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Datamatrix – Food, Drug & Environment

Suite 708

FOOD & DRUG ADMINISTRATION
AND
ENVIRONMENTAL PROTECTION AGENCY


Food and Drug Administration

Environmental Protection Agency

Import Regulations of Foreign Governments

Customs Benefits to Exporters

Export Procedure

North American Free Trade Agreement

The following information is intended for U.S. Exporters only.

In addition to the various export regulations that have been discussed, rules and regulations enforced by the Food and Drug Administration (FDA) and the Environmental Protection Agency (EPA) also affect a limited number of exporters .

708.01 FOOD AND DRUG ADMINISTRATION

FDA enforces U.S. laws intended to assure the consumer that foods are pure and wholesome, that drugs and devices are safe and effective, and that cosmetics are safe. FDA has promulgated a wide range of regulations to enforce these goals.

Exporters of products covered by FDA's regulations are affected as follows:

If the item is intended for export only, meets the specifications of the foreign purchaser, is not in conflict with the laws of the country to which it is to be shipped, and is properly labeled, it is exempt from the adulteration and misbranding provisions of the Federal Food, Drug, and Cosmetic Act (see 801(e)).

This exemption does not apply to "new drugs" that have not been approved as safe and effective, or to certain devices and biologics. Additional requirements apply to these products. Banned new animal drugs may not be exported.

If the exporter thinks the export product may be covered by FDA, it is important to contact the nearest FDA field office or the Food and Drug Administration. Companies can make inquiries by writing to the FDA at 5600 Fishers Lane , Rockville , MD 20857 , calling 1-800-532-4440, or visiting the FDA Web site at: http://www.fda.gov .

708.02 ENVIRONMENTAL PROTECTION AGENCY

EPA regulates the export of hazardous waste, pesticides, toxic chemicals, and ozone deplete substances. Although EPA generally does not prohibit the export of these substances(there are some exceptions).

There are various statutory notification systems design to inform receiving foreign governments that materials of possible human health or environmental concern will be entering their countries, and in some cases, allows for the foreign governments to object to such shipments.

Under the Resource Conservation and Recovery Act (RCRA), there are two different sets of export regulations - one for exports of hazardous wastes moving for recycling within the Organization for Economic Cooperation and Development (OECD) (40 CFR 262 subpart H), and the other for non-OECD hazardous waste exports, as well as for hazardous wastes exported for treatment and disposal, both within and outside the OECD (40 CFR 262 subpart E).

In both cases, exports are prohibited absent the consent of the importing government. Exporters are required to notify EPA's Office of Compliance (EPA/OC) in writing. EPA/OC then forwards the notification to the importing government (and to transit countries, if applicable).

In some cases, the written consent of the importing government is required before the shipment may commence; in other cases, consent is considered "tacit" if there is no response from the importing government after 30 days. Exporters should be aware of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal.

This treaty bans trade in hazardous wastes between parties and non-parties unless there is a Basel-consistent bilateral agreement in place. Approximately 110 countries have ratified the Basel Convention; however, the U.S. has not.

Therefore, exporters should be aware of potential trade restrictions. Exporters of hazardous waste should contact either EPA's Office of Compliance, Import/Export Program at 202-564-2290 or the RCRA/Superfund Hotline at 800-424-9346 or 703-412-9810.

As for pesticides and other toxic chemicals, neither the federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) nor the Toxic Substances Control Act (TSCA) requires exporters of banned or severely restricted chemicals to obtain written consent before shipping.

However, exporters of unregistered pesticides or other chemicals subject to regulatory control actions must comply with certain notification requirements. Under TSCA importing countries are notified of the export or the intended export of many industrial chemicals or mixtures (40 CFR 707 subpart D). These chemicals or mixtures are subject to certain regulator actions taken under the act.

Exporters send to EPA, for each affected chemical or mixture, a notice for each country to which the chemical or mixture is exported. The notice is sent annually or only once, depending on the regulatory action controlling the chemical or mixture. The agency then informs the importing country of the regulatory action taken.

These notices are also used to satisfy the information exchange provisions of the Prior Informed Consent (PIC) procedures, which are under the United Nations Environment Programme.

For chemicals banned or severely restricted in the U.S. and subject to the PIC procedures, EPA forwards to the designated national authority of the importing country information on the chemical's regulatory controls.

