Doing business

(Last updated: 25 Jun 2008)
 

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

In conjunction with the market profiles, the Opportunities Online portal may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, identified by our overseas network to Australian businesses.

Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.

For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.

Business etiquette

Business tips

Business practices:

• When dealing with US business people the use of Australian slang should be avoided as it may lead to confusion and misunderstanding. Ensure you use American spelling on materials targeted at the American market, eg. color not colour.
• In the USA, business attire is very important and projects the image of your company. US business people are generally quite sensitive to dress standards, so it’s wise to err on the conservative side. A business suit is appropriate for meetings and most trade shows.
• Academic credentials are not necessary on business cards. Americans will be more impressed with your understanding of the market, your product, and their company. It is recommended that phone and fax numbers on your business cards should have the International Country Code dialling details.
• Face-to-face business meetings are an important element of doing business in the USA.

Other suggestions which will help achieve successful results are:

• Plan appointments at least a month to six weeks in advance, or as soon as you know your travel details.
• Voice mail is used by companies across the USA as a filtering device. Messages are often never returned. Have a rehearsed message ready so that if you are required to leave a message it is a quality and succinct selling message.
• Confirm appointments the day before and never arrive at an office unannounced.
• US business people will rarely leave their office to meet you, so meet them at their office or at a venue of their choice.
• Ensure that all necessary information is readily available, including your pricing CIF, delivered, production capabilities and trading terms.
• Remember that your first price is just the starting point for negotiating - the US entity will expect several offers and counter-offers before a mutually acceptable price is reached.
• Involve a lawyer to check any contract reached.
• Make sure you clarify what you understand to have taken place at a meeting because Americans are generally courteous and positive in listening to your presentation, which can give a false impression of interest (or commitment) on their part.
• Conclude the meeting with the understanding that you will follow-up - don’t rely on the US businessperson to make the next move.
• Fast and comprehensive follow-up is essential - in any follow up go over who you are and when you met as the buyer may meet several hundred sellers a month.
• Promised delivery dates and production quantities must be honoured.
• Smoking in most offices is prohibited.

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

US tariffs are not unusually high by world standards. The US Customs Service and a number of Government agencies regulate goods imported to the USA. Non-compliance may result in delays, extra costs, litigation and even prohibition. Comprehensive information on US tariffs can be obtained from the website of the US International Trade Commission.

The rate of duty customs assesses on a particular commodity imported is not binding for future shipments of the same or similar merchandise. USA customs has a binding ruling program whereby importers can request a written ruling as to the proper classification, and applicable rates of duty.

Requests for tariff classification rulings should be addressed to:

US Customs
Director, National Commodity Specialist Division
U.S. Customs and Border Protection
Attn: CIE/Ruling Request
One Penn Plaza-10^th Floor
New York, NY 10119

or to any service port office of CBP

Customs brokers are licensed by the US Department of the Treasury and assess tariff classification, quota compliance, and anticipation of difficulties in the entry of products you export to the USA. Austrade's USA team can help you find a customs broker to suit your exporting needs.

Import regulations can and do change without notice.   Australian exporters to the USA are advised to keep in contact with customs related information through the US Customs and Border Protection website which provides comprehensive information.  The US Customs and Border Patrol provide several publications on importing that are valuable reading for new exporters to this market.

Tariff classification

All goods that enter the USA are categorised according to the Harmonised Tariff Schedule. Classification determines how much duty will be collected. It is a complicated process requiring the application of the General Rules of Interpretation: the section, chapter and subheading notes, and the explanatory notes. The importer is responsible for properly classifying merchandise before entry.

If you are unsure how to properly classify an item, a request for a binding rule can be made to US Customs. The rulings will be binding at all ports of entry unless revoked by the Headquarters' Office of Regulations and Rulings. The Customs Service will not issue binding rulings in response to oral requests. Oral inquiries may be made to customs offices regarding existing binding rulings that might cover your importation.

Non-tariff barriers

The US Food and Drug Administration (FDA) Regulations covering food (human and animals) exports to the USA have changed. New Bioterrorism Act regulations came into effective on 12 December 2003. Food exporters that do not comply with these regulations will have their goods refused for entry to the United States. Austrade recommends that exporters access the following links and follow the necessary procedures to meet export compliance rules under these new regulations.

The US Food and Drug Administration (FDA) have published the interim final rules for Facility Registration and Prior Notice to Import.

