10 Tips for Saving Money with ‘Merchandise Passports’
Cynthia J. Duncan
United States Council for International Business
The ATA Carnet, a standard internationally recognized customs document that allows goods to move into foreign markets duty-free and tax-free, is one of the best-kept secrets in international trade. Carnets, also called “merchandise passports,” are used for temporary admission of product samples, merchandise displayed at trade shows and professional equipment — that is, goods that won’t be sold or have value added during their travels overseas. If you regularly take such goods abroad — and who doesn’t? —a Carnet can save time, money and hassle.
There are just a few things you need to know before you go:
Carnets are one document for all customs transactions and good for one year.
Carnets are used for unlimited exits from and entries into the U.S. and a foreign country. This allows a temporary exporter to use a single document for multiple country visits, instead of posting a financial guarantee at every port of entry. Goods on Carnet must return to the U.S. within one year or face penalties.
Carnets are accepted in 75 countries and territories.
Customs authorities in more than 75 nations accept the ATA Carnet as a temporary importation document. Carnets are accepted throughout the European Union and in major emerging markets. The system is growing: Pakistan joined in 2007, and Ukraine and Montenegro followed last year. This network provides ready-made access to a large number of important markets, simplifying and cutting the costs of doing business.
Carnets cover commercial samples, professional equipment and goods for exhibitions and fairs.
Goods covered under Carnets run the gamut from jewelry, jets and construction equipment to computers and the instruments and equipment taken on tour by groups such as Bon Jovi and the San Francisco Symphony. Everyday items such as medical devices, industrial machinery, artwork, computers, vehicles, repair tools, film equipment, wearing apparel and furniture make temporary entry on Carnets. They also cover more unusual items such as vintage costumes, Stradivarius violins, human skulls, satellites, racehorses, and rare gems and jewels.
Carnets eliminate the need to register with U.S. Customs.
Carnets substitute for the CF 4455 (Certificate of Registration), which is used to register goods leaving the U.S. on a temporary basis. The CF 4455 does not negate the need to complete entry documents in all foreign countries visited. What’s more, re-entry into the U.S. can be a hassle, as registration information is not shared among U.S. ports. By using a Carnet, you avoid both pitfalls.
Carnets avoid the need to post duties and taxes.
As an alternative to an ATA Carnet, an exporter may deposit with foreign customs the appropriate taxes and duties. At the time of re-exportation, additional paperwork must be completed to obtain a refund and will be delivered some months later. Why lay out this money in the first place? Reimbursement will be made in the foreign currency, not U.S. dollars, leading to the hassle and expense of currency conversion. What’s more, duties and taxes can range from 20 to 30 percent in Europe, to 40 percent in China — an enormous initial outlay.
Carnets waive the need for Temporary Importation Under Bond (TIB).
Another option for temporary entry is to post a financial guarantee or TIB. An exporter must secure the TIB at the time of entry into each foreign country and must meet foreign customs requirements. These requirements vary from country to country, making it more difficult to plan and prepare.
Carnets are paid for in U.S. dollars.
Because a Carnet is obtained in the U.S., charges are paid in U.S. dollars. The same is not so for duty deposits or TIBs, for which local currency is required.
Carnets are the cost-effective option.
For a Carnet covering $50,000 worth of merchandise for multiple trips to the U.K, the cost is $500. Alternatively, posting just the value-added tax of 17.5 percent would require an outlay of $8,750.
Carnet paperwork is in English.
The Carnet application process is done online and in English. As an internationally recognized customs document, a Carnet also can limit the possibility of confusion or miscommunication posed by language barriers when entering a foreign country.
Carnets save you money and hassles when shipping goods overseas.
Bottom line: Carnets save you time, money and hassle. And they can be obtained by you, the exporter, or by a forwarder or other third party.
A bonus tip …
Remember to check with the Department of Commerce to ensure your goods do not require export or import licenses!
The worldwide ATA Carnet system is overseen by the World Customs Organization in cooperation with the Paris-based International Chamber of Commerce and its network of national guaranteeing associations.
In the U.S., the United States Council for International Business guarantees Carnets and issues them from its headquarters in New York and via a nationwide network of service providers. Visit www.merchandisepassport.org or call 1-800-5DUTYFREE (1-800-538-8937) for more information.
JoC TENs Essayist Cynthia J. Duncan is senior vice president for Carnet operations at the United States Council for International Business in New York City. She can be contacted at email@example.com.