Importation of goods

Part I

Businessmen import goods they cannot obtain locally, especially when there is a demand for them. They will check the price, quality and the speed with which they can be imported. Several businessmen may import the same goods if the demand is great. For example, sugar is widely used in the bakeries, confectionaries and homes. Therefore many businessmen will be keen to import sugar to meet the demand. This will result in competition among them when they try to sell their goods.

First the local importer will have to find a foreign supplier. He will then place an order by letter. The order will mention the quantity, quality, price and the time within which supply is required. When the supplier and importer are agreed on the details of the order, payment will be made.

This can be done in many ways. The importer may establish a credit in favour of his supplier by a Letter of Credit (L/C). The supplier will have to provide a Bill of Lading, an invoice and sometimes an insurance certificate to the bank representing the importer’s interests. If the documents are in order, he will be paid.

The Bill of Lading is a document issued by the owner of the ship to the supplier. It is the proof that the goods mentioned in it have been received on board the ship. It will name the importer as the owner of the goods.

The bank in the supplier’s country will post the documents to the importer’s bank. The importer obtains the documents and arranges with his transport company to collect the goods from the ship’s nearest port of call. The payment of customs duties will have to be made by the importer. He will also have to apply for import permits and where applicable, licences for the goods imported.

Vocabulary

Part II

local (n) demand to check quality quantity speed bakery keen competition foreign supplier order telegram telex detail Letter of Credit representative to provide Bill of Lading invoice call (at a port) insurance certificate to issue on board to mention owner document Customs duty Licence

an inhabitant who is not a foreigner. the ability and desire to buy goods or services. to examine to find out whether something is correct. goodness. amount, e.g. size, weight, number. swiftness. the place where bread is baked. eager to do something. the activity in which people seek more for themselves. of another country. a person who sells goods to another. the request to supply goods. a message sent by a telegraph machine. the system of sending messages by using a teleprinting machine. a small fact. the document permitting a bank to pay the money of its client to a supplier of goods, usually in another country. a person appointed to act for another. to supply. a document used in foreign trade. It is a receipt for goods shipped. The person to whom it is addressed becomes the owner of the goods. an addressed list of goods sold with their prices. a visit by a ship. the undertaking by a company to safeguard the sender of goods against loss by storm, theft, fire ect. in return for regular payments. a printed statement given by somebody in authority, that may be used as a proof of something one possesses, e.g. property. to give. inside a ship, a plane etc. to refer to. a person who has a right to something. something written or printed used as evidence. a tax due to the government on goods imported into a country. a written permission from a government to do something, e.g. to import a certain category of goods.

Explanations

Part III

1. Competition. This word is used to describe the environment in which production and distribution of goods are carried on. Suppliers compete with each other to sell more. Competition among them acts as a spur to efficiency. It lowers prices for customers.

2. Letter of Credit. This is a document instructing a bank to pay the bearer a sum of money. It is a convenient means of settlement for goods bought from foreign suppliers. The buyer establishes credit in favour of the supplier at the bank. Payment involves two banks, one – the buyer’s and the other – the supplier’s in his country. A Confirmed or Irrevocable Letter of Credit cannot be cancelled by the buyer. It is confirmed for payment by the paying bank. An Unconfirmed or Revocable Letter of Credit can be cancelled at any time.

3. Bill of Lading. This is a document, usually prepared in triplicate, that lists and acknowledges receipt of goods for shipment. It will give the name of the ship and full details about the goods. It gives the right to the holder to take possession of the goods mentioned in it. One copy of the bill is retained by the exporter, another is handed to the Master of the Ship and the third is posted to the importer. If advance payment has not been made for the goods, the importer’s copy will be sent to him through the exporter’s bank. The importer will pay the bank and obtain the document. He will then be in a position to collect the goods when the ship arrives.

4. Invoice. This is a document used in business to give a summary of the details relating to a sale. It will list the goods bought and provides the details such as quantity, quality, price, discount, terms of delivery and terms of payment.

5. Customs duties. These are taxes on imported goods. In many countries a large part of the national revenue comes from customs duties. Taxes on goods produced within the country are called excise duties.

6. Import permit. This document is sometimes called an inward declaration. An importer is required to state the details of his import in it. A description of the goods, quantity, value etc. will be revealed. This information is used for compiling trade statistics. For exports an export permit (outward declaration) is required.

7. Licence. The import of certain goods is controlled by quotas. This measure is often taken to protect goods produced by local industries. Importers are issued licences, usually valid for one year, showing the quantity of goods they are permitted to import.

8. Port of call. It is a port a ship visits for a short time.

Exercises

1. Answer the following questions.

1. What are the conditions under which businessmen import goods?

2. What will businessmen check before ordering goods?

3. What will an importer have to do first of all before importing goods?

4. When will the importer make payment?

5. What import documents will the importer have to apply for?

2. Give the meanings of the following words.

1. Keen. 2. Invoice. 3. Licence. 4. Order. 5. To check.

3. Give the word that fits the description.

1. The activity in which people seek more for themselves.

2. A person appointed to act for another.

3. A person who sells goods to another.

4. The ability and desire to buy goods or services.

5. Of another country.

4. Make disjunctive questions using these sentences.

1. Sugar is widely used in the bakeries.

2. Many businessmen will be keen to import sugar to meet the demand.

3. The documents are in order.

4. The buyer establishes credit in favour of the supplier at the bank.

5. Say whether the statements are true or false.

1. Competition increases prices for customers.

2. An Unconfirmed Letter of Credit can be cancelled at any time.

3. Taxes on goods produced within the country are called customs duties.

4. A port of call is a port where a ship stays for a long time.

5. The import of certain goods is controlled by quotas.

Conversation about importation

Part I

Mr Robin. Mr Smith, I’ll be much obliged if you explain how goods are imported.

Mr Smith. Certainly, first the importer must decide what he wants.

Mr Robin. Let’s assume he wants to import sugar.

Mr Smith. He will have to find a supplier.

Mr Robin. What will he do next?

Mr Smith. He will have to state the details of his order to the supplier.

Mr Robin. What are these details?

Mr Smith. They will include the price, quality, quantity and the time within which delivery will be required.

Mr Robin. Why are these details important?

Mr Smith. They ensure that the importer gets the goods he wants at the right time.

Mr Robin. How will firm arrangements be made?

Mr Smith. The importer and the supplier will write to each other.

Mr Robin. Won’t this take too long?

Mr Smith. It won’t. They can also send messages by telegram or telex.

Mr Robin. What is the next step?

Mr Smith. Arrangements will have to be made for payment.

Mr Robin. How is this done?

Mr Smith. The importer will ask his bank to establish a Letter of Credit in

the name of the supplier.

Mr Robin. Could you explain this?

Mr Smith. It is a service by which a bank will pay the supplier on behalf of

the importer.

Mr Robin. Whom does the bank represent?

Mr Smith. It represents the importer.

Mr Robin. What does it do?

Mr Smith. It receives money from the importer and pays it to his foreign

supplier.

Mr Robin. Are there any safeguards for the importer?

Mr Smith. Yes, his bank will pay the foreign supplier only when it receives

from him the Bill of Lading for the goods on board a ship.

Mr Robin. How does this protect the importer?

Mr Smith. The document proves the existence of the goods and names

the importer as the owner.