All posts by mitch

Nuts & Bolts

EAR99 and NLR…are you sure?

Most shippers by now are quite comfortable submitting ACE Export (formerly AES) filings. I have found, though, that EAR99 and NLR are often entered by default. While these may be the correct entries, it is a good business practice to check and confirm.

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.”

For immediate assistance with exports contact mitch@52.91.45.227 .

Regulatory Updates

Drawback Modernization

Posted on LinkedIn today

Just participated in a webcast on Expanding Duty Drawback Benefits in a Turbulent Trade Environment presented by KPMG Tax Watch. The presenters provided a good overview of the different types of drawback and their value as an effective Section 301 Tariff mitigation strategy.

The Trade Facilitation and Trade Enforcement Act of 2015 went into effect in 2018. All drawback claims must now be filed electronically in CBP’s ACE system.

The final topic “Drawback Reimagined” included a number of best practices for managing drawback programs suggested by KPMG. This was an hour well spent as both a duty drawback refresher and an update on TFTEA Drawback Modernization.

for immediate assistance contact mitch@52.91.45.227

#internationaltrade

Nuts & Bolts

LinkedIn Comments

Mitch Kostoulakos, LCB commented on this

Pete Mento • 2ndManaging Director Global Customs and Duties, Crowe LLP4h • Edited • Here’s a reality slap for you: There are only about 14,500 Licensed Customs House Brokers in US. And let’s be serious – a significant portion are retired or not engaged in license focused activities. I would guess less than half are actually working, licensed Trade Professionals. Given the horror stories of the way people were treated taking the last exam, how difficult CBP makes taking it, the absurdity of NCBFFA’s ideas of monetizing and monopolizing our continuing education and how we are outrageously undervalued ….We are ripe to unionize. And no, I’m not joking. The argument back will be that automation and systems are overcoming the need for the insights of brokers. If you are under that impression, you clearly haven’t been paying attention. Importing and global trade is only becoming more difficult. The process of becoming a broker needs to evolve to reflect that. Apprenticeships, comprehensive exams, multiple levels of licensure and real continuing education developed by CBP in conjunction with a non biased group of people not in it for the cash must be considered. And we have to find a way to bring more young professionals into this line of work as we are – literally – dying and retiring off at an alarming rate. hashtag#importhashtag#logisticshashtag#tradehashtag#NCBFFAhashtag#globaltradehashtag#shipping…see

Sign me up Pete. Compliance and regulatory expertise is worth a lot more than brokers are being paid. Entries will continue to be commoditized and automated but they are just the tip of the iceburg.

Nuts & Bolts

Reviewed Your CI Lately?

A recent client project consisted of reviewing a number of entries to check harmonized codes and duty rates. This, of course, led to examination of the commercial invoices. As everyone involved in international trade knows, the commercial invoice is one of the primary documents of the transaction. While there is no universal standard format for commercial invoices, including the following key elements will help reduce customs delays and entry mistakes:

Invoice Number, Page Numbers – Avoids confusion for entries with multiple CIs or CIs with multiple pages.

Country of Origin– Best to use ISO country codes.

Related/Not Related parties

Incoterms and currency- these are elements of the sales contract. Indicate version of Incoterms (2010, 2020) as all parties may not be aware of updates.

Harmonized tariff # and duty rate if known

Description of goods – avoid trade names, brand names. What is it? What is it made of? What is it used for?

Summary of Value- must include IV Invoice Value. Can also include NDC Non Dutiable Charge (subtractions), AMMV Add to Make Market Value (additions), NEV Net Entered Value (bottom line- dutiable)

For immediate assistance contact mitch@52.91.45.227

Regulatory Updates

Incoterms 2020

Just received my copy of Incoterms 2020 published by the International Chamber of Commerce. The book is well structured and clearly written. Incoterms are updated every 10 years so there are significant changes in each version.

Incoterms 2020 presents the rules and explanatory notes in simple language along with useful illustrations. The introduction informs the reader about what Incoterms rules do and do not do. For example, Incoterms rules describe obligations, risk, and costs between buyers and sellers. Incoterms do not deal with title or ownership of the goods, which is a common misperception.

Some of the changes made to Incoterms 2010 rules in the Incoterms 2020 rules include:

  • Bills of Lading with an on-board notation and the FCA rule
  • Costs, where they are listed
  • Different levels of insurance coverage in CIF and CIP
  • Arranging for carriage with seller’s or buyer’s own means of transport in FCA, DAP, DPU, and DDP
  • Change in the three-letter initials for DAT to DPU
  • Inclusion of security-related requirements within carriage obligations and costs
  • Explanatory notes for users

This post is not a book review but an introduction to a valuable resource for anyone involved in trade. I plan to study Incoterms 2020 and incorporate some formal training in the next few months so that I can provide guidance to clients.

contact mitch@52.91.45.227

Regulatory Updates

Are You a Deemed Exporter?

Posted on LinkedIn

Are you a Deemed Exporter?

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.

Check out the Bureau of Industry and Security’s newest online training video, “Deemed Exports,” now available on the BIS Online Training Room at https://www.bis.doc.gov/index.php/online-training-room. 

Nuts & Bolts

Customs Broker Exam

Best of luck to applicants taking the Customs Broker Exam on October 17th. For anyone thinking about applying for a future exam here is a question from the April 2019 exam. I will post the answer next week and also respond to anyone who submits their answers.

10. Die cut steel plier levers were bolted together in China before having rubberized non-slip grips attached to each lever handle in Germany prior to being imported into the United States. What is the proper country of origin and marking method?

A. Made in Beijing printed on a hangtag

B. Made in China printed on a sticker attached to the pliers

C. Made in China die stamped into the pliers

D. Assembled in Germany printed on a sticker attached to the pliers

E. The pliers are exempt from marking in accordance with the J list

Nuts & Bolts

Trading Across Borders

In previous posts we have reported on the World Bank Logistics Performance Index and how the United States ranks compared to other nations.

Another view of world trade is presented by the World Bank in their report Trading Across Borders- Doing Business. In the most recent report the US ranked 36th in trading across borders. Here is a link to the report along with some introductory info.

https://www.doingbusiness.org/en/data/exploretopics/trading-across-borders

 Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. 

Regulatory Updates

Red Flags (Continued)

From the archives….

In a previous post I discussed Red Flags to be aware of in export transactions. Here is more detail from the Bureau of Industry and Security about the Consolidated Screening List. The Department of Commerce lists that are included in the Consolidated Screening List are: Denied Persons List, Unverified List, and Entity List. For help with export compliance contact mitch@52.91.45.227

Consolidated Screening List

Prior to taking any further actions, users are to consult the requirements of the specific list on which the company, entity or person is identified by reviewing the webpage of the agency responsible for such list. The links below will connect you to the specific webpage where additional information about how to use each specific list is contained.

Department of Commerce – Bureau of Industry and Security

  • Denied Persons List– Individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order are prohibited.
  • Unverified List – End-users who BIS has been unable to verify in prior transactions. The presence of a party on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction.
  • Entity List – Parties whose presence in a transaction can trigger a license requirement supplemental to those elsewhere in the Export Administration Regulations (EAR). The list specifies the license requirements and policy that apply to each listed party.
Regulatory Updates

Red Flags Mean Stop!

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. Shippers need authority to stop shipments along with clear protocols for escalation and resolution.

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 re-export.

For help with export compliance contact mitch@52.91.45.227