International Trade

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INTERNATIONAL TRADE GUIDE

Are you ready to be a global success?

Congratulations on deciding to take the plunge and investigate how your business can benefit from entering the global marketplace!

BizLink Orange is pleased to offer this guide to help you embark on your exporting or importing journey.  There is a lot to consider when getting started, and we know you may feel overwhelmed reviewing this information.

Fortunately, you don’t need to do this by yourself.  Orange County recognizes the challenges of getting started in international trade and has funded the Central Florida International Trade Office since 2014 to help guide you through the exporting and importing process and to connect you with other international trade resources and local service providers.

Furthermore, Metro Orlando is already finding international success!  In 2018, the region exported goods valued at $3.6 billion to 224 countries and imported $13.6 billion in goods from 233 countries around the world.

This success is not surprising given the great access we enjoy to the world.  Orlando has on its doorstep one of the busiest international airports in the nation – the Orlando International Airport – as well as two cargo ports – Port Canaveral and Port Tampa Bay – with easy access to two smaller international airports in the region and two other major ports within under four hours’ drive.

There’s no better time to get started than now!


EXPORTING

7 Steps to Exporting Success

Exporting is not simple, but neither was starting your business.  It is part of the human condition to be risk averse, so organizations like the Central Florida International Trade Office and sites like BizLink Orange are here to help you understand what you are getting into, including both the benefits and the costs of exporting, and to provide counselling on what your business needs to do to prepare for export success.

And remember, you are not alone:  Many other Central Florida companies have already achieved success exporting.  For example, did you know that Metro Orlando businesses exported $3.6 billion in goods to 224 markets in 2018?

Step 1:  Preparing for Success

While there are many myths about exporting, there are many more reasons small businesses should start exporting.

Ultimately, this is about you, and for you to be a successful exporter, you will need to first define what success means for your business and what is it that you want to get out of exporting.  Only you can determine your objectives should be, but some common goals will be to:

  • Increase sales and profitability by selling abroad
  • Better manage risk through market diversification (for example, another country may enter a recession months or years after the USA or recover more vigorously after a downturn)
  • Extend product life by entering markets where a product may still deemed new or innovative
  • More fully utilize production capacity
  • Smooth out business cycles (esp. for seasonal products – remember that when it is winter in Florida, it is summer in the southern hemisphere!)
  • Increase value of your intellectual property (by licensing abroad)
  • Once you have an idea of what you want to get out of exporting or importing, then the next step will be to develop an export plan to help everyone in your business to understand what it is you are looking to achieve and what the business will need to do to achieve success.Before starting to research export opportunities, you should undertake an assessment of your company’s export readiness.
    • You may find working through a questionnaire to be helpful to this evaluation.
    • If the business is not yours, don’t forget to get buy in from the owner or senior management!

    And when you are getting ready to export, don’t forget to consider protecting your intellectual property before you start trying to make your first foreign sale.  You worked hard to develop your product or idea, and you don’t want someone at a trade show to grab a sample and copy it or your potential distributor to think it is such a great idea that they decide to make it themselves.

    • Protecting your intellectual property will require working with an attorney who knows how to register your rights internationally, with experience in the countries that you want to sell into.
    • You can learn more about protecting your intellectual property on the website of the World Intellectual Property Organization, including on:
      • Patents (the right to make your product)
      • Trademarks (protection of a feature that identifies your product – e.g., a logo)
      • Industrial design (a distinctive ornamental aspect of your product)
      • Copyright (the right to reproduce a creative work)

Step 2:  Finding the Right Market

  • The world is a big and diverse place, so you’re going to need to research your market!
    • Identifying the right market(s) abroad is similar to finding the right market(s) here in the U.S.: you need to undertake market research and competitive analysis to find customers and a market advantage.
    • The Florida Small Business Development Center at UCF can help your company prepare an Export Marketing Plan (EMP), and Enterprise Florida will provide a grant to eligible Florida companies that will cover all but $500 of the costs of this EMP.
    • If you are already exporting and looking to identify new export markets, then the International Trade Administration’s Market Diversification Tool provides a starting point to supplement your market research.
    • Country Commercial Guides provide reports on market conditions, opportunities, regulations and business customs prepared at U.S. Embassies around the world.
  • The International Trade Administration also provides market intelligence by country and by industry
  • HS coding is the internationally standardized system of names and numbers used to classify internationally traded products.
  • To get a reliable answer for exporting, it is best to work with a customs broker (fee for service), but for the purposes of doing market research, you can get away with consulting a guide on product classification or conducting a search of the S. or European Union tariff codes for a general idea.
  • Just remember that only the first six digits of the tariff codes you find there are the only ones that are internationally agreed and that can be relied upon for undertaking market research.
  • Global credit rating companies like Coface provide information on country risks and assessments of country business climates.
  • You will need to understand any product safety, quality or conformity regulations on imports for the market that you are seeking to enter.
  • Thanks to trade liberalization, greater opportunities may be found in the 20 countries with which the U.S. has free trade agreements.
    • What is access to the market like?

Answers to these questions are complex and may require consulting with experts, but they are intended to give an idea of what you will need to consider in deciding whether to export to a particular market.

      • How will access of American products compare to those of domestic manufactured goods? Or as compared to exports from other markets?
  • Does the United States have a free trade agreement with the market you want to sell into? This may help level the playing field in competing with domestic producers and possibly provide an advantage vis-à-vis competitors from countries that do not have a free trade agreement
  • Do your competitors from another country benefit from a free trade agreement with the market you want to sell into? You may be placed at a competitive disadvantage if your competitor has duty-free access to a market where U.S. exports have to pay a duty at the border.
      • What duties (or tariffs) will your product face at the border?  These border taxes may be expressed as a percentage of the value of the goods you are shipping (ad valorem duties) or be a fixed amount per unit of export (specific duties), e.g., $1 per pound.
  • You will need to know the country of origin of the product. Just because you are exporting from the United States does not mean that you will necessarily enjoy preferential access to the market: generally speaking, it is only products made in the United States that will enjoy duty-free access.
    • Determining origin may be simple in the case of, for example, a tomato that you grew here in Florida, but it can be more complex where you are looking to sell a product that contains components from one or more countries other than the United States.
    • NB: it is the rules on country of origin in the country to which you are exporting, not those of the United States, that will apply. Your customs broker can help with this.
    • Some free trade agreements (FTA) may include specific rules of origin in order to benefit from duty-free access to that market.
      •  Are there any quotas – which limit the number or monetary value of goods that can be imported into a country – on the product you are looking to export?
      • Are there sales taxes or value-added taxes that will be payable?
      • Are there rules or standards – e.g., product safety regulations or labelling requirements – that regulate the sale of your product in that market?
      • Are there export restrictions to that market (e.g., to North Korea or Cuba)?  (See section on Export Compliance for more information)
    • Political risk is the most complicated and will nearly always be beyond your control.  It transpires when a government changes its policies in a way that might negatively affect your business, such as new trade barriers or expropriation of goods.
  • The CIA World Factbook provides basic intelligence on the history, people, government and economy of every country in the world.

