Exporting to the United States

Import Rules and Procedures

Commercial Section, Los Angeles

Nasheeta Mohsin
Commercial Counsellor

Maryam Gueramian
Trade Development Officer
Glossary

BEA Bureau of Economic Statistics

BDC Beneficiary Developing Country
BIT Bilateral Investment Treaty
CAFTA-DR Central America Free Trade Agreement – Dominican Republic
CBP Customs and Border Police
CFR Code of Federal Regulations
CPSC Consumer Protection Safety Commission
EPA Environment Protection Agency
FA Fiscal Year
FDA Food and Drug Administration
FTA Free Trade Agreement
FTC Federal Trade Commission
GSP Generalized System of Preferences
HTS Harmonized Tariff Schedule
LDC Least Developed Countries
MPF Merchandise Processing Fee
NAFTA North American Free Trade Agreement
PN Prior Notice
TEU Twenty Foot Equivalent
TIFA Trade and Investment Framework Agreement
USDA United States Department of Agriculture
USITC United States International Tariff Commission
USTR United States Trade Representative
YoY Year over Year
Table of Contents
1.0 US Economy & Trade ......................................................................................1
1.2 Imports from Pakistan ......................................................................................3
1.3 US- Trade Agreements......................................................................................4
1.4 Generalized System of Preferences (GSP) Program (GSP) .........................................4
1.4.1 Key elements of the GSP Program ................................................................5
1.4.2 Eligibility for GSP Treatment .......................................................................5
2.0 Exporting to the United States ............................................................................7
2.1 Imports-Prohibitions, Restrictions or Special requirements ........................................7
2.1.1 Quota Enforcement and Administration ....................................................... 10
2.2 Import Licensing Requirements ....................................................................... 10
2.3 US Ports ...................................................................................................... 10
2.4 United States Customs and Border Protection (CBP) ............................................. 11
2.4.1 The Process of Entering Goods into the USA ................................................ 11
2.4.2 Entry of goods ........................................................................................ 12
2.4.3 Determining Duty Rates............................................................................ 12
2.4.4 CBP Recommendations for Faster Clearance of Merchandise ............................ 14
2.4.5 Packaging-Requirements and Ways to Expedite Inspection................................ 14
2.4.6 Customs-Trade Partnership Against Terrorism (C-TPAT) ................................ 15
2.4.7 Trade Show Supplies/Products ................................................................... 16
2.5 Charges/Fees on Imports ................................................................................ 17
2.6 Labeling & Marking Requirements ..................................................................... 19
2.6.1 Textile Products ..................................................................................... 20
2.6.2 Wool Products ........................................................................................ 23
2.6.3 Food and Pharmaceutical Products .............................................................. 24
2.6.4 Special marking requirements for certain products ........................................... 25
2.6.4 Commercial Food Products ....................................................................... 25
2.6.5 Pesticides, Fungicides, Chemicals ............................................................... 26
2.6.6 Consumer Products Safety Commission (CPSC) ............................................. 26
3.0 Legislation and Agencies ................................................................................. 27
3.1 Important Laws ............................................................................................ 27
 3.1.1 The Public Health Security & Bio-Terrorism Preparedness & Response Act .......... 27
3.1.1 The Import Milk Act ................................................................................ 27
3.1.2 Federal Food, Drug and Cosmetic Act.......................................................... 27
3.1.3 Flammable Fabrics Act ............................................................................. 28
3.1.4 Agricultural Act ...................................................................................... 28
3.1.5 Toxic Substances Control Act (TSCA).......................................................... 28
3.1.6 Consumer Product Safety Improvement Act .................................................. 28
3.2 Relevant Agencies .......................................................................................... 29
4.0 Business practices .......................................................................................... 31
4.1 Written communication .................................................................................. 31
4.3 Business Guides for more information ............................................................... 32
5.0 Dispute Resolution ........................................................................................ 33
5.1 Precautionary Measures ................................................................................... 33
5.2 Dispute Settlement Options ............................................................................. 33
5.3 Means of Dispute Resolution ........................................................................... 34
1.0 US Economy & Trade

The United States of America is the largest economy in the world in nominal
GDP terms. The nominal GDP stood at $18,860.8 billion (first estimate) for the year
20161. The country remains the top ranking destination for foreign direct investment.
For FY 2015, planned FDI to the USA was estimated at 439.2 billion USD2. The services
sector (including government services) contributed approximately 80% of the GDP and
manufacturing, 12.5% in 2015.3 Finance, transport and telecommunications are the
major contributors in the services sector. The US was ranked 8 th of 190 economies in
the World Bank’s 2016 report on ‘Ease of doing Business’4.
The US is the leading importer and the second leading exporter of goods and
services in the world. For the period, January –November, 2016, the US imported goods
worth $2.2 trillion USD which is lower by 2.8% compared to its imports for the same
period in 2015.5 Primary imports include automobiles, telecommunication equipments
and petroleum products. For a breakup by product category of imports for FY 2016, see
Annex-I. Top 15 importing countries account for 79.7% of the total US imports.
Exports Imports
Country November 2016 % of Total Rank Country November 2016 % of Total Rank
YTD YTD

Total All Countries 1,327.00 100 Total All Countries 2,005.20 100
Top 15 Countries 975.3 73.5 Top 15 Countries 1,597.20 79.7
Canada 244.8 18.4 1 China 423.4 21.1 1
Mexico 211.8 16 2 Mexico 270.6 13.5 2
China 104.1 7.8 3 Canada 254.8 12.7 3
Japan 57.6 4.3 4 Japan 120 6 4
United Kingdom 51.1 3.8 5 Germany 104.6 5.2 5
Germany 45 3.4 6 Korea, South 64.5 3.2 6
Korea, South 38 2.9 7 United Kingdom 49.6 2.5 7
Netherlands 37 2.8 8 France 43.2 2.2 8
Hong Kong 31.9 2.4 9 India 42.6 2.1 9
Belgium 29.9 2.3 10 Ireland 41.5 2.1 10
France 28 2.1 11 Italy 41.1 2.1 11
Brazil 27.7 2.1 12 Vietnam 38.8 1.9 12
Singapore 24.5 1.8 13 Taiwan 35.9 1.8 13
Taiwan 23.4 1.8 14 Malaysia 33.6 1.7 14
Switzerland 20.5 1.5 15 Switzerland 33.1 1.7 15
All Other Countries 351.7 26.5 All Other Countries 408 20.3

1 https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm National Income and Product Accounts Gross Domestic Product: Fourth
Quarter and Annual 2016 (Advance Estimate)
2 https://www.bea.gov/newsreleases/international/fdi/2016/fdi0716.htm ‘New Foreign Direct Investment in the United States, 2014 & 2015’

3 WTO, US Trade Policy Review, 2016

4 http://www.doingbusiness.org/rankings

5 https://www.bea.gov/international/index.htm ‘ U.S. Trade in Goods and Services, 1992-present’

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 1.1 Top 25 Imports of the U.S.

