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Exporting to the United States - Dealing with U.S. customs

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10. Dealing with U.S. customs

Inaccurate or incomplete documentation is the most common reason for export shipments having trouble entering the United States. A little extra time spent on your paperwork will contribute a great deal to problem-free customs clearance.

Although U.S. customs regulations are complex and often different from those used by Canada, shipping goods across the border can be relatively uncomplicated if you are well prepared for it. Some extra time spent on your paperwork will contribute a great deal to problem-free customs clearance, since inaccurate or incomplete documentation is the most common reason for export shipments to have difficulty with U.S. customs.

There are two major ways in which your goods can enter the United States: as a formal entry, also called a commercial entry, or as an informal entry. Most exports enter the U.S. as a formal entry, for which U.S. customs regulations require the use of a U.S. customs broker. Informal entry does not require a broker if the shipment is accompanied by the exporter, or if the consignee comes to the port of entry to collect it.

As well as meeting the U.S. Customs requirements for formal or informal entry, your exports may have to abide by regulations established by other U.S. agencies. The Federal Trade Commission, for example, is responsible for enforcing import regulations for clothing and textiles, which are subject to more controls than some other goods. As another instance, the U.S. Food and Drug Administration maintains guidelines for the labelling of food and beverage products; if your product falls into these categories, you may need additional documentation such as a Certificate of Hygiene, a Certificate of Free Sale or a Certificate of Inspection. Your U.S. customs broker, as well as the agencies in question, can help you understand and deal with these special requirements.

10.1. Customs brokers and what they do

Your U.S. customs broker will act on your behalf to clear your goods through customs and deliver them to their final destination. In the United States, customs brokers are licensed, bonded and regulated by U.S. Customs and Border Protection.

Using a U.S. customs broker is usually mandatory. The benefits of doing so, for the exporter, include the following:

To find a U.S. customs broker, check the website of the National Customs Brokers & Forwarders Association of America (NCBFAA) at www.ncbfaa.org. The site has a searchable membership directory that will direct you to the websites and contact information of NCBFAA members.

Alternatively, you can find a broker at a particular port of entry by visiting the Ports of Entry page on the U.S. Customs and Border Protection site at
www.cbp.gov/xp/cgov/toolbox/contacts/ports. Select the port of entry and scroll down the page to the link for its brokers list.

Agriculture and Agri-food Canada’s website has a useful list of customs resources that are applicable not only to agri-food but to most other sectors as well. Refer to
www.ats-sea.agr.gc.ca/exp/con-eng.htm.

10.2. Formal/commercial entry of goods

U.S. Customs requires formal entry for any shipment valued at more than US$2000.00, and you must use a customs broker to clear such shipments. Formal entry also requires a broker for a shipment of any value if it consists of controlled goods (that is, goods requiring either Canadian or U.S. permits or licenses to cross the border).

We examined Canadian export permit requirements earlier, in Section 8.5, "Controlled, prohibited and regulated exports." On the U.S. side, licences or permits are required for the import of the following products and commodities:

U.S. Customs requires formal entry, using a customs broker, for any shipment valued at more than US$2,000.00.

Note that a U.S. customs inspector can require a formal entry, at his or her discretion, even if the goods are not controlled or even if they are valued at less than US$2,000.00.

The U.S. Bureau of Customs and Border Protection provides a pamphlet called Importing into the United States: A Guide for Commercial Importers. It covers the entry process, invoice requirements, duty assessment and much more. To download a PDF copy of the document, go to the CBP Trade Publications page at www.cbp.gov/xp/cgov/newsroom/publications/trade/ and scroll to the "Importing into the United States" link.

10.3. Required documentation for formal entry

Your shipment, if destined for formal entry, will require the following documents and information:

10.4. Informal entry of goods

Your goods are considered an informal entry if their value is less than US$2,000.00, and if they are not controlled goods. As we also mentioned earlier, informal entry does not require a broker if the shipment is accompanied by the exporter, or if the consignee comes to the port of entry to collect it.

Documentation for informal entry is less stringent than it is for formal entry. The shipment must have its commercial invoice with it. You should also include a NAFTA Certificate of Origin; while this is not legally required by U.S. Customs, providing one will smooth your shipment’s path across the border.

10.5. Clearing U.S. customs

You should ensure with your carrier that the importer of record will be notified of your shipment as soon as it arrives at U.S. Customs. The importer of record is responsible for filing all entry documents with the authorities at the port of entry. When exporting from Canada to the U.S., the importer of record can be the exporter (you), your consignee/buyer, or your U.S. customs broker.

If you want to defer payment of duties and processing fees until you have completed the sale of your goods, you can have them sent to a bonded warehouse. Duties and fees are not levied until the goods leave the warehouse.

After the goods have arrived at the port of entry, they will be examined by U.S. Customs officials to determine:

Once customs officials have decided that the shipment and its documentation are in order, the goods are allowed to proceed into the U.S. The broker then determines the duties or fees payable and files this information, along with any payment due, with U.S. Customs. After official appraisal of the goods, the entry is "liquidated," meaning that the final computation of duties and/or drawback is complete.

10.6. Duty deferral and duty relief

If you are importing goods in order to re-export them to the U.S., you might be able to take advantage of the Duty Deferral Program, administered by the Canadian Border Services Agency (CBSA). The program relieves or defers payment duties if the goods are in transit through Canada and will not be sold here.

There are three components to the Duty Deferral Program:

10.7. Penalties and seizures

You will not normally be penalized for clerical errors or omissions, but negligence or gross negligence, as defined by U.S. Customs, can draw penalties of up to four times the duty or 40 percent of the value of the goods.

U.S. Customs levies severe penalties for fraud or negligence, so you have be sure that the information you give about your exports is accurate and complete. If you discover errors after your goods have entered the U.S., notify your customs broker immediately; you may be able to avoid penalties through prior disclosure of the mistake (in other words, before U.S. Customs detects it).

You will not normally be penalized for clerical errors or omissions, but negligence or gross negligence, as defined by U.S. Customs, can draw penalties of up to four times the duty or 40 percent of the value of the goods. The penalty for outright fraud, such as false valuation, can be the entire value of the shipment or seizure of the shipment. Again, your best defence against such problems is to be very thorough and precise in preparing your documentation.

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