Here are just a few examples of the types of questions we can help with.
- We are working on a military project that includes US content and have a TAA that specifies the UK as the end-user. We need to organise a conference call to discuss the US technical specification with the Supplier. One of our most experienced engineers is German. How should we proceed?
- We are a UK registered Company owned by a US Company. We manufacture Heat Exchangers. We have received an enquiry from Pakistan. Any problem with that?
- We’ve received an order for C130 aircraft parts from a German repair station. Germany’s in the EU so that’s OK then isn’t it?
- How do we obtain payment before our goods are delivered?
- We are thinking about purchasing raw material from the USA. They have quoted us a price called FOB which is cheaper than from our existing Supplier. We haven’t imported before, can you explain what this all means?
- We are buying product from overseas for resale. Export is 80% of our business. Any suggestions?
We are working on a military project that includes US content and have a TAA that specifies the UK as the end-user. We need to organise a conference call to discuss the US technical specification with the Supplier. One of our most experienced engineers is German. How should we proceed?
UK Legislation: conversations discussing technical assistance are only controlled for military list items when reading out the contents of a controlled document or if in connection with weapons of mass destruction. Therefore. the intangible transfer of technology to the German national in the UK (and the US nationals in the USA) is not subject to UK regulation and therefore a UK export licence is not required providing the teleconference does not include reading out the contents of a controlled document.
US legislation : transfer of technology by any means is controlled by the US legislation. Therefore this telephone conversation to discuss the technical specification of a US item does require a US export licence. The good news is that, a licence is in place for the export to the UK but this excludes the verbal transfer of technical information to your engineer from Germany. You must ask your German engineer to leave the room whilst the teleconference tales place.
We are a UK registered Company owned by a US Company. We manufacture Heat Exchangers. We have received an enquiry from Pakistan. Any problem with that?
I would expect payment terms to be Letter of Credit for Pakistan. My first suggestion would be to check the Customer out, there’s no point doing any business unless you’ll get paid.
Heat Exchanger appears in the index of the UK Control List. Therefore, you need to check the specification of these items against the controls to see if they require an export licence. If you need help, the Export Control Organisation offer a rating service via SPIRE.
Even if the specification of your items is not covered by the regulations, you also need to consider what the end-use will be. India and Pakistan are an area of concern. You may remember from the news that, they have been carrying out missile tests.
Because these items appear on the control list and are destined for Pakistan, there is a good chance that Customs will detain the consignment. For all of your exports, I would have the specification and end-user declaration available.
The UK legislation controls nuclear/missile activity to India and Pakistan but, since you are owned by a US Company, you are also subject to the US regulations. The US restrict all activity with both India and Pakistan.
The US publishes lists of Enties/Denied Parties showing which companies and/or individuals you cannot deal with. For all other activity, you should consult your US legal department.
We’ve received an order for C130 aircraft parts from a German repair station. Germany’s in the EU so that’s OK then isn’t it?
The C130 is a US military plane and any parts specially designed or modified for military use require a UK export licence and a US re-export licence. Military licences are ‘sovereign issues’ and each country has their own regulations. Military goods cannot move freely throughout the EU.
You will need an end-user certificate to support a UK export licence application. Check this carefully since your buyer is not the end-user. This could be a genuine purchase for re-sale but, it could also be for diversion to a prohibited country. For this reason, it is imperative that you know who your customers are and who your potential customers are.
If you are ordering these items from the US then, you may find that the parts are classified as commercial if they also fit the L100 and other commercial aircraft.
If they are unique to the C130 then, your US Supplier will obtain a US export licence for shipment to the UK and then on to Germany.
How do we obtain payment before our goods are delivered?
- Cash before shipment
- Letter of Credit – payable at sight
- Letter of Credit – discounted tenor draft
- Sight Draft
- Cash against documents
Give me a call for a more detailed explanation.
We are thinking about purchasing raw material from the USA. They have quoted us a price called FOB which is cheaper than from our existing Supplier. We haven’t imported before, can you explain what this all means?
FOB is an INCOTERM-Internationally recognised trading term. These terms detail who pays for what, who is responsible for insurance, documentation etc. Copies available from International Chamber of Commerce for about £35.
FOB is an old sea freight term and is generally misused. It means that, the price includes all documentation and charges up to the goods going over the ship’s rail. At this point, the goods pass from the seller to the buyer i.e. the goods are delivered and the responsibility of the buyer. So, if the case containing your goods falls from the crane and lands in the sea – the seller has not delivered them and any loss is theirs. If the case falls onto the deck of the ship, the goods have been delivered to the buyer and any loss is theirs. In practical terms this means that, the buyer has to pay for the goods and claim on the cargo insurance (if there is any). Good reason to take out insurance. All costs from this point are then payable by the buyer i.e. sea freight to the UK, unloading, handling, storage, haulage, import duty and taxes.
To calculate the true cost, you need to obtain a packing specification. Freight, unloading, storage and haulage charges are based on the weight or cubic measurement of a consignment whichever is the greater. Import duty is based on the CIF Value i.e. Cost (FOB value), Freight and Insurance. The duty rate is based on a customs tariff depending on the products i.e. aluminium 7604 @ 7.6% Customs offer a classification service or you could contact a Freight Forwarder.
One final consideration, the Customs Tariff Heading may need an import licence – check before authorising shipment as these are not always granted. Again Customs or a good Freight Forwarder could advise.
We are buying product from overseas for resale. Export is 80% of our business. Any suggestions?
If you are importing dutiable items you can avoid, delay or reclaim payments in several ways e.g.
- Customs Bonded Warehouse – store goods without payment of import duty or VAT. If exported outside the European Union, no import duty or VAT payable. If for use within the European Union, import duty and VAT payable by deferment account 15th of next month.
- IPR – Inward Processing Relief Suspension – no payment of import duty or VAT at import. At export, the correct CPC code must be used to cancel ‘suspended’ duty or penalty will be charged.
- END-USE Civil Aircraft Parts – no duty payable, evidence of use required.
For further help and advice contact Elizabeth about consultancy and training.