Title: US Imports
Products: Top 25 Chapters (HS 2 codes)
Origin: All Countries Total
Period: 2015, 2016
Units: Value in Millions of USD
% Change
HS (2-digit) Category 2015 2016
2016/2015
85 - Electrical or Electronic Machinery and Equipment $ 327,637.86 $ 331,000.14 1.03
84 - Nuclear Reactors, Boilers, Machinery and Mechanical Appliances $ 322,174.12 $ 308,919.97 -4.11
87 - Motor Vehicles, Trailers, Bicycles, Motorcycles and Other Similar Vehicles $ 279,288.39 $ 280,862.08 0.56
27 - Mineral Fuels, Mineral Oils, Bituminous Substances and Mineral Waxes $ 191,068.42 $ 154,109.98 -19.34
30 - Pharmaceutical Products $ 85,567.74 $ 92,024.87 7.55
90 - Optical, Medical , Photographic, Scientific and Technical Instrumentation $ 77,237.11 $ 79,772.50 3.28
71 - Pearls, Precious Stones or Metals, Coins and Jewellery $ 59,343.87 $ 66,332.66 11.78
94 - Furniture, and Stuffed Furnishings; Lamps and Illuminated
$ 56,925.59 $ 59,096.02 3.81
Signs; Prefabricated Buildings
29 - Organic Chemicals (Including Vitamins, Alkaloids and Antibiotics) $ 50,998.97 $ 48,780.57 -4.35
39 - Plastics and Articles Thereof $ 47,878.04 $ 48,084.42 0.43
61 - Knitted or Crocheted Clothing and Articles of Apparel $ 46,865.59 $ 43,980.94 -6.16
62 - Woven Clothing and Articles of Apparel $ 39,237.07 $ 37,379.93 -4.73
73 - Articles of Iron or Steel $ 36,465.52 $ 31,783.13 -12.84
88 - Aircrafts and Spacecrafts $ 35,180.48 $ 30,829.77 -12.37
95 - Toys, Games, Sporting Goods and Other Goods for Amusement $ 29,823.14 $ 29,156.00 -2.24
64 – Footwear $ 27,659.87 $ 25,634.09 -7.32
40 - Rubber and Articles Thereof $ 26,511.29 $ 24,872.21 -6.18
22 - Beverages, Spirits and Vinegar $ 21,274.31 $ 22,456.26 5.56
72 - Iron and Steel $ 26,335.19 $ 21,220.88 -19.42
44 - Wood and Articles of Wood (Incl. Wood Charcoal) $ 16,967.59 $ 18,622.99 9.76
76 - Aluminum and Articles Thereof $ 17,390.05 $ 18,139.59 4.31
03 - Fish, Crustaceans, Molluscs and Other Aquatic Invertebrates $ 14,618.06 $ 15,489.79 5.96
48 - Paper, Paperboard and Articles Made From These Materials $ 15,703.21 $ 15,354.76 -2.22
08 - Edible Fruits and Nuts $ 14,017.05 $ 15,262.25 8.88
63 - Other Made-Up Textile Articles and Worn Clothing $ 14,186.96 $ 13,962.60 -1.58
Sub-total $ 1,880,355.49 $ 1,833,128.40 -2.51
Others $ 361,308.23 $ 356,054.48 -1.45
Total (All Products) $ 2,241,663.72 $ 2,189,182.90 -2.34

2
1.2 Imports from Pakistan

3701.0 3675.5 3688.5

3800.0
3627.6
3700.0
3600.0 3446.1
3500.0
3400.0
3300.0
2016 2015 2014 2013 2012
Pakistan's exports to the US ($ Million)

Pakistan’s exports to the United States have hovered between 3.6-3.7 billion USD
since 2012. FY 2016 saw a drop in exports; the YoY loss for FY 2016 was 7% as
compared to 2015 ($254 million). Pakistan’s exports in key categories and a YoY
comparison for each category for the year 2016 is given below.

3
1.3 US- Trade Agreements

The United States has a system of international investment agreements built on

trade and investment framework agreements (TIFAs), bilateral investment treaties
(BITs), and free trade agreements with investment chapters. TIFAs contain details about
consultation procedures and cooperation between the United States and its partners on a
broad range of issues, including market access, labor, and the environment.6 The United
States currently has 55 TIFAs in force, including one with Pakistan.

The US has executed multiple international trade agreements, both regional and
bilateral. International Trade Agreements in the US are considered
congressional/executive agreements that require approval by majority vote in each House
of Congress. The US has free trade agreements with Israel, Jordan, Singapore, Chile,
Morocco, Australia, Bahrain, Oman, Peru, Colombia, Korea and Panama. Additionally,
NAFTA (North American Free Trade Agreement) and CAFTA-DR (Central America
Free Trade Agreement-Dominican Republic) are regional free trade agreements. Most
recently, the US withdrew from the Trans-Pacific Partnership, which it signed in
February 2016. The US has not concluded a new FTA since the USA-Panama FTA in
2012.7

1.4 Generalized System of Preferences (GSP) Program (GSP) 8

The United States also extends unilateral preferences to developing countries and
LDCs (least developed countries) under the GSP Program, the African Growth and
Opportunity Act (AGOA) and the Caribbean Basin Initiative. Pakistan is among the
developing countries that have a GSP program with the United States. The present
authorization for GSP is valid until the end of 2017. India, Thailand, Brazil, Indonesia,
and the Philippines were the leading exporters to the United States under the GSP
program in 2015. The main GSP items (by import value) were motor vehicle parts,
ferroalloys, monumental or building stones, precious metal jewelry, electric motors and
generators.9

6
WTO, US Trade Policy Review, 2016
7
ibid
8
GSP Guidebook https://ustr.gov/sites/default/files/GSP-Guidebook-September-16-2016.pdf
9
WTO, US Trade Policy Review, 2016

4
1.4.1 Key elements of the GSP Program

Approximately 3,500 different products from Pakistan are eligible to enter

the United States duty-free under the GSP program. However, most textiles and
apparel articles, watches, footwear, work gloves, and leather apparel, steel, glass,
and electronic articles are excluded from GSP treatment. The complete list of
GSP eligible items and associated MFN duty rate is available (167 pages) at
https://ustr.gov/sites/default/files/GSP-eligible-for-all-countries-2016.pdf .
Pakistan’s utilization of the GSP has remained low; in 2015, only 5% of Pakistan’s
exports to the US qualified for GSP treatment.

1.4.2 Eligibility for GSP Treatment

To be eligible for GSP treatment:

a. The product must be included on the list of GSP‐eligible articles; Articles
eligible for GSP treatment are identified in the current edition of the
Harmonized Tariff Schedule of the United States (HTSUS), which is
published by the U.S. International Trade Commission (USITC). The
complete HTSUS can be downloaded from the USITC web site at
http://www.usitc.gov/tata/hts/index.htm.
There is also a searchable version of the HTSUS available at the USITC
website. It must be imported directly from a Beneficiary Developing
Country (for example, Pakistan).
b. The BDC must be eligible for GSP treatment for that article. The eligibility
of a product is determined by the presence of the letter ‘A’ in the ‘Special’
tariff column of the (HTSUS) at an 8-digit level. The letter A+ indicates
that the privilege is reserved only for the LDCs and is not applicable to
Pakistan.
c. For an imported article to be GSP‐eligible, it must be the growth, product,
or manufacture of a BDC, and the sum of the cost or value of materials
produced in the BDC plus the direct costs of processing must equal at
least 35 percent of the appraised value of the article at the time of entry
into the United States. The merchandise must be imported directly from
any beneficiary country into the customs territory of the United States. The
cost or value of materials imported into the beneficiary developing country
may be included in calculating the 35-percent value-content requirement of

5
 the GSP only if such materials are substantially transformed in the
beneficiary developing country into a new and different intermediate article
of commerce, which is then transformed a second time in the production
of the final good. Direct costs of processing means costs directly incurred
in the processing of the good. These include all actual labor costs involved
with production of the good, dies, molds, tooling, and depreciation on
machinery and equipment, R&D and costs of inspecting and testing the
merchandise. General expenses such as salaries, insurance, advertising etc.
are not considered direct costs of processing.
d. The exporter/importer must request duty‐free treatment under GSP
by placing the appropriate GSP Special Program Indicator (SPI) (A, A+, or
A*) before the HTSUS number that identified the imported article on the
appropriate shipping documents (CBP Form 7501). If GSP is not claimed
on the entry summary, there are other ways to claim it. One way is to
file a Post Entry Amendment with Customs at least 20 working days prior
to liquidation of the entry. Another method is to file a protest. A sample of
CBP Entry Form 7501 used for entry of merchandise, can be found on the
CBP web site at:
http://www.cbp.gov/sites/default/files/documents/CBP%20Form%2075
01_0.pdf
e. The documents required by the Customs and Border Protection must be
furnished. While the types of documents required may vary on a case-to-
case basis, examples of the types of documents that should be available to
establish and document a GSP claim are GSP Declaration, Bill of Materials,
Invoices, Purchase Orders, Production records kept in the ordinary course
of business, Payroll information to document labor costs, Factory Profile
and Affidavit with supporting documentation. The documentation
necessary to substantiate a GSP claim must be kept readily accessible,
should CBP request it. Records may be requested from the importer of the
products for which GSP is claimed, from the foreign exporter, or both.
The substantiating documentation must be kept for a period of five years.

