Tips for the New Exporter Expanding in to the U.S. Market

This article was written for UK Trade and Investment to provide some tips to new UK exporters selling through the platform "Newegg" for delivery to your average American household.

Think being small means you don’t matter?  Think again!

All shipments arriving from outside of the United States pass through US Customs and the last thing you want to be is a company who is on their list of foreign suppliers to pay attention to.

You further don't want to be the supplier that creates a problem for your U.S. buyer as it could destroy your relationship with the buyer as well as harm your reputation and detract others from buying from you.

You therefore want to have your "ducks in order" with regards to legal compliance of the products you're selling into the US market, even if you're doing so in small quantities.

 Here are 5 tips to help you do that:

1) Recognize that the law applies to those who are selling and even offering to sell in the U.S.

·       That means that even if you have not sold anything, just by virtue of offering the merchandise for sale, it requires compliance with US laws.

·       Keep in mind that each shipment adds to your supplier profile with US Customs.  Though you may start out with “Newegg,” as your business expands your shipments to the U.S. will grow too and your sales here form a part of your export history recorded with U.S. Customs.

2) Understand that many of the products you want to sell may require testing and certification as to compliance with the U.S. law(s) over that category.  For example:

• ·      The US Consumer Product Safety Commission has oversight of many of these laws and you can go to www.cpsc.gov to learn more about how their rules might apply to your products, including toys and other children’s products

• ·      The US Food and Drug Administration has oversight of many food, health and beauty products, including cosmetics

• ·      The US Federal Trade Commission has oversight of clothing and home fashions, as well as marketing claims which may be placed on packaging or temporary labels 

3) Remember that compliance with these laws is required prior to its importation into the U.S.

• ·      While you may think of yourself as “just a seller,” if you’re selling to an individual, remember that they are relying on you to sell them a safe product that complies with U.S. law

• ·      If you’re selling to a reseller, or are trying to sell to one, then they may request from you proof of your compliance with U.S. laws, so you’ll need to have your conformity certificates in order to provide them to those vendors relying on you. 

4) Product compliance aside, there are import protocols which must be complied with such as the proper marking and valuation of the product, as well as invoicing so that US customs can asses the appropriate amount of duties on that particular product.

5) Remember, even though a shipment which has a value not exceeding $200 can enter the U.S. free of duties and other taxes, the marking, valuation, invoicing and product compliance rules all still apply and again, all of these must be correctly done when you (the exporter) ship your product out for export.

• ·       A watch for example, not only has multiple requirements in terms of marking different parts of it with its country of origin information, declaring a watch’s value is overly complicated and so both the physical stamping of the watch parts as well as the invoice need to be prepared in such a way that it meets US Customs regulatory compliance standards.

Questions/comments?  Post below or email Deanna at clark.deanna@gmail.com

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Country of Origin? How About City of Origin?

The Brooklyn Chamber of Commerce has created a "Brooklyn Made" designation available to businesses located in Kings County, NY. 

With the boost in popularity of the "Brooklyn" brand, this marking is in its most simplest form a protectionist measure against non-Brooklyn based companies seeking to capitalize on the borough’s growing popularity.

As discussed in this week's AM New York (photo above), factors for attaining one of the three levels of the "Made in Brooklyn" insignia offered by the Chamber are, not surprisingly, akin to some of those same considerations US Customs looks at when it analyzes country of origin marking and value claims on imported products.  Factors include the amount of raw materials obtained within the territory (i.e. originating materials), level of manufacturing (think: substantial formation) and, the local labor used (i.e., overhead and labor, in value considerations).

More on the Brooklyn Chamber of Commerce can be found here.

As an aside, manufacturing in Brooklyn has been on an upward swing with the neighborhood Sunset Park rapidly emerging as a manufacturing, artist and fashion destination as the waterfront warehouses are being converted into mixed-use spaces that are supporting more than just manufacturing. 

We will be watching closely as the development of this cool Brooklyn neighborhood continues!

Questions/comments?  Post below or email me at clark.deanna@gmail.com

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Goods of Crimea are of Ukrainian Origin US Customs Reminds Us

The U.S. position on Crimea is clear and this sentiment was echoed throughout the customs community in a country of origin marking message it published on April 23rd that stated that goods originating in Crimea are products of the Ukraine.

This means that for country of origin labeling on any product, including that which is on clothing labels, if it is made in Crimea it is of Ukrainian origin - ONLY.

After reminding us of the law requiring that the English name of the country of origin must be marked, U.S. Customs specifically stated that the:

“Growth, production, or manufacture of a good in Crimea is growth, production, or manufacture of a good in Ukraine.  Goods which are the growth, product, or manufacture of Crimea and other areas of Ukraine should be marked as ‘Product of Ukraine’ or ‘Made in Ukraine’.  If the container of the imported good is marked, it may be marked, ‘Contents made in Ukraine’ or words similar in meaning.”

“So what happens if it’s accidentally marked as “Russia” or some other country?” you may be asking yourself?  Pain (in the wallet).  Or at least, a headache for the importer, as goods not correctly marked will also be subject to additional duties of 10% of the final appraised value unless exported or destroyed under Customs supervision prior to liquidation.

