Import/Export transactions usually require much more documentation

Lesson 2 Discussion

Read from your textbook Chapter Chapter 1 and Talbert Trading, Ltd v. Cometals, Inc., 663 F. Supp 561 (1987). Regarding the grade for this forum, if you miss any of the questions required for this post, it will result in a deduction of points per item missed.

Answer ALL Questions:

1. Import/Export transactions usually require much more documentation than domestic transactions. These include detailed invoices, packing lists, shipping and insurance documents, and specialized certificates. In Tarbert, a "certificate of origin" was required by the government of Columbia before the goods could be imported. Describe what this "certificate of origin" is referring to (i.e. are they asking for where the product was made/grown or where it is being shipped from?). Discuss why you think (academic thought/not personal) Columbia required a certificate of origin? What is the purpose of this certificate?

2. Suppose that the beans had arrived in Columbia and were then stopped by Columbian customs authorities because of a fraudulent certificate. What do you think might have happened to the beans? What would the risk have been to Cometals and Tarbert? What if the Columbian buyer had already paid for the beans?

3. Evaluate and discuss the conduct of Cometals and Tarbert. Fraudulent documentation is not uncommon in international trade, especially when the parties do not have a history of business together. What are the lessons to be learned by all parties?

Student 1:

There are multiple processes within the export and import industry. The certificate of origin is one of these important documents in the industry because it refers where the good was manufactured. In other words, this is a document which is proof that the good was originated, made or built in this specific country. Nonetheless, some countries are stricter than others when it comes to provide Certificate of origin. Some countries even request an additional sheet beside packing lists and invoice with a certificate of origin proof, or even notarized. The purpose of this certificate is to demonstrate that the goods are made in a specific location that meet the necessary requirements and import agreement in that destination country. Therefore, importing goods without evidence of origin might be considered fraudulent, and the importer or export organization could legal consequences. 2.    There are different scenarios that can happen if customs in Colombia retain the beans for inspection or in this case due to fraudulent certificate. It all depends to the good relationship and reputation the importer has with customs. Although the beans can be immediately confiscated and not given to the buyer, Cometals and Tarbert would probably pay significant fines and may face legal consequences. If the buyer was not involved in any fraudulent transaction, they would be able to reclaim any lost funds if they had already paid for the beans. However, it all goes back to the good relationship and reputation of the importer with customs because they can do or request an amendment to the certificate of origin, and worst case scenario pay a fine for it to release the goods to the buyer in Colombia.  3.    There are multiple factors that the conduct of Cometals and Tarbert could have done to avoid inconveniences with customs. Cometals and Tarbert should have taken into consideration the importance of being ethical by the law and completing paperwork in a morally and legally responsible manner. International trade can be very difficult to handle if there is no proper procedures and conduct, which could lead to fines and inspections. These businesses could be at risk from now on because they are flagged due to the misunderstanding. Nonetheless, this is a lesson learned because every business must understand the consequences of international trading unethical actions. If a business does not know how to handled import and export procedures in a certain way, they must either hire a trainer to learn how to do it properly or hire a business or expert who can process the documentation for them and avoid these type of inconveniences with customs.

Student 2:

It is imperative to note that CO refers to the country where the goods were grown or manufactured, not where they were shipped. In this case, the source of the goods is identified as the buyer. Consequently, if goods from country A have a better reputation than those from country B, the buyer will know which goods to expect. 2. They would have been impounded and denied entry to the country. Both Cometals and Tarbert may be subject to fines and potential criminal prosecution. A buyer who has already paid for the beans may recover damages from the Columbian courts. Buyers still need to receive what they bargained for and pay for it. 3-They acted unethically and illegally. To conduct business with someone, we need to know who they are. The risk increases if this is not feasible. Due to this, we may not be able to do business with them. The importance of agreements that protect you in international business cannot be overstated.

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