Cargo Business News - Current Issue


Home The Magazine Current Issue Archives Blog About CBN Subscribe Reprints Conferences Overview Southwest Intermodal Port Productivity Conference Southeast Freight Conference Northwest Intermodal Port Handbooks Overview Pacific Northwest Ports Handbook Golden Gates Ports Handbook Southern California Ports Handbook Buy Handbook Newswire Subscribe Archives Calendar Classifieds Advertise General Information Upload Files

Trade Tools Missing money Exporters lose billions by failing to claim drawback By Bill Armbruster Drawback is one of the more arcane facets of U.S. trade law, but U.S. companies, primarily exporters, lose billions of dollars each year because they fail to take advantage of it. Companies can obtain refunds of up to 99 percent of import duties on if they meet certain standards. Those refunds would allow exporters to be more competitive because it would allow them to sell finished goods in foreign markets at lower prices. The most common type of drawback allows companies to claim refunds on duties for imported components that they use to make U.S. goods that are then exported. Candy manufacturers, for example, can claim drawback on imported sugar used to make candy that is then exported. A second form of drawback allows both exporters and importers to claim drawback on imported merchandise that is rejected or goes unused, provided the goods are destroyed under the supervision of Customs and Border Protection officials. A third type of drawback, known as substitute drawback, is more complicated, but companies that use it can reap substantial rewards. Under this provision, companies can claim refunds if they produce and then export merchandise that is similar or identical to goods they import. If, for example, a manufacturer is experiencing production delays in the U.S. and is therefore unable to export goods made domestically, it could claim drawback on the imported goods that are re-exported, even if there is no domestic processing. “It’s staggering how many companies have the opportunity to use drawback but who are either ignorant of the opportunity or who are unwilling to invest in the administrative procedures to enable them to file drawback claims,” said Patrick Gill, an attorney with Rode & Qualey, a New York-based firm specializing in customs and international trade law. Drawback modernization and simplification is the top priority for the American Association of Exporters and Importers, says Marianne Rowden, the association’s executive director. Help may be on the way for companies that have not used drawback because of its complexity. AAEI is working with the Senate Finance Committee to incorporate simplified drawback procedures in the Customs reauthorization bill, rather than as a stand-alone bill. The House is expected to do the same. The biggest users of drawback are in the petroleum, automotive and pharmaceutical sectors. “By modernizing and simplifying drawback, more companies, particularly small and medium companies, would be able to take advantage of it,” Rowden said. Drawback is somewhat less important for companies today because import duties in general are substantially lower than in the past, Gill noted. Moreover, import duties have been completely eliminated or sharply reduced through U.S. free-trade agreements with other countries, most notably Canada, still our largest trade partner, and Mexico. However, the U.S. does not have free-trade agreements with China, the European Union, and other major trade partners, so drawback can be quite important in trade with those countries, says Michael Daly, a drawback specialist with Livingston International. Rejected goods may qualify for drawback if they do not conform to specifications or if they are defective at the time they are imported. This would include cargo that is damaged while it is in transit. To be eligible for drawback, the rejected goods must be returned to Customs within three years after they were released. Moreover, companies must be able to document why they rejected the goods, he said.	In This Issue Up Front News, Trends & Analysis News Trade Tools: Missing money Capitol Watch: Focus on job creation Supply Chain Chris Steele: Why you might be buying industrial real estate soon Compliance Corner: Use the Web for denied party lists Tech Trends: From open source to terminal visibility Product Review: Trucking drayage and chassis management software Gateway Glance New England Southern California Cover Story Spaced Out: Shippers face shortages of vessel space and containers – along with rising rates The Port Community Bumpy Ride: Rebuilding PNW containerized exports Southwest Intermodal: Can intermodal incentives show the way? The Shipping Environment Engaging in the community, slow steaming, and new green products Oceans are making waves Commentary David Bennett: Real signs of trouble Casualties The Big Texas spill leads off this month’s rundown Final Say Top 25 TIGER projects
Home \| Subscribe \| Our Conferences \| Ports Handbooks \| Advertising Info \| Publishing Services \| About Us Contact \| Calendar \| Past Issues \| Upload Files All contents of this site are copyright 2010 by Northwest Publishing Center and Cargo Business News and may not be reproduced in any way without express written consent of the author.

Trade Tools