Updated on 05/05/2015

BusAd 175: Introduction to International Trade

Spring 2011

Course #3819

Apr 18 - Jun 8, 2011

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My BusAd classes:   BusAd-101 (General Business),  BusAd-170 (International Business),  BusAd-175 (International Trade) BusAd-178 (International Finance) 

Chapter Outlines, Sample Tests and Review Questions

Poorna Pal, MS MBA Ph.D. Glendale Community College Phone: (818)240-1000 x 5517 ppal@glendale.edu Office: SG-152 Office Hours: TTh: 3 - 5 PM (SG-152) or by appointment

Chapter 16: Import Regulations, Trade Intermediaries, and Services

Information and materials on this page are based on those provided by the author, Dr. Belay Seyoum

Chapter Outline

Tariffs and Nontariff Barriers as Import Restrictions

	All goods imported into the United States are subject to duty or duty–free entry, depending on their classification under the applicable tariff schedule and their country of origin.
	Methods of Levying Tariffs: Ad valorem: Duty based on value of the imported product Specific: Duty based on quantity or volume Compound: Duty that combines both ad valorem and specific Most merchandise imported into the United States is dutiable under the most–favored–nation (MFN) rate.
	Nontariff Barriers:

• Prohibited Imports: These imports include certain narcotics and drug paraphernalia (materials used to make or produce drugs); counterfeit articles; products sold in violation of intellectual property rights; obscene, immoral, and seditious matter, and merchandise produced by convicts or forced labor.

• Imports Prohibited Without a License: include arms and ammunition, products from certain countries such as Cuba, Iran, and North Korea.

• Imports Requiring a Permit: Such imports include alcoholic beverages, animal and animal products, plant products and trademarked articles. 

• Imports with Labeling, Marking, and Other Requirements: Certain imports require special labeling.

• Imports Limited by Absolute Quotas: These imports include dairy products, animal feed, chocolate, some bears and wines, textiles and apparel, cotton, peanuts, sugars, syrups, molasses, cheese and wheat.

• Imports Limited by Tariff Quotas:  The tariffs rates on these imports are raised after a certain quantity has been imported.

• The Buy-American Act 1933:  This act provides for the purchase of goods by the U.S. government (for use within the country) from domestic sources unless they are not of satisfactory quality or too expensive or not available in sufficient quantity.

  Preferential Trading Arrangements
 

NAFTA: The North American Free Trade Agreement, signed in 1993, eliminates tariffs on most goods originating in Canada, Mexico, and the United States over a maximum transition period of fifteen years (i.e., 2008). Learn here about the North American Free Trade Agreement (NAFTA)

This link will tell you about the countries that the U.S. currently has free trade agreements with

Customs brokers, free-trade zones, and bonded warehouses:

• Customs Brokers

Customs brokers act as agents for importers with regard to:

1. the entry and admissibility of merchandise

2. its classification and valuation

3. the payment of duties and other charges assessed by customs or the refund or drawback thereof.

• License Requirements for Customs Brokers

To obtain a customs broker license, an individual must be:

1. a citizen of the United States (but not an officer or employee of the United States),
2. at least twenty–one years of age,
3. of good moral character, and
4. able to pass an examination to determine that he or she has sufficient knowledge of customs and related laws.

• Free-Trade Zones

1. Free-trade zones are certain designated areas, usually located in or near a customs port of duty, where merchandise admitted is not subject to a tariff until it is entered into the customs territory.
2. Foreign goods brought into an FTZ may be store, or otherwise manipulated or manufactured.
3. FTZs are legally considered to be outside the customs territory of a country.

4. Economic Advantages

   1. Merchandise admitted into the zone is not subject to customs duty until it is admitted into the customs territory.

   2. Businesses can import a product subject to a high rate of duty and manipulate and manufacture it into a final product that is classified under a lower rate of duty when imported into the customs territory.

   3. The importer can establish the duty of foreign merchandise when entered into a zone by applying for a "privileged status".

   4. Duties are paid only on the actual quantity of such foreign goods incorporated in merchandise transferred from a zone of entry into the customs territory.

   5. Merchandise may be remarked or reconditioned to conform to certain requirements for entry into the customs territory.

• Bonded Warehouses

Bonded warehouses are secured, government-approved warehouse facilities in which imported goods are stored or manipulated without payment of duty until they are removed and entered for consumption.