Letters of Credit

Re: [spiers] Letters of Credit


In a message dated 3/10/04 5:54:53 AM, cusacktf@woodwrighttools.com writes:

I am writting to the group to get a response to a problem I ran

into. I have been in contact with a manufacturer in China and I am

in the middle of negotiating the terms with him.

***yes, get ready to spend the next 30 years negotiating terms, as
adjustments are made efter every shipment, adjustments based on the new
information with
every shipment. It is a good thing.***


The product I am planning on importing is mechanical and may require

repairs over time, so I am requesting that he supply some

spare/maintenance parts as part of the order. He tells me he will

include the parts as part of the price of the saw in-leu of a

warranty, which he does not normally provide any warranty.

***Right, what they normally do it "supply some

spare/maintenance parts as part of the order" since there is a known failure
rate, but which units fail cannot be known in advance... thus, the most
sensible course of action is to cover the known failure rate with sufficient
supply
of spare parts.***

I decided

to check with US Customs on this type of arrangement, and they did

not seem to think this was a workable arrangement. Customs, does not

think having an entry on the invoice marked spare parts/ no charge

would be ok. If it is not shown on the invoice, then the packing

slip or carton counts would be out of sync, and if noticed would be a

problem.

***yes, AKA a federal crime, commonly referred to as smuggling. This is why
we all pought to talk to customs brokers, and not us customs service. Customs
are not businesspeople. Spare parts are not without value, so don't call
them what they are not. You supplier certainly is not giving the spare parts
for
free, he has worked them into the privce. Simply have the supplier back out
the spare parts prices from the total price, and itemize it all. And decalre
it all to customs.***


A second Issue that I ran into was that the Letter of Credit is

a "Credit Application", meaning it has to go through a credit

approval process that could take a week or more. I guess, I always

thought that the L/C was a simple application that you pre-paid. So

at this point, I am stalling the manufacturer, while I hope to

recieve an answer from customs and wait for the "Credit Application"

to be processed.


***Yes, homeland security/patriot act. This ticks me off... You cannot get a
mortgage without reports to homeland security. The process for determining
if you are a terrorist is similar to checking credit, so they just say they are
checking your credit. Since we are moving to a secret police state (it is
easier to track you than Osama) and your banker can go to prison for revealing
you are the subject of a secret police investigation, everyone just says
"credit check". Sadly, if you are innocent in USA, you have plenty to worry
about
now.

The bankers are required to know who you are, so it is just another layer.
Until we can elect some competent officials, we are in for Soviet Style
inefficiencies. (and no, I didn't vote democrat either...)

We survived a huge, pointless increase in govt intervention in the 70's and
we'll survive this too, but it sure makes us less competitive.***

John

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