File and Forget is Risky

Exporters, are you filing and forgetting? Auditing EEI (also referred to as AES) filings is a good business practice. If you are a self filer is anyone checking the accuracy of your submissions? Does your freight forwarder have an audit procedure in place if they are filing for you? Here is the risk of a “file it and forget it” policy:

§ 30.71 False or fraudulent reporting on or misuse of the Automated Export System.

(a) Criminal penalties –

(1) Failure to file; submission of false or misleading information. Any person, including USPPIs, authorized agents or carriers, who knowingly fails to file or knowingly submits, directly or indirectly, to the U.S. Government, false or misleading export information through the AES, shall be subject to a fine not to exceed $10,000 or imprisonment for not more than five years, or both, for each violation.

Are you aware of these potential filing errors?

A common misconception is that EEI and Commercial Invoice value should match. However, inland freight charges must be accounted for in the EEI filing whether or not they are on the commercial invoice.

or

The new mandatory filing requirement in Section 758.1(b)(10) applies to all items that have an ECCN and are destined to China, Russia, or Venezuela, regardless of value, end use or end user. 

For audits of your EEI filings contact mitch@adhoclogistics.com .

LinkedIn Comment- Responsible Parties

Deep SenGupta• 𝐂𝐨𝐧𝐭𝐢𝐧𝐮𝐢𝐧𝐠 𝐃𝐒𝐆 𝐆𝐥𝐨𝐛𝐚𝐥 𝐋𝐋𝐂’𝐬 𝐬𝐞𝐫𝐢𝐞𝐬 𝐨𝐟 𝐭𝐡𝐞 𝟐𝟓 𝐤𝐞𝐲 𝐞𝐥𝐞𝐦𝐞𝐧𝐭𝐬 𝐢𝐧 𝐚𝐬𝐬𝐞𝐬𝐬𝐢𝐧𝐠 & 𝐫𝐞𝐝𝐮𝐜𝐢𝐧𝐠 𝐨𝐮𝐫 𝐜𝐥𝐢𝐞𝐧𝐭’𝐬 “𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐓𝐫𝐚𝐝𝐞 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐒𝐜𝐨𝐫𝐞”

CHAPTER 2: RESPONSIBLE ORGANIZATION: When employees wear multiple hats (for example: the warehousing or procurement staff are also the Import-Export compliance go-to person), compliance usually falls through the cracks.

WHAT IS THIS AND WHY IS IT IMPORTANT TO THE TRADE COMPLIANCE SCORE?


Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Excellent post Deep…in my opinion compliance officers should report directly to CEO, COO, or legal dept. They must have autonomy and authority

The Waters Edge- Part 2

As noted in a recent post, complying with US export regulations is only half of the battle in an international transaction. Clearing customs and arranging transportation in the destination country can be even more complex. Issues include choice of customs broker and freight forwarder, Importer of Record status, establishing EORI and VAT accounts, marking and labeling, and much more.

Experienced LSPs (Logistics Service Providers) are valuable partners and should be able to provide guidance. However, due diligence on the part of the exporter means doing some research in advance. This is especially true when shipping to a country for the first time.

The International Trade Administration publishes on-line Country Commercial Guides available at no cost. Check them out at https://www.trade.gov/ccg-landing-page

Contact mitch@adhoclogistics.com for help with international shipping.

Checked Your CI Lately?

Along with airbills and ocean bills of lading, the commercial invoice is one of the primary documents in international trade. While there is no standard format for a CI, specific information is critical. Here is a question from the October 2021 CBLE (Customs Broker License Exam). If you don’t know the correct answer it may be time to review your commercial invoice. Link to the answer key below.

  1. Which piece of information is NOT a requirement on a commercial invoice?
    A. All rebates, drawbacks, and bounties, separately itemized, allowed upon the exportation of the merchandise
    B. An itemized list by name and amount of packing, cases, containers, and inland freight to the port of exportation, if included in the invoice price, and so identified
    C. The kind of currency, whether gold, silver or paper
    D. The port of entry to which the merchandise is destined
    E. The name of a responsible employee of the exporter, who has knowledge, or who can readily obtain knowledge, of the transaction

https://www.cbp.gov/sites/default/files/assets/documents/2021-Nov/October%202021%20Answer%20Key%20Final.pdf

Contact mitch@adhoclogistics.com for assistance

What About a Binding Ruling?

HTSUS (Harmonized Tariff Schedule of the United States) classifications can be straightforward or not, as these two examples illustrate:

9506.69.2040 Baseballs

8532.10.0000 Fixed capacitors designed for use in 50/60 Hz circuits and having a reactive power handling capacity of not less than 0.5 kvar (power capacitors).

A thorough classification includes HTS lookup, GRI (General Rules of Interpretation) review, checking notes, and searching CROSS (Customs Rulings Online Search System). This is the procedural aspect of classification, but there is more. Most commodities require interpretation of the tariff language based on experience. Finally, the process needs to be documented for future reference and parts lists updated.

I sometimes recommend a binding ruling to ensure accuracy in entries. Binding rulings provide uniformity across all ports of entry, and protect the importer from variations in interpretation from current and future CBP personnel. Rulings can be requested on valuation and country of origin as well as classification. The downside to obtaining a ruling is that you must follow it or be subject to penalties, although rulings can be appealed.

If you decide to obtain a ruling it is best to engage an expert to draft your request for a specific classification rather than leave it totally in the hands of CBP.

