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International Trade Frequently Asked Questions

On: January 25, 2021    |    By: Arnesh Roy Arnesh Roy    |    25 min. read

International Trade Frequently Asked Questions | Shipping SolutionsIn my role at Shipping Solutions, I am privileged to talk with people from many different kinds of companies involved in international trade. As you might expect, I receive a lot of questions!

Today’s blog post compiles some of the most frequently asked questions that I hear. I hope that by the time you reach the end of this article, you will have a better understanding of some of the most common issues relevant to international trade.

To make it easier to navigate, I have divided the article into five sections:

1. Export Definitions

2. General Export Questions

3. Export Regulations and Compliance

4. Automated Export System

5. Export Documents

Export Definitions

What is an export?

Regardless of how it is transported out of the United States, any movement of goods outside of the country is considered an export. This also applies to technology, schematics or source code transmitted orally or in written form to a foreign national; these are called deemed exports, and it important to keep in mind that export regulations apply to these as well. An item is also considered an export if it is leaving the U.S. temporarily, or if it is the return of an item to a foreign country.

Deemed Exports: Exporting without Shipping a Product

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Why the Deemed Export Rule Is So Critical: EAR and ITAR

What HR Needs to Know About Export Compliance and Deemed Exports

What is the difference between the different product classifications: HS, HTS, Schedule B, ECCN, USML and ECN?

Harmonized System (HS) codes: HS codes are six-digit codes (e.g., 0701.90) used to identify products. HS codes are universal and are used for most international export documentation and commercial invoices. They are administered by the World Customs Organization. You’ll use an HS number when you are referencing the classification with your customers, vendors and anyone outside of the U.S.

Many governments add additional digits to the HS number to further distinguish products in certain categories. These additional digits are typically different in every country.

Harmonized Tariff Schedule of the United States (HTSUS) codes: HTSUS codes are 10-digit codes (e.g., 0901.21.0045) used to identify products. They may be called HTS codes for short. HTS codes are U.S.-specific and are used for import into the U.S. They are administered by the U.S. International Trade Commission (ITC).

An HTS code takes the same form as an HS code for the first six digits and then has four differing last digits. It’s very important that all U.S. importers know and use the correct HTS codes because commodity duties are assessed based on this classification. With some limited exceptions, HTSUS codes can also be used by U.S. exporters on their export paperwork. The full HTSUS list is available for free on the ITC website.

Schedule B: Schedule B codes are 10-digit codes (e.g., 0101.21.0000) used to identify products. They are U.S.-specific and are used specifically for exports out of the U.S. Schedule B codes are administered by the Census Bureau’s Foreign Trade Division and are used to compile export statistics.

Schedule B numbers are required to be reported to the Automated Export System (AES) for shipments valued at more than $2,500 or when your shipment requires an export license. As with HTS codes, the first six digits of a Schedule B code should be the same as an HS number; however, the last four digits may be different than the HTS code. A full list of Schedule B codes is available for free on the U.S. Census Bureau’s website.

Export Control Classification Number (ECCN): ECCNs are five-character alpha-numeric designations (e.g., 1A001) published on the Commerce Control List (CCL) to identify dual-use items for export control purposes. Dual-use items are products that have a commercial use, but also have the potential to be used in military applications.

An ECCN categorizes items based on the nature of the product, i.e., type of commodity, software or technology and its respective technical parameters. ECCNs are administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) under the Export Administration Regulations (EAR).

United States Munitions List (USML): Under the International Traffic in Arms Regulations (ITAR), the USML is a list of products, technologies and services deemed space- or defense-related. The Directorate of Defense Trade Controls (DDTC) is the organization within the U.S. Department of State that is tasked with enforcing the ITAR. Any product, technology or service listed in the USML requires an export license to export, though license exceptions may be available in certain circumstances.

Export Control Number (ECN): A broad term meant to include all export control numbers including ECCN and USML listings.

What's the Difference between a Schedule B Code and an HS Number?

What's the Difference between HS Codes and HTS Codes?

USML vs. ECCN: What's the Difference

What are Incoterms?

