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A WEB RESOURCE FOR THE TEA INDUSTRY
Purchasing tea and tea accessories from abroad creates a complex web of legal issues, of which the
buyer may or may not be aware. The UN International Trade Center has developed a model contract for
the international sale of perishable goods, which can apply to tea and other substances that are
susceptible to mold and other contamination. The International Chamber of Commerce has produced a
model contract for international sales of manufactured goods for resale, which can apply to durable
items such as teapots, tea kettles, tea strainers and infusers, and related items. However, these model
contracts can only provide so much predictability. Since the transaction is an “international sale of
goods,” the applicable law can be difficult to pin down depending upon the circumstances, and the
countries from which the parties are doing business.
In many cases, tea suppliers provide only a one-page form
contract or purchase order form, which does not allude to the
true complexity of the transaction. Apart from the sales
contract itself, there are normally up to five other contractual
documents in an international goods sale/purchase transaction:
the bill of lading, the bill of exchange (or “draft” in American
English), the letter of credit, the bank’s agreement with the
buyer to issue a letter of credit, and any relevant insurance
contract. Each of these documents will have a different set of
legal rules that apply. Some of them have been standardized
by international treaties, and others have not. International
suppliers often rely on letter of credit (LOC) transactions as
their sole means of securing payment. The alternative is to
retain local counsel in the buyer’s country to file security
instruments against the goods being purchased.
Before goods actually reach the United States, a number of
import clearance issues need to be borne in mind. The
importation of tea accessories generally follows the normal
customs procedures. However, importing tea triggers a
number of regulations imposed by agencies outside of
Customs. For example, the actual manufacturer or packer
of the tea overseas must be registered with the FDA, prior to
the tea being imported. The person importing the tea must give the FDA pre-import notice that the tea
is being imported. Under the Lacey Act, the importer must make pre-import declarations and keep
records concerning the source of any paper and other wood-based products such as tea bags and
packaging that are separately imported into the United States. Some regulatory lawyers are concerned
that the tea itself may be subject to the new Lacey Act requirements, added in 2008.
The primary objective of U.S. Customs (now called US Customs & Border Protection) is to determine
whether imported goods have been properly labeled as to: their true contents (to calculate the correct
import duty), and their true country of origin. However, Customs will also enforce the regulations of
other agencies. As such, tea shipments may be inspected to determine compliance with the
Endangered Species Act of 1973, which covers both plant and animal species, and the Environmental
Protection Agency’s pesticide regulations. Tea-producing countries will often set maximum residue
levels (MRL's) for certain pesticides used by tea farms. China's agriculture and commerce ministries
have begun registering tea farms in order to enforce their MRL's. When the tea reaches the United
States, the tea may be inspected and tested to ensure compliance with the EPA's own tolerances for
listed pesticides. Other countries, such as the United Kingdom, will also enforce their own tolerances for
pesticides that may be used in tea growing.
Apart from Customs inspections of the contents of tea shipments, Customs officials will inspect
shipments to the United States to ensure that they comply with the FDA's labeling requirements.
Moreover, tea accessories and packaging should not infringe on any trademark or patent registered
with the US Patent & Trademark Office, since the holder of a registered mark may request that the US
International Trade Commission (ITC) order the seizure of any infringing shipments at the port of entry.
Importers into the United States also need to be aware that the US Department of Agriculture may issue
periodic import alerts, barring the entry into the United States of agricultural products from certain
countries or regions deemed unsafe.
buyer may or may not be aware. The UN International Trade Center has developed a model contract for
the international sale of perishable goods, which can apply to tea and other substances that are
susceptible to mold and other contamination. The International Chamber of Commerce has produced a
model contract for international sales of manufactured goods for resale, which can apply to durable
items such as teapots, tea kettles, tea strainers and infusers, and related items. However, these model
contracts can only provide so much predictability. Since the transaction is an “international sale of
goods,” the applicable law can be difficult to pin down depending upon the circumstances, and the
countries from which the parties are doing business.
In many cases, tea suppliers provide only a one-page form
contract or purchase order form, which does not allude to the
true complexity of the transaction. Apart from the sales
contract itself, there are normally up to five other contractual
documents in an international goods sale/purchase transaction:
the bill of lading, the bill of exchange (or “draft” in American
English), the letter of credit, the bank’s agreement with the
buyer to issue a letter of credit, and any relevant insurance
contract. Each of these documents will have a different set of
legal rules that apply. Some of them have been standardized
by international treaties, and others have not. International
suppliers often rely on letter of credit (LOC) transactions as
their sole means of securing payment. The alternative is to
retain local counsel in the buyer’s country to file security
instruments against the goods being purchased.
Before goods actually reach the United States, a number of
import clearance issues need to be borne in mind. The
importation of tea accessories generally follows the normal
customs procedures. However, importing tea triggers a
number of regulations imposed by agencies outside of
Customs. For example, the actual manufacturer or packer
of the tea overseas must be registered with the FDA, prior to
the tea being imported. The person importing the tea must give the FDA pre-import notice that the tea
is being imported. Under the Lacey Act, the importer must make pre-import declarations and keep
records concerning the source of any paper and other wood-based products such as tea bags and
packaging that are separately imported into the United States. Some regulatory lawyers are concerned
that the tea itself may be subject to the new Lacey Act requirements, added in 2008.
The primary objective of U.S. Customs (now called US Customs & Border Protection) is to determine
whether imported goods have been properly labeled as to: their true contents (to calculate the correct
import duty), and their true country of origin. However, Customs will also enforce the regulations of
other agencies. As such, tea shipments may be inspected to determine compliance with the
Endangered Species Act of 1973, which covers both plant and animal species, and the Environmental
Protection Agency’s pesticide regulations. Tea-producing countries will often set maximum residue
levels (MRL's) for certain pesticides used by tea farms. China's agriculture and commerce ministries
have begun registering tea farms in order to enforce their MRL's. When the tea reaches the United
States, the tea may be inspected and tested to ensure compliance with the EPA's own tolerances for
listed pesticides. Other countries, such as the United Kingdom, will also enforce their own tolerances for
pesticides that may be used in tea growing.
Apart from Customs inspections of the contents of tea shipments, Customs officials will inspect
shipments to the United States to ensure that they comply with the FDA's labeling requirements.
Moreover, tea accessories and packaging should not infringe on any trademark or patent registered
with the US Patent & Trademark Office, since the holder of a registered mark may request that the US
International Trade Commission (ITC) order the seizure of any infringing shipments at the port of entry.
Importers into the United States also need to be aware that the US Department of Agriculture may issue
periodic import alerts, barring the entry into the United States of agricultural products from certain
countries or regions deemed unsafe.
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