his/her own name and on his/her own behalf, of another natural or
legal person, or in his/her own name but on behalf of another natural or legal
person.

The Purpose of the Customs Declaration Annex Form (CDAF)

This form has been prescribed by the National Bank of Ethiopia to ensure that the foreign exchange
receipts in respect of exports are repatriated to Ethiopia. The form has to be filled in nine copies.
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Five copies are to be submitted to the commercial bank where the Letter of Credit is processed.
The remaining copies should be handed over to the Customs Clearing Agents (CCA) for
distribution with the other relevant documents and to Customs Authority at the port of shipment.
Customs Authorities will certify the value declared by the exporter on both the copies of the form
and will also record the assessed values. They will retain the original to be sent to the National
Bank of Ethiopia (NBE) directly. They will return the duplicate copy which is submitted to the
Negotiating Bank along with other documents after shipment of the goods. The Negotiating Bank
sends the duplicate copy to the NBE after the export proceeds have been realized.

The principal requirement of exchange control is that export proceeds be realized in the prescribed
manner, i.e. payment for exports must be received in Ethiopia not late than 3 months (90 days)
from the date of exportation and in any of the acceptable freely convertible currencies. (Should
there be delays in payment - an extension of the three months can be given by the bank). Major
currencies acceptable in Ethiopia among others include Euro, Pound Sterling, United States Dollar,
Japanese yen, Canadian Dollar, and Djibouti Franc.

However, when the exporter wants to retain the proceeds of his/her exports with agents or branches
abroad or to make other approved types of payments abroad, he/she has to seek the permission of
the NBE.

What is Foreign Exchange Control?

Foreign exchange control means to put legal restrictions on the business which involves foreign
exchange and its sale and purchase in the national market, when such business is undertaken by
the individuals. It is a method to keep the fluctuations away from the economy in order to foster
the speed of economic development.

It becomes apparent that foreign currency is to be checked up by the governmental authority to

avoid any crisis. Thus, control stands for the restrictions on the transactions involving the use of
foreign currencies.

However; Control of Foreign Exchange does not imply the abolition of the use of foreign currency
by the traders. It rather means to channelize the flow of Exchange so that it may not cross the lines
marked for it.

In a wide sense, the term ‘Exchange Control’ refers to all those dominant activities of government
which are intended to influence the rate of exchange or the business connected with foreign
exchange. But in a narrow sense, the exchange control refers to those restrictions which are
imposed by the government on foreign exchange business.

The term exchange control has been defined by different expertise in the field and three of them
are presented as follows:

According to Prof. Kent, “Exchange control may be defined as government

action to regulate exchange rate and to restrict the use of the means of
international payment.”
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Prof. G.B. Haberler, defined “Exchange control is the regulation excluding free
play of economic forces from the foreign exchange market.”

Prof. Evitt forwards his definition as, “Any form of official interference with the
freedom of dealings in foreign exchange in exchange control.”

Characteristics of Exchange Control

Following are the characteristics of exchange control:

i. All sorts of foreign exchange transactions are centralized under the direction of the Central
Bank of the country. In case of Ethiopia it is under the direction of National Bank of Ethiopia
(NBE).
ii. The whole of foreign exchange is deposited in central bank which gives the exporters domestic
currency in turn.
iii. The importers get foreign currency from the central bank of their country.
iv. The government fixes priorities for distribution of foreign exchange.
v. Imports get automatically a result of exchange control.
vi. The government holds its monopoly on foreign exchange business as a whole.

Objectives of Foreign Exchange Control

The motives behind the application of control over foreign exchange are manifold. There are
several purposes for which the control is applied. They range from the stabilizing of prices in the
economy to the stabilization of economic growth.

Following are the important objectives of imposing control over foreign exchange:

a To Provide Stability to the Exchange Rates: stable rate of foreign exchange is vital to the
economic development. The fluctuation are harmful during the normal times and it becomes
a rather threat to the economic structure during the war times. There must be control over
exchange so that the currency may be exchanged at the stable rate. It will avoid the changes
of foreign exchange speculation. Thus with the imposition of the control over the foreign
exchange of the rate of exchange become stable, which provides stability to the economic
growth.
b To Achieve Favorable Balance of Payments: favorable balance of payment is necessary for
an economy if it wants to be independent in the sense of its economic policies. The strict
exchange control will affect the foreign trade. The imports can be checked and exports may
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be sold at the rates favorable to the country. Thus it removes the burden of payments which
tremendously arise due to increasing imports. Here Exchange control works as an efficient
technique to bring favorable balance of payments, which is generally brought up under control
through the improper methods of devaluation and deflation etc.
c To Check the Exports of Gold, Capital and Other Essential Goods: through the
application of Exchange Control the flow of the gold stock of the economy across the national
frontier can be checked. Economically speaking gold is the most in demand metal in the field
of foreign exchange and trade thus its flow must be checked. Similarly the flow of capital
which is the backbone of the economic development can also be checked. At the same time it
is necessary for the economies to check the flow of certain essential goods. This can also be
done through the application of techniques of Exchange Control. One thing more, being
related with the Trade Control; the technique of Exchange Control is helpful in bringing down
the level of interest in the economy.
d To Ensure Necessary Imports: import restriction has assumed priority over various policies
of economies in the modern times. In this context it is held by the economists like Haney that
present day economic politics are nothing but modernized old Mercantilism as far as foreign—
trade policies are concerned. Now with the help of Exchange Control techniques taken
together with the import licensing policies, governments are in efficient position to ensure the
import of only necessary commodities. It is now never permitted by the governments to use
the foreign exchange earnings on useless or second rate imports.
e To Achieve Bargaining Power in the Foreign Trade: Exchange Control facilitates the
countries in any kind of scarcity of any commodity. They can easily import such commodities
from other countries. Exchange Control also gives a kind of monopolistic power to those
countries whose currency is scarce. They are able to secure more commodities at cheap rates.
It has its civil consequences also, especially when the countries exploit the other needy
countries.
f To Help Central Planning: the systematic flow of goods and services on the predetermined
channels is very necessary for the proper functioning of the economies. Exchange Control
may be used as a device to serve as essential checks to the export of required materials
including the raw stuff. It may be also helpful in achieving the desired type of foreign
investment.
g To Stabilize the Prices in the Economy: price stability provides stability to the whole
economy. Fluctuating exchange rates badly affect the monetary system of the economy which
consequently results in to price-fluctuations. Exchange Control may be used to eradicate the
sudden flow of foreign currency. If adopted; it will certainly help in putting a healing affect
on the economic system.

