Importing and Trade in Ethiopia

1. Why is international trade indispensable for countries?

a) To increase domestic prices
b) To meet demand for resources not available domestically
c) To limit domestic supply
d) To discourage local production

2. What does comparative advantage in international trade refer to?

a) Importing goods that are cheaper to produce domestically
b) Importing goods that are more expensive to produce domestically and focusing on
producing goods that can be produced at lower cost
c) Producing all goods domestically
d) Limiting imports

3. What is a key reason for importing goods when domestic production cannot meet demand?
a) To create shortages
b) To fill the gap and stabilize markets
c) To increase prices
d) To limit competition

4. What is the main objective of the WTO Trade Facilitation Agreement (TFA)?
a) To increase border congestion
b) To make trade flow more freely by reducing administrative burdens3
c) To limit customs transparency
d) To slow down the movement of goods

5. What is the role of freight forwarders in international trade?

a) Enforcing import duties and tariffs
b) Managing the transportation of goods across international borders
c) Issuing permits for restricted items
d) Facilitating financial transactions

6. What do banks and financial institutions do to facilitate international trade?

a) Physically transport goods
b) Issue Letters of Credit (LCs) and manage foreign exchange
c) Prepare customs entries
d) Enforce local laws

7. What is the role of a customs clearing agent?

a) Transporting goods internationally
b) Acting as an agent for importers in customs matters
c) Issuing import licenses
d) Managing foreign exchange
8. Before importing, what should an importer consider about the product?
a) Only the price
b) Whether it is a raw material, finished product, or spare part
c) Only the supplier
d) Only the method of transport

9. What is a crucial step for an importer after identifying potential countries for sourcing products?
a) Ignoring supplier quality
b) Identifying a specific and reliable supplier
c) Choosing a supplier with the highest price
d) Only focusing on price

10. What should an importer do before agreeing to purchase from a foreign supplier?
a) Ignore foreign laws
b) Be aware of any foreign laws that might affect the purchase
c) Only focus on the supplier’s information
d) Only consider domestic laws

11. What is the main purpose of Incoterms?

a) To complicate international trade
b) To allocate costs and risks between buyer and seller
c) To increase transportation costs
d) To limit trade agreements

12. In Ex Works (EXW) Incoterm, where does the seller's responsibility end?
a) At the buyer's location
b) At the seller's premises
c) At the port of departure
d) After transportation

13. In Free Carrier (FCA) Incoterm, where does the seller's responsibility end?
a) After unloading at buyer's location
b) At the named place of delivery
c) On board the vessel
d) At the seller's premises

14. In Carriage Paid To (CPT) Incoterm, who arranges and pays for transportation to the named
destination?
a) The buyer b) The seller
c) The carrier d) The customs agent

15. In Carriage and Insurance Paid to (CIP) Incoterm, who is responsible for arranging insurance?
a) The buyer b) The seller
c) The carrier d) The customs agent
16. In Delivered at Place (DAP) Incoterm, who assumes all costs and risks until the goods are
ready for unloading at the destination?
a) The buyer b) The seller
c) The carrier d) The customs agent

17. In Delivered at Place Unloaded (DPU) Incoterm, who assumes the risk until the goods are
unloaded at the agreed destination?
a) The buyer b) The seller
c) The carrier d) The customs agent

18. In Delivered Duty Paid (DDP) Incoterm, who is responsible for import formalities and duty
payments?
a) The buyer b) The seller
c) The carrier d) The customs agent

19. In Free Alongside Ship (FAS) Incoterm, where is the seller responsible for delivering goods?
a) Onboard the vessel b) Alongside the vessel at the port
c) At the buyer's warehouse d) At the seller's factory

20. In Free On Board (FOB) Incoterm, when are risk and cost transferred to the buyer?
a) When the goods reach the port
b) Once the goods are loaded onboard the vessel
c) Once goods are unloaded
d) At the seller's premises

21. What is a Bill of Lading?

a) A payment document b) A transportation document
c) An insurance document d) A customs declaration

Ethiopian Customs Procedures

22. What is the primary function of customs in Ethiopia?
a) To facilitate travel
b) To enforce customs laws and collect duties and taxes
c) To control immigration
d) To manage trade agreements

23. What does customs clearance refer to in Ethiopia?

a) The physical inspection of goods only
b) Fulfilling customs formalities for import and export
c) The payment of tariffs
d) The transportation of goods

