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US - Accessing the Market

3.1 Accessing the US Market

To export, you need to first understand the terms on which you can access your target market. The following information might be useful:

  • The majority of CARICOM countries and the Dominican Republic can access the US market on preferential terms for most goods - no customs tariffs/duties are applied.
  • You have the option of exporting directly to a buyer; selling through an intermediary/distributor or establishing a subsidiary in the US or undertaking a joint venture arrangement with a US firm.

It is important to understand how to access the US market as well as any potential barriers that may exist. The mechanisms an exporter uses to sell speciality foods in the Caribbean may be completely inappropriate to the target market in the US. Research will be essential to understanding a market and it   is strongly advised that novice exporters consult with the appropriate national, regional and international sources to properly navigate the export process.

Between the United States and the Caribbean trade agreements and preferential regimes exist. With the notable exception of Suriname, all other CARICOM Members of CARIFORUM enjoy one-way preferential trade with the US under the Caribbean Basin Initiative (CBI). Under the CBI, the US grants unilateral duty- free treatment to imports of certain eligible products from CBI beneficiary countries (Office of the United States Trade  Representative, 2009).

On the other hand, the Dominican Republic was previously a CBI beneficiary. However, it now engages in bilateral trade with the US on a reciprocal duty-free basis. Under the Dominican Republic-Central America-United States Free Trade Agreement, the US has maintained and in some instances improved duty-free access to its market for nearly all goods originating from the Dominican Republic and the other countries involved in the Agreement.

Under the CBI, there are two general conditions that goods must meet in order to qualify for access to the US market on preferential terms. A product has to meet a substantial transformation test (usually reflected in the final product being of a different tariff heading than the inputs) or the value of local materials used in production should not be less than 35% (World  Trade Organisation, 2010). Under the free trade agreement involving the Dominican Republic, the qualification conditions for goods generally include the substantial transformation test (World Trade Organisation, 2010 ).

While the US grants duty free access to a wide range of goods originating from  CARICOM or the Dominican Republic, there are some non- tariff measures which do impact on goods exported to the US. According to the World Trade Organisation (WTO), exports to the US continue to be subject to a merchandise processing fee and a harbour maintenance fee (exports from the Dominican Republic are exempt). The merchandise processing fee applies to imports  valued at more than $2,000USD - the fee is set at 0.21% of the import value; the statutory minimum and maximum are $25USD and $485USD respectively (World Trade Organisation , 2010 ).

Apart from the merchandise processing fee, exports to the US valued at more than US$2,000 and unloaded at a port receiving federal funds for maintenance  are subject to a harbour maintenance fee regardless of their origin (World Trade Organisation, 2010 ). The fee, which is charged once for the same cargo, is set at  0.125% of the value of the cargo (World Trade Organisation , 2010 ). Additionally, beer, wine, and distilled spirits are all subject to US federal excise taxes. Imported beer faces a rate of $18USD per 31 gallon barrel while imported wine is subject to an excise tax ranging from $2.26USD to $3.40USD per gallon (World Trade Organisation , 2010 ).