If you can understand the overall idea of a topic in trade compliance rather than worrying about the details, it will get you very far.
Attention to detail is a critical factor in compliance.
My recent post “Got Alphabet Soup?” covered ECCNs (Export Control Classification Numbers) and EAR99 which is used for items subject to Export Administration Regulations without having a specific ECCN. License determination is the next step in export compliance and I remind shippers that automatically using EAR99 and NLR (No License Required) is risky.
§ 738.4 DETERMINING WHETHER A
LICENSE IS REQUIRED
(a) Using the CCL and the Country Chart
(1) Overview. Once you have determined that
your item is classified under a specific ECCN,
you must use information contained in the
“License Requirements” section of that ECCN in
combination with the Country Chart to decide
whether a license is required. Note that not all
license requirements set forth under the “License
Requirements” section of an ECCN refer you to
the Commerce Country Chart, but in some cases
this section will contain references to a specific
section in the EAR for license requirements. In
such cases, this section would not apply.
Contact mitch@52.91.45.227 for help with export regulations.
Applicants who passed the April 2022 CBLE (Customs Broker License Exam) are, no doubt, anxiously awaiting issuance of their license. This question from previous exams illustrates part of the process:
Below are the basic requirements to obtain an individual broker’s license EXCEPT:
A. Be a citizen of the United States
B. Not be an employee of the Unites States government
C. Be at least 18 years old at the time of submission of license application
D. Be of good moral character
E. Obtain a passing grade of 75% on the Customs Broker License Exam (CBLE)
The correct answer is C as applicants must be at least 21 years of age. As for D how does CBP judge moral character? An extensive background investigation as noted by CBP:
Each broker license applicant must undergo a background investigation that includes a fingerprint analysis and a review of character references, credit reports, and any arrest record. Arrests or convictions do not necessarily preclude the issuance of a license.
Licensed Customs Brokers are responsible for the assessment and potential collection of revenue for the United States in the form of duties and taxes. They must also ensure that they and their clients comply with the laws and regulations in all transactions. So the background check is more than a mere formality. Be patient applicants!
Clients often say “we’ve used the same harmonized codes for years” and “our products 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 (Harmonized Tariff Schedule) codes is a sign of an amateurish operation. It is likely that, for these clients, commercial invoice descriptions need updating. If they are also an exporter we should check ECCNs, License Exceptions, and Schedule B numbers as well.
The tariff archives show that the 2021 HTS was revised 12 times. The 2022 version already lists 6 revisions. Here are the links to the changes: https://hts.usitc.gov/view/list
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.
July 1st is Canada Day for our neighbor to the north. Known as Dominion Day until 1982, this is the anniversary of the Constitution Act establishing the nation of Canada.
I happen to be planning logistics for upcoming trips to Newfoundland and Quebec as well as researching Canadian export regulations for a client. As with all countries the regulations require careful reading. However, I have found the CBSA (Canada Border Services Agency) website and tariff to be user friendly and easy to navigate.
As noted in previous posts, HTS (Harmonized Tariff Schedule) or Schedule B classification is the first step in export compliance. Other critical factors are ECCN (Export Control Classification Number) or EAR99, License/License Exception or NLR (No License Required), and Country of Origin. We’ll cover ECCN in this post.
Order of Review– Determine if your commodity is subject to the EAR (Export Administration Regulations). Use BIS decision tree. https://www.bis.doc.gov/index.php/export-control-classification-interactive-tool
CCL (Commerce Control List)– If your commodity falls under the EAR it is either EAR99 or requires an ECCN. EAR99 means that an item is subject to Export Administration Regulations but is not listed with a specific ECCN. Check the CCL. https://www.bis.doc.gov/index.php/regulations/commerce-control-list-ccl
CCL Index- The CCL is not especially user friendly but the CCL Index is a good resource. If you find your commodity in the index you can then dig deeper into the CCL. https://bis.doc.gov/index.php/documents/regulations-docs/13-commerce-control-list-index/file
For help with ECCN classification contact mitch@52.91.45.227
I am working with a client on a few HTS (Harmonized Tariff Schedule) classifications and they were surprised that I could not just “look them up”. In fact I may have been able to pick out plausible codes for their commodities, but that would be malpractice on my part . Compliance adds value through attention to detail, established protocols, oversight, and documentation. HTS classification is the first step in both export and import compliance.
Proper classification includes HTS lookup, GRI (General Rules of Interpretation) review, checking both chapter and additional notes, as well as CROSS (Customs Rulings Online Search System). For some commodities it may be necessary to consult with a subject matter expert in engineering, purchasing, or manufacturing for details about the item.
This is the procedural aspect of classification but there is more. Most listings require interpretation of the tariff language based on experience. Finally, the process needs to be documented for future reference and parts lists updated.
Here is an example of an easy classification with no research or interpretation needed:
9506.69.2040 Baseballs
Here is one which is more challenging and time consuming:
8532.10.0000 Fixed capacitors designed for use in 50/60 Hz circuits and having a reactive power handling capacity of not less than 0.5 kvar (power capacitors).
For accurate classification help contact mitch@52.91.45.227.
Here are a couple of questions from the April 2022 CBLE (Customs Broker License Exam). Non-brokers what are your answers?
Global Trade Compliance ProfessionalsLalitha D
Question for thought:
The client wants you to include a HS Code different from what is appropriate in the bill of lading/SAD/Entry summary.
What would you do?
Listen very carefully and suggest you are willing to let Customs know about the different code. If the client insists you should not do that, refer him to another service provider. If he agrees, get an instruction in writing, acknowledging your advice but requesting a different code.
LinkedIn contacts and outreach from search firms tell me that logistics and compliance expertise is in demand. This is good news for experienced professionals. It may also present an opportunity for ambitious shippers to upgrade their skills.
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 as 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.
BIS (Bureau of Industry and Security) offers basic on-line export training at no cost. Why not improve the skills of your existing staff (on company time of course)?
Ad Hoc Logistics can also help with specific training at your site. Contact mitch@52.91.45.227.