Increasing profits, revenue and market share is on every entrepreneur’s books, but thinking locally will not allow you to achieve such a goal. In order to expand, you have to look into delivering your merchandise to different cities, counties, states and even countries. Marketing your products to a wider audience is easier than ever with the power of the internet. It is now easier than ever to reach customers on the other side of the world. Businesses are now eyeing foreign markets and are looking into potential new audiences, and this naturally opens the question of exporting merchandise abroad.
Merchandise produced in the United States has garnered a reputation for being the best value for money. This is why more and more customers are interested in buying US-produced merchandise, especially liquidated stock, which is gaining in popularity. Due to the price point, which is often well below wholesale, it is easy to see why such products are winning over market share. Liquidation companies are among those looking to tap into new markets abroad. However, to export US liquidation pallets into countries such as Colombia, there are certain regulations and a procedure to follow.
To export merchandise from the United States to Colombia, or any other country for that matter, there are permits you have to acquire and regulations you have to follow. While the United States has streamlined the export procedure as well as the trade relations with a number of countries through trade agreements, there can always be some specific requirements for certain types of merchandise. It is always better to consult authorities or an attorney for in order to get the hang of all the legal matters. This guide will, in short, go over the most common and required documentation, procedures to export merchandise from the United States as well as the customs regulations, tariffs, and potential restrictions when importing into Colombia.
When preparing merchandise for export, you are required to fill out and obtain certain documents and permits. One of these documents is the commercial invoice. This is a bill for the merchandise provided by the seller to the buyer and is used by the government of the destination country to establish the value of the merchandise and assess customs duties. You can also come across a pro forma invoice, which is prepared by the exporter before the merchandise is shipped. This invoice provides details to the buyer about the merchandise to be sent. Information includes value and other key specifications.
Next in line is the export packing list, which includes the seller, buyer, the shipping company, the invoice number, shipment date as well as the way of transport and the carrier. It also includes information about the items such as quantity, description, type of packaging, quantity, net and gross weight, package markings and also dimensions.
In terms of transportation documents, whether you need an air waybill or the bill of lading depends on the mode of transport you chose; otherwise, they include the same information. The air waybill is specific to the shipping company and is used in air freight shipments. A bill of lading is a contract between the owner of the merchandise or the seller and the carrier. There are two types of these bills. One is a straight bill of lading for vessels, which is non-negotiable. The second is a negotiable bill of lading, also called the shipper’s order bill of lading which can be traded with while the merchandise is in transit. In order to purchase the merchandise, the buyer will have to provide the original bill of lading in order to take possession of the merchandise.
A shipper’s export declaration, now known as Electronic Export Information Filing, is also among the commonly required export documents and is required for cargoes above $2,500 in value as well as for deliveries that specifically require an export permit. It is filed with the Census and Customs online service AES Direct.
Depending on the type of merchandise and the destination country, you might also require compliance documents and specific export licenses, which are government documents allowing for the export of specific merchandise such as military of defense equipment for which an export license is issued by the State Department’s Directorate of Defense Trade Controls. You might also be required to provide a certificate of origin (CO), depending on the destination. Prior to exporting, always determine that a certificate of origin is required by the destination country or for the merchandise you are exporting.
The governments of the United States and Colombia have signed a United States-Colombia Trade Promotion Agreement (CTPA) in November 2006. The agreement came into force in May 2015. This agreement is a positive development for US exporters, eliminating tariffs and barriers to U.S. services, including financial services, according to the Office of the United States Trade Representative. According to the latest data available to the Office of the United States Trade Representative U.S. goods and services trade with Colombia totaled an estimated $40 billion in 2015, with exports hitting $22.8 billion. Full implementation of the trade promotion agreement is expected to increase the U.S. exports by an additional $1.1 billion.
When importing to Colombia, U.S. companies have a set of steps to follow. As an importer, you are required to complete the Import Registration form and file it with the Colombian Ministry of Commerce, Industry, and Tourism (MinCIT). The form should include a detailed description of the products as well as the tariff classification. Colombian Customs will also inspect the merchandise if considered necessary.
When the value of the merchandise on a free on board (FOB) basis is at $5,000 or over you are required to fill out the Andean Custom Value Declaration (Declaración Andina de Valor en Aduana). You are required to fill out the Import Declaration (Declaración de Importación. However, when the merchandise value exceeds $1,000 a Customs Broker should complete all the paperwork before getting the merchandise out of Customs. Your import duties, VAT and any feed attached to importing the merchandise should be settled with the authorized entity.
As an exporter, you are always advised to cooperate with reputable partners in the destination country because of the export/import requirements. There are certain arrangements you have to complete. You should contact the buyer to make arrangements with the Customs Agency in order to receive the merchandise and pay for it. The merchandise should be delivered to a Colombian port, and the importing partner is required to obtain a MinCIT approval for the Import Registration Form or an Import License which can be required in certain cases. All the documentation must be presented to Customs. The importer must also obtain a Cargo Manifest from the transport company and keep all the documents of every transaction for a period of at least five years.
