Management CH 4 - Management 301 with Mccallister at University of Nevada-Las Vegas - StudyBlue One advantage of small companies over large ones is the former's ability to change direction faster True The international Red Cross is an example of a multinational organization. True Ethnocentrism is a form of parochialism. True Global outsourcing is defined as using suppliers outside the home country to provide labor, goods, or services. True If you can describe a job precisely, or write rules for doing it, it is protected against offshoring. False An import quota is a trade barrier in the form of a customs duty, or tax, levied mainly on imports. False The organization that assists in smoothing the flow of money between nations is the World Bank. False; The International Monetary Fund (IMF) is designed to assist in smoothing the flow of money between nations. Canada is part of NAFTA True Knowing the cultural tendencies of foreign business partners and competitors can give you a strategic competitive advantage. True The trend of the world economy toward becoming a more interdependent system is called Globaization Which of the following is a negative effect for the U.S. of global economic interdependency? Loss of well-paying jobs.

Ethnocentrism among international managers has been linked to recruitment difficulties for foreign subsidiaries A company that is producing good domestically and sells them outside the county is involved in exporting Pizza Hut provides the use of its name plus operating know-how to companies in Costa Rica in return for a fee plus a percentage of profits. Pizza Hut is franchising The movement of good and services among nations without political or economic obstruction is called free trade The EU has recently agreed to cut the taxes it charges on bananas imported from Central and South America. This tax is a type of tariff Kendall was feeling very uncomfortable and disoriented since she arrived for her new job in Bangkok. It seemed like just about everything was different than what she was used to. Kendall was experiencing culture shock In a(n) ______, shared meanings are primarily derived from written and spoken words rather than situational cues. low-context culture; A person from North America, Great Britain, Scandinavia, Germany, or Switzerland, for example, comes from a low-context culture in which shared meanings are primarily derived from written and spoken words. ______ means that people accept inequality in power among people, institutions, and organizations.

high power distance; High power distance, such as occurs in Mexico, India, Thailand, Panama, and the Philippines, means that people accept inequality in power among people, institutions, and organizations. When conducting business in English in Asia, if the answer to a question is "yes", one should assume that means "the question is understood" Megan, a native of New York, was living in London and working for a news magazine. Megan is what is known as a(n) Expatriate If your Chinese coworker in Hong Kong tells you that you have gained weight, you should interpret this comment as Friendliness Which of the following countries is a member of Mercosur? Argentina; The Mercosur is the largest trade bloc in Latin America and has 10 members—Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Chile, Colombia, Ecuador, and Peru. Leah runs a small handmade custom card business, and has recently put up a website. What advantage does her business have over larger competitors? It can change direction quicker. Holly is a seasoned American manager, currently working in South Korea.

She has noticed that some of her management techniques work well in her overseas position, but sometimes she finds it more effective to defer to the practices of her Korean counterparts. Holly can be described as a(n) ______ manager. Geocentric; Geocentric managers accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective. When a government uses measures like tariffs and import quotas, it is called Trade protectionism. If The Gap provides the use of its name plus its operating know-how to companies in Turkey in return for an upfront fee plus a percentage of the profits, The Gap would be participating in franchising. True. In polychronic time, time is viewed as being flexible and multidimensional. True. The purpose of granting "most favored nation" status to another country is to promote tourism. False; Most favored nation trading status describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties. The purpose is to promote stronger and more stable ties between companies in the two countries. According to technology philosopher Nicholas Negroponte, the global market driven by electronic information results in an increase of minifirms and megamergers.

It is rare for Jason to deviate from the practices he has always used as a U.S. manager, even though he is now working at an African subsidiary. He says, to use his words, that he is "just ensuring the job gets done right". Jason is most likely a(n) ______ manager. Ethnocentric A wholly-owned subsidiary is the global expansion strategy with the highest risk and investment. True; a wholly-owned subsidiary is the global expansion strategy with the highest risk and investment. Which of the following is a way to become a world citizen? Learn rituals of respect. Which of the following organizations succeeded GATT? World Trade Organization; WTO succeeded GATT as the world forum for trade negotiations and has the formal legal structure for deciding trade disputes. A narrow view in which people see things solely through their own perspective is known as Parochialism; Parochialism is a narrow view in which people see things solely through their own perspective. When Dupont agrees to let a Brazilian company make its product Teflon, the non-stick coating, for a fee it is called franchising. False; In licensing, a company allows a foreign company to pay it a fee to make or distribute the first company's product or service.

For example, the DuPont chemical company might license a company in Brazil to make Teflon, the nonstick substance that is found on some frying pans. Great Challenge is a nonprofit organization that assists several African nations with large infrastructure development projects. Great Challenge is a(n) multinational organization. A duty imposed on imported goods designed simply to raise money for the government in known as a(n) revenue tariff. Import quotas are designed to prevent dumping; Quotas are designed to prevent dumping, the practice of a foreign company's exporting products abroad at a lower price than the price in the home market—or even below the costs of production—in order to drive down the price of the domestic product. Countertrading refers to a company producing goods domestically and selling them outside the company. False; When exporting, a company produces goods domestically and sells them outside the country. Countertrading is bartering goods for goods. A revenue tariff is designed to protect domestic products from foreign imports by raising the price of the latter. False; There are two types of tariffs: One is designed simply to raise money for the government (revenue tariff). The other, is to raise the price of imported goods to make the prices of domestic products more competitive (protective tariff).

