Each year, goods valued at more than $1.5 billion depart the United States and enter many foreign countries duty-free. And it’s all legal, thanks to ATA Carnets or “The Merchandise Passport.”

There is one catch, however. Goods traveling on a Carnet must return to the United States, or the exporter forfeits a surety bond.

Carnets Facilitate Global Business

The Carnet (car-nay) is an international customs document that facilitates global business by avoiding extensive customs procedures, and eliminating payment of duties, value-added taxes, and the purchase of temporary import bonds.

A Carnet, a set of legal-size documents with a blue cover, involves only goods returning to the United States within 12 months. Basic processing fees for a Carnet range from $120 to $250.

Carnets Are for Big and Small Companies

Though Carnets are used mostly by large corporations, increasingly, U.S. executives from small and medium-sized businesses are finding them highly useful when traveling overseas in quest of new markets.

Goods may pass from one Carnet country to another on a temporary basis, without lodging an import bond with each country’s customs authority. Since many industries have trade shows that run consecutively in different market centers, displays tend to travel quite a bit. This service makes coordinating overseas show participation much easier.

Globe Trotters Avoid Headaches

Without a Carnet, goods carried by a traveler or stored in an aircraft’s cargo hold can sit for days or weeks as customs agents sort through papers and inspect equipment.

Carnets help globe trotters avoid headaches and hassles with foreign custom inspectors by quickly clearing such products as computers, repair tools, scientific and medical equipment, cameras, fine arts, jewelry and wearing apparel, automobiles, live animals, video equipment, and industrial machinery.

Extraordinary items also can travel on Carnets. From circus tigers, elephants, and Cessna jets to World Cup-class yachts, satellites, human skulls, and the New York Philharmonic, the ease Carnets provide is almost endless. However, they do not cover consumable goods (food and agriculture products) or disposable items.

Seventy-five Destinations Honor Carnets

Currently, 75 countries and territories in Europe, Asia and Africa, plus the U.S. and Canada, participate in the system. China and Taiwan became the most recent participants. None of the Latin American countries, including Mexico, participate in the Carnet system.

Some 13,500 Carnets (nearly 200,000 worldwide) are issued each year to 3,000 exporters in the United States.

Who Issues Carnets?

Carnets are issued by the New York-based U.S. Council for International Business (USCIB), an affiliate of the Paris-based International Chamber of Commerce.

The USCIB has authorized two service organizations to issue Carnets — Roanoke Trade Services, Inc. and the Corporation for International Business. The former has eight offices and the latter has one office in the United States.

Carnet insurance can be purchased separately from Roanoke Trade Services, Inc. It will cover merchandise while in transit and abroad. The premium is usually about 1% of the value of the exports with a minimum premium of $50. If the exporter prefers, he or she can purchase the insurance elsewhere.

Security Must Be Posted

All Carnet applicants must furnish the USCIB with security. This acts as collateral and will be drawn upon to reimburse the USCIB in the event it incurs a liability or loss in connection with the Carnet or its use.

The amount of the security deposit is based on the total value of the items to be exported and the country(ies) to be visited. The minimum security is 40% of the value of the goods exported; 100% is required for goods destined for Israel or South Korea.

Most companies post a surety bond that may be obtained from any of the 200 companies admitted in the State of New York. Surety bonds are terminated once the original Carnet has been returned and no claims are anticipated by the USCIB. A certified check also can be used for security. When the exports are returned to the United States, the check is returned if there are no claims to be paid.

Need More Information?

For more information about the Carnet system, you can reach your nearest Carnet issuing office at 1-800-CARNETS, or log onto www.roanoketrade.com or www.uscib.org.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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