Re export or Re-exportation can be defined as a form of international trade in which a country exports goods which were previously imported from another country.
Okay, does this definition sound way too elaborate? Then for the ease of understanding and usage consider the following example:
Due to its location and relocation of manufacturing bases specifically the Pearl River Delta, mainland China is a major source of offshore trading activities. Thus, much of the footwear produced in China is exported to Hongkong which is than re-exported to other nations including India.
Similarly, Dubai has emerged as a major re-export center and it re-exports various goods to Iran because of U.S. trade sanctions against it. Dubai can also be called as an entrepot. Now, what is an Entrepot?
An entrepot is a transshipment port or city where goods are imported, stored or traded usually to be exported again. In contemporary times, entrepots are used to refer to duty-free pots dealing in high volume of re export goods.
In other words, the meaning of re export is an export of imported foreign good such that its items remain unchanged.
Let us further have a look at the reasons why countries re export:
- To send back goods imported for specific purposes like jobbing, execution of a contract, servicing/repairing of machineries, display in fair/exhibition etc.
- Re- exports also happen when the exported goods are not satisfactory in quality measures or the goods exported does not match with the buyer’s requirements or when the goods are been exported for a specific purpose such as project, exhibition, etc. For instance: There are many such machinery equipment amongst others in the Vibrant Gujarat Summit held in India.
- The country is a mid-way between the exporter country (manufacturer of the goods) and the destination country (importer of the goods). This used to specifically occur in the older days when the trading was done via wind-powered ships. Nowadays, this scenario has become obsolete.
Below mentioned are the facts to be kept in mind regarding re export:
- The state of items during export and import should remain the same i.e. the goods should be unchanged or unaltered after importing and before exporting.
- The records of the re-exported goods should be stored separately for organizational ease, efficiency and analytical purposes. This is because the re-exported goods might require some additional information.
Having understood so much about re-exports, it is time we walk through the re-export procedure. This is definitely limited to the regulations det by the Indian government and may not hold effect in other countries.
- Custom notifications are issued allowing duty exemption or duty concession on import of goods under different circumstances, provided these items are re-exported within the stipulated time frame.
- In order to ensure that the goods are re‐exported, the importers are required to furnish bonds undertaking to pay duty which was exempted at the time of import. This is to comply with the failure to re‐export goods within specified time.
- The bonds are canceled when the importer had re‐exported the goods and adhered to the conditions of the notification.
- Follow‐up action by Customs after the import of such goods is important till the cancellation of Bond. Failure to fulfill any of the conditions of the notifications entails payment of duty that was exempted or remitted at the time of import/re‐import.
The above mentioned is the standard reexport procedure followed in India. We have tried to present it to you in the simplest manner possible so that you can reap all the information you require from this.
Furthermore, according to the U.S. Bureau of Industry and Security (BIS), a reexport is “the shipment or transmission of an item subject to the Export Administration Regulations (EAR) from one foreign country (i.e., a country other than the United States) to another foreign country. A reexport also occurs when there is ‘release’ of technology or software (source code) subject to the EAR in one foreign country to a national of another foreign country.”
In general terms this means that if you require a license to export any item, software or technology from the U.S. to any other country, then that same item, software or technology requires a license to be reexported from your country (of course, other than the US) to that same country. This holds true for finished products as well as parts to manufacture finished products.
Having learned so, so much about re-exports, the regulations associated with them, the re-export procedure among other things we are confident that you are taking back with you lots of information. If you still feel stuck, then we at IMPEXPERTS, provide import-export courses, services and trade network. We have over 38 years of experience in this domain and our services speak for themselves. To get a one-stop solution for your business problem, reach out to us today!