Step 3 – Marketing Your Product/Service Abroad

  • One of the biggest decisions you will need to make will be to decide on the right sales channel for your business.
  • You will need to consider how you want to sell into a market, in particular how much responsibility you want to assume for those sales.
  • One option will be direct sales, where you will handle every aspect of finding the buyer, negotiating the sale, and the exporting process. This will require the greatest investment of time and resources to achieve, but it will allow you to maximize your profits.
    • The U.S. Commercial Service’s Gold Key Service is one way to find customers interested in your U.S.-made product.
    • Enterprise Florida also offers virtual matchmaker grants to help eligible Florida businesses in several industry sectors to connect with potential customers in several key markets.
    • Another easy way to connect with potential customers – and to learn about the market for your product in other countries – is to participate in a trade show.
      • You don’t have to be an exhibitor to benefit from a trade show.
      • These shows may be specific to a country or region, or they may bring together the industry from around the world.
      • Some will require international travel, while others take place right here in the U.S.
        • Sometimes you don’t have even have to travel away from home to get to a great trade show: we are fortunate to have the nation’s second biggest convention center – the Orange County Convention Center – right in our back yard!
      • Enterprise Florida hosts many events and organizes Florida pavilions at a variety of trade shows – and they offer grants to help eligible Florida companies participate in them!
      • Do you sell food products? The U.S. Department of Agriculture maintains a list of trade shows for you!
    • Participating in a trade mission – usually organized by the federal or state government – will help raise your company’s profile with potential customers.
    • If you are planning selling in the new market yourself, then you will need to consider the local business culture.
      • Country Commercial Guides contain tips on how to do business in your target country.
      • The way you handle business relationships here in the U.S. may not be appropriate in the country into which you want to sell. For example, in the U.S., we tend to want to get down to business right away, while in many other countries, your potential customer may be accustomed to developing a personal relationship before talking business and may be offended if you skip that step.
    • Having a presence online – selling by e-commerce – is another way to connect with customers abroad.
      • Remember: what works at home won’t necessarily work around the world and you will need to develop an international digital marketing strategy.
      • Be sure your website and online presence is the best it can be to showcase your brand and your business.  Having the best possible international website means localizing it.  This will help your target international audiences to find you easily, securely and in a language and format that they recognize and to which they can relate.
          • Florida exporters can receive grants of up to $8,000 to help with localization through Enterprise Florida and the Florida Online Global Programs.
          • If you’re not sure where to start with your website for international success, check out this free SEO and performance tool, which will give you some initial recommendations for improvement.
    • Distributors and sales agents can also sell your products for you in a foreign market. The main difference between these two relationships is that a distributor takes ownership of the product and then takes care of all aspects of the sale (including the price and customer service) whereas the sales agent will make the sale on your behalf (they will generally be paid an agreed upon percentage of the sale), so ownership remains with you – but so does responsibility for customer support.
    • On that note, don’t forget to consider how you will provide customer support for your exports, particularly if you are not using a local representative.
      • Your clients will expect that you can interact with them in their language, particularly if there are technically complex issues they need to deal with.
      • Instructions on how to use your product will need to be translated (and Google translate is not a great tool for this).
      • Do you currently travel to your U.S. clients to help them with installation or use of your product? If so, then consider how you will do this for your clients overseas (including how you will communicate with them if you do not share a language in common).
      • You will also need to consider how you will handle returns – including how to potentially dispose of returned merchandise – and how you will repair products.
  • Another possibility will be to engage in indirect sales and hire someone to use their contacts to sell your products abroad. The advantage of indirect sales is that you can enter the market more quickly using someone else’s expertise, but at the cost of giving up some control over how your product is marketed and sharing some of the revenue.

You will have several options:

NB: It is strongly recommended that you consult with an attorney who has experience with international contracts and the law of the country where the party you will be contracting with resides before entering into any agreement to market your products.

  • You may want to consider bidding on international projects:
    • The export.gov trade leads database contains contract opportunities for U.S. businesses selling their products and services to foreign governments and non-governmental organizations.
    • Multilateral institutions like the World Bank or the United Nations have websites that will provide information about how to bid on projects they are funding and databases to search available opportunities.
  • As you get started, don’t neglect to establish an export marketing budget
    • You will need to determine what sort of marketing and promotion activities you will want to engage in and how much you are willing to invest in them.

Step 4 – Pricing Strategy

  • You will need to consider several issues when working on a pricing strategy: what will it cost you to sell in that market; what price will the market bear; and in what currency should you price your goods or services.
    • There are a few ways to look at pricing goods for export:
      • Cost plus pricing starts with your product costs for servicing the domestic market and then adding all additional costs related to exporting the product.  The advantage is that this is fairly simple to calculate, but it can lead to your product becoming too expensive in foreign markets.
      • Using marginal cost pricing can help you be more competitive by absorbing fixed costs already paid for in your domestic market pricing and only looking at what it will cost you to manufacture each unit for export, and then adding a profit margin.
      • Or you can look at pricing from a top-down perspective and consider what price the market will bear, deduct the profit margin and use that to determine what the cost to produce should be (and whether you can be profitable at that price point).
      • There will be a variety of costs to consider that are different for exports, including:
  • Tariffs/duties
  • Non-tariff barriers or regulatory matters – you may, for example need to change packaging to meet local rules or have to have your product certified to enter a foreign market
  • Shipping costs (see Logistics) – including for possible return of products
  • Knowing your Incoterms (see section on Incoterms under Logistics) will be important in determining what expenses should be included in the cost of exporting
  • Business travel expenses
  • Cost of market research
  • Fees for foreign sales representatives
    • The pro forma invoice is the most commonly used document to give price quotations to potential customers.  It is a preliminary bill of sale that is sent to the client before the work is completed and is usually considered binding (though the price can change prior to final sale).
    • You will also need to decide in what currency you want to quote prices/be paid.
      • Getting paid in U.S. dollars is the safest way to ensure you get the return on your sale.
  • However, this transfers the foreign exchange risk to the buyer, who also is likely to want to pay in their own currency, and accepting payment in U.S. dollars could lose you the sale.
      • Complicating your decision on foreign exchange issues is the constant fluctuation in the value of currencies in world markets
      • There are many sites online that will help convert currencies at the going rate – e.g., xe.com or Oanda
      • However, you can avoid these fluctuations and arrive at predictable pricing (in U.S. dollars) by using foreign exchange derivatives to hedge your currency risk.  Note that these derivatives come at a cost, which needs to either be factored into the price or they will reduce the anticipated profit from the sale.

