| [1] Definition |
| - A trade transaction that is liaison for export and import for the parties involved for the similar transaction and depends on the counter purchase period, payment settle classification and the relations between the goods that are to be exchanged, it can be classified into a compensation trade, counter purchase and industry cooperations. |
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[2] Classification |
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| - There is no exchange transaction but the goods are exchanged based on 1:1. |
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- Exchange transaction occurs and it is a transaction which counter import obligation is imputable to third countries , and the provisions for Inter-Trade are the extended version of the concept of the compensation trade.
<1> In principle, the export/import transaction is prepared in one contract.
<2> The transaction is engaged using the special L/C such as Back to Back L/C, Tomas L/C and Escrow L/C etc.
<3> Exchange transaction occurs so the payment is to be settle with the currency that was mutually agreed upon.
<4> Counter import execution period is generally within ~ year.
<5> Counter import ratio is generally 20 ~ 100%
<6> There is a compensation trade that enables the counter import obligation to be impute to third countries. |
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- This is similar to a compensation trade in terms of that the goods have to be counter import proper to the fixed ratio according to the counter import contract terms however, using a separate contract and L/C at the time of exporting and importing is the different point.
<1> Transaction is made basis on the separate contract for export/import transaction respectfully.
<2> Open two general L/C.
<3> Two general trading transaction that are completed divided as a matter of form. <4> The performing period for import is normally within ~ year.
<5> Exchange transaction occurs so the payment is to be settle with the currency that was mutually agreed upon.
<6> The counter import duty is imputable to third countries. |
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| (4) Industrial Cooperation (Buy-Back) |
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<1> Importing goods manufactured by the technology and the facility that was counter on export of a plant or technology.
<2> Industrial Cooperation is differentiated as a Joint Venture which an exporter participates to a importer's business by providing the sales network, capital investing and import (Buy Back Deal) the production goods manufactured using the exported equipments. |
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| - The Off-Set Deal is usually utilized for military supplies transaction. In order to take advantage of technical transferring as contingency when adopting fighter or army facilities, impose performance obligation on the entire contract while enforcing secured transaction of Off-Set Deal to procure part of goods in the country or add a method to transfer the manufacturing facility to the country. |
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[3] Unusual L/C for liaison trade |
- Export/import earning countervailing method when trading using liaison: For one-time transaction, special L/C for liaison trade such as Back to Back L/C, Escrow L/C and Tomas L/C such are usually used.
- For the long-term and periodical trade : By adopting an Open Account method, a method to settle the balance after transacting a certain period of time such as within 1 month or 1 year method.
(1) Back to Back L/C |
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| - A condition L/C that allows the effectiveness of the opened L/C only when the transaction parties open two separate import L/C in the same amount at the same time. |
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| - A conditional L/C that when a importer open import L/C, the Nego earning of a draft issued by the L/C is not going to be pay to a beneficiary but the payment will be deposited in a purchasing bank, or an opening bank or a exchange transaction bank's escrow account of third countries by the beneficiary's name and only allow to use it to pay goods importing from the master credit opened country by the beneficiary. |
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| - Not that the both part opens the same amount L/C at the same time, but this is a conditional L/C that allows L/C to be valid when a certificate of guarantee is received from the other party that he/she will open a L/C for the same amount in the later time. |
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[4] Procedure |
| <1> Concluding liaison trade contract |
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1. Cleary state about quality
2. Cleary state of special items or ranges of items
3. Clear state of the acknowledging amount or exporting amount (FOB),
4. clearly state counter purchasing period. |
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| - If paid some % of default of obligation or paid 10~15% penalty, the clause is to waive initial duties such as counter purchase obligation, initial price and price discount etc. |
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| - Price determining clause |
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| - Clearly state quality and price calculation standard for it takes long a long period of time. |
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- The maximum and minimum limit of prices
- International price that are possible to acquire when purchasing etc. |
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| - Quality determining clause |
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| - Clearly state penalty clauses in accordance with standard quality and the right to inspection for quality in accordance with the quality shortage (Inspect before shipping or before accepting) |
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| - Market jurisdiction article |
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| - Grand authority to sale goods at third countries market without any restrictions. |
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| - Imputation of the obligation of the counter purchase |
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| - Include a clause "The obligation for the counter purchasing can be imputable to third parties". |
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<2> Export L/C received
<3> Export/Import license |
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| - Requisite for export/import license |
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1. In principle, an export and a import should be prepared in one contract and if the contract is to be separately prepared, the both should be mutually related and the payment settling should be countervailing.
2. Export should be on L/C method or payment should be guarantee(performance bond). (Except, the export earning and the total import earning amounts have to be countervailing or advance import terms)
3. For the price difference that countervailing with export earning, the payment should be settled in accordance with the related laws of regulations's requisites.
4. If a liaison trade's total transaction period is within ~ year, and if countervailing amount is to be pay or to receive within ~ days after the transaction maturity date, an authorization of a commender of a foreign exchange bank is required. |
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| - Required documents for license |
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1. Export/import license application form
2. Export L/C or performance bond, payment guarantee, (If only it is not a pre-import condition or if the amount before export/import payment does not countervailing)
3. If other laws of regulations requires authorization, the authorization is required.
4. Export/import contract in accordance with a liaison trading |
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<4> Open import L/C
<5> Custom clear the exporting goods
<6> Dispatch transportation documents or accept transportation documents.
<7> customs clearance
<8> Export/import declaration or countervailing |
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| - ex post facto management (Export/import declaration and countervailing)--Refer to laws of regulations of each countries. |
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Trade Helper 
Ex-Import Procedure(to Way of Payment)
Export/Import procedure according to the liaison trade method
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