Incentives to Promote Exports

From the 1870s until 1971, U.S. exports typically exceeded U.S. imports, except during World War II. Even during this period, U.S. exports fell below imports because a substantial per­centage of the exports was not sold but provided to allies under the Marshall Plan. All this began to change in the 1970s. The United States

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Export Trade Certificate of Review

1. Export Activities to Reduce Costs and Risks Export Trade Certificates of Reviews (COR) are issued by the Department of Com­merce (with the concurrence of the Department of Justice) and provide antitrust protection for certain specified export activities. Companies holding certificates can work together in the appointment of exclusive agents or distributors, the set­ting

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Import Restrictions in the United States

1. Tariffs All goods imported into the United States are subject to duty or duty-free entry, depending on their classification under the applicable tariff schedule and their country of origin. For dutiable products, three different methods are used to levy tariffs: Ad valorem duty: The duty levied is a percentage of the value of

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U.S. Free-Trade Agreements (FTAs)

The United States has fourteen FTAs in force with twenty countries. It is also in the process of negotiating a regional FTA, the Trans-Pacific Partnership, with Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, as well as the European Union (EU-US FTA). One of the prominent exceptions to the

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U.S. Trade Preferences

1. Generalized System of Preferences (GSP) The GSP is a special arrangement by developed nations, agreed to under the United Na­tions, to provide special treatment for imports from developing nations to encourage their economic growth. Under the GSP, tariff exemptions and reductions are provided by indus­trialized countries on a specified range of commodities exported

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Trade Intermediaries and Services

1. Customs Brokers Customs brokers are persons who act as agents for importers for activities involving transac­tions with the customs service concerning (1) the entry and admissibility of merchandise; (2) its classification and valuation; and (3) the payment of duties and other charges assessed by customs or the refund or drawback thereof. A customs

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Tax Deduction for Processing in Maquilas: Mere Assembly or Fabrication

The regulations of U.S. Customs and Border Protection (CBP) provide for de­duction of the costs of U.S. components or materials assembled abroad upon importation into the United States. In order to qualify for this exemption from duty assessment, the components must be exported in a condition ready for assem­bly without fabrication and have retained

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Import Penetration Rates in U.S. High-Value Industries: Focus on China

The U.S. trade deficit in goods and services declined from $560 billion in 2011 to $540 billion in 2012. This reflected a $16.8 billion improvement in the services trade surplus and a $2.7 billion improvement in the goods trade deficit. While the U.S. trade deficit in petroleum products declined, the deficit in nonpetro­leum goods

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Selecting Products for Importation

One of the most important import decisions an exporter-importer must make is the selec­tion of the proper product that serves the market need. In the absence of such a product, one is left with a warehouse full of merchandise that no one is interested in buying. Nevertheless, importing can become a successful and profitable

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Determining Import Volume

Much of the literature on imports underlines the importance of high per capita incomes and population size in determining import levels. All other things being equal, countries with higher per capita incomes will be able to import more per person than countries with lower levels (Lutz, 1994). Larger countries (in terms of population) import

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Selecting the Import Supplier

The product selected for importation may be manufactured by several firms in different countries or within the same country. The next important step is to assess and select the right supplier on the basis of a number of critical factors, such as quality, delivery time and supplier reliability, transportation cost, import duty implications, protection

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Pricing the Imported Product

Knowledge of the price structure for imported goods makes it possible to determine the ap­propriate price to be charged for the merchandise. The price structure in Table 17.4 could be used as a general guide. Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.

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Import Marketing Channels

One of the fundamental decisions for foreign suppliers is whether to sell their products directly or through intermediaries. Relying on an intermediary relieves the producer of in­ternational marketing activities. However, the producer forgoes part of the export profit and does not obtain firsthand information on the market, and this, in turn, may reduce the

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Financing Imports

Imports can be financed by using methods such as documentary collection, letters of credit, transferable letters of credit, or back-to-back letter of credit. Readers can refer to the section in Chapter 11 on the various types of letters of credit. Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd

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International Sourcing

The outsourcing of products and services to external suppliers continues to expand, as firms search for ways to lower costs while improving their products to remain competitive. By the end of 1998, it is estimated that U.S. companies had spent more than $100 billion on outsourcing. Outsourcing is commonly used by firms in the

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The ATA Carnet: Unlocking Customs for Temporary Entry of Goods

The ATA Carnet is an international customs document used by travelers to tem­porarily import certain goods without paying tariffs or going through customs formalities. The term “ATA” stands for the French words “Admission Temporaire.” It is created by an international convention to promote world trade and can be used in more than ninety countries.

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Maytag’s Triad Strategy

Firm strategy plays an important part in determining the competitiveness of an industry in a global market. As governments embrace trade liberalization, local industries have become increasingly exposed to fierce competition from a grow­ing array of international suppliers. Domestic producers of bulk appliances like dishwashers and refrigerators were largely insulated from foreign competition be­cause

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The Entry Process for Imports

1. Filing Entry Papers The entry process requires filing the necessary documents to enable customs to determine whether the merchandise may be released from its custody, as well as for duty assessment and statistical purposes. Both of these processes can be accomplished electronically via the Automatic Broker Interface Program. What are entry documents? Entry

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The Harmonized Code (HS Code)

The HS code is a harmonized commodity description and coding system that is used for classifying traded products. The Harmonized System was developed under the auspices of the World Customs Organization (WCO), with the active participation of governments and private organizations. Since entering into force on January 1, 1988, the HS has been partially

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Customs Valuation

In 1979, the United States adopted the customs valuation system that was the result of the Tokyo Round negotiations of the GATT. Valuation of a product is important because most imported products are subject to tariffs based on the percentage of the value of the import (ad valorem rate). It also helps countries to

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