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.