According to a U.S. Department of Commerce report, over 185,000 U.S. companies imported foreign goods in 2012, an increase of more than 10 percent from 2009. The majority of these businesses were small or medium-sized companies that may, in fact, lack the necessary resources to be a successful importer. If your business imports – or is planning to import – foreign goods, here are ten (10) keys to successfully navigating the complex waters of international trade.
- Get a Formal Contract
Before purchasing and importing foreign products, make sure you issue a formal written document that includes all of the significant issues to the buyer and seller, such as product acceptance, warranties and dispute resolution procedures. Otherwise, you will expose your business to significant risks which may be very difficult to control
- Familiarize Yourself with U.S Customs Policies & Procedures
It is essential that you fully understand whether or not importing your product will require a license or permit. Although the U.S Customs and Border Protection (CBP) does not generally require importers to have a license or permit, there are other agencies that may require one; examples include the FDA, USDA and the ATF. Furthermore, there are certain goods that may be subject to specific requirements with regards to their testing, marketing, certification, labeling, packaging and documentation. To get more acquainted with these requirements, you can visit www.cbp.gov (or see key #10 below).
- Make Sure You Understand Incoterms
This may be a no-brainer, but it is always important to understand the deal in which you are getting yourself. Suppliers are obliged to submit a term of sale alongside each quotation submission. It is your responsibility to fully understand the costs, rights and obligations included in these Incoterms. This will also help you estimate your costs more accurately (if you’re confused about Incoterms, see key #10 below).
- Classify Your Products Properly
The harmonized tariff schedule classification (HTS) of a product is what determines the rate of duty applied to it. Therefore, it is very important that you assign the correct classification to your products. This will not only reduce your duties, but will also ensure you don’t face additional obstacles when your goods enter the United States. To learn more about this process, talk to someone familiar with HTS classifications (or see key #10 below).
- Consider Preferential Duty Programs
There are many preferential duty programs out there that can help you avoid certain duties and reduce your transaction costs. The Generalized System of Preferences, in addition to free trade agreements that the U.S. has in force with 20 countries, can give you a competitive advantage in the global market place (or see key #10 below).
- Research Import Quota Requirements
These refer to quotas that limit the amount of imported commodities into the United States within a specified amount of time. Some quotas allow goods to continue entering the United States after the limit has been reached but at a higher rate of duty, these are called tariff rate quotas (If you’re not sure if your product has an import quota, then see key #10 below).
- Find a Reliable and Legitimate Foreign Seller
Before making any final transactions, you need to ensure that the seller which you are dealing with is reliable. This is when you should conduct extensive research in terms of their reputation, financial status and overall history. Doing business with unfamiliar suppliers can be risky, so you have to always be prepared.
- Pick the Right Insurance Coverage
There are many things that could happen to your goods on their way to their final destination – from severe weather conditions, to rough handling by carriers, you can never be over prepared. It is, therefore, very crucial that you accurately determine the type, amount and extent of insurance coverage which you may need. You should also know who will be responsible for insuring your goods when they are not in your possession. Always make sure you have proof of insurance from your sellers, and never only take their word for it.
- Keep Records of Everything
U.S. CBP laws require importers to keep records of all documents relating to imports for a period of five years. These records may be inspected at any time in order to check your compliance status to all U.S. CBP laws (if you’re not sure what documents to keep, see key #10 below).
- Hire an Experienced Customs Broker!
If you’re new to importing – or even if you’re not – you may want to consider hiring a freight forwarder that is also a professional customs broker, like Logistics Plus (LP), to help you with all of your importing procedures. The LP Customs Broker Solutions team can help simplify the process, and ensure you abide by all rules and regulations, thus minimizing any potential future problems. If you have any questions specific to import customs rules or duties, feel free to contact Gretchen Blough, our Customs Brokerage Manager, at email@example.com.