How to Import into the US

When does the ISF have to be filed?

• Not later than 24 hours prior to loading of the shipment to the vessel at the foreign port of lading.

Does the effective date of Jan. 26th mean that any shipment which is departing from the origin port on or after Jan. 26th is required to have an ISF, or any shipment arriving in the USA after Jan. 26th?

• The regulation is effective for any shipment loading to vessel at the origin port on or after Jan. 26th.

Do I have to present my complete set of shipping documents to you for ISF filing at that time?

• No; the minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

What should the importer provide in order to accomplish the ISF filing?

• The minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

Is the party actually receiving the freight the only one responsible for this filing?

• NO! CBP has defined the responsible party as the “ISF Importer”. See the Assessment [PENDING] page for more on this.

Doesn’t Customs realize that this is not possible?

• No. CBP does, however, recognize that this entails, or may entail, changes in some business practices. For this reason, there is a 12 month phased in compliance period.

So who files this?

• A party meeting the requirements to file electronically can file on behalf of the ISF importer, or the ISF importer may self-file, provided they have the technological capability. This means being either ABI or AMS participants. The filer (aka agent) does NOT have to be a licensed US Customs broker ; it can be a freight forwarder or other interested party meeting the technological capabilities. A power of attorney is required in all cases where an agent is performing the actual filing.

Is this going to cost?

• Yes! See the Assessment [PENDING] page.

If Freightgator files the ISF, what’s the fee?

• See the Assessment [PENDING] page.

So do we need new powers of attorney for existing clients?

• No.

What impact does the ISF have on Customs clearance?

• None, provided that it has been done. For importers without a continuous bond in place, evidence of the filing will be required by FgL, if not done by FgL, so as to minimize the risk of punitive damages against the broker’s bond.

What is the impact on freight forwarders?

• The only significant impact is that the AMS filing party will receive a DO NOT LOAD message if there is no ISF matched against the AMS bill of lading prior to the 24 hour cutoff. Depending on the processes ultimately created by all parties involved, there could be missed sailings due to missing ISF’s against shipments in a consolidation container.

After the shipment arrives in the USA, does it clear Customs again, or is this ISF in lieu of clearance?

• The ISF is a security filing only, and is not the same as a clearance or release. Although the entry summary data can be filed in conjunction with the ISF, the customary entry/release procedures are unchanged.

How long does the ISF process take?

• As of this writing, any estimate is speculative. The actual, total time will depend on several factors, such as when the data is received, and its’ accuracy and completeness. In theory, the minimum turnaround time would be about 5 minutes, accounting for data entry and ABI transmission to CBP.

If the importer does not have a continuous bond, will a single entry bond suffice for ISF purposes?

• No. The importer must have a continuous entry bond in force, or the new ISF bond which CBP has authorized. However, at this time, no information is available from FgL’s sureties as to the availability & pricing of this bond. Alternately, the ISF filer may use its’ own bond (i.e. the broker’s bond). See Fees for information on pricing. NOTE: CBP has suspended the bond requirements for the duration of the flexible enforcement period, being Jan. 26th, 2009 through Jan. 25th, 2010.

Is freight which is merely transiting the USA (imported but then exported under inbond conditions (IE, T&E)) required to have a security filing?

• Yes; the primary difference between IE/T&E cargo and regular imports is that only five data elements are required. Please see the CBP presentation for a glimpse of this information.

If CBP is not issuing Do Not Load messages for failure to file timely, and is also not assessing penalties, what incentive does an importer have to file?

• CBP will be issuing “report cards” to filers & importers as the flexible enforcement period progresses. These reports will demonstrate, in an enforced compliance phase, whether or not parties are negligible in compliance improvement, and thus, whether or not penalties will be enforced during the initial enforcement phases.

Does the AMS bill of lading have to be filed before the ISF?

• NO! The ISF can be filed at any time, irrespective of the AMS status. The ISF filer is notified of the bill’s AMS status at the time of filing (either on file or not); if the bill is not on file, ABI will hold the ISF for 30 days.

Chinese trade practice typically has manufacturers exporting through licensed exporters, who in effect become the shipper/selling party. In this case, the actual manufacturer may not be known. How does this affect the ISF requirement to supply the information for the manufacturer?

• The current regulation allows for the use of the party currently required by existing rules for standard entry procedures. In short, this means that we can use the shipper/selling party as the manufacturer for ISF purposes.

Question

Do I have to pay import duty on items that have been exported from the United States that are being returned?