The difference between Trade Balance and Balance of Payment

A country exports and imports many items both visible and invisible, goods as well as services.
Visible items refer to the goods while invisible to the services like shipping, insurance, banking,
etc., for which payments are made to and from a country in the sphere of international trade.

Balance of trade refers to the value of imports and export of commodities including treasure and
visible items only. However, the balance of payments is more comprehensive in scope and it refers
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to the total debits and credits due to both visible items, export-import as well as capital movements
in and from the country. Thus balance of trade is only partial study of what we call balance of
payments. In contrast, the trade balance is the largest component of the balance of payments.

Balance of trade is simply the difference between the value of visible exports
and visible imports. Where as, the balance of payments are the payments and
receipts from the rest of the world to countries on account of shipping, tourism,
banking and insurance services.

Thus according to Haberler the term ‘Balance of Payments’ is used in the sense of the whole
demand and supply situation, and it is in this sense that the concept of the Balance of Payments is
mostly used in international trade discussions. Similarly according to BO Sodersten, “The balance
of payments is merely a way of listing receipts and payments in international transactions for a
country.”

The balance of payment is always in balance though it can be in disequilibrium. Disequilibrium is

caused mainly by movement of funds in either direction. Suppose we buy or import more than we
sell or export. Balance of trade will be unfavorable or adverse and funds will move causing
disequilibrium in the balance of payments. But in the end this disequilibrium would disappear and
there is a balance of payments. Balance is thus a purely accountant’s concept of payment. The
balance of payments thus forms part of the national but equilibrium, on the other hand, is an
economist’s concept.

Information to be Filled in the Annex Form

The following items should be filled correctly in the form. These are:
☑ Date of the application;
☑ Marks or number of packages;
☑ Weight of goods to be exported both in terms of net weight and gross weight;
☑ Full description of valuable things;
☑ Name of the buyer and final destination; and
☑ Basis of shipment; value at final destination in terms of foreign currency

4.3.3 Preparing the Customs Declaration Form (CDF)

4.3.3.1 Customs Declaration Form [CDF]

Customs Declaration Form (CDF) in set of five has to be purchased from Customs. Only three
copies of the declaration are now needed because the computer system prints out three copies of
the receipt for Customs charges. The declaration form is a national version of the widely used
Single Administration Document (SAD) which is recommended by the World Customs
Organization (WCO). For imports by Road, the declaration is lodged with Customs at one of
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

several other Customs Clearance Office/points, e.g. Dire Dawa, Nazareth, Awash, Mile etc. or for
imports by Rail the declaration is lodged at the Railway Station (La Gare) in Addis Ababa, or for
import by Air the declaration is lodged at the Customs Office at the Bole Airport. Let us briefly
discuss the Customs clearing formalities at each of these modes of transportation.

1. For goods which will be transported by Road from Djibouti, the Customs declaration,
supporting documents and payments of Customs charges are required while the goods are still
in Djibouti. Direct payment operates for more than 60% of imports, but payment on deposit is
required for some commodities, importers of doubtful reliability, and the like circumstances.
The deposit is usually the computed amount of Customs charge, but it may occasionally be
125% if there is suspicion of under invoicing. Goods are not examined in detail Ethiopian
Customs Officer while they are in Djibouti.

The Customs Clearing Agent completes the Customs declaration with calculation of charges,
and lodges it at the Customs declarations, accounting and collection of statistics. The Customs
Department uses a United Nations Computer System (ASYCUDA + +). It is currently
operating at all Customs stations where telecommunication network services are extended.
Few of the remote Customs points which such services are not readily available are not using
the Customs computer program.

By the virtue of the technology, within two days a payment notification is issued by Customs
to importer or the Agent. Initial payment may be required on deposit (sometimes 125% of
calculated charges). The Agent advises the importer of the amount payable, and the importer
supplies a bank guaranteed cheque for the Agent to pay charges. Customs give a copy of the
declaration, packing list, and bank permit in a sealed envelope to be sent with the Clearing
Agent’s documents by courier to Djibouti. Receipted documents are sent daily by Clearing
Agents by courier to Djibouti.

All consignments are liable to be examined in detail by Customs on arrival at the appropriate
Customs Point, but not all consignments are examined in detail. In deciding whether to
examine goods in detail, Customs Officer assesses the revenue risk and work to a scale of
examinations. Importations by Government importers are checked only occasionally.

There are frontiers (entrance) Customs Stations alongside Ethiopian boarder. At the Djibouti
boarder (Galafi and Dewele Customs Sub-station), at the Somali boarder (Teferi Ber Customs
Sub-station), at the Kenya boarder (Moyale Customs Sub-station), at the Sudan boarder
(Kumruk, Mankush, Humera and Metema Customs Sub-station) and at the Eritrea boarder
(Rama and Zalambessa Substation).

2. For goods transported from Djibouti by Rail, an Ethiopian Customs declaration and payment
of Customs charge are not required before arrival of the goods, in Addis Ababa. The Railway
Company is responsible for the goods while they are in transit. Customs declaration is not
required until the goods arrive at La Gare (or other inland Customs Points that are divided into
five Customs main branches. These are North Customs main branch which its office is in
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Mekelle, North-east Customs main branch which its office is in Combolcha, East Customs
main branch which its office is in Dire Dawa, Addis Ababa Customs main branch which its
office is at La Gare, and Addis Ababa Airport Customs main branch which its office is found
inside Bole International Airport.

3. For goods imported through Bole International Airport is first goods placed in the appropriate
airline shed on arrival, from where they have to be transferred to the Customs Airport
warehouse for clearance. Customs declarations for goods imported by air are lodged at the
Customs Office at the Bole International Airport. The Customs clearance procedure is basically
the same as for goods arriving by road and rail except that the Airway Bill (AWY) is the
transport document required by Customs and only one third of the air freight is added when
calculating the dutiable (CIF) value.

