- What is the meaning of "importation"?
Importation is the act of bringing or causing any goods to be brought into a Customs Territory.
- Are U.S. importers free to deal with all countries when importing products into the U.S.?
No, the U.S. government has placed trade embargoes on certain countries. These embargoes prohibit U.S. importers from entering into import transactions with embargoed countries. Currently, the U.S. maintains trade embargoes against Cuba, Iran, Iraq, Libya, North Korea, and Sudan.
- Are U.S. importers free to import any product into the U.S.?
No, certain products may not be imported into the U.S. (prohibited imports) while other products are subject to import restrictions or limitations such as licensing requirements and quotas.
- Are any licenses required to import products into the U.S.?
Generally licenses are not required to import products into the U.S. There are certain exceptions to this general rule however. As a result importers should always check with U.S. Customs before attempting to bring a new product type into the country.
- What is a quota?
A quota is a limitation on the quantity of goods that may be imported into a country from all countries or from specific countries during a prescribed time period.
- Are there different types of quotas?
Yes, there are quantitative quotas and tariff-rate quotas.
- What is a quantitative quota?
A quantitative quota (also referred to as an absolute quota) is any pre-set quantity of given goods authorized for importation, during a specified period, beyond which no additional quantity of these goods can be imported.
- What is a tariff-rate quota?
A tariff-rate quota is any pre-set value or quantity of given goods authorized for importation, during a specified period with a reduction of the Customs duties. Once a tariff-rate quota is met, additional quantity of the goods subject to the tariff rate quota can still be imported, but higher Customs duties must be paid.
- What happens if an import shipment arrives in the U.S. and the quota for the product in the shipment has already been filled?
The product cannot be admitted into the U.S. and the importer has the option of exporting the product, destroying the product or entering the product into a foreign trade zone or a bonded warehouse until the beginning of the next quota period.
- What is a foreign trade zone?
A Foreign Trade Zone is an area in the United States that is not considered "in the U.S. Customs Territory" for certain legal purposes. Duty is not paid when goods are put into a Foreign Trade Zone, but rather when they are taken out and "entered for consumption" in the United States.
- What is a bonded warehouse?
A bonded warehouse is a warehouse that carries a special Customs bond and that is used to legally defer duty payment. There are specific types or "classes" of warehouses, and what can be done to the goods while in the warehouse is limited by the "class". Included among bonded warehouse classes are:
(a) Class 1- These are warehouses owned or leased by the government;
(b) Class 2 - An importer can establish this type of warehouse for his/her own merchandise. It is exclusively for storage, however; no processing of the goods is allowed;
(c) Class 3 - These "public bonded warehouses" are for the storage of anyone's imported goods; and
(d) Class 4-These are bonded yards or sheds for storage of heavy or bulky items; stables, corrals and pens for livestock; and large tanks for storing bulk liquids.
- What is a free zone?
A free zone is a part of the territory of a country where any goods introduced are generally regarded, insofar as import duties and taxes are concerned, as being outside the Customs Territory and are not subject to the usual Customs control.
- What does the term "Customs Territory" mean?
Customs Territory is the territory in which the Customs law of a country applies in full. As a rule, the Customs territory of a country corresponds to its national territory including land, sea and air space. However, certain portions of the national territory may be excluded, e.g. free zones or the waters between the coastline and the country's territorial boundary at sea.
- Is U.S. Customs the only U.S. government agency that gets involved in the administration of U.S. imports?
No, other U.S. government agencies that are involved in U.S. import administration include:
(1) Department of Agriculture which is tasked with keeping insect and other pests out of the U.S. to the greatest extent possible;
(2) Department of Commerce which collects statistical information about import shipments and compiles trade statistics;
(3) Department of Energy which issues license to import petroleum products
(4) Food and Drug Administration which insures that food and drug conform to certain standards;
(5) Consumer Products Safety Commission which regulates consumer products that the FDA doesn't handle directly;
(6) Fish and Wildlife Service which is interested in non-domesticated animals, and merchandise made from parts of these animals;
(7) State Department which monitors artifacts and cultural property imported from various countries;
(8) Department of Transportation, Environmental Protection Agency and the Federal Aviation Administration which regulate the import of automobiles;
(9) Bureau of Alcohol, Tobacco and Firearms which issues license and/or permits to import alcoholic beverages of all kinds, firearms, and other weaponry, and tobacco products.
(10) Foreign Assets Control which issues licenses to import products that would otherwise be prohibited (Cuban cigars, Iranian carpets);
(11) Federal Trade Commission which regulates the importation of textiles, fur, articles, and apparel.
- What is a Customs broker and what functions does a Custom broker perform?