Answer

If you have an item that was previously resident in the United States, but for some reason was exported and is now being returned, be sure to inform US Customs about its status. Items previously exported are often considered duty free! This means that although you might have to pay a small entry fee, your goods will not be assessed taxes as a percentage of their value.

The logic behind this duty free status is simple – US Customs wants importers to pay an import tax at least once on items not made in the United States. That means that in general you can claim a duty free status under chapter 98 of the US Harmonized Tariff Schedule on items that were either made in the USA, or had already been imported previously.

When might this apply?

This scenario might come into play if:

• one of your products was exported, used in a foreign country, and is now being returned;
• you’re exporting something for repair;
• your item was exported as an exhibit for a trade show or similar;
• your item is a “tool of trade” used abroad temporarily.

Gotcha’s to avoid:

• Just because your entry is duty free does not mean you can avoid filing import paperwork. You might also be subject to processing fees.
• If your item was “advanced in value” while overseas, you will probably owe duty on the value of the improvement. Example: you exported a car made in the US and had a French radio installed. When the car returns, you will owe duty on the value of the radio but not the car.
• Depending on the product, there may be a three year window between the exportation and duty free re importation of your item.

Import tax or import tariffs (also known as import duties) in the United States generally refer to the taxes and fees charged by US Customs when importers bring goods into the country. They are assessed by government employees with US Customs at the port of entry, and are paid by the importer of record.

All goods entering the United States are subject to the same import procedure and the same tariff (tax) assessment, although every product has its own duty rate and some have a duty rate of zero!

Import taxes are the second largest source of revenue for the United States behind the Internal Revenue Service.

In addition to being revenue source, import taxes are used to control domestic market conditions and as a political tool. US Customs and the US International Trade Commission will raise and lower import taxes on particular goods to give domestic producers an edge over foreign imports. To exert political pressure, certain countries may be assigned a higher duty rate on their exports or may be embargoed (locked out) to prevent trade.

The primary criteria for import tariffs and taxes are:

• Country of origin
• Commodity type
• Intended use

and are determined using the US Harmonized Tariff Schedule, a yearly publication listing duty rates for a wide variety of import commodities. The USHTS also includes procedures and guidelines for determining import tax rates.

A foreign trade zone is a warehouse on US soil that acts like limbo for imported goods. If you have something that can’t come into the country, is just stopping off before being shipped to another country, or needs to operate outside of standard Customs procedures, a Foreign Trade Zone (FTZ) might be the way to go.

Example: I worked with a customer one time importing textiles (T-shirts) from China for sale in the US. As many textile importers will tell you, there is an import quota on Chinese textiles that caps the total amount they’re allowed to import into the US each year. Unfortunately, this importer’s agent failed to advise his customer that his category’s quota for the year had been filled. The end result was 50,000 embroidered T-shirts held at the port of Long Beach California that could not be cleared through Customs.

As you can probably guess, the solution I recommended was a Foreign Trade Zone. By warehousing the goods in an FTZ on US soil, the importer was able to avoid shipping his goods back to China (and all the costs that would incur) and was first in line when quota was re-opened the following year.

Not a totally pleasant experience for the importer, but a lot better than the alternative!

Paying Duty: The importer is ultimately responsible for paying any duty owed on an import. Determining duty can be very complicated, and while shipping services will often give an estimate for what the duty rate on an item might be, only Customs can make a final determination about what is owed. You should not be misled into thinking your purchase price includes duty because the seller cannot say with absolute certainty what the duty will be. As a rule, a purchase price that includes shipping and handling does not include duty or any costs associated with clearing the goods through Customs. First time importers are often surprised by bills they receive for duty, U.S. Customs merchandise processing fee, and something referred to as “customs fees,” which are actually charges for the services of the broker who cleared your goods through Customs.

How you pay duty depends on how your goods were shipped. If your goods were shipped through the International Postal Service, you will need to pay the mail carrier and/or go to your local post office to pay any duty and processing fees owed when your package arrives at that post office. If your goods were sent by a courier service, that service will either bill you for the duty they paid on your behalf or require payment on delivery.

If your goods were sent by freight, there are two possible scenarios for paying duty.

• If no arrangements were made to forward the goods to your door, you will need to either clear them through Customs yourself, in which case you will pay duty directly to Customs at the port where your goods arrived. Alternatively, you will need to arrange for a broker to clear your goods. If you hire a broker, they will bill you for their services and any duty they paid on your behalf.
• If arrangements were made to forward your goods to you, you will be billed for any duty owed, and for the services of the broker who cleared them through Customs.