When examining the dimensions of Hofstede's model, which of the following is true of the U.S.? High individualism Which form of technology was exploding when the notion of a "global village" was first developed? television. A multinational corporation is a nonprofit organization with operations in several countries. False When a company uses a supplier outside itself to provide goods and services, it is outsourcing. Great communications systems have been a hallmark of great organizations. True. A greenfield venture is a foreign subsidiary created to exploit previously untapped natural resources in another country. False Ethnocentric policies have been linked to recruiting difficulties and high turnover. True Managers who take the view that native managers in foreign offices best understand native personnel and practices, and so the home office should leave them alone, are called polycentric managers. True When U.S. airlines use other U.S. companies to perform their aircraft maintenance functions it is known as outsourcing. True The government has certified that more than a half million U.S. workers have lost their jobs or had their hours or wages reduced as a result of NAFTA The __________ is the rate at which one country's currency can be exchanged for another country's currency.

exchange rate General Motors working with Shanghai Automotive Industry Group to build Buicks in China is an example of a strategic alliance. True In China, it is permissible for office colleagues to inquire about the size of your apartment and your salary. True FedEx - Customs documentation guide - Understanding Duties and Taxes Customs Documentation > Understanding Duties and Taxes Understanding Duties and Taxes It is important to consider the effects of duties, taxes, port handling fees and other customs charges when determining your shipment's total shipping charges. Depending on the content of your shipment and the destination country, customs charges will affect the price the recipient is willing to pay for your product. Being able to calculate and communicate the "landed" cost upfront can often save both you and the recipient valuable time and money. Almost all shipments crossing international borders are subject to the assessment of duties and taxes imposed by the importing country's government. Duties and taxes are imposed to generate revenue, protect local industries against foreign competition or both. The duties and taxes normally must be paid before the goods are released from customs.

A shipment's duty and tax amount may be based on: Product value Use of the product The product's Harmonized System (HS) code Customs officials assess duties and taxes based on information provided on the air waybill, the Commercial Invoice and other relevant documents. Please note: As per the contract of carriage with FedEx®, the shipper is ultimately liable for any duties and taxes assessed on the shipment. If the recipient refuses the package or the recipient or third party FedEx account holder refuses to pay for duties and taxes, the original shipper will be billed for duties and taxes. Commodity Descriptions and Duties and Taxes Provide an accurate description of your shipment contents Duties and taxes, and other customs fees may be assessed based on the contents of your shipment. Accurate descriptions of shipment contents are not only required for this purpose, but are essential for timely customs clearance. A consistent and detailed description of your shipment contents on all documents will help reduce customs delays. Tariff tables are based primarily on three factors, so ensure that all three are clearly addressed in your commodity description: What is it? What is it made from? What is the intended use? Be specific.

"Metal parts for hydraulic valves" is better than "machine tools." Also, use generic names, in addition to trade names. Poor description: "Parts" Good description: "Two steel springs for woodworking machine" Including the product's Harmonized System (HS) code will further help customs officials properly assess your shipment and move it through the customs clearance process more quickly. Value-added Tax (VAT) or Goods and Services Tax (GST) A VAT is a general consumption tax assessed on the value added to goods and services. In some countries, including Singapore, Australia, New Zealand and Canada, this tax is known as goods and services tax or GST. Because this is a tax on consumer expenditure, businesses that are VAT-registered and fully taxable do not bear the final costs of VAT. Every member state of the European Union (EU) has a VAT. A VAT is typically assessed on the "duty paid value" of the goods (which equals the cost of the goods, insurance and freight (CIF) plus duty). To see EU-specific VAT rates, please visit the International Trade Administration website . Paying Duties and Taxes FedEx® Advancement Fee: In some circumstances FedEx is required to pay certain duties and taxes in advance on our customers' behalf.

For instance, FedEx may pay an advancement fee when countries require that duties and taxes be paid prior to customs' release or prior to certain items clearing customs. In these circumstances FedEx will assess an Advancement Fee surcharge that will be billed to the party designated to pay duties and taxes. Responsible Party: Duties and taxes on international shipments will be billed automatically to the recipient, unless the shipper requests that FedEx bill the shipper or a third party. When completing the FedEx International air waybill or FedEx Expanded Service International air waybill, you can select the shipper, the recipient or a third party as the party responsible for payment. Non-FedEx Account Holders: Prepayment of duties and taxes before release to the recipient may be required if the recipient does not have a valid FedEx account number or a FedEx account in good credit or standing. Shipments will be held at the destination station until payment arrangements are made or the FedEx Credit department has authorized release of the shipment. Customs tariff - definition of Customs tariff by The Free Dictionary Customs tariff - definition of Customs tariff by The Free Dictionary n. 1. a. A list or system of duties imposed by a government on imported or exported goods. b. A duty or duties so imposed. 2.

A schedule of prices or fees. tr.v. tar·iffed, tar·iff·ing, tar·iffs To fix a duty or price on. [Italian tariffa, from Old Italian, from Arabic ta'rīf, notification, infinitive of 'arrafa, to announce, derived stem of 'arafa, to know; see ʕrp in the Appendix of Semitic roots.] tariff n 1. (Government, Politics & Diplomacy) a. a tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue b. a system or list of such taxes 2. any schedule of prices, fees, fares, etc 3. (Economics) chiefly a. a method of charging for the supply of services, esp public services, such as gas and electricity: block tariff. b. a schedule of such charges 4. (Commerce) chiefly Brit a bill of fare with prices listed; menu 5. (Law) Brit the level of punishment imposed for a criminal offence vb (tr) 6. (Economics) to set a tariff on 7.

(Economics) to set a price on according to a schedule of tariffs [C16: from Italian tariffa, from Arabic ta'rīfa to inform] ˈtariffless adj [ˈtærɪf] n (price list) → tariffa ; (tax) → tariffa doganale , dazio tariff (ˈtӕrif) noun 1. a list of prices or charges eg in a hotel. A copy of the tariff is placed in each bedroom.

tarief تَعْرِفَة الأسْعار ценоразпис tabela de preços ceník das Preisverzeichnis prisliste; takst τιμολόγιο lista de precios hinnakiri فهرست قیمت ها hinnasto tableau des prix תעריף शुल्क-सूची tarifa, cjenik díjszabás tarif verðskrá tariffa 料金表 계산서 kainoraštis cenrādis senarai tarif prijslijst prisliste , takst cennik tabela de preços tarif, listă de preţuri прейскурант cenník cenik tarifa prislista รายการค่าธรรมเนียม fiyat listesi 收費表 прейскурант مينو، نرخ نامہ bảng giá 收费表，价目表 2. (a list of) taxes to be paid on imported or exported goods. the customs tariff.

aksyns تَعْريفَه جُمْرُكِيَّه мита tarifa celní sazebník der Zolltarif importafgift; told δασμολόγιο arancel toll تعرفه گمرکی tullitariffi tarif(s) douanier(s) רְשִימַת מִסֵי מֶכֶס पर शुल्क, शुल्क pristojba (vám)tarifa pajak tollskrá tariffa 関税 관세 tarifas tarifs tarif tarief toll opłaty celne, taryfa celna tarifa taxă (va­mală) пошлина colný sadzobník carinska pristojbina tarifa tariff พิกัดอัตราภาษีศุลกากร gümrük vergisi 關稅表 тариф فہرست محصولات thuế xuất nhập khẩu 关税表 tariff Tariff - definition of tariff by The Free Dictionary Tariff - definition of tariff by The Free Dictionary n.

