Nation's Business

December 1994

"International Trade - Sailing Through Customs," by Brenda Ordonez

To avoid red tape on overseas trips, get a merchandise passport-a carnet-for your equipment and product samples.

Before you travel abroad for business, you'll need a passport. And while you're at it, you should probably get a passport for any products or equipment you'll be taking along to use or to show as samples.

Lisa Sokal learned all about merchandise passports three years ago when she had to ship computer equipment to and from Holland. Sokal, and administrative assistant at the Washington, D.C., law firm of Pierson, Semmes and Bemis, sent computers and printers to The Hague and back every three weeks for two years while the firm's attorneys were in a lengthy trial.

Sokal, whose only previous "international" experience consisted of shipping documents via courier, saved her firm from having to pay Holland's import tariffs and an 18.5 percent value-added tax on the equipment. What's more, she didn't have to cope with the paperwork and hassles with customs officials that are typically involved in shipping goods overseas.

How did she do it? With the merchandise passport, called an ATA carnet (pronounced kar-nay). The carnet program is administered by the U.S. Council for International Business (USCIB), the nonprofit U.S. affiliate of the International Chamber of Commerce. (The U.S. Chamber of Commerce is a member of the USCIB.) The Admission Temporaire/Temporary Admission (ATA) carnet is an international customs document that eases entry for equipment and sample products into 47 countries in Europe, North America, Asia, and Africa.

Carnets are for temporary export. "A carnet covers items that will be out of the country for no more than one year," says Cynthia Duncan, the council's marketing manager for carnet operations.

The carnet, also an entry document for the products, eliminates the time-consuming and costly procedures and provides a guarantee that duties and excise taxes will be paid if items on the carnet are not returned to the country of origin within the specified time limits.

Re-entry into the U.S. for the products is easier on a carnet: Paperwork stamped when the products are sent out of another country serves as the entry document when they arrive in the U.S., so they don't have to be registered again.

Duncan emphasizes that selling goods covered by a carnet is technically a violation of the carnet agreement. Knowing that this sometimes happens, however, she advises the seller to protect against any subsequent customs claims by any country by getting an itemized receipt specifying that appropriate duties and taxes were paid.

What merchandise can be covered by a carnet? "Everything imaginable," syas Duncan, "from ordinary goods, such as commercial samples and trade-show displays, to extraordinary items like Cessna jets, Paul McCartney's band instruments, and the U.S. equestrian team's gear." Exceptions are food and agricultural products, disposables, and postal items.

The U.S. Customs Service, part of the Treasury Department, also endorses carnets. Ernest Cunningham, program manager for the agency's Office of Inspection and Control, Cargo Enforcement, and Facilitation, says carnets simplify customs procedures for business people returning to the U.S. "It allows them to clear customs themselves without engaging outside help," he says.

USCIB, by appointment of the Treasury Department, has been issuing about 10,000 carnets a year since 1968. As the guaranteeing organization that must pay any customs claims resulting from improper use of a carnet, it is required to hold a refundable security deposit-either a certified check or a surety bond-from the individual being issued a carnet. The deposit is 40 percent of the value of the goods being shipped.

An inexpensive alternative is a surety bond, available from about 200 companies approved by the Treasury Department, through the council, also a bonding company. The premium for a bond to secure $20,000 in goods for instance, would be $80; cash security would be $8,000.

You also might want to insure the goods. Roanoke Brokerage Services Inc., of Hunt Valley, Md., a USCIB-authorized carnet-issuing agent, is among insurers offering a special low-cost policy covering items on a carnet againt loss or damage. Unlike most policies, the premium is based on the number of countries entered, not a specific period of time, and can be as low as 1 percent of the goods' value.

The basic cost of a carnet is a processing fee ranging from $120 to a maximum of $250, depending on the value of the shipment. For a $20,000 shipment, the fee would be $175.

To obtain a carnet:

·         Get an application from a carnet service bureau or call the USCIB at 1-800-5-DUTYFREE.

·         Fill out the application. List company details and the countries to be visited. Provide a detailed roster of the goods to be covered, including serial numbers, country of origin, and weight.

·         Post security-either cash or bond.

Cynthia Duncan at the USCIB offers free on-site sessions to companies interested in learning more about the ATA carnet. Free brochures also are available. Contact Duncan at the United States Council for International Business, 1212 Avenue of the Americas, New York, N.Y. 10036-1689. Phone (212) 354-4480.

Brenda Ordonez is a free-lance writer in For Myers, Fla.