Most companies do a good job at arranging for exports of their main products to a foreign country, but they often experience problems with sales incentives and promotional items. Here is what happened to one company which was shipping sales incentives that provides a good example of what can happen if things are not done correctly up front. 

XYZ company decided to provide an incentive of diamond and semiprecious stone jewelry for its sales team. The company does business in both the US and Canada. When it came time to ship the sales awards, there were approximately 30 awards sent to the shipping department for individual sales personnel in Canada. The awards that were earned varied from approximately $100 to $1500 in value (purchase price). In some cases, people earned two awards. In the following paragraphs “What happened” describes the problems that occurred, and “What should happen” describes the recommended actions to resolve this type of problem. 

What happened: The sales manager filled out shipment request forms identifying the Canadian sales persons who were going to receive the shipment and requested insurance coverage since these were pieces of jewelry.
What should happen: Corporate insurance should have been applied. Corporate coverage cost is less than half the cost of insurance for individual shipments with a small package carrier. 

What happened: The shipping manager called one small package carrier that they had a contract with and was told they do not carry jewelry. So they called the other major US small package carrier and they were happy to ship for them. 
What should happen: If you change carriers for any reason, be sure to estimate the rate volume. If you will have regular shipments, you may be able negotiate for better than list rates. 

What happened: The shipping clerk filled out a bill of lading and a commercial invoice stating the purchase price of the jewelry. The sales person, the ultimate consignee, was also listed as the importer of record-the person responsible to pay duties and taxes on the goods. 
What should happen: The invoice should be a pro forma invoice since this is a sales award. (A pro forma invoice has all the elements of a commercial invoice but is created for Customs purposes.) The item must be priced at purchase cost or manufacturing costs plus normal markup if there is no sale-that was done accurately. The shipper should have been listed as the importer of record, not the sales person, since they were an established Non-resident importer for their products shipping to Canada. They did not really want to penalize their sales people with duties and taxes on their sales incentives. 

What happened: The invoice did not name a customs broker. So, some shipments were cleared by the small package carrier at no charge, some were cleared by an affiliate brokerage company at an additional fee of $20 and others were sent to a Canadian broker who was longer authorized to clear in Canada. These clearance documents were held by that unauthorized broker for about ten days and then returned to the small package carrier. A penalty was incurred for late filing for clearance documents. 
What should have happened: Express shipments by small package carriers normally include Customs clearance; however, details need to be worked out ahead of time to determine whom the clearance will be handled by, the classification of the goods and any special documentation (e.g. NAFTA certificate) that could be required. 

What happened: The shipper knew these items were made in the US and got a NAFTA certificate from the manufacturer. But the form was not included in the shipment and the country of origin was not declared on the invoice. Duties of 6.5% were charged on most of the shipments.
What should have happened: The country of origin should have been listed on the invoice and a copy of the certificate of origin should have been attached or a blanket NAFTA certificate of origin could have been filed with a broker who was designated to clear the shipment. 

What happened: When the small package carrier’s invoices for clearance and duties were received by the shipper, it was identified that the shipments should have been duty free. So a certificate of origin was completed, based on the one received from the vendor and sent to the carrier requesting a corrected entry as duty free under NAFTA. The certificate of origin was then returned by the broker for the express carrier because the classification on the certificate of origin was not correct. A new certificate was then completed and resent to the express carrier broker. The express carrier made no charge for the amendments. The affiliate broker had charged $20 to clear and now made an additional fee of $40 each to amend the entries to duty free. 
What should have happened: The classification of the items to be shipped must be identified correctly and advised to the Customs broker clearing the goods. The classification should be placed on the export invoice and on the certificate of origin which is included with the shipment documents or filed ahead of time with Canadian Customs. Any US or Canadian Customs broker can assist in identifying the correct classification to use. US Customs and Border Protection also offers a search engine for Customs rulings on their website which can assist in classification analysis. 

Lessons learned: If you are shipping something to a foreign country, talk to a US international freight forwarder or small package carrier that has an office in the destination country. If you are shipping items that are not restricted exports by 15 CFR and you have checked the various lists for restricted persons, companies, and countries, you should obtain and send all the shipment information such as description, classification, value, and country of origin to the broker who will be clearing the shipment to ensure you have all the documentation necessary to minimize duties and avoid delays. If you take these steps you will be well on your way to going global!

Thomas M. Stanton, Licensed US Customs broker, AFMS, LLC, can be reached at 800 246 3521 x223 or