Incoterms are universal trade terms published by the International Chamber of Commerce (ICC.) They consist of three-letter codes that are intended to clearly communicate the tasks, costs and risks associated with the transportation and delivery of goods in an international transaction. They describe how responsibility is allocated between the seller and the buyer for different parts of the transaction.

An Introduction to Incoterms 2020 Rules

From EXW to DDP: Incoterms 2020 Plain and Simple

Incoterms 2020 Chart of Responsibilities and Transfer of Risk

What is a USPPI?

USPPI stands for United States Principal Party in Interest. In an international transaction, this is typically the exporter.

Understanding U.S. Principal Party in Interest

How to Determine the USPPI

USPPI vs. Exporter: What's the Difference?

What is an FPPI?

FPPI stands for Foreign Principal Party in Interest. In an international transaction, this is typically the foreign buyer.

Who Is the FPPI and Why Are They Important?

What is a routed export transaction?

A routed export transaction occurs when a foreign purchaser, or foreign principal party in interest (FPPI), requests to have their merchandise delivered to another location within the United States.

Standard vs. Routed Export Transaction: What's the Difference?

Why I Hate Routed Export Transactions

What is a freight forwarder?

A freight forwarder is a type of company that specializes in arranging the transportation of goods. A freight forwarder can be hired by either the buyer or the seller in an international transaction, and they may provide additional services such as packaging, document preparation and customs clearance.

Make sure you're using the right export documents. Download the free  Beginner's Guide to Export Forms.

What is a carrier?

A carrier is a company or party that moves the goods in an international transaction. An inland carrier will move the goods from your warehouse to the port of export. From there, an air carrier would transport goods on an airplane, an ocean carrier would transport goods on a ship, a rail carrier would transport goods on a railroad or a truck carrier would transport goods on a truck.

What is a customs broker?

Customs brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting federal requirements governing imports and exports.

How to Choose the Right Customs Broker and Freight Forwarder

So You Want to Be a Customs Broker?

What is customs, and what is its role in international trade?

Customs refers to the official department that administers and collects duties levied by a government on imported goods. Exports from the U.S. are monitored by U.S. Customs and Border Protection (CBP). The customs agency of the country of import is responsible for enforcement of import laws and the collection of duties and taxes.

What is a reexport?

According to the U.S. Bureau of Industry and Security (BIS), a reexport is “the shipment or transmission of an item subject to the Export Administration Regulations (EAR) from one foreign country (i.e., a country other than the United States) to another foreign country. A reexport also occurs when there is 'release' of technology or software (source code) subject to the EAR in one foreign country to a national of another foreign country.”

What Is a Reexport?

What is a power of attorney?

A power of attorney (POA), also called a letter of attorney, is a written authorization to represent or act on another’s behalf. The person authorizing the other to act is called the principal, grantor or donor (of power). The one authorized to act is called the agent.

What is IATA?

IATA stands for International Air Transport Association. This is a trade association of the world’s airlines. IATA publishes a list of codes that correspond to different air carriers, and these codes may be used on export paperwork.

What is SCAC?

SCAC stands for Standard Carrier Alpha Code. The National Motor Freight Traffic Association publishes a list of codes that correspond to different inland carriers, and these codes may be used on export paperwork.

What are the Foreign Trade Regulations?

The Foreign Trade Regulations (FTR) are published by the U.S. Census Bureau in 15 CFR Part 30 and are available for free on the U.S. Census Bureau website. The FTR includes provisions requiring exporters to file their electronic export information (EEI) through the Automated Export System (AES), export licensing requirements, as well as other regulations placed on international trade.

What are the Export Administration Regulations?

The Export Administration Regulations (EAR) are enforced by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). Among the content found in the EAR is the Commerce Control List (CCL), a list of dual-use items; that is, items that have both a commercial use as well as a potential military application. Each dual-use item has a corresponding Export Control Classification Number (ECCN), which is used to determine if an export license is required. The EAR are available for free on the BIS website.

What are the International Traffic in Arms Regulations?

The International Traffic in Arms Regulations (ITAR) are administered by the U.S. Department of State under the Directorate of Defense Trade Controls (DDTC) and include controls placed on the import and export of space- and defense-related products listed on the United States Munitions List (USML). The ITAR are available for free on the U.S. Department of State website.

