International Market - General Requirement

 
Section I. Required Shipping Documents
 
The shipper whether Importer or Exporter has to make several arrangements prior to importing or exporting. Arrangements may include the means of payments (refer to the terminology) based on the contract with the supplier and obtaining the documents and approvals necessary to complete the clearing process and the receiving of goods without facing complications. The shipping documents are as follows (for more information, please refer to the terminology):
 
  • Import License (the import licensing is vary according to product type) (Form # 7 Ar/En & En/Hr)
  • Commercial Invoice : the invoice should indicate the shipping term
    o   Incoterms 2000[1] seeks to create a set of international rules for interpreting the most common terms in international trade. They aim at preventing the uncertainty derived from differing interpretations of trade words in different countries, or at least reduce them greatly. Some examples follow.
  • Packing List
  • Certificate of Origin and other forms proving the origin of the goods (i.e. EUR.1 for Europe or Form A for the USA)
  • Bill of Lading (B/L)   
 
The above mentioned documents are essential to begin the clearing process. These documents are usually received together with the shipment or through a bank. Some importers receive them by courier services.
 
It is advisable to have the documents sent by fax before shipment. This practice enables the importer to verify the accuracy of the documents and prepare the clearing agent for arrival of the goods. If the documents are correct, the clearing agent prepares the Customs Declaration Form in advance, accelerating the clearing procedures and saving time upon arrival of the goods. In case some documents are missing, the exporter will have time to expedite them prior to arrival of goods and therefore avoid costly delays in the clearing process.
 
I. Packing List
 
A packing list is a document that contains product related as well as order related information. It relates to a particular entity (i.e. transport unit) that is shipped to a certain destination. As indicated by the name 'Packing List’, it summarizes all items that have been physically packed together into one handling unit.
 
II. Bill of Lading (B/L)
 
The bill of lading is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified; there are three main types:
 
  • Airway bill (AWB): Document made out by or on behalf of the shipper, which evidences the contract between the shipper and carrier(s) for carriage of goods over routes of the carrier(s) and which is identified by the airline prefix issuing the document plus a serial number.
  • Bill of lading (B/L): This is the carrier’s confirmation of receipt of the goods for sea ports or surface transportation, as well as a convertible certificate of title in favor of the buyer.
  • Truck waybill of lading: This is the carrier’s confirmation of receipt of the goods for land borders, e.g. King Hussein Bridge and the Rafah border.
 
III. Commercial Invoice
 
The Commercial Invoice is a bill for the goods from the seller to the buyer, which describe the goods or the servicers render, indicating the shipping terms. It is used to determine the true value of goods for the assessment of customs duties and taxes by the customs.
 
IV. Issuance of Certificate of Origin
 
The Certificate of Origin is a specific document identifying goods, in which the authority or body authorized to issue it, certifies expressly that the goods to which the certificate relates originate in a specific country (or group of countries, a region or a part of a country). This certificate may also include a declaration by the manufacturer, producer, supplier, exporter or other competent person.
 
There are types of certificate of Origin as follow:
 
  • Arab Countries:
o Arab countries that offers PNA duty free: Unified COO (Under the Agreement to Facilitate and develop trade exchange between Arab countries (Form # 8)
o  Arab counties don’t offer PNA duty free: Bilateral COO
  • EU countries, Certificate of Origin is called EUR1 (under the Association Agreement with the European Union) (Form # 9).
  • USA and Certificate of Origin is called Form A
  • To the rest of the world. (Islamic countries, European countries outside the European Union, South America, Canada and China: special form developed by the Chamber of Commerce.
 
The Certificate of origin for all countries except the European Union is to be issued by the Chamber of Commerce within one working day and costs 0.02% from the invoice value giving that it must not be lower than 5 JD or exceeding 30JD. While the European Union Certificate of Origin (Euro 1) is issued by the Palestinian Ministry of Finance and is free of charge. The Ministry of National Economy is to authenticate the certificate of origin. And its issuance is free of charge.
 