Owing to the speed of air transport, the final invoice for the goods is often available when
goods are cleared. Customs charges are therefore frequently assessed on the basis of the
Proforma Invoice plus 10% and paid on deposit. When the original invoice is available, the
deposit brought to account, and any balance is repaid at the airport by cheque.

4.3.3.2 Information to be filled in CDF

The Ethiopian Customs Declaration Form (CDF) is the only declaration from that is issued for all
Customs procedures (i.e. import and export Customs procedures). The CDF consists of a primary
sheet, and where necessary one or more continuation sheets depending on the number of items to
be declared.

The information required to fill in the CDF primary sheet (taken from the web page of the Ministry
of Inland Revenue) is presented below:

Table 3.1 List of Particulars in Ethiopian Customs Declaration Form (CDF)

▪ Name of exporter/consignor and ▪ Nationality of transporter;
assigned number; ▪ Declarant reference;
▪ Name of importer/consignee and ▪ Guarantee number;
assigned number; ▪ Guarantee amount;
▪ Declarant/agent and assigned number; ▪ Terms of payments;
▪ Clearance office; ▪ Item number;
▪ Manifest number; ▪ Goods description;
▪ Way bill number; ▪ Marks and numbers/container number;
▪ Frontier office/port of exit; ▪ Currency, rate of exchange customs
▪ Date of arrival/departure; value;
▪ Total items; ▪ Valuation method or ruling;
▪ Total packages; ▪ Gross and net weight (Kg);
▪ Voyage/flight/vehicle/rail registration ▪ Warehouse code/name;
number; ▪ Bank/branch reference;
▪ Country of consignment; ▪ Commodity code;
▪ Country of Origin; ▪ Agreement code;
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

▪ Port of loading/discharging; ▪ Insurance;

▪ Country of finial destination;
▪ Account holder/prepayment number;
▪ Mode of transport;
▪ Name, vehicle
owner/driver/organization;
▪ Types of package;
▪ Estimated period in warehouse/transit;
▪ Invoice value; and
▪ Revenue information such as tax type,
tax base code, base value, duty and tax
due, attached documents code, bank
permit number, invoice number, other
charges.

4.3.3.3 Examination of Export Goods

A. Document Examination

The Customs Officer will verify and examine pertinent documents. Checking amongst other
things, the following:
The Officer shall check documents to ensure accuracy of the information supplied in the
documents.
Whether all relevant documents have been submitted and properly completed.
Whether description of goods, quantity, value, etc. are identical in all documents. The
Customs value of an export order is the value of merchandise when it leaves the Customs
territory concerned, while import value is its value when it enters the territory of importation.
In the case of exports, this corresponds to the FOB…, DDP…FAS… value depending on the
mode of transport.
Whether the export goods have been properly classified, i.e. the correct HS Code. The
Harmonized System (HS) of coding goods is mandatory; it is an international system of goods
classification, whereby each product is identified by a six-digit code. The first four digits
correspond to the number of the heading; the fifth and sixth identify the subheading. (For more
information refer back Unit I, section 1 under the title “Historical Development of
Nomenclature”).

B. Goods Examination

It is optional for the exporter to attend the physical examination of the export goods, his/her agent
may represent him/her. The Customs Officer will open and examine the goods in the presence of
relevant officials.

After the formalities are completed an endorsement authorizing shipment of the goods is made by
the Customs Officer on the Customs Export Declaration form and also in the consignment note
/shippers instructions for the dispatch of the goods/. The Customs endorsement stamp must also
be placed on all the other relevant forms submitted to facilitate post-shipment formalities.

In order to avoid difficulties and delays, the exporter should bear in mind that
the Customs Officer begins by methodically checking the consistency of the
documents recording the gross weight, number of packages and marks, and
labeling.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

If everything is in order the Officer will tend not to insist on weighing and counting. The exporter
should ensure that the documents are consistent before declaring them to Customs. If a
discrepancy is found in the weight or number of packages, it should be corrected to avoid the
difficulties likely to arise. The need for this precaution confirms the importance of advance
preparation of the export documents.

4.4. Export Customs Clearing Procedure

4.4.1 Functions of Export Management

Export management is a comprehensive activity and includes variety of functions which an export
manager or export organization has to conduct. Such functions are directly and indirectly related
to export operations of a business unit. Broadly speaking, export management involves five
management functions. They are as follows:
🖝 Planning,
🖝 Organizing,
🖝 Team building,
🖝 Execution, and
🖝 Control.

It may be noted that in every management function the abovementioned activities are involved. In
export management, such activities are directly related to exporting of goods abroad. Here, it is
possible to mention some important functions of export management. Some functions are as noted
below:

✓ To conduct marketing research in order to find out market potential in different countries so
that export efforts will be concentrated on certain commodities and on certain foreign markets
which are highly promising. Thus, assessing overseas export opportunities is one important
function under export management.
✓ To decide export objectives of the organization and to prepare comprehensive short term and
long-term plans and programs to achieve such well defined objectives and targets. In addition,
to prepare action plan for promoting exports. This function can be treated as planning function
under export management.
✓ To introduce product development and to procure or manufacture quality goods as per the
specific needs of foreign markets. This function is to be conducted with the co-operation of
production department and Research and Development department (R & D) of the business
organization.
✓ To prepare and execute long-term export promotion programs for the products with promising
overseas demand.
✓ To fix up the prices of exportable items with proper care and caution and also to find out new
designs for packaging of products to be exported.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

✓ To look after the advertising and publicity abroad and also to maintain effective
communication with prospective buyers abroad.
✓ To look after prompt execution of export orders received through suitable packaging,
transportation, documentation and invoicing and thereby to avoid inconvenience to foreign
buyers.
✓ To analyze the export policy of the government and also the rules, regulations and procedures
connected with the export trade and foreign exchange.
✓ To look after the opening of new branches/offices abroad in order to promote exports and also
for providing efficient services to foreign buyers.
✓ To face the challenges of international competition.
✓ To evaluate correctly the export incentives, facilities and concessions offered by the
government from time to time and to introduce suitable steps for securing the benefits of such
incentives, facilities and concessions.
✓ To look after the accounting and financial aspects of export transactions and thereby to make
export transactions profitable to the company and country.
✓ To look after the training of the administrative staff working in the export division and to
motivate the employees through monetary and non-monetary incentives and finally to develop
human relations in the export organization. In other words, to build a good team of personnel
so as to achieve export targets fixed from time to time.