6
2.0 Exporting to the United States

The sections below give an overview of restrictions on imports, duties and fees as
well as other requirements for goods imported from outside the US for commercial
purposes. Products that are relatively easy to export to the USA include leather goods,
leather hides and saddlery, luggage, musical instruments, paper and paper products,
sporting goods, artificial flowers, jewelry, gems, pearls and gemstones, optics and optical
goods, plastics and plastic products, household appliances, artificial fur, glass and glass
products, utensils, ceramic tiles, art, machine tools, rubber and rubber products, brushes,
base metals, hand tools, cork, lighting fixtures, stone and stone products, umbrellas,
wallpaper, and cutlery. Products that have special requirements include alcoholic
beverages, paints and related products, motor vehicles, meat and meat products,
radioactive materials, explosives and fireworks, prepared foods, drugs, textiles and textile
products, toys, guns, arms and related products, aircraft and aerospace products,
fertilizers, dairy products, live animals, poultry, poultry products and eggs.

2.1 Imports-Prohibitions, Restrictions or Special requirements10

There are also restrictions on the importation of certain trademarked and

copyrighted articles11. The following items must comply with applicable regulations of
other agencies.

a. Art materials a. Conform to the provisions of the

Labeling of Hazardous Art Materials
Act
b. Bicycle Helmets b. To meet regulations issued under the
Federal Hazardous Substances Act,
bicycle helmets must meet CPSC's
Safety Standard
c. Biological materials c. Prohibited unless they have been
propagated or prepared at an
establishment with a U.S. license for
such manufacturing issued by the
Secretary of the Department of

10
https://www.cbp.gov/sites/default/files/documents/Importing%20into%20the%20U.S.pdf
11
Customs Publication No. 549 U.S. Customs and Protection of Intellectual Property Rights

7
 Health and Human Services
d. Subject to requirements of the Food
d. Cheese, milk, and dairy products* and Drug Administration and the
Department of Agriculture
e. Compliance with the child-resistant
e. Cigarette lighters and multi-purpose safety standard
lighters equipment f. Conform to applicable flammability
f. Flammable fabrics standard under the Flammable Fabrics
Act
g. Prohibits the importation of articles
g. Foods, cosmetics, etc. * that are adulterated or misbranded
and products that are defective,
unsafe, filthy, or produced under
unsanitary conditions
h. Subject to the requirements of the
h. Foods, drugs, cosmetics, and medical Public Health Security and Bio-
devices * Terrorism Preparedness and
Response Act of 2002
i. Import requirements relating to grade,
i. Fruits, vegetables, and nuts * size, quality, and maturity
j. Articles made of gold or alloys thereof
j. Gold and silver are prohibited from importation into
the United States if the gold content is
one half carat divergence below the
indicated fineness
k. Inspection and quarantine
k. Livestock and animals requirements of the Animal and Plant
Health Inspection Service (APHIS)
l. Certain matches, fireworks, and
l. Matches, fireworks, knives knives are prohibited
m. Subject to USDA regulations and
m. Meat, poultry, egg products, and fish must be inspected by the Food Safety
and fish products and Inspection Service (FSIS)
n. Certain books, writings,
n. Obscene, immoral, or seditious matter advertisements, circulars, or pictures
and lottery tickets containing these are prohibited

8
 o. The regulations require importers to
o. Pesticides submit to CBP an EPA Notice of
Arrival that the EPA has reviewed
and approved before the importation
arrives in the United States (Prior
Notice)
p. Merchandise produced, mined, or
p. Products of convict or forced labour manufactured, wholly or in part by
means of the use of convict labour,
forced labour, or indentured labour
under penal sanctions is prohibited
from importation
q. Provisions of the Federal Seed Act of
q. Seeds 1939 and regulations of the
Agricultural Marketing Service govern
the importation into the United States
r. Must be stamped, tagged, labelled, or
r. Textile products * otherwise marked with the specific
information
s. Imports will not be released from
s. Toxic substances CBP custody unless proper
certification is presented to CBP
indicating that the import "complies
with" or "is not subject to" TSCA
requirements
t. Compliance with applicable
t. Toys and children's articles* regulations issued under the Federal
Hazardous Substances Act
u. Import regulations require wood
u. Wood packing materials * packing material to be treated and
marked
v. Must be tagged, labeled, or otherwise
v. Wool * clearly marked with specific
information
* Product categories and requirements detailed further in document

9
2.1.1 Quota Enforcement and Administration

Import quotas control the amount or volume of various commodities that can be
imported into the United States during a specified period of time. Quotas are announced
in specific legislation or may be provided for in the Harmonized Tariff Schedule of the
United States (HTSUS). More information on quota enforcement and administration is
available on the link https://www.cbp.gov/trade/quota

2.2 Import Licensing Requirements

A license or permit from the responsible agency may be necessary to import

alcoholic beverages, animal and animal products, certain drugs, firearms and ammunition,
fruits, nuts, meat and meat products, milk, dairy, and cheese products, plants and plant
products, poultry and poultry products, petroleum and petroleum products, and
vegetables. Import licenses, are imposed under various statutes for various purposes and
are enforced by six agencies. Given the nature of Pakistani exports to the US, USDA may
be the most relevant in terms of import licensing requirements.

1. Departments of Agriculture,
2. Department of Commerce (steel),
3. Department of Energy (natural gas),
4. Department of Interior (fish and wildlife)
5. Department of Justice (firearms, explosives, and drugs),
6. Department of Treasury (alcohol and tobacco).

2.3 US Ports

Ports of entry conduct the daily, port-specific operations like clearing cargo,
collecting duties and other monies associated with imports, and processing passengers
arriving from abroad. Port personnel are the face at the border for nearly all cargo
carriers and people entering the United States. Ports of entry are the level at which CBP
enforces import and export laws and regulations and implements immigration policies
and programs. Port officers also perform agricultural inspections to protect the USA
from potential carriers of animal and plant pests or diseases that could cause serious
damage to America's crops, livestock, pets, and the environment. Some of the important

10
sea freight ports of the United States are Long Beach/Los Angeles, Galveston/Houston,
Texas, San Francisco/Oakland, California, Seattle/Tacoma, Washington, New York,
New York, Jacksonville , port Everglades & Miami, Florida and Charleston, South
Carolina. The Los Angeles port handled 17.1% of the nationwide loaded TEUs and
39.6% of the west coast loaded TEUs.12

2.4 United States Customs and Border Protection (CBP)

Before September 11, 2001, the major responsibility of the former U.S. Customs
Service was to administer the Tariff Act of 1930. After 2001 Customs was merged with
other border enforcement agencies to become U.S. Customs and Border Protection. CBP
became the premier border enforcement agency with the mission of homeland security.
CBP is additionally responsible for assessing and collecting duties, taxes and fees
resulting from international traffic and trade. CBP also deals with fraudulent activities
intended to avoid the payment of duties, taxes and fees, evasion of legal requirements of
international traffic and trade, illegal international trafficking in arms, currency, and acts
of terrorism at U.S. ports of entry.

2.4.1 The Process of Entering Goods into the USA13

When a shipment reaches the US, the importer (or his/her customs broker) will
file entry documents for the goods with the port director at the goods' port of entry.
Imported goods are legally entered after the shipment has arrived within the port of
entry, delivery of the merchandise has been authorized by US Customs, and estimated
duties have been paid.

It is the importer’s responsibility to arrange for examination and release of the

goods. Goods may be entered for consumption, entered for warehouse at the port of
arrival, or they may be transported in-bond to another port of entry and entered there
under the same conditions as at the port of arrival. Arrangements for transporting the
merchandise in-bond to an in-land port may be made by the importer or his/her
designated broker or agent. Unless the merchandise arrives directly at the port where it is
to be entered, there may be additional fees by the carrier for transportation to that port.
Arrangements of entry must be made at the US Customs port of entry prior to the arrival
of the goods. A shipment may only be entered by the owner, purchaser, or a licensed

12
https://www.portoflosangeles.org/maritime/stats.asp
13
https://www.cbp.gov/sites/default/files/documents/Importing%20into%20the%20U.S.pdf

11
customs broker. When the goods are consigned “to order,” the bill of lading, properly
endorsed by the consignor, may serve as evidence of the right to make entry. If the
shipment is arriving by air an air waybill may be used for merchandise. In most instances,
entry is made by a person or firm certified by the carrier bringing the goods to the port
of entry. This entity (i.e., the person or certified firm) is considered the “owner” of the
goods for customs purposes. The document issued by the carrier for this purpose is
known as a “Carrier’s Certificate.” In some cases, entry may be made by means of a
duplicate bill of lading or a shipping receipt. When the goods are not imported by a
common carrier, possession of the goods by the importer at the time of arrival shall be
deemed sufficient evidence of the right to make entry.

