All posts by mitch

Compliance Geeks

Geek: “a person who has excessive enthusiasm for and some expertise about a specialized subject or activity”. Many compliance folks proudly refer to themselves as Geeks.

Demand for compliance professionals has never been higher, as LinkedIn users can readily see. Companies of all sizes and in all industries realize that being in compliance means fewer supply chain disruptions. At the very least compliance is good risk management. Think of it as insurance.

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; the factors are complex and need to begin early in the order cycle. However, a few hours of training is a good investment, enabling 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.

Our copyrighted presentation “Exporting for Smart People” will provide your staff with upgraded skills and knowledge.

Contact for more info.

Interactive EAR

In January I posted about the BIS website re-design and noted the difficulty in reading and interpreting the CCL.

This month I am updating parts lists for a couple of clients and finding that the new interactive EAR does make it easier to navigate the CCL. The links to ECCN categories in the CCL and CCL Index are a time saver. The paragraph format for each ECCN is an improvement over the old chart style.

The EAR, like all regulations, will never be interesting reading. However, I see the new format as an improvement. BIS has a button on the lower right of their homepage asking what can be improved. Don’t be shy!

CBLE Results

The May 1, 2024 CBLE (Customs Broker License Exam) resulted in a 13% pass rate prior to appeal decisions. Previous pass rate information is listed below. The exam and answer key are posted on the CBP website.

Congratulations to all who passed! You are now eligible to go through the application process, background check, and fingerprinting to obtain your license. The process can be lengthy, so be patient.

Many brokers have needed more than one try, so don’t be discouraged if you came up short. If you want to challenge any of the questions here is the link explaining how to appeal.

Pass Rate Information

The May 1, 2024 CBLE resulted in a 13% pass rate prior to appeal decisions.

The October 25, 2023 CBLE resulted in a 34% pass rate prior to appeal decisions.

The April 26, 2023 CBLE resulted in a 5.5% pass rate prior to appeal decisions. 

The October 26, 2022 CBLE resulted in a 11.1% pass rate prior to appeal decisions. 

Checked Your Boilerplate Lately?

In the 19th Century boilerplate meant rolled steel templates used to make boilers and the printed matter on the plates.

Today, the term boilerplate refers to standardized text, copy, documents, methods, or procedures that may be used over again without making major changes to the original. Boilerplate is commonly used for efficiency and to increase standardization in the structure and language of written or digital documents.

Traders when was the last time you reviewed your Commercial Invoice for accuracy or updates? Chances are it has been quite a while, given the more immediate challenges in logistics today. The same question applies to documents produced by your freight forwarder. Checking your CIs for accuracy is a best practice and can help reduce customs delays. Reviewers with “fresh eyes” are an even better idea.

While there is no universal standard format for commercial invoices, including the following key elements will help reduce customs delays and entry mistakes:

Description of goods – Vague or incomplete descriptions are the most common cause of customs delays. Avoid trade names, brand names, jargon. What is it? What is it made of? What is it used for?

Recipient or Importer of Record contact info- customs delays are often prolonged by slow communication between CBP and importers or between exporters and customs agencies in other countries. Make sure phone and e mail info is spelled out on the CI.

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 code to the 6 digit level– if unsure best not to include this info.

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).

Signature and Date

For immediate assistance contact

CBLE Relief and Anxiety

To all who sat for the May 1st CBLE (Customs Broker License Exam) you may now have your weekends back. I know from experience that you are feeling both relief that the exam is over and anxiety about your results. CBP advises that you will be notified of your score in 2-3 weeks. The pass rate for the previous two exams was 34% for October 2023 and 5.5% for April 2023.

I sometimes advise prospective candidates and would be interested in hearing your impressions of the May 1st exam.

Compliance Adds Value

I have always advised clients that export compliance equals good risk management. Furthermore, compliance functions should be viewed as value adds rather than as a cost center. Whether or not a formal ECP (Export Compliance Program) is implemented, there are a number of best practices that are essential for any company involved in international trade.

As noted in recent posts, compliance is often a “back burner” project for several reasons including: Don’t know where to start, lack of C-level commitment, reluctance to allocate resources, too small to worry about compliance, no previous problems, or just plain inertia.