Reminder: Customs holds the importer – YOU – liable for the payment of duty not the seller.

Question

I am interested in importing single samples of furniture from Bulgaria as showroom pieces. Each piece is valued at 90-150 Euros and I would like to find out the approximate import tax. The pieces are not for resale.

Answer

Importing samples into the United States allows companies to receive example goods from overseas and choose from multiple vendors before committing to larger import quantities. It’s a common practice and an excellent method for determining quality, transit times, and estimating a budget.

When importing a sample shipment, keep the following in mind

Sample goods are classified under chapter 98 of the US Harmonized Tariff Schedule, a chapter designated for specialty import provisions. Most imported samples are classified under HTS number 9811.00.60. Samples classified in this way must not be valued over USD $1 or must be permanently marked, torn, perforated, or otherwise mutilated so that they are not suitable as a saleable item.

Example sample mutilations and markings

• Drilling a one inch hole into the bottom of a tennis shoe would make it unsuitable for sale and would allow it to be imported as a sample.
• Indelibly marking by carving or etching a surface of a piece of wooden furniture where it would be conspicuous and in plain sight with the words “Sample: Not for resale” would meet the marking requirements of classification 9811.00.60.
• Including a permanent tag, sewn in a conspicuous place, with the words “Sample: Not for resale” on cushions and upholstered furniture would meet the sample marking requirements.

Duty

Sample imports classified under HTS classification 9811.00.60 and meeting the above requirements for marking are free of duty from any country of import.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Question

A US company wants to outsource software development to India. Will the US company have to pay import duties on the software? If so, what is the tax or range?

Answer

Electronic transmission and data exchange have evolved at an alarming rate in the last ten years. Mulit-million dollar projects are outsourced and completed overseas with the final result often delivered simply by email or FTP. The US International Trade Commission addresses the import of data in a some what archaic manner by exempting electronic tele-communications under General Note 16(b) of the HTSUS. Data imported in a physical form (on CD or diskette), however, is dutiable under the classification of the physical media itself. It is important to realize that value of the data contained in physical media may directly influence the value of the media itself. An importer importing a $0.50 cent compact disc containing a $30,000 software bundle may be liable for paying import duties as a percentage of the $30,000.

Importers considering outsourced software projects should also note that imports and exports of cryptographic hardware and software are regulated by the Bureau of Industry and Security.

Please note: This article is intended for informational purposes only and is not specific legal advice. As

Question

My friend and I would like to purchase fashion jewelry and fashion accessories, such as: belts, earrings, bracelets, necklaces, watches, etc. from countries outside of the U.S. and then sell them on e-bay or our own website. We have a sellers permit in California. Do we need any other kind of license and/or permit if we purchase goods outside of the U.S. and sell them in the U.S.? Also, how do the taxes work on those items?

Answer

Most fashion accessories with the exception of those made from textiles (cloth or clothing items) will be free from any additional licensing or import requirements of other government agencies, so your main obstacle will be US Customs – filing the proper paperwork, paying import duties, etc. This is assuming you are importing items from a country that maintains normal trade relations with the United States. Importing will be very difficult if your product is manufactured in Cuba or North Korea because they do not enjoy normal trade with the US.

Sources

There are large export markets for fashion accessories in both China and India. I would recommend dealing with Chinese markets for non-textile related goods and India for textiles. China currently has some quota restrictions with regard to the import of textiles whereas India does not. It might be also be easier to find an English speaking vendor in India.

Import Taxes and Valuation

When you import any good into the United States, you are required to pay an import duty (also called an import tax). Some goods have a duty rate of free while others can climb to over 20% of the value declared. The average duty rate in the US is between 3-5% of the value. The value of an import is typically considered the current US market rate for that good. For example, if you are going to sell a silver bracelet for $20 in your online store, you would declare its value to US Customs as $20 and pay duty based on that.

Because you plan on importing multiple items, I recommend becoming familiar with the US Harmonized Tariff Schedule. Each item you import must be assigned a ten digit classification number which will determine its rate of duty and eligibility for special trade programs. I’ve included a few sample classifications for your reference below.

Other Notes

Watches

You mention wanting to import watches which can be challenging without the proper research. Instead of having one classification number per item type, watches (even if they are assembled) are imported with multiple classifications per piece (one for the band, the crystal, the movement mechanism, etc.) and declared separately.

