Course Code: AED - 01
Course Title: Export Procedures and
Documentation
Assignment Code: AED - 01/TMA/2014-15
Coverage: All Blocks
Attempt all the questions.
Q.No.1:- What is the Significance of
International Trade? Discuss the factors that motivate a firm to export.
Ans: Meaning
and Significance: International trade
allows us to expand our markets for both goods and services that otherwise may
not have been available to us. It is the reason why you can pick between a
Japanese, German or American car. As a result of international trade, the
market contains greater competition and therefore more competitive prices,
which brings a cheaper product home to the consumer.
International trade is the exchange of goods and
services between countries. This type of trade gives rise to a world economy,
in which prices, or supply and
demand, affect and are affected by global events. Political change in Asia, for
example, could result in an increase in the cost of labour, thereby increasing
the manufacturing costs for an American sneaker company based in Malaysia,
which would then result in an increase in the price that you have to pay to buy
the tennis shoes at your local mall. A decrease in the cost of labour, on the
other hand, would result in you having to pay less for your new shoes.
Trading globally gives consumers and countries the
opportunity to be exposed to goods and services not available in their own
countries. Almost every kind of product can be found on the international
market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and
water. Services are also traded: tourism, banking, consulting and
transportation. A product that is sold to the global market is an export, and a product that is bought from the global market
is an import. Imports and exports are accounted for in a country's current account in the
balance of payments.
Factors that motivate a firm to export
1.
Relative
Profitability: The rate of profit to be earned from export business
may be higher than the corresponding rate on the domestic sales.
2.
Insufficiency of
Domestic Demand: The level of domestic demand may be
insufficient for utilizing the installed capacity in full. Export
business offers a suitable mechanism for utilizing the unused
capacity. This will reduce costs and improve the
overall profitability of the firm. Recession in
the domestic market often serves as a stimulus to export ventures.
3.
Reducing business risks: When a firm is selling in a number of markets,
the downward fluctuations in sales in one market, which may be the domestic market,
may be fully or partly counter balanced by a rise in the sales in other markets.
Secondly, geographic diversification also provides the momentum to growth in as
much as a single or few markets will have only limited absorptive capacity.
4.
Legal restrictions: Governments may impose certain restrictions on furthergrowth
and capacity expansion of some firms within the domestic market in order to
achieve certain social objectives. But there may not be any such
restrictions, if the additional capacity is utilized
for exports. Then the firm may be tempted to export its products
abroad.
5.
Obtaining
imported inputs: Nations have to pay for imports of materials,
technology or processes not available within their national boundaries.
Governments, therefore, may be compelled to impose export obligations on the
firms, especially those in need of imported inputs. In other
words, in order to import, the firms will have to export.
6.
Social
responsibility: Sometimes businessmen themselves feel a sense of responsibility
and contribute towards the national exchequer by increasing their exports. They
also build up their image in domestic marketing by their export
activities. They also look at exporting to attain status and
prestige.
7.
Increased
productivity: Increased productivity is necessary for ultimate survival
of a firm. This will lead the firm to increase production and then move to
export business. To meet the increased costs of Research and
Development, larger markets become a necessity and exports become unavoidable.
8.
Technological
improvement: Entry to export market may enable a firm to pick up new
produce ideas and to add to product line, improve its product, reduce costs and
discover new applications for its product.
Q.No.2: Explain various kinds of
letters of credit in detail. Also discuss various documents required under
letters of credit.
COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE
MEMBERS ONLY.
BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF
Rs.300 ONLY.
SOME SOLVED QUESTION PAPERS
WILL ALSO BE PROVIDED.
FOR DETAILS CONTACT:
KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
CONTACT NO. 9577097967
Q.No.3: Describe various kinds of
perils against which insurance cover can be obtained.
Ans: Types of Perils which are covered under
Insurance
COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE
MEMBERS ONLY.
BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF
Rs.300 ONLY.
SOME SOLVED QUESTION PAPERS
WILL ALSO BE PROVIDED.
FOR DETAILS CONTACT:
KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
CONTACT NO. 9577097967
Q.No.4: Differentiate between: (10×2)
A). Liner Shipping Service and Tramp
Shipping Service.
Ans: Liner Shipping Service: A shipping company who transports goods in
containers by sea, with a fixed route and schedule (timetable), and with a high
level of cargo safety is called a Liner. This is similar to an air line or bus line
(service), on a route with fixed stopping’s as per predetermined timetable.
These services will continue to run irrespective of whether the airoplane/bus
is full or empty as they have to strictly keep their timings and route.