While the ROI for export compliance will vary for individual firms, we can identify an overall value proposition easily surpassing the costs involved in implementing a program.

Risk Management– avoid the cost of fines and penalties which can reach $1 Million for criminal violations. Think of compliance as insurance.

Save Time/Save Money– export compliance means less re-work or follow up of requests for information from customers, government agencies, or forwarders.

Make MoneyGrow the Business- basic competence in exporting enables expansion to international markets. Compliance problems will cause customs delays and be an impediment to growth.

Enhance the Brand– similar to ISO certification and C-TPAT, an ECP demonstrates professionalism. Show customers and prospective customers that you know what you are doing.

Let’s get started!

Contact for help with export compliance.

Importers Beware

Importers, if you have been relying on your suppliers for HTS classifications of your products check this September 2022 CBP ruling. Briefly, it states that suppliers are not qualified to provide HTS classifications unless they employ LCBs (Licensed Customs Brokers), even with a disclaimer that the information is advisory.

Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. Pursuant to 19 U.S.C. § 1641(b)(1), “[n]o person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license . . . .”

The ruling includes the following language which explains that classifying to the six digit level is not considered customs business:

We note, however, that CBP has consistently held that classifying goods to the six-digit level of the HTS is not customs business and does not require a customs broker’s license. This level of classification “does not constitute customs business because the six-digit HTS provision is insufficient for entry.”

Contact for classification help.

Got Responsibility?

I recently posted about common self-imposed roadblocks to implementing an ECP (Export Compliance Program). The process certainly starts with management commitment. As noted CBP and BIS are ramping up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.

One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), bears ultimate responsibility for compliance.

Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Compliance must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.

In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP (Export Compliance Program), compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.

All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.

So once again; “Who’s responsible?”

Contact for immediate assistance.

Counting Down to Exam Day

If you are scheduled to sit for the CBLE (Customs Broker License Exam) on May 1st your preparations have most likely included practice exams as well as a deep dive into the HTS tariff and customs regulations. Not to mention blood, sweat, and tears.

Let me suggest also reviewing the notifications on the CBP website so that you don’t have an unexpected complication on exam day. The notifications include details about Covid restrictions, reference materials allowed, and ID/Proof of Citizenship requirements. There are separate sections for remote and in-person test takers.

You will find the info under this link:

Look for the heading It’s Exam Day !

Best of luck on May 1st !

ECP Procrastination

The value of an Export Compliance Program (ECP) has been well documented in this previous Passages post.

Exporters, what has prevented you from implementing an Export Compliance Program? Here are the most common self-imposed roadblocks:

  • Inertia- initial steps are taken to develop an Export Compliance Program but progress stalls as more urgent tasks need attention.
  • Management believes that the company is too small or does not export enough to need a formal ECP.
  • Lack of upper management commitment and willingness to put in the time.
  • Management is unwilling to spend the money or devote resources to create an ECP.
  • Compliance is managed at lower levels with limited authority to get the project done.
  • Reliance on Logistics Service Providers for compliance. While LSPs are valuable business partners, the exporter is ultimately responsible for compliance.

An effective Export Compliance Program includes these elements: Management Commitment, Risk Assessment, Export Authorization (Agency Jurisdiction), Record Keeping, Training, Audits, Handling Export Violations (Corrective Action), and Build and Maintain an ECP Manual.

The most essential element, by far, is Management Commitment. C-Level executives must allocate resources, communicate the importance of an ECP throughout the organization, and hold everyone accountable. Without strong management commitment and involvement, you will end up with a weak program.

In addition to C-level commitment, compliance professionals know that an effective ECP must also include sufficient funding, well defined and documented responsibilities, on-going training, and internal audits. Weak ECPs lack some of these elements and are simply window dressing or paper programs.

 In some cases, exporters may be under pressure to put a program in place quickly, with the focus on creating the ECP manual. This approach ignores the foundation needed for an effective program. The likely result will be a glossy manual that will sit on the shelf and have negligible impact on operations.

In-house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels or in the wrong chain of command. With or without a formal ECP, compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Written protocols for resolving issues and releasing holds require C-level or legal approval.

All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.

Finally, do not self-blind on export compliance. It is time to get started.