Many companies rely on importing goods into the United States as a core aspect of their business model. The most common mistake in importing goods is to assume that someone along the way, either the transport company or the manufacturer’s representative, will let you know what has to be done. Unfortunately, those parties have their own concerns and businesses to run. The duties of an importer are the obligation of the party that is bringing the goods into the United States.
Some tips from the experts are provided below:
#1. Don’t assume that there are no import regulations or controls on your product. Whether you are relying on another business owner who’s importing similar goods or on rules that have since changed, every business should independently verify if their product is regulated. Import controls are often aimed at health and safety concerns such as restricting plants and animals that can be brought into the United States. Imports can also be subject to quotas or licensing requirements depending on the country where the product originates. Counterfeit products are also restricted. The consequences for violating import controls can be very costly. A shipment with products that violate the import regulations can be seized by U.S. Customs, and the products can be refused entry.
#2. Check any trade barriers or laws in the originating country relating to the goods being imported. Although the U.S. has fairly open trade rules, there are restrictions. Agricultural goods are subject to the Food and Safety Inspection Service of the U.S. Department of Agriculture (USDA). Many countries protect the removal of certain artifacts, plants, or animals. For example, this summer, the U.S. Fish and Wildlife Service placed an almost total ban on the import of ivory from Africa into the United States.
#3. Hire an experienced customs broker. A customs broker can be an invaluable partner to help navigate the changing landscape of customs rules, licenses, and fees. All merchandise coming into the U.S. must clear customs and is subject to a customs duty unless specifically exempted. The customs duties are usually a percentage rate that is applied to the dutiable value of the imported goods. Processing fees also apply. Imported goods must also arrive within the limits of the port of entry and the delivery of the merchandise must be authorized by Customs in order for the imported goods to enter the U.S. legally. Importers must also complete documentation within a set number of days of the goods arriving in the U.S. If you do not pick up your shipment within six months, the merchandise is sold at an auction. Customs brokers can take care of the bulk of these responsibilities and can serve as the main liaison between you and the government.
#4. Be sure to evaluate insurance coverage for your goods and identify when coverage begins and ends. This is an area that stumps even the most experienced importers. Insurance coverage for goods is generally based on transfer points and when the titles pass between parties. Often, in the import business, there are multiple transfer points as goods are moved from rails to ships to trucks. Making sure that insurance is in place and paid for by the responsible party is critical to the safe passage of goods to your end customer. Often, the lack of insurance or underinsurance is not discovered until the need arises, making a bad situation even worse.
Although the United States has a robust trading economy, the importing landscape is fraught with traps for the unwary.
There are many resources available to importers who are getting started. The Small Business Administration (SBA) has a good Introductory Guide for Small Business Owners that was updated in August 2016 (https://www.sba.gov/blogs/importing-goods-usintroductory-guide-small-business-owners).
Business Insights is hosted by the Law Firm of
Kumar, Prabhu, Patel & Banerjee, LLC (KPPB).
Sonjui L. Kumar is a founding partner of KPPB Law, and a corporate transactional lawyer representing companies in all aspects of corporate law, including cross-border transactions.
Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.
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