Canadian importers and Non-Resident Importers, ready or not CARM is coming.
https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn24-29-eng.html
All posts by mitch
Quick or Accurate Classifications?
Customs Brokers are often asked for “quick classifications”. In fact, it may be possible to quickly find plausible codes for clients’ commodities; but that can be malpractice by the broker. Compliance adds value through attention to detail, established protocols, oversight, and documentation. HTS classification is the first step in both export and import compliance.
The reality is that most classifiers will shorten the process, especially if they are familiar with the commodities. The challenge is to consider changes to the tariff and make an effort to classify the commodity as if doing so for the first time.
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@adhoclogistics.com.
Countdown to Exam Day
If you are scheduled to sit for the CBLE (Customs Broker License Exam) on October 23rd your preparations have most likely included practice exams as well as a deep dive into the HTS tariff and customs regulations. Not to mention blood, sweat, and tears.
Let me suggest also reviewing the notifications on the CBP website so that you don’t have an unexpected complication on exam day. The notifications include details about Covid restrictions, reference materials allowed, and ID/Proof of Citizenship requirements. There are separate sections for remote and in-person test takers.
You will find the info under this link:
Look for the heading It’s Exam Day !
Best of luck on October 23rd.
Got Questions?
LCBs here is your chance to help write questions for future Customs Broker License Exams.
U.S. Customs and Border Protection has contracted with the Human Research Organization (HumRRO) to help modernize the Customs Broker License Examination (CBLE). HumRRO also seeks licensed customs brokers who are interested in participating in writing questions for future CBLE administrations. If you have any questions about this opportunity, please contact HumRRO at lcb_inquiry@humrro.org
Ready for CARM ?
If you are a Canadian importer or NRI (Non-Resident Importer) you will want to keep up to date on CARM . Many US exporters act as Non-Resident Importers in Canada. A Non-Resident Importer is a business located outside of Canada that ships goods to customers in Canada and assumes responsibility for customs clearance and other import-related requirements.
On October 21, 2024, CARM will become the official system of record for imposing or levying duties and taxes.
To register contact your Canadian Customs Broker or access the Client Portal on the CBSA website.
https://ccp-pcc.cbsa-asfc.cloud-nuage.canada.ca/en/auth/login
As a reminder, the Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) project is a multi-year digital initiative that will change how CBSA collects duties and taxes for goods imported into Canada. Through CARM, the CBSA will modernize and streamline the process of importing commercial goods.
CBLE Prep
With a little more than 60 days before the next CBLE (Customs Broker License Exam), candidates should be well into their prep. Thanks to Pete Mento here is a group of LCBs ready to help you: https://www.linkedin.com/groups/12862151/
The next CBLE will be administered on Wednesday, October 23, 2024. The registration period is now open and will close on Wednesday, September 11, 2024 at 4:30 pm (Eastern). No late registrations will be accepted.
Monitor this link for exam info:
Logistics and Finance
Logistics managers with operations backgrounds and responsibilities typically leave finance to the accountants. This is understandable given the full time need to stay on top of logistics details. However, some basic financial knowledge can help make sure that operations managers are “in the room” when strategic business decisions are made. Consider the 3 logistics flows of material, information, and financial. These different tracks often result in silos which are counterproductive. It has been said that accountants look back while managers must look forward. Here is some info from the text Global Logistics & Supply Chain Management published by John Wiley and Sons. This is common knowledge for accountants and finance professionals.
Balance Sheet- snapshot of assets and liabilities at a particular point in time.
Income Statement- profit and loss for a defined period of time.
Cash Flow- where the money comes from and where it goes.
Obvious implications for logistics are that time is money, so shortening the supply chain or eliminating delays results in greater profit. High working capital (inventory) reduces profit. Efficient resource utilization (labor, real estate, equipment) increases profit. Cash to cash cycle is key.
Debt financing can be described as gearing. Low gearing means little or no debt. High gearing means the firm has a large proportion of debt to assets. This presents high risk for investors. It also may preclude opportunities to expand or improve operations and debt service (interest) will constrain cash flow.
International logistics involves greater risk which may include uncertain demand, unstable infrastructure and services, political instability, or currency fluctuations. Cost accounting for logistics companies is not as straightforward as for manufacturers. Services are intangible, quality can be difficult to measure, they cannot be stored (perishable), and may involve more that one provider.
More Basics
Order Cycle- Short order cycle leads to reduced inventory; Long order cycle leads to increased inventory.
Cost of Lost Sales- High inventory results in lower lost sales; Lower inventory results in higher lost sales.
Transportation costs- similar tradeoffs as lost sales. Mode shifts from slower to faster (ground to air) can reduce inventory. Shifts from faster to slower (air to ocean) will increase inventory.
Commodity dollar value- High value commodities lead to high inventory, transportation, and packaging costs.
Density- High density commodities lead to reduced transportation and inventory (warehousing) costs.
Loss/Damage- commodities with high susceptibility to loss/damage result in higher costs of transportation and warehousing.
Location decision- Plant or distribution center proximity from materials sources or markets can mean relative advantage or disadvantage vs competitors. These are C- level decisions.
Stuck in Customs?
I often hear from potential clients about shipments “stuck” in customs and, needless to say, they are always frustrated. The shipments may include critical parts needed for an equipment or plant shutdown, expensive high tech components not generally carried in inventory, or medical instruments for hospitals. Delayed orders also mean delayed payments which gets everyone’s attention.
The data used in customs entries comes directly from the commercial invoice for the transaction. All countries have different, and sometimes obscure, customs regulations. It is true, however, that most delays are caused by a few commercial invoice errors or omissions.
Commodity descriptions should answer the questions: What is it? What is it made of? What is it used for? Use plain language which can be understood by anyone. Avoid trade names, brand names, and jargon. These can be added below the description or to the packing list as needed. If using a harmonized code enter only the first 6 digits which are universal. All countries apply their own last 4 or 6 digits.
Value for customs may be questionable for the commodity being shipped. The customs agencies in the destination country need to make sure that duty rates are accurate and will hold up the shipment if in doubt. Make sure that your commercial invoice reflects the correct transaction value.
Recipient contact info is often lacking on the commercial invoice. Customs in the importing country will not contact the exporter if they have questions or issues. If they are unable to contact the importer the shipment will go into storage. Make sure you include recipient name, address, phone number, and e mail address on your CI.
Contact mitch@adhoclogistics.com for immediate assistance.
CBLE Registration
For those planning to sit for the October, 2024 Customs Broker License Exam (CBLE) it is not too soon to begin your preparations. Here is the exam registration info from the CBP website:
Exporters Own Your Mistakes
As noted in a recent post self-blinding carries risk for exporters in addition to the fines and penalties associated with export violations. Mistakes happen and it is best to take corrective action on your own as a part of your compliance program.
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:
BIS encourages the submission of Voluntary Self Disclosures (VSDs) by parties who believe they may have violated the Export Administration Regulations (EAR). VSDs are an excellent indicator of a party’s intent to comply with U.S. export control requirements and may provide BIS important information on other ongoing violations. BIS carefully reviews VSDs received from disclosing parties to determine if violations of the EAR have occurred and to determine the appropriate corrective action when violations have taken place. Additional information regarding VSDs can be found in Part 764.5 of the EAR, or the enforcement section of our website www.bis.doc.gov.
https://www.bis.doc.gov/index.php/documents/enforcement/3262-vsd-policy-memo-04-18-2023/file
Contact mitch@adhoclogistics.com for help with Voluntary Self Disclosures.