Introduction to Importing Basics Process and Requirements Hosted by: Alibaba.com Presenter: Tekle Sebhatu, Ph.D. Importing Basics Agenda • • • • • • Essentials for Import Success Customs Modernization Act. Customs Entry Process Documents Required to Clear Customs Classification (Harmonized System-- HS) International Commercial Terms (Incoterms 2000) • Common Mistakes Made by Importers • Help Available! • Resources Essentials For Import Success Planning Knowledge © PhotoDisc Import Success Commitment Relationship Customs Modernization (Mode Act) • Two Key concepts– Informed compliance – Shared responsibility • Key component “Importer responsible to use reasonable care” • Benefits to Customs and Importers: – Customs resources saved (Customs) – Greater obligation provide information on rights and responsibilities (Customs) – Information available at www.cbp.gov – Less likely to have shipments delayed or entries reviewed can help avoid penalty (Importer) Informal VS Formal Entry Entry -- filing documents with Customs at the port of entry to get goods released. • Informal Entry • • • • Value < $2000 (some might not e.g quota) Personal Shipments Commercial Shipments Mail shipments (Duty Paid to Postal Employee) • Formal Entry (Entry/Entry Summary) • >$2000 including personal shipments/Goods part of $250 • Exceptions (Corpses, Records, Diagrams) • Major Differences -- Formal VS Informal • Bond requirements • Liquidation process Customs Entry Process Entry 10 Working/Bus Days Entry Summary 15 Calendar Days One Year Arrival Liquidation -No change -Additional duty -Duty refunded Who Can Make Entry? • Owner of goods • Purchaser of goods • Custom House Brokers (Licensed) • Individual with power of attorney Documents Required to Make Entry • Bill of lading or Airway bill or Carriers Certificate • Commercial or pro-forma invoice • Entry/Entry Summary CF 3461/7501 or Entry/Immediate Delivery • Packing list • Other agency document requirements (FDA, FCC, DOA, ATF) Harmonized Tariff Schedule of the US (HTSUS) • Language of International trade (Int. standard system) • Covers all imported merchandise (U.S.) • Customs Entry forms • Customs duties, international statistics and Rules of origin • Over 12,000 codes recognized by over 200 countries, more than 95% of world trade • Products NOT specifically provided in the HTSUSUse term “Other” Harmonized Tariff Schedule of The US • First two digits for chapter –04 • Second two digits for heading –0409 • Third two digits for sub-heading –0409.00 • Forth two digits for duty –0409.00.00 • Fifth two digits for statistics –0409.00.00 Universal What Incoterms Can and Can’t Do For Buyers/Sellers • Only deal with obligations of buyers and sellers: • Packing for proper shipment • Provide appropriate documents • Identify insurance • Provide agreed documents for Customs clearance • Do not deal : • Transfer of property rights • Providing relief from liability for unforeseen events Four INCOTERM Groups Group E- Seller makes the goods available to the buyer at his premises (Ex-Works) Group F- Seller to deliver the goods to a carrier appointed by the buyer (FCA, FAS, FOB) Group C- Seller contracts for carriage at his own expenses, up to a destination (CFR, CIF, CPT, CIP) Group D- Seller responsible to deliver goods at agreed place of destination, at the border or inside the country (DAF, DES, DEQ, DDP, DDU) EXW--Ex Works (... named place) Seller makes goods available to the buyer at his warehouse; buyer pays to load aboard carrier' conveyance. FOB--- Free On Board (... named port of shipment) Export sale; delivered according to custom of port; risk transfers When goods are loaded; ocean freight collect. CFR--- Cost and Freight (... named port of destination) Similar to FOB except that ocean freight is prepaid. Buyer Country CIF--- Cost, Insurance and Freight (... Named port of destination) Same as CFR, except that seller also purchases insurance for the buyer. Buyer Country DDP---Delivered Duty Paid (... named place destination) Seller is like a domestic seller in destination country. Seller imports goods, pays duty, etc. bears risk and pays freight to named point. Terms can be modified to include delivery into buyer's warehouse at seller's expense. Buyer Country Role of Customs and Border Protection Assess and Collect Duties & Fees Enforcement of Customs and Related Laws Administer Treaties Role Of Custom House Brokers • Conduct Customs Business (valuation, classification, Admissibility & marking ) • International documentation and packaging • Carrier and routing information • Import quota information • Marine insurance rates and coverage • Warehouse and distribution services • Customs Bonds • Hazardous materials shipping compliance info. Importers Common Mistakes • Failure to obtain assistance from Customs or Custom House Brokers • Several distinct articles lumped as one • Failure to comply with Marking regulations • Inaccurate information of other agency requirements (e.g. FDA, Dept. of Agriculture) • Inaccurate Transaction Documents (e.g. Invoice) • Insufficient care when identifying product Classification using the HTSUS • Incorrect Duty Assessment (Valuation) Importing References U.S. Customs and Border Protection http://www.cbp.gov Harmonized Tariff Schedule of The U.S. http://www.usitc.gov/tata/hts/bychapter/index.htm International Chamber of Commerce (ICC) http://www.iccbooks.com National Customs Brokers & Freight Forwarders Association http://www.ncbfaa.org/