Ship with confidence: Understanding global customs regulations

2019-01-04T15:06:17+00:00September 25th, 2018|Best Practices, Compliance, Shipping|

The rise of cross border e-commerce offers exciting new opportunities for brands and retailers expanding into new markets. However, it is also placing unprecedented pressure on global customs operations. Cross border e-commerce makes it easier than ever for  smaller businesses with limited understanding of international regulations to sell to customers in new global markets. World Customs Organization (WCO) Secretary General Kunio Mikuriya described this trend as a “tsunami of small packages” that customs officials are struggling to process. All too often, customs officials are flagging international e-commerce shipments that, through lack of knowledge, fail to comply with the destination country’s regulations on documentation, product descriptions, and declared values of goods.

As a result, the WCO and customs bodies in individual countries are pushing to modernize customs processes in this new era of global online shopping. For example, in March 2018, U.S. Customs and Border Protection (CBP) released its E-Commerce Strategic Plan as a response to the increasing volume of low-value packages entering the country, driven by consumer e-commerce. The plan is designed to address the potential for “illicit or dangerous products” crossing U.S. borders under the guise of legitimate e-commerce goods.

From the perspective of brands and retailers, identifying and complying with customs in each destination country is a complex and often confusing task. Import regulations vary widely from country to country. More recently, uncertainty around international trade deals between nations is causing anxiety for vendors who rely on the protection of these deals to ensure a smooth trip through customs for packages.

For easy reference, we have compiled a few examples of customs regulations and product restrictions in top global e-commerce markets to demonstrate the dramatic differences in each market. Some of these regulations were formed to address national security, environmental protection, regional stability or safety concerns. Some countries require an export license for certain products before e-commerce companies can ship their products.

  •      China: Cross border e-commerce companies should be aware of guidelines and restrictions contained in the People’s Republic of China e-commerce law, known as the draft PRC E-commerce Law, published in 2016. The regulations are focused on “those doing business on their own websites, e-commerce platform operators, and stores on e-commerce platforms,” and outlines protections for Chinese consumers. Brands and retailers should also be aware of prohibited import items such as imitation firearms, as well as restricted goods such as some kinds of communications equipment and cosmetics.
  •      United States: In the U.S., the Federal Trade Commission (FTC) oversees e-commerce regulations impacting consumers in the U.S. These regulations include language regarding brand trademark and patent use, consumer protections, and what’s known as the Prompt Delivery Rule. Restricted items include alcohol containing absinthe, certain fruits and vegetables, and cars that don’t protect their occupants in a crash (such as cars without airbags). The U.S. Fish and Wildlife website is a great resource for determining whether certain goods or products require a special export license, as is the U.S. International Trade Administration’s Export.gov website.
  •      U.K.: The Unfair Contract Terms Act 1977 (UCTA) prohibits the exclusion of certain warranties on goods and services to consumers in the UK, and has been applied to cross border e-commerce goods as well. The typical banned goods include firearms and other weapons, and restricted items include meat and dairy that did not originate in the European Union.  
  •      Japan: According to HKTDC Research: “Most [imported] goods do not require an import license and can be freely imported into Japan. Import licenses are required for certain goods, including hazardous materials, animals, plants, perishables, and in some cases articles of high value.” Examples of restricted items that may require a special license include pharmaceuticals, medical devices, and certain kinds of cosmetics and toiletries.
  •      Germany: Brands and retailers selling into Germany must observe EU consumer protection regulations such as indicating contact details on their website, as well as clearly identifying advertisements and protecting consumers against spam. Restricted items include textile samples, rough diamonds, food products from non-EU member countries and certain medical and dental supplies.
  •      France: Like Germany, France models its trade laws after the EU’s, and the Tarif Intégré de la Communauté (TARIC) can help cross border e-commerce companies determine if a license is required to ship a particular product. One key regulation of note is the French Code of Consumption requiring French language on all packaging. Some restrictions on goods entering France include electronics, alcoholic beverages, and agricultural and food products from outside the EU.
  •      Canada: In addition to federal consumer protection laws, each province in Canada has its own consumer protection legislation that extends to cross border e-commerce. These regulations cover product safety and quality, product packaging and labeling, and “anti-competitive practices” such as misleading product pricing. International businesses are also expected to comply with the country’s strict language regulations that require packaging to include both English and French. Restricted items in Canada include pharmaceuticals, agricultural and food items and some kinds of pet foods. (See more about How to Sell in Canada in our ebook.)

To manage compliance and keep pace with the changes in customs regulations, many e-commerce companies are turning to brokers and technology partners. Third-party brokers can add value by staying on top of any changes in global customs rules, and technology partners can automate some of the processes on a retailer’s website to ensure compliance all the way through the purchasing and shipping journey.

How Tech Partners Can Help

In addition to awareness of key regulations and restrictions in each global market, brands and retailers must assess the preparedness of each of their country-specific e-commerce websites to ensure compliance. Priorities during this assessment should include:

Product catalog restrictions: These are a must for each global market where brands and retailers are selling to ensure that any possibly restricted or prohibited goods will not be offered to consumers who live there. Cross border e-commerce platforms like Flow’s Console are designed to allows merchants to dynamically exclude products from appearing on websites for specific destination countries and regions. This can be sorted by such properties as product SKU, brand or product category.

Terms and conditions: Provide clear language on your e-commerce site to spell out what buyers are agreeing to when they purchase goods from your website. Be sure to outline the terms of delivery, international shipping, refunds and payments, how your brand will use consumer data, and terms of use for your website in all locales. More recently, the terms and conditions page on e-commerce websites has become a popular place to include country-specific clauses for data privacy regulations, such as GDPR.

To learn more about how Flow’s cross border e-commerce platform helps brands and retailers gain more control over shipping regulations and restrictions around the globe, request a demo from our international business experts today.

Written by
Garrett is passionate about keeping up to date with trends in cross border e-commerce. Garrett is one of the most tenured members of the Flow team and has deep expertise that touches all areas of cross border from pricing strategy to payments to taxes and duties to shipping and logistics. Whatever your cross border challenge, Garrett has seen it all before.