An Export and Import guide to the Middle East

If you have ever exported goods to the Middle East, you’ve probably scratched your head over the absurd commercial document requirements. ‘Why would I need a blue ink signature’ and ‘where the heck do I get a rubber company stamp in this day and age,’ are probably some of the questions that you ask yourself.

Then, depending on the country, you start to figure out whether you need to certify your commercial invoice by your local Chamber of Commerce, the U.S. Arab Chamber of Commerce, or the National U.S.-Arab Chamber of Commerce (no, they are not the same). Once you figure all of this out, you head on to your Secretary of State and/or Department of State, or perhaps the President himself. If you are lucky, your next stop is the consulate of the country in question. If you’re unlucky, there will be a few more stops before your final packet of documents is ready to be sent to the buyer. One obvious question is ‘who pays for all of this?’ The answer to this lies within the Incoterms.

So why do these countries go to the extremes of requiring up to six different stages of legalization?

Well, it's a way to make sure importers don't falsify information. It's all about the Benjamins (Dinars, Rials, and Dirhams, to be precise). Duty and taxes are based on the value of imported goods. A common way of evading duties and taxes is to lower the value on the invoice. Another, albeit less common way of circumvention, is to falsify the country of manufacture on the Certificate of Origin. For example, the U.S. and Canada have a Free Trade Agreement that allows duty-free trade. A duty-evading-importer may falsely claim that the goods are manufactured in Canada, and import into the U.S. duty-free.

In the U.S., as in other developed countries, the value of the Commercial Invoice and the integrity of the Certificate of Origin are presumed accurate as the importer providing the document assumes liability of false declaration to Customs. This is a big deal in the United States.

After all who would risk going to jail over duty? (This is a rhetorical question. Lots of companies do). In countries where the consequences of this kind of falsification are not severe, importers are more likely to resort to these tricks.

Generally, the more developed the country is, the more invisible their trade compliance enforcement is. Of course invisible does not mean nonexistent. Most OECD countries, for example, rely on companies to self-regulate. The compliance is often enforced when issues come up and not necessarily at the time of import.

Other countries are extremely diligent with trade enforcement at the time of entry. Making sure commercial and shipping documents are not doctored is a big part of this enforcement. This is why many Middle Eastern countries require that these documents be scrutinized, validated, and certified to various extents. The rigor of the validation can range from requiring that the seller sign and stamp the documents in original blue ink, to full legalization by the Chamber of Commerce, Department of State, an Apostille, and the consulate of the importing country. This bureaucracy makes trade extremely cumbersome for all parties involved.

In stark contrast to this extreme, the U.S. government largely relies on the importer's declaration and requests substantiating documents only in a minority of cases. This approach is, of course, extremely unfair to the law-abiding importers. They compete not only with their duty evading U.S.-based competitors, but also foreign importers who face no practical repercussions for falsifying documents.

Some countries require the documents to be signed and stamped by the seller or exporter. This is the minimal validation, attesting that somebody else has acknowledged that the value is accurate. Some others require that the Commercial Invoice and Certificate of Origin to be notarized, to authenticate the signature of the seller, stamped by the local Chamber of Commerce, authenticated by the Secretary of State, and so on. Countries like Russia require the importer to provide proof of payment, as well as a Contract of Sale to substantiate the amount on the commercial documents.

1. Compliance with U.S. Law

First things first. Make sure you are not selling to the bad guys. Whether you are selling seemingly dangerous items like military surplus (very useful for terrorists) or completely innocent things like arcade games, you have to make sure the buyer is somebody you can sell to.

As the principal beneficiary of the sale, you are required to determine if the product is regulated by any government agency. You are also required to perform due diligence to identify the end-user and end-use of the product. You may not sell if the buyer or end-user is in the U.S. Denied Party List . This is the case with all shipments but the likelihood is somewhat higher with exports to the Middle East.

2. Compliance with the Destination Country’s Laws

An importer in the destination country must make sure that the goods they are purchasing are compliant with local rules. This is not related to shipping, but rather the safety of the goods to be distributed in a given country. Most countries have safety standards in place. The United States, for example, heavily regulates imports into the country.

However, compliance with the regulation is not always enforced at the time of importation. While customs enforces some local regulations, generally the distributor and/or importer are required to uphold compliance, even if Customs overlooks it or is otherwise unable to enforce it. For example, California enforces specific limits on formaldehyde present in hardwood flooring. If you are distributing flooring in California, you must ensure that it is compliant and certified according to California’s rules.

However, as a federal agency that is majorly concerned with compliance of imports into the country and not the state, the U.S. Customs authority would not necessarily enforce or check this certification at the time of import. State-specific enforcement would not be feasible either. After all, there is no way to tell in which state the goods would end up after being imported into one.

Diligent importers would source their hardwood flooring from companies that provide certification of compliance with both federal (U.S.) and state (California) standards. The same is true of many countries, including those in the Middle East. The compliance with regulation is the responsibility of the importer and/or distributor, which is generally not a shipping issue and would have already come up during the sale.

Since the buyers or importers have to make sure they can import the goods to their countries, compliance would largely be their responsibility. They may request specific information or certifications to make sure the goods are compliant. An example would be a Certificate of Conformity (COC) which certifies compliance of the product with the country’s laws. A COC is issued by third-party agencies like Intertek, Cotecna, and SGS. A COC is required by several countries like: Algeria, Mongolia, Belarus, Kenya, Kuwait, Russia, and others.

3. Compliance with Documentary Requirements

As an international seller or exporter, you are required to provide proper documentation for the clearance of the goods with the destination country’s Customs Agency. Every time you ship from one country to another, you must provide documents like these:

• Commercial Invoice

• Packing List

• Certificate of Origin (COO)

• Bill of Lading (BOL)

• Halal Certification

Under most Incoterms, as a seller, you are required to provide these documents. Some Incoterms, however, allow you to charge for some of the documents.

Things to Consider / Additional Facts

• Each country in the Middle East has its own list of products that the country considers to be “regulated.”

• Each country also has a list of exempted products, which means these items do not need any certification for importation.

• Some of these countries will have a list of completely prohibited products, which cannot be imported to their country under any circumstances.

Countries With Regulatory Programs

Iraq

-ICIGI Pre-Importation Inspection

-Testing & Certification of Goods to Iraq

Saudi Arabia

-SASO Certificate of Conformity

Kuwait

-KUCAS- Kuwait Conformity Assurance Scheme

Qatar

-QGOSM Certificate of Conformity- Qatar General Organization for Standards and Metrology

Kurdistan

-KSQCA Certification- The Kurdistan Standardization and Quality Control Administration

Lebanon

-IRI Conformity Verification- Industrial Research Institute of Lebanon Pre-Shipment Programme

Syria

-Syrian Product Conformity Assessment and Verification of Price and Origin