Difficulties and Problems in Export Marketing

Export marketing is restricted to some extent due to certain difficulties or drawbacks such as:

🢥 Difficulties of Distance: export markets are spread over long distance. Naturally, the exporter
will find difficulty in catering to long distance markets. Longer the distance, the more will be
the transport goods to the customers.
🢥 High Risks and Uncertainties: export marketing is subject to high risks and uncertainties.
The risks may be both political and commercial. The political risks involve government
instability, war, civil disturbances, etc. The commercial risks involve insolvency of the buyer,
protracted default on the part of the buyer, and so on. However, it is possible to overcome
some of these risks through purchasing insurance policy from insurance companies.
🢥 Diverse Languages, Customs and Traditions: the export markets differ in languages,
customs, and traditions. The exporter may not be able to cope up with these diversities.
Therefore, the exporter has to be selective. He/she should deal in only such markets where
he/she can easily handle or overcome such differences or diversities.
🢥 Different Currencies, Weights and Measures: different countries in the world have their
own system of weights and measures. Some countries may measure in pounds, and others in
kilograms, or in some other measures. Again, every country has its own currency. Each
currency has different exchange rates. The currencies of some countries see subject to heavy
fluctuations in exchange rates.
🢥 Customs Formalities: there are a number of Customs formalities in the export of goods from
one country to another. Again, there are Customs formalities for the buyer, i.e., Customs
formalities of the importing country.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

🢥 Foreign Exchange Regulation: export marketing is subject to foreign exchange regulations.

For instance, in Ethiopia, the exporters have to give declaration to the National Bank of
Ethiopia (NBE) that they will realize the full value of exports within a period of six months.
🢥 Problems for Non-members of Trading Blocs: the countries, which are not the members of
powerful trading blocs like NAFTA, EEC, ASEAN, etc., do face problems while dealing with
the member countries of the trading blocs. The trading blocs try to eliminate or if possible
reduce trade barriers on the member nations. However, they impose common external trade
barriers on non-member nations.
🢥 Double-faced Competition: exporters in the international markets have to face strong
challenges from the double-faced competition. The competition is more severe and acute in
the international market. There are direct competitions from similar products and indirect
competitions from substitute products.

🢥 Trade Barriers: export trade is subject to a number of tariff and non-tariff barriers. Various
importing countries do impose a variety of taxes and other formalities. This creates difficulty
for the smooth flow of goods and services among countries. However efforts are now being
made at WTO to reduce and simplify a number of trade barriers.
Documentation Formalities: there are a number of documents to be prepared in export trade.
In Ethiopia, for example, there are more than 15 documents that are compulsory needed to
facilitate Customs export formalities.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

CHAPTER V

Trade Fairs and Exhibitions

Trade fairs and exhibitions play very significant role in the export marketing. They are
organized by the home government fully or sometimes by the home government partly in
collaboration with the foreign governments.

Trade fairs and exhibitions are organized particularly to create awareness for
the export of non-traditional markets.

As it is observed that non traditional products are such that for some there is no enough
awareness and in many cases there is no awareness at all. Trade fairs and exhibitions in
such cases are very much helpful. Friendly countries come together and hold these fairs
and exhibitions.

Trade fairs and exhibitions both attract the visitors. National positions are often constructed
where a fair idea of price, quality and availability of product is made available to the
prospective buyers. Both build up image of product and country in the minds of prospects.
Trade fairs and exhibitions serve as the trade festival where exporters and importers of the
world around come together. They create an opportunity of direct interaction between the
exporters and importers. Latest knowledge of technological improvement in their field can
be known from such festivals.

These festivals are regularly organized in different parts of the world. For example in
Ethiopia’s Chamber of Commerce has also organized such festivals in Ethiopia and abroad
for non-traditional items of exports. ANUGA food fair at Cologne (Germany), Hanover
Engineering Fair, Sport Goods Fair held in USA are the best examples of such festivals.

Use of Trade Fair and Exhibitions

International trade fairs and exhibitions are now becoming increasingly popular. These are
the publicity tools where goods are display by the manufacturers in an attractive manner in
order to catch the imagination of the visiting public and attract them to get interested in the
objects or goods displayed. They help reach the public which may not be reached many
other ways.

In trade fairs and exhibitions, generally, the goods are displayed, with a view to
create the demand on the market. Their working is demonstrated if the goods
are of technical nature. Generally, goods are not offered for sale but they are
only displayed. However, sometimes consumer goods of small value are sold
there on cash terms.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Though fairs and exhibitions had been the medium of trade since time immemorial, their
use, popularity and number have increased tremendously now-a-days. Trade fairs are
general and large fairs, while exhibitions mean specified fairs or ‘solo’ or ‘company’
exhibitions.

To put in a nut shell, the benefits of trade fairs and exhibition can be generalized as follows:
i. They play important role in trade promotion where media advertising is absent.
ii. They bring together potential importers and exporters of the world at a convenient a place
and facilitate trade.
iii. They provide opportunity to popularize the product and to interact potential exporters and
importers.
iv. The trends of development in general and of industry in particular can be known.
v. They enable participants and visitors to know about business opportunities, government
policies, and assistance packages.
vi. They provide scope for foreign investment in the trade and business.
vii. They facilitate gathering of competitive information.
viii. They help manufactures in improving their sources of technology materials, customers and
suppliers.
ix. They generate business and business enquiries in general.
x. They help importers to know their sources of supplies.

Types of Fairs

1. General fairs: all types of goods-consumer as well as industrial-are exhibited in

general fairs. The participants come from domestic and international markets.
Separate pavilions (i.e. exhibition areas) are set up for each nations and domestic
manufacturers or for a group of national or international manufacturers. Exhibits of
one group are displayed in one pavilion. Such exhibitions and trade fairs are visited
by business firms as well as general public. They are medium of disseminating
information or to make the public aware of the newly manufactured product which is
about to enter the market.

