Issue Date: October 2011 e-news, Posted On: 10/16/2011
An Independent Solution to Exporting By Tom Stanton, AFMS
In a recent article on exporting from the United States we talked about three companies in the market place that can help you make entry into foreign markets. (See the article from our August issue here.) If none of these options look good to you and you are more interested in an independent solution, this article addresses some of the details you need to know about and companies or services that might assist in a more independent export process.
Step one: Establish a database of all items to be exported: You must have all items you are shipping listed in a database or excel spreadsheet with reasonable descriptions you might use to classify them. The basic description should tell what the material the item is made of and if it is a part of something else; the description of the item that it supports or works with is also necessary. In some cases, experience with the technical differences identified in the Harmonized classification determines the amount of detail required. More general descriptions such as "CN 35I sleeve" or "computer parts" would not be acceptable. Better descriptions might be "CN 351 metal sleeve for 351 power transmission" or "heat sink for X35 high speed ram."
Step two: Classify all items in the database: The US Commerce Department requires an Export Commodity Control Classification Number-ECCN (see www.exportweb.com/finder as a resource for information). The ECCN helps identify any export-controlled commodities such as nuclear research, high technology, or military controls. With regard to duties, the Harmonized System (HS) of coding is an internationally standardized numeric system with six digits as the standard. Additional digits are added according to various country requirements to assign tariffs and trade statistics. The Harmonized Tariff Schedule is organized into 21 sections and 96 chapters, accompanied with general rules of interpretation and explanatory notes.
Identifying the correct classification is often a challenge for companies first entering the global market. CUSTOMS Info & Global Data Mining offer a free 7-minute recorded webinar that will give you some tips on what you should look for in selecting a service provider to help you with your classification research needs. http://www.gdmllc.com/webinars/Default.aspx?webinarId=46.
Any US Customs broker or freight forwarder can also help you with classification of your goods according to the US tariff schedules. Since the first six digits of the harmonized classification are the standard for international, assigning the US classification for all your goods makes it easy for the broker or local importer. to modify the classification to suit any local import statistical requirements. The harmonized classification can be obtained by using the US Schedule B system http://www.census.gov/foreign-trade/schedules/b/ or by researching yourself in the US Customs Cross system http://rulings.cbp.gov/ or by looking up the US Harmonized tariff online http://www.usitc.gov/tata/hts/bychapter/index.htm.
Step 3: Identify end user restrictions/import restrictions. In some types of transactions the US government requires documentation about the end user of the merchandise to assure high technology is not getting into the wrong hands. In other cases the foreign government may restrict the import of a particular product so that they can develop their own manufacturing of that item. Also, the US government may have created a free trade agreement with that country and documentation that the item was made in the US will eliminate duties that would normally be due.
Lower value goods usually flow through Customs clearance informally but higher value or heavier items may require Customs clearance by a Customs broker, as well as a Customs bond. For example, imports into the United States valued at less than $20 can be entered informally without duties, and items valued less than $2000 can usually be entered informally on courier paperwork. Items valued over $2000, however, must be cleared by a licensed customs broker with an import bond. Brokers Worldwide (www.brokersworldwide.com) has been helpful in this arena as have the international desks of the two major US small package carriers and various customs brokers located at the shipment destination.
Summary: If you are interested in developing your own exports to foreign countries you need to start with an export product database and enhance the product descriptions so the items can be classified. A number of resources are available for classification assistance with regard to US export laws and the Harmonized System. Once these classifications have been made you can contact various resources to help you compute the duties and taxes and or any special documentation or restrictions on the exports of your products to each specific foreign country. Freight forwarders, Customs brokers, small package carriers and trade consultants are excellent resources for obtaining this type of information. It is essential to know what your shipment might encounter as it enters Customs for the end customer. Careful research of this information will put you on the best footing for the timely release and delivery of your products worldwide.
Tuesday, October 18, 2011 8:22:27 PM by Charles Simpson