Archive for the ‘Non-Resident Importing’ Category


 

5 Most Common Mistakes to Avoid When Importing into the U.S.

Image: 5 Most Common Mistakes to Avoid When Importing into the U.S.

In 2010, during one of our first U.S. Customs Compliance seminars, U.S. Customs and Border Protection (CBP) identified the 5 most common mistakes to avoid when importing into the U.S., and interestingly enough, these are STILL the most common mistakes today.

Whether you are a U.S. manufacturer sourcing from China, purchasing completed goods for immediate sale, or acting as the non-resident importer (NRI) into the U.S., understanding these common mistakes and how to avoid them could save you a lot of time and money.

Mistake #1: Not Determining Your Customs Tariff Codes Correctly

The Harmonized Tariff Schedule determines the correct duty rate for your imported products. It is the foundation for your import compliance. Using the wrong code can mean you are underpaying or overpaying customs duties and taxes.

There are many ways to determine your customs tariff codes, some more reliable than others:

Regardless of your method of determination, treat tariff classification like you would a medical condition. Rather than relying on a self-diagnosis obtained from the internet, some things are best left to the trained professionals!

Mistake #2: Misunderstanding Rules of Origin

There are standard rules of origin for all goods. When importing goods into a nation with which the U.S. has a trade agreement, such as the North American Free Trade Agreement (NAFTA), they may be eligible for reduced or eliminated duty. Something to note, however, the use of an FTA may result in additional rules of origin to qualify for preferential treatment.

NAFTA certificates list the originating nation of the goods and act as proof of the claim. You, as the importer of record (IOR), are responsible for the completeness and accuracy of the NAFTA certificate.

Ensure you are filling out NAFTA certificates correctly by taking our Free Trade Agreements and Rules of Origin seminar or NAFTA for Beginners webinar series.

Mistake #3: Incorrect and Incomplete Country of Origin Marking

Legibly and permanently mark you imported goods with their country of origin. The country of origin may not be the same as country of purchase. Reference the U.S. Customs Regulation (19 CFR 134) to ensure compliance regarding markings and “J” list exemptions.

Pay close attention when reusing boxes. All previous markings must be eliminated to ensure that the correct country of origin markings are the only ones visible.

Mistake #4: Misunderstanding U.S. Customs Valuation

Delare the proper value of the imported goods to customs. Ensure you also calculate any deductions or additions. Support these adjustments with proper documentation at the time of entry.

Determine your goods value by attending our Customs Valuation seminar or commissioning our Trade Advisors.

Mistake #5: Using a U.S. Goods Returned Declaration for Non-American Goods

If you are importing goods back into the U.S., you can declare them as U.S. Goods Returned (USGR) to eliminate the duty… unless it turns out that they are not U.S. goods!

Declaration of Free Entry of Returned American Products requires you to provide appropriate documentation that goods were manufactured in the U.S. Maintaining a close relationship with your U.S. vendors may be helpful when it comes time to request an affidavit of manufacture to avoid paying duties on U.S.-made goods.

Final Suggestions by CBP

  1. If you are in doubt of whether or not your good is NAFTA eligible, do not claim it as such, and ensure that your customs broker does the same.
  2. If, after the fact, you find that you have made a mistake or a ‘false statement,’ notify CBP as soon as possible to ensure that you do not get penalized.
  3. Talk to your customs broker about the steps needed to disclose the scope of a discovered discrepancy. Some discrepancies can be corrected very quickly while others require more effort.

CBP does not want to be an impediment to doing business with the U.S. Avoid these 5 most common mistakes when importing into the U.S. and enjoy import success.

Did you like this article on common mistakes to avoid on U.S. imports? Sign up here to receive them each week!

