How to Maximize Your Export Profits

By Tom Travis of Entrepreneur.com

Despite the news about the stagnation of the economy in recent months, there has been one bright spot: Export profits. With 95% of the world's consumers residing outside U.S. borders, a weakened dollar that makes American goods more affordable and a decline in domestic demand, more U.S. companies are boosting their exports to bolster their bottom lines. But there's more profit to be made on shipments abroad than just the margin between selling price and cost.

Since the nation's founding, the federal government has passed laws to promote exports and improve the global competitiveness of U.S. companies. One of these is duty drawback. Drawback is a 99% refund of import duties on exports. In other words, if you use imported raw materials, intermediate products or other inputs in the manufacture of products that are then exported, you can get back virtually all the duties you paid on those imports.

You don't even have to use the specific products you imported to qualify; in certain cases, you can substitute U.S.-made goods that are substantially the same as the imports and still get a refund of the duties you paid on the foreign goods.

Under U.S. law, three primary types of drawback are allowed: unused, manufacturing and rejected merchandise drawback.

Unused merchandise drawback -- Merchandise that's imported or substituted for commercially interchangeable merchandise and exported without being used for its intended purpose in the U.S. is eligible for this drawback. Even if the imported or substituted merchandise undergoes certain incidental operations such as repackaging, unused drawback is still available.