A Customs broker is a person licensed by the Customs Service to transact Customs business on behalf of an importer for a fee. A Customs Broker can:
-Prepare the import "entry" for an importer;
-Pay duty and fees and complete the entry process; and
-Deliver cargo to the importer or arrange for transport.
- What is an import entry?
An import entry is the process of clearing an import shipment through Customs. This involves preparing the requisite import entry documentation, classifying the imported product, assigning a value to the imported product and paying all Customs duties and fees owed on the imported product.
- What is involved in classifying an imported product?
Classifying an imported product involves the categorization of the imported product according to the Harmonized Tariff Schedule of the U.S. (HTSUS).
- What is the Harmonized Tariff Schedule of the U.S.?
The Harmonized Tariff Schedule of the United States (HTSUS) is a system of tariff classification in use in the United States. The HTSUS comprises part of a uniform system of tariff classification used by major trading partners throughout the world. Goods are classified for the purpose of calculating the appropriate import duties.
- What is involved in valuing an imported product?
Valuing an imported product (also referred to as appraising an imported product) involves assigning a value to a product for duty and calculation purposes.
- Which value is most commonly used in appraising imported goods?
The value most commonly used in appraising imported goods is the transaction value of the imported goods, i.e., the total price actually paid or payable for the merchandise when sold for exportation to the U.S. plus amounts for the following if not included on the price:
-packing costs
-sales commissions
-royalties and license fees
-assists
- What is an assist?
An assist is something the importer sends to the seller or manufacturer in the foreign country, free or at a reduced cost, to use in making the goods that are being imported.
- Is the transaction value of imported goods the only valuation method available to appraise the value of imported merchandise?
No, other valuation methods exist that can be used in appraising the value of imported merchandise. These alternate valuation methods include:
-the transaction value of identical merchandise;
-the transaction value of similar merchandise; and
-the deductive value or computed value for identical or similar merchandise.
- When are the alternative valuation methods used in place of the transaction value of the imported goods for appraising imported goods?
The alternative valuation methods are used in the case of:
(1) Restrictions on the disposition or use of the merchandise;
(2) Conditions for which a value cannot be determined;
(3) Proceeds of any subsequent resale, disposal, or use of the merchandise, accruing to the seller, for which an appropriate adjustment to transaction value cannot be made; and
(4) Related-party transactions where the transaction value is not acceptable.
- What is a related party transaction?
A related party transaction is a transaction where the seller and the buyer are:
(1) Officers or directors of one another's business;
(2) Legally recognized partners in business;
(3) Employer and employee;
(4) Parties owning/controlling or controlled by another party; and/or
(5) Members of the same family.
- How are the duties on an imported product determined?
After an imported product has been classified and valued, the duties on the imported product can be determined by multiplying the value of the imported product by the tariff rate in the HTSUS that applies to products with the same classification as the imported product.
- How does an importer determine which tariff rate in the HTSUS applies to an imported product?
An importer makes the determination by knowing the country of origin on the imported product and by knowing if the country of origin qualifies for the General Duty Rate or for the Special Duty rate on HTSUS.
- To which countries does the General Duty Rate in the HTSUS apply?
The General Duty Rate in the HTSUS applies to those countries that have been granted "normal trade relations" status. Normal trade relation status was previously referred to as "most favored nation" status. This is a non-discriminatory trade and policy commitment on the part of one country to extend to another country the lowest tariff rates it applies to any other country.
- To which countries does the Special Duty Rate in the HTSUS apply?
The special duty rate in the HTSUS applies to those countries that the U.S. has designated as beneficiary developing countries and made eligible for Generalized System of Preferences Treatment.
- What is the Generalized System of Preferences (GSP)?
This is a program providing for duty-free entry of eligible merchandise into the United States from 117 countries and 26 nonindependent countries and territories.
- Are goods imported into the U.S. subject to any origin marking requirements?
Yes, the U.S. Customs laws require each imported article produced abroad to be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article permits, with the English name of the country of origin, to indicate to the ultimate purchaser in the U.S. the name of the country in which the article was manufactured or produced.
- What does the term "liquidation" mean?
Liquidation is the point at which the Customs Service's ascertainment of the rate of duty and amount of duty becomes final for most purposes.
- What is a temporary import admission?
Temporary import admission is a customs procedure under which certain goods are brought into a Customs territory conditionally relieved from payment of import duties and taxes; such goods must, however be imported for a specific purpose and must be intended for reexportation within a specified period and without having undergone any change except normal depreciation due to the use made of the goods.
- What is drawback?
Drawback is a refund or remission of a customs duty paid on imported goods, particularly those goods used in products produced in the US that are then exported overseas.
