The United States International Trade Commission has updated the Harmonized Tariff Schedule of the United States. This revised edition of the 2017 Harmonized Tariff Schedule takes effect July 1, 2017.
It is a good business practice to review your codes at least once per year to make sure you are in compliance. For help with your codes contact mitch@52.91.45.227
An annual review of Harmonized Tariff codes is a good business practice. Another good practice is 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. Contact mitch@52.91.45.227 if you need help.
From the archives
Logistics service providers point to their technological solutions and KPI’s (Key Performance Indicators) to add value for their clients. KPI’s are essential to the management of logistics providers as well as to their clients. Some customer service functions, however, are not as easy to measure. Clients of logistics providers include shippers, consignees, importers, and exporters. Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse company, you will need customer service assistance from time to time. Let’s differentiate:
Request for Information– shipment status, tracking and tracing, claims status, rate requests, invoice balance. This type of customer service is best obtained on line. Take the time to become familiar with your providers’ info systems so you don’t waste time on the phone or waiting for a call back. If your provider does not offer this type of info on line they are either inefficient or very small. To avoid frustration ask yourself if you just need information or action by your provider. Information is easier to get than action.
Action Needed- This level of customer service most likely requires human intervention. Examples include customs or regulatory delays, stopping or diverting shipments, credit issues, special pricing, or real emergencies. While no one likes calling an 800 number, it is a good idea to get your request into the provider’s system as soon as possible as a first step. The difficulty is in reaching the right contact and getting the action you need. If you use a 3PL you may be able to delegate the problem for their handling and have them provide timely updates. If you do not use a 3PL, then you need to manage the issue on your own. One mistake clients make is to rely on their account rep for all customer service. Account reps are usually on the road and in meetings so this causes delays in action. Another mistake is to depend on the super efficient Mary, Debbie, or Bill in your provider’s office. Everyone takes vacations and sick days so don’t rely on one person for your customer service needs. A better way to get good customer service is to establish protocols with the help of your providers.
Protocols- Day to day logistics consists of planning, execution, and problem solving. Good planning is essential but not foolproof. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. I suggest developing a set of problem solving protocols for the most common issues in your supply chain. This approach will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing resources. They should be willing and able to give you relevant operations contacts along with phone and e mail info for your identified problem areas. Your account rep may be surprised when you ask for help developing protocols but they should welcome the opportunity. This method can be a big time saver for them as well. Get commitment from your providers to respond to your requests in an agreed to amount of time. You can update the protocols as needed. Make them a part of your review meetings with your account reps and you will get better customer service.
Finally, if your account rep says “Just call me”, don’t accept this response.
We help small and medium sized companies stay compliant with Customs and export regulations and manage logistics. Contact mitch@52.91.45.227
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. Here is some info from the BIS website.
For help with exports contact mitch@52.91.45.227
Deemed Export FAQs
What is the “deemed export” rule?
An export of technology or source code (except encryption source code) is “deemed” to take place when it is released to a foreign national within the United States. See §734.13(b) of the Export Administration Regulations (EAR). For brevity, these questions and answers refer only to “technology” but apply equally to source code.
What is a “release” of technology?
Technology is “released” for export when it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally; or when technology is made available by practice or application under the guidance of persons with knowledge of the technology. See §734.2(b)(3) of the Export Administration Regulations (EAR).
When do I need to apply for an export license for technology under the “deemed export” rule?
Assuming that a license is required because the technology does not qualify for treatment under EAR99 and no license exception is available, U.S. entities must apply for an export license under the “deemed export” rule when both of the following conditions are met: (1) they intend to transfer controlled technologies to foreign nationals in the United States; and (2) transfer of the same technology to the foreign national’s home country would require an export license.
When the ECCN (Export Control Classification Number) comes up on export documents many exporters automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default exception. While these may be the correct entries, it is a good business practice to check and confirm. Here is some info from a previous post.
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.”
If you need help contact mitch@52.91.45.227
If you are planning to take the customs broker exam in October you should be well into your preparations by now. In a previous post I shared the prep strategies that worked for me. Here is the info again with the key steps highlighted. Best of luck but don’t rely on luck.
According to CBP Customs and Border Protection passing rates for the customs brokers exam average only 3-11% nationwide. The test is given twice per year in April and October. It consists of 80 multiple choice questions and a passing grade is 75%. The exam is open book which makes it seem easy. However, the books consist of the HTUS Harmonized Tariff of the United States and CFR 19 Code of Federal Regulations, totaling hundreds of pages. The difficulty is in being able to quickly access the right section for each question. It is a four hour exam so three minutes per question is not much time.
