Class 2 for starting an import export business
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Transcript of Class 2 for starting an import export business
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Starting an Import/Export Business
Week Two
Presented by
Clarence Light, MS, CPA, CGFM
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Importing and Exporting Basics
• Two sides of the coin• Similar approaches—Pricing, marketing,
agency, distribution• Regulation
• Importing—Customs and Border Protection• Exporting—U.S. Department of Commerce
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Importing Basics
• Preexisting distribution network and contacts• Limited marketing (family members)• Shipping and Regulations
• Establishing import activities• Agents• Marketing• Distribution• Shipping and Regulations
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Importing Basics
• Find a product• Find the best source• Obtain samples• Cost the product the samples represent• Present the sample at trade shows• Order stock based on the demand from the
trade showsHow Small Business Trades Worldwide, (Spears, 2001)
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Import Information Sources• Internet
• Example—Thomas Register• www.thomasnet.com
• Agents for wholesalers and retailers• Regulations
• Importing into the United States• www.cbp.gov
• Informed Compliance Publications• What Every Member of the Trade Community
Should Know About: ……..
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Import Information Sources• Agents for wholesalers and retailers• Examples
• www.oneworldsourcing.com• www.alibaba.com• www.tradekey.com• www.fita.org
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Import Regulation Basics
• U.S. Bureau of Customs and Border Protection (CBP) • Previously U.S. Dept. of Treasury• Currently U.S. Dept. of Homeland Security
• Specialized Documentation
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Import Regulation BasicsImport Process
• Entry • Evidence of right to make entry• Surety (bond)
• Examination of Goods and Entry Documents • Classification and Value • Assessment of Duty• Payment of duty and release of bond• Release of shipment to importer of record
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Import Regulation Basics• Tariffs
• International Trade Commission• Injury determinations (Antidumping cases)
• Harmonized Tariff System• Quotas
• Absolute• Tariff-Rate
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Import Regulation Basics• Harmonized Tariff System
• Complexity rivals the Income Tax Code• 2,959 pages• 99 chapters• 10,523 separate tariff lines• Interactive Tariff and Trade Database
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Import Documentation
• Commercial Invoice• Certificate of Origin• Letter of Credit• Sight Draft
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Source: Import/Export, Nelson, p. 28
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Mail Shipments• Advantages
• Ease in clearing shipments through CBP • Savings on shipping charges• Smaller, low-valued packages may be
sent less expensively through the mail
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Mail Shipments• Duties ≤ $2,000 collected by carrier• No formal entry required on duty-free
merchandise ≤ $2,000• No need to personally clear shipments
if < $2,000 in value
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Export Basics• Similar issues as importing—marketing,
agency, distribution• Political and cultural considerations• U.S. Department of Commerce
• Export Licensing
• Documentation• Shippers Export Declaration (SED)• Automated Export System (AES)
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Export Marketing
• Potential unfamiliar markets• High incentives from U.S. Government
• Trade deficit• Government resources
• International Trade Administration• U.S. Commercial Service• Foreign Commercial Service• Small Business Administration
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Export Regulations
• Export controls• Limited to extensive• Military applications, drugs, nuclear material
• Export Administration Regulations (EAR)• U.S. Department of Commerce• Commerce Control List (CCL)
• Export licensing• Less than 4% of U.S. manufactured products
require an export license (Nelson, 2000)
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Shipper’s Export Declaration
• Required for most shipments out of the borders of the United States
• Basically for statistical requirements• Exceptions
• US to Canada (unless export license required)• US Virgin Islands to US• US Virgin Islands to Puerto Rico• US/Puerto Rico to Other US Possessions• Other US Possessions to US