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