U S Commercial Service Top 11 Factors to

U. S. Commercial Service Top 11 Factors to Consider When Entering Foreign Markets for “Exports, the New Buzz” May 15, 2008

An Overview • Export Classification Code • Export Licensing • Foreign Language Marketing • Channels of Distribution • Export Pricing & Payment • • • Incoterms Marking and Labeling Standards Documentation Foreign Corrupt Practices Act • Intellectual Property

1. Schedule B Export Classification Code • Look up code on http: //www. census. gov/foreigntrade/schedules/b/index. html or ask freight forwarder • 10 digits for Census purposes, 6 for worldwide duty rates • Use code to locate top export markets (http: //dataweb. usitc. gov/scripts/user_set. asp) • Shipper’s Export Declaration (SED) over $2500 • SED internet filing: www. aesdirect. gov • Call 1 -800 -USA-Trade to determine duty rate

2. Export Administration Regulations/Licensing • Compliance is crucial • Review Commerce Control List/Country Chart • Export Commodity Control Number (ECCN) – different from Schedule B • “Know your customer” and use the “Lists to Check” – Entity List, Denied Persons, Specially Designated Nationals, etc. • Be wary of “Deemed exports” • Watch out for “RED FLAGS” • Bureau of Industrial Security (www. bis. doc. gov)

3. Foreign Language Marketing • Keep English language materials short and to the point – Provide conversion to metrics • Have your materials translated – If you have a good agent/distributor, they should assist in translation to avoid local variations – Written in local terminology and dialect

4. Channels of Distribution • Choose the right partner the first time – Ask for references/Conduct background check • Make sure you know the agent termination laws; Consult attorney – Even if you do not sign a contract, you may have locked into an agreement that you can’t get out of – Termination may be costly and time consuming • Your int’l banker and U. S. Commercial Service can provide guidance and conduct background checks (ICP) • U. S Commercial Service can help in your initial

5. Export Pricing & Payment Terms • Cash in Advance is the NOT the standard • L/Cs may be secure, but they are expensive • Offering Favorable Payment Terms will increase your competitiveness (EXIM Export Credit Insurance) • Remember to discount for your agent’s/distributor’s profit margin

6. Shipping Terms & Incoterms 2000 • FOB Factory under US law does not mean the same under ICC law. – FOB, FAS, CFR, CIF, DES, DEQ are all vessel ONLY – www. iccwbo. org/incoterms – Incoterms do not assign title or ownership – They assign responsibility and liability

7. Marking & Labeling • Country of Origin (“Made in USA”) • Weight marking (in pounds and in kilograms) • Number of packages and size of cases (in inches and centimeters) • Handling Marks (int’l pictorial symbols) • Cautionary markings, such as “This Side Up” (in English and the language of the country of destination) • Port of Entry

8. Standards • US standards are NOT universally accepted • May need to register with Foreign Ministries (i. e. Ministry of Health); Good importer can assist. • Various Foreign government/industry standards – CE Mark (“European Passport” to trade) more info at: www. export. gov/cemark – CCC (China)

9. Documentation • Every country has different requirements – Certificates of Origin (NAFTA, Chile, Australia, Israel, Jordan, Singapore, Morocco) – Canada Customs Invoice – Authentication of documents (Middle East) • Softwood packaging requirements • ATA Carnet - temporary exports (i. e. trade shows)

10. Foreign Corrupt Practices Act & Anti-Boycott FCPA • It may be a tax write off in another country, but it is still illegal for US companies – There is a provision for “facilitating payments for routine governmental action” Anti-Boycott • You can NOT participate in foreign boycotts and must report any requests (i. e. Israel)

11. Intellectual Property • IP is territorial -U. S. patents, trademarks and copyrights only good in the U. S. • Analyze IP and determine which is critical • Develop strategy to protect your IP • Consider international filings • American Bar Association has free 1 hour consultations on IP for China • www. stopfakes. gov

SERVICES EXPORTS • Travel and Tourism • Transportation Services • Architecture Construction and Engineering • Education and Training • Banking, Financial and Insurance • Entertainment • Information Services • Professional Business Services

CHALLENGES • Intangibility-communicating a service offer is much harder than a product offer • Customer involvement-service needs to be tailored to customer needs, requiring direct customer participation • Greater cultural sensitivity is required • No collateral makes financing more difficult

MARKETING STRATEGIES • Follow the path of complementary product exports • Service support for U. S. clients operating internationally, such as manufacturers • Seek affiliation with foreign firm in your market segment- agent, representative or joint venture. • The Commerce Department can help you find these agents and partners.

How to contact us Shakir Farsakh, Director Long Island U. S. Export Assistance Center Tel: 646 -722 -0182 Email: Shakir. Farsakh@mail. doc. gov Jonathan Heimer, Commercial Officer Tel: 631 -935 -2388 Email: Jonathan. Heimer@mail. doc. gov www. buy. USA. gov/longislandwww. export. gov