Exporting goods can be lucrative for businesses looking to expand their reach beyond their domestic market. However, engaging in international trade requires careful planning and dedication to various procedures, regulations, and documentation requirements. The process can be complex and challenging, but understanding export procedure in Pakistan and the necessary documents is crucial to ensure the success of your export business.
Whether just starting or seeking to improve your export operations, this blog post highlights the key procedures and necessary documents for exporting goods. Every step requires precise attention to detail, from obtaining an export license to complying with customs regulations.
The information provided in this post can also help you understand the different types of documents required for an export transaction and how to complete them accurately. Proper documentation plays a critical role in the movement of goods from one country to another, and knowing what export documents are necessary and how to complete them can make all the difference in avoiding delays and ensuring smooth operations.
Export Procedure Guide
Understanding the export procedure can help exporters avoid hurdles and ensure a smooth process. To begin with, exporters need to identify the goods or services they intend to export, verify whether they are permitted for export, and comply with the destination country’s regulations.
Once established, the exporter must obtain the necessary permits, licenses, and certifications, including the export declaration or shipping bill, to complete the export procedure. The next step involves arranging transport, booking cargo space, confirming necessary documentation with carriers, and preparing commercial documents, including the invoice, packing list, and certificate of origin.
Following steps are taken in the export procedure in Pakistan.
- Pakistan Customs mainly examines the ‘Goods Declaration (GD)’ and ‘Packing List (PL)’ and then compares them with the physical goods packaged for export.
- There are three types of Custom channels Red, Yellow, and Green
- Goods going through the red channel must be thoroughly inspected, and their GD and PL will be examined in detail.
- Goods going through the yellow channel are not examined physically; usually, their documents are inspected for compliance.
- Goods going through the green channel are not inspected, and their documents are error-free.
- After the automation of the current system through WeBOC, the decision of which channel to choose for a specific shipment is computer-based. The system decides it by analyzing the history of the exporter.
- WeBOC (Web Based One Customs) now integrates most of the partners involved in the process of exporting and has made processes quicker:
- Preparation of invoice, Packing list, and other documents as per contract.
- E-form (Through an authorized Commercial Bank). o Filling of good declaration and customs clearance by the exporter or clearing agent.
- Agreement with freight forwarders for shipment.
- Loading on a cargo ship
- Issuance of Bill of landing by shipping company/freight forwarder.
- Certificate Country of origin (Through Chamber) or (Through TDAP)
- Inspection Certification by 3rd-Party Inspectors (if required)
- Sanitary/ Phyto-Sanitary Certificates issued by the Department of Plant Protection
- Insurance Certificate
- 4th copy of the shipping (through customs) bill will be used for bank/sales tax refund rebates. The State Bank of Pakistan processes refunds and rebates.
- BCA (Bank Credit Advice) is to be received from commercial Banks after receiving foreign exchange. The BCA is considered proof for rebates, refinance schemes, etc.
Export documents required for the export procedure in Pakistan
The exporter must submit the required customs documents and clearances to the appropriate authorities to ensure the shipment’s smooth release. The following are the necessary export documents to provide a smooth export procedure in Pakistan.
GD (Goods Declaration Form)
The Goods Declaration (GD) Form is one of the essential documents required for export business from Pakistan. It encompasses various vital details, including but not limited to quantity, unit, price, and payment Terms. The latest customs clearance mechanism in Pakistan is the Web Based One Customs (Weboc), which necessitates submitting the GD form online to facilitate the import/export process.
Once the form is duly completed and verified by the customs personnel operating through the Weboc system and your clearing agent has successfully examined your cargo, you may load your container on the designated vessel. The GD form shall be released and utilized to issue the Bill of Lading (B/L).
PL (Packing List)
A Packing List is an essential component of international trade. It is a document that contains a detailed list of the goods being shipped, including their quantity, weight, and description. The purpose of a Packing List is to help ensure that the goods are correctly identified and accounted for during transportation.
The data outlined in the packing list provided to your freight forwarder may be utilized to generate the bills of lading for your shipment. A comprehensive packing list may be required to receive payment under a letter of credit as part of the document package presented to a Bank.
Customs officials in both Pakistan and the destination country may reference the packing list to pinpoint specific items within the cargo that require further examination. It is highly advantageous for these officials to be informed of the precise location of targeted items to avoid the need for a time-consuming and exhaustive search of the entire shipment.
The packing list catalogs the contents of the consignment and provides relevant data such as the net and gross weight and the dimensions of the packed goods. It lists any identifying symbols that may be present on the packaging. Further, it outlines any detailed guidelines critical to the safe and timely arrival of the merchandise at its intended destination.
Certificate of Origin
For some countries, you must furnish a certificate of origin (CO) for your exports to ascertain the goods’ country of origin. The Chamber of Commerce typically issues this certificate in your area. It is important to note that a certificate of origin may still be deemed necessary despite indicating the country of origin in your commercial invoice. The Chamber of Commerce may levy a fee for endorsing and certifying the authenticity of your certificate or mandate membership to the chamber.
To properly assess the applicable duty rates for imported goods, countries mandate the provision of a certificate of origin. Typically, such certificates require authentication via seal from the Trade Development Authority of Pakistan (TDAP) or an authorized chamber of commerce.