Step 5 – Getting Paid

  • You will need to determine what method of payment you will want. In descending order of security for your business are:
    • If you require payment by cash in advance, then your customer will pay you before you ship the goods or perform the service. While this is favorable for you, many buyers will be reluctant to accept the risk of paying for goods or services before they are received, particularly where your competitors are willing to accept other forms of payment.
    • A letter of credit (LC) is a payment mechanism under which your customer’s bank (the “issuing bank”) guarantees payment when the documents required by the LC are presented. Because the issuing bank may be in a foreign country (and you may not have any way of knowing if their guarantee is reliable), you may wish to have your bank confirm – i.e., guarantee – the LC.  LCs are generally pretty secure, but they are also the most expensive form of payment (due to fees paid to the various banks involved).
    • A documentary collection may be useful for ongoing business relationships where you do not need the protection (and expense) of an LC. Under this arrangement, the bank holds the shipping documents against payment, i.e., your buyer cannot take delivery of the goods until after they pay for them at the bank.  However, the banks do not verify the documents and do not guarantee payment as they do with LCs (and your buyer can walk away from the transaction).
    • Another option where you already have an ongoing relationship with your foreign customer is cash against documents (CAD). Open account provides the most security for your customer and the greatest risk for you.  Under this method of payment, your customer will pay you after receipt of an invoice, usually after they have taken delivery of the goods or the services are performed.
    • Consignment of your goods – i.e., where you do not get paid until your customer sells the goods – is another option. While your customer will have possession of the goods, title remains with you until the goods are sold.  In effect, your customer acts as an agent for you (rather than as an end-user).
  • Providing credit or extending longer payment periods may help you make the sale, but you will need to consider up front the commercial risk of not being paid by your customer.
    • Consider what are the normal commercial terms in your industry for internationally traded products?
    • Undertake due diligence on your customer’s ability to pay, particularly if they will not be paying until after delivery of your product.
    • Export credit insurance – available from EXIM Bank or the SBA (for products made in the USA), as well as some private banks – will help protect your accounts receivable.
      • And if EXIM declines to insure your accounts receivable from that potential partner, then that will give you a pretty good idea of the risk involved dealing with them.
  • Other types of risk you face when exporting include:
    • Political risks – e.g., you may not get a U.S. export license or the importing country may decide to implement new regulations for a product you are exporting
    • Economic risks – e.g., foreign currency fluctuation or the letter of credit is dishonored,
    • Cultural risks – e.g., speaking different languages or corruption issues

Step 6 – Financing Your Exports

One challenge you may face exporting is that your lender may be unwilling to provide loans against your foreign receivables.  There are, however, several types of financing available to exporters to help them make those sales:

Step 7 – Export Compliance

Please note: the guidance below is provided for information purposes and is not intended as a substitute for seeking professional consultation with export compliance experts

  • Exports are regulated by the U.S. Government in order to protect U.S. national security, foreign policy and economic interests.
  • S. export regulations apply not only to your export sale but to subsequent sales as well.
  • In determining whether an export license is required, you will need to consider:
    • What are you exporting?
      • Most products and services are not specifically controlled for export and are given the classification of EAR99.

HOWEVER…

  • Trade in defense and military related technologies, products and services are regulated by the State Department under the International Traffic in Arms Regulations (ITAR)
  • Exporting “dual use” goods and services requires an export license.  These are goods and services that may have both military and civilian uses, and they are identified under the Bureau of Industry and Security’s Commerce Control List.
  • To what country will it be sent?
    • Is that country subject to an embargo or other sanctions?
    • What is the country of ultimate destination or re-export?
      • You need to know whether your buyer is going to re-export the product.
    • Who is going to receive it?
    • How will it be used?
      • You will need to know the end-use of your product to apply for an export license.
    • If you do need to secure an export license, be sure to account for applying for and obtaining the license into your delivery timeframe.
      • It normally takes 30-60 days for a license to be issued, so be sure to apply as early in the contracting process as possible.
  • The Department of Commerce’s Bureau of Industry and Security (BIS) have published Export Compliance Guidelines to help your business develop an effective export compliance program.
  • You need to always be alert to red flags in export transactions in order to ensure that you do not violate export compliance rules. For example, if a small bakery wants to place an order for sophisticated computers from you, this raises a red flag that you need to look into.
  • Other rules to be aware of:
    • The Foreign Corrupt Practices Act makes it unlawful for you or your agents or representatives to bribe foreign government officials to obtain or retain business.
    • The Anti-Boycott Act prohibits you from participating in another country’s boycott of a country friendly to the United States. (The Arab League boycott of Israel is the principal unsanctioned foreign boycott that U.S. persons must be concerned with today.)
  • You (or your shipper on your behalf) must file an Electronic Export Information (EEI) for shipments with a value greater than $2500 that are sent to any destination other than Canada.
  • Other common documentation you may need for exporting includes:
  • In addition to your exports of goods or services, you need to be aware of the need to obtain an export license for deemed exports.
    • For example, if a potential foreign client wants to come visit your manufacturing facilities or asks for technical information, if the product itself is a controlled technology, then you will need an export license.

LOGISTICS

Getting your product to your foreign buyer or from a seller abroad is similar but not identical to sending it to your customers across town or getting it shipped to your premises from across the country.  The issues you will deal with to move your product are pretty much the same, and while each of them will doubtlessly be more complex, there will be service providers who can assume the burden of shipping decisions and help make your international transactions move smoothly.

