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International trade supports about 218,000 jobs in New Mexico — about one in five jobs — at companies of all sizes, according to the New Mexico-based Business Roundtable. While exports bring money to New Mexico producers in an obvious way, imports also bring money to the state by supplying materials that keep the state’s manufacturers and retailers competitive.
In 2010, 1,056 New Mexico companies imported products to sell or use in manufacturing. Nearly 64 percent of these importers were small businesses with fewer than 20 employees.
Businesses new to importing can save money by using the services of trade professionals and learning the lingo of international trade.
Go with the pros: Using a customs broker is essential for saving money and time when arranging imports. A customs broker knows the ins and outs of international trade the way an attorney knows how to navigate the legal system. She can help the importer avoid costly fines, delays and storage problems that confound inexperienced do-it-yourselfers. Freight companies offer these same services, but they’re often based outside the state and aren’t familiar with the specific challenges of importing and moving freight in New Mexico.
Know what the price includes: Before deciding to import goods, the business should be clear about what the price includes. Few suppliers quote a price based on “delivery duty paid,” which means the importer has to pay some or all shipping costs. Product price should be based on the “landed cost” of the imported goods: It should include all duties, taxes and transportation costs associated with getting the goods from supplier to importer.
Classification matters: Correct classification is the only way to accurately determine duty rates, as foreign suppliers often inadvertently use the wrong code. Classification codes are found in the Harmonized Tariff Schedule of the United States, an online reference tool. Responsibility for getting it right falls on the importer.
Smoothing entry: The importer needs to be sure the customs broker or freight forwarder files the importer security filing, or ISF, required by U.S. Customs at least 24 hours before the goods are loaded onto a ship. This is the financial and legal responsibility of the importer, not the exporter or shipping company. No such requirement governs air shipments, but that is likely to change. Failure to file the ISF — or to file it correctly — can result in a penalty of $5,000 to $10,000.
Review freight quotes: The importer — or a trusted professional representative in the United States — should review freight quotes provided by the supplier, as the importer might be able to arrange a cheaper, safer or more efficient alternative. The importer, for example, can sometimes cut costs by having imported products shipped “free on board,” which means they’re delivered to a stateside dock or warehouse for pickup. A customs broker can help with this and also make sure the supplier doesn’t confuse the state of New Mexico with the nation of Mexico — a surprisingly common misunderstanding that creates problems for our state’s importers.
For more information about importing goods into New Mexico, visit intlimportbrokers.com/resources.
Finance New Mexico is a public service initiative to assist individuals and businesses with obtaining skills and funding resources for their business or idea. To learn more, go to FinanceNewMexico.org.