2.4.2 Entry of goods

Informal Entry: Informal entry can be used for most imports valued at $2,000 or less
(if the goods are not included under a quota and a few other exceptions). Informal entry
is a short customs clearance procedure of shipments of small value.
Formal Entry: Formal entry is applied to all shipments $2,000 or more in value. A
licensed Customs Broker should be used to clear all formal entry shipments. The paper
work for a formal entry is much more complex than for an informal entry. Usually a
Customs Broker can submit the necessary entry documents electronically by way of the
Automated Broker Interface system (ABI) before the shipment has actually arrived, using
the bill of lading, packing slips, importer’s EIN (Employer Identification Number), a
power of attorney and relevant invoices.

2.4.3 Determining Duty Rates

All goods imported into the United States are subject to duty or duty-free entry in
accordance with their classification under the applicable items in the Harmonized Tariff
Schedule of the United States (HSTUS). When goods are dutiable, ad valorem, specific, or
compound rates may be assessed.

Ad Valorem Rate: Type of rate most often applied as a percentage of the value of the
merchandise, such as five percent ad valorem.
Specific Rate: Specified amount per unit of weight or other quantity, such as 5.9 cents
per dozen.
Compound Rate: Combination of both ad valorem and specific rates, such as 10
percent ad valorem plus 0.7 cents per kilo.

12
Free of Duty or Dutiable Rates of duty for imported merchandise may vary depending upon
the country of origin. Most merchandise is dutiable under the most-favored-nation—
now referred to as normal trade relations—rates in the General column under column 1
of the tariff schedule. Merchandise from countries to which these rates have not been
extended is dutiable at the full or “statutory” rates in column 2 of the tariff schedule.
Free rates are provided for many subheadings in columns 1 and 2 of the tariff schedule.
Duty-free status is also available under various conditional exemptions which are
reflected in the Special column under column 1 of the tariff schedule. It is the importer’s
responsibility to show eligibility for a conditional exemption from duty. One of the more
frequently applied exemptions from duty applicable to Pakistan occurs under the
Generalized System of Preferences (GSP).

The harmonized tariff system offers duty rates. In addition to the Harmonized Tarriff
Schedule available on the USITC website, the website also offers an interactive Tariff
Database that offers an idea of the duty rate for a product. The actual duty rate of the
item imported may be different due to the attributes of the product. CBP has the final
authority in determining duty rates. For very specific duty information on products,
Importers may request a binding ruling from the CBP.

2.4.3.1 Binding Rulings14

The CBP offers the Binding Rulings program under which the CBP issues binding
advance rulings and other legal decisions with regard to the import of merchandise into
the United States. Advance rulings allow the importers to understand how the CBP will
treat the transaction/import. For example, a ruling letter may inform the importer about
the tariff classification or appraised value of merchandise, exclusion of merchandise from
entry etc. It is important to note that in the Binding Rulings Program, the tariff
classifications are binding but the duty rates are not.
The CBP requires the following information to process a binding ruling:
a. The names, addresses and other information of all interested parties (if known)
b. Manufacturer ID code (if known)
c. The port(s) at which the merchandise will be entered (if known)
d. A description of the transaction; for example, an import of a product from a certain
country

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e. A statement that there are, to the importer’s knowledge, no issues on the commodity
pending before CBP or any court
f. A statement as to whether classification advice has previously been sought from a
CBP officer, and if so, from whom, and what advice was rendered, if any
g. A request for a tariff classification should include a complete description of the
goods. Samples, drawings, other illustrative material that can further elaborate the
products, costs, uses of the prospective import, any other information that can help
the CBP understand the product better.
h. Importers will generally receive an answer in 30 days. The initial ruling received can
be protested.

2.4.4 CBP Recommendations for Faster Clearance of Merchandise15

The CBP suggests the following for faster clearance of merchandise.

1. All information required on customs invoices must be filled out.
2. Invoices should be prepared carefully and typed clearly. There should be sufficient
space between lines and the data should be within each column.
3. Invoices must contain information that would appear on a well-prepared packing list.
4. Each package should be marked and numbered so it can be identified and
corresponded with marks and numbers on the invoice.
5. Show a detailed description on your invoice of each item of merchandise contained
in each individual package.
6. Country of origin marking must be conspicuous unless goods are specifically
exempted from such marking requirements.
7. Compliance with provisions of any special laws of the United States that may apply
to your goods, such as laws related to food, drugs, cosmetics, alcoholic beverages,
radioactive materials, and others.
8. Work with CBP to develop packing standards for commodities.
9. Consider shipping on a carrier participating in the Automated Manifest System
(AMS).
10. Consider working with a licensed customs broker who participates in the Automated
Broker Interface (ABI).

2.4.5 Packaging-Requirements and Ways to Expedite Inspection16

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 Working with CBP to develop packing standards that will permit effective CBP
examinations with a minimum of delay, damage, and cost. A critical aspect in facilitating
inspections is how the cargo is loaded.
 Loading cargo into pallets or consolidated units facilitates CBP examinations and
allows for quick cargo removal.
 Loading up the container to leave space at the top of the container and an aisle
down the center to allow access by a narcotic detector dog is advised by the CBP.
It helps CBP officers to decide which packages should be examined and whether
other requirements are met. NOT packing a combination of different types of
goods. Combination packaging makes it impracticable for CBP officers to
determine the quantity of each type of product in an importation. Such packing
can also lead to a variety of other complications in the entry process.
 The CBP advises against comingling-combining articles. If required, the
combination packaging must be orderly with a separate invoice for each type of
goods. Comingled lots run the risk of being assessed at the highest rate of duty
applicable to items in the lot if CBP officers can not readily determine the quantity
and value of each item in the lot without physically separating them.
• The U.S. strictly monitors packaging materials coming into the country to protect
agriculture industries from insects and pests. All raw wood used in packaging,
including pallets, must comply to the ISPM15 standard (International Standards
for Phytosanitary Measures #15)
• To demonstrate compliance, all raw materials need to show the ‘debug’ symbol, 2
letter country code and unique number of the manufacturer: Example: DB - HT
GB - FC0000
• These standards do not apply to plywood, particle board or plastic.
• Show the exact quantity of each item of goods in each box, bale, case, or other
package.
• Put marks and numbers on each package and reflect these marks and number on
the invoice opposite the itemization of goods contained.

2.4.6 Customs-Trade Partnership Against Terrorism (C-TPAT) 17

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 A C-TPAT certification may be useful for Pakistani companies that have presence
in the US and work as importers of Pakistani goods. C-TPAT is a voluntary, joint
government-business partnership to help add to supply chain and increase border
security launched by the CBP in 2001. Over 11000 companies are registered with the C-
TPAT. Nearly half of the certified companies are importers. Some of the advantages of
getting C-TPAT certified are listed below:

 Access to the Free and Secure Trade (FAST) lanes at land borders and
moving to the front of inspection lines
 Lower potential of CBP exams and exemption from certain exams.
 Shorter wait at the border
 Access to the Status Verification Interface (SVI)
 Access to the Free and Secure Trade (FAST) Lanes at the land borders
 Assignment of a CBP Supply Chain Security Specialist (SCSS) to the
company
 Eligibility for other U.S. Government pilot programs such as the U.S. Food
and Drug Administration (FDA) Secure Supply Chain (SSC) program
 The potential to participate in the Importer Self-Assessment Program (ISA)

There are no fees associated with the C-TPAT program. However, there may be costs
associated with operational improvements required for certification/compliance.

2.4.7 Trade Show Supplies/Products

The CBP recommends the following for entry of products be exhibited at trade
shows.
a. Official documentation, date and location of the Trade Show, proof of being an
exhibitor
b. Documentation indicating value of items
c. Mark items "Not for Sale" or mutilate the items
d. Check with the government agency that regulates your product for any possible
restrictions or required documentation (if applicable)
e. Obtain the HTSUS code for your items
f. The United States allows for the temporary importation of commercial samples,
professional equipment and certain advertising materials by a nonresident
individual.

