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Regulatory Updates

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@52.91.45.227

Nuts & Bolts

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@52.91.45.227 .

Regulatory Updates

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@52.91.45.227

#internationaltrade

Nuts & Bolts

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.

Nuts & Bolts

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@52.91.45.227

Regulatory Updates

Incoterms 2020

Just received my copy of Incoterms 2020 published by the International Chamber of Commerce. The book is well structured and clearly written. Incoterms are updated every 10 years so there are significant changes in each version.

Incoterms 2020 presents the rules and explanatory notes in simple language along with useful illustrations. The introduction informs the reader about what Incoterms rules do and do not do. For example, Incoterms rules describe obligations, risk, and costs between buyers and sellers. Incoterms do not deal with title or ownership of the goods, which is a common misperception.

Some of the changes made to Incoterms 2010 rules in the Incoterms 2020 rules include:

  • Bills of Lading with an on-board notation and the FCA rule
  • Costs, where they are listed
  • Different levels of insurance coverage in CIF and CIP
  • Arranging for carriage with seller’s or buyer’s own means of transport in FCA, DAP, DPU, and DDP
  • Change in the three-letter initials for DAT to DPU
  • Inclusion of security-related requirements within carriage obligations and costs
  • Explanatory notes for users

This post is not a book review but an introduction to a valuable resource for anyone involved in trade. I plan to study Incoterms 2020 and incorporate some formal training in the next few months so that I can provide guidance to clients.

contact mitch@52.91.45.227

Regulatory Updates

Are You a Deemed Exporter?

Posted on LinkedIn

Are you a Deemed Exporter?

Engineering firms, software companies, researchers, manufacturers, and universities need to be aware of the “deemed export” rules. They may be engaged in export transactions without even knowing it.

Check out the Bureau of Industry and Security’s newest online training video, “Deemed Exports,” now available on the BIS Online Training Room at https://www.bis.doc.gov/index.php/online-training-room. 

Nuts & Bolts

Customs Broker Exam

Best of luck to applicants taking the Customs Broker Exam on October 17th. For anyone thinking about applying for a future exam here is a question from the April 2019 exam. I will post the answer next week and also respond to anyone who submits their answers.

10. Die cut steel plier levers were bolted together in China before having rubberized non-slip grips attached to each lever handle in Germany prior to being imported into the United States. What is the proper country of origin and marking method?

A. Made in Beijing printed on a hangtag

B. Made in China printed on a sticker attached to the pliers

C. Made in China die stamped into the pliers

D. Assembled in Germany printed on a sticker attached to the pliers

E. The pliers are exempt from marking in accordance with the J list

Nuts & Bolts

Trading Across Borders

In previous posts we have reported on the World Bank Logistics Performance Index and how the United States ranks compared to other nations.

Another view of world trade is presented by the World Bank in their report Trading Across Borders- Doing Business. In the most recent report the US ranked 36th in trading across borders. Here is a link to the report along with some introductory info.

https://www.doingbusiness.org/en/data/exploretopics/trading-across-borders

 Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. 

Regulatory Updates

Red Flags (Continued)

From the archives….

In a previous post I discussed Red Flags to be aware of in export transactions. Here is more detail from the Bureau of Industry and Security about the Consolidated Screening List. The Department of Commerce lists that are included in the Consolidated Screening List are: Denied Persons List, Unverified List, and Entity List. For help with export compliance contact mitch@52.91.45.227

Consolidated Screening List

Prior to taking any further actions, users are to consult the requirements of the specific list on which the company, entity or person is identified by reviewing the webpage of the agency responsible for such list. The links below will connect you to the specific webpage where additional information about how to use each specific list is contained.

Department of Commerce – Bureau of Industry and Security

  • Denied Persons List– Individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order are prohibited.
  • Unverified List – End-users who BIS has been unable to verify in prior transactions. The presence of a party on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction.
  • Entity List – Parties whose presence in a transaction can trigger a license requirement supplemental to those elsewhere in the Export Administration Regulations (EAR). The list specifies the license requirements and policy that apply to each listed party.