Theory question 105
Foreign Trade Documents(a) What is entrepôt trade?
(b)(i) Differentiate between a bill of lading and a consignment note.
(ii) Explain the use of a bill of sight in foreign trade.
(c) State five reasons for the criticism against advertising.
Show the model answer
(a) Entrepôt trade is importing goods into a country in order to re-export them to other countries, often after storing, sorting or repacking.
(b)(i) A bill of lading is the document of title used when goods are carried by sea: a receipt, contract of carriage and title between exporter and shipping company. A consignment note is used when goods are sent by an independent carrier by land (road/rail), giving details of the goods and instructions for delivery.
(ii) A bill of sight is completed by an importer who cannot give full details of the goods (e.g. the bill of lading has not arrived); it allows customs to inspect the goods so they can be valued and duty assessed.
(c) Any five: raises costs and so prices; may mislead with false or exaggerated claims; persuades people to buy what they do not need; may promote harmful goods (alcohol, tobacco); may use indecent language and images; big firms can use it to drive out small ones, creating monopoly; wastes resources in competitive advertising.
Bill of lading = sea; consignment note = land carrier.