  • The most important thing to know is what are the Incoterms – short for International Commercial Terms – in your contract.
  • Incoterms provide a standardized set of terms that determine the responsibilities of buyers and sellers when shipping goods, in particular who is paying for the shipping costs.
  • These are complex and will require seeking expert guidance.  Nonetheless, in selling internationally, you will need to know the Incoterm being used in your contracts, as they will determine which party is responsible for transportation costs and for insuring the shipment, and consequently they will be a key factor in calculating the price of your product.
  • Your freight forwarder can help explain the relevant Incoterm in your contract, but you really need to know this before you sign on the dotted line in order to fully understand the contract terms.
  • Make sure that your packaging is properly marked for shipping.
  • Fortunately, you don’t have to figure out all your shipping needs alone!
    • You can outsource your entire order fulfillment operations to third party logistics (3PL) providers, which provide a full range of services including warehousing, inventory management, shipping & receiving, and freight shipping.
    • Another option would be to use freight forwarders.  They will not move the shipment themselves, but they are experts in logistics and will arrange for transportation of the shipment on your behalf.  In particular, they will help negotiate prices with the carrier and help decide the route that best meets your needs (balancing speed, reliability and price).
    • A customs broker will act as the agent for the importer in order to help streamline the entry of your shipment into the importing country.  They will know all the rules and regulations for importing into that country, and they will prepare and submit any documentation needed for customs entry, as well as ensure that customs duties are paid on entry.  The 3PL or freight forwarder you work with is likely to have an in-house customs broker.
  • Nonetheless, some of the factors you ought to consider before speaking to your freight forwarder will include:
    • How sensitive are you to the cost of shipping?
      • Speed = money:  the quicker the product needs to reach destination, the greater the cost to ship will be.
    • Where are you sending the product?
      • Most destinations will be accessible only by air or sea, but for Canada and Mexico, ground transportation (truck or rail) may also be options.
    • Speed/Reliability
      • Do you need to overnight a product?  Then you will probably want to use a courier service.
      • Is the product perishable or time-sensitive?  Then you may need to send by air cargo.
      • Make sure to tell your freight forwarder if the product needs to reach your client by a specific date.
  • Remember, though, that delays due to inspections by customs officials in the market to which you are exporting are beyond the control of your freight forwarder. So if your client wants delivery by a specific date, try to use an Incoterm – or provision in your contract – that will make getting the product through customs a responsibility of that client.
    • Product value
      • High-value products may require better security – and gentler treatment – of air cargo.
      • And don’t forget cargo insurance (see below) for higher value products!
    • Product size
      • If your product is very large, it may be too big to ship any other way than by sea.
    • Sturdiness of product
      • If the product is fragile, then air cargo may be the best option.
      • If the product is sturdy and/or well-packed, then ocean cargo may be the way to go.
      • Does the product require storage at a particular temperature range? Or humidity level?  Then it may need to be shipped in a refrigerated or climate-controlled shipping container.
    • Volume of shipments
      • It may not be worthwhile to ship low volume shipments by sea, and large volume shipments may be too expensive to ship by air.
    • Does your buyer have a customs broker to help with importing your product into their country?
      • If not, then you will need to work with a freight forwarder who can provide that service to you.
  • Cargo Insurance

You need to be ready for the unexpected and prepared for loss of your shipment en route to your buyer or before it arrives at your facilities from your seller.  Cargo insurance is not necessary, but it is highly recommended if you don’t want to assume the economic losses if something happens.

  • Carriers have to provide compensation if they are found to be at fault (and in case of acts of God – e.g., a hurricane – they are unlikely to be found liable) in losing or damaging your shipment, but their liability is limited to a calculation based on the weight or shipping unit of the shipment, not the actual value of the goods (e.g., an ocean shipper’s liability is limited to $500/container).

The Incoterms will be important in understanding where your responsibilities begin and end, and you want to consider how much coverage you want – 110% of the transaction value is common – and look at the type of cargo insurance you need.

  • All Risk is the most comprehensive form and covers all physical damage or loss from almost any external circumstance (other than certain exclusions, e.g., civil war)
  • With Average (WA) is more limited insurance that covers all losses from basic perils, as well as a partial loss from certain other  conditions
  • Free of Particular Average (FPA) is the most restrictive and only covers partial loss

NB:  Marine cargo insurance policies will require that goods must be professionally packed, and they may dictate specific packing requirements.

  • This will include appropriate packaging of the product itself (product should be well protected within its package – e.g., with Styrofoam); the packages should then fit snugly within the carton, which should be strong and moisture resistant (e.g., double-walled corrugated carton); and the cartons should be well stacked on a pallet and shrink wrapped to protect against shifting and moisture.
  • Some useful sites to consult

QUICK EXPORT GUIDE:

YOU JUST GOT A FOREIGN ORDER – NOW WHAT?

You have a terrific product or service, and word spreads.  Out of the blue, you get an e-mail message or a phone call from a client based outside the United States asking you for a quote on a purchase from them.  Your first thought might be: ok, what do I do now?

Here are some tips on how to prepare for success:

  1. Check whether the request is legitimate. This might seem rather obvious, but you will want to make sure that the e-mail is not part of some phishing scheme to get your personal information or a Trojan horse seeking to infect your computer with the latest malware.
    • If the message just wants to know more about “your product” or “your service” and it does not identify specifically what the sender is looking for, it is unlikely to be a good lead.

 

  1. What type of product or service will you be exporting? The U.S. Government regulates exports in order to protect U.S. national security, foreign policy and economic interests. Depending on the nature of your product or service, it may be need export permits.

 

There are three main categories of product or service to consider:

  • Defense or military-related – these are subject to the International Trade in Arms Regulations (ITAR).
    • These exports are heavily regulated. You can learn more from the U.S. Department of State’s Directorate of Defense Trade Controls, or you may wish to hire a professional to help you ensure that your export is ITAR -compliant.
    • Dual-use – these are goods and services that may have both military and civilian uses. They are identified under the Bureau of Industry and Security’s Commerce Control List (CCL) and require an export license.
    • Everything else (aka, EAR99) – these are not listed on the CCL and won’t necessarily need a permit for export.

 

  1. Confirm whether you can sell your product or service into the country from which the request has been made or to the individual making the request.
    • Is that country subject to an embargo or other sanctions? (Ex: North Korea)
    • Is your customer on the Consolidated Screening List? (The CSL is a list of parties for which the United States Government maintains restrictions on certain exports.)
    • You need to always be alert to red flags in export transactions in order to ensure that you do not violate export compliance rules.
      • Ex: if a small bakery wants to place an order for sophisticated computers from you, this raises a red flag that you need to look into.

(Please see section on Export Controls for more information.)

 

  1. You want to make sure you will be paid at the end of the day, so perform due diligence on the customer (and their country!).
    • The U.S. Commercial Service can perform (for a fee) an International Company Profile (background check) of your potential partner.
    • You can order a credit report from a company like Dun & Bradstreet or EulerHermes.
    • Country Commercial Guides provide reports on market conditions, opportunities, regulations and business customs prepared at U.S. Embassies around the world.
    • Global credit rating companies like Coface provide information on country risks and assessments of country business climates.

5. Once you decide you are interested in making the sale, the most important thing to do will be to find a partner to work on getting your product to your customer.