1. a. A list or system of duties imposed by a government on imported or exported goods. b. A duty or duties so imposed. 2. A schedule of prices or fees. tr.v. tar·iffed, tar·iff·ing, tar·iffs To fix a duty or price on. [Italian tariffa, from Old Italian, from Arabic ta'rīf, notification, infinitive of 'arrafa, to announce, derived stem of 'arafa, to know; see ʕrp in the Appendix of Semitic roots.] tariff n 1. (Government, Politics & Diplomacy) a. a tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue b. a system or list of such taxes 2. any schedule of prices, fees, fares, etc 3. (Economics) chiefly a. a method of charging for the supply of services, esp public services, such as gas and electricity: block tariff. b. a schedule of such charges 4. (Commerce) chiefly Brit a bill of fare with prices listed; menu 5.

(Law) Brit the level of punishment imposed for a criminal offence vb (tr) 6. (Economics) to set a tariff on 7. (Economics) to set a price on according to a schedule of tariffs [C16: from Italian tariffa, from Arabic ta'rīfa to inform] ˈtariffless adj [ˈtærɪf] n (price list) → tariffa ; (tax) → tariffa doganale , dazio tariff (ˈtӕrif) noun 1. a list of prices or charges eg in a hotel. A copy of the tariff is placed in each bedroom.

tarief تَعْرِفَة الأسْعار ценоразпис tabela de preços ceník das Preisverzeichnis prisliste; takst τιμολόγιο lista de precios hinnakiri فهرست قیمت ها hinnasto tableau des prix תעריף शुल्क-सूची tarifa, cjenik díjszabás tarif verðskrá tariffa 料金表 계산서 kainoraštis cenrādis senarai tarif prijslijst prisliste , takst cennik tabela de preços tarif, listă de preţuri прейскурант cenník cenik tarifa prislista รายการค่าธรรมเนียม fiyat listesi 收費表 прейскурант مينو، نرخ نامہ bảng giá 收费表，价目表 2. (a list of) taxes to be paid on imported or exported goods. the customs tariff.

aksyns تَعْريفَه جُمْرُكِيَّه мита tarifa celní sazebník der Zolltarif importafgift; told δασμολόγιο arancel toll تعرفه گمرکی tullitariffi tarif(s) douanier(s) רְשִימַת מִסֵי מֶכֶס पर शुल्क, शुल्क pristojba (vám)tarifa pajak tollskrá tariffa 関税 관세 tarifas tarifs tarif tarief toll opłaty celne, taryfa celna tarifa taxă (va­mală) пошлина colný sadzobník carinska pristojbina tarifa tariff พิกัดอัตราภาษีศุลกากร gümrük vergisi 關稅表 тариф فہرست محصولات thuế xuất nhập khẩu 关税表 tariff Tariff | Define Tariff at Dictionary.com tariff noun 1.

an official list or table showing the duties or customs imposed by a government on imports or exports. 2. the schedule or system of duties so imposed. 3. any duty or rate of duty in such a list or schedule. 4. any table of charges, as of a railroad, bus line, etc. 5. to subject to a tariff. 7. to put a valuation on according to a tariff. Origin of tariff 1585-95; earlier tariffa < Italian < Arabic taʿrīfah, derivative of ʿarrafa to make known Related forms retariff, verb (used with object) Dictionary.com Unabridged Examples from the Web for tariff Expand Contemporary Examples Everybody knows how the tariff and Labour questions were settled. The New Nation Frederic L. Paxson Mr. Bright had the patent evidence all around him of the misery which the inequitable adjustment of the tariff had created. The New Nation Frederic L. Paxson The alleged ground of her quarrel was the high rates of the tariff imposed by Congress upon imports. British Dictionary definitions for tariff Expand noun 1.

a tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue a system or list of such taxes 2. any schedule of prices, fees, fares, etc 3. (mainly Brit) a method of charging for the supply of services, esp public services, such as gas and electricity: block tariff a schedule of such charges 4. (mainly Brit) a bill of fare with prices listed; menu 5. (Brit) the level of punishment imposed for a criminal offence verb (transitive) to set a tariff on 7. to set a price on according to a schedule of tariffs Derived Forms C16: from Italian tariffa, from Arabic ta`rīfa to inform Collins English Dictionary - Complete & Unabridged 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012 Word Origin and History for tariff Expand n.

1590s, "arithmetical table," from Italian tariffa, Medieval Latin tarifa "list of prices, book of rates," from Arabic ta'rif "information, notification, inventory of fees to be paid," verbal noun from arafa "to make known." Meaning "official list of customs duties on imports or exports" is from 1590s; sense of "classified list of charges made in a business" is recorded from 1757. Online Etymology Dictionary, © 2010 Douglas Harper WTO | Customs Valuation - Technical Information Specific and ad valorem customs duties back to top Customs duties can be designated in either specific or ad valorem terms or as a mix of the two. In case of a specific duty, a concrete sum is charged for a quantitative description of the good, for example USD 1 per item or per unit. The customs value of the good does not need to be determined, as the duty is not based on the value of the good but on other criteria. In this case, no rules on customs valuation are needed and the Valuation Agreement does not apply. In contrast, an ad valorem duty depends on the value of a good.

Under this system, the customs valuation is multiplied by an ad valorem rate of duty (e.g. 5 per cent) in order to arrive at the amount of duty payable on an imported item. Customs valuation is a customs procedure applied to determine the customs value of imported goods. If the rate of duty is ad valorem, the customs value is essential to determine the duty to be paid on an imported good. Short historical overview back to top Article VII GATT Article VII of the General Agreement on Tariffs and Trade laid down the general principles for an international system of valuation. It stipulated that the value for customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values. Although Article VII also contains a definition of actual value, it still permitted the use of widely differing methods of valuing goods. In addition, grandfather clauses permitted continuation of old standards which did not even meet the very general new standard.