However, it is advisable to consider using electronic certificates of origin (eCOs) to mitigate delays and expenses associated with manual submissions. eCOs offer expedited processing and reduced costs, with the added benefit of electronic delivery to the importer. Further, eCOs are registered with the TDAP, providing enhanced credibility with various customs authorities.
Country Specific Certificate
Aside from the standard certificate of origin documentation, it is noteworthy that country-specific certificates of origin also exist. Presently, Pakistan has signed four Free Trade Agreements (FTAs) and three Preferential Trade Agreements (PTAs) while being eligible for ten Generalized System of Preferences (GSP) schemes.
These agreements offer Pakistani goods favorable import treatment, including zero or reduced duty rates, in the bcorresponding countries. It is important to note that to qualify for the reduced tariff rates, the importer must substantiate that the imported goods satisfy the regulations of the specific free trade agreement.
Bill of Lading
There are three common bill of lading documents: inland, ocean, and airways. Let’s take a look.
Inland Bill of Lading
The initial transportation document necessary for international shipping, exclusive to exports, is commonly known as the inland bill of lading. The inland carrier or the exporter may prepare this critical document. It functions as a legal contract of carriage between the exporter and the goods’ shipper, outlining the intended destination of the goods and serving as an acknowledgment of their pick-up.
It is important to note that in the case of international shipments, the inland bill of lading is not generally consigned to the buyer but to the carrier responsible for the goods’ transportation. Alternatively, the bill may be consigned to a third party, such as a warehouse or forwarder, who will subsequently consign the goods to the carrier upon readiness.
Ocean Bill of Lading
If your goods are transported by sea, you must obtain an ocean bill of lading. This document serves two crucial purposes: it functions as a legally binding contract of carriage and a title document for the goods being shipped. There exist two types of ocean bills of lading, each with its unique characteristics and requirements:
- The first type, a straight bill of lading, is designated for a specific consignee and is non-negotiable. The recipient must present a signed original bill of lading to the carrier to take custody of the cargo.
- On the other hand, the second type, a negotiable bill of lading, is consigned “to order” or “to the order of shipper” and is signed by the shipper before being dispatched to the buyer’s bank. The bank will retain the original bill of lading until the terms of a documentary collection or a letter of credit have been fulfilled.
An airway bill is an essential document to transport goods via air that serves as a legal agreement between the sender and the carrier. This document is non-negotiable and outlines the terms and conditions of the carriage contract.
Documents of Clearing Agent
Once the consignment to be exported arrives at the port, clearing agent services are usually sought. The following documents are required to provide to the clearing agent to clear the consignment:
- Packing List,
- Commercial Invoice,
- Letter of Credit (L/C),
- Certificate of Origin: issued by the Chamber of Commerce.
- Goods Declaration:GD Form mentions complete details (i.e., Quantity, Unit Price, Payment Terms, etc.) of Goods exported from Pakistan.
Following the requirements outlined in the contractual agreement and the regulations set forth by the final destination country, it may be necessary to engage the services of a commercial inspection entity to ensure compliance with all applicable Sanitary and Phytosanitary standards and regulatory mandates for the shipment in question.
Upon resolving all preceding matters in adherence to the terms of delivery, it may be prudent to engage the services of a proficient freight forwarding agent to oversee all aspects of transportation logistics. A professional transporter may be contracted to facilitate the transportation of goods to the designated port, procuring the appropriate container (either by the buyer or seller in accordance with the Terms of Trade) for loading the merchandise.
After container registration and allocation of a unique serial number, meticulous scrutiny of all relevant documents, including weight, value, quarantine, grading, and invoice, is conducted by the examination officer, appraiser officer (A.O), and principal appraiser. Upon the principal officer’s satisfaction, the consignment is approved for shipment. The freight forwarding agent is entrusted with the stamped bill of lading, which is subsequently dispatched to the buyer to release payment.
Dangerous Good Form
Suppose goods are deemed hazardous by the International Air Transport Association (IATA) or the International Maritime Organization (IMO). In that case, it is incumbent upon the exporter to include the requisite dangerous goods documentation with the consignment. Individuals with specialized knowledge of safely transporting dangerous goods must meticulously complete documentation.
In international trade, the bank draft is a fundamental component of the payment process for exported goods via documentary collection. The vendor dutifully assembles the requisite paperwork and appends them to the bank draft, after that submitting it to the financial institution for prompt compensation.
Typically, the vendor’s bank dispatches the bank draft and all pertinent materials through the freight forwarder to the buyer’s bank. Upon receipt of authorization from the purchaser for remitting payment, the bank liberates the documents to the acquirer while transferring funds to the vendor’s bank account.
Goods Quality Check
In accordance with the established terms and conditions between the buyer and exporter, an inspection by a reputable international quality control agency is implemented. Once all requisite quality check formalities have been completed, the goods intended for export are subjected to careful packaging to ensure conformity with export standards. For optimal cargo security, our team thoughtfully arranges palletization or crating.
Exporting is a complex process that requires knowledge of various rules and regulations. It’s important to ensure all necessary documents are to avoid legal or financial issues. By following the appropriate export procedure and obtaining all the necessary documents, businesses can have a safe and profitable export experience. It’s important to remember that the specific requirements for export can vary depending on the country and product being exported, so it’s crucial to do comprehensive research and consult with experts to ensure everything runs smoothly.