Please note the following exemption: Truck terminals and other stationary facilities that serve merely to assist transportation vehicles in the process of transporting food are not required to be registered with FDA. For the purpose of the registration Interim Final Rule, truck terminals and freight forwarders that are part of the transportation network and have possession, custody, or control of food for the sole purpose of facilitating its transport are not required to be registered with FDA.

FDA acknowledges that this response is not completely consistent with certain prior guidance.

The Department of Agriculture, Fisheries and Forestry has reviewed the two interim final rules, and provides the following supplementary information. Please note, although the information provided below should assist most people to comply with the Bioterrorism Act regulations, it is recommended that individual exporters review the two interim final rules to determine how the rules will affect their individual trade, or potential trade with the USA.  Please note, these rules apply to food (human and animal) exported to the USA including all its States and Territories.

Further information on the two interim final rules, including registration form and instructions for completing the form, are available. The two FDA fact sheets on these interim rules provide information on the requirements of the two rules.

The following comments are in addition to the detail provided in the FDA fact sheets. Fact sheets can be found at:

• www.cfsan.fda.gov/~dms/fsbtac12.html
• www.cfsan.fda.gov/~dms/fsbtac13.html

New information about Bioterrorism regulations on the AFFA website is also available:

• Registration process
• Prior notice to import

Product liability

Product liability is an issue that can cause concern for business operations in or exporting to the United States. Exporters need to assess the risks associated with their product and industry and determine the measures necessary to limit exposure to product liability lawsuits. Advice from lawyers and specialists in product liability is recommended.

Import restrictions

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

• alcoholic beverages
• animal and animal products
• certain drugs (Note: narcotic drugs are generally prohibited)
• 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
• vegetables

There are also restrictions on the importation of certain trademarked and copyrighted articles. For further information see Customs Publication No. 549 US Customs and Protection of Intellectual Property Rights.

The following items must comply with applicable regulations of other US Government agencies:

• art materials
• cultural property
• hazardous/toxic/flammable materials
• household appliances
• some electronic products
• toys and children's articles

Today, an increasing number of goods and products such as textiles, clothing, automobiles, boats, radios, CD players, television and medical devices, are subject to special standards, declarations, certification, marking or labeling requirements. Other merchandise must be examined for fitness of use, freedom from contamination, or may be subject to quotas on the quantity imported.

All these requirements must be met before the merchandise may be released from Customs.

Many categories of goods are subject to quota or visa restrictions. The US Customs Service has a brochure on Import Quotas for a complete list.

There are no foreign exchange restrictions on payments for imports and only limited import licensing. However, there are special technical requirements concerning issues such as safety and quality that apply to certain goods, such as motor vehicles and electrical equipment.

Product certification, labelling and packaging

The Federal Trade Commission, the Food and Drug Administration (FDA), and the Department of Agriculture all have guidelines that must be met depending on the product.

• All imported products are inspected by US Customs to ensure that appropriate packing and labelling requirements are met.
• Goods subject to different rates of duties should be packed separately unless they can be easily identified and separately both physically and on the import documents.
• Packages containing mixed goods may otherwise be assessed for total duty at the highest rate applicable to any of the contents.
• Strict regulations govern both the distribution in commerce and labelling of any packaged consumer commodity, including the manner of specifying and indicating net contents.
• Food items must list all ingredients in order from most to least prevalent and must list nutritional information.
• Textiles and apparel must list country of origin, fibre content, and fabric care instructions. The US Federal Trade Commission has produced a guide to help companies comply with federal labelling requirements for textiles and wool products. This guide is essential reading for companies involved with exporting textiles and clothing to the USA.
• Apparel items are subject to labelling and flammability requirements and articles containing fur or wool have additional labeling requirements.
• Samples of labels for cosmetics, foodstuffs and pharmaceuticals should be submitted to the US Food and Drug Administration for approval, before shipments are made.
• US customs laws require each imported article produced abroad to be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article permits, with the English name of the country of origin, to indicate to the ultimate purchaser in the USA the name of the country in which the article was manufactured or produced. Articles which are otherwise specifically exempted form individual marking are an exemption to this rule.

Most US retailers require Universal Product Codes (UPC) bar codes, rather than the bar coding system used in Australia called EAN International. If you are exporting to the USA, you are advised to join EAN Australia and then apply for a UPC.

Documentary requirements

The US Customs authorities are very precise about import documentation being provided completely and accurately. Any defalcation can cause major problems, risking delays or seizure of goods. The services of a competent customs broker is therefore strongly recommended.

