Supply Chain Review 2

Question 1

A bill of lading can act as both a (blank) and a (blank)?

Answer 1

Receipt for cargo

Question 2

Bills of Lading Issued by the Carrier (ocean or air) to:

Answer 2

1. Serve as a receipt for the cargo
2. Act as a contract for the transportation of the goods
3. Act as document of possession (title)
   - Negotiable bill of lading (can be bought, sold, or traded while the goods are in transit) a.ka. an “order bill of lading”
   - Nonnegotiable bill of lading (carrier can only deliver goods to the consignee/buyer) a.k.a a “straight bill of lading”
   - negotiable bills are commonly used with letter of credits
   - “Clean Bill of Lading” - no indication of damage or shortages
   - “Board Bill of Lading” – cargo placed aboard vessel and is signed by master of vessel.

Question 3

Ocean Bill of Lading

Answer 3

• Issued by the steamship line with information provided by the freight forwarder
• Exporter should understand how to read an ocean bill of lading to review costs and if applicable, that it complies with letter of credit requirements
• Includes all shipping information including shipper, consignee, reference such as invoice number, vessel details, L/C number, labeling, and number of boxes

Question 4

A negotiable bill of lading is also a(n)

Answer 4

Order bill of lading

Question 5

A non-negotiable bill of lading is also a(n):

Answer 5

Straight bill of lading

Question 6

A bill of lading acts as a title document meaning:

Answer 6

Which party can take possession of the goods

Question 7

An air waybill is:

Answer 7

A bill of lading used for air shipment

Question 8

All air waybills are:

Answer 8

Non-negotiable

Question 9

Air Waybill (Air Bill of Lading)

Answer 9

• Used as the ‘bill of lading’ for air shipments and is issued by the air carrier
• All air waybills are nonnegotiable – as such, it is not a document of ownership for the goods
• Unless the goods are consigned to a third party like the issuing bank, the importer can obtain the goods from the carrier at destination without paying the seller.

Question 10

Assume an importer arrives at a port to collect goods shipped to them and the bill of lading is currently consigned to a bank. What will happen when the importer requests the goods?

Answer 10

They will not be able to take possession until the banks endorses the bill of lading to them.

Question 11

Drafts

Answer 11

• Unconditional order in writing from one party to another
• In an export, seller orders the buyer to pay a fixed amount of money as specified in draft

Question 12

Shipper’s Letter of Instruction

Answer 12

• Completed by the exporter for the freight forwarder
• Contains essentially information associated with the shipment
• Forwarded uses for related documents including bills of lading and Electronic Export Information (EEI) filing through AES Direct

Question 13

What is the purpose of the Shipper’s Letter of Instruction?

Answer 13

To provide all the essential information regarding an export so the forwarder can correctly execute the shipment and if required, complete the necessary documents

Question 14

Insurance Certificate

Answer 14

• Important for seller to ensure insurance has been arranged
• Insurance amount established at CIF value plus an additional 10%

Question 15

MERCOSUR is an agreement concerning trade on the continent of:

Answer 15

South America

Question 16

How many forms of Economic Integration are there?

Answer 16

5

Question 17

Forms of Economic Integration

Answer 17

From High to Low economic integration:
1. Political Union
2. Economic Union
3. Common Market
4. Customs Union
5. Free Trade Area

Question 18

Why do Nations Pursue Economic Integration?

Answer 18

1. Expand market size
2. Enhance productivity and economies of scale
3. Attract investment from outside the bloc
4. Acquire stronger defensive and political defensive and political posture

Question 19

What factors help regional integration succeed?

Answer 19

1. Economic similarity
2. Political similarity
3. Similarity of culture and language
4. Geographic proximity

Question 20

The multinational organization that was created to help promote global trade is?

Answer 20

World Trade Organization

Question 21

The US governmental agency responsible for negotiating and implementing free trade agreements is the:

Answer 21

Office of US Trade Representative

Question 22

USMCA (formerly NAFTA) agreement is what form of Regional Economic Integration?

Answer 22

Free Trade Area

Question 23

The following are some of the improvements in the new USMCA agreement from NAFTA EXCEPT:

Answer 23

Intellectual property and digital trade – terms of copyright are at 40 years

Question 24

NAFTA (Canada, Mexico, the U.S.)

Answer 24

-NAFTA passage (1994) was facilitated by the maquiladora program - U.S. firms locate manufacturing facilities just south of the U.S. Border and access low-cost labor without having to pay significant tariffs

Question 25

NAFTA has:

Answer 25

1. Eliminated tariffs and most nontariff barriers for products/services. 2. Initiated bidding for government contracts by member country firms 3. Established trade rules and uniform custom procedures 4. Prohibited standards/technical regulations to be used as trade barriers 5. Instituted rules for investment and IPR (intellectual property rights) 6. Provided for dispute settlement for investment, unfair pricing, labor issues, and the environment

Question 26

USMCA (U.S., Mexico, and Canada)

Answer 26

- Signed by the three countries in Nov. 2018 - Replaced NAFTA after ratification by the three countries' parliaments (March 2020) - NAFTA 2.0 with the following changes: --Country of origin- 75% domestic contents to qualify for 0 tariffs -- Labor provisions 40-45% of automobile parts must be made by workers earning at least $16 by 2023 -- US farmers get more access to Canadian dairy markets --IPR and digital trade -terms of copyright extended to 70 years --Sunset clause: agreement expires or sunsets after 16 years

Question 27

Extra NAFTA info

Answer 27

Certificate of Origin - Main document for USMCA qualification - Prepared by producer/manufacturer Preference Criteria - Origin criteria which explains the way in which your product meets the USMCA Rules of Origin. Only goods that meet these criteria can qualify - In general, most manufactured goods that qualify for USMCA satisfy the rules of origin pertaining to either preference criteria or criteria B or C

Question 28

The purpose of USMCA preference criteria is to:

Answer 28

Determine if the product qualifies

Question 29

A product manufactured in the US using foreign materials

Answer 29

May qualify for USMCA duty free treatment