External Trade — Import, Export, and Entrepot Trade

5. External Trade — Import, Export, and Entrepot Trade

External (foreign) trade has three recognised forms:

1. Import Trade — the purchase of goods from a supplier in a foreign country and

bringing them into one's own country, usually because the goods are not produced

domestically, or are produced more cheaply/of better quality abroad. In brief, an importer

must: identify a reliable foreign supplier and negotiate terms; arrange the necessary import

licence/registration and comply with the country's foreign-trade policy; arrange payment

through banking channels (commonly a letter of credit); arrange shipping/freight and

insurance for the goods in transit; and complete customs clearance (including payment of

import duty) at the port of entry before taking delivery.

2. Export Trade — the sale of goods produced or manufactured within one's own country to

a buyer in a foreign country. In brief, an exporter must: secure an export order and agree

terms with the foreign buyer; obtain any export licence/registration required and ensure the

goods meet the importing country's quality/regulatory standards; arrange pre-shipment

inspection and packing suited to a long transit; arrange shipping and marine insurance; and

complete customs (export) clearance and prepare the shipping documents (invoice, bill of

lading/airway bill, certificate of origin, etc.) that the foreign buyer's bank and customs

authority will require.

3. Entrepot Trade (Re-export Trade) — a country imports goods not to consume them

domestically, but to store, sometimes lightly process or re-pack, and then re-export them to

a third country. A trader/country engaged in entrepot trade is, in effect, acting as an

intermediary hub in the chain between the original exporting country and the final importing

country — useful where the intermediary country has strong ports, warehousing, and trading

infrastructure that make it an efficient staging point between the two other countries.

Common documents seen across import/export trade (introductory overview; detailed

procedure and specimen documents belong to a dedicated Secretarial-Practice-level treatment):

commercial invoice, bill of lading/airway bill, packing list, certificate of origin, letter of

credit, and the customs bill of entry (import) / shipping bill (export).