Export

The following information is not specific to any particular country, as the fundamental principles apply to the establishment of international trade relationships in general.

Regardless of the target country, it is important to clarify that, as far as the practical management of import and export trade is concerned, most of the regulations relating to the movement of goods to and from third countries are either governed by or based on EU law. However, in addition to this, individual member states of the European Union have their own national legislation which can sometimes differ considerably from one country to another, but which must also be observed in the appropriate circumstances. It is important to establish early which laws apply, if one wishes to make the transition from business concept to reality as smooth as possible.

Businesses often know nothing about the different trading practices of their foreign counterparts. By reaching a contractual agreement to handle deliveries in accordance with Incoterms® (officially known as ‘Incoterms® 2010 by the International Chamber of Commerce [CCI]’), misunderstandings and differing interpretations of the other party’s delivery clauses can be avoided or at least minimised. Incoterms® mainly serve to regulate some of the terms of delivery and acceptance for buyers and sellers engaged in foreign business transactions. However, they also establish the point at which risk is transferred from the seller to the buyer and define the allocation of costs for transporting and insuring the goods. The Incoterms® published by the International Chamber of Commerce in Paris (www.iccwbo.org) are used to simplify foreign trade. However, they will only become part of the contract by explicit agreement. It is also important to specify which version of the Incoterms® is being used. Since 1 January 2011, this has been Incoterms® 2010.

However, the Incoterms® do not cover all the clauses required for an international sales contract. That is why it is advisable to settle any other matters no later than at the contract stage, although preferably beforehand, at the offer stage. These include terms of payment, delivery deadlines, warranty and guarantee obligations, etc. In cross-border contracts, the following areas are also of especial importance:

For Standard Terms and Conditions to be valid, they must meet widely differing criteria in different jurisdictions. In order to ensure the validity of these Standard Terms and Conditions, it is therefore essential to verify in every case that they are compatible with the law in force in the country concerned.

When entering into cross-border contracts, the parties often overlook the question of which national law should apply. The best choice to make will depend on individual circumstances. The contracting parties usually have the opportunity to decide which legal system to adopt, and should take advantage of this.

If the contracting parties neglect to do so, international private law should be consulted to determine which country’s laws should be applicable. The conflict-of-law rules enshrined in the country’s legislation will play a key part in this decision. These determine which legal system should apply to issues of a cross-border nature.

Arbitration has become an established alternative to normal legal channels when it comes to international business transactions. One of arbitration's advantages is that the parties themselves can choose the arbitrator, the type of proceedings and how they are conducted. In most cases, it also provides a faster and more cost-effective solution than bringing proceedings before a foreign court. Information on the German Institution for Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit e.V.) is available online.

It is important to ensure that the arbitration award will be recognised and enforced by the courts of the contractual partner’s home country. This issue, as well as the choice of a suitable arbitration system, must be clarified before a binding arbitration clause is included in the contract.

Nearly every country has its own producer’s liability legislation, either in the form of specific laws (such as is the case in EU countries) or as part of its consumer protection legislation. Almost without exception, the burden of proof is on the manufacturer and/or importer or seller if personal injury or material damage is caused by a faulty product. Since legislation, the administration of justice and the level of any compensation to be paid differ from country to country in this area, a market-related risk assessment should be carried out for hazardous products before they are first put on sale, and in certain circumstances an agreement on the (albeit only internal) sharing of risk between the manufacturer and the distributor should be included in the contract.

For many companies, patents, utility models, designs, trademarks and copyright play a key role in their success in foreign sales markets. Consequently, it is important to protect one’s own trademarks both at home and abroad, i.e., in the EU and worldwide, and to word contracts with foreign trading partners in such a way as to prevent any abuse of one’s own rights by the other party to the contract or a third party. Detailed information on this can be obtained from the German Patent and Trademark Office (Deutsches Patent- und Markenamt).

The Member States of the European Union form a customs union. This means that they levy a common customs tariff at their external borders and are subject to the common customs rules enshrined in the Customs Code. The free movement of goods in the internal market means that no duty is paid between EU countries.

Consequently, the same tariff is always levied when a particular type of commodity is imported into the EU, irrespective of whether the goods enter the European Union through Rotterdam, Rostock or Naples. The tariff is levied only once, and the goods can then circulate freely between EU states without being subject to any additional customs duty. Once they are moving freely within the EU (i.e., once EU customs duty has been paid), non-Community goods acquire the status of Community goods for the purposes of customs legislation. However, the origin of the goods is preserved. Nonetheless, the amount of import sales tax and excise duty levied may differ between EU Member States. Despite all the tendencies towards harmonisation, these tax rates vary from one member country to another.