The said import declaration, containing information such as the duties and taxes paid as well as the bank where the payments were made, is submitted to the Colombian Customs (DIAN), up to 15 days prior to the arrival of merchandise in Colombia and up to two months after the merchandise arrives.
Pay attention to specific permits and requirements, as merchandise like textiles, vegetables, plants, fruit or animals need such permits. In addition to the specific permits, you have to pay attention to tariffs and potential restrictions when exporting US liquidation pallets into Colombia.
The mentioned free trade agreement signed between the United States and Colombia eliminated duties on almost 80 percent of consumer and industrial products, and it is expected that tariffs for remaining products will be phased out over the following 10-year period. This has a positive effect on U.S. exports to Colombia since tariffs on industrial exports range from 7.4 to 14.6 percent.
In general, Colombia applies three tariff levels with duties on capital goods, industrial goods and raw material that is not being produced in the country ranging from 0 to 5 percent. Manufactured goods, with certain exceptions, have a tariff of 10 percent with 15 to 20 percent duties applied to consumer goods. Agricultural commodities have also benefited from the FTA since close to 70 percent of such goods became duty-free and the remaining tariffs are to be eliminated within a 19-year period from the date of the FTA.
However, despite the trade deal, there are some issues that U.S. exporters should be aware of. Colombia has signed a number of economic integration agreements which have created overlaps in certain tariff applications. A single product can be subject to more than ten different duties, depending on its origin, and import tariffs as well as the value-added tax apply. The country’s value-added tax (VAT) is at 19 percent with a 5 percent rate applied to certain goods and services. You can calculate your tariff with the U.S. Department of Commerce’s FTA tariff tool if you know the first six digits of Colombia’s Harmonized Tariff System.
Colombia has also introduced the Unified Portal for Foreign Trade (VUCE) to streamline the import and export paperwork process, but bureaucracy is still the major stumbling stone. You can still expect truck robberies as well as pilferage in customs warehouses. And it is essential you complete and file all the documentation without any errors or typos since these can be reasons for the Customs to detain the merchandise indefinitely. This is why we strongly advise you contact an attorney who can help with all the export requirements and is familiar with the procedure so you avoid any possible issues.
As an exporter or importer, you are now familiar with the basic steps and procedures. But as a customer, you might be more interested in what liquidation merchandise actually is. There are a number of reasons merchandise is liquidated. You can see stores closing or moving to a new location, and the merchandise that is left behind is sold at significantly discounted prices through liquidation companies. But retailers and manufacturers can liquidate merchandise from their own warehouses.
Seasonal goods are the perfect example of liquidation merchandise. Products like the summer clothing are significantly discounted at the end of summer as retailers are looking to empty their shelves and free up space for the upcoming fall collections. Such liquidated stock is called closeout merchandise. This type of merchandise is often very desirable due to its quality as it is often brand new and never used merchandise that was just not sold during the season. But there is also another side to the liquidated merchandise coin. There are customer returned products or used merchandise that is either damaged or broken completely and you can even find scrap products on offer, and for many, this type of merchandise has been the reason why they looked away from liquidation merchandise.
The choices are numerous and the demand is strong for this kind of product. Market dynamics often dictate what products you will buy and sell. This also means that the best liquidated merchandise for you depends on the market conditions. You might live in an area where scrap products are in demand as people are looking for spare parts to repair their appliances or any other products they already have. Or you might be looking to supply a market for high-end smartphones. Whatever the market demands at any given point in time might be the best liquidated merchandise for you to buy.
As mentioned above, the condition of liquidated merchandise varies. This is why your research skills play a major part in securing quality. If you are looking to buy high-quality or brand new merchandise through liquidation companies, you will give yourself the best chance if you buy through a reputable liquidator. Such companies have a good reputation for a reason. They either provide great service, shipping options as well as quality merchandise but they also attract top-tier retailers and manufacturers.
It is not unusual to see a top retailer like Walmart open its storefront on Direct Liquidation. This is because of the way the liquidation companies are set up. They do not own the merchandise that is offered on their websites. They rather serve as a platform for retailers like Walmart to liquidate their merchandise and reach a wider online audience faster, eliminating the middlemen such as wholesale suppliers that buy truckloads of closeouts or overstock merchandise from retailers before breaking these truckloads up into pallets and offering them at wholesale prices to other retailers or online buyers.
With their reputation on the line and due to exclusive contracts signed between liquidators and retailers as well as manufacturers, the merchandise offered is of high quality. In addition, every top liquidator will provide you with a manifest which shows you the type, quantity, and the condition of the merchandise within each pallet so you always know what you are buying.
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