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 g. For supplies/goods valued over $2,500, a Temporary importation under bond on
Carnet is recommended. The ATA Carnet is an international Customs document
that a traveler may use temporarily to import certain goods into a country without
having to engage in the Customs formalities usually required for the importation
of goods, and without having to pay duty or value-added taxes on the goods.
Carnets are a security that participating countries accept as a guarantee against the
payment of Customs duties that may become due on goods temporarily imported
under a carnet and not exported as required. “ATA” stands for the combined
French and English words “Admission Temporaire-Temporary Admission.”

2.5 Charges/Fees on Imports18

Fees collected by CBP

Fee/charge Amount Other
Merchandise Processing fee 0.3464% of the Imports under FTAs or
1. Formal Entry customs value (not preferential agreements or
including duty, freight, arrangements may be exempt from
or insurance charges), the Merchandise Processing Fee.
with minimum and MPF is not applied to express and
maximum of US$25 postal shipments of less than
and US$485, for formal US$800 value.
entries

2. Informal Entry (i.e. Instead of the Ad

commercial shipments worth Valorem rates, flat rates
no more than US$2,500 and are applied depending
personal shipments, are not on whether the entry or
subject to the ad valorem release:
rate.)  is entirely automated
(US$2)
 is manual, but not
prepared by CBP
staff (US$6)
 requires any

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 preparation by CBP
personnel (US$9).
COBRA fees Commercial Vessel: US These fees are likely to be built
These are collected for $437-$5,955 (max) into the cost of shipping by the
various customs services Air/Sea Passenger: $5.5 shipping line/carrier.
including issuance of broker per arrival
permits, treatment of Dutiable Mail: $5.5 per
dutiable mail packages and dutiable packet
the processing of private
vessels, commercial trucks,
passengers and cargo.
Fees vary by mode of arrival
and may be assessed per
crossing or annually.

Harbor Maintenance Tax 0.125% Applicable to all commercial

imports arriving by vessel,
admissions into foreign trade
zones, domestic cargo shipped
through a port, and cruise ship
passengers.

Agriculture Fees19

The Animal and Plant Health Inspection Service (APHIS), part of the U.S.
Department of Agriculture (USDA), collects Agriculture Quarantine Inspection (AQI)
fees.

Fee Purpose/Legal basis Rate

AQI Aircraft Agricultural quarantine and inspection US$225.00 per arrival
Clearance services/ Food, Agriculture and
Conservation Act of 1990
AQI Agricultural quarantine and inspection US$825.00 per arrival
Commercial services/ Food, Agriculture and
Cargo Vessel Conservation Act of 1990;

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AQI Treatment Agricultural quarantine and inspection First year: US$47.00, Second
services/Food, Agriculture and year: US$95.00, Third year:
Conservation Act of 1990 US$142.00, Fourth year:
US$190.00, Fifth year:
US$237.00
Mango Import Mango research, promotion, US$0.0075 per pound
Assessment consumer/7 CFR 1206.42
Information
Paper and Paper and packaging research, US$0.00000386 per kg
Packaging promotion and consumer
Import information/7 CFR 1222.52
Assessment
Cotton Import Cotton research, promotion and Varies according to the
Assessment consumer information/ Cotton product and HTS number
Research and Promotion Act of 1989
& 7 CFR 1205
Watermelon Watermelon research, promotion and Varies according to the
Import consumer information/ Watermelon product and HTS number
Assessment Research and Promotion Act 7 CFR
1210

2.6 Labeling & Marking Requirements

Several American agencies have labeling and marking requirements for imports
entering the United States. Goods may be denied entry if they do not meet these
requirements. Following are some of the agency-specific requirements for entry of
goods into the US. CBP requires the country of origin markings to be placed on
products. U.S. customs laws require that each article produced abroad and imported
into the United States be marked with the English name of the country of origin to
indicate to the ultimate purchaser in the United States what country the article was
manufactured or produced in. These laws also require that marking be located in a
conspicuous place as legibly, indelibly and permanently as the nature of the article
permits. Articles that are otherwise specifically exempted from individual marking are
also an exception to this rule. If the article ⎯ or its container, when the container and
not the article must be marked ⎯ is not properly marked at the time of importation, a
marking duty equal to 10 percent of the article’s customs value will be assessed unless

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the article is exported, destroyed or properly marked under CBP supervision before the
entry is liquidated.
Although it may not be possible to identify the ultimate purchaser in every
transaction, broadly stated, the “ultimate purchaser” may be defined as the last person
in the United States who will receive the article in the form in which it was imported.
Generally speaking, when an article is imported into and used in the United States to
manufacture another article with a different name, character or usage than the imported
article, the manufacturer is the ultimate purchaser. If an article is to be sold at retail in
its imported form, the retail customer is the ultimate purchaser. A person who subjects
an imported article to a process that results in the article’s substantial transformation is
the ultimate purchaser, but if that process is only minor and leaves the identity of the
imported article intact, the processor of the article will not be regarded as the ultimate
purchaser. When an article or its container is required to be marked with the country of
origin, the marking is considered sufficiently permanent if it will remain on the article or
container until it reaches the ultimate purchaser. Exemptions to the marking provisions
are available at the link below:

2.6.1 Textile Products20

Labeling requirements are enforced by the Federal Trade Commission (FTC) for
textile and wool products and care labels for clothing. All textile fiber products imported
into the United States must be stamped, tagged, labeled, or marked with the following
information as a requirement of the Textile Fiber Products Identification Act.

 The generic names and percentages by weight of the constituent fibers present in
the textile fiber product, exclusive of permissive ornamentation, in amounts
greater than five percent.
 Constituent fibers must be listed in order of predominance by weight. Any fiber
or fibers present in amounts of five percent or less must be designated as “other
fiber” or “other fibers” and must appear last in this list.
 The name of the manufacturer, or the name or identification number issued by the
Federal Trade Commission of the person(s) marketing or handling the textile fiber
product. A word trademark, used as a house mark, that is registered with the
United States Patent Office may be used on labels in lieu of the name otherwise

20
FTC ‘Threading your way through the labeling requirements under the Textile & Wool Act’ ,
https://www.ftc.gov/tips-advice/business-center/guidance/threading-your-way-through-labeling-requirements-under-
textile

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 required if the owner of such trademark furnishes a copy of the Patent Office
registration to the Federal Trade Commission prior to use.
 The name of the country where the product was processed or manufactured.
 A commercial invoice is required for each shipment of textile fiber products worth
more than $500.
 Labeling requirements and products they apply on for textiles are given below:

Labeling requirements apply Labeling requirements do not apply

 Clothing, except for hats and  Upholstery or mattress stuffing that is not
shoes reused. If the stuffing is reused, the label
 Handkerchiefs must say so.
 Scarves  Outer coverings of upholstered furniture,
 Bedding, including sheets, covers, mattresses and box springs
blankets, comforters, pillows,  Linings, interlinings, filling or padding
pillowcases, quilts, bedspreads and used for structural purposes. If used for
pads (but not outer coverings for warmth, though, the fiber must be
mattresses or box springs) disclosed. In addition, if you state the fiber
 Curtains and casements content of linings, interlinings, filling or
 Draperies padding, the products are not exempt.
 Tablecloths, napkins and doilies  Stiffenings, trimmings, facings or
interfacings
 Floor coverings: rugs, carpets and
mats  Backings of carpets or rugs and pads or
cushions for use under carpets, rugs or
 Towels, washcloths and dishcloths
other floor coverings
 Ironing board covers and pads
 Sewing and handicraft threads
 Umbrellas and parasols
 Bandages, surgical dressings and other
 Flags with heading or that are
products subject to the federal Food,
bigger than 216 square inches
Drug and Cosmetic Act
 Cushions
 Waste materials not used in a textile
 All fibers, yarns and fabrics, but product
not packaging ribbons
 Shoes, overshoes, boots, slippers and all
 Furniture slip covers and other outer footwear.
furniture covers
 Headwear, including hats, caps or
 Afghans and throws anything worn exclusively on the head

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  Sleeping bags except woolen caps
 Antimacassars (doilies)  Textiles used in handbags or luggage,
 Hammocks brushes, lampshades, toys, feminine
 Dresser and other furniture hygiene products, adhesive tapes and
scarves adhesive sheets, cleaning cloths
impregnated with chemicals, or diapers
 Socks and hosiery

The disclosure requirement applies only to fibers in yarns, fabrics, clothing and
other household items. If part of the product is made from a non-fibrous material, such
as plastic, glass, wood, paint, metal or leather, these do not have to be included on the
label. That includes the contents of zippers, buttons, beads, sequins, leather patches,
painted designs, or any other parts that are not made from fiber, yarn, or fabric. Fibers
comprising 5% or more of the fiber weight should be disclosed. Fibers of less than 5%
weight, except recycled wool or wool, may be disclosed as other fiber or other fibers and
not by their generic name of fiber trademark.

