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Overview
The ultimate guide to navigating the increasingly complicated world of export and import guidelines.
International business is more complex today than ever before, from customs and export control requirements, and distributors versus agents to payment mechanisms, insurance, and transportation.
Featuring dozens of sample contracts, procedures, checklists, and ready-to-use forms, Export/Import Procedures and Documentation is an authoritative voice in the ever-changing, often-confusing world of international laws and regulations.
This revised fifth edition contains new and expanded information on topics including:
- Corporate oversight and compliance
- Valuation
- The Export Control Reform Act
- Licensing requirements and exceptions
- International Commerce Trade Terminology
- The shifting definition of “Country of Origin”
- Specialized exporting and importing, and more!
You no longer have to worry about all the dos, don’ts, and details of the vast world of importing/exporting. Export/Import Procedures and Documentation has done it for you already.
Product Details
| ISBN-13: | 9780814434765 |
|---|---|
| Publisher: | AMACOM |
| Publication date: | 02/18/2015 |
| Sold by: | HarperCollins Publishing |
| Format: | eBook |
| Pages: | 640 |
| File size: | 37 MB |
| Note: | This product may take a few minutes to download. |
About the Author
Read an Excerpt
Export/Import Procedures and Documentation
By Donna L. Bade
AMACOM
Copyright © 2015 Donna L. BadeAll rights reserved.
ISBN: 978-0-8144-3476-5
CHAPTER 1
Organizing for Export and Import Operations
When a company makes the decision to begin marketing its products outside the United States or to source raw materials from abroad, it generally assigns the compliance task to someone in the supply chain group with little to no background in the complexities of regulatory compliance. Very few people set out on a career path to develop an expertise in the import/export compliance field, but it is a highly necessary and valued position in today's global environment.
Companies must have a smooth, efficient, and compliance-oriented (and, therefore, profitable) exporting and/or importing program and it requires that some personnel must have specialized knowledge. The personnel involved and their place in the business organization vary from company to company, and sometimes the same personnel have roles in both exporting/importing and other functions within the company. In small companies, one person may perform all of the relevant functions, while in large companies or companies with a large amount of exports or imports, the number of personnel dedicated to the compliance responsibilities may be large. In addition, as a company decides to perform in-house the work that it previously contracted with outside companies (such as customs brokers, freight forwarders, consultants, packing companies, and others) to perform, the export/import department may grow. As business increases, specialties may develop within the department, and the duties performed by any one person may become narrower.
A. Export Compliance Department
For a company to grow by marketing its products abroad, it must be compliant with both U.S. export controls and foreign import regulations. This compliance-first attitude must be driven from the top by the President or CEO. To be compliant, every employee must be aware of his own role in the process. Violations may result in penalties of $250,000 per violation, bad publicity and even a denial of export privileges. It is critical to the bottom line of any company to be compliant. One of the key responsibilities of an export compliance person is the ability to say "Stop the Shipment" and have the support of management to enforce that dictate. It is far better to stop a shipment than try to explain later when a subpoena arrives or when an enforcement agent shows up at your door why the company exported products in violation of the law.
For many companies, the export department begins in the sales or marketing department. That department may develop leads or identify customers located in other countries. Inquiries or orders may come from potential customers through the company's web site. When such orders come in, the salespeople need to determine what steps are different from its domestic sales in order to fill those export orders. For example, how do they arrange for the shipment; how will they guarantee payment; who is responsible for insurance; etc. Often the exporter's first foreign sales are to Canada or Mexico. Because the export order may require special procedures in manufacturing, credit checking, insuring, packing, shipping, and collection, it is likely that a number of people within the company will have input on the appropriate way to fill the order. In addition, if the customer is expecting to take advantage of the North American Free Trade Agreement, the products must meet certain criteria to be eligible. Determining the eligibility should be done before marketing the product and the process can be complicated, but without ensuring the product is eligible, all duty-free privileges will be denied and the Company may lose a customer. As export orders increase (for example, as a result of an overseas distributor having been appointed or through an expansion of Internet sales), the handling of such orders should become more routine and the assignment of the special procedures related to an export sale should be given to specific personnel. It will be necessary to interface with freight forwarders, couriers, banks, packing companies, steamship lines, airlines, translators, government agencies, domestic transportation companies, and attorneys. Because most manufacturers have personnel who must interface with domestic transportation companies (traffic or logistics department), often additional personnel will be assigned to that department to manage export shipments and interface with other outside services. Some of this interface, such as with packing companies and steamship lines, and possibly government agencies and banks, may be handled by a freight forwarder, but the ultimate responsibility lies with the exporter, so knowledgeable oversight of the supply chain partnerships including, freight forwarder oversight is critical. The number of personnel needed and the assignment of responsibilities depend upon the size of the company and the volume of exports involved. A chart for a company with a large export department is shown in Figure 1–1. The way in which an export order is processed at the time of quotation, order entry, shipment, and collection is shown in Figures 1–2, 1–3, 1–4, and 1–5, respectively. Smaller companies will combine some of these functions into tasks for one or more persons.
