13 March 2008 | Jake Kanter
Buyers in the US often make legal mistakes when importing goods, according to a white paper published by financial services firm JPMorgan.
It said many purchasers are not fully aware of the risks and challenges when trading in the global market and are misled by common misconceptions regarding their legal responsibilities and liabilities. As a result, mistakes are made in their management of goods, invoices and import records.
Buyers are also unprepared for how government regulations, slow bureaucracy and different exchange rates can affect transactions. It urged US buyers to familiarise themselves with the potential pitfalls of importing and dispelled some of the falsehoods.
One popular misconception is that once goods have been cleared by customs, a buyer relinquishes responsibility for them. But they actually remain responsible for the import for five years and can be held liable for mistakes in invoices, even if they are prepared by a supplier.
Susan Pomerantz, vice-president, trade management consulting at JPMorgan Global Trade Services, told SM buyers should receive more training on import compliance. "All employees who touch the supply chain must be on the same page as far as compliance is concerned and teams must work together to ensure that regulations are being followed throughout the company."
The penalties for not complying with import regulations can be significant. Firms can incur fines, increased customs audits and can even be banned from trading.