For help with binding rulings contact mitch@adhoclogistics.com.

CBLE Pass Rate

Earlier this week I posted about the appeal process for the Custom Broker License Exam. CBP has released the pass rate for October 2021.

The October 21, 2021 CBLE resulted in a 25% pass rate prior to appeal decisions.

Here is a sampling of exam questions with answers below:

Category III – Marking

  1. What is the appropriate country of origin marking for a pair of shoes manufactured in China and imported with its unsealed shoebox that reads “Kicks! America’s Favorite Sneaker”?
    A. Shoes must be marked with country of origin; shoebox is exempt from country of origin marking.
    B. Shoes are exempt from country of origin marking.
    C. Both the shoebox and shoes must be marked with country of origin.
    D. Only the shoebox must be marked with country of origin.
    E. Shoes and shoebox can be marked with a sticker stating the country of origin.

Category VIII – Classification

  1. An article of base metal containing two or more base metals is classified by the metal that
    ______.
    A. Is referenced last in the HTSUS
    B. Imparts the essential character of the article
    C. Predominates by weight over each of the other metals
    D. Has the highest value
    E. Is essential to its actual use

Category XI – Value

  1. Exporter E provides the following quantity discounts on mattresses purchased by importers before
    their importation:
    • 1 to 99 mattresses – no discount
    • 100 to 499 mattresses – 10% discount
    • Over 500 mattresses – 15% discount
    Under the first scenario, Importer X purchases and imports 120 mattresses in a single shipment. The invoice price reflects a 10% discount. Under the second scenario, Importer Y purchases 120 mattresses in a single transaction at a price which reflects a 10% discount but imports them in four separate shipments each comprising 30 mattresses. What is the customs value of the imported mattresses under the two scenarios?
    A. Under both scenarios, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount.
    B. Under the first scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount. Under the second scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting no discounts.
    C. Under both scenarios, the customs value is the price actually paid or payable for the imported mattresses reflecting no discounts.
    D. Under the first scenario, the customs value is the price actually paid or payable for the imported mattresses reflecting a 10% discount. Under the second scenario, the customs
    value is the price actually paid or payable for the imported mattresses reflecting a 15% discount.
    E. In both cases, the customs value is the price actually paid or payable for the imported mattresses reflecting a 15% discount.

Answers 9-C, 34-C, 56-A

Looking for Help?

Logistics and compliance professionals have always understood the complexity of 21st Century supply chains. The last couple of years have certainly raised this awareness with C-level executives and owners of smaller businesses as well. LinkedIn contacts and outreach from search firms tell me that logistics and compliance expertise is in demand.

You may be looking to add a logistics or compliance pro to your staff and, understandably, want to make a good selection. In the meantime let me suggest training your shippers in some export compliance basics. I have always warned that compliance should not be left to a busy shipping department. However, a few hours of training is a good investment as it will enable shippers to spot possible export violations before shipments leave your dock. It will also allow your new professional to focus on more strategic matters and hit the ground running.

BIS (Bureau of Industry and Security) offers basic on-line export training at no cost. Why not improve the skills of your existing staff (on company time of course)?

Ad Hoc Logistics can also help with specific training at your site. Contact mitch@adhoclogistics.com.

Appealing the CBLE?

Congratulations to those applicants who have passed the October 2021 CBLE (Customs Broker License Exam). The exam is very challenging with typical pass rates in the 10-15% range, although the October rate has not yet been posted. If you came up short consider taking it again in April 2022 now that you have some testing experience. You also have the option of appealing your answers to specific questions. Here is some info from the CBP website about how to appeal. Check the link for details.

How To Appeal

Appeal Instructions

Who can appeal?

Anyone who takes a Customs Broker License Examination and does not achieve a passing score may appeal questions on that examination.

When must an Appeal be submitted?

Any appeal must be submitted within 60 days of the date of the letter notifying the applicant of his or her score.

What is the basis for an Appeal?

The applicant must submit a compelling argument why his or her answer is better than the official answer for a specific question, or why the appealed question has no possible correct answer.

https://www.cbp.gov/trade/programs-administration/customs-brokers/how-appeal

Moral Character

The October 2021 CBLE (Customs Broker License Exam) has been posted to the CBP website. The answer key and pass rate have not yet been posted. Here is one of the easier questions from the Broker Compliance category.

  1. Below are the basic requirements to obtain an individual broker’s license EXCEPT:
    A. Be a citizen of the United States
    B. Not be an employee of the Unites States government
    C. Be at least 18 years old at the time of submission of license application
    D. Be of good moral character
    E. Obtain a passing grade of 75% on the Customs Broker License Exam (CBLE)

The correct answer is C as applicants must be at least 21 years of age. It is well known that the exam is difficult to pass. How does CBP judge moral character? An extensive background investigation as noted by CBP:

Q:What does the background investigation include?
A:Each broker license applicant must undergo a background investigation that includes a fingerprint analysis and a review of character references, credit reports, and any arrest record. Arrests or convictions do not necessarily preclude the issuance of a license.

LinkedIn Comment- Factors In Selecting Freight Forwarders

Factors to consider when selecting a freight forwarder

jamaica-gleaner.com • 

https://jamaica-gleaner.com/article/shipping/20211102/factors-consider-when-selecting-freight-forwarder

Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

The article covers most of the factors in choosing a forwarder. I would add the ability to advise on export compliance. While exporters bear the primary responsibility for compliance, forwarders can be a valuable resource in this area.