Similarly cargo liners too have to stick to the fixed schedule and route
irrespective of whether the vessel is full or not.
Tramp
Shipping Service: On the other hand, Tramp
shipping is irregular shipping, mainly over nonstandard routes, with no
definite schedule. Tramp ships are used to transport bulk cargoes and
break-bulk cargoes of low value that do not require fast delivery. The
transportation of cargoes that are picked up or dropped off along the way plays
a large role in tramp shipping. Tramp ships are slow and can transport a
variety of cargoes. Specialized types of dry-cargo, liquid-cargo, and
mixed-cargo ships are also used in tramp shipping. Tramp shipping plays an
important role in the foreign trade of the capitalist countries.
Today, the tramp trade includes all types of vessels,
from bulk carriers to tankers. Each can be used for a specific market, or ships
can be combined like the oil, bulk, ore carriers to accommodate many different
markets depending where the ship is located and the supply and demand of the
area. Tramp ships often carry with them their own gear (booms, cranes,
derricks) in case the next port lacks the proper equipment for loading or
discharging cargo.
From the above explanation, we got the following
difference between Liner Service and Tramp Service: Liner service is a service
that operates within a schedule and has a fixed port rotation with published
dates of calls at the advertised ports. A liner service generally fulfills the
schedule unless in cases where a call at one of the ports has been unduly
delayed due to natural or man-mad causes while a Tramp Service or tramper on
the other hand is a ship that has no fixed routing or itinerary or schedule and
is available at short notice or fixture to load any cargo from any port to any port.
One of the main differences between Liner and Tramp would be in the type of
contract of carriage and Bill of Lading used. In the case of a Liner, generally
the shipping line operating the liner service will have their own pre-printed
bill of lading , whereas in the case of a Tramp service (which may
be covered by a Charter Party), a bill of lading like
the BIMCO CONGENBILL 2007 will be used depending on the
cargo, charter party etc..
b) Fiscal Incentives and Financial Incentives.
COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE
MEMBERS ONLY.
BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF
Rs.300 ONLY.
SOME SOLVED QUESTION PAPERS
WILL ALSO BE PROVIDED.
FOR DETAILS CONTACT:
KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
CONTACT NO. 9577097967
Q.No. 5: Write short notes on the
following: (5×4).
a) Duty Drawback Scheme
Ans: The
duty drawback scheme enables exporting companies to obtain a refund of Customs
duty paid on imported goods where those goods will have undergone production,
mixing, assembling, or packing and then exported to a foreign port. Only the
person who is the legal owner of the goods at the time the goods are exported,
or a person to whom this right has been assigned, is eligible to make a claim
for duty drawback.
According to the Revised Kyoto Convention, the term
“drawback” means the amount of import duties and taxes repaid under the
drawback procedure.
Duty drawback is provided under Section 19 of
the Customs Act (No.9) B.E. 2482. It means the refund of import duty already
paid or the return of guarantee placed on imports which have undergone
production, mixing, assembling, or packing and then exported to a foreign port
or as stores for use on board a ship proceeding to a foreign port within one
(1) year from the date of importation.
b) India Trade Promotion Organisation
(ITPO).
COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE
MEMBERS ONLY.
BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF
Rs.300 ONLY.
SOME SOLVED QUESTION PAPERS
WILL ALSO BE PROVIDED.
FOR DETAILS CONTACT:
KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
CONTACT NO. 9577097967
c) Voyage Charter.
COMPLETE SOLVED ASSIGNMENTS ARE AVAILABLE FOR ONLINE
MEMBERS ONLY.
BECOME ONLINE LEARNING MEMBER BY PAYING A NOMINAL FEE OF
Rs.300 ONLY.
SOME SOLVED QUESTION PAPERS
WILL ALSO BE PROVIDED.
FOR DETAILS CONTACT:
KUMAR NIRMAL PRASAD, TINSUKIA (ASSAM)
CONTACT NO. 9577097967
d) International Arbitration.
Ans: International
arbitration is a leading method for
resolving disputes arising from
international commercial agreements and other international relationships.
International arbitration has enjoyed growing popularity with business and
other users over the past 50 years. There are a number of reasons that parties
elect to have their international disputes resolved through arbitration. These
include the desire to avoid the uncertainties and local practices associated
with litigation in national courts, the desire to obtain a quicker, more
efficient decision, the relative enforceability of arbitration agreements and
arbitral awards (as contrasted with forum selection clauses and national court
judgments), the commercial expertise of arbitrators, the parties' freedom to
select and design the arbitral procedures, confidentiality and other benefits.
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