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.

Compliance is about attention to detail, consistency, process, and oversight. I guarantee that your compliance folks are not trying to practice “sales prevention”. The goal is to complete transactions the right way, avoid customs or logistics delays and reduce exposure to fines and penalties. However, there is no doubt that complying with all of the agencies involved in international trade generates a lot of red tape and can be frustrating.

Compliance managers must have the authority to stop shipments when red flags appear. In order to ensure independence compliance folks should not be in the supply chain, finance, or marketing chain of command. Better reporting relationships would be with the legal department, CEO, or COO.

Consider just a few of the details that can make or break a smooth transaction:

Harmonized Codes to the full 10 digits including heading and sub heading. It is very easy to transpose digits.

Schedule B Codes, ditto

ECCN , Alpha numeric, number, letter, followed by 3 numbers. Example 4A994. Then followed by sub paragraph level and don’t forget the dot between the last number and the sub para.

License Exceptions are designated by 3 letter codes and must be compatible with the ECCN listed.

COO, Country of Origin markings and proper codes on documents and AES filings. Best not to guess here. Have you ever entered CH for China?

Valuation must be determined accurately and is best covered in a separate post which I have done on 05/09/2019.

These tactical elements are just some of the basics. We could also mention commodity descriptions, red flag screening, and plenty of other details. Trade policy is more strategic, encompassing trade agreements, incoterms, and dealing with enforcement agencies. There is a lot at stake so, hats off to the compliance teams.

For assistance contact mitch@52.91.45.227

No, I’m not referring to golf, but using links as a logistics term. The pandemic and recent events have made it clear that diversifying supply chains can help mitigate disruptions.

Logistics is tactical in support of supply chain strategy, so must be able to adapt to the planned diversification. The textbook terms nodes and links are descriptive in logistics and supply chain discussions. Nodes are fixed locations such as factories and distribution centers. Links are Logistics Service Providers (LSPs) which connect the nodes from pick up (first mile), through line-haul operations (middle mile), to end user delivery (last mile). The links include ocean and air carriers, freight forwarders, truck lines, integrated parcel systems, customs brokers, and possibly 3PLs. It is easier to change links than nodes. However, if diversification is to reduce supply chain disruptions, both nodes and links must be strengthened.

New LSPs must be evaluated for their export compliance and ability to perform first mile, middle mile, and last mile operations. Details matter. Failure to review documentation, for example, can cause customs delays. New LSPs can make or break supply chain strategy. Consider their services as “value adds” rather than just cost. Consistent performance is more important than rates when new links are utilized in your supply chain.

Diversifying any supply chain requires time, a complete project plan, upper management commitment, and attention to detail.

We can help you work with the links. Contact mitch@52.91.45.227

Clients often say “we’ve used the same harmonized codes for years” and “our commodities are duty free“. As a Licensed Customs Broker and consultant this tells me that I need to do some checking on the client’s behalf. Using obsolete or invalid HTS codes is a sign of an amateurish operation. It is likely that, for these clients, commercial invoice descriptions also need updating. If they are an exporter we should check ECCNs, License Exceptions, and Schedule B numbers as well.

The Harmonized Tariff Schedule code is a 10-digit import classification system that is specific to the United States. HTS codes, also called HTS numbers, are administered by the U.S. International Trade Commission (ITC).

Customs brokers use the HTS, along with CBP regulations, in their day to day business. Importers and traders may also make use of the HTS in determining duty rates. Checking the validity of harmonized codes at least semi-annually is a good business practice. What may be surprising is the frequency of revisions to the HTS.

The tariff archives show that the 2021 HTS was revised 12 times. Don’t assume that your codes are valid. A little due diligence helps avoid problems down the road. Contact mitch@52.91.45.227 for a review of your HTS codes.

Following up on my February 3rd post about the April 2022 Customs Broker License Exam, here is some info from the CBP website:

Past CBLE Information

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

The April 21, 2021 CBLE resulted in a 19% pass rate prior to appeal decisions. 

These results are significantly higher than for previous exams. The CBLE remains challenging, however, even for those who have experience in the field. If you are planning to take the exam on April 27th you should be well into your preparations by now.

Contact mitch@52.91.45.227 if you would like study tips.

My January post about due diligence in compliance included reviewing updated HTS and Schedule B codes. Another best practice is to check your ECCN codes and License Exceptions. Chances are you have been using the same ECCN and License Exceptions or EAR99 and NLR as default entries.

Here is some recent info from BIS (Bureau of Industry and Security) about changes to ECCN and License Exceptions. While this notice may not apply to you, the point is that ECCNs and License Exceptions can change. For help contact mitch@52.91.45.227.

1/12/2022
87 FR 1670

Information Security Controls: Cybersecurity Items; Delay of Effective Date

On October 21, 2021, the Bureau of Industry and Security (BIS) published an interim final rule that establishes new controls on certain cybersecurity items for National Security (NS) and Anti-terrorism (AT) reasons, along with a new License Exception, Authorized Cybersecurity Exports (ACE), that authorizes exports of these items to most destinations except in the circumstances described in that rule.  That rule was published with a 45-day comment period, which ended on December 12, 2021, and a 90-day delayed effective date (January 19, 2022). This rule delays the effective date of the interim final rule by 45 days (March 7, 2022).  This action does not extend or reopen the comment period for BIS’s previous request for comments on the interim final rule.

Rebecca Dabkowski•

Trade Compliance Director at Cambridge Isotope Laboratories, Inc

Keep filing your EEI to PR and USVI.

Mitch Kostoulakos, LCB 

Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Disappointing that US territories are treated as foreign countries.

From the CPB website

Announcement – Customs Broker License Exam Date

The next CBLE will take place on Wednesday, April 27, 2022. Exam registration will open on Monday, February 28, 2022 and close on Monday, March 28, 2022.

The April 27, 2022 CBLE will be offered on-site only; U.S. Customs and Border Protection (CBP) will not offer a remote exam in April 2022.  CBP is dedicated to the ongoing modernization of the CBLE and intends to offer a remotely-proctored option at a later date.

If you are planning to take the exam and would like some study tips contact mitch@52.91.45.227

While working with a client on exports to Canada, we have found that the Canada Border Services Agency (CBSA) maintains a robust, user friendly website. Here is a link that may be helpful for traders:

https://www.cbsa-asfc.gc.ca/import/guide-eng.html

For help with exporting contact mitch@52.91.45.227

Export compliance means attention to detail, consistent procedures, up to date knowledge, and oversight. Due diligence is required for EEI filings, Schedule B and ECCN classification, Licensing entries, and Country of Origin determination. In spite of best efforts, mistakes will be made. In these cases a Voluntary Self-Disclosure is a smart move. Here is some info from the BIS (Bureau of Industry and Security) website:

Parties who believe they may have committed a violation of the EAR are encouraged to submit a Voluntary Self-Disclosure (VSD) to BIS. VSDs are an important indicator of a party’s desire to bring their export activities into compliance, and also may provide important information to BIS helping to identify foreign proliferation networks. Parties submitting VSDs may be eligible for significant reductions in administrative penalties, and those with well-implemented EMCPs may expect further significant reductions of administrative penalties. Procedures for submitting VSDs may be found in Section 764.5 of the EAR. The procedures detailed in Section 764.5 do not apply to VSDs involving violations of the antiboycott provisions of the EAR. Procedures for submitting VSDs for boycott violations are found in Section 764.8 of the EAR.

Contact mitch@52.91.45.227 for assistance in submitting VSDs.

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.

Contact mitch@52.91.45.227 for help with Schedule B or HTS codes.