I took a prep course but, as good as it was, it would have been difficult to pass the exam without additional study. I estimate that I spent about 60 hours on weekends leading up to the exam.
I used 6 previous exams and a 3 step process. In step 1 I took each test for accuracy, ignoring the clock. In step 2 I took the tests again in the same order, while timing myself to make sure I could finish within 4 hours. I believe that step 3 was the key to my success. For this phase I circled all the questions I had missed in steps 1 and 2 and created a separate mini exam which I took several times until I answered all the questions correctly.
From the archives…
Customs entries on imported merchandise involve calculating duties and taxes based on commodity classification (HTS), country of origin, and transaction value, along with special notes. In previous posts we have discussed the importance of making sure that correct HTS codes are used. In most cases the commercial invoice or CI value is used for duty calculation. In situations where the transaction is not so clear Customs has established an “appraisement hierarchy” to determine entry value. The details can be found in US Customs and Border Protection regulations 19 CFR part 152. Here is a summary:
Appraisement Hierarchy
1) Transaction Value- actual invoice value
2) Transaction Value of identical merchandise- same country, same class and kind
3) Transaction Value of similar merchandise- same country, commercially interchangeable
4) Deductive Value – start with US retail selling price and deduct commissions, transportation, insurance, duty/tax, and value of further processing
5) Computed Value- sum of the following. Importer can request computed instead of deductive.
6) Value if other values cannot be determined- if the value of imported merchandise cannot be determined it will be appraised on the basis of a value derived from the methods set forth in parts 152.103 thru 152.106.
Transaction Value cannot be used and the hierarchy comes into play when:
Unacceptable bases of appraisement:
Need regulatory help? Contact mitch@52.91.45.227 .
In previous posts we have discussed the World Bank Logistics Performance Index for international trade. The Index also contains a domestic component as detailed below:
The Domestic LPI looks in detail at the logistics environments in 160 countries. For this measure, surveyed logistics professionals assess the logistics environments in their own countries. This domestic evaluation contains more detailed information on countries’ logistics environments, core logistics processes and institutions, and performance time and cost. This approach looks at the logistics constraints within countries, not just at the gateways, such as ports or borders. It uses four major determinants of overall logistics performance to measure performance:
• Infrastructure,
• Services,
• Border procedures and time, and
• Supply chain reliability.
Here is some of the data for the US from the 2016 report. The low percentage of physical inspections stands out.
| Shipments meeting quality criteria (%) | 96.34% |
|---|---|
| Number of agencies – exports | 3 |
| Number of agencies – imports | 2 |
| Number of documents – exports | 3 |
| Number of documents – imports | 3 |
| Clearance time without physical inspection (days) | 1 days |
| Clearance time with physical inspection (days) | 2 days |
| Physical inspection (%) | 4.29% |
| Multiple inspection (%) | 2.58% |
| Declarations submitted and processed electronically and on-line (%) | 100% |
| Importers use a licensed Customs Broker (%) | 100% |
| Able to choose the location of the final clearance (%) | 100% |
| Goods released pending customs clearance (%) | 57.14% |
The World Bank has posted their Logistics Performance Index for 2016. The index benchmarks 6 areas of performance and gives nations a score from 1-5 for each area. The benchmarks are 1) Efficiency of customs clearance process, 2) Quality of trade related infrastructure, 3) Ease of arranging competitive pricing for shipments, 4) Competence and quality of logistics services, 5) Ability to track and trace shipments, and 6) Timeliness of shipments in reaching destination within scheduled time of arrival.
For 2016 the US ranks 10th overall with an average score of 3.99 for the 6 benchmarks. The highest US score is 4.25 for timeliness, and the lowest is 3.65 for ease of arranging international shipments. This may be due to the wide variety of services available to US traders which can make comparisons more complex.
http://lpi.worldbank.org/international/global
The Trifecta: supply chain, an interactive map and…donuts. (Its National Donut Day, after all)
http://archive.boston.com/yourtown/specials/starbucks_vs_dunkin_donuts/
Great, quick Reauthorization summary
Drawback times are a-changin’
http://blog.tradewin.net/holy-cow-the-drawback-program-is-actually-and-finally-changing