Over the last few months, we have encountered several questions that we think might be of interest to all exporters and importers, including Incoterms and marking issues.
Incoterms: Information on incoterms can be found at a number of places on the Internet, such ashttp://www.iccwbo.org/Incoterms/index.html?id=40772. In particular, one of our clients shipping small packages was asked by their vendor to handle all the duties and taxes for the shipments they were making. In other words, the customer was asking that all shipments would be shipped on a delivered duty paid (“DDP”) basis. The consignee or user of the merchandise did not have local representation in every country where they wanted to receive the merchandise. The consignee only had a project team in the destination country and no local citizen to act as the importer of record. However, some countries require that the importer be a local citizen, so this raised some challenges. Ultimately, the consignee found a local company that would act as importer of record, and they became the party responsible for duties and taxes. But the solution was not inexpensive. In general, DDP or “Free Domicile” shipments are not recommended but rather importation by the consignee who may have approval for tax exemptions that the shipper might not be able to achieve.
Labeling or Marking: A client called us and explained they were exporting a product to Europe for additional processing and reshipment to the United States. When their shipment arrived, it was held because the items did not meet local marking/labeling requirements. We have found this to be a problem both in shipments to Europe and Asia. Whether goods will enter a foreign country temporarily or permanently, we recommend that the exporter send a message to the importer and his customs broker requesting whether any special markings are required in the local language before making any commercial shipment.
In the US Customs regulations (19 CFR 134), the United States requires that goods entering this country be marked with their country of origin in English with the name of the country, such as “China.” The following are some of the exceptions that could exempt a product from being marked before release for US sale:
(a) Articles that are incapable of being marked;
(b) Articles that cannot be marked prior to shipment to the United States without injury to the product;
(c) Articles that cannot be marked prior to shipment to the United States except at an expense economically prohibitive of its importation;
(d) Articles for which the marking of the containers will reasonably indicate the origin of the articles;
(e) Articles which are crude substances;
(f) Articles imported for use by the importer and not intended for sale in their imported or any other form;
(g) Articles to be processed in the United States by the importer in such manner that any mark would necessarily be obliterated, destroyed, or permanently concealed;
(h) Articles for which the ultimate purchaser must necessarily know the country of origin by reason of the circumstances of their importation even though they are not marked to indicate their origin;
(i) Articles which were produced more than 20 years prior to their importation into the United States;
(j) Articles entered or withdrawn from warehouse for immediate exportation or for transportation and exportation.
In the case at hand, the goods were to be processed in Europe and reexported to the United States. So we presented the logic that the importer was the ultimate consignee of the merchandise and it would be processed and reexported so that the marking would not reach the end customer. However, after a month of communication, we have not been able to identify a similar exemption for marking into the European destination country.
Summary/Conclusion: When you are arranging a new transaction with a foreign country, be sure to have expert advisors review the proposed transaction for any technical details that might delay or otherwise compromise your products’ sale and distribution. Discussing your transaction with knowledgeable forwarders and customs brokers at both ends of the transaction before shipment takes place is well worth the time invested.
Tom Stanton, International Logistics Analyst, AFMS, LLC can be reached at tom.stanton@afms.com.
Incoterms: Information on incoterms can be found at a number of places on the Internet, such ashttp://www.iccwbo.org/Incoterms/index.html?id=40772. In particular, one of our clients shipping small packages was asked by their vendor to handle all the duties and taxes for the shipments they were making. In other words, the customer was asking that all shipments would be shipped on a delivered duty paid (“DDP”) basis. The consignee or user of the merchandise did not have local representation in every country where they wanted to receive the merchandise. The consignee only had a project team in the destination country and no local citizen to act as the importer of record. However, some countries require that the importer be a local citizen, so this raised some challenges. Ultimately, the consignee found a local company that would act as importer of record, and they became the party responsible for duties and taxes. But the solution was not inexpensive. In general, DDP or “Free Domicile” shipments are not recommended but rather importation by the consignee who may have approval for tax exemptions that the shipper might not be able to achieve.
Labeling or Marking: A client called us and explained they were exporting a product to Europe for additional processing and reshipment to the United States. When their shipment arrived, it was held because the items did not meet local marking/labeling requirements. We have found this to be a problem both in shipments to Europe and Asia. Whether goods will enter a foreign country temporarily or permanently, we recommend that the exporter send a message to the importer and his customs broker requesting whether any special markings are required in the local language before making any commercial shipment.
In the US Customs regulations (19 CFR 134), the United States requires that goods entering this country be marked with their country of origin in English with the name of the country, such as “China.” The following are some of the exceptions that could exempt a product from being marked before release for US sale:
(a) Articles that are incapable of being marked;
(b) Articles that cannot be marked prior to shipment to the United States without injury to the product;
(c) Articles that cannot be marked prior to shipment to the United States except at an expense economically prohibitive of its importation;
(d) Articles for which the marking of the containers will reasonably indicate the origin of the articles;
(e) Articles which are crude substances;
(f) Articles imported for use by the importer and not intended for sale in their imported or any other form;
(g) Articles to be processed in the United States by the importer in such manner that any mark would necessarily be obliterated, destroyed, or permanently concealed;
(h) Articles for which the ultimate purchaser must necessarily know the country of origin by reason of the circumstances of their importation even though they are not marked to indicate their origin;
(i) Articles which were produced more than 20 years prior to their importation into the United States;
(j) Articles entered or withdrawn from warehouse for immediate exportation or for transportation and exportation.
In the case at hand, the goods were to be processed in Europe and reexported to the United States. So we presented the logic that the importer was the ultimate consignee of the merchandise and it would be processed and reexported so that the marking would not reach the end customer. However, after a month of communication, we have not been able to identify a similar exemption for marking into the European destination country.
Summary/Conclusion: When you are arranging a new transaction with a foreign country, be sure to have expert advisors review the proposed transaction for any technical details that might delay or otherwise compromise your products’ sale and distribution. Discussing your transaction with knowledgeable forwarders and customs brokers at both ends of the transaction before shipment takes place is well worth the time invested.
Tom Stanton, International Logistics Analyst, AFMS, LLC can be reached at tom.stanton@afms.com.
