New Practice Tools for Representing Importers

July 26, 2016

BankruptcyTwo new chapters to help business counselors represent importers have recently been added to Business Transactions Solution on Westlaw.  The first chapter, titled Purchasing Goods in Foreign Markets (Business Transactions Solution §§ 279:1 et seq.) covers supply and purchase arrangements by a relating to the procurement of goods and materials from a supplier in a foreign country that will be incorporated into the purchaser’s manufacturing activities. The purchased goods and supplies may become part of the purchaser’s finished products or may be used in equipment owned or leased by the purchaser to manufacture its products.  This chapter assumes that the purchaser is based and operating in the U.S.; however, many of the lessons would apply to purchasers in other countries.

The chapter provides a description of the key reasons for foreign procurement activities and the steps that a prospective importer should take to select and evaluate foreign vendors. The potential hidden cost of cross-border purchasing is discussed, including the time and expense necessary to comply with additional legal and regulatory requirements in the U.S. and in the country of origin and to mitigate the risks associated with selecting goods in a distant location and transporting them to the U.S.  The chapter also covers the role of counsel and other outside specialists in assisting U.S. companies regarding foreign procurement and analyzes the key business and legal issues that arise in drafting and negotiating an international purchase-of-goods contract including topics such as the specification of the goods, price and payment terms, shipping and delivery requirements, warranties and dispute resolution procedures.

Gutterman WLEC bannerThe specialty forms library in the chapter includes an international purchase agreement (§279:61); standard terms and conditions for international purchases (§279:62) and a sample of a code of conduct for foreign supplier (§279:63).  Useful checklists and questionnaires in the chapter for counsel’s tool kit for assisting clients with international purchasing activities include a checklist of issues relating to compliance with U.S. customs laws and procedures (§279:65); a checklist of legal issues relating to international sourcing (§279:66) and a foreign supplier pre-assessment questionnaire (§279:67).  Additional practice tools available in the chapter include an executive summary for clients regarding international sourcing (§279:68); training materials for business counselors on the role of counsel in global sourcing (§279:69) and the Business Counselor’s Guide to Import Planning (§279:70) from the Business Counselor’s Mini-MBA Program.

Business counselors working in the import area will need to understand how to help their clients comply US customs laws and regulations, a topic covered in the second new chapter on Import and Customs Law Compliance (Business Transactions Solutions §§272:1 et seq.).  The primary regulatory authority in the US with respect to imports is the United States Customs and Border Protection (“CBP” or “Customs”), which is part of the US Department of Homeland Security.  The overall mission of Customs includes protecting the nation’s revenue by assessing and collecting duties, taxes and fees incident to international traffic and trade; controlling, regulating, and facilitating the movement of carriers, people, and commodities between the US and other nations; and protecting US consumers and the environment against the introduction of hazardous or noxious products into the US; protecting US industry and labor against unfair foreign competition; and detecting, interdicting, and investigating smuggling and other illegal practices aimed at illegally entering narcotics, drugs, contraband or other prohibited articles into the US.  In addition, Customs is involved with detecting, interdicting, and investigating fraudulent activities intended to avoid the payment of duties, taxes and fees, or activities meant to evade the legal requirements of international traffic and trade; and for detecting, interdicting, and investigating illegal international trafficking in arms, munitions, currency, and acts of terrorism at US ports of entry.

Customs law is actually a complex set of statutes, rules, procedures and regulations that are located in a variety of sources.  In addition to the statutes and regulations pertaining to determination and collection of customs duties, there are numerous laws and regulations pertaining to import transactions, particularly those that deal with various aspects of international traffic and trade.  Moreover, given that imports present serious and substantial homeland security issues for the US, a plethora of restrictions and procedures have been adopted to reduce the risk that terrorists will use US ports to import dangerous and illegal items into the US.  All of the laws and regulations currently enforced by Customs can be accessed at the Customs website. In addition, the Government Printing Office (“GPO”) publishes Customs Regulations of the United States in loose-leaf format and makes it available by subscription.

The specialty forms library in the new chapter includes examples of import and customs laws compliance policies and procedures, communications tools for vendors and service providers regarding cargo security procedures and an example of a policy regarding country of origin marking and labeling requirements.  The chapter also includes a checklist of questions for satisfying reasonable care standard under informed compliance principles, a checklist of possible legal remedies in a gray market situation, the importer self-assessment handbook published by Customs, Customs’ best practices of compliant companies and five components of effective internal controls, an executive summary for clients regarding Customs’ informed compliance and the Business Counselor’s Guide to Customs Compliance from the Business Counselor’s Mini-MBA Program.

Titles by Alan Gutterman