 

 

Section II.Secure Payment

Secure payment is critical. There are a variety of trade finance instruments to obtain payment for your sale and a simplified list is:

 
  • A cash sale: A buyer pays cash in advance of shipment. This is unusual in international trade, but more common in internet transactions.
  • Letter of Credit (L/C): Guarantees payment for an export against receipt of specified documents. Letters of Credit have been a cornerstone of international trade and the mostly used mean for payment.
  • Letter of Credit confirmations: Your bank can assist with mitigating country and political risks.
  • Documentary collection: The exporter entrusts the handling of trade documents to banks and provides the banks with instructions on the release of the documents (and hence the goods) to the importer.
  • Open account: This is similar to domestic credit terms where you place trust in the buyer to remit funds within a specified time, while these terms are often requested by buyers.
  • Export financing: Supporting customers by providing pre- and post-shipment financing. Overseas buyers may require your company to supply them with bonds as security for advance payments or in support of your performance obligations under contracts.
  • Factoring (the sale of an exporter’s accounts receivable) and forfeiting (the purchase of an exporter’s receivables) at a discount by paying cash can be useful financial tools to assist new exporters manage cash flow pressures.
  • Performance bonds: A Performance Bond is an undertaking that your company will carry out the required work and comply with the contract. Your bank can assist with establishing a performance bond or guarantee. A bond will commonly be sought for 10-15% of the contract value.
 
Section III. Other technical requirements
 
Sanitary and Phytosanitary regulations: Are regulations set by the governments to ensure food safety, animal and plant health measures; and to prevent the spread of pests or diseases among animals and plants. Sanitary and phytosanitary measures can take many forms, such as:
 
  • Requiring products to come from a disease-free area,
  • inspection of products,
  • specific treatment or processing of products,
  • Setting of allowable maximum levels of pesticide residues or permitted use of only certain additives in food.
 
Sanitary (human and animal health) and phytosanitary (plant health) measures apply to domestically produced food or local animal and plant diseases, as well as to products coming from other countries.
 
Palestinian exports must meet all the standards outlined by the destination country. It should be known that the phytosanitary certificate is issued by the relevant authority in the country of origin in case of products such as fresh fruits, fresh vegetables, dried fruits, nuts, cut flowers. While the Sanitary Certificate is issued by the country of origin for products such as frozen meat, hides, animal parts and live cattle.
 
 
A Veterinary License: Certifies that the animals being exported have not been infected by any diseases for a certain number of months. It is required for the exports such as live animals, meat, milk, and any products of animal origin and it is issued by the relevant authorities in the country of origin.
 
An Environmental Permit is required for the movement of commodities that might have an impact on the environment or cause an environmental risk to health or have any other environmental concerns. It is issued by the responsible authorities in the country of origin.
In Palestine this permit is issued by the Environmental department of the Ministry of Health and need an approval of the Israeli Ministry of Environment which can be obtained through the Israeli Civil Administration. The application should be accompanied by:
 
  •  A certificate of analysis of imported goods which is obtained from the exporter.
  •  Pro forma invoice.
     
Issuing the Environmental permit may take up to five days and it is free of charge.
 
 
 
Labeling, marking and packaging are mandatory requirements for any imported product so that it will comply with Palestinian standards.
 
Labeling
 
The Labels of Imported commodities must meet the Specifications set by the Ministry of National Economy, which are as follows:
 
  • The labeling should be in Arabic; if another language is included other than Arabic, the Arabic language label should be written in larger letters in proportion to the letter size of the foreign language.
  • The contents of the produce should be of identical size in both languages.
  • The label should be printed in a color different from that of the package and be easily legible.
  • The label should be printed on the packaging and not glued to the product itself; In the case of clothing items, the label should be sewn to each individual piece.
     
The labeling should include the following information:
 
  • Name of the product and product trademark;
  • Type of product;
  • Name and address of the importer;
  • Place of production, name and address of producer;
  • Date of production and expiry date;
  • Product contents/ingredients;
  • Conservation or storage tools contained or required; and
  • Volume of the product.
  • The importer should contact the Ministry of National Economy for approval of the label/artwork of the product prior to shipping of the merchandise. In addition to the application, the following documents should be enclosed with the application form:
  • Label design containing the aforementioned information;
  • Corporate registration;
  • Registration of the Palestinian agent if the producer distributes into Palestine through an authorized agent; and
  • Proof that the product contents comply with standards and specifications.
  • Moreover, any product that requires a safety warning cannot be distributed without the requisite warning (i.e. cigarettes and flammables). There are numerous kinds of warnings depending on the type of product.
     

The importer may conduct the labeling of products in one of three ways:
 

  • At exporter country; the importer can send the label for approval to the MNE prior to receiving the shipment.
  • At the port of arrival. Products packed into a container cannot be discharged from the border crossing until the products are labeled.
  • At the importer’s warehouse. To proceed with this option, the products can be cleared by obtaining a bank guarantee until such time that an inspector, delegated by the MNE, verifies that the products have been correctly labeled according to the specified standards. Accordingly, the MNE will inform the Israeli Customs Authorities within 45 days of the outcome of the inspection. Consequently, the Israeli Customs Authorities will instruct the bank to release the guarantee. Currently, as a result of an agreement between the PNA and Israel, guarantees should be placed with Israeli banks.
     
