With Halloween around the corner, it’s that time of year to sit around the campfire, make some s’mores, and share spine-chilling horror stories about cross-border trade mishaps and more importantly, how to avoid them. Below are five “scary” trade situations we have come across in working with importers-exporters of all sizes. BEWARE, and heed these true tales of…
Blood-curdling screams from overpaying import duties on products that could benefit from free trade agreements.
Many a business have fallen victim to overpaying because they did not check to see whether or not their import or export market had trade agreements in place. In the US alone, exporters and importers can take advantage of 14 FTAs, which provide lower duties for the cross-border shipment of goods into/out of 20 countries. When TPP enters into force, additional tariff reductions in 4 more countries that are not currently FTA trading partners will go into effect. If TTIP is completed and implemented, lower tariffs could exist between the United States and the EU. Knowing that lower tariffs are available can help you save on cross-border trade costs.
Chilling audits and customs valuation inquiries.
The proliferation of free trade agreements around the world has reduced or eliminated duties on many goods crossing national borders. In this new, more open trade environment, we are seeing Customs authorities more aggressively auditing companies to determine if they are undervaluing imported goods to lower their duty and VAT exposure. Customs rules require that importers include all appropriate international transport costs, commissions, assists, and royalty or license fees in the dutiable value of the good. Customs compliance is important to ensure the speediest clearance of your goods on an ongoing basis. Work with your suppliers and customers to ensure all dutiable costs are declared to customs.
Frightening detentions of products due to lack of appropriate certificates.
Some countries will detain imports if the right certificates do not accompany the shipment. For dairy and animal products, many veterinary authorities often require the certificate to be processed in advance of shipment. Don’t get caught with your food shipments sitting at port, or worse, destroyed or returned due to inability to meet import requirement. Learn about a country’s import requirements far in advance, and obtain the right certificates and documents to facilitate easy clearance by Customs and other governmental agencies
Haunting realizations that the landed cost includes many other fees and taxes than just the import duty.
In addition to import duties, many countries tack on value-added taxes, customs processing fees, infrastructure fees, and/or other taxes and fees that can easily increase the landed cost. Brazil and India are notorious for the myriad of additional fees applied upon import. Gathering the right tariff and tax intelligence can save you money in the long run.
Dreadful news that the customer shipped to is on the “Denied Parties List”.
The US Department of Commerce maintains the list of people and entities in which a strict export prohibition may be in place, a license application may be required, an evaluation of the end-use or user is mandated to ensure the activity is not prohibited by any US export regulations, or other restrictions may apply. Export.gov has a Consolidated Screening List tool to help US companies do their due diligence. Do your homework to avoid conducting business transactions with denied parties
Contact the TradeMoves team if you need help preparing to import/export, or want to avoid these horror stories like the plague.
Shawn Marie Jarosz