What are Quota Shipments?
Import quota shipments set a numerical limit on how much of a good or product can be imported into the United States during a specific time. Import Quotas are regulatory measures used to encourage or discourage the number of international goods shipped in the USA.
Why do they impose these quota shipments?
Governments set quotas for various regulatory reasons. Since import quotas are quantity controls, this helps to protect local producers from facing too much competition and going out of business. Essentially, import quota measures help prevent or limit the purchase of imported goods by domestics consumers.
For a quota to be established, it must be enacted by legislation and authorized through Presidential proclamations/Executive Orders. Additionally, the Harmonized Tariff Schedule of the United States also provides some quotas.
In International Shipping, there are two types of import quotas:
- An Absolute Import Quota strictly limits the quantity of a product or merchandise to be entered in each period. Once the limit is reached, no further quantities may be entered until the next quota period is open.
For example, companies can import 100,000 t-shirts from China. That’s it, nothing more.
If an absolute quota is reached, the importer must warehouse, export, destroy, or abandon merchandise imported more than the restraint limit. As of this writing, no merchandise are affected by absolute quota restrictions.
- Tariff-rate quotas work differently since products or merchandise can be imported in unlimited quantities. However, it sets a limit on the quantity of merchandise that can be entered at a reduced duty rate for a specific period. Excess quantities of the quota can be imported in unlimited amounts during the quota period but are subject to higher rates of duty.
For example, companies can import 100,000 t-shirts per year from China duty-free. Anything beyond that the duty is $.5 per t-shirt.
What types of commodities are subject to quota?
As mentioned earlier, there are no commodities subject to the absolute import quota. However, for tariff-rate quotas, the more common commodities are sugar, tuna, and honey. You may view the complete list of the quotas here.
What is the role of CBP in administering import quotas?
Once directed to administer or implement a quota, Customs and Border Protection is then responsible for ensuring that the applicable restrictions are strictly complied with. CBP’s duties include administering, enforcing, and monitoring these restrictions.
Filing Procedures for Import Quotas
The importer can submit an import quota shipments entry on the day when the quota is opened. Either:
- Submit the entry and entry summary to the customs (the entry status has no legal status if clerical errors are found) or;
- Submit documents for preliminary review (no legal status).
The import quota documents and requirements can be submitted through ABI (Automated Broker Interface) or ACH (Automated Clearing House).
Properly determining and filling for import quotas can play an important role in your business. Experts at Gallagher Transport can guide you and your team all throughout this process.