Have you ever seen a word on a page and just asked yourself, “What?” That’s it. No other words. You see a word, and you just do not know what to make of it. That might happen to you a lot with international shipping. Here’s a few examples:
- Customs: The assessing of duties and fees applied to a shipment made from one country to another
- Duty: A tax on imports
You’ve probably seen those two before. How about this one: Carnet
It’s likely if you’re reading this blog, you went on Google to define the word. As to not disappoint expectations, let’s dive right into what a carnet is.
A carnet (pronounced: kahr-ney) is an international customs document used to allow temporary entry of goods into a country. This is done on a duty-free and a tax-free basis. It’s often referred to as either a “Merchandise Passport” or a “Temporary Import.”
Carnets were created with the intent to encourage world trade while reducing barriers that would otherwise render trade too challenging for certain businesses. Let’s say you operate a cosmetics company in the United States and you want to expand your operations to France since that’s where the big players in that industry came from. You have a problem though, you don’t have any leads on how to make that idea feasible in France yet and you don’t have your own niche built into the French cosmetics market. You don’t want to commit yourself to an investment like that unless you know it’s going to make you money. That’s where a carnet can help. A carnet can be used to ship your product into France without jumping through as many hoops; that way you could participate in a trade show for instance. That way, you could get your product in front of the right people without locking yourself into something in the process. Then, you can make a more educated decision in regards to your investment.
Please do be aware though that ATA carnets will only apply to temporary imports, meaning whatever you send must return to the country it originated from. Using our trade show example, this means that whatever you sent to the show will need to return to you once the show is over. Or let’s say that things went really well and you’re setting up an office over in France. You can temporarily send equipment to that office as long as it’ll eventually return to your origin country. Another case is that you send a product overseas for testing. In short, anything sent on an ATA carnet must always return to you.
Carnets are jointly issued by the World Customs Organization (WCO) and International Chamber of Commerce (ICC).
There are two different systems that include different sets of countries:
- ATA: (Temporary Admission) which covers 78 countries and customs territories. The full list of these areas can be found at Dynamic Dox
- CPD: (Carnet de Passages) is a similar system that revolves around bilateral agreements with China and Taiwan (kind of a big geopolitical deal right now). Only certain ATA countries are included in this agreement. The full list of these can be found from this article on Wikipedia
Carnets are good for one year after their issuance.
You would also be able file a carnet when one of these situations applies:
- You're sending something for an exhibition for a fair
- You’re sending something that would be considered professional equipment (construction equipment and machinery, tools, video cameras)
- You’re sending commercial samples and goods for testing purposes
- You’re sending sports equipment
- You’re sending goods for educational, scientific, or cultural purposes
Carnets can cover items that will be used for demonstration purposes or something that isn’t meant to go directly to your average consumer (or average business). Something that you’re not necessarily trying to sell, which is why it’s possible to bypass the duties and taxes via a carnet.
They will not cover disposable or consumable goods though. Furthermore, items in a carnet cannot be sent without first contacting the local, foreign customs office to make sure that the correct legal procedures and documents needed have been adhered to.
If something in your carnet shipment ends up being sold, be aware that you can be subject to financial penalties for doing so. The penalty is equal to 110% of the duties and taxes for the goods that were sold. You might also be subject to a USCIB (United States Council for International Business) claims handling fee. For more information on those penalties, consult the USCIB website.
As we said earlier, any product sent on an ATA carnet is temporary, meaning it must return to you upon the completion of whatever objective you had overseas. If it does not return, you need to report that and will be subject to the duties and taxes you normally would have been.
Unfortunately, this is not something that a shipping provider can do on your behalf. There do exist resources however that will help you through the steps that you need to go through. You’re going to be looking at a $90 fee from DHL to process a shipment that will involve a carnet. This is because of the extra work on their backend to fulfill a carnet shipment. Any shipping provider like OptimalShip will pass that fee onto your shipment. If you’d like help finding out where to start, please contact us at the following: