The nature of business has changed dramatically over the past generation. The establishment of the World Trade Organization and the signing of free trade agreements around the world has meant greater access to international markets than ever before.
Access to international markets has been supported by unprecedented innovations in communications technology, improvements in transportation infrastructure and the removal of barriers to trade, such as tariffs.
Millions of businesses around the world have found tremendous success by using suppliers and vendors in international markets to support the development or sale of their products.
Yet, as advantageous as international trade may be, the process of bringing goods into a new market can be complex and bogged down in regulatory processes and administrative burdens. Many businesses new to international trade attempt to navigate these processes on their own and find them cumbersome, time-consuming and difficult to understand.
That’s why many businesses have come to use customs brokers to help them fulfill common import-related tasks and ensure there are minimal delays at international borders so that they can get goods to market as quickly as possible. But what exactly do customs brokers do to make trade easier? Here are five ways customs brokers make trade easier:
All that Paperwork
Most business owners and managers don’t exactly love doing tedious paperwork. That’s where customs brokers become invaluable. Trade processes involve the completion of very detailed paperwork. One missed checkbox and your goods could be held at the border for an indeterminate period of time until things can get sorted out.
While importers are ultimately accountable for the paperwork, many choose to enlist the help of customs brokers to complete and/or review the paperwork so that border delays and penalties for non-compliance can be avoided.
Shipments into the U.S. over $800 in value require payment of duties that are levied based on the goods being imported. The amount of duty to be paid is based on the Harmonized Tariff Schedule, which is made up of 99 chapters. Since many business managers aren’t inclined to learn the intricacies of HTS, they turn to customs brokers who are well versed in the art of customs classification. This saves the businesses time and ensures they properly classify their goods. It also saves them money by helping them avoid border delays and costly penalties.
Apart from the U.S. Customs and Border Protection (CBP) agency, which is responsible for administering shipments into the U.S., there are a number of regulatory bodies or Partner Government Agencies (PGAs) that have established clear standards for certain types of goods that must be met before they can enter into the United States. Examples of PGAs include the Federal Drug Administration (FDA), Food Safety & Inspection Service (FSIS), and the Consumer Product Safety Commission (CPSC).
Each of these agencies has prescriptive rules for the products under their purview. Importers must ensure they meet each of the respective PGA’s rules or risk having their products turned away at the border. Customs brokers have close and ongoing relationships with representatives from the PGAs to ensure they are kept up to date with any changes related to product standards. These relationships allow customs brokers to provide businesses with timely counsel on the material composition of products, their assembly and how they are transported so that products aren’t rejected for import after the production process.
Many of America’s businesses that do engage in trade, often conduct trade with their neighbors to the south and north (Mexico and Canada). There are a number of reasons for this, not least of which are geography, comparable business cultures and processes, and the ability to get the most out of what each market has to offer.
But apart from all of this, there’s the North American Free Trade Agreement (NAFTA), the first multilateral free trade agreement signed. NAFTA eliminates tariffs on a wide range of traded goods, allowing businesses in America to take advantage of cost efficiencies. These savings allow American businesses to be more competitive in the domestic and international marketplace.
While NAFTA offers countless benefits to businesses engaged in North American trade, there’s also a great deal of complexity in using the agreement. Customs brokers can play a critical role in helping to simplify an often complicated process. Firstly, customs brokers can help you obtain NAFTA certificates of origin, which provide evidence that the goods being shipped qualify under NAFTA.
Some customs brokers can also help to ensure goods comply with NAFTA’s many provisions. This allows businesses to focus more on what they do best rather than get caught up in the minutia of NAFTA paperwork.
360 degrees of trade facilitation
In some cases, customs brokers offer additional services, such as freight forwarding and consulting services that create a 360-degree approach to trade facilitation. The consulting services are particularly valuable to businesses with limited trade experience.
Consultations allow businesses not only to understand their current import and export practices and how to streamline or optimize them; they also allow businesses to identify other potential markets, the risks and opportunities associated with them and how to make use of other trade agreements or cost savings.
The freight forwarding services allow those same businesses to leverage the efficiencies of sourcing the transport of goods from a provider who already understands their needs and can find them the most cost-effective transportation options.
These are only a few ways customs brokers can make trade easier for American businesses looking to explore international markets.