In addition, TSCA also prohibits the export of polychlorinated biphenyls (PCBs) and PCB-containing items in concentrations greater than or equal to 50 ppm, unless an exemption was granted. The TSCA hotline, 202-554-1404, can provide general information on these export requirements.

A person may not export class I ozone-depleting substances, including chloro-fluorcarbons (CFCs), to any country that is not a signatory to the international treaty entitled the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol).

The United States is a signatory to the Montreal Protocol.

Under authority of the Clean Air Act Amendations of 1990, the EPA published regulations prohibiting the export of bulk shipments of CFCs, halons, methyl chloroform, carbon tetrachloride, and hydrobromoflurocarbons (HBFCs) to any country not a party to the protocol (40 CFR Part 82 subpart A). Currently, there are 162 nations that are signatories to the Montreal Protocol.

The U.S. Customs Service and EPA coordinate to monitor and enforce import and export restrictions on ozone-depleting substances. To obtain an up-to-date list of signatories to Montreal Protocol to export class I ozone-depleting substances contact EPA's Stratospheric Protection Division at 202-233-9410 .

708.03 IMPORT REGULATIONS OF FOREIGN GOVERNMENTS

Import documentation requirements and other regulations imposed by foreign governments vary from country to country. It is vital that exporters be aware of the regulations that apply to their own operations and transactions. Many governments, for instance, require consular invoices, certificates of inspection, health certification, and various other documents. For sources of information about foreign government import regulations.

708.04 CUSTOMS BENEFITS FOR EXPORTERS

Drawback of Customs Duties

Historically, the word "drawback" has denoted a situation in which the duty or tax, lawfully collected, is refunded or remitted, wholly, or partially, because of a particular use made of the commodity on which the duty or tax was collected.

Drawback was initially authorized by the first tariff act of the United States in 1789. Since then, it has been part of the law, although from time to time the conditions under which it is payable have changed.

The rationale for drawback has always been to encourage American commerce or manufacturers to compete in foreign markets without the handicap of including costs, and consequently in his sales price, the duty paid on imported merchandise.

Types of Drawback

Several types of drawback are authorized under section 1313, Title 19, United States Code:

If articles are exported or destroyed, which were manufactured in the United States with the use of imported merchandise, then the duties paid on the imported merchandise used may be refunded as drawback, (less 1 percent which is retained by the U.S. Customs Service (Customs) to defray costs (section 1313(a) drawback).

If both imported merchandise and any other merchandise of the same kind and quality are used to manufacture articles, some of which are exported or destroyed before use, then drawback not exceeding 99 percent of the duty which was paid on the imported merchandise is payable on the exports.

It is immaterial whether the actual imported merchandise or the domestic merchandise of the same kind and quality was used in the exported articles. This provision in the code makes it possible for firms to obtain drawback without the expense of maintaining separate inventories for imported and domestic merchandise (section 1313(b) drawback - the substitution provision).

If merchandise is exported or destroyed because it does not conform with sample or specifications, or was shipped without the consent of the consignee, then 99 percent of the duties which were paid on the merchandise may be recovered as drawback.

When certain products manufactured with the use of domestic alcohol are exported or shipped to various island possessions, a drawback of the internal revenue taxes paid on the domestic alcohol may be refunded (section 1313(e) drawback).

  • If imported salt is used to cure fish, the duties on the salt may be remitted (section 1313(e) drawback).
  • If imported salt is used to cure meat which is exported, a drawback, in amounts not less than $100, of duties paid on the salt may be obtained (section 1313(f) drawback).
  • If imported materials are used to construct and equip vessels and aircraft built for foreign account and ownership, 99 percent of the duties paid on the materials may be recovered as drawback, even though the vessels and aircraft are not, in the strict meaning of the word, exported (section 1313(g) drawback).
  • If imported merchandise is used in the United States to repair jet aircraft engines originally manufactured abroad, the duties paid on the imported merchandise may be recovered as drawback, in the amounts not less than $100, when the engines are exported (section 1313(h) drawback).
  • If imported merchandise is exported without being used, or destroyed under Customs supervision, 99 percent of the duties paid on the merchandise may be recovered as drawback (section 1313(j) drawback).
  • If merchandise that is commercially interchangeable with imported merchandise is exported or destroyed under Customs supervision and at the time of exportation or destruction has not been used, 99 percent of the duties on the merchandise may be recovered as drawback (section 1313(j) drawback).