B. Import Department
A manufacturer's import department often grows out of the purchasing department, whose personnel have been assigned the responsibility of procuring raw materials or components for the manufacturing process or out of the supply chain department, because the responsibility of that group is managing the international transportation. It is important that the personnel responsible for the import compliance receive proper training.
For importers or trading companies that deal in finished goods, the import department may begin as the result of being appointed as the U.S. distributor for a foreign manufacturer or from purchasing a product produced by a foreign manufacturer that has U.S. sales potential. Because foreign manufacturers often sell their products ex-factory or FOB plant, a U.S. company that intends to import such products must familiarize itself with ocean shipping, insurance, U.S. Customs clearance, and other procedural matters. Increasingly, a number of U.S. manufacturers are moving their manufacturing operations overseas to cheaper labor regions and importing products they formerly manufactured in the United States. That activity will also put them in contact with foreign freight forwarders, U.S. customs brokers, banks, the U.S. Customs and Border Protection, marine insurance companies, and other service companies.
Once again, import compliance is key to ensuring a smooth import process and all parties in an organization must be aware of the compliance role they play in meeting those requirements. Compliance begins at the time a product is in the design stages for manufacture either abroad or in the U.S. in order to be able to take advantage of import opportunities for finished goods or components and to ensure that there is no misunderstanding regarding the classification, duty rate, availability of certain free trade agreements duty reduction programs, proper valuation, county of origin marking, etc. There are potential penalties and seizures available to the U.S. Customs and Border Protection, so compliance must be first and foremost at all times.
C. Combined Export and Import Departments
In many companies, some or all of the functions of the export and import departments are combined in some way. In smaller companies, where the volume of exports or imports does not justify more personnel, one or two persons may have responsibility for both export and import procedures and documentation. As companies grow larger or the volume of export/import business increases, these functions tend to be separated more into export departments and import departments as each develops a specialized expertise in their areas. A diagram of the interrelationships between the export and import personnel in the company and outside service providers is shown in Figure 1–6.
D. Manuals of Procedures and Documentation
It is often very helpful for companies to have a manual of procedures and documentation for their export and import departments particularly as personnel changes. Such manuals serve as a reference tool for smooth operation and as a training tool for new employees. Moreover, since the Customs Modernization Act, such manuals are required to establish that the importer is using "reasonable care" in its importing operations, and they have become essential in the mitigation of penalties for violations of the import and export laws administered by the U.S. Customs and Border Protection; the Bureau of Industry & Security, Department of Commerce; and the Office of Foreign Assets Control, Department of Treasury and Directorate of Defense Trade Control, Department of State. Such manuals should be customized to the particular company and kept up-to-date. A good manual should describe the company's export and import processes. It should contain names, telephone numbers, and contact persons at the freight forwarders and customs brokers, steamship companies, packing companies, and other services that the company has chosen to utilize as well as government agencies required for the import or export of the company's commodities. It should contain copies of the forms that the company has developed or chosen to use in export sales and import purchases and transportation, identify the internal routing of forms and documentation within the company for proper review and authorization, and contain job descriptions for the various personnel who are engaged in export/import operations. The manuals should be kept electronically and disseminated via hard copy or the company intranet to key personnel. The manuals must be updated as changes in policies, procedures, contact persons, telephone numbers, forms, or government regulations occur. Sample tables of contents for export and import manuals are shown in Figures 1–7 and 1–8, respectively. A company manual that is stagnant, unread and unused is not viewed favorably by the government agencies.
