14 key trade documents and data elements for cross-border trade: Inside the ICC’s KTDDE report

The ICC DSI released their 2023 Key Trade Documents and Data Elements (KTDDE) report. The report outlines 14 key trade documents, going into depth on the definitions, purpose, and legal frameworks.

Even for those with lots of experience, the international trade industry is incredibly complex. Cross-border trade requires a deep knowledge of numerous regulations, or an intricate web of local relationships to help break down the legal requirements.

While there have been some efforts to ease the process, there are still many aspects that need help and clarification.

The ICC DSI recognised the importance of creating a comprehensive guide to help break down the nebulous terminology of the international trade world.

In March 2023, they released the “Batch 1” report on 7 key trade documents, with the intent of building on further key terms over the next year and a half.

Today, they released their “Batch 2” Report on 14 key trade documents.

The ICC DSI said, “To ensure that our recommendations are, as far as possible, globally relevant and that they consider different challenges and circumstances faced by trade parties around the world, the working group was also designed to be cross-regional and cross-sectoral.”

All definitions and details are sourced from ICC DSI through the “Key Trade Documents and Data Elements” report. 

To see the full report and more detailed recommendations, please view the ICC DSI report here.

14 key trade documents

1. Air Cargo Manifest

Air Cargo Manifests are an important document for the air forwarding industry for many reasons, including:

  • Identifying cargo: The manifest provides a complete list of all items or goods loaded onto the aircraft. It facilitates clear identification, detailing descriptions, quantities, and types of goods. 
  • Regulatory compliance: This document is crucial for regulatory adherence, offering evidence that transported items comply with relevant laws, including safety and security regulations. It can also serve as a declaration of cargo content, value, and destination, aiding in customs compliance.
  • Planning and management: Airline staff rely on the manifest for effective loading and unloading of goods. It guides them to the specific location of items and assists in planning for weight distribution and balance, ensuring safe aircraft operation.
  • Tracking and accountability: Cargo manifests contribute to supply chain tracking. If discrepancies or issues arise, they help pinpoint when and where problems occurred, facilitating accountability.
  • Insurance and liability: In the unfortunate event of accidents, damage, or loss, the manifest serves as a record of the aircraft’s cargo. This record is vital for insurance claims and determining liability.

2. Air Waybill

An airway bill is a contract of carriage between the shipper and airline, outlining both parties’ responsibilities. It also functions as a cargo receipt, provides essential customs information, enables tracking, and streamlines billing and accounting processes.

3. Bill of Exchange and Promissory Note

Promissory Note (PN) is a written promise by the issuer to pay a specific sum to the payee on a specified date or on demand, while a Bill of Exchange (BE) is an order made by one party to pay a set sum to the designated payee, involving three parties. 

Both PN and BE are independent payment undertakings (debt obligations) between parties, codified in various legal systems worldwide, and have a rich history of court interpretations.

4. Cargo Insurance Document

Cargo Insurance Documents provide evidence of insurance coverage, fulfilling multiple international trade and regulatory needs. Depending on the situation, it may be presented as:

  • Certificate of Insurance and Insurance Policy: typically issued at the shipper’s request, often to fulfil Letter of Credit requirements.
  • Debit Note (of insurance): typically issued in specific countries upon the consignee’s request to comply with import customs requirements.

5. Customs Bond

Customs Bonds are generally used as guarantee for exemptions of international trade duties, taxes and obligations set out under Custom rules and Regulations.

6. Export Cargo Shipping Instruction

Also known as Shipper’s Letter of Instruction (SLI), an SLI serves as instructions from the Exporter to the Freight Forwarder, providing the scope of services required as well as essential information for documentation and transport-related guidance.

7. Letter of Credit

letter of credit (LC) is a bank-issued document that assures a seller of payment from a buyer under specific conditions, serving as a secure payment method for international trade, especially when trust is limited. LC ensures payment to the seller only after the goods meet agreed-upon conditions, reducing the risk of fraud and nonpayment, offering security to both parties in the transaction.

8. Payment Confirmation

The main purpose of a Payment Confirmation is to provide evidence that a payment has been made and received.