So, referendum of not.  Goods of Crimea are of Ukrainian origin.  Period.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

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How to Mark a Commercial Sample as a “SAMPLE”

Say you want to set up a carpet business and need carpet samples to show prospective buyers your range of colors.

 

 
Commercial samples become an issue for US Customs primarily under two (2) scenarios. 

The first is where an importer, because it is importing a product it does not intend to resell, seeks to avoid marking a product via use of one of the country of origin marking exceptions.

The second is where an importer seeks duty-free treatment of the merchandise being imported by classifying it as a commercial sample under a special provision in chapter 98 of the Harmonized Tariff Schedule of the US (HTSUS).

Chapter 98 of the HTSUS has a special provision regarding the duty-free entry of a commercial sample under HTSUS heading 9811.00.20 when use of the sample is for the purpose of soliciting purchase orders for foreign merchandise and the creation of demand for future orders.  Such treatment is afforded when the sample is

1.    Not valued over $1, OR

2.    Is marked, torn, perforated or otherwise treaded so that it is unsuitable for sale or for use otherwise than a sample.

Whereas not having the ”SAMPLE” marking may raise an issue by a US Customs border inspector, marking it “SAMPLE NOT FOR RESALE” eliminates any issue.  A best practice is to instruct your foreign vendor to mark the sample so as to minimize any ambiguities.

One way to mark these little guys would be as shown in the image below.

 

Again, such recommendation is being made in order to avoid issues that could arise due to an inspection of the sample. 

 

Questions/comments?  Post below or email me at clark.deanna@gmail.com

 

Keep up with me on Twitter @fashcompliance.

 

Labeling Products as Being Made or Assembled in the USA

Both the Federal Trade Commission (FTC) and US Customs have distinct rules governing country of origin marking and qualifying claims of US origin.

The FTC’s focus is with regards to the labeling and advertising of products making claims of US origin.  This is because the FTC is charged with preventing deception and unfairness in the marketplace.  It therefore has the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.  Naturally, where a product is being imported and it’s labeled “Made in USA,” it is likely going to raise some eyebrows without further explanation.

Traditionally, the FTC has required that a product labeled or advertised as Made in USA be "all or virtually all" made in the U.S.  While this is not clearly defined, the thrust of this rule is that the product itself is comprised of components that are of US origin, or virtually all of US origin.

US Customs interest in marking however, has to do with consumer preferences.  According to the case, United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940), the intention behind the marking law (19 U.S.C. 1304) was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product.  The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will."

US Customs, on the other hand, does not require any marking of Made in the USA when a product is of US origin.  Where this issue typically arises however, is in the case of an article whose components are of US origin but for which the final product is “assembled” in another country.

Customs has held that where the word “assembled” is used in conjunction with the origin statement to supply additional information, it has been found acceptable provided the additional information about where the watch was assembled was (1) not false or misleading, (2) appeared in close proximity to, and (3) was in a comparable font size to, the country of origin marking.

One point to note is that the FTCs rules tend to be more prohibitive than that of US Customs, so when in doubt, consult with the agency itself, such as at the FTC webpage entitled “Complying With the Made in USA Standard” http://business.ftc.gov/documents/bus03-complying-made-usa-standard or your attorney.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

Classification and Marking of Watches

Earlier this week I found myself describing to my summer law clerk the difference between specific duty rates, such as a “per piece” rate like $0.40 cents per piece, and “ad valorem” duty rates, i.e. a percentage rate of duty, such as 6% of the invoiced value of the merchandise.

When it came to explaining that there are certain imports that are a combination of the two types of duty, I turned to watches whose classifications within HTSUS Ch. 91 can be made up of a combination of duty rates.

Watches are unique in the tariff for not only this reason but because they are subject to all kinds of different types of additional rules that other commodities are not subject to.

Take the marking requirements for a watch for example.

The “marking statute,” codified in 19 USC 1304, mandates the marking of every article of foreign origin of its country of origin.

Under Customs interpretation of the Marking Statute, the country of origin of a watch is based upon the country of origin of the movement of the watch, irrespective of whether the case, band, or other parts were produced in another country.

HTSUS Additional U.S. Note 4 to Chapter 91 of the tariff, provides for special marking requirements for watches as described in bold below.

There is an exception to these special marking requirements however, for those watches with movements with “opto-electronic displays” and cases designed for use with “opto-electronic movements.”

As liquid crystal display (LCD) and light emitting diode (LED) display watches are categorized as watches with an opto-electronic display, they are excepted from these special marking requirements.

Watch Movement: Must be marked on one (1) or more of the bridges or top plates to show the name of the country of manufacture; the name of the manufacturer or purchaser; and in words, the number of jewels, if any, serving a mechanical purpose as frictional bearings

Watch Case: Must be marked on the inside or outside of the back to show the name of the country of manufacture and the name of the manufacturer or purchaser

For more information on the classification and marking of watches, check out US Customs updated publication entitled “Classification and Marking of Watches and Clocks.”

Questions/comments? Post below or email me at clark.deanna@gmail.com