E. Record-Keeping Compliance
Exporters and importers have always had an obligation to maintain records relating to their international trade transactions. Recently, however, these obligations have become mandatory due to changes in the law. The use of electronic documentation including emailing or web purchasing and confirmations as well as the invoices makes it all the more important to identify the terms and conditions and require the customer to either send confirmation of acceptance either in writing through an email or by having a mandatory link before the transaction can be complete. Almost all government agencies have transitioned to either electronic filing or web-based filing of important documentation. It doesn't, however, alleviate the exporter or import from hard-copy record-keeping.
Each of the agencies has new record-keeping standards and failing to maintain the proper documentation may result in penalties. For example, if an importer or exporter fails to provide documents requested by the U.S. Customs and Border Protection, it can be fined up to $100,000 (or 75 percent of the appraised value, whichever is less) if the failure to produce a document is intentional, or $10,000 (or 40 percent of the appraised value, whichever is less) if it is negligent or accidental.
Other laws, such as the Export Administration Act, the Foreign Trade Statistics Regulations, the North American Free Trade Agreement, and the various other free trade agreements, also impose record-keeping requirements on exporters. For companies that engage in both exporting and importing, it is important to establish a record-keeping compliance program that maintains the documents required by all the laws regulating international trade. In general, U.S. export and import laws require that the records be kept for a period of five years from the date of import or export (or three years from date of payment on drawback entries). However, other laws—for example, state income tax laws or foreign laws—may require longer periods.
U.S. Customs and Border Protection has issued a Recordkeeping Compliance Handbook describing in detail its interpretation of the proper record-keeping responsibilities for importers. This Handbook states that Customs expects each importer to designate a manager of record-keeping compliance who can act as the point of contact for all document requests from Customs and who is responsible for managing and administering the record-keeping compliance within the company. The manager, as well as all employees involved in importing (and exporting), is expected to receive regular training on compliance with the customs laws and on documentation and record-keeping requirements. Each company is expected to maintain a procedures manual to ensure compliance with all customs laws and record-keeping requirements.
F. Software
Many companies offer software programs for managing the export process, including order taking, generation of export documentation, compliance with export control regulations, calculation of transportation charges and duties, and identification of trade leads including leading business software companies. Not all software programs are the same so it is important to review various different programs to determine which one is right for your current and future business as well as the ability to stay current. The use of software enables companies to process import and export documentation more efficiently, but the legal burden of accuracy always remains with the importer or exporter.
G. Federal, State, International, and Foreign Law
The Constitution of the United States specifically provides that the U.S. Congress shall have power to regulate exports and imports (Art. 1, §8). This means that exporting or importing will be governed primarily by federal law rather than state law.
On the other hand, the law of contracts, which governs the formation of international sales and purchase agreements and distributor and sales agent agreements, is almost exclusively governed by state law, which varies from state to state. As discussed in Chapter 3, Section B.2.m, and Chapter 7, Section B.2.l, a number of countries, including the United States, have entered into an international treaty that governs the sale of goods and will supersede the state law of contracts in certain circumstances. Finally, in many circumstances, the laws of the foreign country will govern at least as to that portion of the transaction occurring within its borders, and in certain situations, it may govern the international sales and purchase agreements as well. Most of the procedures and forms that are used in exporting and importing have been developed to fulfill specific legal requirements, so that an exporter or importer should disregard such procedures and forms only after confirming that doing so will not subject the company to legal risks or penalties.
CHAPTER 2Exporting: Preliminary Considerations
This chapter will discuss the preliminary considerations that anyone intending to export should consider. Before beginning to export and on each export sale thereafter, a number of considerations should be addressed to avoid costly mistakes and difficulties. Those companies that begin exporting or continue to export without having addressed the following issues will run into problems sooner or later.
A. Products
Initially, the exporter should think about certain considerations relating to the product it intends to export. For example, is the product normally utilized as a component in a customer's manufacturing process? Is it sold separately as a spare part? Is the product a raw material, commodity, or finished product? Is it sold singly or as part of a set or system? Does the product need to be modified—such as the size, weight, or color to be salable in the foreign market? Is the product new or used? (If the product is used, some countries prohibit importation or require independent appraisals of value, which can delay the sale.) Often the appropriate methods of manufacturing and marketing, the appropriate documentation, the appropriate procedures for exportation, and the treatment under foreign law, including foreign customs laws, will depend upon these considerations.
