Starting an Import/Export Business

Week Two

Presented by

Clarence Light, MS, CPA, CGFM

Importing and Exporting Basics

• Two sides of the coin• Similar approaches—Pricing, marketing,

agency, distribution• Regulation

• Importing—Customs and Border Protection• Exporting—U.S. Department of Commerce

Importing Basics

• Preexisting distribution network and contacts• Limited marketing (family members)• Shipping and Regulations

• Establishing import activities• Agents• Marketing• Distribution• Shipping and Regulations

Importing Basics

• Find a product• Find the best source• Obtain samples• Cost the product the samples represent• Present the sample at trade shows• Order stock based on the demand from the

trade showsHow Small Business Trades Worldwide, (Spears, 2001)

Import Information Sources• Internet

• Example—Thomas Register• www.thomasnet.com

• Agents for wholesalers and retailers• Regulations

• Importing into the United States• www.cbp.gov

• Informed Compliance Publications• What Every Member of the Trade Community

Should Know About: ……..

Import Information Sources• Agents for wholesalers and retailers• Examples

• www.oneworldsourcing.com• www.alibaba.com• www.tradekey.com• www.fita.org

Import Regulation Basics

• U.S. Bureau of Customs and Border Protection (CBP) • Previously U.S. Dept. of Treasury• Currently U.S. Dept. of Homeland Security

• Specialized Documentation

Import Regulation BasicsImport Process

• Entry • Evidence of right to make entry• Surety (bond)

• Examination of Goods and Entry Documents • Classification and Value • Assessment of Duty• Payment of duty and release of bond• Release of shipment to importer of record

Import Regulation Basics• Tariffs

• International Trade Commission• Injury determinations (Antidumping cases)

• Harmonized Tariff System• Quotas

• Absolute• Tariff-Rate

Import Regulation Basics• Harmonized Tariff System

• Complexity rivals the Income Tax Code• 2,959 pages• 99 chapters• 10,523 separate tariff lines• Interactive Tariff and Trade Database

Import Documentation

• Commercial Invoice• Certificate of Origin• Letter of Credit• Sight Draft

Source: Import/Export, Nelson, p. 28

Mail Shipments• Advantages

• Ease in clearing shipments through CBP • Savings on shipping charges• Smaller, low-valued packages may be

sent less expensively through the mail

Mail Shipments• Duties ≤ $2,000 collected by carrier• No formal entry required on duty-free

merchandise ≤ $2,000• No need to personally clear shipments

if < $2,000 in value

Export Basics• Similar issues as importing—marketing,

agency, distribution• Political and cultural considerations• U.S. Department of Commerce

• Export Licensing

• Documentation• Shippers Export Declaration (SED)• Automated Export System (AES)

Export Marketing

• Potential unfamiliar markets• High incentives from U.S. Government

• Trade deficit• Government resources

• International Trade Administration• U.S. Commercial Service• Foreign Commercial Service• Small Business Administration

Export Regulations

• Export controls• Limited to extensive• Military applications, drugs, nuclear material

• Export Administration Regulations (EAR)• U.S. Department of Commerce• Commerce Control List (CCL)

• Export licensing• Less than 4% of U.S. manufactured products

require an export license (Nelson, 2000)

Shipper’s Export Declaration

• Required for most shipments out of the borders of the United States

• Basically for statistical requirements• Exceptions

• US to Canada (unless export license required)• US Virgin Islands to US• US Virgin Islands to Puerto Rico• US/Puerto Rico to Other US Possessions• Other US Possessions to US