(a) What is a bonded warehouse?
(b) State four ways in which a bonded warehouse may be useful in international trade.
Explanation
(a) Bonded warehouse; is a warehouse used for storing goods on which customs duty is yet to be paid. The custom will issue a release warrant authorizing the release of the goods once the duty has been paid.
Uses of bonded warehouses in international trade are:
(i) Bonded warehouse provides the importer with an opportunity to sell the imported goods while in bond.
(ii) The importer can also complete some processing on the goods while in bond e.g packaging.
(iii) It facilitates international trade transactions.
(vi) Safety of goods imported is also guaranteed.
(v) Effective check on the goods in a bond can be made by the Customs Authority as to ascertaining import duties on contraband goods etc.