The effective regulation of foreign trade is essential in maintaining a prosperous marketplace. With an abundance of trade routes, suppliers, manufacturers, and classifications being imported to the United States every day, the customs and border protection (CBP) plays an integral role in customs regulations.
While free trade agreements are in place with individual nations, CBP must still perform various duties regarding imports and exports. There are stringent rules around entry procedures, goods classifications, valuations, duties, and taxes.
When dealing with international trade, it’s highly advisable to use a clearance agent to ensure you handle this complex process legally and efficiently.
Customs and Border Protection
The CBP is responsible for the transfer of merchandise into the U.S. Items cannot legally enter the country without permission from the CBP. The CBP aims to prevent illegal or prohibited items from entering through their various ports of entry. Imported goods must receive customs clearance.
On a typical day, CBP customs agents process over 1 million passengers and pedestrians, as well as $7.3 billion worth of imported products.
Anyone importing goods into the United States will come into contact with customs and border protection and must adhere to all rules and regulations.
What is a Clearance Agent
Often referred to as a customs broker, a clearance agent is an international customs expert licensed by the CBP. Customs brokers offer their knowledge and expertise to importers that need to meet the standards, regulations, and customs duties requirements for their goods.
Hiring a clearing agent is not a legal requirement for importers. However, customs brokerage is very complex and necessitates in-depth and specialized knowledge.
Failing to meet customs requirements can lead to the indefinite confiscation of merchandise at the shipper’s expense. What’s more, customs-related issues are fineable offenses and can even cause serious legal difficulties. Intentional or not, importers who don’t comply with trade requirements can potentially face imprisonment.
The costs of customs issues by far outweigh the rates of duty charged by a clearance agent.
What Does a Clearance Agent Do?
Although Clearance Agents are employed by, partnered, or associated with private organizations, they are licensed and supported by the CBP. They work on behalf of their clients to ensure that all imports meet federal requirements before entering the country. They submit necessary information and payments and deal with the CBP directly if needs be.
Becoming a licensed agent requires candidates to pass an examination, submit a broker license application, pay the necessary fees, and receive approval by the CBP.
Some of the specialized work they carry out revolves around the following areas:
The Harmonized System of Tariff Classification
This is a classification system devised by the World Customs Organization to set customs tariffs and collect trade data. Failing to classify goods correctly can cause a chain reaction of problems with imports.
Transfer pricing knowledge is vital to ensure companies aren’t exploiting tax or duties loopholes by shipping items internationally. If an importer fails to allocate an accurate valuation of its goods, it can result in audits, investigations, and monetary penalties.
Trade Agreements and International Rules
Importers can avail of significant savings due to trade agreements. However, legislative requirements and rules of origin must be adhered to for these agreements to come into effect. Clearance agents ensure that their clients take all necessary steps.
U.S. Food Safety Monetization Act
The FSMA was introduced in 2011 to ensure the safety of food imports to the USA. Importers must submit documentation and allow supply chain access to receive clearance from the Food and Drug Administration (FDA).
Customs Compliance, Verification, and Audit
These three steps have to establish an importer’s reputation and profile, enabling them to gain customs clearance. Each process involves documentation and communication with the CBP, which can be handled by an agent.
Why You Should Use a Clearance Agent
There are several key reasons why an importer should use a clearance agent. Here are some of the main considerations to be taken into account:
Knowledge and Expertise
Foreign trade is a complicated area. Unless an importer or a member of its team is up to date on the processes, procedures, and requirements of cross-border trading, the company is likely to encounter some issues.
A clearance agent can act on an importer’s behalf and advise them on all requirements, making the process a lot easier.
The most critical aspect of foreign trade is receiving customs clearance for your goods. This can be a sticking point for many importers, causing them a great deal of stress. A clearance agent should be able to navigate importers through the process quickly and easily. They can also deal with CBP agents on behalf of the importer.
Avoiding Extra Costs
If you haven’t done your research about foreign trade, you can expect delays, fines, and penalties. Avoid unnecessary costs by hiring an expert.
Familiarity with the Harmonized Tariff Schedule
Correctly identifying your imported items is a critical step in the importation process. Clearance agents are well-versed in this department, ensuring that your items are identified and declared accurately.
Importers must complete a staggering amount of paperwork. This can take up a tremendous amount of time. Slight mistakes are made frequently, leading to extra costs down the line. A clearance agent can take care of the paperwork on your behalf, lessening the load for an importer.
The Importance of Clearance Agents
Many businesses avoid international trade due to the requirements and complexities that are involved. Although these might be valid reasons, this can diminish the potential for an organization’s international expansion.
A clearance agent can act as a bridge that enables companies to grow in international markets. By outsourcing the specialized aspects of foreign trade, the business can continue to develop its core competencies. While clearance agents might not be necessary legally, they are crucial to international trade in the bigger picture.