What is the "Country of Origin?"
Generally, the country of origin refers to the country where the product was grown, produced, or manufactured. This is easily applied when the product is produced in one country using domestic materials. For example, a bicycle that is manufactured in India using components all made in India has the country of origin "Made in India."
However, today it is unrealistic to think that all materials, components, and labor all stem from the same country. Using the bicycle example, the wheels may be from USA, the bicycle frame from India, but the labor was done in China. In this example, it is not always clear as to where the country of origin is. In these situations the law created the concept of substantial transformation - it is a degree of processing requiring to change the country of origin (more on substantial transformation to be discussed next post).
An incorrect determination as to an imported product may lead to incorrect marking, incorrect duty, and incorrect documentation upon attempted entry. The consequences for these errors can be delays, additional costs, or seizures.
Happy Importing and Happy Holidays :)
www.customsesq.com
Wednesday, December 21, 2011
Tuesday, December 13, 2011
Countervailing duties - Protection against foreign government subsidies
What are countervailing duties?
Countervailing duties, similar to anti-dumping is a trade remedy to neutralize foreign economic threat. Specifically, countervailing duties are duties imposed by the U.S. government against tax reduction, grants, bounties, or any other subsidy provided by a foreign government on exported goods.
For example, in our country the government provides corn growers a tax credit whereby they pay them to use their corn for ethanol instead of food.
Who determines if a countervailing duty is applicable?
Same as in the anti-dumping matters, "Commerce determines whether the alleged . . . subsidizing is happening, and if so, the margin of dumping or amount of subsidy. The International Trade Commission determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds that goods are provided subsidies, countervailing duties will be implemented in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection. Countervailing duty is approximately equal to the amount of any subsidy that exists to which is creating harm in the U.S. market.
Happy Importing :)
customsesq.com
Countervailing duties, similar to anti-dumping is a trade remedy to neutralize foreign economic threat. Specifically, countervailing duties are duties imposed by the U.S. government against tax reduction, grants, bounties, or any other subsidy provided by a foreign government on exported goods.
For example, in our country the government provides corn growers a tax credit whereby they pay them to use their corn for ethanol instead of food.
Who determines if a countervailing duty is applicable?
Same as in the anti-dumping matters, "Commerce determines whether the alleged . . . subsidizing is happening, and if so, the margin of dumping or amount of subsidy. The International Trade Commission determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds that goods are provided subsidies, countervailing duties will be implemented in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection. Countervailing duty is approximately equal to the amount of any subsidy that exists to which is creating harm in the U.S. market.
Happy Importing :)
customsesq.com
Thursday, December 8, 2011
Anti-Dumping Duties - Protection from Lowball Pricing
What are anti-dumping duties? Duties imposed against goods from foreign countries that are sold significantly lower in their country of origin or comparable third country markets - destroying the U.S. market for that product in the process.
For example: Company X, an exporter from China is selling massive quantities of iPod's to U.S. resellers for the wholesale price of $50 a piece when the average price for an iPod sold at wholesale price in China is $200 a piece.
So what? a great deal is just that, a great deal, who determines whether it reaches the level of anti-dumping.
There are two players involved. The International Trade Commission (USITC) and the U.S. Department of Commerce, but each address a different issue.
"Commerce determines whether the alleged dumping . . . is happening, and if so, the margin of dumping. The USITC determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds anti-dumping, Company X from China will face anti-dumping duties in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection.
How do these agencies find out about the potential anti-dumping? Generally, the agencies are prompted to investigate after receiving word from a business harmed by the influx of cheap goods (e.g., your competitors!)
Happy Importing :)
www.customsesq.com
For example: Company X, an exporter from China is selling massive quantities of iPod's to U.S. resellers for the wholesale price of $50 a piece when the average price for an iPod sold at wholesale price in China is $200 a piece.
So what? a great deal is just that, a great deal, who determines whether it reaches the level of anti-dumping.
There are two players involved. The International Trade Commission (USITC) and the U.S. Department of Commerce, but each address a different issue.
"Commerce determines whether the alleged dumping . . . is happening, and if so, the margin of dumping. The USITC determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds anti-dumping, Company X from China will face anti-dumping duties in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection.
How do these agencies find out about the potential anti-dumping? Generally, the agencies are prompted to investigate after receiving word from a business harmed by the influx of cheap goods (e.g., your competitors!)
Happy Importing :)
www.customsesq.com
Monday, December 5, 2011
"Drawback" - What is it?
