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What is Import Compliance? Reducing Risks for Importers

Dock inspector checks for import compliance on incoming shipment from a cargo carrier.
Learn the ins and outs of import compliance laws, including harmonized tariff schedules, correctly displaying your merchandise’s country of origin, and the potential penalties that can result from improper importing practices.
Joe Weaver
April 20, 2023
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Last Modified: October 9, 2023

Import compliance should be one of the primary concerns of any business importing goods into the USA. Goods entering the U.S. are subject to the scrutiny of Customs and Border Protection (CBP), the government agency whose responsibility it is to ensure that the importer of record has followed the rules and regulations governing receipt of imported merchandise. With that being said, you may ask yourself: “What is import compliance?”

According to CBP, import compliance refers to the rules and regulations that must be followed when importing goods into the U.S. Informed compliance describes the relationship between the importer and CBP, and is central to this concept. CBP creates guidelines for importing, and the responsibility of the importer is to use reasonable care in order to comply.

By following the CBP guidelines for import compliance, you reduce the risk of incurring penalties such as seizure of goods and expensive fines. To understand more about reaching full compliance with CBP importing guidelines and regulations, let’s take a look at some key elements and practices.

Key Elements of Import Compliance for International Trade

There are many laws and regulations governing import compliance, but the following elements are at the heart of any import process. 

Harmonized Tariff Schedule Classification

Often referred to by the acronym HTS, this system is used to identify and classify internationally traded goods in order to assess applicable tariffs and duties payable once they arrive at port. Whether it’s raw construction materials, fine art, or even livestock, there is a classification code. Using the correct HTS classification code is an essential aspect of import compliance.

Value and Quantity of Imported Goods

Valuation of imported goods includes the price paid or payable for the items in question, but it doesn’t stop there. Valuation must also include rebates and indirect costs. CBP also distinguishes between actual and estimated value. Actual value refers to the price paid by the importer for merchandise, rather than its resale value. 

Country of Origin

On paper, the country of origin may seem like the easiest aspect of import compliance to satisfy: simply mark your imported goods with the English name of the country from which they originated. However, depending on the class of goods in question, there is more room for error here than you might realize. 

Textiles and apparel, for instance, may originate from one country as a finished product, but the materials used in their construction could come from an entirely different country. CBP considers the country from which the raw materials were sourced to be the true country of origin when determining the correct duty rate. 

It’s surprisingly easy to make a mistake here, and the consequences can range from seizure of your merchandise, to thousands of dollars worth of fines. This is one of the primary reasons we recommend consulting one of our experienced customs brokers rather than attempting to navigate the risks of importing on your own.

Product Regulations

While the basic processes of import compliance apply to almost any item or items being imported into the US, many products are subject to further regulations depending on their classification. 

This is especially true of biological materials and pharmaceuticals, which are subject to greater scrutiny because of their potentially dangerous and/or addictive qualities. If you’re unsure about specific regulations may apply to your imported goods, take advantage of our consulting services so you can proceed with confidence.

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What are the Best Practices for Import Trade Compliance?

There are several steps you can complete in order to ensure a greater likelihood of compliance with CBP laws and regulations. These practices include:

  • Complete CBP Importer Self Assessment (ISA): The ISA allows importers to evaluate how well their practices line up with the rules and regulations set forth by CBP and other government entities.
  • Customs Trade Partnership Against Terrorism (CTPAT) Certification: This certification requires applicants to address their supply chain’s security with a high level of scrutiny, addressing an array of security topics and presenting plans to standardize heightened security throughout the supply chain.
  • Benefits of CTPAT Partnership: While not easily accomplished, certified CTPAT partners enjoy material benefits, including a reduced number of inspections by CBP, shorter waiting times when merchandise reaches its port, and access to training materials that would otherwise be unavailable. 
  • Create an Import Compliance Program: A standardized internal system with clear, step-by-step instructions to ensure your imported goods meet full compliance with CBP laws and regulations.
  • Get a Customs Bond: In order to ensure that the costs associated with importation (duties, taxes, and other accrued charges) are covered upon arrival of your merchandise, you must post a bond with CBP. If you work through a customs broker or customs clearance agent, they can post the bond on your behalf. 

By adhering to these practices, your business will be well on its way to meeting the reasonable care standard expected by CBP.

Are Import Compliance Guidelines Universal?

In short, no. For instance, this article is focused on general guidelines to ensure import compliance when bringing merchandise into the USA. These guidelines do not apply to other countries such as Canada and Mexico. 

Guidelines also vary from one product classification to another within the U.S., so rules and regulations for the importation of vehicles will be substantially different from those for imported foods. 

To learn more about the compliance differences between those two imports, check out our articles on FDA Customs Clearance and the Ultimate Guide to Importing Cars to the USA.

Consequences of Breaking Trade Compliance Regulations

Failure to comply with trade regulations can cause one or more of several penalties. These penalties include:

  • Forfeiture of imported goods
  • Fines in excess of $1,000 USD
  • Imprisonment (when deliberate attempts at fraud or smuggling are found)

For businesses importing goods for resale, there are further consequences that come out of those levied by CBP, such as dissatisfied customers and loss of profits. Even the most diligent in-house staff can fall short of meeting CBP compliance guidelines without assistance from an experienced customs broker. That’s where we come in.

Check out our article on Penalties for Using the Wrong HTS Code for more information on the fines and fees involved in import noncompliance.

Should You Invest in a U.S. Import Compliance Manual?

Two warehouse employees scanning cargo at a warehouse.

An import compliance manual is an invaluable resource for businesses who import merchandise regularly. It will allow you or your business to create an accurate and standardized process for labeling and valuing your imports. 

You may wonder what the difference is between an import compliance manual and the Guide for Commercial Importers published by CBP. It all comes down to the specificity of information contained in the manual. 

What Import Compliance Regulations Should be Included in a Manual?

Where the guide presents a broad overview of customs laws and statutes to be followed, an import compliance manual is custom-tailored to your specific importing needs. 

The manual should focus on guidelines and regulations pertinent to the class of goods your business imports, as well as the classification codes you require from the HTS. 

Examples of regulations that are unique to the importation of specific products include:

  • Food and Pharmaceuticals: If your business imports consumables such as food and medicine, Food and Drug Administration (FDA) regulations will be a crucial element of your compliance manual.
  • Vehicles and Vehicle Parts: Imported vehicles and certain vehicle parts such as engines or engine components must adhere to Environmental Protection Agency (EPA) regulations in order to be brought into the US.
  • Ceramic Materials: Depending on the intended use of your ceramic goods, they may be subject to regulation by the FDA or EPA, and those regulations will differ from one agency to the other.

Our knowledgeable team of customs and brokerage experts can put together an import compliance manual that takes the guesswork out of what can otherwise be a confusing process.

Interested in learning more about Import Compliance Manuals or want to see if it’s right for your business? Read our article or fill out a contact form to learn more.

USA Customs Clearance: Your Trusted Partner for Import Compliance Solutions

At USA Customs Clearance, we offer a full spectrum of import compliance solutions. By partnering with our team of expert brokers and customs agents, you can rest easy knowing that your imported merchandise is fully compliant with CBP regulations. 

Call us at 855-912-0406 or click here to schedule a consultation: we’re here to help you through every step of getting your goods from there to here.

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