Trim, linings (unless used for warmth), small amounts of ornamentation and the
threads that hold the garment together, may not require labeling although the label may
need to disclose that the stated fiber content is exclusive of decoration or ornamentation.

The FTC provides information about labeling requirements including

requirements under the US Fair Packaging and Labeling Act. The act applies to
consumable goods. Other regulations apply to textiles, clothing, wool, fur and leather.
The FTC’s publication “Threading Your Way Through the Labeling Requirements
Under the Textile and Wool Acts", is a user-friendly source of information on these
rules and is available at www.business.ftc.gov/documents/bus21-threading-your-way-
through-labeling-requirements-under-textile-and-wool-acts.
The labeling requirements do not apply until the products are ready for sale to
consumers. Items shipped or delivered in an intermediate stage of production and not
labeled with the required information must include an invoice disclosing the fiber,
country of origin, manufacturer or dealer identity, and the name and address of the
person or company issuing the invoice. If the manufacturing or processing of the
products is substantially complete, the products are considered ready for sale. Even if
small details like hemming, cuffing or attaching buttons to garments are yet to be
finished, the products still would require labeling.

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2.6.2 Wool Products21

Products that contain any amount of wool such as clothing, fabric, blankets, yarns
and other items are covered by the Wool Act and Wool Rules. There is overlap between
the Wool and Textile requirements. Wool products are any products that contain a
portion of wool, including recycled wool. Some products exempted from the Textile Act
and Rules such as socks, slipper and hats are covered by the Wool Act if they contain
wool. Carpets, rugs or mats, upholsteries which are covered by the Textile Act and Rules
are exempt under the Wool act and rules even if they contain wool. Articles
manufactured more than 20 years prior to imports are also exempted from the tagging
and labeling requirements given below.

a. The percentage of the wool product’s total fiber weight, exclusive of

ornamentation not exceeding five percent of the total fiber weight of:
 Wool,
 Recycled wool
 Every fiber other than wool if the percent by weight of such fiber is at least
five percent
b. The aggregate of all other fibers. The percent of the wool product’s total weight
composed of any non-fibrous loading, filling, or adulterating matter.
c. The name of the manufacturer or importer. If the importer has a registered
identification number issued by the Federal Trade Commission, that number may
be used instead of the individual’s name. A commercial invoice is required for
each shipment of wool products exceeding $500 in value. The provisions of the
Wool Products Labeling Act apply to products manufactured in the United States
as well as to imported products.

Most imported articles of foreign origin arriving in the United States are required
to be marked identifying their country of manufacture. The marks must be in the English
language, as legibly, indelibly and permanently as the nature of the article will permit and
must be of adequate size. This requirement informs the ultimate purchaser of the article
in the United States where the article was manufactured, processed or grown. Below are
labeling requirements for certain product types.

21
FTC: Threading your way through the labeling requirements of the Textile & Wool Act https://www.ftc.gov/tips-
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2.6.3 Food and Pharmaceutical Products22

Labeling for food stuffs and pharmaceuticals should be submitted to the US Food
and Drug Administration for approval, before shipments are made. The FDA regulates
food labeling in the United States. The FDA also provides labeling requirements for
dietary supplements, cosmetics, drugs (both prescription and over-the-counter), medical
devices, devices that emit radiation and animal foods. Manufacturers must list all
ingredients in order from most to least prevalent and also list nutritional information.

 FDA does not have a pre-market approval system for cosmetic products or
ingredients, with the important exception of color additives and
cosmetics and products and ingredients.
 FDA maintains the Voluntary Cosmetic Registration Program (VCRP) for
cosmetic establishments and formulations. This program is voluntary, but it
is highly recommended.
 FDA’s labeling requirements are extensive and can be found on
www.fda.gov. A summary of some import food labeling requirement is
given below. These requirements are not exhaustive. Any product that is to
be imported should be researched in greater depth using the information
on the FDA website and exploring necessary inspections associated with
the product to be imported.

Food must be labeled in the following manner:

 Place the statement of identity, or name of the food, and the net quantity
statement, or amount of product, on the Principal Display Panel (PDP) of
the product and on the alternate to the principle display panel.
 The Nutrition Facts label may be placed together with the ingredient list
and the name and address (name and address of the manufacturer, packer,
or distributor) on the PDP.
 Unless the name given is the actual manufacturer, it must be accompanied
by a qualifying phrase which states the firm's relation to the product (i.e.,
"manufactured for "or "distributed by").
 Street address must be included if the firm’s name and address are not
listed in a current city directory or telephone book. For products

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business/Tariffs-and-regulations

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 manufactured outside the US, only the city and country of origin are
required to be listed.

2.6.4 Special marking requirements for certain products

The following articles and their parts are expected to be marked legibly and
conspicuously to indicate their origin by die-stamping, cast-in-the-mold lettering, etching
(acid or electrolytic), engraving, or by means of metal plates that bear the prescribed
marking and that are securely attached to the article in a conspicuous place by welding,
screws, or rivets:
a. Knives
b. Clippers
c. Shears
d. Safety Razors
e. Surgical Instruments
f. Scientific and Laboratory Instruments
g. Pliers
h. Pincers
i. Vacuum Containers

2.6.4 Commercial Food Products

The USDA regulates U.S. commercial food supply, its packaging and labeling
through the Food Safety and Inspection Service (FSIS). The FSIS Labeling and
Consumer Protection requirements are available at the following link:
https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling.
Most labels on retail packages of meat or poultry must be pre-approved by the FSIS.
The Labeling procedures are further detailed on the FSIS website at.
www.fsis.usda.gov/Regulations_&_Policies/Labeling_Procedures/index.asp
Further information on some products relevant to Pakistan is given below:
 Fruits, Vegetables, and Nuts23
Certain agricultural commodities, including: fresh tomatoes, avocadoes, mangoes,
limes, oranges, grapefruit, green peppers, Irish potatoes, cucumbers, eggplants, dry
onions, processed dates, prunes, walnuts, filberts raisins, and olives in tins must meet
United States import requirements relating to grade, size, and quality. These

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 commodities are inspected; an inspection certificate must be issued by USDA’s Food
Safety and Inspection Service to indicate import compliance. Additional restrictions
may be imposed by the USDA’s Animal and Plant Health Inspection Service, under
the Plant Quarantine Act, and by the Food and Drug Administration under the
Federal Food, Drug and Cosmetic Act. Imported foods regulated by the FDA, such
as confectionery, dairy products, poultry, eggs and egg products, meats, fruits, nuts
and vegetables, are also subject to other agencies’ requirements

2.6.5 Pesticides, Fungicides, Chemicals

The EPA (www.epa.gov) deals with protection of the environment in the U.S. If
your product contains chemicals that may come under the U.S. Toxic Substances Control
Act, it may need special labeling.
Any product that purports to be a pesticide, fungicide, rodenticide or anti-microbial
agent is subject to the U.S. Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), which
is under the authority of the EPA. (This excludes products associated with cosmetics or
over-the counter drugs, which are under the FDA.) More information on labeling is
available in the EPA’s Label Review Manual,
to www.epa.gov/oppfead1/labeling/lrm/chap-03.pdf. The rules governing the FIFRA
are in Title 40, Part 152 of the CFR. For details, refer
to www.gpo.gov/fdsys/search/pagedetails.action?collectionCode=CFR&searchPath=T
itle+40%2FChapter+I%2FSubchapter+E%2FPart+152&granuleId=&packageId=CFR
2007title40vol1&oldPath=Title+40%2FChapter+I%2FSubchapter+E%2FPart+152&f
romPageDetails=true&collapse=true&ycord=162, which will allow you to reference the
document online.