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6 Basic Steps for Export Compliance

What You Need to Know about Export Compliance [White Paper]

General Export Questions

What is the role of banks in an international transaction?

Both the buyer and seller will work with their own bank to transfer funds. The seller’s bank in the U.S. can help determine the best payment terms for a sale, such as a letter of credit, and will work with the buyer’s bank to facilitate payment based on their banking instructions.

What resources are available to help with international trade?

At the state level, state Trade Offices and District Export Councils can help companies engaged in international trade. At the federal level, there are U.S. Export Assistance Centers (USEACs) as well as Small Business Development Centers (SBDC). At the international level, World Trade Centers and the U.S. Commercial Service’s international locations may be of assistance as well.

Export Assistance: State, Federal and International Resources

Tapping into the U.S. Commercial Service's In-Country Offices

Export Regulations and Compliance

How can I determine the correct classification for my products?

The first step in ensuring export compliance is determining who has jurisdiction over your goods. While most items are controlled by the U.S. Department of Commerce under the Export Administration Regulations (EAR), your items may not be, especially if they have a direct military application. In that case, they may fall under the jurisdiction of the State Department's Directorate of Defense Trade Controls (DDTC).

There are three ways to classify your commercial products for export controls:

  1. You can self-classify your products by finding your item’s Export Control Classification Number (ECCN) on the Commerce Control List (CCL).
  2. You can submit a Simplified Network Application Process - Redesign (SNAP-R) request for a ruling from the Bureau of Industry and Security (BIS).
  3. You can rely on the product vendor to classify your products.

You can search for Schedule B codes on the U.S. Census Bureau website. Alternatively, you can use a tool like the Shipping Solutions Product Classification Wizard to help you classify your products.

Export Codes: ECCN vs. HS, HTS and Schedule B

How do I determine if I need an export license, and how do I obtain one if needed?

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) is responsible for enforcing the Export Administration Regulations (EAR) that regulate the export and reexport of goods that are dual-use; that is, they have both a commercial as well as a military application. Purely commercial items are also subject to the EAR.

Other U.S. government agencies regulate more specialized exports. For example, the U.S. Department of State has authority over defense-related products and services. Supplement No. 3 to Part 730 of the EAR lists the other agencies involved in export controls.

In order to determine if your export requires authorization from the Bureau of Industry and Security (BIS), which is part of the Commerce Department, you need to answer the following questions:

  • What is the ECCN of the item?
  • Where is it going?
  • Who is the end user?
  • What is the end use?

If after reviewing the CCL you are convinced that your item does not fit the parameters of any ECCN on the list, you may have an item that is designated EAR99, which means that though it is under the jurisdiction of the EAR, it does not have a corresponding ECCN on the CCL. If this is the case, you may export the product under license exception NLR (No License Required) if all the following criteria are met:

  • The item is not being shipped to a sanctioned destination.
  • The item is not being shipped to a denied person, sanctioned entity or prohibited end user.
  • The item will not be used for a specific end use, subject to higher controls.

The Shipping Solutions Export Controls Wizard can help to streamline this process. This tool takes the answers to these questions into account and helps you determine if you need an export license to stay compliant with export regulations.

EAR99 Isn't a Free Pass for Export Compliance

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No, You Probably Don't Need an Export License, But...

Automated Export System

When and how do you have to file through the Automated Export System?

Companies that export out of the United States are required to report shipment information to the Automated Export System (AES), the system that the U.S. government uses to collect data on exports. The U.S. Census Bureau uses this data, which they call electronic export information (EEI), to compile statistics on economic indicators and the Gross Domestic Product (GDP) of the United States. U.S. Customs and Border Protection (CBP) uses this data to ensure that exporters are following regulations and that exports do not end up in the hands of restricted parties who may pose a threat to the national security of the United States.

If the exporting company or the foreign buyer is going to rely on a freight forwarder or other agent to file through AES on their behalf, they must present this agent with a written limited power of attorney or some other written authorization.