The Disadvantages of Delivered Duty Paid (DDP)

Outsourcing your Transportation and Customs Control

Have you ever asked yourself why you choose Delivered Duty Paid (DDP Incoterms ®) for your international business? Many companies choose international terms of sale based on their company philosophy, history, costs, seller options or perceived ease of transaction. Without knowing the options beyond Incoterms DDP; a company could be losing control of their shipments and increasing their costs dramatically. The solution is to understand all Incoterms®; the responsibility involved, and to select the most advantageous term for your business strategy.

DDP Incoterms ®

Incoterms® DDP being an example, are terms that are agreed upon during the negotiation of a contract or sale and deal exclusively with;

  • The obligation of buyers and sellers (with regard to each of the 13 stages involved in the transport and clearance of a shipment – see Incoterms® chart), and
  • The stipulations on which party bears the risk of loss during transit.

Additional Information:

  • The purpose of these terms are to provide a set of international rules for the interpretation of the most commonly used trade terms.
  • The parties to the transaction select the Incoterms®, which determines who pays the cost of each transportation segment.
  • Incoterms® influence customs valuation of imported merchandise. Certain costs within the supply chain may or may not be included in the value for Customs, depending on the term selected.

It is important that your buyers understand and select terms of sale that are in the best interest of your company. The best time to determine the chosen one is when the buyer is evaluating whether or not to move forward with the purchase. Decisions made after the fact will inevitably affect the initial price that was being considered.

DDP – Delivered Duty Paid

This commonly used term places the maximum obligations on the seller and minimum obligations on the buyer.

The seller is responsible for delivering the goods to the named place, in the country of the buyer, and pays all costs and risks in bringing the goods to the destination, including, import duties and taxes. Risk transfers from seller to buyer when the goods are made available to the buyer, ready for unloading from the arriving conveyance.

Buyer Advantages

  • Lower risk, as the seller assumes all responsibilities and charges to the destination. However, risk is not gone!
  • Landed cost is known at the time of purchase.
  • No administrative supply chain management, arrangement of vendors or payment of such charges.

Buyer Disadvantages

  • Can not be used if the seller is unable to obtain import licenses, permits or certain payment options with Canada Customs. Some taxes such as GST are only payable by registered business entities, so there may be no mechanism for the seller to make payment.
  • No control over the movement or importation of the goods.
  • No direct contacts to track a shipment other than through your vendor.
  • No ability to interject in the event of an issue.
  • Hidden transport and import costs may lie in the markup calculated by the seller.

An Alternative to DDP: FCA – Free Carrier

This commonly used term places the maximum obligations on the buyer and minimum obligations on the seller.

The buyer is now responsible for delivering the goods to their intended destination, and pays all costs and risks in bringing the goods to the destination, including, import duties and taxes.

The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier

Buyer Advantages

  • Control over the movement or importation of the goods.
  • Direct contacts to track a shipment.
  • Ability to interject in the event of an issue.
  • No hidden transport and import costs.

Buyer Disadvantages

  • Administrative resources to liaise with service provider.

Always review and consider terms of sale proposed for use in a new contractual agreement to ensure they are consistent with your business plan. Ask for advice from your customs broker or freight forwarder, as often times they can recommend advantageous terms of sale.

Need assistance in reviewing your terms of sale? Please leave your questions and comments in the section below or email Ask Your Broker.

Have You Received an Informed Compliance Letter from U.S. Customs?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In an apparent effort to increase enforcement activities, U.S. Customs and Border Protection (CBP) has been issuing Informed Compliance Notification (ICN) letters to a variety of importers lately with a subject line, “Distribution of Informed Compliance Publications and Other Informative Documents.” They may particularly be targeting importers whom they have identified as having specific high-risk imports OR non-compliance issues with customs regulations, and are thus quite susceptible to undergoing a comprehensive regulatory audit. The letters are being sent accompanied with a DVD that contains a number of Informed Compliance Publications (ICP). These very valuable and informative ICPs can also be found here on CBP’s website.

You are encouraged to review those that pertain to your import activities, and most particularly those regarding entry requirements, valuation, tariff classification and country of origin.