2. Specialized fairs: these fairs and exhibitions are highly specialized in the sense that
only specific products are displayed there. For example, the Auto Fair that was held at
the Addis Ababa Exhibition Center in June 2005. This fair was intended only for trade
and industry and for the general public as well. Their main purpose is not only to create
deals immediately but also to have first hand knowledge of technical developments in
auto’s manufacturing industries in various countries. Specialized fairs help to identify
business partners on a long term basis or to get ideas for product development and
planning. They also help improve trade relations.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Types of Exhibitions

1. Solo exhibitions: these are organized by the Government of a country. Generally, the
Export Promotion office or any other government agency organizes it in another
country where the market prospects of its export products are bright. The exhibitions
may be specialized where only a limited number of products that are important for
exporting country.

2. Company exhibitions: such an exhibition is organized by an exporting firm in another

country to exhibit its own products. It may be open for traders or for both traders and
consumers.

Both these types of festivals are capable of removing misconception and negative attitude
of the potential importers about the products, their technology, design, packaging, etc, they
conceive. Direct sales can be booked in these festivals. It is found that these festivals fetch
on the spot orders and on the spot sales.

Questions for Selection of a Trade Fair for Participation

In recent years the number of trade fairs and exhibitions has increased tremendously all
over the world. The participants get a lot of information about the latest developments in
the sector. They identify their markets and competitors in the fields. Other relevant factors
advantageous to the business are cultural environment, habits, attitudes etc. However, the
company, first of all, should think over seriously whether it should participate in the fair
taking the costs of participation into consideration and that too in foreign exchange. It
necessitates identification of a set of criteria for taking a decision with regard to
participation in a particular trade fair. The following questions should be asked to take an
appropriate decision as to whether to participate or not in the particular event.

🖝 Objectives: What are the company’s objectives in the market where the
fair/exhibition is proposed to be held?
🖝 Achievement of Objectives: Could participations in the fair, either as a main
activity or supplementary to other promotional activities assist in the achievement of
these objectives?
🖝 Alternatives: What are the other alternatives promotional forms available to the
company? Could the time, efforts and costs involved in such participations, achieve
more through other forms of promotion?
🖝 Market: Has the product to be displayed a substantial market which presently has
not been exploited but could be done through such participation?
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

🖝 Agent: Does the local agent of the company support the idea of participations in the
event?
🖝 Commensurate with Result: Would the anticipated costs of participation be
commensurate with the anticipated results?
🖝 Information on the level of participation in the fair. In this context, two questions
are pertinent. These are:
i. Is the level of participation increasing over the years?
ii. Are the major firms in the product line participating in fair? A positive answer to
both these questions means that the importance of the fair/exhibition is increasing
both qualitatively and quantitatively. The firm may take a decision for
participation in the fair if answers to the above questions are in affirmative.

Measurements for Tapping Foreign Markets

Export promotion depends upon the measures to be effectively implemented which are
introduced by the government. What is more important is to tap the foreign markets or
capture the foreign markets.

It can be done by several ways. However, the following two ways are important to tap the
foreign markets:

I. Trade Delegations
II. Trade Fairs and Exhibition (Trade Festivals)

I. Trade Delegations

Trade delegations are sponsored by one’s country Ministry of Trade, Chamber of

Commerce, Trade Associations, etc. Trade delegations become necessary to explore the
export marketing opportunities and to promote interaction with importing community and
governments. Trade delegations are also necessary to tackle the problems arising in the
export adventure.
Trade delegations are sponsored by concerned party of a country to survey the
markets of many countries to collect the useful information and explore the
possibilities of products to be exported and promote interaction with the
importing community and government.

Trade delegations help in projecting the image of country’s industry and thereby promoting
it’s image in the world. The problems which may be purely technical and procedural can
be sorted out by the delegation.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Roles of Trade Delegation

Trade delegations play a significant role to achieve the following objectives:

i. Study the product needs of particular market.
ii. Compare a country’s products with the product of potential foreign competitors.
iii. Analyze competitors’ methods of exports and their pricing policies.
iv. Obtain general information about import restrictions distribution methods, buyers’
general behavior and promotion technique.
v. Interact with government authorities and business communities for useful information
and measures to be adopted for mutual benefits of the countries.
vi. Arrange trade fairs and exhibitions abroad.
vii. Ascertain proper advertising media abroad and display means and find out new
prospective distributors.
viii. Familiarize the product abroad.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

REFERENCES

Belay Seyoum(2009).Export –Import Theory Practices and Procedures ,2nd Edition, New
York:The Haworth Press

Achrya and Jain (2003). Export Marketing. Mumbai: Himalaya publishing house

Materials and Commercial Banks Operations Manuals. Addis Ababa: SMUC

Balagopal, T.A., (2003). Export Marketing. New Delhi: Himalaya Publishing House.

Cherunailam, F. (2004). International Trade and Export Management. Mubai: Himalaya

Gopal, C.R. (2006). Export Import Procedures: Documentation and Logistics. New Delhi: Age
International Publishers

How to start Export in Ethiopia. Addis Ababa: AACCSA .(2016).

Biruck Tesfaye (2006). Custom and Bank Clearing Operations Teaching

St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Annexure
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX2900TEL 251-11-0000000000000 F AX251 10000000000000 ADDIS ABABA, ETHIOPIA

DATE

Way Bill No

MESSERS

SABA TRANSIT OR DUNI TRADING PLC

DJIBOUTI

SHIPPING INSTRUCTION NO: EX04/RSC/SAM/09

We have dispatched to you the following goods and ship cargo as per our instruction.

Oper.No Quantity and Type 800 Bags: RAPE SEED CAKE

Gross Weight: 200,400.00 KGS NET Weight 200, 000.00 KGS

Truck No: ET-3-37597 Trailer No: ET-3-12081

Marks and Numbers: RAPE SEED CAKE

Destination: XINGANG PORT, CHINA

Yours faithfully,

I the Under Signed driver received and loaded the above cargo in good order and condition and Liability
for loss and damage is responsible.

Furthermore the above goods are weighted and counted in my presence and here by take responsibility

to deliver in some order and condition to YYYYY TRANSIT OR DUNI TRADING PLC

Name and Signature of Driver:

P.O.BOX 29621 TEL 251-11-284 44 09 FAX 251-11-1573792 ADDIS ABABA, ETHIOPIA

DATE
 St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

የወጪ ዕቃዎች የፍተሻ ዉጤት መግለጫ ቅጽ

የላኪዉ ስም ………………… ቀን 12/04/2017

የጉምሩክ አስተላላፊዉ ስም SABA TRANSIT OR DUNI TRADING PLC

የኮንቴይነር ቁጥር…………….. ዲ/ዮን ቁጥር……………………………….