What is "Drawback"? A program that provides a refund for a majority of goods that are exported or destroyed after importation into the United States.
If the goods are exported or destroyed drawback permits Customs to refund 99% of the duties when the goods were imported into the U.S. The only difficult part about drawback is that you must maintain precise compliance with the drawback rules and regulations - the government is not going to just return money willy nilly. The importer must fill out the drawback application before exportation.
There are (4) types of drawback:
1. Merchandise not conforming to sample or specifications - Imported goods that were not solicited not conform to the samples or specifications at the time it was imported. Must be done within 3 years from the time the merchandise was released from Customs.
2. Unused merchandise drawback - Imported goods that have not been "used" (speak to an expert about whether your particular product qualifies as used). Must be done within 3 years from the time the merchandise was released from Customs.
3. Manufacturing drawback - Imported goods used to manufacture new goods. Manufacturer's Drawback requires that a "ruling" be approved by Customs so that Customs is aware of how the product is being manufactured.
4. Substitution for drawback purposes - Like manufacturing drawback, but you may substitute components of exported products with "commercially interchangeable" (again speak to an expert as to whether you qualify) components. For example: You import Company A screws into the U.S. but instead use Company B screws to manufacture your product. Company A screws and Company B screws are found to be commercially interchangeable, in other words industry equivalents. Must be done before the close of the 3-year period beginning on the date of importation of the imported merchandise
Happy Importing :)
If the goods are exported or destroyed drawback permits Customs to refund 99% of the duties when the goods were imported into the U.S. The only difficult part about drawback is that you must maintain precise compliance with the drawback rules and regulations - the government is not going to just return money willy nilly. The importer must fill out the drawback application before exportation.
There are (4) types of drawback:
1. Merchandise not conforming to sample or specifications - Imported goods that were not solicited not conform to the samples or specifications at the time it was imported. Must be done within 3 years from the time the merchandise was released from Customs.
2. Unused merchandise drawback - Imported goods that have not been "used" (speak to an expert about whether your particular product qualifies as used). Must be done within 3 years from the time the merchandise was released from Customs.
3. Manufacturing drawback - Imported goods used to manufacture new goods. Manufacturer's Drawback requires that a "ruling" be approved by Customs so that Customs is aware of how the product is being manufactured.
4. Substitution for drawback purposes - Like manufacturing drawback, but you may substitute components of exported products with "commercially interchangeable" (again speak to an expert as to whether you qualify) components. For example: You import Company A screws into the U.S. but instead use Company B screws to manufacture your product. Company A screws and Company B screws are found to be commercially interchangeable, in other words industry equivalents. Must be done before the close of the 3-year period beginning on the date of importation of the imported merchandise
Happy Importing :)
Tuesday, November 29, 2011
Programs to Reduce your Duties
The United States offers a number of special duty reduction programs for products that originate from certain countries. Each of the programs requires that the good originate from beneficiary country. If the good was imported into the beneficiary country then the material must be "transformed" by a process or manufactured into a product of that country. Transformation is where things get a bit gray, contact an expert to determine if and how a good can be transformed.
Value Requirements:
The amount of value to be added consists of:
1. the materials produced in the beneficiary country
2. the direct costs of processing operations performed in the beneficiary country
Documents Required:
Most duty reduction programs require a certificate of origin and basis for qualifying under the program. It must be filed with each entry of goods into the U.S.
Some examples of Duty Free Reduction Programs:
The U.S.-Australia Free Trade Agreement
The U.S.—Israel Free Trade Area Agreement
he North American Free Trade Agreement
Happy Importing :)
Value Requirements:
The amount of value to be added consists of:
1. the materials produced in the beneficiary country
2. the direct costs of processing operations performed in the beneficiary country
Documents Required:
Most duty reduction programs require a certificate of origin and basis for qualifying under the program. It must be filed with each entry of goods into the U.S.
Some examples of Duty Free Reduction Programs:
The U.S.-Australia Free Trade Agreement
The U.S.—Israel Free Trade Area Agreement
he North American Free Trade Agreement
Happy Importing :)
Friday, November 18, 2011
New Rule and Duty Rate Governing Textile-Bottomed Footwear! DECEMBER 3, 2011
THE FOLLOWING WILL BE IN EFFECT DECEMBER 3, 2011.
Ever since an intelligent business man designed footwear with a textile outer sole (i.e. textile bottom) that footwear was subject to duty rates approximately 25% - 35% lower than equivalent footwear with a rubber or plastic outer sole - what a way to utilize Tariff Engineering!
