An exporter planning a sale to a foreign buyer must examine the export restrictions of the home country as well as the import restrictions and regulations of the importing country. Although the responsibility of import restrictions may rest with the importer, the exporter does not want to ship goods until it is certain that all import regulations of the destination country have been met. Goods arriving without proper documentation can be denied entry and returned to the shipper.
Besides import tariffs, many other trade restrictions are imposed by foreign countries. A few example from the 30 basic barriers to exporting considered important by Business International include import licenses quotas and other quantitative restrictions and allocation of exchange at unfavorable rates on payments for imports; devaluation prohibitive prior import deposits prohibition of collection basis sales, and insistence on cash letters of credit’ arbitrarily short periods in which to apply for import licenses and delays resulting form pressure on overworked officials or from competitor’s influences on susceptible officials
Trading with the European Union from outside the European Union or within member states an exporter continues to be confronted with market barriers that have yet to be eliminated. One study of 20,000 EU exporting firms indicated that the most troublesome barriers were administrative roadblocks, border crossing delays and capital controls. The French government imposed one such barrier against Japanese VCRs. All Japanese VCRs were directed to land only at one port, where only one inspector was employed; hence just 10 to 12 VCRs could enter France each day. Generally such barriers are challenged and ultimately dropped. As the European Union becomes more fully integrated many of the barriers that exist member countries will be eliminated although not as rapidly as some expect.
The most frequently encountered trade restrictions besides tariffs, are such non tariff barriers (NTBs) as exchange permits, quotas import licenses standards boycotts and voluntary agreements.
Recall that tariffs are the taxes or customs duties levied against goods imported from anther country. All countries have tariffs for the purpose of raising revenue and protecting homes industries from competition with foreign produced goods. Tariff rates are based on value or quantity or a combination of both, In the United States for example, the types of customs duties used are classified as follows (1) ad valorem duties, which are base on percentage of the determined value of the imported goods, (2) specific duties, a stipulated amount per unit weight or some other measure of quantity and (3) a compound duty, which combines both specific and ad valorem taxes on a particular item, that is, a tax per pound plus a percentage of value Because tariffs frequently change published tariff schedules for every country are available to the exporter on a current basis.
Especially troublesome to exporters are exchange restrictions placed on the flow of currency by some foreign countries. To conserve foreign exchange and alleviate balance of payments difficulties many countries impose restrictions on the amount of their currency they will exchange for the currency of another country – in effect they ration the amount of currency available to pay for imports. Exchange controls may be applied in general to all commodities or a country may employ a system of multiple exchange rates based on the type of import. Essential products might have a very favorable exchange rate, while nonessentials or luxuries would have a less favorable arte of exchange South Africa for example has a two tier system for foreign exchange : Commercial Rand and Financial and. At times, may not issue any exchange permits for certain classes of commodities.
In countries that use exchange controls, the usual procedure is for the importer to apply to the control agency of the importing country for an import permit; if the control agency approves the request an import license is issued. On presentation to the proper government agency the import license can be used to have local currency of the seller.