Guest Columnist - John Ropa

Nearly every U.S. manufacturer uses some item of foreign origin in its processes. Almost all of those items carry with them an import duty, the tariff based on the suppliers' invoice descriptions. Once the invoice descriptions and the classifications have been reconciled, the importer can begin to attack the level of duties paid.

There are three avenues to take to mitigate the impact of duties. These are classification, which we talked about in the first article (July 30, 2010 issue of The Bottom Line);duty drawback; and foreign trade zones.

Duty drawback is one of the first regulations ever passed in the U.S. Simply, drawback states that if you pay duties on imports, you get 99 percent of your duties refunded to you if you export what you imported, or used it in a product that you exported. It does not even have to be the item imported.

If, when you visited Accounts Payable, you found that you paid an import agent to clear goods through customs, you have nearly all of the information you need to file for drawback. You will have the consumption entry which specifies the import and duties paid. All you need to do is to identify its exported end use.

A visit or letter to U.S. Customs describing your activity will allow you to draw up a contact with Customs, which will, in essence, state that whenever this product is exported, the export includes a specific number of imported items whose duties were paid. As an aside, in all my dealings with government agencies, I have found that U.S. Customs is the most helpful and cooperative. Eventually, Customs will cut a check refunding those duties. If you do not have consumption entries showing your imports, take a tour through your warehouse, looking for items of foreign origin. By law, items of foreign origin must be identified as such.

When someone else, such as a distributor for a foreign supplier, is importing on your behalf, you can ask that distributor to provide a certificate of delivery, again showing proof of import. The certificate of delivery will not tell you what duties you paid, but it is sufficient to provide to Customs that you are exporting a product containing an item of foreign origin. Customs will ascertain the duties paid and issue a check for the refund.

Drawback is also available for special circumstances, such as an unusual level of scrap or returns to a vendor.

John Ropa is a retired executive with an international firm. He can be reached at: jropa@yahoo.com