Import Controls

Import Compliance has been a hot topic for U.S. Customs, and for importers, since 1993 when Congress passed the Customs Modernization and Informed Compliance Act (The Mod Act).

The passage of the Mod Act intensified discussion of import compliance by fundamentally altering the relationship between CBP and importers by shifting to the importer from CPB the legal responsibility for declaring the value, classification, and rate of duty applicable to entered merchandise, and for maintaining compliance with import laws and regulations. more +

Determination of the relevant import controls for imported products is a key component of any import compliance program because it sets the stage as to what and how much U.S. importers can import (import prohibitions and import restrictions) and as to whether or not U.S. importers must deal with any specific product requirements or any country of origin marking requirements in importing products. It is also important in that it will safeguard U.S. importers from the imposition of monetary fines and penalties.

U.S. import controls arise from concerns related to the U.S. economy, the preservation of domestic plant and animal life, consumer health and consumer well-being. Consequently, as concern over these matters shifts, import controls will likely be subjected to change.

Penalties for violations

Failure to comply with any of the relevant import laws and regulations can result in heavy fines ranging in the millions and other significant civil and criminal penalties, including revocation of the company's import privileges and/or potential seizure of imported merchandise. Individuals found to be in violation of these laws and regulations can be fined or face imprisonment.

U.S. Customs and Border Protection

U.S. Customs and Border Protection (CPB) is charged with responsibility for import regulations, which subject all imports to prohibitions, restrictions and product requirements. CPB is also responsible for collecting import duties, interdiction of smuggling and fraud, and the enforcement of the requirements of other government departments and agencies.

All imports must be properly declared to U.S. Customs in the designated timeframe, manner and format. Broadly, declarations include a description, a country of origin (where the product was manufactured), a tariff classification, and the correct quantity and value. These factors combined determine the amount of duty that is paid upon entry into the United States.

Import prohibitions

Import prohibitions block the entry of certain products into the U.S. and are based primarily on country of origin, product type, and/or product manufacturing practices. The U.S., for example prohibits the entry of products of Cuban origin, illegal narcotics and goods made with convict or child labor. Goods which are subject to import prohibitions are generally refused entry at the U.S. border and are subject to seizure by U.S. Customs.

Import restrictions

Import restrictions limit the entry of certain products into the U.S. and are based primarily on country of origin and product type. Restrictions may be imposed by U.S. Customs, by another U.S. agency which has regulatory authority over a particular product, or by a State government into which the goods will be transported or are consigned. Restrictions include:

  • Import quotas more +
  • Import permits, license, visas, certificates more +
  • Labeling and/or marking requirements more +
  • Inspection
  • Clearance for certain goods being allowed only at certain designated ports

Goods which do not meet restrictions are generally refused entry at the U.S. border.

Country of origin requirements

Country of origin requirements are relevant to all imported products. Country of origin is a technical term which often means more than just where a product came from. The U.S. has approximately 20 different definitions of origin for imported products. The default position deals primarily with substantial transformation, i.e., production which results in a new or different good that has a name, character and use different from those of its constituent materials. In addition to the default position, however, there are various other origin rules that are applied in the U.S.. Some are applicable to certain product categories (rules of origin for apparel); others are applicable to imports from certain geographical regions (NAFTA origin rules, Caribbean Basin origin rules) or to imports from certain countries (Israel U.S. Free Trade Agreement and countries designated as beneficiary countries under the Generalized System of Preferences). more +

Trade group memberships

Numerous bilateral and multilateral agreements such as the Agreement on Textiles and Clothing (formerly the Multi-fiber Agreement) are grouped under the umbrella of the WTO, the World Trade Organization, the successor to the GATT (General Agreement on Tariff and Trade). The WTO oversees most global trade in goods and services as negotiated in the various agreements; it also provides arbitration in case of disputes. MFN or Most Favored Nation tariff treatment is accorded to all countries who have ratified the WTO as well as to the other previous GATT members who have yet to ratify the accord. more +

Customs valuation & import duties

The value to declare for Customs purposes is the price paid or payable for the goods excluding freight and insurance. Any selling commissions, assists, royalties, packing and proceeds must also be factored in as part of the value. Failure to include the above is undervaluing the goods and may result in penalties. Duty is assessed on the price paid and does not include freight and insurance charges.

Duty rates are determined by the classification of goods within the Harmonized Tariff Schedule of the United States (HTSUS). Several rates of duty are possible for each item: "general" rates for most nations; "special" rates (which are lower than the general rates) for goods eligible under special trade programs; and "column 2" rates for imports not eligible for either general or special rates. Rates are usually "ad valorem" (a percentage) that is applied to the value of the imported goods. However, some goods are dutiable at a specific rate of duty (so many cents per piece, kilo, liter, etc.) or are dutiable at a compound rate of duty (a combination of both "ad valorem" and specific rates).

Certain classes of duties and exemptions apply in certain circumstances and to certain products. more +

Special import provisions

Special import provisions apply to U.S.-origin goods, free trade zones, samples and temporary imports. more +

Other government agencies

Although Title 15 (Foreign Trade) and Title 19 (Customs Duties) contain regulations that apply to most or all imports, many other Titles contain import and export requirements that are associated with specific regulatory agencies. more +

Import record-keeping

Import record-keeping requirements require the following persons to maintain import records and to make them available for examination by the Customs Service on Customs' demand: an importer, consignee, entry filer or other person who: (a) imports merchandise into the customs territory of the U.S.; or (b) files a drawback claim. more +

If a record keeper fails to produce an import record upon lawful demand by Customs, the consequences can be severe. If the failure is the result of a willful failure, Customs may assess an administrative penalty for each release of merchandise, not to exceed $100,000, or an amount equal to 75% of the appraised value of the merchandise, whichever is less. Alternatively, if the failure is the result of a negligent failure, Customs may assess an administrative penalty for each release of merchandise, not to exceed $10,000, or an amount equal to 40% of the appraised value of the merchandise, whichever is less.

For more information

For more information, call us toll-free 1-877-328-7866 (Intl: 716-881-2590) and talk to one of our foreign trade compliance consultants. Or send us an email.