Import Licensing: Everything You Need to Know
Import licensing provides protection from legal disputes and financial losses for businesses engaged in international trade. 3 min read
Import licensing provides protection from legal disputes and financial losses for businesses engaged in international trade. An import license is a permit to import an indicated quantity of certain goods over a specified period of time (typically one year). Such licenses limit outflow of foreign currency, foresee entry of unsafe items and substances, and guard domestic economy from foreign competition.
How to Apply for an Import License
Import licenses can be acquired from the United States Customs and Border Protection Agency. The type of imported goods determines the license requirements. For example, to import petroleum, you only need an import authorization, whereas a license is needed to import food. All imported items are subject to tariff charges.
To get an import license, complete the following steps:
- Get an Employer Identification Number from the IRS if you plan to import goods under your business's name, or use a Social Security number for importing as an individual. If you have neither of these numbers, fill out the U.S. Customs and Border Protection Form 5106 to apply for a new importer number.
- Buy a surety bond to insure your high-value goods during shipment.
- Check with the country's consulate if the shipping country is in good trade standing with the U.S. Otherwise, you might have to wait for the resolution of the issues between the countries. Regardless of good standing, the shipping country can have its own requirements for moving goods out of the country.
- Choose a port of entry for your goods among the U.S. 300 ports. Note that tariffs vary between different ports.
- Apply for an import license from the regulatory agency that deals with the type of goods that you plan to import. For example, contact the Food and Drug Administration for food imports.
International Import Permit or License
The U.S. is one of the few countries not restricting import and requiring no import license, except for certain categories of products, like human body parts, firearms, and others. Most countries impose limitations on certain goods and demand import permits.
Before importing products:
- Find out from your supplier whether you need an import license and ask for an assistance in getting one.
- Because it is the shipper's responsibility to comply with the country's import laws and regulations, make sure to get a written statement from your shipper stating this explicitly. Though the shipper will be responsible in case of a violation of the country's laws, you should still familiarize yourself with importing conditions of that country. Consider working with a seasoned international lawyer to help you draft an import contact that will protect you from damage.
- Check with UPS or FedEx about any documents needed for the clearance and delivery of your goods on time. Both companies are up-to-date on customs regulations for all countries, including complete lists of prohibited and restricted goods for each country.
- In addition, check import information with the local government's International Trade Administration Office.
License for an Import-Export Business
International imports and exports are regulated and taxed by the Department of Commerce. The U.S. uses an effective tariff system to successfully raise its revenue.
For an import-export license:
- Obtain a Company Identification Number (CIN), used by the Department of Commerce to track your international trade activities.
- Obtain an export license. Learn for which products you need a license and for which you do not.
- Obtain an import license from each country that you plan to export to.
- Obtain the appropriate U.S. import license for your specific products.
Agreement on Import Licensing Procedures
The Agreement on Import Licensing Procedures states that import licensing should be straightforward, clear, and predictable. It requires governments to make all adequate information publicly available so traders understand the granting process for licenses. According to the agreement, countries must make the WTO aware of any changes in import licensing procedures.
The agreement outlines protocols for automatic licensing so as to not limit trade by administrative procedures. Thus, it limits an application's handling time by the agencies to 30 days and to 60 days for reviewing all applications simultaneously.
A section of the agreement discusses the importance of a reasonable distribution of licenses to new importers, especially those bringing products from developing and the least-developed countries.
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