All posts by mitch

Regulatory Updates

Think You Know the HTS?

Clients frequently say “we’ve used the same harmonized codes for years”. As a Licensed Customs Broker and consultant this tells me that I need to do some checking on the client’s behalf.

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 2020 HTS was revised 28 times. The 2021 version already lists 3 preliminary revisions.

Year: 2021 Releases

2021 Preliminary Revision 3

2021 Preliminary Revision 2

2021 Preliminary Revision 1

Year: 2020 Releases

2021 Preliminary Edition

2020 Revision 28

2020 Revision 27

Contact mitch@52.91.45.227 for immediate assistance.

Uncategorized

October Exam Results

From the CBP website

Customs Brokers License Exam Information

The bi-annual Customs broker license exam (CBLE) was administered on October 8, 2020 resulting in a 37% pass rate prior to appeal decisions.  The electronic exam was held nationwide at over 120 testing locations.

This is a much higher pass rate than for previous exams.

Here is one of the questions from the Entry section of the exam. Answer below.

17. The importation to the United States of cats, dogs, and monkeys are subject to Foreign Quarantine Regulations of which agency(s) ________?

A. United States Fish and Wildlife Service

B. Custom and Border Protection Agriculture

C. United States Public Health Service

D. Animal Plant Health Inspection Service

E. All of the Above

Answer: C

Uncategorized

CBP Announcement

Customs Broker License Examination

Announcement – Remote Proctored Exam Delivery Option

The next Exam will be held on Wednesday, April 21, 2021. Exam Registration will open on February 22, 2021 and close on March 22, 2021.

U.S. Customs and Border Protection (CBP) is offering a remote proctored exam delivery option for the April 21, 2021 Customs Broker License Exam (CBLE) available to a limited number of examinees. 

Check the CBP website for details

Uncategorized

Zooming Down the Road

The last year has brought major changes in how business is conducted between logistics service providers (LSPs) and their clients. Here is what I wrote in a post just 18 months ago about managing carrier relationships:

LSPs, especially motor carriers, make extensive use of “customer entertainment” to gain and retain market share. Lunches, dinners, and sporting events are a big part of the job for carrier representatives. …..Business lunches can be productive for both parties. Clients should have an agenda with a few discussion points. Remember, as with any meeting, if you don’t have an agenda you are subject to someone else’s…… Expensive dinners and sporting events are much less productive from a business perspective. Food and drink becomes the main event.  The game takes precedence at sporting events.….In summary manage your carrier relationships, Don’t let your providers “reward” you for your business. It makes it much more difficult to change providers or negotiate new deals.

In the last year entertainment and face to face sales calls have been limited. Most interaction between LSPs and clients is via Zoom or other remote methods. This no doubt makes the carrier rep’s job more difficult. The relationship must now be built on adding value and problem solving instead of entertainment. In other words the relationship becomes more professional and a little less personal. While the client may not enjoy as many lunches or dinners, negotiations and accountability may be easier.

Regulatory Updates

Notice to Exporters

Here is a notice posted on the 2021 Harmonized Tariff Schedule. Except as noted there is no need to toggle between HTS codes for imports and Schedule B codes for exports. Exporters may use HTS codes in place of Schedule B. Go to https://hts.usitc.gov/current and choose the view tab.

Harmonized Tariff Schedule of the United States (2021)
Annotated for Statistical Reporting Purposes


NOTICE TO EXPORTERS
Through this notice, this HTS publication may be used in place of the reporting codes of Schedule B for reporting exports on the Shipper’s
Export Declaration or under the program for electronic reporting of exports. Except as noted below, the statistical reporting numbers (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 special tariff treatment should not be included. The following provisions are applicable for export
reporting purposes in lieu of the corresponding provisions in the HTS:
Description S

Contact mitch@52.91.45.227 for immediate assistance.

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HTS Best Practices

As an independent consultant and Licensed Customs Broker my most frequent client requests are for classification help. While some commodities are easy to classify, most require research and interpretation. Here is an example of an easy one with no research or interpretation needed:

9506.69.2040 Baseballs

Here is one which is more challenging and time consuming:

8532.10.00 00 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)

There are 3 ways to classify: 1) self classify, 2) consult with commodity manufacturer, 3) request rulings from CBP (imports) or BIS (exports).