Marking
 
Marking is mainly used as an alternative to labeling when the imported goods cannot be labeled (i.e. heavy-duty machinery, vehicles, etc).. Moreover, marking is always required on the packing cases. Common shipping marks to be placed on each packing case are the following:
 
  •  identification of the importer;
  •  number of the packing case;
  •  port of destination;
  •  gross and net weight;
  •  outside measurements of the case;
  •  country of origin; and
  •  Cautionary marks if careful handling is required.
     
Packaging
 
Packing is essential to ensure the arrival of goods safely. There are various types of packaging including corrugated or plywood boxes, wooden crates, multi-wall bags, barrels and metal containers. Selecting the appropriate type of depends on the following:
 
  • The characteristics of the product;
  • The type of transport carrier;
  • Legal restrictions and;
  • The after sale use of the product.
 
Packaging should comply with the customs rules on packaging applied in the country of destination. Imported goods destined for Palestine should comply with such packaging requirements, knowing that there are no specific Israeli packing requirements related to security concerns or inspections for products imported into Palestine. Example on packaging requirements is the prevention of using any packaging materials for foodstuffs which contain substances likely to have adverse affects on human health.
 
Standard approvals
 
The Palestinian Authority (PA) under the Paris Protocol (PP) has agreed to implement Israeli import taxes, commodity quotas and product standards on the majority of imports to Palestine. However, the PA maintains the right to decide the level of import taxes for a limited set of items contained in the lists below:
 
  • Lists A1(certain items imported from Jordan and Egypt),
  • A2(certain items imported from other Arab and Islamic countries) and;
  • List B (raw materials and machinery) the PA can decide the level of import taxes but applies the same Israeli standards.
     
It should be mentioned that the PA applies its level of import taxes in case of list A1 and A2 only for a specified quantity, in case of exceeding this quantity the Israeli standards will be applied to the additional quantity.
Also it should be mentioned that in addition to the mandatory standards with which the importer must comply for entry into Palestine, there may be additional certificates such as the ISO 9000 & ISO 9001 requested by the exporting country.
The Israeli tariff schedule is the official reference guide indicating which standards are applicable for a specific product by an “S” designator. The products are divided into four categories according to the extent to which products are a danger to health or other considerations, and which standard is applicable.
Product testing by the Israeli Standard Institute (ISI) falls into two categories:
 
The Model Test

Is a test conducted by the Israeli Standards Institute for a sample item of a shipment prior to its arrival. In case the item passes the test a model certificate is issued, If not the ISI may seek the co-operation of the Palestinian Standard Institute (PSI). In this case the following procedure applies:
 
  • The importer pays a bank guarantee equal to the value of the goods to an Israeli bank to release the shipment. The best source of information concerning the bank guarantee is the customs agent.
  • The importer files a Notice of Shipments’ Clearance/Imported Shipment form as a notification that the shipment has been released by the Israelis and is in a warehouse.
  • The importer files a notarized Application for Imports’ Conformity form at the PSI and pays a 100 NIS fee.
  • The importer then brings the shipment into compliance and applies to the PSI to have the correction verified. 
  • The PSI conducts tests to verify the correction and the importer pays a 120 NIS fee and an additional 50 NIS for the transportation of the PSI employees.
  • The importer files a Permit to Market Import Goods for PSI approval.
  • The PSI coordinates with the Ministry of national economy to gain Israeli Civil Administration (Beit Eil) approval to release the bank guarantee.
  • The importer should not market the goods until the PSI grants approval for the shipment.
     
The duration of the Modal test can range from one month to one year depending on the type of product. The fees paid depend on the type of product and the type of tests conducted and cannot be determined within the scope of this guide. Palestinian traders can ask for quotation for product test. For example, for bicycles, the amount of the product test is 8025 NIS.
If the importer presents a CB certificate (a Certification Body certificate which is an international test report), there will be no need for an ISI model test. However the ISI will verify the certificate and if there is a successful verification, the shipment is released. This process typically takes ten days. 
 
The Prototype Test
 
In order to process a product with a prototype test, the importer or their agent provides the ISI with a sample of the product and accompanying background material such as catalogues and manuals, product description and operation instructions, despite the fact that a sample is pre-tested, on arrival the goods might be rechecked by partial re-testing. 
 
[1] for more information about Incoterms 2000, please refer to (http://www.iccwbo.org/incoterms/id3040/index.html)