Thursday, November 8, 2007

Foreign Suppliers Can Help Importers

Foreign suppliers are often overlooked in the import process, yet they must perform certain tasks in order for the foreign goods to be allowed entry into the U.S. Sometimes foreign entities are only familiar with the laws of their own country and do not realize that the U.S. has laws that are different. The manner in which the foreign supplier fulfills their obligations can expedite or delay the import process. If the importer provides the foreign supplier with instructions about preparation of documents, country or origin, cargo security and other requirements, then the foreign supplier will have a better understanding and the tools to help them help you.

Wait a minute! You may be thinking that you don’t even have time to train your own staff and other departments in your organization. How can you be expected to train foreign suppliers? However, it’s not that hard and the small investment in time will make your life easier because the quality of the documentation and compliance with the company’s requirements will be improved.

Here are some suggestions on how you can educate your foreign suppliers.

1. Provide the foreign suppliers with standard guidelines for import shipments. The guidelines can be published online, provided with each purchase order, or some other method. You may also want to collaborate with others in your supply chain, such as buyers and logistics, to create a document that covers the importation of these products from the time an order is placed to the time payment is made. What should be included in those guidelines? The following is a brief list of items that should be addressed:

A. Company Contacts
Your guidelines should provide names, phone numbers and email addresses for key contacts related to imports, exports and logistics.

B. Documents
This section should provide a list of all documents that are required for your shipments along with any specific requirements for each document. For example, the commercial invoice is a key document and it is important for the foreign supplier to know what information is required to be included on the document. You could include a link to 19 CFR 141.86 or provide the list in your own format. If your company imports goods from a NAFTA country, remember to include the production of the CBP 434 NAFTA Certificate as a required document.

C. Country of Origin Marking
The requirements for country of origin marking should be explained along with any special requirements your company may have for marking of the merchandise and packaging. Since failure to mark or improperly marked merchandise creates additional work for the importer and potential penalties from CBP, some companies include a provision for charge-backs for improper marking. Provide a list of responsibilities for the supplier to assist them in marking the merchandise correctly.

D. Valuation - General
Determining the value for goods is difficult enough for importers, so explanation of these requirements to the foreign suppliers may be even more difficult. Consider introducing this topic with a summary of the importance of declaring the value and being able to support these calculations if requested. Then provide a list and brief explanation of the key components of value such assists, commissions, packing and related parties. If you are aware that certain components affect your shipments, such as related party transactions, place more emphasis on these topics.

E. Free of Charge Goods
Include some brief instructions on the proper declaration for free of charge goods. It is important for foreign suppliers to properly declare the values for the free of charge items they send and it will save you time having to contact the supplier to obtain the values in order to obtain release of the goods from CBP. The supplier may have difficulty understanding the importance of declaring accurate values since the good are being supplied free, so a good explanation and example may help get the point across.

F. Repaired Goods
Explain that imported merchandise that is subsequently exported for repairs and re-imported could be charged duty on the entire value of the shipment unless the return shipment is properly identified as being “repaired goods returned.” The foreign supplier responsible for the repairs must complete documentation that provides the value of the goods and value of the repair. Explain that for purposes of paying Customs duties, it is irrelevant that the goods may have been under warranty or that the repairs are performed at no cost to the importer.

G. Packaging and Labeling
In addition to the country of origin markings, each company will have specific packaging and labeling requirements based on the type of products imported. You should include information such as size and type of boxes, pallets and special marking required on the cartons.

H. Transportation
While transportation issues may not be the responsibility of the Import Compliance Department, your Logistics Department may want to contribute to these guidelines. This section usually contains information about the use of ocean and air carriers, as well as forwarders. You may want to specify carriers and when it is allowable to ship air versus ocean.

I. C-TPAT Security Requirements for Suppliers
For those companies that are members of C-TPAT, you must assess the security policies, procedures and processes of your business partners. Use this section to convey your company’s commitment to C-TPAT and provide links or references to the relevant C-TPAT Security Criteria for Manufacturers.

J. Accounts Payable
This section should include the requirements for submitting invoices for payment and provide the methods of payment used by the company.

2. Check out the bcpLearning courses.

The basic suite of courses contains a short course designed specifically for foreign suppliers. This course describes the basic process of importing for a U.S. company from beginning to end. The course then focuses on the roles of Foreign Suppliers in the process, including complying with C-TPAT guidelines, providing complete documentation packages, and preparing documents for express courier shipments. This course also includes a foreign supplier guidelines document, which describes the information included in this article and additional topics in more detail.

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