On Second Thought
with Jerry Cook
In my last column, I wrote about the recent study by Prof. Matthew Slaughter of Dartmouth University on American participation in complex global supply networks, and how this engagement with the world benefits our economy here at home. One of the most interesting findings of that report was that over 25 percent of U.S. global companies fit the definition of small or midsized enterprises (SMEs), meaning that they employ fewer than 500 people. It’s clear that the threshold for engaging successfully with the global marketplace is far lower than it used to be.
It’s long been said that small business is the cornerstone of our economy. So now that some SMEs are becoming global companies, how can we help them further ramp up their exports and sales to customers overseas?
One way is through an aggressive American trade policy to eliminate tariffs and other barriers to U.S. exports, especially in the big emerging markets like the BRIC (Brazil, Russia, India and China) countries. Another is working with U.S. and foreign customs authorities to reduce clearance times for shipments, and address other administrative barriers to trade. A third way is to help SMEs help themselves, to use the tools they already available to them. I’d like to focus on that last point in this column.
SMEs, even more than larger companies, simply cannot afford the costly overhead associated with many aspects of exporting — especially the uncertainty, hassles and lack of transparency that many companies face when shipping products to customers around the world. But imagine you, as the head of a small company, had a key to “unlock” customs. Well, you do, and it’s called an ATA Carnet.
The ATA Carnet, also known as a “Merchandise Passport,” is an international customs document that expedites temporary, duty-free and tax-free imports into 73 foreign countries. It is valid for up to one year for unlimited exits from the United States and entries into foreign countries. In a world dependent on your successful delivery of samples, trials and products to key customers, a Carnet can position your product seamlessly through various international hurdles to better serve your customers.
Getting an ATA Carnet is easy. The system is run jointly by the World Customs Organization and the International Chamber of Commerce (ICC). The U.S. Council for International Business (USCIB), which serves as ICC’s American chapter, is chartered by the U.S. government to issue and guarantee ATA Carnets in the United States, and works closely with U.S. Customs and Border Protection to ensure the system is well managed. You can apply for a Carnet
The only limitations on using a Carnet are that the goods you ship must return to the United States within 12 months, and you may not sell or add value to them while they are overseas. ATA Carnets cover almost all types of goods samples, professional equipment, items for trade shows and exhibitions. And they are put to a dizzying array of uses, such as heavy equipment for bridge repairs, rock bands and symphony orchestras going on world tours, news organizations covering an international crisis, jewelers bringing extremely valuable diamonds to an overseas trade fair, aircraft to the Paris Air Show, just to name a few.
Seventy-three countries are part of the ATA Carnet system, but only until recently Latin American countries were outliers in the international Carnet system, which originated in Europe a half-century ago. Chile became the first country south of the Rio Grande to accept Carnets in 2005. Mexico joined the system in 2011 and has seen heavy use of Carnets, with more than 6,000 shipments over the U.S.-Mexico border. With many companies looking for even greater market access in South and Central America, but facing a lot of hurdles and restrictive trade measures in the region, it is a crucial time for large economies like Brazil to join.
Brazil’s acceptance of the ATA Carnet would significantly facilitate imports into the country, just in time for the 2014 FIFA World Cup and the 2016 Olympic Games in Rio de Janeiro. Brazil has taken some big steps in that direction. The U.S. Commerce Department and its Brazilian counterpart have been strong advocates of initiating the system in time for the World Cup. There appears to be plenty of political goodwill in Brazil toward the idea of joining, and there are even multiple organizations in Brazil vying to serve as the national guaranteeing organization (like USCIB in the United States). All that remains is for the Brazilian government to take action.
An ATA Carnet is just one of the many tools smaller businesses can use to grow their exports and their international prowess. In future columns, I hope to look at some of the other tools you can use to do more business overseas, plus the work companies and the U.S. government is doing to remove trade barriers and administrative hurdles for exporters.
Cook is vice president of government and trade relations at HanesBrands, Inc., and chairs the Customs and Trade Facilitation Committee of the United States Council for International Business. He can be reached by email.