24. What is the main objective of a customs agency in Ethiopia?

a) To hinder trade b) To collect revenue
c) To increase product prices d) To control market prices
25. What is self-assessment in Ethiopian customs operations?
a) Customs officials evaluating goods for taxes
b) Importers assessing and submitting the value of goods
c) Random checks of goods
d) A system for payment of tariffs

26. What is the purpose of risk management in customs?

a) To cause delays b) To avoid unnecessary delays and wastage of resources
c) To increase costs d) To make customs process more complicated

27. Which principle ensures that ERCA provides information about trade including rates of duties
and taxes, laws, and appeal procedures?
a) Accountability b) Service orientation
c) Transparency d) Risk Management

28. What is the focus of the principle of preventing illegal practices by promoting self-compliance?
a) To increase government intervention b) To prevent commercial fraud
c) To create delays in customs d) To only check documents

29. What activity is performed in customs clearing operations?

a) Only document checking
b) Filling documents and physical checking of the products
c) Only payment of customs duties
d) Only Issuing permits

30. In customs clearing operations what does checking documents for legality entail?
a) Ignoring the importer or exporter documents
b) Checking the legality of the importer and exporter documents
c) Only checking the financial aspects
d) Disregarding the provided documents

31. In customs clearing operations what does verifying documents with the goods entail?
a) Disregarding the actual goods
b) Checking if the documents match the goods being imported or exported
c) Ignoring any discrepancies
d) Only checking legal documents

32. In customs clearing operations what does processing custom duties entail?
a) Ignoring duty payment
b) Creating arrangements for importers and exporters for their duty payment process
c) Not following government protocols
d) Refusing payments

33. What does the customs authority issue after checking all aspects of an import/export activity?
a) A rejection letter b) A release document
c) A warning d) A penalty
34. What is the first step in importing goods into Ethiopia?
a) Paying customs duties b) Obtaining an import license
c) Preparing the customs declaration d) Collecting commercial documents

35. What is required for an import license application in Ethiopia?

a) Only a copy of the TIN
b) A copy of the TIN, Memorandum of Association, and other documents
c) Only photos
d) Only payment details

36. Why are pre-import permits required for certain goods in Ethiopia?
a) To increase prices
b) For safety, security, environmental, and health reasons
c) To slow down trade
d) To limit competition

37. Which regulatory agency is responsible for issuing pre-import permits for pharmaceuticals and
medicines?
a) INSA b) MCIT
c) FMHACA d) VDFACA

38. What is an important step after securing a pre-import permit in Ethiopia?

a) Ignoring payment issues
b) Preparing for the payment of imported goods
c) Disregarding the need for foreign exchange
d) Only focusing on the goods

39. Why is foreign currency approval necessary for importing goods into Ethiopia?
a) To increase import prices b) Due to foreign exchange controls
c) To encourage local production d) To limit imports

40. What is required as part of the foreign currency approval request?

a) Only pro-forma invoice b) Valid business license and pro-forma invoice
c) Only supplier’s details d) Only bank details

41. What does the pro-forma invoice for foreign currency approval should include?
a) Only price of goods
b) Description of goods, unit price, quantity, total price, and additional charges
c) Only quantity of goods
d) Only total price of the goods

42. What methods of payment for imports are used in Ethiopia?

a) Only Advance Payment
b) Only cash against document
c) Only letter of credit
d) Letter of credit (L/C), cash against document (CAD), and advance payment
43. In what method of payment does a bank undertake to pay the supplier a sum of money within
an agreed time limit against documents?
a) Advance payment b) Letter of credit (L/C)
c) Cash against document (CAD) d) Foreign currency approval

44. What does cash against document (CAD) entail?

a) Payment prior to shipment of goods
b) Importers bank hands over documents upon payment
c) Payment at the time of delivery
d) Payment through SWIFT transfer

45. In advance payment, when does the importer instruct the bank to pay the seller?
a) After delivery b) Prior to shipment
c) On completion of the process d) After payment of duties

46. After the payment issues are complete, what happens to the goods?
a) Goods are sent back b) Goods are discarded
c) Goods are shipped to Ethiopia d) Goods remain with the supplier

47. Where are goods placed upon arrival at the port of entry in Ethiopia?
a) In the importer’s warehouse b) In a customs warehouse
c) In the supplier’s warehouse d) Sent directly to the receiver