2.6.6 Consumer Products Safety Commission (CPSC)

The CPSC, at www.cpsc.gov, is responsible for the proper labeling of various
hazardous substances and articles. The CPSC oversees compliance with the
requirements of the CPSIA (Consumer protection Safety Information Act, detailed in
Section 3 of the document) These rules can be found in Title 16, Part 1500 of the CFR;
for details, refer to www.gpo.gov/fdsys/pkg/CFR-2012-title16-vol2/pdf/CFR-2012-
title16-vol2-sec1500-135.pdf . The CPSC is also responsible for the labeling
requirements of flammable products.

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3.0 Legislation and Agencies
3.1 Important Laws24

Exporters should be aware of the following laws and requirements to be fulfilled

while exporting products to the US.
3.1.1 The Public Health Security & Bio-Terrorism Preparedness & Response Act

All food imported into the United States, for human and animal consumption, is
subject to the requirements of this Act. The products subject to the provisions of this act
include food, drinks, chewing gum and products used as components for consumable
products. Under the BTA, manufacturers and shippers register the facilities from which
they export food and food products to the U.S. with the Food and Drug Administration.
Manufacturers and shippers must also provide the FDA with prior notification (PN) for
any food shipment covered by BTA regulations. Failure to provide the PN will result in
refusal of the food importation, which could cause the shipment to be held, delayed,
exported or destroyed. More information on BTA and requirements is available at
www.FDA.gov

3.1.1 The Import Milk Act

Permits are required to import cheese, milk and dairy products subject to the
provisions of this act. The imports are overseen by the FDA and the USDA. The
imports are governed by the Import Milk Act.

3.1.2 Federal Food, Drug and Cosmetic Act

Import of food, drugs, devices, and cosmetics is governed by provisions of the

Federal Food, Drug, and Cosmetic Act. The FDA administers this Act. The act
prohibits import of articles that are adulterated or misbranded and products that are
defective, unsafe, filthy, or produced under unsanitary conditions. The term misbranded
includes statements, designs, or pictures in labeling that are false or misleading or that fail
to provide the information required in labeling. The Act also prohibits the importation of
pharmaceuticals that have not been approved by the FDA for admission into the United
States. Imported products regulated by the FDA are subject to inspection at the time of

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27
entry. Shipments found not to comply with its laws and regulations are subject to refusal;
these shipments must be brought into compliance, destroyed, or re-exported.

3.1.3 Flammable Fabrics Act

All apparel, fabric/interior furnishings, mattresses & mattress pads, carpets and
rugs, childrens’ sleepwear etc. must conform to US flammability standards.

3.1.4 Agricultural Act

Pursuant to Section 204 of the Act, imported textiles and textile products may, in
addition to labeling requirements, also be subject to quota, visa, export-license or other
entry requirements, including declarations that identify the fabricated components.

3.1.5 Toxic Substances Control Act (TSCA)

This act regulates the manufacturing, importation, processing, commercial

distribution, use or disposal of any chemical substances or mixtures broadly defined in
Section 3 of TSCA. Section 3 specifies that certain substances be excluded from the
definition of “chemical substance” based upon their use. These substances include, but
are not limited to foods, drugs, cosmetics and active ingredients in pesticides.
Importations will not be released from CBP custody unless proper certification is
presented to CBP indicating that the import “complies with” or “is not subject to” TSCA
requirements, or it has already been identified as a food, drug, or active pesticide
ingredient.

3.1.6 Consumer Product Safety Improvement Act

CPSIA expanded and introduced new certification requirements for consumer

goods imported into the United States for consumption, warehousing or for distribution
in commerce. These certificates are required to accompany all imports. However, it is the
responsibility of the shipper to comply with the requirements.

Commodities Covered
Consumer goods regulated by the CPSC include but are not limited to arts &
crafts supplies, bicycles, children’s cribs & other children’s furniture, children’s
clothing, electrical items, fire safety equipment, holiday decorations, home heating
equipment, household products, indoor air purifiers, outdoor power equipment,

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 playground equipment, pool & spa equipment, recreational & sports equipment
and toys.
CPSC administered mandatory standards
Consumer products manufactured on or after 2008, which are subject to a
Consumer Product Safety Commission (CPSC) administered mandatory safety
standard, rule, ban, or regulation is subject to the requirement of a certificate.
Types of Certificates Required Under this Act
 Third Party Test Certificates for children’s products: Children’s products
are generally defined as a consumer product designed or intended primarily for
children 12 years of age or younger. Importers of such products will be required
to have a product tested by a CPSC accredited independent or third-party test
facility. Based on such testing, a certificate will be issued evidencing compliance.
 General Conformity Certificates for all other products: The CPSIA also
requires domestic manufacturers or importers of non-children’s products to
issue a General Certificate of Conformity (GCC). These GCC’s apply to
products subject to a consumer product safety rule or any similar CPSC rule,
ban, standard or regulation enforced by the Commission. The general
conformity certificate must certify, based on a test or a reasonable testing
program that a product complies with all standards or regulations applicable to
the product. The certificates must accompany the shipment of such products.
The certificate is not required to be filed with the entry, but must be furnished
upon request to the CPSC and CBP.

CPSIA has identified new standards for certification of consumer products. These
standards follow different requirements and timelines that should be considered in the
certification: Lead Standards that began February 2009: including paint and other
surface coatings and Phthalates Standards that began February 2009.

3.2 Relevant Agencies

Questions about Agency

Import regulations affecting all products U.S. Customs and Border Protection
entering the U.S. (CBP) www.cbp.gov
Agricultural commodities, meat and live Food and Drug Administration (FDA)
animal products, dairy products, dietary www.fda.gov
supplements, cosmetics, drugs (both U.S. Department of Agriculture (USDA)
prescription and over-the-counter), www.usda.gov

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medical devices, items that emit radiation
and animal foods
Consumer products safety regulations and Consumer Products Safety Commission
voluntary standards (CPSC) – www.cpsc.gov
Federal Trade Commission (FTC)
www.ftc.gov
Products that may be considered toxic or Environmental Protection Agency (EPA)
hazardous to the environment such as www.epa.gov
pesticides, fungicides, rat poison or
antimicrobial agents
Patented and trademarked products U.S. Patent and Trademark Office
(USPTO) – www.uspto.gov
Tax collection and tax laws Revenue Service (IRS)
www.irs.gov
Safety-related certification, validation, Underwriter Laboratories (UL)
testing, inspection, auditing, advising and www.ul.com
training services

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4.0 Business practices

 A business suit is advisable for meetings. Business attire varies by

industry/market. For example, the IT industry tends to dress more casually than
financial services.
 It is advisable to have US presence. Buyers in the United States are more
comfortable dealing with Pakistani companies that have US offices, agents,
warehouses etc.
 Consider investing in a professional website, brochures etc. that convey
information on the capabilities and experience of the company. A professional
designed website is a must in today’s world. Importers are unlikely to take a
company seriously which does not have a website. The content of the website
should address key questions a buyer may have i.e. MoQs, shipping time,
production capacity, compliance with standards, certifications, past clients,
existing customers, volume of exports, office locations, licenses, registration,
memberships of associations, etc.
 It is useful to have a US Phone number. Services such as Vonage or Magic Jack
can provide this option at a fairly low cost.
 Plan the appointments at least six weeks in advance. Businesses have their
calendars booked months in advance. It is useful to confirm the appointments 24-
48 hours in advance of the appointment.
 Buyers will expect to know pricing, logistics, production capacities, M.o.Qs during
a meeting.
 Follow up emails should be prompt and comprehensive.
 Contract details, delivery times must be honored.
 The US clients expect the highest standards of customer service. The US
buyers/companies have a multitude of choices when it comes to sourcing and will
change suppliers if they experience poor customer service or quality.

