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CUSTOMS BARRIERS

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One of the important keys to understanding many aspects related to customs and its application in logistics or transport is to understand the role of customs and its objectives. A clear understanding of this concept will allow us to more safely develop our Foreign Trade operations, in the event that we have physical products travelling to our customer.

Customs creates certain barriers to the importation of goods, by means of

  • Definition of limits or quotas for a given product to be imported. 
  • Tariffs, which are tax barriers that establish a fee to be paid during the nationalisation process in a country or single market, which results in a price increase of the product. 
  • Administrative barriers: permits, licences, product quality standards, para-customs controls (Health, Pharmacy, SOIVRE, etc.) 

The first step is to correctly identify our product

To do this, we need to know the corresponding tariff code, which is a set of digits that identify the goods within the tariff nomenclature, and which in fact constitutes an international language in terms of customs identification of goods. 

TARIC code 

The countries of the European Union use TARIC codes to classify products and goods for foreign trade operations. 

TRADE AUTOMATION SERVICES

It is a DHL tool that contains the largest database on customs clearance and foreign trade covering the regulations of 64 countries, i.e. more than 98% of international trade. 

WHAT CAN BE CONSULTED IN TAS (TRADE AUTOMATION SERVICES)?

  • Estimated costs Customs regulations.
  • Trade restrictions.
  • TARIC code search.
  • Documentation Available through the WEB of DHL or via WEB Services integration.

Export requirements according to the type of goods:

Knowing your product well will help you to know what requirements it has to meet for export and, in this way, you can ensure that it reaches its destination in the best possible way.

WITHIN THE DIFFERENT TYPES OF GOODS, IT IS IMPORTANT TO EMPHASISE THE FOLLOWING GROUPS:  

  • Restricted and prohibited goods.
  • Dangerous goods.
  • Special goods.
RESTRICTED AND PROHIBITED GOODS
  • There are goods that are restricted or even banned by customs in some countries. You can consult the DHL tool, TAS (Trade Automation Services) which makes it possible to check the entry limitations of the product in the country to which it is to be exported.
  • There are many restrictions on shipments of weapons, cash, illegal drugs, animals or furs and restricts, under specific conditions, the shipment of other goods such as alcoholic beverages, pharmaceuticals, credit cards, jewellery or antiques. 
DANGEROUS GOODS
  • The following are considered dangerous goodsproducts or substances that are likely to endanger health, safety, property or the environment. 
  • These items are subject to specific security measures and regulations for their transport and are included in the IATA Dangerous Goods Lists for air transport or ADR for land transport.

The types of dangerous goods include products such as explosives, gases, flammable liquids or solids, but also those which, although they do not appear to be dangerous, can cause damage during the shipping phase, such as equipment with lithium batteries, perfumes, aerosols or cleaning products.

  • These goods must be transported with proper packaging and labelling, as well as specific documentation, for which the shipper is responsible. 
  • At the time of shipment, the shipper must be aware of the regulations on the transport of dangerous goods and prove, by means of an authorisation, that he has been informed and is aware of the type of product he is exporting.
SPECIAL GOODS
  • There are certain goods that are considered special, which due to their importance in the country's economy and the type of goods must meet more requirements for export, as many countries require specific documentation for this type of goods.
  • For foodstuffs, it is essential that the shipment meets specific preservation requirements and, in addition, that its integrity is guaranteed.

Customs barriers are restrictions that governments of countries establish at their borders to control the entry and exit of goods and services. These barriers can take different forms and can be applied to both the import and export of goods and services.

SOME OF THE MOST COMMON CUSTOMS BARRIERS ARE:

  1. Tariffs: These are taxes levied on imported products. Tariffs can be specific (applied as a fixed amount per unit) or ad valorem (applied as a percentage of the value of the product).
  2. Import quotas: Quotas are limits on the amount of products that can be imported into a country during a specific period of time. Quotas can be global (they apply to all imports of a particular product) or specific (they apply only to a country or group of countries).
  3. Technical regulations: These are technical and quality standards that must be met before a product can be imported into a country. These regulations may include labelling requirements, safety and quality testing, and other technical requirements.
  4. Non-tariff barriers: These are customs barriers that are not import duties or quotas. They may include licensing requirements, import prohibitions, inspection requirements and other regulatory requirements.

