Committed to Being the Best	FALL 2004

FOREIGN INSIGHT by Del Brahm

Drawback. We have talked about duty drawback before. This is the refund of duty paid on imported goods, when they are exported. Duty is a tax placed on imported goods to protect American manufacturers of the same types of goods. Tax on exported goods is unconstitutional, so, when imported goods are exported from the US, the duty that was paid on importation may be refunded. Hence DUTY DRAWBACK. The sad fact is that no matter how much this subject is discussed, how often articles are written, how many seminars are provided; huge sums of duty are not refunded when goods are exported. In the November, 2004 issue of AMERICAN SHIPPER magazine, it is estimated that more than 2.5 BILLION dollars of drawback is available EACH YEAR on U.S. imported goods, which were reshipped out of the U.S. The article states that the U.S. Customs and Border Protection (CBP) returned 466 million dollars to exporters in 2003, which was an increase over 429 million dollars returned in 2002. Politicians get to spend the rest. What is most disturbing about this whole situation is that exporters don't know or don't care about their money. Make a New Year's resolution to do two things in 2005. First find out the origin of all the material in the products you export, and who paid how much duty on any of the material which originated outside the U.S., even if you purchased it in the U.S. Then call your forwarder or broker and ask if a duty drawback program might get your money back and help you make your product more competitive in price. Cargo Insurance. This topic has been discussed several times before, too. If you import or export any cargo, be absolutely certain that it is insured. Don't assume. No matter what mode of transportation is used on an import or export shipment, there is no excuse for failing to insure it. If you do a large amount of international shipping, you may qualify for your own insurance policy. If not, your forwarder/broker will be able to supply insurance for your shipment. In earlier articles we warned about the assumption that using a certain Incoterm will protect you. Again, don't assume. Incoterms 2000 will indicate which party is responsible for the cargo and for which portion of the journey. Remember, NOT A SINGLE ONE OF THE THIRTEEN INCOTERMS 2000 REQUIRES THE BUYER TO CONTRACT FOR INSURANCE; only two of the thirteen Incoterms 2000 (CIF and CIP) require the seller to contract for insurance. Then, beware of the level of coverage that is required. In the December, 2004 issue of WORLD TRADE it was stated that over 110,000 ocean containers went overboard during 2003 and an average of about one cargo vessel sank each day. If you are involved with import or export shipping, be sure you know who is responsible for insurance, including general average and war risk, for the shipment. Although the numbers of containers and vessels lost each year are low compared with the total numbers shipped, extremely serious problems will occur when your cargo is involved with a mishap, even if your shipment might not be directly involved. Shippers Export Declaration (SED). Some months ago the Government of Costa Rica was requesting a copy of the SED on shipments going into that country. It seems that this problem has subsided, but it's worth repeating the fact that the SED is a document for use in the U.S. There is no reason that this document or a copy of it should ever leave the U.S. In fact, this document should no longer be done in paper form. If it is, it is nearly certain that a fee will be assessed. The U.S. Government wants to automate documentation as much as possible to save time and cost. The SED formerly was used primarily for tracking the balance of trade numbers when reporting the balance of trade deficit each calendar quarter. Today it is still used for this purpose, but other purposes take precedence, not the least of which is U.S. Customs in conjunction with homeland security. It is required that this SED info be reported via the Automated Export System, via computer, to the government. Your forwarder will report this for you usually at no additional cost. So, if you are still preparing a paper SED, you should save your time and effort. To broaden your nautical knowledge: "Broaden" in this case is the operative word. Many times a New Year's resolution includes a diet or an intention to trim. However, in nautical terms the word "trim" is the difference between the forward and aft drafts of a vessel. Usually vessels are designed to operate at even keel or zero trim; in lay terms the front and back are at the same level in the water.