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Yes, Virginia, Duty Drawback Really Does Work

Posted by Lawrence Tobia

2/11/16 5:00 PM

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The “encouragements” that Adam Smith refers to are none other than Duty Drawback. In the United States, drawback has been a fixed part of trade policy since 1789 when the Founding Fathers understood that a thriving domestic economy required robust international trade. 

By allowing exporters of products to draw back duty imposed upon its initial importation, it puts those exporters on an equal footing with their overseas competitors. 

Simply put, better-priced products sell, well, better.

Over the years – indeed centuries- the rules, regulations, and documentary requirements governing the drawback program have become so excessively onerous that 75% of all eligible drawback, or $2.5 billon, goes unclaimed every year.

Alas, this forlorn story may have a happy ending after all. Buried in the soon to be passed Customs Reauthorization Bill are provisions that will radically streamline the drawback program, providing access to an “encouragement” that so many exporters have abandoned over the years. 

Will it really work? In 2003, Congress passed similar drawback program liberalization exclusively for the wine industry. 

And…what happened? 

Annual exports of domestically produced bulk wine grew from 50 million liters to upwards of 200 million liters in the ensuing years. 

Adam Smith would surely drink to that.

 

Do you think your company is missing out on eligible drawback? Don’t hesitate to reach out to Tradewin. Let us handle the details. 

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Topics: Duty Drawback

Written by Lawrence Tobia

For more than 25 years, Larry has been working with the U.S. trade community designing, implementing and managing Customs duty and fee recovery programs. He's worked for companies in every industry, including automotive, chemical, retail, and pharmaceutical. Nearly half of that time was spent as the Vice President of a prominent drawback specialist and customhouse brokerage firm in New York City. Since 1999, Larry has been Principal for Drawback Services at Tradewin.