Top Five Import Compliance Challenges Affecting International Trade

As globalization increases, so does the complexity associated with doing business across borders. Here are the top five challenges affecting International Trade today.

5. Getting Accurate Customs Valuation

The trouble with getting an accurate valuation for Customs is in getting all pertinent background information for the product. Minor transactions can qualify as assists by Customs. The term “assist” describes something of value that a supplier receives from a customer that aids in the production of goods that are subsequently sold/shipped to that customer. Examples of assists include molds, production tools, raw materials, supplies and parts used in to produce the final product. The value of the assist needs to be added to the transaction value when calculating customs value.

Sometimes identifying these assists is very difficult. Those involved in the manufacture or purchase of a product are not even aware that some items potentially qualify as assists. Therefore it takes considerable effort to gather all the information necessary to calculate the transaction value for Customs.

4. Inaccurate or Unclear Commercial Invoices

Commercial Invoices should include a precise description of the goods as well as contain all the information needed to fulfill origin and destination country requirements. This includes the HS number for the goods being sold, number and export/import license information. Many foreign countries have specific requirements relating to commercial invoices to enable customs authorities to assess correct customs duty.

Often the detailed description of the goods is inaccurate or too general. Many companies use generic names such as “machine equipment” or “machine parts” etc. They often fail to stipulate the kind of “machine” that the parts are for. This makes the job of a Broker very hard, since it is impossible to determine the end-use of the goods.

3. There is also lack of consistency in how imports are regulated between all countries that belong to WTO

The interpretations of WTO rules vary widely among countries. Some countries interpret and implement the WTO rules strictly while others pay lip service. The result is global trade barriers remaining in place due to subsidies and other support received by manufacturers and exporters in other countries.

There are many variables that create problems with interpretation. The lack of a well developed legal system, lack of implementation of existing laws and lack of respect for intellectual property etc. all give rise to more favored treatment for exporters in other countries at the expense of exporters in the US. Further the existence of corruption in some countries means that their companies are better poised to be able to pay lower import duties and compete for orders without being hampered by legislation similar to the FCPA. Political posturing and pandering to vote banks creates inconsistencies in implementation of many WTO Rules in several countries.

2. Still lots of trade barriers and also how anti-dumping/countervailing duty cases are reactive as opposed to a forward looking

Businesses/importers face a lot of uncertainty because they always have to look in the rearview mirror. This combined with the fact that many U.S. regulation bodies lack intra-agency cooperation and communication amongst themselves. This creates an inefficient and uncertain environment for International Trade.

1. Getting the HS classification correct

Considering that all other regulations, restrictions and OGA requirements are triggered by the HS code, this is really the biggest challenge in the industry. Proper classification using GRIs is rapidly becoming a lost art. Computerized/Automated classification programs give a false sense of security to the inexperienced and unskilled.

One only needs to look at the preceding challenges to see why classification can be difficult for even seasoned veterans. Insufficient information from businesses about their goods (#4) and inconsistent interpretations of rulings (#3) create confusion, ergo improper classifications. The “harmonized system” is rarely completely in harmony across borders. Some countries still haven’t implemented the 2012 reformed harmonized nomenclature.
Conclusion

For all of these reasons, it is important to rely on the judgment of a seasoned professional. But even seasoned professionals need accurate and up-to-date data to make correct decisions. CUSTOMS Info and Global Data Mining offer data solutions and support for classifying goods correctly for nearly any country on the planet.