Brussels definition of value Starting in the 1950s, customs duties were assessed by many countries according to the Brussels Definition of Value (BVD). Under this method, a normal market price, defined as the price that a good would fetch in an open market between a buyer and seller independent of each other, was determined for each product, according to which the duty was assessed. Factual deviations from this price were only fully taken into account where the declared value was higher than the listed value. Downward variations were only taken into account up to 10 per cent. This method caused widespread dissatisfaction among traders, as price changes and competitive advantages of firms were not reflected until the notional price was adjusted by the customs office after certain periods of time. New and rare products were often not captured in the lists, which made determination of the normal price difficult. The USA never became part of the BVD. It was clear that a more flexible and uniform valuation method was needed which would harmonize the systems of all countries.

Tokyo Round Valuation Code The Tokyo Round Valuation Code, or the Agreement on Implementation of Article VII of the GATT, concluded in 1979, established a positive system of Customs Valuation based on the price actually paid or payable for the imported goods. Based on the transaction value, it was intended to provide a fair, uniform and neutral system for the valuation of goods for customs purposes, conforming to commercial realities. This differs from the notional value used in the Brussels Definition of Value (BVD). As a stand-alone agreement, the Tokyo Round Valuation Code was signed by more than 40 contracting parties. The new Agreement back to top The Tokyo Round Code was replaced by the WTO Agreement on Implementation of Article VII of the GATT 1994 following conclusion of the Uruguay Round. This Agreement is essentially the same as the Tokyo Round Valuation Code and applies only to the valuation of imported goods for the purpose of levying ad valorem duties on such goods. It does not contain obligations concerning valuation for purposes of determining export duties or quota administration based on the value of goods, nor does it lay down conditions for the valuation of goods for internal taxation or foreign exchange control.

Basic principle: Transaction value back to top The Agreement stipulates that customs valuation shall, except in specified circumstances, be based on the actual price of the goods to be valued, which is generally shown on the invoice. This price, plus adjustments for certain elements listed in Article 8, equals the transaction value, which constitutes the first and most important method of valuation referred to in the Agreement. The 6 Methods back to top For cases in which there is no transaction value, or where the transaction value is not acceptable as the customs value because the price has been distorted as a result of certain conditions, the Agreement lays down five other methods of customs valuation, to be applied in the prescribed hierarchical order. Overall the following six methods are considered in the Agreement: Other provisions back to top The sequence of methods 4 and 5 can be switched at the request of the importer (not, however, at the discretion of the customs officer). Moreover, the Agreement contains provisions for special and differential treatment of developing countries and for technical assistance. Since this Agreement is an integral part of the single WTO undertaking, all WTO Members are Members of the Customs Valuation Agreement.

Method 1  Transaction value back to top Definition of transaction value The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods, and includes all payments made as a condition of sale of the imported goods by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller. Conditions to be fulfilled The customs value is the transaction value if all of the following conditions have been fulfilled: Evidence of sale There must be evidence of a sale for export to the country of importation (i.e. commercial invoices, contracts, purchase orders, etc.). No restriction on the disposition or use There must be no restriction on the disposition or use of the goods by the buyer, other than restrictions which:  are imposed or required by law in the country of importation;  are limited to the geographic area in which the goods may be resold;  do not substantially affect the value of the goods. Not subject to additional conditions The sale or price must not be subject to conditions or considerations for which a value cannot be determined with respect to the goods being valued.

Some examples are provided in Annex I, Note to Article 1:1(b):  the seller establishes the price of the imported goods on the condition that the buyer will also buy other goods in specified quantities;  the price of the imported goods is dependent upon the price or prices at which the buyer sells other goods to the seller;  the price is established on the basis of a form of payment extraneous to the imported goods. Full prices, unless... No part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless adjustment can be made in accordance with provisions in Article 8. Sufficient information for adjustments Sufficient information is available to enable the specific adjustments to be made under Article 8to the price paid or payable such as;  commissions and brokerage, except buying commissions  packing and container costs and charges  assists  royalties and licence fees  subsequent proceeds  the cost of transport, insurance and related charges up to the place of importation if the Member bases evaluation on a C.I.F.

basis  but not: costs incurred after importation (duties, transport, construction or assembly), [Annex I, Note 3 to Article 1]. Buyer and seller not related, otherwise ... The buyer and seller are not related, but even if so, the use of the transaction value is acceptable if the importer demonstrates that:  the relationship did not influence the price, or  the transaction value closely approximates a test value. Related parties The definition of related persons is found in Article 15 of the Agreement, which states that persons are to be deemed to be related only if:  they are officers or directors of one another's businesses;  they are legally recognized partners in business;  they are employer and employee;  any person directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them;  one of them directly or indirectly controls the other (the Interpretative Note to Article 15provides that for the purposes of the Agreement, one person shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter.

The note also states that persons includes a legal person, where appropriate).  both of them are directly or indirectly controlled by a third person; or  they are members of the same family. Cases where Customs Administrations have reasons to doubt the truth or accuracy of the declared value back to top Customs valuation based on the transaction value method is largely based on documentary input from the importer. Article 17of the Agreement confirms that customs administrations have the right to satisfy themselves as to the truth or accuracy of any statement, document or declaration. A Decision Regarding Cases Where Customs Administrations Have Reasons To Doubt The Truth Or Accuracy Of The Declared Value taken by the Committee on Customs Valuation pursuant to a Ministerial Decision at Marrakesh spells out the procedures to be observed in such cases. As a first step, customs may ask the importer to provide further explanation that the declared value represents the total amount actually paid or payable for the imported goods. If the reasonable doubt still exists after reception of further information (or in absence of a response), customs may decide that the value cannot be determined according to the transaction value method.

