Guide for Importers

IMPORTING PLAN

There are many reasons why goods might be imported: innovation, quality, costs, new business opportunities, or opening of new markets. However, whatever might be the reason, an importing plan must always be produced.

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This plan will contain all of the necessary information and will serve as a guide to the process. It must cover a wide range of subjects including the products to be offered, details of the competitive advantages, management of distribution, planning for financing, pricing policy, payment systems, and protection against fluctuating exchange rates.

It is important to be aware of any regulations related to the product that will be imported, whether there are barriers to its importing, if there are any applicable duties, quotas, or restrictions, if special documentation is required, or if the product must be official authorised, among other aspects.

The importing plan must also cover the overall logistical processes for the importing. Cargo Flores is an international logistics operator that can provide consultation with respect to the most favourable delivery conditions for the goods. It can also help to evaluate possible costs at the origin, select the most appropiate Incoterms 2010 rules and mode of transport, and coordinate all of the operations necessary to ensure that your goods will reach their destination with maximum security, on time, and at the lowest cost possible.

INTERNATIONAL SALES CONTRACT

This is a fundamental instrument because it will allow commercial relationships to go smoothly, prevent possible disputes, and cover a variety of economic and legal functions. There are model contracts proposed by the International Chamber of Commerce for various types of goods and possible situations encountered.

The contract must cover the entire range of circumstances and conditions for the operation:

  • Identification of the parties involved in the sales operation.
  • The object of the contract and description of the goods.
  • Price, means of payment and payment deadlines, response to possible breaches, taxes, duties and fees, etc.
  • Date and place of delivery, type of transport, insurance and guarantees.
  • Shipping and delivery terms and conditions, according to the established Incoterms 2010 rules.
  • Commercial and financial documents required by the purchasing party.
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Any contract must fundamentally establish a commercial offer by the selling party and its acceptance by the purchaser.

MEANS OF PAYMENT

The means of payment agreed upon will depend upon the degree of trust established between the parties, the commercial risk involved, and the country from which payment will be issued.

A documentary means of payment allows risk to be mitigated in terms of the goods not complying with the agreed-upon conditions or not arriving within the agreed-upon time period.

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Simple means of payment:

  •  Personal cheque.
  •  Bank draft.
  •  Simple documentary payment order.
  •  Clean remittance.

Documentary means of payment:

  •  Documentary remittance. This is payment against presentation of a series of documents and can be either sight or term.
  •  Documentary credit. This is the safest form of payment since although the purchasing party provides all of the guarantees to the seller, the purchaser’s bank is only obligated to pay once all of the obligations imposed by the letter of credit are complied with.

CUSTOMS PROCEDURES

Depending on the type of goods involved, the corresponding customs-related services may be required before the importing occurs.

The purpose of the customs office is to control entry and exit of goods to and from a country and to authorise or deny exporting, importing, and movement of goods. This does not apply in member states of the European Union, where free movement of goods and persons exists under a common customs system.

For importing, the customs office will receive and dispatch the goods according to the documentation presented by the customs agent along with the single administrative document (SAD), and will also collect any corresponding duties and fees.

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The possible customs outcomes for goods include:

  •  Inclusion under a customs regimen.
  •  Entry into a free trade zone or bonded warehouse.
  •  Re-exporting to outside of the customs territory.
  •  Destruction.
  •  Abandonment.

In turn, the following customs regimens can be differentiated

  •  Free circulation.
  •  Transit.
  •  Warehouse: customs or outside of customs, a temporary local storage warehouse authorised for goods declared for exporting.
  •  Inward or outward processing.
  •  Temporary or final exporting.
  •  emporary importing.
  •  Transformation under customs control.

Cargo Flores can advise the importing company in relation to:

  •  The customers’ outcomes and regimens that correspond to the operation.
  •  The documents that must be submitted to importing customs, as well as any that may be required at their exit from the originating country.
  •  Preventing possible delays caused by inspections, whether regarding documentation or physical inspection of goods.
  •  Often the exporting company will manage the customs procedures in the origin country and the importer will handle those in the destination country.

IMPORTING DOCUMENTS

In addition to the single administrative document (SAD), the most common documents that must be submitted to the customs office, depending on the operation and the nature of the imported goods, are:

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  • Sales invoice (the origin should be indicated).
  • Cargo list if multiple packages are involved.
  • Certificate of origin if there is a reduction of duties, or documentation to verify the origin in cases where bilateral agreements exist.
    • Forms: FORM-A, EUR-1, or ATR.
  • Information on transport and insurance based on the agreed-upon delivery conditions.
  • Transport documents based on the mode of transport utilised:
    • Maritime bill of lading.
    • Air waybill.
    • Rail carrier letter (CIM).
    • Road carrier letter (CMR).
    • TIR carnet.
    • T Certificate for transit and accompanying document.
  • Product certifications that may be required: health, veterinary, SOIVRE (Spain), pharmaceutical, plant products, low voltage, official authorisation, etc.
  • Certifications based on the commercial policies of the destination country:
    • Importing licence or authorisation.
    • Quota authorisation.
    • Agrex importing certificate.
  • If the value is greater than €10,000, the DV-1 is issued. Occasionally physical inspection photos, catalogues, specific certifications, etc. may be required.

TRANSPORT INSURANCE FOR IMPORTING

Based upon the Incoterms 2010 rules agreed upon in the international sales contract, the importing party should consider purchasing an insurance policy to cover all of the risks incurred by transport of the goods from the seller’s facilities to the final destination.

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This insurance should cover not only the risks of packing, handling, storage, loading, and transport of the goods, but also other less common issues such as civil unrest, labour actions, or acts of piracy.

Transport insurance is not the same as the transporter liability insurance, established in the international agreements regulating each mode of shipping , since compensation in these is limited by the weight and value of the goods. On the other hand, in a transport insurance contract the risks covered and the compensation and indemnification are left to the discretion of the policyholder.

In general, risks are covered through policies that include the “ICC clauses” (Institute Cargo Clauses) from the Institute of London Underwriters. These consist of three modalities (A, B, or C), with A offering the highest level of coverage.