48. What document is necessary for the preparation of a customs declaration?

a) Only the packing list
b) Transportation document, invoice, bank document, and other documents
c) Only the certificate of origin
d) Only bank documents

49. What does a packing list describe?

a) Where the goods are made b) How the goods are packed during transport
c) The price of goods d) The origin of goods

50. What does a certificate of origin describe?

a) The price of goods b) How the goods are packed
c) The customs classification d) Where the goods were originally produced

51. What is the purpose of filling out the customs declaration?

a) To pay more taxes
b) To indicate the type of import regime and provide details about the imported goods
c) To delay the import process
d) To provide confusing data

52. What is customs duty in Ethiopia normally calculated as?

a) A fixed amount b) A percentage of the CIF value
c) A tax only on luxury goods d) A tax on export goods
53. What does the CIF value include?
a) Only the cost of the goods
b) Only transport charges
c) Only insurance charges
d) Cost of goods, transport charges, insurance paid, and other charges

54. What is excise tax charged on in Ethiopia?

a) All goods
b) Only basic goods
c) Selective goods like luxury goods and goods hazardous to health
d) Only on industrial goods

55. How is the excise tax computed?

a) On the sum of CIF value and VAT
b) On the basis of the CIF value plus the amount of the customs duty payable
c) Only on the sum of CIF value
d) Only on VAT

56. What is the rate of VAT in Ethiopia?

a) 5% b) 15% c) 10% d) 20%

57. What is the surtax levied on all goods imported to Ethiopia?

a) 5% b) 10% c) 15% d) 20%

58. How is the surtax calculated?

a) Only on the value of the goods
b) On the sum of CIF value, customs duty, excise tax, and VAT
c) Only on the sum of excise tax and VAT
d) Only on the sum of customs duty and VAT

59. What is the purpose of withholding tax on imported goods?

a) An additional tax on all goods
b) A partial guarantee on the payment of income taxes
c) A direct tax on imported goods
d) A tax only on luxury goods

60. Who is responsible for calculating the duties and taxes on imports in Ethiopia?
a) ERCA officials b) The importer
c) The customs agent d) The supplier

61. What is the first step in calculating duties and taxes on imports?
a) Calculating the VAT b) Classifying the goods
c) Calculating the excise tax d) Calculating surtax

62. What is the second step in calculating duties and taxes on imports?
a) Calculating the tax b) Establishing the value of the imported goods
c) Classifying the goods d) Paying duties
63. What are the two different procedures for obtaining clearance of goods from ERCA?
a) Only unimodal transport b) Only multimodal transport
c) Multimodal and unimodal transport d) Payment through bank or cash

64. What is multimodal transport?

a) Transport using only one method of transportation
b) Only road transportation
c) Only sea transportation
d) Transport using different means of transportation under a single contract

65. What is unimodal transport?

a) Using two different modes of transport
b) Using only one means of transportation
c) Using road, sea and air transportation
d) Using multiple contracts for transportation

66. What does ERCA do after the customs declaration is submitted?

a) Rejects all documents b) Determines whether to accept or reject it
c) Ignores the document d) Immediately issues release of goods

67. How does ERCA determine the risk level of a consignment?

a) By disregarding documentations b) Using a customs management system
c) By ignoring the type of goods d) By selecting randomly

68. What are the three risk levels distinguished by ERCA?

a) Low, medium, high b) Green, yellow, red
c) Acceptable, moderate, unacceptable d) Simple, moderate, complex

69. What does a 'green' risk level mean?

a) Physical examination of the imported goods is required
b) Verification of declaration is required
c) Automatic release of goods without further checks
d) Rejection of customs declaration

70. What does a 'yellow' risk level mean?

a) Physical examination of the imported goods is required
b) Verification of the declaration only
c) Automatic release of goods without further checks
d) Rejection of customs declaration

71. What does a 'red' risk level mean?

a) Automatic release of goods without further checks
b) Verification of the declaration only
c) Verification of the declaration and physical examination of the goods
d) Rejection of the customs declaration
72. What charges might the importer have to pay after goods release note is issued?
a) Only customs duties b) Storage fees and other service charges
c) Only payments to the bank d) Only payments to the supplier

73. What should an importer do after obtaining a foreign currency permit and having been issued
a final import customs declaration?
a) Store it indefinitely
b) Ignore the declaration
c) Present the final import customs declaration to the NBE
d) Dispose of the document