Before a final decision is taken, customs must communicate its reasoning to the importer, who, in turn, must be given reasonable time to respond. In addition, the reasoning of the final decision must be communicated to the importer in writing. Method 2  Transaction value of identical goods (Article 2) back to top The transaction value is calculated in the same manner on identical goods if the goods are:  the same in all respects including physical characteristics, quality, and reputation;  produced in the same country as the goods being valued;  and produced by the producer of the goods being valued. For this method to be used, the goods must be sold for export to the same country of importation as the goods being valued. The goods must also be exported at or about the same time as the goods being valued. Exceptions Some exceptions are accepted, in particular:  where there are no identical goods produced by the same person in the country of production of the goods being valued, identical goods produced by a different person in the same country may be taken into account.  minor differences in appearance would not preclude goods which otherwise conform to the definitions from being regarded as identical.

The definition excludes imported goods which incorporate engineering, artwork etc, provided by the buyer to the producer of goods free of charge or at a reduced cost, undertaken in the country of importation for which no adjustment has been made under Article 8. Method 3  Transaction value of similar goods (Article 3) back to top The transaction value is calculated in the same manner on similar goods if:  goods closely resembling the goods being valued in terms of component materials and characteristics  goods which are capable of performing the same functions and are commercially interchangeable with the goods being valued  goods which are produced in the same country as and by the producer of the goods being valued. For this method to be used, the goods must be sold to the same country of importation as the goods being valued. The goods must be exported at or about the same time as the goods being valued.

Method 4  Deductive value back to top Deduction of value from the price of the greatest aggregate quantity sold The Agreement provides that when customs value cannot be determined on the basis of the transaction value of the imported goods or identical or similar goods, it will be determined on the basis of the unit price at which the imported goods or identical or similar goods are sold to an unrelated buyer in the greatest aggregate quantity in the country of importation. The buyer and the seller in the importing country must not be related and the sale must take place at or about the time of importation of the goods being valued. If no sale took place at or about the time of importation, it is permitted to use sales up to 90 days after importation of the goods being valued. Determination of the greatest aggregate quantity sold Under Article 5.1, the unit price at which the imported goods or identical or similar imported goods are sold in the greatest aggregate quantity is to be the basis for establishing the customs value. The greatest aggregate quantity is, according to the Interpretative Note to that Article, the price at which the greatest number of units is sold to unrelated persons at the first commercial level after importation at which such sales take place.

To determine the greatest aggregate quantity all sales at a given price are taken together and the sum of all the units of goods sold at that price is compared to the sum of all the units of goods sold at any other price. The greatest number of units sold at one price represents the greatest aggregate quantity. Deductions from the price at the greatest aggregate quantity Since the starting point in calculating deductive value is the sale price in the country of importation, various deductions are necessary to reduce that price to the relevant customs value:  commissions usually paid or agreed to be paid, the sum of profits and general expenses added in connection with sales must also be deducted;  the usual transport costs and corresponding insurance are to be deducted from the price of the goods when these costs are usually incurred within the country of importation;  the customs duties and other national taxes payable in the country of importation by reason of the importation or sale of the goods are also to be deducted;  value added by assembly or further processing, when applicable.

Method 5  Computed value back to top Definition: Production cost and profits and expenses Computed value, the most difficult and rarely used method, determines the customs value on the basis of the cost of production of the goods being valued, plus an amount for profit and general expenses usually reflected in sales from the country of exportation to the country of importation of goods of the same class or kind. Computed value is the sum of the following elements: Production cost = value of materials and fabrication The cost or value of materials and fabrication or other processing employed in producing the imported goods. Materials would include, for example, raw materials, such as lumber, steel, lead, clay textiles, etc.; costs to get the raw materials to the place of production; subassemblies, such as integrated circuits; and prefabricated components which will eventually be assembled. Fabrication would include the costs for labour, any costs for assembly when there is an assembly operation instead of manufacturing process, and indirect costs such as factory supervision, plant maintenance, overtime, etc. Cost or value is to be determined on the basis of information relating to the production of the goods being valued, supplied by or on behalf of the producer.

If not included above, packing costs and charges, assists, engineering work, artwork, etc. undertaken in the country of importation would be added. Profit and general expenses Profit and general expenses usually reflected in export sales to the country of importation, by producers in the country of importation on the basis of information supplied by the producer, of goods of the same class or kind. The latter phrase means goods which fall within a group or range of goods produced by a particular industry or industry sector and includes identical or similar goods. The amount of profit and general expenses has to be taken as a whole (i.e. the sum of the two). General expenses could include rent, electricity, water, legal fees, etc. Other expenses to be added Finally, other expenses should be added to the price such as the cost of transport of the imported goods to the port or place of importation, loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation, and the cost of insurance.

Method 6  Fall-back method back to top Definition Customs value determination based on reasonable means consistent with the principles and general provisions of the Agreement, Article VII GATT and on the basis of available data. When the customs value cannot be determined under any of the previous methods, it may be determined using reasonable means consistent with the principles and general provisions of the Agreement and of Article VII of GATT, and on the basis of data available in the country of importation. To the greatest extent possible, this method should be based on previously determined values and methods with a reasonable degree of flexibility in their application. Valuation criteria not to be used Under the fall-back method, the customs value must not be based on:  the selling price of goods in the country of importation (i.e.

the sale price of goods manufactured in the importing country);  a system which provides for the acceptance for customs purposes of the higher of two alternative values (the lowest should be used);  the price of goods on the domestic market of the country of exportation (valuation on this basis would go against the principle in the Preamble that valuation procedures should not be used to combat dumping);  the cost of production other than computed values which have been determined for identical or similar goods (valuation must be arrived at on the basis of data available in the country of importation);  the price of goods for export to a third country (two export markets are always to be treated as separate and the price to one should not control the customs value in the other);  minimum customs value (unless a developing country has taken the exception which allows for use of minimum values);  arbitrary or fictitious values (these prohibitions are aimed at systems which do not base their values on what happens in fact in the marketplace, as reflected in actual prices, in actual sales, and in actual costs, reason of the importation or sale of the goods are also to be deducted; Special and differential treatment back to top Delay of application of the Agreement for five

 years for developing countries Article 20.1 allows developing country Members, not party to the Tokyo Round Code, to delay application of the provisions of the Agreement for a period of five years from the date of entry into force of the WTO Agreement for the Member concerned.

