Did you know?
Exporters may use HTS codes in place of Schedule B. Go to https://hts.usitc.gov/current and choose the view tab. As always, there are exceptions, but you may be able to avoid toggling between lists. If you are maintaining separate parts lists for HTS and Schedule B codes this could be a time saver.
From the tariff:
For reporting exports, the provisions of this HTS publication may generally be used in place of the reporting codes of Schedule B on the Shipper’s Export Declaration, or under the program for electronic reporting of exports. Except as noted below, the statistical reporting numbers in the HTS (with the article descriptions and units of quantity) for articles falling in chapters 1 through 97 may be used in place of those in Schedule B. The special prefix symbols which denote preferential tariff treatment should not be included.
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As noted in previous posts the HTS (Harmonized Tariff Schedule) has been updated for 2022 and the changes are significant. The change record lists 12 pages of codes that have been established, discontinued. or modified. The tariff will be revised throughout the year. For reference the 2021 version was revised 12 times and the 2020 version 28 times.
It’s time to review your codes.
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An annual customs review is a good business practice. As part of your due diligence check to make sure you are taking advantage of regulations that allow importing on a duty free or preferential basis. Here are a few basic items for your annual customs review:
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Classification– review annual updates to Harmonized Tariff to make sure your codes and descriptions are accurate. Proper classification and valuation of imported goods are the first step in compliance. If you do nothing else, do this.
Duty Drawback– this is a refund of duties paid on imports that are later exported. As supply chains expand there may be new opportunities for drawback. Record keeping is key here.
Chapter 98 of the Harmonized Tariff allows duty free entry of certain categories of goods. Examples are: American Goods Returned, American Goods Repaired or Altered Abroad, and American Components Assembled Abroad.
Trade agreements– programs which allow duty free or reduced duty rate entries. There are many agreements (such as USMCA) in place.
Customs rulings– consider requesting formal customs rulings prior to large transactions. This ensures compliance and eliminates uncertainty about imports. Rulings can be requested thru the CBP website.
Correcting errors– when an entry mistake is discovered it can be corrected by a prior disclosure to CBP. The formal process is a Post-Entry Amendment/Post Summary Correction. A prior disclosure can help mitigate penalties.
Happy New Year…It’s that time of year again. The 2022 Preliminary Edition of the Harmonized Tariff Schedule has been published and there will be more changes later in January. Best practices in compliance include reviewing your parts lists to make sure you are using accurate and up to date HTS codes.
Why not take it one step further and develop a parts matrix listing descriptions, HTS codes, Schedule B codes, ECCN, License info, Country of Origin, and any other relevant import/export data? Your matrix will enable you to document new parts additions and changes as they occur. All departments involved in trade will be working with the same information so errors and omissions will be reduced.
Contact firstname.lastname@example.org for help with your matrix.
I’m not an economist (nor do I play one on TV), but this can’t be good. Canada is the US’s largest trading partner for exports and in the top 3 for imports. Supply chains linking the two nations are relatively short and logistics less complex.
If NLR is your default entry this is a wake up call. Thanks Jim Dickeson – Trade Compliance Geek #compliance
It’s finally happened. I’ve been saying for years that AES needed this simple edit check.
As you know, when you export an item with an ECCN whose reason for control is the same as the reason for control for your destination country, there is a license requirement. Either you need an export license, or there may be a license exception available. But if you filed the EEI in AES with the License Type C33 for No License Required (NLR), you would have a BIS export violation. No, AES wouldn’t tell you this. You’d just get the bad news at some point in the future. Along with a penalty of up to $250,000. Cha-ching!
Perhaps you have been “looking the other way” when it comes to export compliance. If you are lucky there have been no consequences for this negligence. CEOs and COOs, why not start off 2022 with a little executive action and move your organization towards compliance?
While a formal Export Compliance Program is the ideal solution, you may not be ready to commit the resources needed at this time. However, there are some steps that can be implemented immediately at little cost.
Here are a few best practices to help you get started :
1) Review and confirm correct Harmonized Tariff and Schedule B codes and maintain master list as updates occur. Proper classification follows established protocols and is the starting place for compliance.
2) Check Export Administration Regulations (EAR) for correct ECCN and license exception codes. Are you automatically using EAR99 and NLR? https://www.bis.doc.gov/ can help.
3) Confirm Country of Origin for all imports. This info is needed for your Commercial Invoice and is not always obvious, so consider consulting a Licensed Customs Broker.
4) Check common “Red Flags” such as denied parties lists, entities lists, and unverified lists. Once again, https://www.bis.doc.gov/ provides details and training.
5) Review export documentation for possible improvements.
Make export compliance a front-end process not a last minute shipping function. Remember, while Logistics Service Providers (LSPs) are valued partners, the exporter bears primary responsibility for compliance. Finally, if exporting under ITAR you need a responsible trained officer.
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In a recent post we discussed Country Commercial Guides published by the International Trade Administration, which is part of the US Department of Commerce.
The FTA Tariff Tool is another valuable ITA resource for exporters . This tool enables exporters to determine duty rates when shipping to foreign countries. Here is the link:
For help with international logistics contact firstname.lastname@example.org