    • Finding a trusted partner for your shipping needs is worth doing before you quote a price to your client.
      • Assuming what the cost of shipping will be is very risky! Better to know up front what you are getting into.
    • If your shipment is small, then maybe working with a courier (e.g., UPS or DHL) or the U.S. Postal Service will be all you need.
    • Consider working with a freight forwarder on larger shipments: they will be able to help you with the logistics of shipping your product and getting it through customs.
      • In particular, they can help you understand (or to use the right) Incoterm in the contract and how it will affect your responsibility for shipping and insurance costs.
      • They can also help you with the documents you will need for the exports.
    • In addition to cost of shipping, you will need to discuss how much time your shipment will take – and whether you can get it to your customer in time!
      • If you will be responsible under the contract to get the shipment through customs, bear in mind that random inspections can add considerable time to delivery.

 

6. Calculate what it will cost to export your product – or for you to deliver the service – to the customer.

    • Your freight forwarder and their customs broker will be able to help identify costs such as:
      • Shipping
      • Cargo insurance
      • Tariffs (taxes at the border)
      • Sales/value added taxes that may need to be paid
      • Any regulations (e.g., labelling or product certification) or product safety standards your product would need to meet in the export market
    • Don’t forget to include:
      • Travel expenses if you will need to train your client in person on using your product or to deliver services in your client’s home country.
      • Expenses related to financing (e.g., fees for Letter of Credit or cost of accounts receivable insurance).
      • Any packing costs to prepare your goods for shipping (e.g., palletizing shipment)

 

7. Decide on the price – and how you want to be paid!

    • Just adding all the costs of exporting to the price you charge domestically may make your product too expensive: starting with the marginal cost to manufacture those extra products and then adding the export costs plus a profit margin may help you make the sale.
    • Do you want to be paid in U.S. dollars or is the local currency acceptable?
      • Consider: while you may be reluctant to take the risk of dealing with currency fluctuations, so might your potential customer.
    • When do you want to be paid?
      • Consider: being paid before shipping reduces your risk but your potential customer may not be interested in assuming the risk of receiving goods that will be shipped only after they have paid for them.
      • There are other ways to deal with payment other than being paid before shipping or on receipt of goods – e.g., a letter of credit still provides a degree of security (and while the fees for this are substantial, you can include these in the price you quote).

IMPORTING

Do you have a favorite product from your home country that you think would be a big seller here in Central Florida if you had the opportunity to introduce it to local consumers?  Or do you have a great idea and need to find a manufacturer who can produce it at a competitive price?  Or maybe there is a component for your product that is only manufactured outside the United States?  Then you might be ready to become an importer!

General Advice

As you get started importing, your logistics provider (company that will look after shipping your product) will be your best source of advice on importing.  In addition to moving your shipment from point of origin to destination, they will have a customs broker on staff who can help with classification of your product – so that you can determine what the applicable tariff will be – as well as make you aware of other rules that will affect the importation of that article.  (And unless you want to fill out and file the paperwork and obtain a CBP bond yourself, you will need to work with a customs broker for any shipments of a value in excess of $800.)  So be sure to find one that has expertise in the market you are importing from and, even more importantly, that you find easy to reach when you have a question and that whose answers you trust.  (For more information about the role of a logistics provider, please see the section on Logistics.)

Also, some suppliers will offer to take care of the importing process for you and deliver the product directly to your place of business.  This will make things easier for you, which is important as you get started, but always remember that they will be charging for this service (even if that expense is wrapped up in the price).  A great way to cut costs – particularly as you become more confident as an importer and/or start importing in greater volume – will be to take greater control of your supply chain and the shipping and import processes.

Step 1 – Familiarize Yourself with Import and Regulatory Requirements

  • When you get started importing, you will benefit greatly from working with a customs broker in order to navigate the complex rules of entry into the United States.  The cost of making a mistake is just too high to try to learn as you go.
    • If you are working with a logistics provider, then they may have a customs broker on staff already.
  • MYTH-BUSTER:  you are generally not required to have a license in order to import into the United States.
    • However, you may need a license for importing certain products (e.g., firearms), and the product may need to be certified in order to enter the United States (e.g., products that have the potential to affect human, plant or animal health).
  • The Importer of Record (IOR) is ultimately (legally) responsible for paying any duties and for ensuring that any legal requirements for entry are met.
    • Typically your business – as the purchaser – will be the importer of record, even if you are using a customs broker.
    • If you not a U.S. entity, then you will need to:
      • Establish a presence (e.g., incorporate an importing business) in the United States with a tax i.d. number, or
      • Provide a tax i.d. number for the ultimate consignee.

Product’s Country of Origin

  • The country of origin of a product refers to as the “economic nationality” of the article you are importing.
    • The country of origin is not necessarily the same as the country from which you are purchasing the product, even if the product was made in that country.
  • The country of origin can affect, among other things, admissibility, the application of preferential tariff rates, eligibility for special programs, marking requirement or the addition of retaliatory tariffs based on anti-dumping, countervailing and other trade protection needs (e.g.,  the 15%-25% tariff imposed in the U.S.-China trade war).
  • All imports (or their packages/containers) must, unless specifically exempted, be marked in a manner that will indicate the article’s country of origin to the ultimate purchaser.
  • Determining origin may be simple in the case of goods that are “wholly obtained” – i.e., grown, produced or manufactured – in a county, but it can be more complex where you are looking to sell a product that contains components from one or more countries.
    • Some free trade agreements – e.g., USMCA – may include specific rules of origin in order to benefit from duty-free access.
  • The country of origin determination is very fact-specific.  U.S. Customs and Border Protection (CBP) relies on a body of court decisions, CBP regulations and agency interpretations to determine the country of origin of imported products.
    • Your customs broker – or your logistics provider’s customs broker – should be able to help with this.
    • You may ask CBP for a binding ruling on the country of origin.
      • A binding ruling is not a court process.  Effectively, it involves asking CBP a question and they will provide an answer that is binding on them (as opposed to a customs broker providing the answer, which is usually technically correct but with which CBP can disagree).

Tariff Code

NOTE: it is important to determine the tariff code before committing to purchase a product, as this will have a major determinant effect on your costs (including duties payable and the conditions for entry into U.S. commerce).