While we have yet to be made aware of our clients having received such letters, we would like to alert you to be on the watch for any correspondence that your firm may receive from CBP, and strongly urge you to contact us immediately. Please be reminded that CBP is allowed to conduct full audits on your importing activities into the U.S. whether or not you are a U.S. domiciled company.

CBP has stated that these ICNs are generally intended to encourage importers to conduct internal reviews of their importing practices, and to file prior disclosures in cases where there are discrepancies or deficiencies discovered.

Important: Prior to communicating with U.S. Customs directly we emphasize the importance of contacting us first and as soon as possible after receiving any correspondence from CBP. As your customs broker, we are generally copied in on most correspondence from CBP to our clients; however, we do not anticipate being notified of this particular outreach unless we hear directly from you.

Pacific Customs Brokers stands ready to assist and guide you on all customs matters, and we look forward to hearing from you.

Have you received an Informed Compliance Notification recently or in the past? Did you wait, respond immediately or contact your customs broker first? Share your experience in the comments section below or email Ask Your Broker. However, if you have received a letter recently, call us immediately.

How U.S. Exporters Can Access the Profitable Canadian Market

Non-Resident Importing into CanadaWith a significant boost from consumer and business spending, there is a resurgence in the U.S. economy. Economists are encouraged by an increase in export volumes and businesses are now expanding their sales to the number one export market outside of the United States – Canada.

Sharing a border is not the only thing Canada and the U.S. have in common. The United States and Canada share the world’s largest and most comprehensive trading relationship (source). Currently, Canada is the United State’s largest goods trading partner with $632 billion in total (two ways) goods trade during 2013 (source) accounting for 19 % of total U.S. exports. Canada offers excellent business opportunities for  U.S. companies. With similarities in people, language and the close shipping proximity, exporting to Canada can be the most lucrative and easiest export market for U.S. exporters.

 

The Canadian Market:

  1. An estimated 75% of Canadians live within 161 kilometers (100 miles) of the U.S. border. (source)
  2. Potential market of more than 35 million people. (source)
  3. U.S. goods exports to Canada in 2013 were $300.2 billion, up 2.6% ($7.7 billion) from 2012.(source)
  4. U.S. exports to Canada account for 19.0% of overall U.S. exports in 2013. (source)

As a Canadian and U.S. customs broker with experience on both sides of the border, Pacific Customs Brokers knows first hand the benefits of international trade between these neighboring countries.

 

How Can U.S. Exporters Access the Profitable Canadian Market?

If you are a U.S. company, then perhaps the Non-Resident Importer  option may be your biggest advantage when selling your goods to Canada.

 

Who is a Non-Resident Importer (NRI)?

A Non-Resident Importer (NRI) is simply a company that is considered the Importer of Record for shipments going into Canada, even though the company does not have a physical presence in Canada. A Non-Resident Importer controls the customs release process and the costs associated with getting their products into Canada in a timely and cost-effective manner. Products are sold with an all-inclusive delivered price. The customer orders and pays for the product and waits for it to be delivered.

 

Benefits of Becoming a Non-Resident Importer (NRI):

By considering the Non-Resident Importer option, U.S. exporters can:

  • Remove border hassles and unexpected fees for your Canadian customers
  • Provide price guarantee to leverage more sales
  • Capitalize on NAFTA  for your ‘Made in USA’ products
  • Simplify customs documents and reduce customs brokerage fees
  • Open doors to large retailers who will not agree to be the Importer of Record
  • Create a potential advantage over U.S. competitors without impacting profits
  • Position yourself on an even playing field with Canadian firms without the additional expense of a Canadian office, warehouse or distribution point
  • Leverage Canada’s trade agreements by shipping directly from participating foreign countries into Canada. There’s no need to land your goods in the U.S. first.

 

For further information on the Non-Resident Importer option and to learn how it could benefit your sales strategy, please contact us.

