Both customs classification and valuation are based on international agreements. The U.S. and other members of the World Trade Organization have also adopted the Customs Valuation Code, which is used to determine the value of imports. Classifications proceed from the simplest goods to the most complex. Duty rates are associated with each classification. The column 2 rates are generally very high.
Many imports qualify for duty free or reduced duty treatment.
Other preference programs include the U.S. - Israel Free Trade Agreement, imports from U.S. insular possessions, and the Caribbean Basin and Andean duty free programs. Items such as selling commissions, assists, royalties, and the proceeds of a subsequent resale accruing to the exporter, are added to transaction value. On the other hand, foreign inland freight and international freight may be excluded from transaction value if reported separately. The country of origin of imports may determine whether the imports qualify for duty reduction or elimination. With few exceptions, imports must also be clearly, conspicuously and indelibly marked with their country of origin.