የዕቃዉ ዓይነት RAPE SEED CAKE ሲል ቁጥር……………………..

የፕሎምፕ ብዛት……………………….

ዕቃዉ የተጫነበት የተጫነ የሾፌሩ ስም ፊርማ ክ/ከተ ወረዳ/ የቤ/ቁ ስልክ ቁጥር
መኪና ሰሌዳ ጥቅል ብዛት ማ ቀበሌ

3-40012-14314 800 - - -
3-37597-12081 800 - - -
3-38305-14081 800 - - -
3-37249-12078 800 - - -
3-81688-24798 800 - - - -

የተጣራ ክብደት፡200, 000.00.ኪሎ ግራም

ዕቃዉ በዚህ ደረጃ መሰረት በትክክል የተላከ መሆኑን በፊርማችን እናረጋግጣለን፡፡

የላኪ አድራሻ፡ ክ/ከተማ ፡ አራዳ ወረዳ፡ የቤ.ቁጥር፡ ስ.ቁጥር፡ ፊርማ………..

የወኪሉ አድራሻ ፡ ክ/ከተማ ……. ቀበሌ……….. የቤ.ቁ……….. ስ.ቁጥር…………..ፊርማ………..

የጉምሩክ ፈታሽ ማህተም

ስም……………………..

ፊርማ……………..

ቀን……………..
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERL IMPORTER &EXPORTER

P.O.BOX 29621 TEL 09-30-095359 FAX 251-11-2844409ADDIS ABABA, ETHIOPIA

REF. NO. EX05/CI/RSC/SAM/09 DATE: 04-APR-2017

COMMERCIAL INVOICE
NAME AND ADDRESS OF BUYER: ABBC TRADING FZE AJMAN, UAE
CONTRACT NO PC/495/ETH/YEA/2016-17 DATED 03.04.17
COMMODITY: RAPE SEED CAKE

ORIGIN: ETHIOPIA

SPECIFICATIONS : MOISTURE-10% MAX,PROTEIN-36% MIN,FAT-9% MAX,ASH-10% MAX,SILICA /SAND-

2%MAX.FREE FROM MOLD,PESTICIDES,CASTOR/SUNFLOWER AND/OR HUSKS,OTHER FOREIGN SEEDS,UREA
AND OTHER CHEMICALS SUBSTANCES.
QUANTITY: 200 MT (4,000 BAGS)

PRICE/MT: US$ 150 / MT FOB DJIBOUTI

PACKING: TO BE PACKED IN 50 KGS PP BAGS SUITABLE FOR EXPORT
VALUE: US$ 30,000.00 (UNITED STATES DOLLARS THRETY THOUSAND ONLY)
WEIGHT NET WT 200, 000.00 KGS

GROSS WT. 200,400.00 KGS

PORT OF LOADING: DJIBOUTI PORT

PORT OF DISCHARGE: HAIPHONG PORT, VIETNAM
CARRIER: PIL
SHIPPERS: XYZ EXPORT P.O.x0000,
ADDIS ABABA, ETHIOPIA

SIGNITURE DATE
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX 29621TEL: 09-30-095359 FAXES 251-11-2844409 ADDIS ABABA, ETHIOPIA

REF. NO. EX04/PL/RSC/SAM/09 DATE: 04-APR-2017

ORIGINAL

PACKING LIST
NAME AND ADDRESS OF BUYER: YEAB GENERAL TRADING FZE AJMAN, UAE

SALES CONTRACT NO. PC/495/ETH/YEA/2016-17 DATED 03.04.17

COMMODITY: RAPE SEED CAKE

ORIGIN: ETHIOPIA

PACKING: TO BE PACKED IN 50 KGS PP BAGS SUITABLE FOR EXPORT

TOTAL QUANTITY: 200 MTS

WEIGHT NET WT 200, 000.00 KGS

GROSS WT. 200,400.00 KGS

NO.OF BAGS: 4,000 BAGS

PORT OF LOADING: DJIBOUTI PORT

PORT OF DISCHARGE: HAIPHONG PORT, VIETNAM

CARRIER: PIL

SHIPPERS: XYZ GENERAL IMPORT AND EXPORT P.O.BOX; 29621,

ADDIS ABABA, ETHIOPIA

SIGNITURE DATE
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX2900TEL 251-11-0000000000000 F AX251 10000000000000 ADDIS ABABA, ETHIOPIA

REVASED SHIPPING INSTRUCTION REF NO.

EX04/SI/RSC/SAM/09
DATE: 25-APR-2017
TO: - SABA TRANSIT OR DUNI TRADING PLC

CONTRACT NO. . PC/495/ETH/YEA/2016-17 DATED 03.04.17

COMMODITY: RAPE SEED MEAL

SPECIFICATIONS: MOISTURE-10% MAX,PROTEIN-36% MIN,FAT-9% MAX,ASH-10% MAX,SILICA /SAND-

2%MAX.FREE FROM MOLD,PESTICIDES,CASTOR/SUNFLOWER AND/OR HUSKS,OTHER FOREIGN
SEEDS,UREA AND OTHER CHEMICALS SUBSTANCES.

PACKING: TO BE PACKED IN 50 KGS PP BAGS SUITABLE FOR EXPORT

ORIGIN: ETHIOPIA

QUANTITY 160 MT

TOTAL QUANTITY: 160 MT (3,200 BAGS)

GROSS WT.: 160,320.00 KGS NET WT. 160,000.00 KGS

NOTIFY PARTY: TIANJIN GUIHEYUAN INTERNATIONAL TRADING CO., LTD 7-2-477, HAIFENG LOGISTICS
PARK, NO.601, LOUYANG ROAD, DONGJIANG FREE TRADE PORT ZONE, TIANJIN FREE
TRADE ZONE, TIANJIN, CHINA
SHIPPERS: XYZ GENERAL IMPORT AND EXPORT P.O.BOX; 29621,
ADDIS ABABA, ETHIOPIA