Importing into Canada for the Novice:

For those who are new to importing into Canada, our webinars on Importing for the Beginner [CA Series] will make a good start. In this two-part webinar series to get a step-by-step description of the importing process into Canada. Each part in the series is 60 minutes in length and will provide a comprehensive understanding of the supply chain parties involved, compliance considerations, documents and forms, free trade agreements, and more.

Learn more and register »

 

Is your American business trying to expand into Canada? Have you considered Non-Resident Importing? Let us know in the comments below or email us at Ask Your Broker.

 

Additional resources:

Non-Resident Importing — Discover Your Unfair Advantage

seesaw-600With an improving U.S. economy and a comparable low Canadian loonie, U.S. companies continue to find different ways to cut costs while still looking to grow their sales and revenues. Creating or growing an export initiative to Canada right now can be one of the easiest ways to achieve great results. A stronger U.S. dollar and lower Canadian loonie, has encouraged Canadians to continue in online and cross-border shopping.

How can U.S. companies tap into the Canadian market?

As a U.S. business, that is currently not in Canada, you could look into expanding your market by exporting to Canada or, better yet, finding out how to do it better than your competition. Business Executive, John Rollwagen says, “the secret of business, especially these days, is to focus relentlessly on your unfair advantage — the thing you do that others don’t.”

What will give you an “unfair advantage” over other competitors?

Simply put, unfair advantage is just another term for competitive advantage. One suggestion is to look at the Non-Resident Importer program for U.S. exporters to Canada and how it may benefit your export growth strategy.

Who is a Non-Resident Importer (NRI)?

A Non-Resident Importer (NRI) is simply a company that is considered the Importer of Record for shipments going into Canada, even though the company does not have a physical presence in Canada. A Non-Resident Importer controls the customs release process and the costs associated with getting their products into Canada in a timely and cost-effective manner. Products are sold with an all-inclusive delivered price. The customer orders and pays for the product and waits for it to be delivered. No border hassles, no waiting for the courier company to arrive and collect extra charges. Ordered, paid and delivered. That’s it!

What are the benefits of being a Non-Resident Importer?

By becoming a Non-Resident Importer and acting as the Importer of Record, as a U.S. exporter you can:

  • Remove border hassles and unexpected fees for your Canadian customers
  • Provide price guarantee to leverage more sales
  • Capitalize on NAFTA  for your ‘Made in USA’ products
  • Simplify customs documents and reduce customs brokerage fees
  • Open doors to large retailers who will not agree to be the Importer of Record
  • Create a potential advantage over U.S. competitors without impacting profits
  • Position yourself on an even playing field with Canadian firms without the additional expense of a Canadian office, warehouse or distribution point
  • Leverage Canada’s trade agreements by shipping directly from participating foreign countries into Canada. There’s no need to land your goods in the U.S. first.

The Non-Resident Importer option can provide your company with that “unfair advantage” over other competitors who just export their products and never think about what happens when the goods cross the border and a delivery attempt is made. Think of how your customer service team could actually get a “thank you” and a compliment instead of complaints about unexpected duties, taxes or other related customs release fees. There are more opportunities and benefits that can be realized by becoming a Non Resident Importer, many specific to what you are currently doing or want to do in the future. In coming weeks, we will continue to explore this exciting option of your sales to Canada and all the considerations you should know before you begin.

Pacific Customs Brokers offers a Non-Resident Importer Program tailored to your company’s needs.We can guide you through the process and help you tap into the Canadian market. Contact us for more information and to get set up.

For those who are new to importing into Canada, our webinars on Importing for the Beginner [CA Series] will make a good start. In this two-part webinar series to get a step-by-step description of the importing process into Canada. Each part in the series is 60-minutes in length and will provide a comprehensive understanding of: the supply chain parties involved, compliance considerations, documents and forms, free trade agreements, and more.

Learn more and register »

 

What do you think of Non-Resident Importing as a competitive advantage? How will you use it in your business? Share your thoughts in our comments section below or email us at Ask Your Broker.