  • The U.S. subscribes to the Harmonized Tariff Schedule of the United States (HTSUS) to classify goods for the purpose of assessing duties. The schedule’s assigned tariff classification code impacts the rate of duty applied.
  • You can perform an online search the HTSUS.  However, for many products, it is best to work with an expert – your customs broker or that of your logistics provider – as the rules can be very complex.
    • If you are buying a product that is generally available, the manufacturer may be able to help with this as the first six digits of the tariff code are universal throughout the world.
    • You can contact a U.S. Customs and Border Protection (CBP) import specialist at your local port of entry for a list of local customs brokers.
    • CBP maintains Centers of Excellence and Expertise for certain sectors (e.g., pharmaceuticals or agricultural products).
    • You may find relevant information on the CBP Customs Rulings Online Search System (CROSS).
    • If the product you are purchasing or manufacturing abroad is novel, it may require a classification ruling from CBP.
      • If you need a binding ruling on the classification, you will need to provide detailed information on the product.
        • While the ruling is binding, it is only as good as the information you provide to CBP.  That is to say, if you provide incomplete or erroneous information in your submission, then the ruling may not apply.

Tariffs and Quotas

  • Once you know the tariff code, you can find the tariff rate through an online search the HTSUS.
    • To determine the applicable tariff rate, you will need to know the country of origin.
      • Country of origin will be particularly important for determining whether the article is subject to preferential tariff rates (i.e., lower rates or duty-free).
    • The duties you will pay are based on the “dutiable value” of your merchandise.
      • This is basically the price that you paid for the articles, but it is not always the same as the invoice price.
      • If they are not already included in the invoice price of the good, then the “dutiable value” will also include:
        • Packing costs
        • Any selling commission you paid
        • Any royalty or license fees you paid
        • Proceeds of subsequent resale that you pay to the seller (e.g., if you pay $1 initially for the product and you agree to pay $0.25 per unit for each unit sold in the U.S., then the $0.25 per unit would be added to the price in determining the dutiable value)

(This list is not comprehensive but serves to illustrate some of the additional items that may be added to your invoice price when calculating duties to be paid.  Your customs broker will be able to provide a more complete answer based on your unique situation.)

    • Low value (“de minimis”) shipments – i.e., those valued at $800 or less – will enter the U.S. duty-free.
  • You will also need to determine whether you goods are subject to a quota.
    • There are three types of quotas: absolute, tariff-rate, and tariff preference level.
      • Absolute quotas impose a strict limit on the quantity or volume of goods that may enter the United States over a specific period.
      • Tariff Rate Quotas (TRQs) permit entry for a specified quantity or volume of merchandise to be entered at a reduced tariff rate during the quota period. Once the tariff-rate quota limit is reached, goods may still be entered but at a higher rate of duty.
      • Many Free Trade Agreements (FTAs) and other special trade legislation establish Tariff Preference Levels (TPLs) that CBP administers like tariff rate quotas.
    • Determining whether your import is subject to a quota is not always simple.
      • It is in the HTSUS, but that online document is very dense and it is easy to miss if you do not know what you are looking for.
      • A good solution is to contact a customs broker, a CBP import specialist at your local port of entry or a CBP Center of Excellence and Expertise.
  • You may also need to confirm whether the product is subject to any countervailing (CV) or anti-dumping (AD) duties.
    • AD and CV duties are country or company-specific.
    • These duties are imposed to ensure fair trading in the United States: CV duties are imposed to offset subsidies provided by foreign governments, and AD duties are imposed to ensure that companies (or countries) are not selling products in the United States below fair market value.

Regulatory Requirements

Step 2 – Sourcing imports

After identifying the product, you want and the conditions that will apply to importing it, you will need to find a supplier.  International sourcing in many ways is not very dissimilar to sourcing domestically, though the investment may be greater.

The first issue to address is whether you are looking for an off-the-shelf product or looking for a manufacturer to make your product or component for you based on your specifications or design.  Once you make that decision, the search to find a supplier or manufacturer will be relatively similar.

Some potential methods to connect include:

  • Perform an online search for the product name plus the country you are looking to source from.
  • Find trade shows where the type of product you are looking for might be featured.
    • Try searches like “[product name] trade show”
  • Magazines specific to the industry may contain useful advertisements by potential suppliers.
  • Trade associations may be a useful sources of information.
  • Reach out to your local World Trade Center.
    • This is a membership-based organization, but they will usually send out your request for quote to other WTCs around the world.
  • Online marketplaces and sourcing platforms such as AlibabaGlobal SourcesKompass and ThomasNet, as well as online wholesale trade directories, are great resources to start with as they bring together a wide spectrum of manufacturers.
  • Embassies in Washington, DC, or the local consulate with responsibility for relations with Florida, will likely have a trade commissioner who is responsible for promoting imports from their country into the United States.
    • Unfortunately, there is no single database for the websites of all embassies in the United States.
      • A tactic for finding the right person is to search online for “[country name] trade commissioner United States” or “[country name] embassy United States” or “[country name] consulate Florida” and then look on the website for a section on “Business” or “Investment”.
      • Be forewarned that not all diplomatic missions are equally responsive to inquiries and may take a long time to respond (if at all).
  • You may wish to use a sourcing agent to help you identify suppliers or manufacturers.
    • Particularly if you are just getting started, working with a good sourcing agent may help you avoid many pitfalls in sourcing globally.
    • These agents can be a big help communicating with a foreign manufacturer and help guide them through the processes needed to manufacture your product.
    • They may have suppliers or manufacturers that they work with for many years and whom they trust to deliver quality products.
    • If they work in multiple countries, they may also be able to advise you on which country to source from.
  • When you’re dealing with a supplier, either online or offline, there will always be a fundamental risk of fraud or misrepresentation.
    • The best way to minimize this risk is to conduct proper research before finalizing any transaction.
    • You need to check the reputation, reliability, and financial status of your prospective trading partner.
  • If your foreign seller has a questionable reputation, you will want to select a method of payment that will protect the import against the sellers’ nonperformance.
  • You will also need to ensure that you are not dealing with a denied person (i.e., someone who is blocked from import or export transactions in the United States).
    • You can begin by checking the International Trade Administration’s Consolidated Screening List.
    • Your customs broker may use software systems to identify and halt shipments with questionable parties when they enter the shipment into their systems.
  • If you are trying to find a manufacturer for your product, be sure to protect your intellectual property! 
    • Consider registering your patent and trademarks before you send detailed specifications or a model to a manufacturer, particularly one you do not already know and trust.
      • In many countries, including China and the United States, the patent is awarded to the first to file.  The last thing you want is a potential manufacturer to love your idea so much that they go file with the local patent office before you do!
      • The best course of action is to work with an attorney or consultant who is familiar with intellectual property law in the country of manufacturing.

