4. 23-4
Exhibit 23.1 Alternative International
Trade Relationships
Exporter
Unaffiliated
Known Party
Importer is ….
A long-term customer
with which there is an
established relationship of
trust and performance
Unaffiliated
Unknown Party
A new customer
which with exporter has
no historical business
relationship
Affiliated
Party
A foreign subsidiary
or affiliate
of exporter
Requires:
1. A contract
2. Protection against
non-payment
Requires:
1. No contract
2. No protection against
non-payment
Requires:
1. A contract
2. Possibly some protection
against non-payment
6. Exhibit 23.2 The Mechanics of Import and Export
2nd: Importer pays after goods received
23-6
Importer
Importer
Exporter
Exporter
1st: Exporter ships the goods
Importer Preference
1st: Importer pays for goods
Exporter Preference
2nd: Exporter ships the goods after being paid
8. Exhibit 23.3 The Bank as the Import/Export Intermediary
23-8
Importer
Exporter
1st: Importer obtains bank’s promise
to pay on importer’s behalf.
Bank
2nd: Bank promises exporter
to pay on behalf of importer.
4th: Bank pays the
exporter.
6th: Importer pays
3rd: Exporter ships ‘to the bank’
trusting bank’s promise.
the bank.
5th: Bank ‘gives’ merchandise
to the importer.
16. Exhibit 23.5 Parties to a Letter of Credit (L/C)
The relationship between the
importer and the issuing bank is
governed by the terms of the
application and agreement
for the letter of credit (L/C).
23-16
Issuing Bank
The relationship between the
issuing bank and the exporter
is governed by the terms of the
letter of credit, as issued by
that bank.
Beneficiary
(exporter)
Applicant
(importer)
The relationship between the importer and the
exporter is governed by the sales contract.
25. Exhibit 23.8 Steps in a Typical Trade Transaction
Importer
23-25
Exporter
1. Importer orders goods
2. Exporter agrees to fill order
6. Exporter ships goods to Importer
7. Exporter presents
draft and documents
to its bank, Bank X
Bank X Bank I
9. Bank I accepts draft, promising to pay in 60
days, and returns accepted draft to Bank X
Public
Investor
4. Bank I sends
L/C to Bank X
12. Bank I obtains
importer’s note
and releases shipment
3. Importer
arranges L/C
with its bank
13. Importer
pays
its bank
8. Bank X presents draft and
documents to Bank I
5. Bank X
advises
exporter
of L/C 10. Bank X sells
acceptance to investor
14. Investor presents acceptance
and is paid by Bank I
11. Bank X
pays
exporter
29. Exhibit 23.10 Typical Forfaiting Transaction
Exporter
(private industrial firm)
Importer
(private firm or government
purchaser in emerging market)
23-29
FORFAITER
(subsidiary of a
European bank)
Importer’s Bank
(usually a private bank in
the importer’s country
Investor
(institutional or individual)
Step 1
Step 3
Step 2
Step 7
Step 5
Step 4
Step 6