Alligned Document System of Export Documentation

In the last session of ITPD yesterday at I.T.S Mohan Nagar Campus, we discussed the importance and features of Aligned Documents System for export documentation. ADS is an international initiative to standardize the size and information of international trade documentation. Once ratified by majority of the countries the whole trade documentation world wide can be made electronic significantly improving the process of documents and reducing time for documentary formalities while ensuring compliance. Most importantly such EDI if introduced worldwide can significantly improve the monitoring of the international trade transaction reducing scope of frauds and misappropriation by unscrupulous traders.

The documentation was also discussed and important documents both commercial and regulatory were discussed. Important documents which were discussed in the class are – Invoice, Packing List, Transport Documents, Mate’s receipt, Inspection certificate, and Country of Origin certificate. It was argued that most of the information provided in the invoice is essential for the smooth flow of goods through shipping and regulatory channels. The invoice acts as the bill for the seller and identifies the description of the goods and rationale for the cost of the goods. On the other hand packing list identifies the goods in details with respect to nature of packing, size and weight of different packing units etc.

Transport documents acts as the document of title and can be negotiable instrument depending upon the type of the document. In most cases Ocean Bill of Lading is a negotiable document which can be sold to the bank for consideration. On the other hand Air way bill can not be made negotiable since by the time this document reaches the buyer through different banking channels the air shipment is already there on the destination port and may attract heavy demurrage charges for want of such transport document if it is necessary to have it in original. Therefore Air Way Bill is consignee named and a non negotiable copy can be used to claim the goods by the named consignee at the port of call.

While the country of origin of the goods is mentioned in the invoice it is important to have the certificate of origin among the major set of commercial documents, since such document is important of the customs at the port of call to levy right quantum of duties on the goods received in the host country before these are claimed by the buyer.


Geopolitics and Change: Implications for Businesses

Geopolitics refers to the relationship between the political power and geographic space. The drivers of change for the geopolitical environment of a specific geographic space are – Time, Location and Demography. The main purpose of the Geopoliical studies is to understand the political and strategic significance of a geographic space when defined in terms of – Location, Size, Workings, Culture and Resources.

Geopolitics lead to geostrategies which bring about the change which businesses has to deal with. One good example of such changes is, the emergence of China as a third power in the world as a result of geostrategic efforts by America’s foreign policy which was an answer to the long haul of cold war during the years of a bipolar world which did not help grow the multinational business. America took note of the cracks in the Sino – Soviet relationship and encouraged the development of China as a third power centre as its geostrategic moves over the years.

These geoplotical changes were coincided with growing changes in the world brought about by the sudden advances of technology, communication and IT, which made the world highly connected.

How does business deal with such changes

It has been argued that businesses around the world can deal with such chances as well as the result of war and recession (caused by some bad geostrategic ideas), by democratization of technology, finance and Information. This could only happen with the support of poltical powers around the world which encourages such democratization.

This means above political effrots can being about prosperity through openness and democratization of modern fruits of advancement

Golden Straightjacket

The golden straightjacket view as popularized by Thomas Friedman is: Tight Money, Small Government, Low taxes, Flexible labor legislations, deregulations, privatization, and openness all around. Some of the smaller countries like Singapore, UAE, Mauritius and others have demonstrated the benefits of this view. These so called tax heavens and free ports are able to develop faster than the world average by using this democratization of technology, finance and information. Some of the larger countries are trying to follow suit and trying to finetune their own golden straightjackets.

Session 5 and 6 of Geopolitical Environment for Business discussed above details and threw open the subject to the students who interacted on diverse topics related to above phenomenon.

For the next class, case study on ‘Cogentrix’ has been given to be discussed in the next classes of GEB.

Sessions 5 and 6 of the ITPD course

Sessions 5 and 6 of the ITPD course saw one class quiz which was well taken by the students and most students could answer majority of the questions right. The sessions also started with the concept of Alligned Documentary System ratified by many countries aimed at making the international trade procedures and documentaion based on electronic data interface (EDI) compliance to reduce the delays in the logistics operations. The class also discussed the basic structure of an INVOICE and PACKING LIST. An exercise about of knotted carpet consignment having 320 carpets of 3 sizes and 3 colors helped understand the students about the compleities involved in making a packing list wihtout which a consignment can not be identified well.

Sessions 3 and 4 of ITPD

Amazingly the 3 and 4th sessions of ITPD were very interactive with students showing great interest in the benfits of through understanding of ITPD. It was pleasant to see that student did not find the understanding of the course too tough which is generally the case.

The significance of ITPD is coumponded by the fact that overall foreign trade of India is on the upswing. In order to ensure smooth foreign trade, having happy buyers, getting timely proceeds, a thorough understanding of the ITPD is must. Students gave strong feedback on their views regarding the significance of ITPD and linked the understanding to smooth customs clearance of goods, minimizing the trade risks.

It also emerged that n order to minimize the differnt types of trade risks, an understanding of different tools available to cover the risks is essential.

Data Collection for the CFC project

I am happy to inform you that following is the updated figures of data already collected worldwide for the CFC project

India – 150
Portugal – 181
There are certain percentages of incomplete responses but that were allowed by the questionnaire since some of the questions were allowed to be skipped by the instruction to deal with the local sensitivities.
I am sure other collaborators are also working on the questionnaire. Kindly update the data collection response from your respective countries.

Sessions 1 and 2 of ITPD course

Sessions on ITPD course started off today with around 40 students anxiously trying to understand the concepts of International Trade Procedures and Documentation. The sessions were very interactive, students trying to bring in the issues related to procedural bypassing of certain companies like SPEAK ASIA which by having the formation of company n Singapore managed to bypass FEMA laws and fleece the investors in India. Such discussions highlighted the loopholes and vulnerability of the exiting company laws related to companies which have used these procedural cracks to launder money internationally.

However the main focus of the sessions revolved around the importance of understanding the international trade procedures and documentation which can probably ensure strong technical skills and knowledge of international trading which can be really helpful for the students to enter into an international business career. It was highlighted that a person well versed with the ITPD can prove to be an intelligent and prudent international marketer and negotiator capable to signing favorable business contracts with least ambiguity and by ensuring happiness of the buyers overseas.

It was also a focus of the discussions that there are number of areas and steps where strong understanding of ITPD is essential. These areas range from company formation to dealing with local and foreign governments as also dealing with an array of govt. agencies during the course of international trade transactions.

In order to understand the steps involved in exporting a real life situation was given to the students to discuss the course of action which is required. The situation was well understood by the students who came forth energetically to discuss the issues and challenges involved in exporting an off track product. Several interesting alternative for export models emerged from the discussions and debate among students. The true story situation related to export of ‘pan’ by a famous Pan Wala from Delhi after he floated his website and he started getting enquiries from rich NRIs living all over the world. The challenge involved related to packing of the products, logistics, dealing with the customs, airlines, food regulatory agencies, foreign laws, documentation, payment realization from the customers, risks management, inspection of the export consignments etc. Students gave valuable solutions and identified possible procedural obstacles. The situation was well debated and brought out practical insights into steps and reasons of procedures and documentation involved in international trade transactions.

Student seemed to be very responsive and ready to take off to higher level of understanding of the subject.