Delay of application of the computed value method for three years following the application of all other provisions of the Agreement Article 20.2 allows developing country Members, not party to the Tokyo Round Codes to delay application of the computed value method for a period not exceeding three years following their application of all other provisions of the Agreement. In practice, this means that developing country Members, not party to the Tokyo Round Code, can delay the computed value method a total of 8 years. Extension of the transition period Paragraph 1 of Annex III of the Agreement allows developing country Members for whom the five-year delay in the application of the provisions of the Agreement provided for in Article 20.1 is insufficient to request, before the end of the five-year period, an extension of such a period, it being understood that the Members will give sympathetic consideration to such a request in cases where the developing country Member in question can show good cause. Reservations to retain established minimum values Paragraph 2 of Annex III provides that developing country Members may make a reservation to retain an already-existing system of officially established minimum values on a limited and transitional basis under such terms and conditions as may be agreed to by the Committee (even though minimum prices are prohibited under the Agreement).

Reservation against Article 4 Paragraph 3 of Annex III allows developing country Members the right to make a reservation permitting them to refuse the request of importers (allowed under Article 4 of the Agreement) to reverse the order of the deductive and computed value methods. Special application of the deductive method Paragraph 4 of Annex III allows developing country Members the right to value the goods under the deductive method even if the goods have undergone further processing in the country of importation, whether or not the importer so requests. Technical assistance Under Article 20.3 developed country Members shall furnish, on mutually agreed terms, technical assistance to developing country Members that so request. On this basis, developed country Members shall draw up programmes of technical assistance which may include, inter alia, training of personnel, assistance in preparing implementation measures, access to sources of information regarding customs valuation methodology, and advice on the application of the provisions of the Agreement. Institutions back to top Committee on Customs Valuation The Agreement establishes a Committee on Customs Valuation composed of representatives from each of the Members for the purpose of affording Members the opportunity to consult on matters relating to the administration of the customs valuation system by any Member or the furtherance of the objectives of the Agreement.

Technical Committee on Customs Valuation The Agreement also establishes a Technical Committee on Customs Valuation under the auspices of the World Customs Organization with a view to ensuring, at the technical level, uniformity in interpretation and application of the Agreement. The responsibilities of the Technical Committee include advising on specific technical matters as requested by Members or by a panel in a dispute. Economic Effect of Tariffs: Why Governments Impose Them Fields of Economics and Economics Careers Updated February 18, 2016. In my article The Softwood Lumber Dispute we saw an example of a tariff placed on a foreign good. A tariff is simply a tax or duty placed on an imported good by a domestic government. Tariffs are usually levied as a percentage of the declared value of the good, similar to a sales tax . Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. The upcoming book Advanced International Trade: Theory and Evidence by Robert Feenstra gives three situations in which governments often impose tariffs: To protect fledgling domestic industries from foreign competition. To protect aging and inefficient domestic industries from foreign competition. To protect domestic producers from dumping by foreign companies or governments.

Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price in the domestic market. In other instances "too low" means a price which is below cost, so the producer is losing money. continue reading below our video 10 Best Universities in the United States The cost of tariffs to the economy is not trivial. The World Bank estimates that if all barriers to trade such as tariffs were eliminated, the global economy would expand by 830 billion dollars by 2015. The economic effect of tariffs can be broken down into two components: The impact to the country which has a tariff imposed on it. The impact to the country imposing the tariff. In almost all instances the tariff causes a net loss to the economies of both the country imposing the tariff and the country the tariff is imposed on. Impact to the economy of a country with the tariff imposed on it. It is easy to see why a foreign tariff hurts the economy of a country. A foreign tariff raises the costs of domestic producers which causes them to sell less in those foreign markets.

In the case of the softwood lumber dispute , it is estimated that recent American tariffs have cost Canadian lumber producers 1.5 billion Canadian dollars . Producers cut production due to this reduction in demand which causes jobs to be lost. These job losses impact other industries as the demand for consumer products decreases because of the reduced employment level. Foreign tariffs, along with other forms of market restrictions, cause a decline in the economic health of a nation. The next section explains why tariffs also hurt the economy of the country which imposes them. Be sure to continue to page 2 of The Economic Effect of Tariffs Prev INCOTERMS | ACT Logistics Home INCOTERMS Incoterms, promulgated by the International Chamber of Commerce, is an acronym for “International commercial terms,” and provide a standard set of definitions for trade terms (also known as delivery terms and terms of sale) for use in international trade. The eleven terms (as of Incoterms 2010, effective January, 2011) are: EXW, FCA, FAS, FOB, CPT, CFR, CIF, CIP, DAT, DAP and DDP.

Incoterms facilitate international commerce by promoting common and precise understanding between a seller and buyer of their respective operational obligations, costs and passage of risk of cargo loss or damage under various specified delivery arrangements. Citing a particular Incoterm in a sales contract will also aid transportation intermediaries, banks, and service providers involved in shipping or financing the goods better performing their functions. Incoterms are also designed to reduce the likelihood of disputes between a seller and buyer over their respective responsibilities and costs. Incoterms first edition was published in 1936, in English and French. Since then there have been five revisions at approximately 10 year intervals, with transaction into most commercially used languages. The 1990 revision first addressed the use of electronic messages (EDI) used in lieu of traditional shipping documents. The revision in 2000 made substantive changes to the customs clearance and payment of customs duty obligations under FAS and DEQ terms; and the loading and unloading obligations under FCA. And Incoterms 2010 eliminated terms DAF, DES, DEQ and DDU, replacing these with new terms DAT or DAP.

Note: Incoterms are separate and significantly different from American Foreign Trade Definitions, which are incorporated into the Uniform Commercial Code (UCC), continue to be used by some companies in domestic U.S. commerce, and have been recommended for deletion from the UCC. EXW Abbreviation for ex works, the Incoterm (delivery term) under which the Seller is responsible only for making the goods available at his designated premises for pick up by the buyer or buyer’s designated transportation carrier. Upon release of the goods to the buyer or carrier, the seller has no further responsibilities; all costs and risks of transportation transfer to the buyer. Variations on the this term ex works include ex factory, ex mill, ex plant, ex refinery, ex site, ex warehouse, etc., depending upon the type of origin facility at which goods will be delivered to the buyer by the seller. Action responsibilities, division of costs and passage of risk, EXW terms may be illustrated as follows when the principal modes of transportation are airfreight and ocean freight: The official Incoterms publications (Incoterms 2010) may be ordered from the International Chamber of Commerce. FCA (Incoterms) Abbreviation for free carrier (named place).