Step 3– Paying for Your Imports

Method of Payment

  • You will need to determine what method of payment you will want to use and that the seller will accept.  In descending order of security for your business are:
    • Consignment of your goods – i.e., where you do not pay until you sell the goods – is a great option for you.  However, this is very risky from the seller’s perspective, as you will have possession of the goods and they do not know when they will be paid.
    • If you already have an ongoing relationship with your foreign supplier, then cash against documents (CAD) may be an option.  Open account provides the most security for you and the greatest risk for your supplier.  Under this method of payment, you will pay your supplier after receipt of an invoice, usually after you have taken delivery of the goods.  (Terms may also provide for payment after 30, 60 or 90 days after receipt of goods.)
    • A documentary collection may be useful for ongoing business relationships where your supplier does not need the protection (and expense) of a Letter of Credit (LC).  Under this arrangement, the bank holds the shipping documents against payment, i.e., you cannot take delivery of the goods until after you pay for them at the bank.  However, the banks do not verify the documents and do not guarantee payment as they do with LCs (which is slightly risker for your supplier as you can decide to cancel the sale even though the shipment has already entered the U.S.).
    • A letter of credit (LC) is a payment mechanism under which your bank (the “issuing bank”) guarantees payment when the documents required by the LC are presented.  LCs are generally pretty secure for your supplier, but they are also the most expensive form of payment (due to fees paid to the various banks involved).
    • Many sellers – and all online retailers – want payment by cash in advance.  This presents the greatest risk to you as it requires paying for goods before they are received.

Currency

  • You will also need to consider in what currency you will pay for your imports.
    • You may have no choice but to buy in the local currency, particularly if you are buying in small volume or from a small online retailer that is not set up to accept payment in foreign currencies.
  • Paying in U.S. dollars is the safest way to ensure you get the return you want on your sale.
    • However, this transfers the foreign exchange risk to the seller, who also is likely to want to be paid in their own currency.
    • For that reason, the seller will likely charge a premium to cover their currency-related risks – or potentially to profit from buyers’ desire to pay in their currency.
    • Paying in the local currency therefore may provide an opportunity for you to lower your costs.
  • The constant fluctuation in the value of currencies in world markets may give rise to concern.
    • There are many sites online that will help convert currencies at the going rate – e.g., xe.com or Oanda
  • However, you can avoid these fluctuations and arrive at predictable costing (in U.S. dollars) by using foreign exchange derivatives to hedge your currency risk.
    • Note that these derivatives come at a cost, which needs to either be factored into the price or they will reduce the anticipated profit from the sale.
    • If you are going to be making regular purchases, there may be value in using techniques like dollar cost averaging or timing the currency market to purchase the currency you will need.
      • However, there are risks involved in this, and you would also need to get a bank account in which to hold these funds.
  • Note that there are a number of currencies that are pegged to the U.S. dollar (e.g., the Bahamian dollar of the Qatari rial) or that are allowed to float in a narrow margin (e.g., Chinese yuan), which may limit the risk involved in buying in a foreign currency.

Step 4 – Understanding Your Contract

  • Oral agreements are permitted in international trade.
  • If you need to sign a contract, you need to be clear about the terms.
    • Best tip: work with an attorney familiar with international and local (to the country where the supplier is located) contract law before signing any contract.
    • Be clear about the exact specifications so that you will know what you are getting and the seller/manufacturer will know what they are expected to produce.
    • Include payment terms
      • See Methods of Payment under Step 2.
    • Review the shipping terms.
      • Understand the applicable Incoterm (see section on Incoterms under Logistics), which provides for who is responsible for shipping and insurance costs.
    • Make sure that the seller – if they are responsible for insurance – has obtained adequate insurance.
      • The Incoterm used in the contract will determine who is responsible for insurance, but you cannot just assume that the insurance obtained by the seller will cover every type of loss you contemplate.
      • Make sure that the seller provides you with a certificate of insurance along with all other required shipping documentation.
    • Include details on delivery dates (i.e., by what date you expect to receive the products).
      • This is key if you have production or sales deadlines yourself.
    • Consider including a termination date for the contract.
    • If you are going to be a distributor or sales agent for the products, then be sure to reach agreement – and that the contract includes provisions that reflect this agreement – on:
      • A description of the territory for which you will have exclusivity
      • Who will be responsible for sales promotion and advertising
      • Who will register any trademarks/copyrights/patents and in whose name they will be
      • How defective or unsold products will be handled
      • Any sales targets for you
      • What is the order lead time (i.e., how long will it take from placing an order to receiving it)
      • Who will be responsible for increases in material or shipping costs between the order being placed and becoming actually available for shipment
      • Provisions for termination of the agreement and settlement of disputes