HTS and Schedule B best practices include checking and confirming commodity classifications at least annually starting with a few universal principles:

Classification is subjective- tariff schedules do not necessarily keep up with technology

Customs definitions can differ from industry definitions

Different interpretations exist between countries and also between ports within the same country

The basic components of a best in class process are:

Break down items from universe into groups

Research- even if you think you know the correct classification  

Identify necessary info needed for classification such as materials, dimensions, intended use, etc

Documentation- needed to support your determination

Automation- implementing a software classification tool will improve efficiency and productivity

On-going maintenance and monitoring for changes in HTS binding rulings and in your products is essential

Supporting documentation includes:

spec sheets, drawings, photos

info requests from engineers, scientists, chemists, etc

HTS chapter and section notes that apply to your product

explanatory notes

informed compliance publications

customs rulings that apply to your product

record keeping (5 years)

contact mitch@adhoclogistics for immediate assistance.

Uncategorized

Mitch’s LinkedIn Comment

• Post from Eliska Mundell

Why are some Leaders still using the ‘Stick’ Management method?

Unbelievably this is true !

With everything that people have been through during 2020 and continuing into 2021, surely the methods used to push people to reach targets would have changed ?

Unfortunately no….

Whilst everyone is aware that the end of the Financial Year is looming and the race is on to secure as much business & revenue as possible, Leaders need to consider the mental health of their people.

Mitch Kostoulakos, LCB  Licensed Customs Broker, International Logistics Consultant

Agree…Stick management is made worse by dashboard mgt….Tracking key indicators is essential but it is not management just measurement…Unfortunately many managers focus on the dashboard because it is easier than trying to incentivize and motivate. Dashboard data is for managing process not leading people.

Nuts & Bolts

Do You See Red?

Last week’s post emphasized the importance of an Export Compliance Program as a risk management tool. Unfortunately, most small/medium companies do not have full ECPs. Whether your company has a formal Export Compliance Program (ECP) or not, it is critical that you have procedures in place to screen orders for Red Flags.

Many companies rely on their busy shipping department to manage export compliance. I believe that this is a mistake because shippers are under time pressure to get shipments off the dock, they often don’t have training or expertise, and usually don’t have authority to stop shipments. In the absence of a formal Export Compliance Program, clear protocols for escalation and resolution must be in place when Red Flags appear.

Here is a list from the Bureau of Industry and Security (BIS) website of things to look for in an export transaction. Make sure you are not doing business with the bad guys. A little due diligence up front saves a lot of trouble later on.

The customer or its address is similar to one of the parties found on the Commerce Department’s [BIS’] list of denied persons.

The customer or purchasing agent is reluctant to offer information about the end-use of the item.

The product’s capabilities do not fit the buyer’s line of business, such as an order for sophisticated computers for a small bakery.

The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry.

The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing.

The customer has little or no business background.

The customer is unfamiliar with the product’s performance characteristics but still wants the product.

Routine installation, training, or maintenance services are declined by the customer.

Delivery dates are vague, or deliveries are planned for out of the way destinations.

A freight forwarding firm is listed as the product’s final destination.

The shipping route is abnormal for the product and destination.

Packaging is inconsistent with the stated method of shipment or destination.

When questioned, the buyer is evasive and especially unclear about whether the purchased product is for domestic use, for export, or for reexport.

For help contact mitch@52.91.45.227

Nuts & Bolts

Risky Business

C-level executives all understand risk management and protect their organizations accordingly. They make sure insurance policies are in place for all possible contingencies and retain legal counsel for further protection. Unfortunately, export compliance is rarely treated as the risk that it represents. There are several reasons for this:

Inertia- initial steps are taken to develop an Export Compliance Plan but progress stalls as more urgent tasks need attention.

Management believes that company is too small or doesn‘t export enough to need a formal ECP.

Lack of upper management commitment and willingness to put in the time.

Management doesn’t want to spend the money or devote resources to create an ECP.

Compliance is managed at lower levels with limited authority to get the project done.

Reliance on Logistics Service Providers for compliance. While LSPs are valuable business partners, the exporter is ultimately responsible for compliance.

The best insurance against export fines and penalties is an up to date Export Compliance Program. Both upper management commitment and front line training are essential parts of an ECP.

Fines and penalties for violations should make export compliance a basic part of risk management. Best practices, including an ECP, will reduce exposure to steep fines and penalties as described by BIS (Bureau of Industry and Security) on their website https://www.bis.doc.gov/

Penalties- Violators of the Export Administration Act of 1979, may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation.

Privileges – A denial of export privileges prohibits a person from participation in any transaction subject to the EAR.

contact mitch@52.91.45.227 for assistance.