Customs barriers can be a significant barrier to international trade and can increase the cost of imported and exported goods. International businesses should be familiar with customs barriers and work to comply with the regulations of the destination country to avoid delays and additional costs.

HERE ARE SOME PRACTICAL EXAMPLES OF CUSTOMS BARRIERS:
  1. Tariffs: For example, a country may impose a 25% tariff on imported electronic products, which means that a company importing electronic products will have to pay a 25% tax on the value of the product when it enters the country.
  2. Import quotas: For example, a country can set an annual import quota of 10,000 tonnes of rice, which means that any rice imports in excess of that amount will be subject to an additional tariff.
  3. Technical regulations: For example, a country may require imported cars to meet certain safety and emissions standards before they can be imported into the country. If an automobile manufacturer does not comply with these requirements, it may be banned from importing its vehicles into the country.
  4. Non-tariff barriers: For example, a country may ban the import of products containing certain ingredients, such as beef treated with growth hormones. Any company importing such products would be subject to fines and penalties.

These are just some of the common customs barriers that companies doing international business may face. To avoid problems with these barriers, companies should make sure to comply with the regulations of the destination country and work with international trade experts who can help navigate the complex regulatory landscape of international trade.

How can I use chatgpt to find out what customs barriers a company that wants to internationalise to several countries has?

  1. Do an online search to find out which countries the company wants to expand to.
  2. Once you have identified the destination countries, you can ask ChatGPT about the customs barriers that exist in each of them. For example, you can ask: "What customs barriers exist in [destination country] for the import of [company's product or service]?"
  3. ChatGPT will provide you with general information about customs barriers in each country, such as tariffs, taxes, restrictions and documentation requirements. However, please note that this information may vary depending on the specific product or service the company wishes to export.
  4. In addition to using ChatGPT, you can also search for information on government and international trade websites for each destination country. You might also consider consulting an international trade expert or hiring a customs broker to help the company navigate customs barriers and other aspects of international trade.

I hope you find this information useful. If you have any further questions, don't hesitate to ask ChatGPT!

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TASK

CASE STUDY TO ILLUSTRATE HOW CHATGPT COULD BE USED TO IDENTIFY THE CUSTOMS BARRIERS A COMPANY WOULD FACE WHEN TRYING TO INTERNATIONALISE TO MULTIPLE COUNTRIES

Suppose a US technology company called XYZ wants to expand into three countries: Mexico, Brazil and Japan. The company manufactures high-end electronic products and wants to export them to these markets to increase its international presence.

TO IDENTIFY THE CUSTOMS BARRIERS THAT XYZ MIGHT FACE WHEN TRYING TO ENTER THESE MARKETS, A COMPANY REPRESENTATIVE DECIDES TO USE CHATGPT IN THE FOLLOWING WAY:
  • "Hello ChatGPT, what are the customs barriers in Mexico for the import of high-end electronic products?"
CHATGPT PROVIDES THE FOLLOWING INFORMATION:

"Customs barriers in Mexico for the importation of high-end electronic products may include import tariffs, value-added taxes, excise taxes, certification and testing requirements, and rules of origin. In addition, the company must ensure that it complies with all regulations and documentation requirements when importing electronic products into Mexico."

  • "And what are the customs barriers in Brazil for the import of high-end electronic products?
CHATGPT PROVIDES THE FOLLOWING INFORMATION:

"Customs barriers in Brazil for importing high-end electronic products may include import tariffs, value-added taxes, excise taxes, certification and testing requirements, and rules of origin. In addition, the company must ensure that it complies with all regulations and documentation requirements when importing electronic products into Brazil."

  • "I understand, ChatGPT, and what are the customs barriers in Japan for the import of high-end electronic products?
CHATGPT PROVIDES THE FOLLOWING INFORMATION:

"Customs barriers in Japan for the import of high-end electronic products may include import tariffs, value-added taxes, excise taxes, certification and testing requirements, and rules of origin. In addition, the company must ensure that it complies with all regulations and documentation requirements when importing electronic products into Japan."

With this information, the XYZ representative can begin to prepare for the customs barriers that the company would face in trying to enter these markets.

The company might consider hiring a customs broker or international trade expert to help them navigate country-specific regulations and requirements. Also could consider adjusting their export strategy to comply with these regulations and reduce the impact of customs barriers on their operations.

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