Step 5 – Entry Process

  • It may be helpful to familiarize yourself with the basics of the entry process in order to better understand what your customs broker will be asking of you.
  • If you are working with a customs broker (either directly or through your logistics provider), then they will take care of the entry process on your behalf and all you will need to do is ensure that your send them any documentation they need.
    • Note that even though you may hire a broker to act as your agent in the customs entry process, your business is ultimately responsible for the accuracy of information submitted to CBP and for duties paid.  Relying on a broker’s advice does not relieve you of these responsibilities.
  • Don’t forget to review your contract or commercial invoice – in particular, the relevant Incoterm (see section on Incoterms in Logistics) – to determine whether you will be responsible for the import process.
  • Regardless, it is worth familiarizing yourself with some of the terminology you may hear as well as the basics of the customs clearance process for your imports into the United States.
  • Be sure to keep all import records (even though your customs broker will retain the documents.)
    • The general rule is that you must keep all documents related to imports for five years.
    • You will be required to produce these documents should CBP request them during this five-year period.
      • You may be subject to heavy fines should you fail to produce these records.
  • There are two primary types of entry for products going directly into United States commerce: informal and formal entry.
  • Informal entries, as defined by CBP regulations, are usually valued at less than $2,500 (value subject to change).
    • Informal entries do not require posting a bond.
    • Documentation for informal entry is less stringent than it is for formal entry.
    • Informal entry does not require a broker if the shipment is accompanied by the exporter or if the consignee comes to the port of entry to collect it.
    • Some products are restricted from informal entry, regardless of value.
      • For example, high risk products or goods subject to a quota or to anti-dumping or countervailing duties.
  • Formal entries, as defined by CBP regulations, generally have an aggregate value of $2,500 or more and are required to be covered by a bond.  This bond ensures the payment of applicable duties and compliance with customs requirements.
  • 24 hours before your cargo is loaded on a vessel, an Import Security Filing (ISF) must be transmitted to CBP.
  • Before the cargo arrives and is offloaded from the vessel, the importer of record (i.e., the owner, purchaser, or licensed customs broker designated by the owner, purchaser, or consignee) will be sent an Arrival Notice with details for customs clearance and pick-up.
  • The process for entering cargo into the U.S. is a multi-step process:
  1. Evidence of Right to Make Entry – goods may be entered only by the owner, purchaser, or licensed customs broker. When the goods are consigned to order, a bill of lading or an air waybill may serve as the evidence of a right to make entry.
  2. Entry for Consumption – 2 part process
    1. Filing of documents necessary to determine if the cargo can be released by customs
    2. Filing of documents necessary to assess duty and compile statistics
  3. Surety – bond posted with customs to cover duties, taxes, and possible penalties.
  4. Entry Summary Documentation
    1. Bill of Lading/Air Waybill
    2. Commercial Invoice and Packing List.
    3. Arrival Notice
    4. Duty Deposit must be paid within 10 days of entry and release.
  • Your shipment may be inspected on entry into the United States.
    • CBP does not disclose details on why they decide to inspect individual shipments.  However, elements such as the shipper, importer, product type and country of origin or export are all taken into consideration, and some examinations are completely random.
      • As a first time importer, CBP will likely examine your first few shipments in order to establish credibility.
    • If your shipment is flagged for inspection, your customs broker and your carrier will receive an electronic system notification.
    • Your cargo may be x-rayed (VACIS/NII Exam); the container opened for a quick visual exam (Tailgate Exam); or the container may be transported to a customs warehouse for a more detailed inspection (Intensive Exam).
    • The Centralized Examination Station (CES – a privately operated facility designated by CBP for physical examination where imported cargo is made available for a customs inspection) charges a variety of fees related to these examinations, e.g., for the inspection itself, for drayage (moving the container) or demurrage (storing the container for longer than expected).
  • The final step of your importing process will be for your shipment to be shipped to your designated point of delivery.
    • Again, you need to be sure of the relevant Incoterm in your contract as to who is responsible for moving the shipment once it has cleared customs to the point of delivery and to ensure that clear communications take place with your freight forwader as to how that will be handled.

Step 6 – Foreign Trade Zones

    • These may also be colloquially referred to as “free trade zones” (and in most other countries, this what “FTZ” means).
  • Benefits of operating within an FTZ include, among other things:
    • Duty exemption – if you plan to re-export your products, you will not need to pay any duties.
      • Note: you can claim a return of duties – aka “duty drawback” – that you paid for products you re-export even if they do not enter an FTZ.  However, it takes time for CBP to issue drawback refunds and they will only refund 99% of the duties paid (other 1% is kept as a processing fee).
    • Duty deferral: you won’t have to pay duties until the product leaves the FTZ
      • This is an advantage if you want to import in bulk.  For example, if your imported shipment represents 6 months’ supply, then you will not have to pay the duties up front on that whole shipment: you will only pay as you sell the articles to customers.
    • Duty reduction (“inverted tariff”) – if you purchase a component for use in a finished product that is subject to a lower tariff than the component, it will be subject to the lower tariff upon exit from the FTZ.
      • For example, if the tariff for a computer chip – subject to a 20% tariff – that you use in assembling your toy car – subject to a 5% tariff – then you would pay a tariff of only 5% on those chips, rather than 20%.
  • If you want to take advantage of the benefits of an FTZ, you could operate within an FTZ magnet sites – usually located at ports or industrial parks – or apply for your own subzones (to operate within your own facilities).
    • Please note that if you want to operate a subzone on your own property, access you will need to strictly control access to that area and ensure no co-mingling of domestic and foreign merchandise.
  • While there are many advantages of operating in an FTZ, you should be aware that there are also costs involved, including records management (you have to keep meticulous records on when products enter and exit the FTZ), fees to pay to the FTZ operator, and potentially higher rents to be located within the FTZ.
  • For more information, contact CFITO or your local FTZ operator.

BUSINESS IMMIGRATION

The Central Florida International Trade Office does not offer immigration-related services.  Nonetheless, it is worth highlighting a few key concepts on how your international business may be affected by immigration rules and regulations.

Are you a U.S. citizen looking to travelDon’t forget to get a passport!  And if you already have a passport, don’t forget to check that it has not expired (or won’t expire before you return from your business trip).

  • NB: it can take up to 18 weeks from submitting the application until you receive a new passport (routine service) and up to 12 weeks for expedited service.

Exporters: before planning business travel, check the country information from the U.S. Department of State for travel advisories and determine whether you will need a visa in order to travel to your destination.

Also, if you need to temporarily bring in a worker – e.g., a professional you employ in a foreign market for training on the product or services they will be selling – then you may need to apply for a non-immigrant worker visa for them.

Importers/Exporters: if you are inviting a supplier or a customer to visit with you in the United States, be sure to highlight to them that they should confirm if they need a visa before they book their business trip.

Looking to move to the USA to establish a new business or buy an existing one?  You will need to apply for a visitor visa or an immigrant visa, depending on whether you just plan to visit or are seeking to live here permanently.

Investors may consider the following programs for entry into the United States:

The EB-5 Immigrant Investor Program provides a path to obtaining a green card for investors, their spouse and unmarried children under 21 if they make the qualifying investment.

  • The rules for the EB-5 Immigrant Investor Program have been subject to litigation. In order to ensure that you get the most current and accurate information, it is recommended that you seek legal counsel (see below).

The E-1 and E-2 nonimmigrant classifications permit nationals of a treaty country (note that neither China nor India are treaty countries) and their spouse and unmarried children under 21 to be admitted to the United States.

  • The E-1 nonimmigrant classification (“treaty trader”) is for individuals who engage in international trade on their own behalf.
  • The E-2 nonimmigrant classification (“treaty investor”) is for individuals investing a substantial amount of capital in a U.S. business.
  • The initial stay for these classifications will be a maximum of two years. An unlimited number of extensions (up to two years in duration) may be granted.
  • However, these classifications are not green cards and do not lead directly to permanent U.S. residence. All E-1 and E-2 nonimmigrants must maintain an intention to leave the United States when their status expires or is terminated.
  • While your spouse can apply to work in the United States, your children will not be able to work here while they hold a derivative E-1 or E-2 visa based on your E-1 or E-2 approval. In addition, when your children turn 21, they will need to either leave the United States or apply for a visa in their own right.

The information above is not intended to provide legal advice.  It is strongly recommended that you consult an immigration attorney – for example, a member of the American Immigration Lawyers Association or an Immigration and Nationality Law attorney certified by the Florida Bar – for any immigrant visa-related inquiries.