4.1 Written communication

 Avoid sending unsolicited sales faxes to businesses in the US. US law prohibits
sending faxed sales messages without the prior approval of the importer/buyers.
Buyers do not like to waste fax paper and receive unwanted faxes.25

25
Guide to successful marketing and selling to US importers, US Embassy Bangladesh,
http://www.bdembassyusa.org/uploads/US%20Market%20Tips.pdf

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  Avoid email addresses such as gmail.com, Hotmail.com, yahoo.com etc. American
businesses are used to business email addresses and are suspicious of free email
addresses. Not having an appropriate business email may be considered lazy and
unprofessional.
 Most companies do not respond to phone calls. However, the option to leave
voicemails exists. It is important to have a rehearsed, succinct 30 second message
to leave a voicemail. Be mindful of the American pronunciation of words. For
example, words such as route (ra-u-t not root), schedule (skedul not shed-ule). Z is
pronounced zee and not ‘zed’ by Americans.
 When emailing sales letters start with something that will catch the buyer’s
attention for ex. Last year our company exported 3 million USD worth of …… to
California. Research indicates that buyers rarely read past the 1st paragraph.
 While communicating, avoid using phrases that may be construed as flattery such
as ‘your good self’, ‘your esteemed company’, ‘dear respected sir’. Keep the
communication concise, clear and modern. Avoid pushing an expectation, (i.e.
Looking forward to your favorable/prompt response’ or ‘ASAP’). Avoid using
terms like ‘thanking you in anticipation, thanking you in advance’. Use ‘yours
sincerely’ instead of ‘yours faithfully’. Avoid using ‘to whom it may concern’ when
emailing or sending letters to prospective buyers. Do not use abbreviations. Avoid
using "B. Rgds" for "Best Regards" and ‘Thx” for "Thank You".
 Avoid spelling and grammatical errors in emails/sales letters.

4.3 Business Guides for more information26

More information on doing business with the United States is available through
various free business guides. These cover subjects such as legal guidelines,
accounting, information on tax laws etc. Some are listed below:

a. Baker & McKenzie: Legal Guide to Doing Business in the US

b. Deloitte: International Tax & Business Guide for the USA
c. Ernst & Young: The Inbound Guide to US Corporate Tax
d. Gallet Dreyer & Berkey, LLP: Doing Business in the USA
e. HLB International: Doing Business in the United States
f. KPMG: Investing in the US:

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https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/United-States-of-America/Doing-
business/Tariffs-and-regulations

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5.0 Dispute Resolution

5.1 Precautionary Measures

While exporting, Pakistani businesses occasionally run into companies or
individuals engaging in fraudulent practices. Here are some helpful tips for protecting
yourself engaging in an import/export transaction.

 Ask for their legal business name and name of company owner
 Get all offers in writing and independently verify credentials. You can do so by
running a business search on the appropriate Secretary of State website to see if
they are an officially registered US business and to obtain more details. For
example, if the company you wish to do business with is located in California, you
can run a search on the following website: https://businesssearch.sos.ca.gov
 The EIN, Employer Identification Number is available for publicly listed
companies free of cost but for private companies, a paid search may determine
whether the company is a valid company or not.
 Do not fully trust information you find on independent websites. Government
websites which typically end in “.gov” will give you the most up to date and
reliable information.
 Look for possible red flags:
o Missing contact and location information on their website. One can
ascertain the veracity of the location information on google maps. For
example if the company lists their address as Encino, CA, it is not an actual
street address and just a city and state. Also be aware of companies that
only give a P.O. Box number. Additional location information must be
requested.
o Outdated copyright footer
o Sales person not disclosing his/her last name and phone number
 Try to get payment through an irrevocable letter of credit or cash on delivery.
 Beware of fine prints, and the terms and conditions buttons on websites.

5.2 Dispute Settlement Options

If despite careful research, disputes still arise, the following measures can be taken
for dispute resolution:

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  Report the Fraud to Law Enforcement
o Local Law Enforcement – Contact the local law enforcement office
where the company you conducted business with is located and file a police
report.
o District Attorney – Contact the local District Attorney’s Office.
o State Attorney General – Contact your state’s Attorney General’s Office
to report the fraud. Find contact information at www.naag.org
o Federal Law Enforcement – Contact the local FBI Field Office or submit
an online tip at www.tips.fbi.gov. Look up the local field office
www.fbi.gov/contact-us/field.
 Report the Fraud to the Federal Trade Commission
o Federal Trade Commission—Contact the FTC's Complaint Assistant.
o Lodging a complaint with the FTC will also enter the fraud into the
Consumer Sentinel Network so that law enforcement can stop ongoing
fraud and track these crimes. Please note that this process will not initiate a
criminal investigation of your case.
o Complaining to the Better Business Bureau.

5.3 Means of Dispute Resolution

The United States legal system offers 4 ways to settle disputes: Litigation,
Arbitration, Mediation and Collaborative Law.

5.3.1. Litigation
The federal court system has three main levels: district courts (the trial court),
circuit courts which are the first level of appeal, and the Supreme Court of the United
States, the final level of appeal in the federal system. There are 94 district courts, 13
circuit courts, and one Supreme Court throughout the country.
https://www.justice.gov/usao/justice-101/federal-courts
The Judicial Process
U.S. litigation has some unique features not present in most other legal systems. These
include class actions, punitive damages, and contingency fees. Each of these features is
briefly described below. More complete descriptions can be found on this link:
http://www.metrocorpcounsel.com/articles/3664/explaining-us-commercial-litigation-
system-foreign-executives-and-lawyers

Class Actions: In federal court, and in most state courts, a plaintiff is allowed to sue as a
representative of a large class of people who have all been injured in the same way by the

34
same actions of a defendant. If certain conditions are met, the law will allow one or more
shareholders or buyers to sue as representatives of the whole class, without all the other
members of the class formally becoming parties to the lawsuit.

Punitive Damages: In certain kinds of cases, juries are also entitled to award punitive
damages, which are intended to punish the defendant for certain types of improper
conduct. Some states place very strict limits on a jury's ability to award punitive damages,
while in other states punitive damage awards by juries are much more common.

Contingency Fees: Unlike lawyers in the rest of the world, United States lawyers are
permitted to represent a client based on a contingency fee agreement. This means that
instead of billing for his or her time as the case progresses, or a flat fee, the lawyer's fee is
"contingent" on some recovery after trial or by settlement. In that case the lawyer
receives a percentage of the recovery (one-third is typical); but if the case is lost, the
lawyer gets nothing. This, however, is very rare and it is hard to find lawyers that work on
a contingency basis.

Litigation is a cumbersome and expensive process. It required hiring an Attorney who

bills by the hour. For claims smaller than $4,000, you may consider filing a claim in the
Small Claims Court.

Small Claims Court

Small claims court is a special court where disputes are resolved quickly and
inexpensively. The rules are simple and informal. Lawyers are not allowed to represent
parties in hearings at the Small Claims court but either party may consult a lawyer before
or after court. Anyone aged 18 years or older may sue in the Small Claims Court. In
general, an individual cannot ask for more than $10,000 in a claim. Businesses and other
entities cannot ask for more than $5,000. The limit on businesses does not apply to sole
proprietors who are treated as ‘natural persons’ or individuals. One may file as many
claims as you want for up to $2,500 each but one can only file 2 claims in a calendar year
that are for more than $2,500.

5.3.2. Arbitration
Arbitration in the U.S. is governed by U.S. Arbitration Act, 1996. It provides for
settlement of disputes through an institutional arbitration body or any other specialized
entity, in the U.S. or abroad. The parties are allowed to establish place of arbitration as
well as the language. Arbitration options may be listed in the contract.

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5.3.3. Mediation
The Mediation Act 2015 establishes important rules on use of mediation in U.S.
and provides parties with an adequate level of predictability and assurance as to the
institute’s advantages, procedures, possible consequences, etc. It encourages mediation
regardless of the commencement of court litigation.

None of the options listed above offer guaranteed results. Pakistani businesses may have
greater risk in the US than US businesses in Pakistan for the following reasons:

a. None of the options above may get the exporters’ money back.
b. Litigation, the most expensive of options, will culminate in a judgment only.
Even if the Pakistani businesses win their case, there is no guarantee of
payment/ execution of judgment if the defendant declares bankruptcy or does
not have the capacity to pay.
c. The Better Business Bureau/Federal Trade Commission and some of the other
options listed above may result in negative consequences for a fraudulent
company but will not result in recovery of lost funds by the complainant.
d. Unlike Pakistan, where the Government authorities tend to step in to resolve
disputes faced by foreign companies with Pakistani companies, the US
Government does not intervene or influence a private dispute. A common
misperception amongst Pakistani businesses is the expectation that Commercial
Sections/Consulates can persuade the host country’s government to intervene in
the case of fraud against the Pakistani companies. Such a notion is incorrect and
the US agencies do not take any responsibility for fraud committed by a private
firm.
e. An out of court settlement may be affected by hiring a lawyer and making a
strong case as long as the respondent/defendant has the capacity to pay.
However, as stated earlier, lawyers’ fees in the US are expensive.

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