The Incoterm (delivery term) under which the seller is responsible for handing over the goods, cleared for export, to a transportation carrier named by the buyer at a named location, typically at either the seller’s facility or else the terminal of the buyer-nominated carrier or freight forwarder, typically within the country of export. If the FCA point is the seller’s facility, and loading the conveyance is essential to “handing over the goods,” the seller is responsible for the risk and expense of loading (if loading is not otherwise included in the carrier’s basic transportation charge). FCA, shipper’s facility, is the appropriate delivery term for situations in which the shipper will load an intermodal container, truck trailer, rail car, barge or other conveyance. The seller is not responsible for the cost of unloading the conveyance at the named destination point, nor for transfer of the goods to the on-carrier.

For example, if the FCA point is an ocean carrier and/or inland waterway terminal (other than the seller’s own facility), the buyer is responsible for unloading the incoming FCA conveyance, inclusive of forklift charge or other expenses, and for loading the outgoing vessel (e.g., the terminal charges, or wharfage and handling charge, etc.). See also FOB (vessel), under which the seller is additionally responsible for the cost of loading the vessel. Under FCA terms, the seller has no obligation to insure the shipment. Action responsibilities, division of costs and passage of risk under FCA terms may be illustrated as follows when the principal modes of transportation are airfreight and ocean freight: Responsibility for govern security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. The trading party responsible for export formalities is thus responsible for security requirements in the export country whereas the party responsible for import formalities is responsible for security responsibilities in the import country.

For security requirements in a transit country, if any, if the seller has accomplished delivery under the applicable term, the buyer is responsible for this; otherwise security requirements are the seller’s responsibility. FAS (Incoterms) Abbreviation for free alongside. The Incoterm (delivery term) under which the seller is responsible for arranging transportation of the goods to a named ocean or inland waterway port and placing them “alongside” the vessel which the buyer has arranged to transport the goods. The seller is also responsible for export clearance (under pre-2000 versions of Incoterms, this was the buyer’s responsibility). For this reason, FAS terms require special coordination by the shipper or freight forwarder with the inland carrier and water carrier. Under FAS terms, the seller has no obligation to insure the shipment. See Also definitions for ship’s rail, ship’s tackle and shipside delivery. Note: This term is used for shipment via ocean and inland water transportation only and is different from FOB in that the seller is not responsible for placing the goods on the vessel.

Action responsibilities, division of costs and passage of risk, FAS terms may be illustrated as follows: Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under FAS terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this. FOB (Incoterms) Abbreviation for free on board. The Incoterm (trade term) under which the seller is responsible for arranging transportation of goods to a vessel named by the buyer at a named port, and for all costs of placing the goods on board the vessel if this not included in the ocean carrier’s basic transportation rate (which it rarely is—see terminal charge, handling charge). The seller’s responsibility is satisfied when the cargo is “on-board” the vessel.

The seller is not responsible for costs of actually stowing the goods on board, but is responsible for that portion of the terminal charges which cover services other than stowage and vessel wharfage charges. The seller is not responsible for the cost of ocean carriage, marine cargo insurance, nor for arranging the contract of carriage unless the buyer requests his assistance with this. This Incoterm may never be used alone; rather it must be clarified by stating a specific location, an, because of possible uncertainty as to mode (see box below) the type of conveyance (e.g., “FOB vessel, Baltimore”). Important Under Incoterms 1990 and 2000, “FOB” may be used only for shipments via vessel (prior to these editions, “fob” could be used with other transportation modes). However, “fob” remains applicable to all modes under the American Foreign Trade Definitions (terms of sale). Furthermore, as traditionally used, “fob” can become ambiguous as to whether it means on board the carrier at point of origin vs. destination. For example, “FOB truck, Baltimore” would typically describe a shipment originating in Baltimore by truck.

But it might also be used to describe goods shipped prepaid by a supplier consigned to an exporter, at a port city, hold and notify the exporter or his freight forwarder. To eliminate these problems, and to create the precision needed for EDI transactions, Incoterms 1990 dropped all use of “FOB” except with respect to the trade term under which the seller is responsible for placing the cargo on-board a vessel at a named origin port. Otherwise, “FOB” was replaced with “FCA.” Notwithstanding this change in the Incoterms, “fob” continues to be widely used domestically and by U.S. exporters for modes of transportation other than vessel, which can result in ambiguity and confusion. When in doubt as to the intention of the seller/shipper as to their use of “fob” for a particular transaction, always clarify this before further dispatching or forwarding cargo. See also definitions for FOB stowed (FOBS), FOB stowed and trimmed (FOBST), FOBFO and FOBLO, which are used with charter vessels and/or bulk vessels, and FOB liner.

Action responsibilities, division of costs and passage of risk, the FOB trade term may be illustrated as follows: CPT (Incoterms) Abbreviation for carriage paid to; the Incoterm (delivery term) under which the seller is responsible for arranging transportation and paying the freight for goods to a named point, typically in the destination country. Note, however, that the seller has fulfilled his obligation when he has tendered the goods to the transportation carrier who, under the contract of carriage, will accomplish this transportation to the named point. At this point, typically in the origin country, the buyer assumes the risk of loss of the goods and/or unforeseeable costs. This Incoterm may be used with any transportation mode, including through multimodal movements. Under CPT terms, the seller has no obligation to insure the shipment.

In terms of action responsibilities, division of costs and passage of risk, CPT terms may be illustrated as follows where the principal modes of transportation are airfreight and ocean freight: Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under CPT terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this. CFR (Incoterms) Abbreviation for cost and freight; the Incoterm (delivery term) under which the seller is responsible for arranging and paying for transportation of the goods (but not shipping insurance) through to a named ocean/inland waterway destination port, typically in the destination country.