- What are the three most common types of drawback?
The three most common types of drawback are "same condition", " manufacturing", and "non-conforming merchandise".
- What is "same condition" drawback?
In the "same condition" category, substitution is permitted, but the goods being exported from the U.S. must be exported in the same condition as the goods that were imported into the U.S.
- What is "manufacturing" drawback?
In the "manufacturing" category, an importer can import a part, use it in the manufacture of a machine, export the machine and get a refund of the duty paid on the imported part. Manufacturing drawback also allows for substitution, i.e., it is not necessary that the exported item be the exact item that was imported.
- What is "non-conforming" drawback?
Non-conforming drawback is a refund of the duty paid on imported goods that do not conform to the importer’s sample goods or to the importer’s specifications.
- What are antidumping duties?
Antidumping duties (ADs) are assessed on imported merchandise of a class or a kind that is sold to purchasers in the U.S. at a price less than the fair market value. Fair market value of merchandise is the price at which it is normally sold in the manufacturer’s home market.
- What are countervailing duties?
Countervailing duties (CVDs) are assessed to counter the effects of subsidies provided by foreign governments to goods exported to the U.S. These subsidies cause the price of such goods to be artificially low, which causes economic "injury" to U.S. manufacturers.
- What is the Mod Act?
The Mod Act is the Customs Modernization Act that was passed in December of 1993 to amend the Tariff Act of 1930.
- What is the purpose of the Mod Act?
The main purpose of the Mod Act is to streamline and automate the U.S. Customs Service, improve compliance with trade laws and provide safeguards, uniformity and "due process" to importers.
- What two concepts did the Mod Act introduce?
The Mod Act officially introduces the controversial concepts of "informed compliance" and "reasonable care".
- What does "informed compliance" mean?
The Customs Service defines "informed compliance" as "a shared responsibility wherein the Customs Service effectively communicates its requirements to the trade, and the people and businesses subject to those requirements conduct their regulated activities in conformance with U.S. laws and regulations.
- What does "reasonable care" mean?
The term "reasonable care" is not officially defined in the Mod Act. Customs has, however, published a reasonable care checklist to assist importers in the exercise of reasonable care.
- How long should importers retain copies of their import records?
Importers should retain copies of their import records for a period of 5 years from the date of import entry. Records that must be kept include, but are not limited to, commercial invoices, packing lists, certificates of origin, declarations of foreign manufacturers, and any additional documents required for the particular entry, either in paper form or as electrically-generated or machine readable material.
- What is a prior disclosure?
It is a disclosure by an importer to Customs of a violation or a mistake. To be valid, a prior disclosure must be made before or without knowledge of the commencement of a formal investigation.
- What is the significance of Customs Form 28 (CF28)?
CF28 is a formal request for information issued by a Customs Import Specialist. Importers who receive a CF28 should respond specifically and without delay (generally within 30 days of the date on the CF28) to the information requested.
- What is a supplemental information letter?
It is a new procedure that can be very beneficial to importers who wish to correct mistakes in entries. The procedures for issuing a supplemental information letter are fairly simple. The letter must be submitted in triplicate to the Customs entry section in the port where the entry was filed and must contain the following information:
- a list of the entries involved,
- the reason for the requested change,
- a revised CF-7501 (Entry Summary) containing the "Tender/Refund" stamp affixed and the dollar amount shown,
- appropriate supporting documentation or evidence, and
- a check for any additional duty being paid
- What is a protest?
A protest is the means by which an importer, consignee, or other designated party may challenge decisions made by a District Director of Customs. The importer files a protest and an application for further review on Customs Form 19 within 90 days after liquidation. If the Customs Service denies a protest, an importer has the right to litigate the matter by filing a summons with the U.S. Court of International Trade within 180 days after denial of the protest.
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What is C-TPAT?
C-TPAT stands for Customs-Trade Partnership Against Terrorism and is a joint government-business initiative to strengthen overall supply chain and border security.
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What does participation in C-TPAT require?
C-TPAT provides businesses (including manufacturers, forwarders, carriers, warehouse operators, etc.) with secure supply chains, reduced numbers of Customs inspections, quicker processing times, an assigned account manager, and access to the C-TPAT membership list.
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Who is eligible for C-TPAT?
C-TPAT is presently open to carriers (rail, air, sea), and all importers. It will eventually be opened to everyone involved in trade.
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What is the application process to become a C-TPAT participant?
An application with a Memorandum of Understanding must be submitted to the Bureau of Customs and Border Protection that outlines the importer/carrier's security profile. Customs will then evaluated the importer's application and make recommendations to enhance security.
