Archive for the ‘Non-Resident Importing’ Category


 

How The Proposed Tariffs Affect You In The U.S.-China Trade War

China U.S. Trade War Proposed Tariffs

For the second time in July the U.S. government has placed additional tariffs on products exported from China and imported into the U.S.  If the proposed tariffs were actioned, there would be changes for both American and Canadian importers. How will the additional tariffs on Chinese manufactured goods affect trade between the United States and Canada?

The Proposed Tariffs Effect On Canadians

Canada is already in the midst of a trade war with the U.S.  Now Canada is unwittingly affected by the trade war between the U.S. and China because many items proposed for additional tariffs are manufactured in China, exported to Canada and then finally exported into the U.S.  The additional tariffs levied against Chinese goods are applicable to goods manufactured in China without regard to the previous country of export.

Canada has enjoyed a long standing trade partnership with the U.S.  Canadian companies often act as Non-Resident Importers; handling all of the import requirements including payment of duties and taxes. This has allowed Canadians to sell their goods to companies in the U.S. as seamlessly as a U.S. company. This allows Canadian exporters to expand their market beyond the Canadian border.

The third list of tariffs released on July 11th cover consumer goods such as furniture, seafood, automobile parts, televisions and video equipment, which we see our clients from Canada ship on a daily basis.

Even though the trade war is between the U.S. and China, other countries are affected because they, like the U.S., have their goods manufactured in China.

Many of the items on the proposed list such as furniture and seafood, which are normally duty free, will be dutiable at 10% if the proposed tariffs are actioned.

If you are a Canadian company who exports Chinese manufactured products into the U.S. you will need to consider how you will address the increase in cost of exporting to Americans.

The Proposed Tariffs Effect On Americans

Over 75% of the new tariffs target machinery for manufacturing goods, electrical equipment, televisions, recorders, bicycles, bicycle parts, and automobile parts: all merchandise which is in high demand with american consumers. With the U.S. being a consumer based economy, where the consumer is interested in paying the lowest price possible, this new legislation would have an adverse effect on the U.S. economy.

In short order, the increase in costs to bring goods into the U.S. will increase costs for producers, importers and ultimately the consumer. This is never a popular solution, however the U.S. has tried to entice China to come to the table to discuss revising their unfair trade practices.  

The additional tariffs were initiated to combat Chinese regulations that require companies wishing to do business in China partner with a chinese company and share the technology associated with their products leading to violations of both intellectual property rights and World Trade Organization (WTO) rules.

Some economists say that a more appropriate way to combat these unfair trade practices would be to band together with other countries and take their concerns to the WTO to initiate a lawsuit against China.

In the long run, if the two countries can come to a satisfactory solution to the root of the issue the U.S. will benefit greatly and the trade deficit will balance out.

The Proposed Tariffs Affect On U.S. Import Bonds

How will the increased duties affect your import bond? Bond limits are set based on duties, taxes and fees paid in a 12 month period. With the increased duties, higher bond limits may be required. In addition to the higher bond limits, the surety company may request financial documents and collateral to secure the bond.

Your Guide To The Proposed Tariffs

This is a retaliatory move by the U.S. to address concerns of intellectual property rights.

The United States Trade Representative (USTR) will be holding a hearing August 20th-23rd on the impact the proposed tariffs will have if imposed. In order to appear at the hearing, submission must be made before July 27th, which must include a summary of the expected testimony. Written comments can be submitted to the USTR from now until August 17th, 2018.

A decision on if the additional 10% tariff will be imposed or not is expected to be announced at the end of August, after the hearings.

This 10% will be in addition to the already imposed 25% tariff on $34 billion worth of goods from China that came into effect on July 6th, 2018. China retaliates with a reciprocal tariff increase on U.S. commodities imported into China.

How You Can Prepare For The Proposed Tariffs

As a business it is best for you to be proactive in your approach to the impending changes. Contacting a trade professionals for advice on how the proposed legislation could affect your company will provide you with the knowledge to make quick decisions when change inevitably comes.

This includes understanding;

  • What country has the most cost effective solution to source your materials from,
  • Determining your rate of duty if there were changes to the proposed tariffs or NAFTA,
  • Education to make yourself prepared for current practices and future changes, as well as,
  • Freight costs to get your products from your source to you.

All of these services are provided to you by our Trade Advisory experts in Canada and the U.S. Contact us to start a conversation with a Trade Advisor today.

 

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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.

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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.

 

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