Dave McGuireDave McGuireSenior Manager, International TradeSenior Manager, International TradeGlobal LogisticsGlobal Logistics

Import Licensing for Information Import Licensing for Information Technology ProductsTechnology Products

July 16, 1999July 16, 1999

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Nortel NetworksGlobal Trade Activity

• Export to more than 160 Countries

— Many ITA Signatory Countries

• Manufacture in 10 Countries

• 1998 Revenues US$18b

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INFORMATION TECHNOLOGY AGREEMENTPHASE I

• Nortel Endorses the ITA— Encourage other Countries to Participate

• Duty Reduced to Zero by Year 2000

• Lower Costs to Importer and Consumers

• Encourage other Initiatives Intended to Ensure Smooth Delivery of Goods to Customers

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IMPORT LICENSING

• Required by some Countries prior to Import

• May be Reviewed by Many Government Departments Prior to Approval— Administrative Burden

— Adds to Delivery Time

— Clerical Errors Delay Delivery

• No value seen by Importer or Exporter

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IMPORT LICENSING

• Tariff Classification Required on License— H.S. Code based on Product Description

— Buyers Interpretation may be Different from Sellers Description

— Classification Interpretation not Consistent in all Countries– LAN/WAN Equipment

— Results in Delays if the is a Discrepancy– License must be amended– Goods remain in Storage ($)

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IMPORT LICENSING

• Product Descriptions— Marketing Brochure, Purchase Order, Engineering Description,

Customs Description, Import License Description.

— Inconsistent Description Leads to Misinterpretation and Delays

— Adds Costs not Value

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IMPORT LICENSING

• Customs Clearance— Seller may make Partial Shipment

— Delay in Release While Import License is Matched to other Customs Documents

— No Customs Release if License does not Match

— Storage Charges Incurred While License is Corrected

— Adds Cost not Value

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IMPORT LICENSINGRECOMMENDATION 1

• Eliminate Import License Requirement for ITA Eligible Goods

– Reduced Administrative Burden– Simplifies the Import Process– Demonstrates the spirit of the ITA

– Open Market for Technology Products

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IMPORT LICENSINGRECOMMENDATION 2

• Simplify Import License Requirement for ITA Eligible Goods

– Eliminate Multiple Department Review– Reduce the Number of Reporting Fields– Permit Flexibility in Modifying License to Correct Errors