Documentation requirements can be extensive and may include commercial invoice, certificate of origin, bill of lading, packaging list and special certificates. The US Customs Department suggests that to speed customs clearance, the import community and the Customs Service have created the Customs Automated Commercial System (ACS), which electronically receives and processes entry documentation and provides cargo disposition information. Cargo carriers, customs brokers, and importers may use the system, which reduces clearance time from day to hours or even minutes. Persons entering into the importing trade who intend to file their own entry documentation with customs are encouraged to explore this method of transacting business.

The US Customs Service suggests the following approach for faster customs clearance:

• Include all information required on your customs invoice.
• Prepare your invoices carefully. Make sure that your invoices contain the information that would be shown on a well-prepared packing list. Type them clearly and allow sufficient spaces between lines. Keep the data within each column.
• Mark and number each package so that it can be identified with the corresponding marks and numbers appearing on your invoice.
• Show a detailed description on your invoice of each item of merchandise contained in each individual package.
• Mark your goods legibly and conspicuously with the country of origin unless they are specifically exempted from country-of-origin marking requirements, and with such other marking as is required by the marking laws of the USA.
• Comply with such provisions of any special laws of the USA that may apply to your goods, such as laws relating to food, drugs, cosmetics, alcoholic beverages, radioactive materials and others.
• Observe the instructions closely with respect to invoicing, packaging, marking, labeling, etc. sent to you by your customer in the USA.
• Establish sound security procedures at your facility and while transporting your goods for shipment.
• Consider shipping on a carrier participating in the Automated Manifest System.
• If you use a licensed customs broker for your transaction, consider using a firm that participates in the Automated Broker InterfacPro-forma invoice.

Public health requirements

The US Department of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS), Veterinary Services (VS) regulates the importation of animal and animal-derived materials.

All meat and meat products must be processed in establishments approved customs and must be covered by an appropriate certificate.

Imported livestock, including cattle, swine, horses and sheep and goat - as well as semen or embryos from these species - must be accompanied by a health certificate issued by an official of the exporting country. Similar requirements apply to poultry - including chickens, geese, ducks, pigeons and a number of other species.

Generally, a USDA veterinary permit is needed for materials derived from animals or exposed to animal-source materials. Materials which require a permit include:

• animal tissues
• blood
• cells or cell lines of livestock or poultry origin
• RNA/DNA extracts
• hormones
• enzymes
• monoclonal antibodies for IN VIVO uses in non-human species
• certain polyclonal antibodies
• antisera
• bulk shipments of test kit reagents
• microorganisms including bacteria, viruses, protozoa and fungi

Health certificates indicating inspection and treatment are required for bees, live or dead, related products and beekeeping equipment.

Plants and plant products (including fruit and vegetables) are strictly controlled. Some are prohibited and others require permits from the USDA. Imports of these items must be covered by an appropriate certificate issued by the approved authority in the country of origin.  In addition to possible inspection and disinfection, fruit and vegetables may be required to undergo prescribed treatments for fruit flies or other harmful insects as a condition of entry, or to meet other special conditions.

Importation of milk and dairy products is subject to stringent regulations requiring import permits, licences and adherence to quotas and must comply with requirements of the USDA, APHIS, and VS. Livestock disease prevention requirements are necessary in addition to the requirements of the FDA.

Foods, cosmetics and pharmaceuticals are subject to regulations governing standards, composition, use of colouring matters, labelling, printing and claims of efficacy. 

Federal law requires all packaged foodstuffs to list ingredients on the label. Information concerning the nutrition value of the contents is also required.

Weights and measures

US weights and measures system in the US imperial measurements: inch, foot, mile; ounce, pound; 128 fluid ounces per US gallon. The short tonne of 2000 lb is usually used (1 cwt =100 lb.). If used in documents etc., the term tonne should be defined.

Taxation

Many states impose a sales tax at the point of sale. The rate varies between states and even between counties.

Income tax and corporate tax laws apply. Advice from taxation professionals is suggested for Australians establishing a business presence in the USA. There are several relevant publications available. Ernst and Young, have a publication entitled ‘Doing Business in the USA’, which provides overviews of the US tax systems. Other accounting firms provide similar publications. The US Small Business Administration provides direct links to state based tax information.

Information on changes made in early 2003 to the Australian and US Double Taxation Treaty are now available from the Treasury Department.

General tax information:

• Excise and regulatory taxes apply to a range of products.
• Retail sales tax is levied by states and municipal bodies, and vary considerably.

Advice on your tax liability situation should be obtained from professional tax advisers, accountants, or lawyers The IRS can also provide advice in this area. The Australian Taxation Office can advise on Australian tax implications.