74. How long must an importer keep records and documents related to the import?
a) 1 year b) 2 years c) 3 years d) 5 years

75. What is a goods declaration?

a) Payment of duties
b) Only custom clearance
c) A statement indicating the customs procedure to be applied to goods
d) Physical inspection of goods

76. What is an important aspect of a goods declaration?

a) Careless handling is permitted
b) Ignoring the document’s contents
c) Careful handling due to penalties for careless handling
d) Disregarding authenticity

77. Who is a declarant?

a) Only customs agent b) Only custom officials
c) The importer or exporter or a legal person d) Only the supplier

78. Who is responsible for the information in the declaration?

a) Only the customs agent b) Only custom officials
c) The transporter d) The declarant

79. What kind of goods need to be declared in principle?

a) Only goods for home use b) All import, export, or transit goods
c) Only personal goods d) Only commercial goods

80. What is a characteristic of dutiable goods?

a) Goods that are only exported b) Goods for inward processing only
c) Goods imported temporarily d) Goods imported for home use

81. What is a characteristic of goods declared for outright export?

a) Goods that are only imported b) Goods for export permanently
c) Goods imported temporarily d) Goods for inward processing only
82. What is a characteristic of goods declared for outward processing?
a) Goods that are imported temporarily b) Goods imported for home use
c) Goods sent for processing and then re-imported d) Goods that are only exported

83. What is a characteristic of goods declared for inward processing?

a) Goods that are only exported
b) Goods for personal use only
c) Goods that are not subject to duty
d) Goods imported for further processing and duty free

84. What is a characteristic of goods declared as being imported temporarily?

a) Goods that are only exported b) Goods for home use
c) Goods imported without paying taxes d) Goods subject to customs duty

85. Which goods are exempted from requiring a goods declaration?

a) All commercial goods
b) Non-commercial goods for personal and home use
c) All imported goods
d) All export goods

86. What is the value threshold for goods for commercial advertising and samples that are
exempted from requiring a goods declaration?
a) USD 500 b) USD 1,00047 c) USD 1,500 d) USD 2,000

87. What is the purpose of import duties and tariffs?

a) To reduce domestic prices b) To increase supply
c) To regulate imports and collect revenue d) To discourage trade

88. Why do countries sometimes impose import restrictions?

a) To encourage international trade
b) For safety, security, environmental, and health reasons
c) To reduce local production
d) To cause a shortage of goods

89. What do carriers do in the import process?

a) Process payments b) Physically transport goods
c) Issue import permits d) Clear goods at customs

90. Why is it important for importers to understand foreign laws?

a) To increase purchase price b) To ensure compliance and avoid legal issues
c) To cause confusion d) To create delays

91. What does customs valuation refer to?

a) Classifying goods for duties
b) Paying duties and taxes
c) Calculating duties and taxes
d) Establishing the value of imported goods for calculating duties and taxes

92. What is a transportation document, like a bill of lading, used for?

a) To value goods b) To provide a record of shipment
c) To calculate duties d) To apply for permits

93. What is the importance of a commercial invoice?

a) Only to provide list of packing b) To provide a method of transport
c) To describe the value of imported goods d) To indicate the origin of goods

94. What do you need a bank document for in the import process?
a) To show packing details
b) To confirm origin of goods
c) To get transportation details
d) To show mode of payment or agreement to pay

95. Which of the following describes the role of the customs authority?
a) To only collect duties b) To slow down trade
c) To enforce laws and ensure compliance d) Only to issue permits

96. What is the importance of transparency in customs operations?

a) To confuse traders b) To complicate procedures
c) To hide information d) To provide clear and relevant information about trade

97. What does accountability refer to in the customs context?

a) The responsibilities of traders only
b) The responsibilities of the customs agent only
c) The clearly defined duties and responsibilities of each actor in customs operations
d) The responsibilities of the supplier

98. What is the importance of the principle of "service orientation" in customs?

a) To create delays
b) To make the process complex
c) To create a difficult trading environment
d) To provide equitable, expeditious, predictable and reliable services

99. What does the term Franco-Valuta refer to in the context of importing goods into Ethiopia?
a) A pre-import permit b) A method of customs valuation
c) A method of payment d) A type of customs duty

100. What is the role of the National Bank of Ethiopia (NBE) in the import process?
a) To issue import licenses
b) To handle storage of goods
c) To receive the final import customs declaration for future imports
d) To conduct physical checks