Packaging material used to package merchandise exported or destroyed under section 1313(a), (b), (c), or (j), may receive 99 percent of the duties paid on the packaging materials as drawback (section 1313(q) drawback).

How to obtain drawback

As most manufacturers are interested in sections 1313(a) and (b), only the procedures for obtaining drawback under these provisions are discussed.

The purpose of drawback is to enable a manufacturer to compete in foreign markets.

To do so, however, the manufacturer must know, prior to making contractual commitments, that he will be entitled to drawback on his exports. The drawback procedure has been designed to give the manufacturer this assurance and protection.

Drawback Proposal

To obtain drawback, first prepare a drawback proposal (statement) and file it with a Regional Commissioner of Customs for section 1313(a) drawback and with the Entry Rulings Branch, Customs headquarters, for other types of drawback, including combination 1313(a) and (b) drawback.

There are currently several general drawback contracts available (orange juice, steel, sugar, component parts, and greige goods) which eliminate the need for submission of a proposal. These have been published in the Customs Bulletin and Decisions with instructions as to the procedure for adhering to them.

A simple drawback proposal to serve as a model may be obtained from regional commissioners for section 1313(a) drawback.

For other types of drawback, including combination 1313(a) and (b), write to: U.S. Customs Service, Entry Rulings Branch, 1301 Constitution Ave., NW, Franklin Court, Washington, D.C., 20229, or call 202-482-7040. The U.S. Customs Service also maintains an Internet site at http://www.customs. ustreas.gov .

Approval

The approval of section 1313(a) proposal takes the form of a letter from a Regional Commissioner of Customs to the applicant. The approval of a section 1313(b) drawback proposal takes the form of a letter from U.S. Customs Service headquarters to the Regional Commissioner of Customs where the applicant will file claims. The applicant receives a copy of this letter. Synopses of all contracts are published in the Customs Bulletin and Decisions The proposal and approval together are called a drawback contract or drawback rate.

If the manufacturer desires to have his contract (rate) changed in any way, he should file a new proposal (statement) and the procedure is the same as above.

Completion of Drawback Claims

Claims must be filed within three years after the exportation of the articles. To prevent tolling by the statute of limitations, a claim may be filed before a drawback contract (rate) is effective, although no payments will be made until the contract is approved. For completion of same condition.

708.05 EXPORT PROCEDURE

It is necessary for a drawback claimant to establish that the articles on which drawback is being claimed were exported within five years after importation of the imported merchandise which is the basis for the drawback. In the case of same condition drawback, the time period for exportation is three years after importation.

There are three methods which can be used to do so, and these are described in sections 191.51 through 191.56 of the Customs Regulations. Before exporting, a future claimant should make certain that he is taking the necessary steps to comply with one of these procedures.

Export of qualified U.S.-made petroleum products may be shown by matching production at a specific refinery with exports of qualified petroleum of the same kind and quality that occur within 180 days after the refinery produced the designated petroleum product.

Export of qualified imported petroleum products may be shown by matching the amount imported with exports of qualified petroleum products of the same kind and quality that occur within 180 days after the import (section 1313(p) drawback).

Payment of Claims

When a claim has been completed by the filing of all required documents, the entry will be liquidated by the Regional Commissioner of Customs to determine the amount of drawback due. Drawback is payable to the exporter unless the manufacturer reserves to himself the right to claim the drawback.

Accelerated Payment

Accelerated payment of drawback under certain conditions is authorized by section 192.72 of the Customs Regulations. Accelerated payment generally will ensure that a claimant will receive his drawback no later than two months after he files a claim. Accelerated drawback currently applies to same condition drawback.

708.06 EFFECT OF THE NORTH AMERICAN FREE TRADE AGREEMENT

The North American Free Trade Agreement (NAFTA) provisions on drawback will apply to goods imported into the United States and subsequently exported to Canada on or after January 1, 1996. The NAFTA provisions on drawback will apply to goods imported into the United States and subsequently exported to Mexico on or after January 1, 2001.

Drawback

Under the NAFTA, the amount of Customs duties that will be refunded, reduced, or waived is the lesser of the total amount of Customs duties paid or owed on the finished good in the NAFTA country to which it is exported, for purposes of sections 1313(a), (b), (f), (h), and (g).