Note, however, that the seller has fulfilled his obligation when he has tendered the goods to the transportation carrier who, under the contract of carriage, will accomplish this transportation to the named point. When the cargo is “on-board” the vessel, typically in the origin country, the risk of loss of the goods and/or unforeseeable costs transfers to the buyer. This Incoterm may be used only with ocean or inland waterway transportation for cargo delivered directly to the vessel (i.e., cargo shipped loose or in bulk, aboard a breakbulk vessel, ro-ro vessel, bulk vessel, etc.); it is not used for cargo to be shipped in an intermodal container via a container vessel, where the correct term for delivery to a foreign port or inland container yard is CPT. Action responsibilities, division of costs and passage of risk, CFR terms may be illustrated as follows: Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities.

Under CFR terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this. CIF (Incoterms) Abbreviation for cost, insurance and freight; the Incoterm (trade terms) under which the seller is responsible for arranging and paying for transportation of the goods and shipping insurance through to a named ocean or inland waterway destination port. Note, however, that the seller has fulfilled his obligation when he has tendered the goods to the transportation carrier who, under the contract of carriage, will accomplish this transportation to the named point. Once the cargo is “on-board” the vessel, typically in the origin country, the risk of loss of the goods and/or unforeseeable costs transfers to the buyer.

Note that under Incoterms, CIF is used only for ocean or inland waterway shipment, and then only for cargo shipped loose or in bulk (e.g., via a breakbulk vessel, ro-ro vessel or bulk vessel), and not for cargo shipped in an intermodal container via a container vessel, where the CIP term is used for this other mode shipments where the seller is responsible for insuring and paying freight through to a named destination point/airport. Action responsibilities, division of costs and passage of risk, CIF terms may be illustrated as follows: Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under CIF terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this.

CIP (Incoterms) Abbreviation for carriage and insurance paid to; the Incoterm (delivery term) under which the seller is responsible for arranging and paying for both the transportation of the goods and shipping insurance through to a named destination point, typically in the destination country. Note, however, that the seller has fulfilled his obligation when he has properly insured the goods and tendered them to the transportation carrier who, under the contract of carriage, will accomplish this transportation to the named point. At this point, typically in the origin country, the risk of loss of the goods and/or unforeseeable costs transfers to the buyer. This Incoterm may be used with any transportation mode, including cargo to be shipped in intermodal containers aboard a container vessel, and through multimodal movements.

(For cargo shipped loose or in bulk via vessel, CIF would typically be used instead of CIP for port-to-port ocean or inland waterway shipments where seller was to provide insurance.) Action responsibilities, division of costs and passage of risk, CIP terms may be illustrated as follows where the principal modes of transportation are airfreight and ocean freight: Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under CIP terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this.

DAT (Incoterms) Abbreviation for delivered at terminal, the Incoterm (delivery term) under which the seller is responsible for delivering the goods, export cleared, to the carrier’s terminal at the named destination location, unloaded from the delivering conveyance, available for customs clearance and/or pick-up by the buyer. Under DAT terms, the seller assumes the cost and risk of unloading at the named destination terminal, where as the buyer is responsible for customs clearance. This term may be used with any transportation mode, including through intermodal transportation, and for international as well as domestic sales transactions. Allocation of responsibilities, division of costs and passage of risk under DAT terms may be illustrated as follows for international delivery via airfreight, ocean freight and truck transportation: Note: DAT is new under Incoterms 2010, replacing Incoterm DEQ, but may be used with any mode of transportation, including through intermodal transportation. or use with any mode of transportation. See also DAP, under which the seller is not responsible for unloading the delivering conveyance place of delivery, but rather only for placing the cargo “at the disposal of the buyer” on board the conveyance at the named place of delivery.

Under DAT terms, the seller has no obligation to insure the shipment. In contrast to “C” terms in which the seller’s risk terminates once he has tendered the goods over to the export carrier in the origin country, under this and other “D” terms, the seller remains at risk for cargo loss or damage until delivery occurs at the named destination point. Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under DAT terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has already accomplished delivery, the buyer is responsible for this.

DAP (Incoterms) Abbreviation for delivered at place, the Incoterm (delivery term) under which the seller is responsible for delivering the goods, export cleared, to a named destination place, on-board the transportation conveyance, available (“at the disposal of the buyer”) for unloading by the buyer. Under DAP terms, the buyer assumes the cost and risk of unloading at the named destination place and for customs clearance. This term may be used with any transportation mode, including through intermodal transportation, and for international as well as domestic sales transactions. Allocation of responsibilities, division of costs and passage of risk under DAT terms may be illustrated as follows for international delivery via truck transportation: Note: DAP is new under Incoterms 2010, replacing Incoterms DAF, DES, and DDU. See also DAT, under which the seller is additionally responsible for the costs of unloading the delivering conveyance place of delivery (e.g., the delivering carrier’s terminal or another cargo terminal as the designated place of delivery). Under DAP terms, the seller has no obligation to insure the shipment.

In contrast to “C” terms in which the seller’s risk terminates once he has tendered the goods over to the export carrier in the origin country, under this and other “D” terms, the seller remains at risk for cargo loss or damage until delivery occurs at the named destination point. Responsibility for government security requirements: Incoterms 2010 changed rules A2 & B2, now captioned “Licenses, authorizations, security clearances and other formalities,” to include government imposed security requirements, whatever they may be, as part of export formalities and import formalities. Under DAP terms, the seller is responsible for export formalities and thus also security requirements in the export country whereas the buyer is responsible for import formalities and thus for security responsibilities in the import country. For security requirements in a transit country, if any, since the seller has not yet accomplished delivery, the seller is responsible for this. DDP (Incoterms) Abbreviation for delivered duty paid. The Incoterm (delivery term) under which the seller is responsible for arranging transportation of the goods through to the buyer’s door, and pays all costs required to accomplish this, including customs clearance, customs duty, and taxes due upon importation.

Under pre-1990 versions of Incoterms, and under American Foreign Trade Definitions, this is also known as free domicile or free house. Under DDP terms, the seller has no obligation to insure the shipment. This Incoterm may be used with any transportation mode or combination of modes. Action responsibilities, division of costs and passage of risk, DDP terms may be illustrated as follows where the principal modes of transportation are airfreight and ocean freight:

Question: From the Arabic for 'to make known', what is the correct term for a duty imposed on foreign goods?
Answer: Tariff