Five New Year Resolutions for US Exporters

Happy 2013!  New Year’s has always been a time to reflect over the past year, and more importantly, to look forward toward the coming year. It is the perfect time to make positive changes and plan for success. As a small business,  part of this planning may include an examination of your company’s overall sales and sourcing strategies—and whether you are considering expanding further or for the first time, there are five New Year’s resolutions  every exporting business should have on its list:

1.     Classify your products properly. 
Every product that enters a foreign market must be classified properly to determine which category a product belongs in and at what tariff rate it will be taxed.   Most countries classify products according to a version of the Harmonized System, which was developed by the World Customs Organization and is harmonized internationally to the first six digits. Beyond the first six digits, classifications may vary from country to country.  Proper classification is important not only because it affords a reliable indicator of exporting costs, but also because improper classification can lead to substantial penalties, which may devastate a small business. 
 
2.     Explore potential savings found in Free Trade Agreements (FTAs).
As you may know, in the past year the US has concluded three major FTAs:  Korea, Colombia, and Panama.  These new agreements may provide savings for companies doing business in these regions—not only are components sourced from FTA partners generally subject to lower duties, but because many US products enter those markets duty free as well, US products may have a price advantage over non-FTA partners.  Every company that actively exports should periodically review their sales and sourcing strategies in order to take advantage of tariff savings, be aware of changes in tariff reduction schedules, and know the duties their products are subject to as they enter a foreign market. 
 
3.     Know the import regulations in your target market.
Does the territory where you plan on exporting to require a health certificate? Are any of your products’ ingredients banned or restricted? Must your shipping containers adhere to ISPM 15 requirements? Do you need an import license? Do you have to register your product—if so, can you register at the border or must your registration be received by the authorities before your consignment leaves its home country? How should your product be labeled—metric or standard? Can it be labeled in English? Are stick-on labels acceptable or must packaging be changed at the manufacturing level?  Avoid the possibility of costly delays at the border by knowing import regulations and being aware of potential challenges before a product is exported.
 
4.     Register your Intellectual Property Rights (IPR) in your target markets.
Did you know that your U.S. trademarks, copyrights, and patents is not enough to protect you in foreign markets? In order to enjoy protection in markets abroad, consider registering your IPR in each territory where you do business. In some instances, it may be possible to register your IPR regionally, if your target market is part of a trade bloc or community that recognizes regional IPR rights. For more information on specific registration requirements, check out the World Intellectual Property Organization’s website.  Remember that your IPR is an important part of your business—counterfeit products not only sap your profits, but also damage your reputation. A good name is key to global competitiveness. 
 
5.     Ensure that your products are not subject to Export Controls. 
Are your products subject to Export Controls? Any company that manufactures software, technology, or other potentially sensitive products should know whether their export is subject to restriction or requires an export license.   In order to determine whether your product requires an export license, ask yourself the following questions: 

• What am I exporting?
• Where am I exporting to?
• Who am I exporting to?
• What will my item be used for?

Once your product is classified and is assigned an Export Control Classification Number (ECCN), you must determine if the product is found within the Department of Commerce’s Commerce Control List (CCL).  If your product’s ECCN is listed, you will find more information on the specific restrictions for its export on the CCL, including a list of territories for which sale of that product is restricted. While restrictions are found in the CCL based on destination country, exporters should note that the US also maintains lists of entities, designated nationals and blocked persons, unverified persons, and denied persons to which no exports are allowed.  Finally, no exports are allowed for weapons proliferation, nuclear, biological, or chemical destruction, or other restricted end-uses, regardless of the product.
 
If you have any questions on export planning, TradeMoves can help.  Give us a call or send an email, so you can know before you go!
 
Elena Fowlkes / EFowlkes@TradeMoves.net / 443-668-8683