Before you commit

Once your vendors are established and you are ready to import, take several precautions before you send payment overseas:

• Ask for samples of the item you intend to import to verify quality.
• Make sure you have considered transportation costs when negotiating your final price.
  • Who will be paying for the goods to leave the country?
  • Who pays for the air/ocean freight to get it to the United States?
  • Who pays for the transportation from the airport/oceanport to your place of business?
  • What about insurance?
• Take a moment to research incoterms and do not be shy about discussing it with your vendor.

Sample classifications:

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Information and materials downloaded from the Internet are not subject to duty. This applies to any goods or merchandise that are electronically transmitted to the purchaser, such as CDs, books, or posters. However, the unauthorized downloading of copyrighted items could subject you to prosecution. Downloading child pornography is also a crime. U.S. Customs Service has the authority to investigate and prosecute persons involved in this and other illegal activities.

Question

I am considering importing items from New Zealand, made from ancient kauri wood, items ranging from jewelry pieces to coffee tables, for re-sale. What are the import/duty requirements of such an operation?

Answer

Country of Origin

New Zealand maintains normal trade relations with the US, so there are no specific trade restrictions that would interfere with imports from that country.

Duty

The duty amount payable would depend largely on the types of item being imported rather than the material they are made from. Coffee tables, for example are found in chapter 94 of the USHTS, while wooden jewelry would likely be found in chapter 71. You will need to classify each type of article being imported and assign it an HTS number to determine the rate of duty for that item.

Imports of Wood

The USDA (US Department of Agriculture) publishes regulations regarding the importation of wood products (including craft products manufactured from natural plant materials) in chapter 7 of the Code of Federal Regulations. One of their primary missions is to prevent the spread of insects and disease that could have an environmental impact on the United States.

Although there is no mention specifically of kauri wood in chapter 7, import restrictions of wood products from New Zealand are mentioned in 7CFR319.40-5, but they are with regard to logs and unrefined lumber. A list of regulated products can be found on the USDA website. To ensure your import is not regulated by the USDA, you should determine the class and genus of the wood used in your commodity and check it against this list or with your local USDA office. Some woods may be subject to a visual inspection, and if determined to be pest free, will be allowed entry into the United States. Others must be treated to ensure that they are pest free before they can be brought into the US.

Question

I am going to import solid oak floor and engineered oak floor from China. Do I need a license for doing this?

Answer

Wood from China is a tightly restricted commodity due to a concern for disease and pest carrying imports. Manufactured wood products that undergo intensive heat and pressure in their fabrication are exempted, but solid oak flooring may be subject to the USDA Suspension of Manufactured Wood Item Imports from China which states:

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service APHIS), beginning April 1, 2005, will suspend the importation of craft items from China that contain wooden logs, limbs, branches, or twigs greater than 1 centimeter in diameter and with intact bark. Manufactured wood items that have been heat treated or fumigated with methyl bromide and have had 100 percent of the bark removed are not subject to the import suspension.

Question

Is there a requirement for fumigation for pallets made of plywood?

Answer

There is no fumigation requirement because plywood is a product of heat and pressure that by nature of its manufacturing process is free of pest and plant-born disease. You can read about the requirements for wood packaging material on the APHIS (Animal Plant Health Inspection) portion of the USDA website.

Question

I am undertaking a trip to Australia in October and a friend who is a woodworker has asked if I could bring back some native wood for him to work with in his backyard woodshop. He uses the pieces to make small bowls and things out of and doesn’t market any of the finished wood commercially at all. What would be required to bring in 3 pieces about a foot long each for him?

Answer

Regardless of whether the wood is for commercial or individual use, you will be asked to declare it to US Customs when you return to the United States. Many types of wood are subject to inspection, and if declared pest-free, will be allowed to enter the United States. Some, however, must be fumigated or subjected to heat treatment before they can be imported. Before leaving the US, you should determine the scientific name of the wood you will be importing and check with US Customs and the USDA regarding the import requirements for that species.

Question

I have shipped household goods from the U.S. to Papua New Guinea and would now like to return some of them in one of my original crates that was constructed from American plywood and dimensional lumber. I have heard that the dimensional lumber used is an issue with international shipping now. Do I have to remove and replace the 2×4 braces in my crate or would it be allowable for return shipping?

Answer

Yes, you will have to replace or treat the dimensional lumber according to the Wood Packing Material Questions and Answers (Phase II):

1. Dimensional lumber used as a bracing in pallets/crates otherwise constructed of plywood must meet proper heat or chemical treatment to ensure that they are free from pests and disease prior to importation.
2. Because country of origin will be nearly impossible to confirm for imported pallets and crates, all wood packing materials are assumed to be of foreign origin and are subject to the Wood Packing Material requirements.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.