Compliance Nuts and Bolts

The November 2019 edition of Logistics Management magazine includes an excellent article on trade compliance. 2020 Trade Update: More Complexity in Compliance by Patrick Burnson is a worthwhile read for trade professionals.

Some of the complex global issues to be monitored are the US-Mexico- Canada agreement, US-China tariffs, and the status of Brexit. Compliance managers and shippers are advised to get back to basics irrespective of international trade agreements.

Here are a few takeaways from the article:

Incoterms 2020 – changes can impact the price paid for materials and products. Shippers should review DDP contracts to make sure they are being accurately invoiced especially in light of the China 301 tariffs.

Antidumping and Countervailing Duties  (AD/CVD) – CBP has increased focus on imports subject to AD/CVD . Internal controls and periodic assessments can help reduce risk.

HTS Classifications – Review of HTS and Schedule B classifications is one of the most basic compliance tasks. Tariff numbers are frequently changed, updated, or deleted. Failure to keep on top of this can result in customs delays and/or inaccurate duty assessments.

Bond Sufficiency- Recent changes to duty rates, especially China 301 tariffs, are requiring shippers to increase their bond amounts. The difficulty is in projecting duties, fees, and taxes over the next 12 months.

Preparation and Planning- CBP reports an uptick in mistakes from traders who are trying new strategies to save on tariffs. Experts recommend looking at data in the same light as CBP does and then establishing compliance procedures. A strategic approach toward Section 301 tariffs could be analyzing the biggest dollar amounts paid to see where changes can be made in your supply chain.

In summary the challenge for compliance and logistics professionals is to both get back to basics and, at the same time, pay attention to new regulations.

For immediate assistance contact mitch@

EAR99 and NLR…are you sure?

Most shippers by now are quite comfortable submitting ACE Export (formerly AES) filings. I have found, though, that EAR99 and NLR are often entered by default. While these may be the correct entries, it is a good business practice to check and confirm.

As part of any Export Management Program, exporters need to make sure they are using correct commodity classifications and license exceptions. While freight forwarders can provide expertise in these areas the exporter bears primary responsibility for compliance. If you are automatically using NLR and EAR 99 you may be at risk.  According to EAR part 732 “For items subject to EAR but not listed in CCL the proper classification is EAR 99. EAR 99 is a basket for items not specified under CCL and appears at the end of each Category on the CCL.”

For immediate assistance with exports contact mitch@ .

Drawback Modernization

Posted on LinkedIn today

Just participated in a webcast on Expanding Duty Drawback Benefits in a Turbulent Trade Environment presented by KPMG Tax Watch. The presenters provided a good overview of the different types of drawback and their value as an effective Section 301 Tariff mitigation strategy.

The Trade Facilitation and Trade Enforcement Act of 2015 went into effect in 2018. All drawback claims must now be filed electronically in CBP’s ACE system.

The final topic “Drawback Reimagined” included a number of best practices for managing drawback programs suggested by KPMG. This was an hour well spent as both a duty drawback refresher and an update on TFTEA Drawback Modernization.

for immediate assistance contact mitch@


LinkedIn Comments

Mitch Kostoulakos, LCB commented on this

Pete Mento • 2ndManaging Director Global Customs and Duties, Crowe LLP4h • Edited • Here’s a reality slap for you: There are only about 14,500 Licensed Customs House Brokers in US. And let’s be serious – a significant portion are retired or not engaged in license focused activities. I would guess less than half are actually working, licensed Trade Professionals. Given the horror stories of the way people were treated taking the last exam, how difficult CBP makes taking it, the absurdity of NCBFFA’s ideas of monetizing and monopolizing our continuing education and how we are outrageously undervalued ….We are ripe to unionize. And no, I’m not joking. The argument back will be that automation and systems are overcoming the need for the insights of brokers. If you are under that impression, you clearly haven’t been paying attention. Importing and global trade is only becoming more difficult. The process of becoming a broker needs to evolve to reflect that. Apprenticeships, comprehensive exams, multiple levels of licensure and real continuing education developed by CBP in conjunction with a non biased group of people not in it for the cash must be considered. And we have to find a way to bring more young professionals into this line of work as we are – literally – dying and retiring off at an alarming rate. hashtag#importhashtag#logisticshashtag#tradehashtag#NCBFFAhashtag#globaltradehashtag#shipping…see

Sign me up Pete. Compliance and regulatory expertise is worth a lot more than brokers are being paid. Entries will continue to be commoditized and automated but they are just the tip of the iceburg.

Reviewed Your CI Lately?

A recent client project consisted of reviewing a number of entries to check harmonized codes and duty rates. This, of course, led to examination of the commercial invoices. As everyone involved in international trade knows, the commercial invoice is one of the primary documents of the transaction. While there is no universal standard format for commercial invoices, including the following key elements will help reduce customs delays and entry mistakes:

Invoice Number, Page Numbers – Avoids confusion for entries with multiple CIs or CIs with multiple pages.

Country of Origin– Best to use ISO country codes.

Related/Not Related parties

Incoterms and currency- these are elements of the sales contract. Indicate version of Incoterms (2010, 2020) as all parties may not be aware of updates.

Harmonized tariff # and duty rate if known

Description of goods – avoid trade names, brand names. What is it? What is it made of? What is it used for?

Summary of Value- must include IV Invoice Value. Can also include NDC Non Dutiable Charge (subtractions), AMMV Add to Make Market Value (additions), NEV Net Entered Value (bottom line- dutiable)

For immediate assistance contact mitch@