President Obama signed Presidential Proclamation 8742 that was published in the Federal Register on November 3, 2011. What the Proclamation did was add a U.S. Note 5 to the footwear Chapter in the tariff schedule ("Chapter 64").
The new note, Note 5 states “For the purposes of determining the constituent material of the outer sole pursuant to note 4(b) of this chapter, no account shall be taken of textile materials that do not possess the characteristics usually required for normal use of an outer sole, including durability and strength.” Consequently, based on this note duty rates for certain footwear with the textile bottom may be affected.
What does "normal" mean?
How does an importer determine "durability and strength"?
As always it is in the importers best interest to consult an expert and/or have your goods tested during the production phase to evaluate the best model for the lowest duty rates.
Happy Importing :)
Ever since an intelligent business man designed footwear with a textile outer sole (i.e. textile bottom) that footwear was subject to duty rates approximately 25% - 35% lower than equivalent footwear with a rubber or plastic outer sole - what a way to utilize Tariff Engineering!
President Obama signed Presidential Proclamation 8742 that was published in the Federal Register on November 3, 2011. What the Proclamation did was add a U.S. Note 5 to the footwear Chapter in the tariff schedule ("Chapter 64").
The new note, Note 5 states “For the purposes of determining the constituent material of the outer sole pursuant to note 4(b) of this chapter, no account shall be taken of textile materials that do not possess the characteristics usually required for normal use of an outer sole, including durability and strength.” Consequently, based on this note duty rates for certain footwear with the textile bottom may be affected.
What does "normal" mean?
How does an importer determine "durability and strength"?
As always it is in the importers best interest to consult an expert and/or have your goods tested during the production phase to evaluate the best model for the lowest duty rates.
Happy Importing :)
Thursday, November 17, 2011
The Foreign Trade Zone
What is a Foreign Trade Zone?
A United States Foreign Trade Zone (FTZ) is a geographic location within the United States but is considered to be outside of Customs territory. Similar to a Bonded Warehouse, (inside Customs territory) many prerequisites for entry such as quotas are not to be adhered to. Additionally, goods may be transferred to a foreign trade zone with less formality than the bonded warehouse.
What are its advantages?
1. Both Domestic as well as foreign goods may be stored in a foreign trade zone for an UNLIMITED amount of time (for a bonded warehouse only 5 years).
2. Good may be stored, manipulated, processed, and manufactured.
3. Domestic merchandise can be taken from the FTZ duty free. Customs duties are only due on foreign goods when removed from the FTZ and entered into the domestic market (unlike if exported - no duty requirements).
4. Ability to get "PRIVILEGED" status for goods - Dutiabilility based on the condition of the goods and the duty rate when the goods entered the FTZ even though they may have been changed by the time they are withdrawn from the FTZ. Meaning that you can alter the goods in the FTZ whereby they would have been subject to a higher duty rate. However, because they were placed in an FTZ, you the importer only pays the duty rate for the goods when entered in the FTZ.
5. Ability to get "NON-PRIVILEGED" status for goods - Dutiable based upon when the goods were withdrawn from the FTZ. An importer can manufacture goods within the FTZ whereby foreign materials are used to lower the duty rate.
A United States Foreign Trade Zone (FTZ) is a geographic location within the United States but is considered to be outside of Customs territory. Similar to a Bonded Warehouse, (inside Customs territory) many prerequisites for entry such as quotas are not to be adhered to. Additionally, goods may be transferred to a foreign trade zone with less formality than the bonded warehouse.
What are its advantages?
1. Both Domestic as well as foreign goods may be stored in a foreign trade zone for an UNLIMITED amount of time (for a bonded warehouse only 5 years).
2. Good may be stored, manipulated, processed, and manufactured.
3. Domestic merchandise can be taken from the FTZ duty free. Customs duties are only due on foreign goods when removed from the FTZ and entered into the domestic market (unlike if exported - no duty requirements).
4. Ability to get "PRIVILEGED" status for goods - Dutiabilility based on the condition of the goods and the duty rate when the goods entered the FTZ even though they may have been changed by the time they are withdrawn from the FTZ. Meaning that you can alter the goods in the FTZ whereby they would have been subject to a higher duty rate. However, because they were placed in an FTZ, you the importer only pays the duty rate for the goods when entered in the FTZ.
5. Ability to get "NON-PRIVILEGED" status for goods - Dutiable based upon when the goods were withdrawn from the FTZ. An importer can manufacture goods within the FTZ whereby foreign materials are used to lower the duty rate.
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