Watch the video tutorial: How to File through AESDirect via the ACE PortalAES filing information includes:

  • Name and contact information for the USPPI, the ultimate consignee, freight forwarder and, if appropriate, intermediate consignee.
  • Actual date of export.
  • Method of transportation, including the carrier information and the port of export.
  • Quantity, description, Schedule B number, weight and value of goods.
  • ECCN classification and export license or license exemption code.
  • Shipment reference number.

Filing Your Export Shipments through AES

What Is an EEI Filing?

Who Is Responsible for Filing the Electronic Export Information (EEI)?

Filing through AESDirect: 20 Terms Exporters Need to Know

Filing Your Export Shipments through AES [White Paper]

Export Documents

What is a proforma invoice?

After a potential buyer expresses interest in purchasing your product and outlines the terms of their interest, they may ask for a formal quote. A proforma invoice lists the products to be purchased and acts as a quote. If an order results, the commercial invoice you generate will closely resemble the proforma invoice with the included costs being consistent across both documents.

A typical proforma invoice includes:

  • A price for your products.
  • A description of the goods including the correct six-digit Harmonized System (HS) or Schedule B number, which the buyer will use to determine any duties and taxes.
  • The delivery terms usually expressed as one of the Incoterms 2010 terms.
  • Payment terms.
  • Delivery details, including where the goods will originate and where they will be delivered.
  • The expiration date.

How Does the Proforma Invoice Fit in the Sales Process?

Proforma vs. Commercial Invoice: What's the Difference?

What is a commercial invoice?

A commercial invoice is perhaps the most fundamental document in an international transaction. This document is prepared by the exporter and provides important instructions and information to the buyer, freight forwarder, U.S. and foreign customs, the import broker, the marine insurance company and both your bank and the buyer’s bank.

A typical commercial invoice includes:

  • An invoice date and number.
  • Contact information for the seller, buyer and delivery locations.
  • Quantity, price and description of the goods including the correct six-digit Harmonized System (HS) or Schedule B number.
  • Additional freight and handling fees, if appropriate.
  • The currency used for payment of the goods.
  • The delivery terms usually expressed as one of the Incoterms 2010 terms.
  • Payment terms.
  • The Destination Control Statement.

10 Items That Belong on Your Commercial Invoices

Why You Shouldn't Include HS Numbers on a Commercial Invoice

Export Compliance: Using the Proper Value on a Commercial Invoice

What is a certificate of origin?

The certificate of origin (COO) is used to identify the country of manufacture of the goods in your export shipment. It may have to be certified by a chamber of commerce or consulate. Some countries have free trade agreements (FTAs) with each other that specify a version of the certificate of origin form. Many countries accept a generic certificate of origin or even a statement of origin on the commercial invoice.

Most countries also accept an electronic certificate of origin (eCO) that has been electronically signed by a chamber of commerce, who then registers the legitimacy of the certificate with customs authorities around the world. Using an eCO can be faster and less expensive than traditional paper certificates.

A generic certificate of origin usually includes:

  • The exporter and importer name and address.
  • A description of the goods, including the 10-digit Harmonized Tariff System (HTS) Code and the country of origin for each item.
  • The certification statement used by the chamber of commerce or consulate certifying the goods along with their signature and stamp.
  • The location where and when the certification took place.

The Chamber of Commerce and Export Documents: The Certificate of Origin

When to Use a Certificate of Origin Form for Your Export Shipments

Using the Right Certificate of Origin Form for Your Export Shipments


What is a packing list?

The packing list may be used by the freight forwarder to prepare a bill of lading for the ocean or air carrier and to understand how much room is needed for the cargo. It may be used by banks as a supporting document presented for payment under a letter of credit or other payment terms. It may be used by U.S. Customs as well as by customs in the country of import for compliance and duty liability.

In addition to including the basic details about the international transaction, the packing list will include:

  • The name and contact information of the exporter and ultimate consignee.
  • Details of which items appear in each of the packing containers.
  • Weight and measurements of each packing container.
  • Any marks and numbers including a container number and seal number if appropriate.
  • The total number of pieces and weight and measures of the entire shipment.
  • Any special instructions or additional information that is important for the shipment.

The Importance of an Export Packing List for Your International Shipments

What is a shipper’s letter of instruction?

