Shipping Solutions Newsletter

By Catherine J. Petersen email | bio

The sales team can be your biggest ally and supporter when communicating with your international customer. However, your sales team may not know about changing compliance issues or the fines and penalties that may face your firm if compliance is not a part of their day-to-day activities.

Here are 10 important facts to forward to your sales team that can provide information, generate a conversation, and enhance your company’s export compliance activities:

Cuba is one of the embargoed countries or restricted destinations. You’ll find a list of embargoed countries and reasons for export controls at the U.S. Bureau of Industry & Security’s (BIS) website.
Osama bin Laden is one of thousands of individuals and organizations on a series of government-published lists with whom you cannot do business. You should check these lists prior to quoting, selling and delivering goods to foreign customers in the United States or abroad. You’ll find these lists at the BIS website.
U.S. export regulations control the export of products; some are restricted, including circuit boards and encrypted software. View the Export Administration Regulations (EAR) online before exporting your products.
Your customer, your customer’s government, and/or the U.S. government often require additional statements for export transactions on your documents. The EAR requires that your company include the following statement on the commercial invoice: “These commodities, technologies, or software were exported from the United States of America in accordance with the Export Administration regulations. Diversion contrary to U.S. law is prohibited.” The EAR recommends that any quote or pro forma invoice you prepare for an export also include that statement.
Don’t think export regulations really matter? Check out Don’t Let This Happen to You! to see a sample of the penalties that the U.S. government has issued against export companies and individuals who violate US Export Laws.
Benchmark success!
Cross your “T’s” and dot your “I’s” in quotes. Quotes are not revocable when the buyer’s country has signed the UN Convention on the International Sale of Goods. Make sure you include an expiration date on all your quotes. Visit the Pace Law School website to see a list of participating countries.
FOB Plant is not an international trade term; Incoterms 2000 are the terms to use. Visit the International Chamber of Commerce website for an explanation of Incoterms. Be sure to outline those costs you will cover by using an Incoterm to avoid “profit erosion.”
The buyer’s country will often have special requirements. If the buyer doesn’t advise you of those requirements, refer to the U.S. Trade Information Center website.
There is personal responsibility in an export transaction. Export policies are designed to protect you and your organization.

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CAFTA-DR: When Will Your Product Become Duty Free?

By Sue Senger email | bio

The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR) includes seven signatories: the United States, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The U.S. Congress approved the CAFTA-DR in July 2005, and the President signed it into law on August 2, 2005. The CAFTA-DR has been approved by the legislatures in the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. Approval is pending in Costa Rica.

The United States is implementing the CAFTA-DR on a rolling basis as countries make sufficient progress to complete their commitments under the Agreement. The Agreement first entered into force between the United States and El Salvador on March 1, 2006. On March 31, 2006, the President issued a proclamation implementing the CAFTA-DR for Honduras and Nicaragua on April 1, 2006.

The U.S. Government continues to work with the remaining three CAFTA-DR partners to ensure timely and full implementation of the Agreement.

Duty Reduction

More than 80% of U.S. exports of consumer and industrial goods became duty free when the agreement went into force. The remaining tariffs will be phased out over a ten-year period. Duties on remaining U.S. products will be phased out over a period of up to 20 years.

To determine when your product will become duty free in a particular CAFTA-DR country, you’ll need to know the correct Harmonized System (HS) number for your product. Once you have the correct HS number, click on the Tariff Schedule listed below for the country of import to determine when and at what rate your duty is reduced.

Here are the web links for the individual country tariff schedule:

After each HS number and description, you’ll find letter that indicates your product’s “staging category.” These staging categories indicate when your product will become duty free. Except as otherwise noted in the General Notes section to each tariff schedule, the codes are generally defined as follows:

Category A: Goods (there are unique rules for textile or apparel goods) will be duty-free immediately on the date that the Agreement enters into force.

Category B: Duties will be eliminated in five equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year five.

Category C: Duties will be eliminated in 10 equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year 10.

Category D: Duties will be eliminated in 15 equal annual stages beginning on the date the Agreement enters into force, and shall be duty-free effective January 1 of year 15.

Category E: Duties will remain at base rates for years one through six. Duties shall be reduced by 8.25%of the base rate on January 1 of year seven and by an additional 8.25% each year thereafter through year 10. Beginning January 1 of year 11, duties shall be reduced by an additional 13.4% annually through year 15, and such goods shall be duty-free effective January 1 of year 15.

Category F: Duties will remain at base rates for years one through 10. Beginning January 1 of year 11, duties shall be reduced in 10 equal annual stages, and such goods shall be duty-free effective January 1 of year 20.

Category G: Goods already receiving duty-free treatment shall continue to receive duty-free treatment under the Free Trade Agreement.

Category H: Goods in this category will continue to receive most-favored-nation treatment.

Categories M through Y: In addition to the staging categories listed above, the Agreement has country-specific schedules that contain staging categories M through Y. These categories may be found in the General Notes of the country-specific tariff elimination schedule.

My next article will discuss how to declare that a product qualifies for reduced or no duties under CAFTA-DR.

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Thousands of successful exporters are using Shipping Solutions to complete their export documents faster, easier and less expensively than ever before. Why aren't you?

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See why Shipping Solutions is America's #1 export software. Sign up for the free online demo today!

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