When a foreign business imports products into the US, it will encounter the intricate rules of US Customs and Border Protection. As an importer, among the first customs issues that you will face are classification, valuation and marking.
Classification
Classification involves assigning a classification number to imported goods based on the Harmonized Tariff Schedule of the United States (HTSUS). The classification of goods determines the rate of duty you, the importer must pay. Frequently, goods may be described in more than one HTSUS category, presenting an opportunity to fashion merchandise to secure the lowest possible tariff. If these issues are considered early on, slight changes in the product could produce significant duty savings. It is important to investigate this during the planning stage, as US Customs determines the classification and may assess at a rate far higher than anticipated long after the goods are sold.
Valuation
Valuation is the determination of the value of imported goods for customs purposes. This value is the amount against which the tariff rate is applied. Most imported products are valued under the transaction value basis, meaning the price paid for the merchandise when sold for exportation to the US plus certain additional costs. Valuation is a complex area requiring expert advice.
Marking
Marking requirements must also be considered. Every foreign product imported into the US must reach the “ultimate purchaser” marked with its country of origin, unless it is exempt. This presents a number of concerns, including determining the ultimate purchaser, where the marking should appear on the goods and what to do when components are manufactured in different countries.
Manufacturing Location
Another issue to consider for customs planning is the manufacturing location. Certain countries have trade agreements, treaties and programs with the US that provide a preferential rate of duty. However, import quotas may apply to certain products coming from certain countries.
Compliance
You must also be aware of the requirements of US regulatory agencies. US law requires that all imported goods meet the regulatory standards for domestic products. This requires familiarity with the rules of the Food and Drug Administration (FDA), Federal Trade Commission (FTC), Environmental Protection Agency (EPA), Consumer Product Safety Commission (CPSC) and other administrative agencies. These rules are enforced by US Customs, and failure to comply may result in delay, detention or seizure of your shipments by US Customs.
Planning Ahead
Some importers may be confused by the difference between customs brokers and customs attorneys. Customs brokers assist importers in “clearing” goods through US Customs formalities. The more sophisticated issues of classification, valuation and marking, as well as planning and US Customs investigations and audits, are addressed by a customs and international trade attorney.
To avoid running afoul of these rules and to take maximum advantage of opportunities for customs planning, consult a customs and international trade attorney before beginning to manufacture your products.