No NAFTA country, on condition of export, will refund, reduce, or waive the following: antidumping or countervailing duties, premiums offered or collected pursuant to any tendering system with respect to the administration of quantitative import restrictions, tariff rate quotas or trade preference levels, or a fee pursuant to section 22 of the U.S. Agricultural Adjustment Act. Moreover, same condition substitution drawback was eliminated as of January 1, 1994.

U.S. Foreign-Trade Zones

Exporters should also consider the customs privileges of U.S. foreign-trade zones. These zones are domestic U.S. sites that are considered outside U.S. customs territory and are available for activities that might otherwise be carried on overseas for customs reasons. For export operations, the zones provide accelerated export status for purposes of excise tax rebates and customs drawback.

For import and re-export activities, no customs duties, federal excise taxes, or state or local ad valorem taxes are charged on foreign goods moved into zones unless and until the goods, or products made from them, are moved into customs territory. This means that the use of zones can be profitable for operations involving foreign dutiable materials and components being assembled or produced here for re-export. Also, no quota restrictions ordinarily apply to export activity.

There are now 217 approved foreign-trade zones in port communities throughout the United States . Associated with these projects are some 356 subzones. These facilities are available for operations involving storage, repacking, inspection, exhibition, assembly, manufacturing, and other processing.

More than 2,800 business firms used foreign-trade zones in fiscal year 1995. The value of merchandise moved to and from the zones during that year exceeded $143 billion. Export shipments from zones and subzones amounted to nearly $17 billion.

Information about the zones is available from the zone manager, from local Commerce Export Assistance Centers, or from the Executive Secretary, Foreign-Trade Zones Board, International Trade Administration, U.S. Department of Commerce, Washington , D.C. 20230 .

Foreign Free Port and Free Trade Zones

To encourage and facilitate international trade, more than 300 free ports, free trade zones, and similar customs-privileged facilities are now in operation in some 75 foreign countries, usually in or near seaports or airports.

Many U.S. manufacturers and their distributors use free ports or free trade zones for receiving shipments of goods that are reshipped in smaller lots to customers throughout the surrounding areas. For further information, contact your local Department of Commerce Export Assistance Center or the Trade Information Center (1-800-872-8723).

AID TO TRADE
UNDERSTANDING TRADE
WHAT IS TRADE?
THE ORIGIN OF TRADE
THEORY OF INTERNATIONAL TRADE
ORGANIZATION OF TRADE
CURRENCY AND THE TRADING LANGUAGE
THE HISTORY OF CURRENCY
CURRENCY A UNIT OF EXCHANGE
THE LANGUAGE OF INTERNATIONAL TRADE
IMPORT / EXPORT TERMINOLOGY
TRADE ETHICS, TRENDS AND POLICIES
ETHICAL TRADING
RISKS AND REWARDS
ECONOMIC TRADE POLICIES
AGENCY FOR INTERNATIONAL DEVELOPMENT
GETTING STARTED
EXPORTING ? THE START
ASSESSING YOUR EXPORT POTENTIAL
PREPARING YOUR PRODUCT FOR EXPORT
PRICING, QUOTATIONS AND TERMS
MARKETING
MARKET RESEARCH
MARKET INFORMATION
MARKET ENTRY
THE MARKETING PLAN
STRATEGY, PORTS AND WAREHOUSES
EXPORT LICENCE
IMPORTING
AN EXPORT STRATEGY
SHIPPING
DOCUMENTATION, FOOD, DRUG AND ENVIRONMENT
DOCUMENTATION
BONDED WAREHOUSE
LEGAL CONSIDERATIONS
FOOD, DRUG & ENVIRONMENT
PAYMENT, CREDIT AND FINANCE PROGRAMS
METHODS OF PAYMENT
EXPORT CREDIT
EXPORT FINANCE PROGRAMS
EXPORT FINANCE PROTECTION
REPRESENTATION AND INTELLIGENCE
TRADE ASSISTANCE PROGRAMS
OFFSHORE REPRESENTATION
EXAMPLE FORMS
INTELLECTUAL PROPERTY
THE PENTHOUSE - INTERACTION
FINANCE
THE DIRECTORS CLUB
THE CONFERENCE ROOM
THE SITE?S BONUS FEATURES


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