9. Purchase Order

An electronic purchase order document starts the transaction process, defining prices, quantities and delivery dates in accordance with pre-negotiated contractual conditions, between a buyer and a seller. The buyer uses it to request goods, items or services from a supplier.

10. Rail Consignment (CIM) Note

The CIM consignment note regulates international carriage of freight traffic by rail. The contract is finished when the railway undertaking accepts the shipment, and the dispatch station’s stamp (a date stamp) is placed on the consignment note.

Signed and stamped by both sender and the carrier, the CIM consignment note is used in most European countries and in several countries that are party to the Convention concerning International Carriage by Rail (COTIF). Both the sender and the receiver (consignee) have the right to modify the carriage contract.

11. Road Consignment (CMR) Note

The CMR consignment note is a significant document in the context of the UN Convention on the contract for the international carriage of goods by road (or CMR). Many European nations, along with many others, have already ratified this convention.

This document is an important tool for companies, drivers, and recipients involved in the transportation process, containing essential details about the transported goods, as well as information about the parties responsible for transport and receipt.

Although CMR notes were traditionally paper-based, there’s a growing push from businesses and government stakeholders to transition to an electronic format (e-CMR).

12. Sea Cargo Manifest

A Sea Cargo Manifest summarises all cargo loaded on a ship, including descriptions, container numbers, shipper and consignee details, weight, measurements, packing information, and cargo specifics like UN Numbers, International Maritime Organization (IMO) Class for hazardous goods, temperature settings for refrigerated cargo, and dimensions for over-dimensional cargo.

13. Sea Waybill

The Sea Waybill is similar to an ocean Bill of Lading, but it is non-negotiable. Its main purposes are to serve as evidence of the contract of carriage and to confirm the goods’ receipt.

14. Ship’s Delivery Order

A Ship’s Delivery Order is a release document issued by the carrier releasing the cargo to the consignee mentioned in the bill of lading.

Courtesy: tradefinanceglobal.com

Read more
SEZs - Special economic zones

SEZs should be allowed to sell goods in domestic market on payment of duty foregone on inputs: GTRI

The government should consider allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs as that would help promote value addition, think tank GTRI said on Tuesday. At present, units in SEZs are allowed to sell their products in the Domestic Tariff Area (DTA or domestic market) on payment of duties on an output basis (finished goods).

The Global Trade Research Initiative (GTRI) said the government already allows DTA sales on payment of duty foregone on input basis to firms operating under the ‘Manufacturing and Other Operations in Warehouse Regulations (MOOWR)’ scheme.

The government can “extend the same concession to the SEZs for parity sake. This will encourage value addition within the SEZ, as in most cases, the tariff on finished products is higher than on inputs,” GTRI Co-Founder Ajay Srivastava said.

He added that SEZ units could be incentivised to increase value addition to avail the benefit of DTA sales, which could further enhance technological advancement and skill development.

These zones are treated as foreign territories for trade and duties, with restrictions on duty-free domestic sales.

Companies operating within SEZs are allowed to import materials and components duty-free, with the condition that the finished goods produced are meant to be exported out of India and sold in the Indian domestic market on payment of applicable duties on the output.

On demand of units in SEZs that they should be permitted to sell their products in the domestic market without paying import duties, the GTRI said and added that this would distort the export focus as well as lead to a loss of revenue for the government.

“SEZ units are intended to be export-oriented. If goods from SEZs are allowed into the DTA on the same terms as free trade agreement imports, this might disincentivise exports and turn these zones into back doors for importing goods duty-free for the domestic market, defeating the purpose of having export-focused zones,” it said.

Such a move would also adversely affect the domestic industry by the influx of SEZ-made goods sold at lower prices due to duty exemption.

“This could lead to unfair competition and potential job losses in domestic manufacturing sectors,” Srivastava said.

Courtesy: economictimes.indiatimes.com

Read more

Post-ETDA shipment puts focus on broader range of trade documents

An international consortium says it has executed the first fully digitised shipment of goods following the enactment of UK legislation giving legal recognition to paperless trade documents.

A consignment of valves were shipped from the UK to Singapore using the blockchain platform of supply chain solutions provider LogChain shortly after the UK’s Electronic Trade Documents Act (ETDA) entered force on September 20.

