Navigating Trade Law

1.0 Introduction

The trade-law can be defined as the approach that can be used to determine the rules and customs related to handling trade in between different countries all over the globe. Now most of the government trades have become the part of World Trade organization. The Trade law is basically based or focused on the theory of economic-liberalism that is developed in Europe. The trade or transportation of products from territory of republic to the other foreign is termed as export of goods whereas transportation of goods from other foreign countries to territory of republic is termed as import of goods. The goods are nothing but the list of tangible assets, commercial cash or papers. There are various documents that are required to export and import certain goods from one location to other like Trading License, Bill of Lading and many others.

The study will discuss the Trade law for exporting and importing different commercial products and the laws and documents associated with it. It will also explain different shipping options which can be used for the trade of products through ship. The recommendation will also be provided considering the factors of shipping scenario as the primary component.

2.0 Discussion

2.1 Application to Practice

There exists a strong relationship within two of the biggest countries of Asia and that is India and China. It is found that both the nations have been subjected to fluctuation in the markets shares. Both the countries with an aim to start an economic relationship started trading goods from one location to other in between each other. It was in the year 1984, that both China and India entered into agreement of Trade. This agreement provides them with the most promising status of Most-favored nation. In the year 1994, India started involving in full trade relationship with China. The government from both the representative countries took steps or an initiative to turn into the dialogue-partners within the “Association of Southeast Asian Nations”. In the year 2003, the Bangkok agreement had been signed in between both the countries. This agreement allows both the countries China and India to offer trade preference for each other. As in accordance with the World-Trade organization both the countries started to take part in multilateral trade system. Therefore from there China started to be among India’s largest trading partners (Krikorian, 2012).

In the year 2013 the China undertook the UAE and becomes the largest trading partner of India. It became India 4th biggest destination of export as well as the largest import source. The trade figure shows the jumps in between India and China from “USD 2.71 billion” in 2001 to about “70 billion” in 2016. The majority amount of the imports remains in the favor of China because it has found to export around 50.48 billion goods from India. As it is found that the foreign trade and the rate of investments are gaining high percentage of importance in market, India is paying high attention to improve the security of sea lanes. The sea-lanes that move through and across the Andaman and Nicobar Island in the east of India are considered to be strategic route for the flow of Oils from the Indian Ocean to that of pacific oceans. India used to get about 70 percent of oil supplies through the sea route of India Oceans. The country India exports Oil through the India oceans to Beijing in China. The direction of the ship can be across the Bay of Bengal and straits of Malacca (thehindubusinessline.com, 2020).

The trade between two countries India and China takes place using the resources like technology, labor and many others. One of the country among India and China urge to sell the product at cheaper rate as compared to other countries. This process is known as specialization in the subject of International trade. For example if the India exports only oil and minerals and China export cotton then both agree to create at least 20 units of the products and sell to each other. Thereafter both the countries are now having access to the total of 20 units of product from both sides. The bank which is responsible for the finance of import and export of the particular company and also for financing, facilitating and promoting the actual amount of foreign trade is called as Export-Import Bank of India (Exim Bank). It is set up in the year 1982 which is owned by the government of India for promoting and financing the trade activity (Gil‐Pareja et al. 2019).

2.1.1 Carriers for Trading Activity from India to China and Vice Versa

China United Lines that is a part of Unitrans Group has considered being the latest ocean carries that introduced the direct services of trade in between India and China. The Seaspan Lebu is also one among the six vehicles that is operating on this route. The Nhava Sheva carrier that is operating from India to China takes 16 days to Tianjin. This connection of carrier helps in getting direct link with the Qingdao and Tianjin which are the two major ports of China. In the middle of the year 2014, Taiwanese Carrier Yang Marine transport has added some of the benefits through the slot exchange deals with the biggest operators. According to the report the actual trade between the China and India reached to about $70.59 billion with the shipment value of total $16.4 billion. The actual imports from China to India are about $54.2 Billion. The CISC is enabling CU Lines directly linked with the Indian Subcontinent and other parts of China as confirmed by one of the company of Shanghai (joc.com, 2020).

2.1.2 List of goods that are imported and Exported from India to China

The list of goods that are exported from India to China through ship is listed as below

Cotton Yarn which consists of 85% or more by the actual weight of cotton.

Iron Ores and Concentrates

Copper and Copper alloys

Roasted Iron pyrites

The goods that are imported from China to India are

Food and Agricultural products

Cement

Steel products

Medical Equipment

Automobile accessories

Diesel Engine

2.1.3 Role of checklist in trading activity

The 10 point checklist is been used as the type of guide to ensure that all the trading activity is been performed accurately or it entails about the clearance of good items. The 10 point checklist that is been used by India for the trading activity contains or for clearance of goods contains the following points

Preparation of Invoice correctly that is used for selling or exporting the good items.

Included all the information that is required for the customer invoice

It checks whether the invoice is matching up with the packaging slip

The goods is been marked with the country of origin unless the goods that are being exported are exempt.

Before clearing of goods scrutinize the instruction of supplier with respect to invoice

Work with the Customer Border Patrol to abide by all rules and regulations

Shipping on the carrier that has participated in AMS

Use of licensed Customer broker for the purpose of importation

Compiled with the laws that are related to import of goods

Contacting the CBP office at the entry port where actually the merchandise will enter so that the details of transaction can be provided.

Thus once all this 10 points are checked then finally the clearance of good is done in international trade activity.