A shipper’s letter of instruction (SLI) is a document prepared by the exporter that is given to the freight forwarder and outlines instructions for the freight forwarder. An SLI typically includes a limited power of attorney statement that authorizes the freight forwarder to sign documents on behalf of the exporter.

Think of the standard format SLI as a cover memo for the rest of the export documents. It includes:

  • The name and contact information of the freight forwarder, exporter, ultimate consignee and intermediate consignee.
  • Information about the products being shipped, including a description of the goods, how they are packed, any special markings on the packing and their weights and measurements.
  • Any export control information that may be used to determine whether or not there are any restrictions on exporting the goods.
  • Who is paying for the freight.
  • Whether or not the goods should be shipped directly or consolidated with other freight, which may reduce the cost of the shipping.
  • Whether or not insurance is required for the shipment.
  • What other documents are being included with the shipment.
  • Any other special instructions to the forwarder or carrier.

In cases where you need to file your export information through the Automated Export System (AES), you may use a specific version of the SLI created by the National Customs Brokers and Forwarders Association of America (NCBFAA) that includes additional information for the freight forwarder to file through AES on your behalf. This version of the SLI typically includes an additional statement granting the forwarder the right to file through AES.

Foreign Trade Regulations (FTR) require that you provide at least these 10 data elements:

  • The name and address of the USPPI.
  • The employer identification number or other tax identification number of the USPPI.
  • The point of origin for the merchandise awaiting exportation.
  • The appropriate merchandise code, Domestic (D) or Foreign (F).
  • The appropriate Schedule B number.
  • The appropriate Schedule B description of commodities.
  • The appropriate quantity and unit of measure.
  • The appropriate value.
  • The appropriate export control classification number (ECCN) or enough technical information to determine the ECCN.
  • Sufficient technical information to determine which U.S. government agency has licensing authority over the goods.

5 Reasons You Need a Shipper’s Letter of Instruction for Your Exports

The Beginner's Guide to the Shipper's Letter of Instruction

What is a bill of lading?

A bill of lading (BOL) is a document issued by a carrier or the carrier’s agent that acknowledges receipt of cargo for shipment. It serves as a contract between the owner of the goods and the carrier stating what goods you’re shipping, where the shipment is coming from and where it’s headed. A bill of lading (or a waybill) may also serve as a document of title that allows the person holding it to claim possession of your shipment.

What Is a Bill of Lading: 3 Things You Need to Know

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What is an inland bill of lading?

The inland bill of lading is a contract between the owner of the goods and the carrier stating what goods are shipping, where they are going and where they started. It also serves as a receipt issued by the carrier once your shipment is picked up. This document is typically consigned to the freight forwarder, warehouse, packaging company, another third party in the process, or the international carrier. It is not typically consigned to the foreign buyer of the goods. If it is not immediately consigned to the international carrier, the forwarder or other third party will need to consign it to the carrier once they are identified.

An inland bill of lading should include:

  • The name and contact information for the exporter, the consignee and the bill to party.
  • The inland carrier’s information.
  • A description of the goods, including their weight and dimensions and how they are packed.
  • Any special instructions for the shipment.

What You Need to Know about the Inland Bill of Lading

Understanding the Inland Bill of Lading [webinar]

What is an ocean bill of lading?

The ocean bill of lading serves as both a contract for carriage and a document of title for the cargo. The bill of lading identifies the parties on both ends of the shipment, as well as a description of the goods and routing instructions.

An ocean bill of lading should include:

  • The name and contact information for the exporter, the ultimate consignee, forwarding agent and the notify parties.
  • Vessel, booking and loading instructions for the international carriage of the goods.
  • A description of the goods, including their weight and dimensions, the number and kinds of packages, any marks and numbers on those packages, and whether any of the goods are hazardous.
  • Freight rates and charges.

8 Common Costly Mistakes Shippers Make on the Ocean Bill of Lading

What is an air waybill?

The air waybill is the equivalent of the ocean bill of lading but for air transport. However, the air waybill cannot be negotiable; they may never be consigned “to order of shipper.” An air waybill is the document that controls the routing of the exporter’s cargo while it is in the hands of the air carrier or a consolidator.