MARKED: FREIGHT PAYABLE AT DESTINATION

TO THE ORDER OF TO ORDER

SHIPPING COMPANY PIL

PORT OF LOADING: DJIBOUTI PORT

St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

PORT OF DISCHARGE: XINGANG PORT, CHINA

BILL OF LOADING: FULL SET PLUS 3 NON NEGOTIABLE COPIES CLEAN ON BOARD

REMARKS:

• SHIPMENT TO BE DONE IN 20FCL

• B/L: NOT STATE THAT THE CARRIER RESERVES ITS RIGHT TO RELEASE GOODS WITH OUT
RECEIVING THE ORIGINAL BILL OF LADING.
• B/L MUST STATE THE EACH CONTAINER HAS TO BE STAFFED WITH 17.80 MT (356 BAGS)
• ONE CONTAINER HAS TO BE STAFFED WITH 17.60 MT (352 BAGS)
• SHIPMENT TO BE EFFECTED IN 9X20FT FCL’S AND BILL OF LADING TO EVIDENCE THE SAME
• NUMBER OF DAYS FREE DEMURRAGE/DETENTION TIME AT DESTINATI0N

SIGNITURE
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

APPLICATION FOR

PHYTOSANITARY INSPECTION
ON EXPORT
TO: Plant Quarantine Services
Ministry Of Agriculture & Rural Development
P.O.Box: 62347
Addis Ababa

I XYZ GENERAL IMPORT AND EXPORT (Full Name)

Request that Phytosanitary inspection should be carried out in view of the export of the consignment
described below:
Description of Consignment

Sender (Name & Address SAMUEL LEMA GENERAL IMPORT AND EXPORT P.O.BOX; 29621,
ADDIS ABABA, ETHIOPIA

Consignee (Name & Address): YEAB GENERAL TRADING FZE AJMAN, UAE
Number &Description of Packages: 4,000 BAGS PACKING TO BE PACKED IN 50 KGS PP BAGS
SUITABLE FOR EXPORT
Distinguishing Marks: _
Means of Conveyance: By Truck and Vessel
Point Of Entry: HAIPHONG PORT, VIETNAM

Country of Destination: VIETNAM

Contents of the Packages: 200 MT RAPE SEED CAKE

GROSS WT 200,400.00 KGS NET WT 200,000.00 KGS
Types of plants (fruits, seeds, rooted plants, etc)
Name of plants and varieties:
Botanical name (1): RICINUS COMMUNIS

Quantity (by variety if necessary):

Origin (2): ETHIOPIA

Certification Required
General Phytosanitary certificate (3) X
Additional Declarations (4)
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Treatments Required (4)

Place on 2014
Date& place agreed for this inspection (5)
Signature
Date
Note:
1. If requested by the importing country or deemed useful by the inspector
2. Place of production
3. FAO Model unless otherwise stated by the importing country
4. To be stated by the exporter, with the help of inspector in accordance with the regulations in
the
Importing country.
5. To be stated by the inspector, after agreement with the exporter
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

EXPORT

MINISTRY OF AGRICULTURE AND RURAL DEV’T

PLANT QUARANTINE SERVICE
(GOOD FOR INLAND PURPOSE ONLY)
TO: LAGAR Customs Office
ADDIS ABABA
This is to certify that plants, parts of plants or plant products described below or representative
sample of them were examined on by an
Authorized officer of the plant quarantine and were found to the best of his knowledge to be
substantially free from injurious diseases and pests and pests and
The consignment is recommended for release.
Chemical Treatment Carried Out
Date of Treatment Exposure time
Chemical and dosage rate
Servicing
Organization

Description of the Consignment

Name and address of Exporter SAMUEL LEMA GENERAL IMPORT AND EXPORT P.O.BOX; 29621,
ADDIS ABABA, ETHIOPIA

Name and address of Consignee: YEAB GENERAL TRADING FZE AJMAN, UAE

Number & Description of Packages 4,000 BAGS PACKING TO BE PACKED IN 50 KGS PP BAGS
SUITABLE FOR EXPORT
Distinguishing mark -

Origin: ETHIOPIA

Means of Conveyance: BY TRUCK AND VESSELE

Point of Entry HAIPHONG PORT, VIETNAM

Weight (net) and name of produce: 200 MT RAPE SEED CAKE

GROSS WT 200,400.00 KGS NET WT 200,000.00 KGS

St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

Botanical Name: RICINUS COMMUNIS

Notice:-
If the consignment is not shipped within 14 days of the date this certificate is issued it
Should be reinserted and certified again.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX29621TEL 251-11-284 44 09 251-11-1573792FAX-251-1567364 ADDIS ABABA, ETHIOPIA

REF. NO. EX05/PL/RSC/SAM/09 DATE: 26- MAR -2017

ORIGINAL
PACKING LIST
NAME AND ADDRESS OF APPLICANT : TIANJIN GUINEYU INTERNATIONAL TRADING CO., LTD 7-2-477, HAIFENG
LOGISTICS PARL NO.601LOUYANG ROAD, DONGJIANG FREE TRADE
PORT ZONE,
TIANJIN FREE TRADE ZONE, TIANJIN FREE TRADE ZONE, TIANJIN,
CHINA

CONTRACT NO. PC/495/ETH/YEA/2016-17 DATED 13.04.17

DESCRIPTION OF GOODS & / OR SERVICES COMMODITY: RAPE SEED MEAL

SPECIFICATIONS : MOISTURE-10% MAX,PROTEIN-36% MIN,FAT-9% MAX,ASH-10% MAX,SILICA/SAND-2%MAX.FREE FROM

MOLD,PESTICIDES,CASTOR/SUNFLOWER AND/OR HUSKS,OTHER FOREIGN SEEDS,UREA AND OTHER CHEMICALS
SUBSTANCES.
PACKING: TO BE PACKED IN 50 KGS PP BAGS SUITABLE FOR EXPORT