Some products are subject to special export limitations and procedures. In addition to the general export procedures discussed in this part, exporters of munitions; narcotics and controlled substances; nuclear equipment, materials, and waste; watercraft; natural gas; electric power; hazardous substances; biological products; consumer products not conforming to applicable product safety standards; adulterated or misbranded food, drugs, medical devices, and cosmetics; endangered species; ozone-depleting chemicals; flammable fabrics; precursor chemicals; tobacco seeds and plants; fish and wildlife; crude oil; certain petroleum-based chemicals and products; and pharmaceuticals intended for human or animal use must give notices or apply for special licenses, permits, or approvals from the appropriate U.S. government agency before exporting such products.
B. Volume
What is the expected volume of export of the product? Will this be an isolated sale of a small quantity or an ongoing series of transactions amounting to substantial quantities? Small quantities may be exported under purchase orders and purchase order acceptances. Large quantities may require more formal international sales agreements; more secure methods of payment; special shipping, packing, and handling procedures; the appointment of sales agents and/or distributors in the foreign country; or after-sales service (see the discussion in Chapter 3).
C. Country Market and Product Competitiveness Research
On many occasions, a company's sole export sales business consists of responding to orders from customers located in foreign countries without any active sales efforts by the company. However, as a matter of successful exporting, it is imperative that the company adequately evaluate the various world markets where its product is likely to be marketable. This will include a review of macroeconomic factors such as the size of the population and the economic development level and buying power of the country, and more specific factors, such as the existence of competitive products in that country. The United Nations publishes its International Trade Statistics Yearbook (http://comtrade.un.org/), and the International Monetary Fund (IMF) publishes its Direction of Trade Statistics Yearbook (http://www.imf.org/external/) showing what countries are buying and importing all types of products. The U.S. Department of Commerce, Bureau of Census gathers and publishes data to assist those who are interested in evaluating various country markets, including its International Data Base and Export and Import Trade Data Base (http://www.census.gov/foreign-trade/ statistics/country/index.html). It has also compiled detailed assessments of the international competitiveness of many U.S. products and information on foreign trade fairs to identify sales opportunities for such products. Another useful tool for evaluating the political and commercial risk of doing business in a particular country is the Country Limitation Schedule published periodically by the Export-Import Bank of the United States (http://www.exim.gov/tools/country/country_limits.cfm). The Department of Commerce's web site is Export.gov (http://www.export.gov/exportbasics/ index.asp). It provides information about the basics of exporting, Frequently Asked Questions, and information on marketing, finance, and logistics. Of course, other private companies also publish data, such as those contained in the Dun & Bradstreet Exporters Encyclopedia or BNA's Export Reference Manual. With limited personnel and resources, all companies must make strategic decisions about which countries they will target for export sales and how much profit they are likely to obtain by their efforts in various countries.
(Continues...)
Excerpted from Export/Import Procedures and Documentation by Donna L. Bade. Copyright © 2015 Donna L. Bade. Excerpted by permission of AMACOM.
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Table of Contents
Contents
Preface, xiii,Acknowledgments, xv,
About the Author, xvii,
Part I Organizing for Export and Import Operations,
Chapter 1. Organizing for Export and Import Operations, 3,
Part II Exporting: Procedures and Documentation,
Chapter 2. Exporting: Preliminary Considerations, 21,
Chapter 3. Exporting: Sales Documentation, 53,
Chapter 4. Exporting: Other Export Documentation, 111,
Chapter 5. Export Controls and Licenses, 197,
Part III Importing: Procedures and Documentation,
Chapter 6. Importing: Preliminary Considerations, 261,
Chapter 7. Importing: Purchase Documentation, 313,
Chapter 8. Import Process and Documentation, 343,
Part IV Global Customs Considerations,
Chapter 9. Determining the Proper Classification of a Product, 407,
Chapter 10. Determining the Proper Value to Declare, 425,
Chapter 11. Determining the Proper Country of Origin, 435,
Chapter 12. Specialized Exporting and Importing, 469,
Appendix A. Incoterms Diagram, 483,
Appendix B. International Sales Agreement (Export), 485,
Appendix C. Department of Defense – Compliance Program Guidelines, 491,
Appendix D. Informed Compliance: Reasonable Care, 497,
Appendix E. USITC Harmonized Tariff Schedule Contents, 515,
Appendix F. International Purchase Agreement (Import), 521,
Appendix G. A CE Program and Standard Reports, 527,
Appendix H. Guidance on Internet Purchases, 537,
Appendix I. Regulatory Audit Questionnaires, 547,
Appendix J. E xport/Import–Related Web Sites, 555,
Glossary of International Trade Terms, 561,
Index, 591,