An air waybill should include:

  • The name and contact information for the exporter and the ultimate consignee.
  • Carrier information.
  • The airport of departure and routing.
  • The description, weight and dimensions of the cargo.
  • Freight charges.
  • The relevant anti-diversion clause.

What is a dock receipt?

A dock receipt is a document designed to provide the exporter with proof of delivery of the cargo to the international carrier in good condition. It is often prepared by the exporter or freight forwarder and is signed by the warehouse worker or agent of the carrier upon receipt of the goods. Once the goods are delivered and signed for, the inland carrier provides the dock receipt to the freight forwarder as evidence it has successfully completed delivery of the goods. This is important in case the goods are lost or damaged after delivery to the dock and before arriving at their international destination.

A dock receipt should include:

  • The name and contact information for the exporter, the ultimate consignee, forwarding agent, and the notify parties.
  • The place, date and time of the inland delivery of the goods.
  • Vessel, booking and loading instructions for the international carriage of the goods.
  • A description of the goods including their weights and dimensions, the number and kinds of packages, any marks and numbers on those packages, and whether any of the goods are hazardous.
  • Any special instructions for the shipment.

Watch the free online webinar: An Introduction to Shipping Dangerous Goods.

What is a Dangerous Goods IATA form?

The International Air Transport Association (IATA), which makes up the majority of the world’s airlines, uses the ICAO Technical Instructions for the Safe Transport of Dangerous Goods by Air as the basis for their dangerous goods regulations (IATA-DGR.) Some airlines have specific operational variations and shippers should be aware of these variations. The Shipper’s DG Declaration has very specific requirements and can be quite complex.

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What is a Dangerous Goods IMO form?

Shipping dangerous goods internationally by vessel is regulated through the International Maritime Organization (IMO). The IMO is a specialized agency of the United Nations. The IMO uses the International Maritime Dangerous Goods Regulations Code (IMDG Code) as the basis for international enforcement of dangerous goods transportation by vessel. These regulations are amended every two years with each amendment valid for three years.

The IMDG Code requires the following:

  • A declaration from the consignor stating that the particular dangerous goods declared are identified, classified, packaged, marked, labeled and placarded correctly.
  • A declaration from the person packing the container to ensure it has been done correctly.

A Dangerous Good Shipped by Any Other Name Would Smell as Sweet

Hazardous Materials vs. Dangerous Goods: What's the Difference?

What is a Non-Dangerous Goods form?

As stated in IATA DGR 8.2.6 Non-Dangerous Goods:

If an article or substance could be suspected of being a dangerous good, but does not meet the criteria for any of the hazard classes or divisions, it may be offered for transport as not restricted if the words ‘Not Restricted’ are included in the description of the article or substance on the Air Waybill to indicate that it has been checked. The statement “Not restricted, as per Special Provision Axx” must be included in the description of the article on the Air Waybill, when required, to indicate that the Special Provision has been applied.

This form relieves any suspicion if handlers question the nature of the product and assures them there are no dangerous goods involved. It also shows the shipper has taken due diligence and responsibility, formally presenting the product information and stating the article, or material, being shipped is not restricted for air transport.

It is not a required form, but it is commonly used to make the exporting process easier.

What is a bank draft?

A bank draft is an important part of the international sales process for transferring control of the exported goods from the seller in exchange for funds from the buyer. It is often called a documentary collection, because the seller attaches documents to a draft and a cover letter.
Usually the seller’s bank will send the bank draft and related documents via the freight forwarder to the buyer’s bank or a bank with which it has a relationship in the buyer’s country. When the buyer authorizes payment for the goods, the buyer’s bank will release the documents to the buyer and transfer the funds to the seller’s bank.

The bank draft may or may not include a transmittal letter, which includes details of the draft transaction including the types of additional documents that are included and payment instructions.

10 Terms You Need to Know to Help You Get Paid for Your Exports

Getting Paid for Your Exports: Payment Options for International Transactions


This article was first published in April 2017 and has been updated to include current information, links and formatting.

Shipping-Solutions-Export-Procedures-and-Documentation

Arnesh Roy

About the Author: Arnesh Roy

Arnesh Roy was a Senior Inside Sales Representative at Shipping Solutions.

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