Introduction
During the last two decades, the total exports and imports of the U.S.A have increased from just $ 83.9 billion in 1970 to $ 470.9 billion in 1980, to $ 888.9 billion in 1990 and a whopping figure of $2507 billion in 2000!
Importing a product into the U.S.A should be supported by the fact that it not only is having a cost advantage but is also not available locally at a competitive price. Import offers many benefits to the American economy and U.S consumers. Imported products offer a wide range of products, increased competition between U.S manufacturers and foreign suppliers as it assists to keep the domestic price at a competitive range as evidenced in the automobile industry where imports have resulted in improvement in production and design of better quality domestic goods.
Due to fast transformations in the global economy, an exhaustive knowledge of new rules like the General Agreement on Tariffs and Trades (GATT), the 1993 Customs Modification Act (Mod Act) will help the importer for expanding his import business in the U.S.A.
It is to be observed that an importer is subject not only to applicable U.S laws but also the laws of those countries from where products are being imported into the U.S.A.
The first and foremost element in an import transaction is that the importer should have a well-structured purchase contract. The importer and the foreign supplier may agree to employ the legal framework of either the U.S. or the laws of exporting nation to govern the purchase contract. It is significant to mention the jurisdiction where legal action can be initiated if there is any dispute between the parties and agree to settle any dispute through arbitration or mediation mainly to save time and cost. It is wise to define all parties to the business transaction, their responsibilities and the terms of purchase should be mentioned in the purchase contract.
A second important factor is the payment terms and it is nice to use a documentary letter of credit as the method of payment.
The third significant element is about to mention the packing and labeling requirements in the purchase contract. It is wise to mention how the product is to be labeled mainly to satisfy U.S. Customs and other government agency requirements. Thus, an importer has to assure that imported product is in harmony with conditions stipulated in rules like “ Country of Origin Marking “, “ Packing of Goods and Commingling”, and the commodity-specific “ Marking and Labeling Requirements”. (Hinkelman et al 12).
In the purchase contract, it is essential to mention is import price is on FOB (Free on Board) or CIF (Cost, Insurance and Freight). Ensuring the product will help to minimize any possible transit loss.
Articles meant for gifts or for personal use valued up to $1200 which is the fair retail value in the country of purchase will be allowed to be imported without duty when the same is accompanied by a traveler subject to fulfilling certain conditions.
Import of prohibited or restricted articles required a valid permit or license or some products are totally prohibited to be imported into the U.S.A. For instance, endangered species biological materials, pirated computer programs, dairy products, dangerous narcotics, and drugs are banned from import into the U.S.A.
For instance, if an importer wants to import Dairy products under Chapter 4 which is a restricted item, he has to observe the following:
- Conformity with “FDS (U.S. Food and Drug Administration) “as regards identity, purity, standards, and manufacturing standards
- Entry notification and procedures under FDA have to be observed.
- FDD dairy import permit is needed for import of cream and milk.
- Compliance as regards to restrictions, requirements, a requirement of permit in certain cases have to be complied under the following.
- “Animal and Plant Health Inspection Service. (APHIS) “
- “U.S Department of Agriculture. (USDA).”
- “Veterinary Services (VS)”
- “Live Stock Disease –Prevention “
- Adherence with “Food Safety and Inspection Services. (FSIS)” (Hinkelman et al 450).
If undeclared goods are also imported along with the declared products say, for instance, endangered species or drugs, then the importer is liable to be booked for an offense under the 1993 Customs Modernization Act and is liable to pay a minimum penalty of $ 500 for having imported undeclared controlled or prohibited products found in the shipment.
Normally, imports from China to the U.S. are more rational and tax is very low unless if the product imported falls under the restricted or unusual category. One another buying tip is to avoid designer replicas as these products will not only create copyright or trademark issues but also be subject to closer scrutiny by U.S. customs.
List of Materials and Tools
- Filing the following documents to Customs for the release of the product imported.
- Suppliers invoice along with bill of lading and insurance and freight documents.
- Copy of the Letter of Credit issued by the Bank.
- Packing List
- Filing document for the assessment of duty.
- Supplier’s invoice and copy of the Letter of Credit issued by the Bank.
- Step by Step instruction for Imports:
An individual may arrange for customs clearance on his own accord for the products imported either for his business or personal use.
An importer need not require having a license or permitting under U.S Customs and Border Protection rules. However, other agencies may require either permit or license, or certification which depends upon the product imported. Further, an importer requires a business tax number that can be obtained from IRS. This number has to be quoted on all customs paperwork as an “importer number.”
All product imported into U.S.A attracts customs duty unless the same is exempted from the duty. The customs duty is levied on ad valorem rate, i.e. a percentage on value products imported. rocessing fees will also levied by U.S. customs wherever it is applicable. Other than this, there are compound and specific rates also exist. A specific rate is a definite rate per unit of quantity or weight like 6 cents per kilo or dozen. A compound rate is the mixture of the specific rate and ad valorem rate like 0.8 cents per kilo plus 11% ad valorem.
Classification of merchandise by type of product and rates of duty will be prescribed in the Harmonized Tariff schedule of the U.S.A issued by the International Trade Commission.
On arrival of the imported product, it is wise to handle the customs clearance through a customs broker to handle the Customs entry and clearance process. They are the licensed, qualified, and experienced professionals who will help in the clearing process of your imported product.
Since, the importer wants to import $10,000 flip-flops from China, assuming that it falls under” Easy –to-Import Products”, these are not subject to significant prohibitions, restrictions, licenses, permits, and documentation other than fundamental Customs requirements.
Assuming that the flip-flop falls under” Appliances, Household “, one has to Chapter 84 of the Commodity Index for household appliance products other than those producing radiations. Electronics and Components start on page 857 of the book Importers Manual USA, a book written by Hinkelman et al.
Customs duty on the product has to be paid which will vary according to the type of the product and the maximum customs duty for any product will be up to 20%
Apart from the above, an importer may have to pay $300 as a processing fee or customs clearance fee.
Port handling charges are being charged at a fixed rate per one cubic meter or tonne.
If the imported container remains in the port or customs yard for longer than the free period, then demurrage has to be paid by the importer which is very expensive.
For faster customs clearance, the following procedure has to be perused.
- The invoice should contain clear information with well-prepared packing slip.
- Each package is distinctly labeled and numbered for easy identification with invoices.
- Each package should have an exhaustive description of the merchandise and should be reflected in the invoice.
- The label should clearly exhibit the country of origin.
- Import of restricted items like drugs, food, and alcohol will have to be complied with special laws.
Thus, observing the formalities and filing the relevant documents will help the importer to clear his imported goods without any hassle.
Works Cited
Hinkelman Edward G, Manley Myron et al. Importers Manual USA. New York: World Trade Press, 1993.