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Introduction to Importing Basics Process and Requirements Hosted by: Alibaba.com Presenter: Tekle Sebhatu, Ph.D.

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Presentation on theme: "Introduction to Importing Basics Process and Requirements Hosted by: Alibaba.com Presenter: Tekle Sebhatu, Ph.D."— Presentation transcript:

1 Introduction to Importing Basics Process and Requirements Hosted by: Alibaba.com Presenter: Tekle Sebhatu, Ph.D.

2 Importing Basics Agenda Essentials for Import SuccessEssentials for Import Success Customs Modernization Act.Customs Modernization Act. Customs Entry ProcessCustoms Entry Process Documents Required to Clear CustomsDocuments Required to Clear Customs Classification (Harmonized System-- HS)Classification (Harmonized System-- HS) International Commercial Terms (Incoterms 2000)International Commercial Terms (Incoterms 2000) Common Mistakes Made by ImportersCommon Mistakes Made by Importers Help Available!Help Available! ResourcesResources

3 Essentials For Import Success Import Success Knowledge Planning Relationship Commitment © PhotoDisc

4 Customs Modernization (Mode Act) Two Key concepts-Two Key concepts- –Informed compliance –Shared responsibility Key component “Importer responsible to use reasonable care”Key component “Importer responsible to use reasonable care” Benefits to Customs and Importers:Benefits to Customs and Importers: –Customs resources saved (Customs) –Greater obligation provide information on rights and responsibilities (Customs) –Information available at –Less likely to have shipments delayed or entries reviewed can help avoid penalty (Importer)

5 Informal VS Formal Entry Entry -- filing documents with Customs at the port of entry to get goods released. Informal EntryInformal Entry Value < $2000 (some might not e.g quota)Value < $2000 (some might not e.g quota) Personal ShipmentsPersonal Shipments Commercial ShipmentsCommercial Shipments Mail shipments (Duty Paid to Postal Employee)Mail shipments (Duty Paid to Postal Employee) Formal Entry (Entry/Entry Summary)Formal Entry (Entry/Entry Summary) >$2000 including personal shipments/Goods part of $250>$2000 including personal shipments/Goods part of $250 Exceptions (Corpses, Records, Diagrams)Exceptions (Corpses, Records, Diagrams) Major Differences -- Formal VS InformalMajor Differences -- Formal VS Informal Bond requirementsBond requirements Liquidation processLiquidation process

6 Customs Entry Process 15 Calendar Days 10 Working/Bus Days One Year Arrival Entry Entry Summary Liquidation -No change -Additional duty -Duty refunded

7 Who Can Make Entry? Owner of goodsOwner of goods Purchaser of goodsPurchaser of goods Custom House Brokers (Licensed)Custom House Brokers (Licensed) Individual with power of attorneyIndividual with power of attorney

8 Documents Required to Make Entry Bill of lading or Airway bill or Carriers CertificateBill of lading or Airway bill or Carriers Certificate Commercial or pro-forma invoiceCommercial or pro-forma invoice Entry/Entry Summary CF 3461/7501 or Entry/Immediate DeliveryEntry/Entry Summary CF 3461/7501 or Entry/Immediate Delivery Packing listPacking list Other agency document requirements (FDA, FCC, DOA, ATF)Other agency document requirements (FDA, FCC, DOA, ATF)

9 Harmonized Tariff Schedule of the US (HTSUS) Language of International trade (Int. standard system)Language of International trade (Int. standard system) Covers all imported merchandise (U.S.)Covers all imported merchandise (U.S.) Customs Entry forms Customs Entry forms Customs duties, international statistics and Rules of originCustoms duties, international statistics and Rules of origin Over 12,000 codes recognized by over 200 countries, more than 95% of world tradeOver 12,000 codes recognized by over 200 countries, more than 95% of world trade Products NOT specifically provided in the HTSUS- Use term “Other”Products NOT specifically provided in the HTSUS- Use term “Other”

10 Harmonized Tariff Schedule of The US First two digits for chapterFirst two digits for chapter –04 Second two digits for headingSecond two digits for heading –0409 Third two digits for sub-headingThird two digits for sub-heading – Forth two digits for dutyForth two digits for duty – Fifth two digits for statisticsFifth two digits for statistics – Universal

11 What Incoterms Can and Can’t Do For Buyers/Sellers Only deal with obligations of buyers and sellers:Only deal with obligations of buyers and sellers: Packing for proper shipmentPacking for proper shipment Provide appropriate documentsProvide appropriate documents Identify insuranceIdentify insurance Provide agreed documents for Customs clearanceProvide agreed documents for Customs clearance Do not deal :Do not deal : Transfer of property rightsTransfer of property rights Providing relief from liability for unforeseen eventsProviding relief from liability for unforeseen events

12 Four INCOTERM Groups Group E- Seller makes the goods available to the buyer at his premises (Ex-Works) Group F- Seller to deliver the goods to a carrier appointed by the buyer (FCA, FAS, FOB) Group C- Seller contracts for carriage at his own expenses, up to a destination (CFR, CIF, CPT, CIP) Group D- Seller responsible to deliver goods at agreed place of destination, at the border or inside the country (DAF, DES, DEQ, DDP, DDU)

13 EXW--Ex Works (... named place) Seller makes goods available to the buyer at his warehouse; buyer pays to load aboard carrier' conveyance.

14 FOB--- Free On Board (... named port of shipment) Export sale; delivered according to custom of port; risk transfers When goods are loaded; ocean freight collect.

15 CFR--- Cost and Freight (... named port of destination) Similar to FOB except that ocean freight is prepaid. Buyer Country

16 CIF--- Cost, Insurance and Freight (... Named port of destination) Buyer Country Same as CFR, except that seller also purchases insurance for the buyer.

17 Buyer Country DDP---Delivered Duty Paid (... named place destination) Seller is like a domestic seller in destination country. Seller imports goods, pays duty, etc. bears risk and pays freight to named point. Terms can be modified to include delivery into buyer's warehouse at seller's expense.

18 Role of Customs and Border Protection Administer Treaties Administer Treaties Enforcement of Customs and Related Laws Enforcement of Customs and Related Laws Assess and Collect Duties & Fees Assess and Collect Duties & Fees

19 Role Of Custom House Brokers Conduct Customs Business (valuation, classification, Admissibility & marking ) International documentation and packaging Carrier and routing information Import quota information Marine insurance rates and coverage Warehouse and distribution services Customs Bonds Hazardous materials shipping compliance info.

20 Importers Common Mistakes Failure to obtain assistance from Customs or Custom House BrokersFailure to obtain assistance from Customs or Custom House Brokers Several distinct articles lumped as oneSeveral distinct articles lumped as one Failure to comply with Marking regulationsFailure to comply with Marking regulations Inaccurate information of other agency requirements (e.g. FDA, Dept. of Agriculture)Inaccurate information of other agency requirements (e.g. FDA, Dept. of Agriculture) Inaccurate Transaction Documents (e.g. Invoice)Inaccurate Transaction Documents (e.g. Invoice) Insufficient care when identifying product Classification using the HTSUSInsufficient care when identifying product Classification using the HTSUS Incorrect Duty Assessment (Valuation)Incorrect Duty Assessment (Valuation)

21 Importing References U.S. Customs and Border Protection Harmonized Tariff Schedule of The U.S. International Chamber of Commerce (ICC) National Customs Brokers & Freight Forwarders Association


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