An electronic air waybill was used to ship the goods by Singapore Airlines and  LogChain says it is the first to use a full suite of digital logistics documents such as the purchase order, driver and vehicle checklists, gate in and out receipts, packing lists, security declarations and product paperwork.

“Placing a bill of lading on the blockchain is a commendable feat, but if the hands-on – on-ground and on-site – staff at the heart of our operations are still tethered to manual methods like clipboards, then the essence of a fully digitalised supply chain eludes us,” says Andrew McKeown, LogChain’s CEO.

“We sought to highlight the logistical element, demonstrating the potential for comprehensive digitalisation across the entire spectrum of the supply chain, transcending mere transactional boundaries,” he tells GTR.

While the focus of global reforms to digitise trade paperwork has been on documents of title such as the bill of lading, McKeown says this shipment seeks to achieve the “broader intent of ensuring end-to-end digitalisation in line with the ‘spirit of the agreement’ of the ETDA”.

“To cite an example, warehouse receipts and ship’s delivery orders, while not traditionally recognised as documents of title under common law, have an operational significance attached to their possession. In practice, holding these documents might sometimes be a prerequisite for a party to assert performance of a duty, or to activate certain statutory effects, as seen under statutes like the Sale of Goods Act 1979,” he says.

The shipment was sent from Burnley in the UK by Fort Vale, a valves and fittings manufacturer, to its own facility in Singapore, meaning no buyer or seller was involved.

“A significant number of our key accounts are based in Singapore and as such, the opportunity to be part of this historic moment was something not to miss,” says Graham Blanchard, Fort Vale’s global sales and marketing director.

“Fort Vale sees the benefits of security, efficiency, cost savings and reduced risk of delays as real positives not only for our organisation but as a contribution to frictionless trade between the UK and Singapore as a whole.”

Courtesy – gtreview.com

Read more

How will Egypt benefit from the currency swap agreement with UAE?

Economists have touched on the various advantages the Egyptian economy may receive from the currency swap agreement signed on Thursday with the UAE.

Egypt and the UAE signed an agreement that allows the two parties to exchange the Egyptian pound and the UAE dirham, with a nominal value of up to LE42 billion or five billion AED.

According to one economist, the agreement provides Egypt with its needs for services and goods, while another said that it reduces pressure on the US dollar demand in Egypt.

It comes under efforts to strengthen close relations between the two countries at all levels, which contributes to facilitating and increasing the volume of trade exchange between them, the Emirates News Agency quoted the Governor of the Central Bank of Egypt, Hassan Abdullah as saying.

And the Governor of the Central Bank of the UAE, Khaled Mohamed Balama, stated that the agreement reflects the depth of bilateral relations between both nations.

It constitutes an important opportunity to develop the economic and financial markets between the two sides in all fields, he said, which reflects positively on the commercial, investment and financial sectors and enhances financial stability.

Courtesy:- egyptindependent

Read more

FTAs with UAE & Australia boosted engineering exports by 9% in April-August period

Free Trade Agreements (FTAs) with UAE and Australia have provided a much-needed fillip to engineering exports with shipments to both nations rising 9% in the April-August period of the current financial year even as overall engineering exports nosedived during the period.

Engineering exports to UAE in the April-August period of FY24 increased 9% year-on-year to $2.24 billion. In the same period, engineering exports to Australia also jumped 9% year-on-year and stood at $596.14 million as compared to $548.62 in the April-August period of FY23.

Overall engineering exports in the April-August period of 2023-24 dropped 4.55% to $44.62 billion as against $46.74 billion in April-August period of 2022-23.

Notably, engineering exports to Russia surged 178% year-on-year to $568.41 million in the April-August period of FY24. In the same period last year, engineering exports to Russia were $204.17 million.

Engineering exports to the US, India’s top market, fell 14% year-on-year in the April-August period of the current financial year.

“Engineering exports to UAE and Australia have been beneficial. Our exports to both the two major markets rose 9% in the April-August period of FY24. At this point we urge the government to think about more such FTAs not only with our traditional partners but also our non-traditional markets in Latin America and Africa,” said EEPC India Chairman Arun Kumar Garodia.

Courtesy :- TheEconomicTimes

Read more