2.2 Documents and Applicable laws

The different key documents that are required for the International trade activity all around the world are listed as below

Bill of Lading: The Bill of Lading is considered to be as one of the essential documents that contains the list of Ship’s Cargo usually in the form of receipt. The documents are handed over or given by the master of Ship to the person who will consign the goods to destination. It is the type of shipment-receipt that is carried by the carrier who delivered the goods to that of the predetermined location or the destination. It is categorized as a type of legal documents that can be used as the evidence or proof of goods delivery to the actual destination (Ahmadi et al. 2017). The information that is available in the bill of Lading is essential as it directs the person about the exact route for the shipment and also where actually it is going and how it can be handled. It also provides the title of ownership to the one who is the owner of consignments. The electronic bills of Lading are named as Bolero, EU Commerce, UNCITRAL and many others (Plomaritou and Voudouris, 2019). [Referred to Appendix 1]

International Sales Contract: The international sales of contract are considered to be an agreement between the group of sellers and a buyer for performing the sales of good. The contract contains the name of seller and buyer as well as the quantity or the type of product. The time of delivery, price as well as the condition of payment is also finalized and written in the International sales contract. It is specifies the list of acknowledgement that is exchanged between two of the parties formally. It specifies that both the parties must follow the American way of continuing the business that follows the guidance of UCC and also they understand the terms and condition properly. The International sales contract consists of the list of EEI Fillings and also the payments terms that can be followed from both the exporting as well as importing countries. It also includes the warranty obligation that indicates that during exchanging of goods in between India and China or any other countries there must be replacement and repair of damaged or expired products.

Letter of Credit: The letter of credit is basically a type of letter that is issued by Bank of one country like India or any other country to bank which is in different country like if it is in China as the guarantee of a payment which are made to one of the specified person (Istrate, 2019). Thus it ensures that if the buyer pays some amount to the seller or exporter then it will be done in time and also the correct amount will be paid. [Referred to Appendix 2]

Bill of exchange: The Bill of Exchange is also termed as the Draft or Bill that is issued by the Drawer or one who is Originator or seller. If India is exporter or selling any product to China then they are the Originator. It is also a type of Sight draft which subjected to be paid immediately. The benefits or the advantages of using the Bill of Exchange are it is a type of negotiable document which can be negotiated further to the other respective person. It gives value as the payment needs to be done before the actual merchandise gets finally delivered. The Bills of Exchange if issued by the seller like India or any other country then it usually does not provide any title to that of good materials.

Documents related to Insurance: The insurance certificate is required basically to ensure or certified that the goods which is transported has been basically insured through the open policy and it is safe from any coverage of risk. It is needed that the actual date through which the insurance will get effective must be same or can be earlier to that of the date for insurance of a transport documents.

Agreements of Charterparty: It is a type a contract through which the actual owner of ship give right to the other to use their ship for transporting a cargo. The owner of ship continues to proceed with the work like controlling the navigation and all the vessels management. But the actual capacity to carry is basically managed or engaged by the group of charterer.

The other list of documents that needs to carry by the India and other countries for exporting and importing goods to other country is Sea Waybill, Certificates of Origin, Export and Import License as well as Consular Documents. The commercial invoice is also needed while performing the trading activities in other country. The Sea Waybills is issued by any country like India as in the form of hard copy or soft copy format. It is basically a type of contract for the carriage. The commercial invoice is a legal document that is basically describes the good which is sold to importer and amount at which it is sold (Itwaru, 2018). Therefore whenever country India export any items to China or any other country then they this documents is used as a legalized paper (businessmanagementideas.com, 2020).

The list of law that is been followed while trading the goods from one place to another like for example in between India and China is defined as below

International Trade law: The international trade law consisting of the number of unfair or wrong practices which is followed by the country while exporting or importing goods to different country (legalcareerpath.com, 2020).

Estoppel Doctrine is a common law that is been followed to restrict the person from denying the agreement that has already been settled between two different countries like India and China or others. It consists of Carriage of Good by sea 1992 act.

3.0 Recommendation

There are various issues that have been faced by the Indian exporters while trading to China like lack of information related to the custom procedures, frequent rate change as well as change in policy, lack of transparency related to the technical standards and difference in testing method for imported and domestic products. The problems can be solved if there is increase in the number of continuous participation in the trade-fairs as well as seminars by both the countries. It will provide better trade opportunity through the positive initiative between two of the country.

4.0 Conclusion

The trade is one of the essential activities that is performed in between two different countries and it is necessary that both the country must abide by the laws and regulation so that there might not be any obstacles. The trading activity is one of the important step that needs some of the documents like Bill of Lading, Insurance, International sales contract, bill of exchange and many others. The study evaluated that how trade activity takes place between two different countries India and China. The carriers like Nhava Seva carriers mostly operate from India to the ports of China. The checklist is one of the essential documents that help the country to check accurately every trading step that must be followed before implementing the clearance of goods.

Reference List

Krikorian, J., 2012. International Trade Law and Domestic Policy: Canada, the United States, and the WTO. U.K: UBC Press.

Ahmadi, M.R.A., Elsan, M. and Noshadi, I., 2017. Comparative Study of Bill of Lading Function as Title Document. J. Pol. & L., 10, p.188.

Gil‐Pareja, S., Llorca‐Vivero, R. and Paniagua, J., 2019. Trade law and trade flows. The World Economy.

Istrate, L.G., 2019. The Role of Credits and Bank Guarantee Letters in Financing Trading Companies. Ovidius University Annals, Economic Sciences Series, 19(1), pp.601-606.

Itwaru, M., RIAVERA CORP, 2018. Merchant ordering system using optical machine readable image representation of invoice information. U.S. Patent Application 15/632,850.

Plomaritou, E. and Voudouris, I., 2019. The Relationships of Bill of Lading, Charterparty and Other Transport Documents. Journal of Economics, Management and Trade, pp.1-8.

Appendices

Letter of Credit Process

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