The HTS (Harmonized Tariff Schedule) has been updated for 2023 and the changes are significant. The change record lists 22 pages of codes that have been established, discontinued, or modified in the last year. The tariff will be updated throughout 2023 and, for reference, the 2022 version was revised 12 times.
Accurate classification is the first step in customs compliance. Best practices include reviewing your HTS codes at least semi-annually.
For help contact mitch@52.91.45.227
An annual customs review is a good business practice. Early January is a good time to get this done before day to day activity ramps up again. 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:
Classification– review updates to the HTSUS (Harmonized Tariff Schedule of the United States) 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.
Contact mitch@52.91.45.227 if you need help.
Info for Customs Broker Permit User Fee as published in the Federal Register. Payment is due no later than February 24, 2023. The fee is $163.71 for each permit held.
C- Level executives, 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. Why not start off 2023 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.
Contact mitch@52.91.45.227 for immediate assistance.
CBP is eliminating district permits effective 12/19/2022. Those brokers holding only district permits will be transitioned to national permits. Those already holding national permits will not be affected.
Here is some of the info posted on the CBP website in October followed by a link to the complete announcement:
Within the new national framework, district permits will be eliminated. All customs brokers currently operating with only a district permit will be automatically transitioned to a national permit before the Final Rule effective date. CBP has diligently designed a national permit transition process that will ensure no lapse in permit activity for customs brokers impacted by this process. Licensed customs brokers who already hold a national permit will not be affected.
As all logistics professionals know, problem solving is a big part of the job. My clients are mostly small or medium sized firms working with minimal staffs, so I frequently assist them in resolving service issues. We’re in the middle of one right now, which prompted this post.
We engage with a variety of LSPs (Logistics Service Providers) including freight forwarders, carriers, integrators, and customs brokers. Most have automated systems for efficiency and cost control purposes. When looking for a status update or answer to a simple question these systems are fine. Self service can be frustrating, though, when the problem is not easily described and is of no use for more complex issues. Information is easier to get than action.
The ability/authority to solve problems is what defines great customer service. Reaching a human being in customer service requires patience and many times that person is simply reading from a script. If I haven’t been able to solve the problem on-line then I need someone with the ability and authority to resolve the issue.
LSPs, don’t force your clients to dump problems on their account rep or e mail the CEO. A few key people in customer service roles with the authority to fix problems on the spot will earn you a lot of customer loyalty.
The pass rate for the October, 2022 CBLE (Customs Broker License Exam) has been posted to the CBP website. The 11.1% rate is considerably lower than April, 2022 (39.6%) or October, 2021 (25%).
I often hear from recruiters looking for Licensed Customs Brokers so, apparently, there is demand. However, the difficulty of the CBLE, along with the stringent background investigation, present very big obstacles to anyone wishing to enter the profession. I doubt that there are any other licensing exams with pass rates this low, including the bar exam.
Pete Mento posted about this topic on LinkedIn in September and I completely agree with his thoughts.
The October 26, 2022 CBLE resulted in a 11.1% pass rate prior to appeal decisions.
The April 27, 2022 CBLE resulted in a 39.6% pass rate prior to appeal decisions.
As noted in a previous post, CBP conducts intensive background checks for applicants who have passed the CBLE (Customs Broker License Exam). Here is a relevant question from the October 2022 exam.
Under what circumstances may a Customs broker employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice (former broker)?
A) A Customs broker may not employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice under any circumstances.
B) A Customs broker may employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice under all circumstances.
C) A Customs broker may employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice after receiving written permission from the Assistant Commissioner upon appropriate notification or petition.
D) A Customs broker may employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice if the hiring Customs broker never asked about and is unaware of such status.
E) A Customs broker may employ a convicted felon or an individual who formerly was a broker whose license was cancelled with prejudice if five (5) years has passed since the felon was released from prison and/or parole or five (5) years has passed since the former broker’s license was cancelled with prejudice.
Answer: C
Congratulations to all who passed the October 2022 CBLE (Customs Broker License Exam). Now be prepared for a background investigation. From CBP regulations:
Link to an amendment published at 87 FR 63314, Oct. 18, 2022.
(a) Referral of application for investigation. The port director will immediately refer an application for an individual, partnership, association, or corporation license to the special agent in charge or other entity designated by Headquarters for investigation and report.
(b) Scope of investigation. An investigation under this section will ascertain facts relevant to the question of whether the applicant is qualified and will cover, but need not be limited to:
(1) The accuracy of the statements made in the application;
(2) The business integrity of the applicant; and
(3) When the applicant is an individual (including a member of a partnership or an officer of an association or corporation), the character and reputation of the applicant.
