Tuesday, June 2, 2009

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports and one for logistics/transportation. This week, we continue with the F’s.

Force Majeure
Force majeure clauses are found in standard transportation contracts and usually excuse a party who breaches a contract because performance is prevented by an occurrence of an event beyond the party’s control. Generally, force majeure clauses cover earthquakes, floods, hurricanes and war. It is important to remember that force majeure clauses are intended to excuse performance only if the failure to perform could not be avoided by the exercise of due care by the breaching party.

Fallback Method
When imported merchandise cannot be appraised using transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in sequential order. The alternative bases of appraisement, in order of precedence, are the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with section 402(f) of the TAA, known as the “fallback method.” 19 U.S.C. § 1401a(a)(1).The fallback method is also known as derived value, the sixth and final true method of valuation. If all other methods are inappropriate, then derived value must be used. Derived value determines the dutiable value using a combination of the other five methods and allows the value to be "reasonably adjusted to the extent necessary."

Foreign Corrupt Practices Act (FCPA)
Administered by the Department of Justice, the
FCPA makes it unlawful for any U.S. citizen or business to offer, pay, transfer, promise to pay money or anything of value to any foreign appointed or elected government official, foreign political party or candidate for foreign political office for a corrupt purpose. The FCPA does not prohibit payments made to facilitate a routine government action, one that a foreign official must perform as part of the job such as processing visas or other official documents. . A corrupt payment is one made to influence an official’s discretionary decision. In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business. Individuals and business entities can be criminally liable and punished by both fines and imprisonment. Civil penalties may also be assessed against firms and offices, directors, employees and agents.

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