QUANTITY: 200 MTS

WEIGHT: NET WT፡ 200,000.00 KGS

GROSS WT: 200,400.00 KGS

NO.OF BAGS: 4,000 BAGS

GROSS AND NET WEIGHT OF EACH PACKAGE GROSS WT 50.10
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

NET WT 50.00
CONTAINERS: NO
1. PCIU2960567/X0522781 16.7 MTS 334 BAGS 17,134.20.00 KGS
2. PCIU1217520/X0522752 16.7 MTS 334 BAGS 17,134.20 KGS
3. PCIU1386496/X0522753 16.7 MTS 334 BAGS 17,134.20 KGS
4. PCIU1503376/X0522754 16.7 MTS 334 BAGS 17,134.20 KGS
5. PCIU2811440/X05222755 16.7 MTS 334 BAGS 17,134.20 KGS
6. PCIU1742895/X0522756 16.7 MTS 334 BAGS 17,134.20KGS
7. PCIU1104123/X052275716.7 MTS 334 BAGS 17,134.20 KGS
8. PCIU2866294/X052258 16.7 MTS 334 BAGS 17,134.20 KGS
9. PCIU2063820/X0520759 16.3 MTS 326 BAGS 17,134.20 KGS

PORT OF LOADING. DJIBOUTI PORT

PORT OF DISCHARGE XINGANG PORT, CHINA

CARRIER: KOTA CAHAYA CHY031E

DATE OF SHIPMENT 19 APR 2017 BILL NO. JIB790031200

BENEFICIARY NAME SAMUEL LEMA GENERAL IMPORT AND EXPORT P.O.BOX 29621 ADDIS ABABA, ETHIOPIA

SIGNITURE DATE
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX2900TEL 251-11-0000000000000 F AX251 10000000000000 ADDIS ABABA, ETHIOPIA

REF.NO. EX01/SI/SAM/09
DATE : 24-MAR-201

ORIGINAL

APPLICANT: CHINA NATIONAL CHEMICAL FIBER CORP.ADDRESS 23/F CHINA

GARMENTS MANSION NO.99 JIANGUO ROAD BEIJING 100020, CHINA

INLAND TRANSPORTION
CERTEFICATE
RE: 76 MTS ETHIOPIAN ORIGIN SESAME SEEDS
PER VESSEL: MAERSK SEMBAWANG 1704
B/L NO. 769545207

• WE CERTIFY THAT THE CARGOES HAVE BEEN TRANSPORTED INLAND

FROM ETHIOPIA TO DJIBOUTI FOR LOADING purpose.

BEST REGARDS

\
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX2900TEL 251-11-0000000000000 F AX251 10000000000000 ADDIS ABABA, ETHIOPIA

ORIGINAL
REF. NO. EX01/SI/SAM/09 DATE : 24-MAR-2017

TO: ETHIOPIAN CUSTOM AUTHORITY

ADDIS ABABA

APPLICANT: CHINA NATIONAL CHEMICAL FIBER CORP.ADDRESS 23/F CHINA

GARMENTS MANSION NO.99 JIANGUO ROAD BEIJING 100020, CHINA

TO WHOM IT MAY CONCERN

RE:76 MT (4X20FT CONTAINERS) OF ETHIOPIAN ORIGIN SESAME SEEDS SHIPPED PER VESSEL MAERSK
SEMBAWANG 1704 DATE 2017-03-23 UNDER B/LNO. 769545207 FROM DJIBOUTI PORT TO XINGANG
PORT, CHINA

WE CONFIRM THAT BECAUSE ETHIOPIA DOES NOT HAVE A SEA PORT, CARGO FOR EXPORT
IS LOADED FROM DJIBOUTI PORT AND
CERTIFIED ALL CARGO DID NOT ENTER FOR TRADING AND CONSUMPTION AND WAS NOT PROCESSED IN THE
THIRD CONTRY..
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

24-MAR-2017
no 01/09 USD 87,400.00
1ST PAID
SIGHT
At 2nd UNPAID
COMMERCIAL BANK OF ETHIOPIA, ADDIS ABABA ET

USD (USD EIGHTY SEVEN THUSEND FOUR HUNDRED ONLY)

DRAWN UNDER DOCUMENTARY CREDIT NO. LC11106B700527 DATED 170209

To INDUSTRIAL AND COMMERCIAL BANK OF CHINA (BEIJING MUNICIPAL BRANCH)

BEIJING CN

24-MAR-2017
01/09 USD 87,400.00
no
2ND PAID
At SIGHT
1ST UNPAID
COMMERCIAL BANK OF ETHIOPIA, ADDIS ABABA ET

USD (USD EIGHTY SEVEN THUSEND FOUR HUNDRED ONLY)

DRAWN UNDER DOCUMENTARY CREDIT NO. LC11106B700527 DATED 170209

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (BEIJING MUNICIPAL BRANCH)

To
BEIJING CN
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.

XYZ GENERAL IMPORT AND EXPORT

P.O.BOX2900TEL 251-11-0000000000000 F AX251 10000000000000 ADDIS ABABA, ETHIOPIA
REF. NO. EX01/SI/SAM/09 DATE: 24-MAR-2017

Commercial BANK OF ETHIOPIA, ADDIS ABABA BRANCH

Dear Sirs,

L/C NO. LC11106B700527 DATED 17 02 09 We have the pleasure in attaching herewith the following documents
covering the shipment of 1,520 bags /76,000 Kgs Net of 76MTS. ETHIOPIANORIGIN SESAME SEEDS
FROM DIIBOUTI PORT TO XINGANG PORT, CHINA per under the
Bill Of Loading No.769545207 DATED 2017-03-23

1. Commercial Invoice : 3 Original & 3 Copies

2. B/Loading (Full Set) : 3 Originals & 3 Non Negotiable Copies
3. Packing List : 2 Original & 1 Copies
4. Certificate OF QUANTITY/ WEIGHT : 1 Original & 1 Copies
5. Certificate OF Quality : 1 Original & 1 Copies
6. Certificate OF Phytosanitary : 1 Original & 1 Copies
7. Certificate OF Fumigation : 1 Original & 1 Copies
8. Customs Certificate : 1 Original
9. Certificate of Origin : 1 Original & 2 Copies
10. Inland Transportation Certificate : 2 Original& 2 Copies
11. Certificate OF Origin Duty-free treatment : 1 Original & 2 Copies
15. BANK PERMIT : 1 Copies

We hereby present full set of required documents along with negotiable B/Loading made out to your order.
We would, therefore, kindly request you to Collect 100% the proceeds to ourAccount No. 100000000000
and as soon as possible Thanking you in anticipation for your kind and early attention to this matter,
we remain

Sincerely Yours
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.
St. Mary’s University
Department of Marketing Management (2011EC) By. Girma W.