The customs duties levied on industrial products by the EU are value-related tariffs based on their transaction value and/or customs value. There are a total of six different methods of establishing the customs value.

Some of the most common specialist terms used in foreign trade are as follows:

In order that goods which are traded internationally can be identified without ambiguity, a coding system is to be used to classify all commodities. The so-called ‘Harmonised System’ is currently in use in some 160 countries. A useful initial source of information is the ‘Warenverzeichnis für die Aussenhandelsstatistik’ published annually by the German Federal Office of Statistics. It is essential to know the relevant code number of the goods, often also referred to as the customs tariffs number, when addressing any queries to the customs authorities. Rates of duties and taxes can only be established and questions about authorisation requirements and other essential paperwork answered if the code number relating to the goods is quoted. Using the wrong code number can have very far-reaching consequences, so it is important to ascertain well in advance the appropriate code numbers for the goods concerned, and to double-check them.

Non-binding information about customs tariffs can be obtained from the customs authorities (tel.: +49 (0) 351-44834-520, Email: enquiries.english@zoll.de).
Binding tariff information can also be obtained before importing the goods. This is especially advisable if the classification of the goods concerned is unclear and the tariff rate, import sales tax and import requirements differ, depending on the commodity code. The commodity code which is issued is binding for all customs offices within the European Union.

Before importing goods, the importer should establish beyond doubt whether the transaction is even permitted in the first place, and what expenses he can expect to incur. He should also be aware of what documents will have to be submitted, so that the appropriate contractual arrangements can be made with his foreign partner. It is important to note that customs duties in particular have a direct impact on price calculations, while the import sales tax (VAT), as a transitory item, is of little relevance in practice to companies which are entitled to deduct VAT. A summary of customs duties, taxes and other preconditions can be obtained from the customs information application and the export helpdesk.

Detailed information on importation procedures is to be found in our leaflet ”Basic Facts about Importation”.

When goods are exported, the exporter's counterparty will require certain documents to be supplied alongside the goods. The nature of these documents, the number of copies and, in certain cases, the need for them to be authenticated, must be agreed without fail when preparing the contract. Information on what documents are generally required in which countries are available at any Chamber of Commerce and Industry. Germany's Chambers of Commerce and Industry obtain most of their information from a reference work published by Hamburg Chamber of Commerce entitled ‘Konsulats- und Mustervorschriften’, which contains a wide range of information on the import rules of every country in the world. The Market Access Database of the European Commission also provides a good indication of which documents are required in the target country as well as the customs tariffs and tax rules in force there.
The exportation of goods to third countries is generally exempt from VAT. However, this depends on satisfactory evidence being provided that the goods have actually left the territory of the European Union.

Any goods not placed under outward processing customs procedures or a transit procedure are governed by the export procedures of the European Union. This means that a declaration must be made to the customs office responsible for supervising the place where the exporter is established or where the goods are packed or loaded for export shipment. The exporter is deemed to be the person on whose behalf the export declaration is made and who is the owner of the goods or has a similar right of disposal over them at the time the declaration is made. If this person is established outside the Community according to the terms of the contract governing the transaction, the contracting party established in the EU shall be deemed to be the exporter.
Certain goods require an export licence. This applies in particular to military weapons, goods with a military use, certain chemicals and chemical equipment, but also hi-tech goods of strategic military and/or security relevance. Goods requiring an export licence are listed in the Foreign Trade and Payments Act (Aussenwirtschaftsgesetz), the Foreign Trade and Payments Ordinance (Aussenwirtschaftsverordnung), Council Regulation (EC) No 428/2009 on dual-use items, and amendments to these documents, as well as in the Export Control List (Annex AL to the German Foreign-Trade and Payments Ordinance). Additional information on German export control legislation can be found on our homepage at Foreign Trade, and at the website of the Federal Office of Economic Affairs and Export Control (BAFA).

If goods are to be taken to certain non-EU countries on a temporary basis, an ATA Carnet may be issued by a Chamber of Commerce and Industry. The ATA (Admission Temporaire / Temporary Admission) Carnet Convention is an international transit procedure to which currently 63 countries around the world have signed up, and is intended to simplify the customs formalities pertaining to the temporary use of goods abroad. The umbrella organisation of Chambers of Industry and Commerce, the Association of German Chambers of Industry and Commerce (DIHK), assumes the role of a guarantor for foreign customs authorities. The not inconsiderable risk borne by the DIHK in this capacity is covered by a reinsurance contract with Euler Hermes Deutschland AG. ATA Carnets are obtained in circumstances where, for instance, goods are destined for trade fairs or exhibitions, as well as for samples of goods and professional equipment, and can be used in a number of target countries in accordance with the national regulations applicable there.