The United States offers a number of trade programs that provide for duty reduction or exemption when goods originate from certain countries. These programs include but are not limited to the North American Free Trade Agreement (“NAFTA”), Generalized System of Preferences (“GSP”), United States- Jordan Free Trade Agreement, Israeli Free Trade Agreement and other multilateral and bilateral agreements. Our firm advises you as to whether your product qualifies for a particular program.
Duty Reduction or Exemption
1. Understanding Customs Regulations:
To benefit from duty reduction or exemption, you must first navigate the complex web of customs regulations. These regulations differ between countries and are subject to change, so it is crucial to stay up-to-date. You may want to consider hiring a customs broker or consultant to guide you and ensure compliance. Failure to comply with customs regulations can result in costly fines and delays, so investing in compliance can ultimately save your business money.
2. Free Trade Agreements:
Many countries have established free trade agreements that reduce or eliminate import duties, promoting international trade. To benefit from these agreements, your business must meet specific criteria, such as sourcing materials from qualifying countries or meeting rules of origin. These agreements can provide significant cost savings for eligible businesses, so being aware of and taking advantage of them is important.
3. Tariff Classification:
Imports are subject to specific tariff rates based on their classification. Misclassification can result in overpayment of duties, so it is crucial to ensure that your imports are correctly classified. Your customs broker or consultant can assist with this, or you can review the Harmonized Tariff Schedule of the United States or other applicable country to determine the correct classification.
4. Valuation:
Importers are required to declare the value of their imported goods to customs authorities. The declared value determines the amount of duties and taxes owed. Accurately declaring the value of your goods is crucial to avoid under- or overpayment of duties. Customs authorities can also reject inaccurate declarations and cause delays, so investing in accurate valuation practices can save time and money.
5. Duty Drawback:
Duty drawback allows businesses to receive a refund of duty paid on imported goods that are later exported. The drawback amount varies by country and eligibility is subject to specific requirements, such as filing within a certain timeframe or meeting minimum value thresholds. Claiming duty drawback can be a complex process, but it can provide significant cost savings for businesses that regularly import and export.