Clients often say “we’ve used the same harmonized codes for years” and “our commodities 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 codes is a sign of an amateurish operation. It is likely that, for these clients, commercial invoice descriptions also need updating. If they are an exporter we should check ECCNs, License Exceptions, and Schedule B numbers as well.

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 2021 HTS was revised 12 times. 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.

Following up on my February 3rd post about the April 2022 Customs Broker License Exam, here is some info from the CBP website:

Past CBLE Information

The October 21, 2021 CBLE resulted in a 25% pass rate prior to appeal decisions.

The April 21, 2021 CBLE resulted in a 19% pass rate prior to appeal decisions. 

These results are significantly higher than for previous exams. The CBLE remains challenging, however, even for those who have experience in the field. If you are planning to take the exam on April 27th you should be well into your preparations by now.

Contact mitch@52.91.45.227 if you would like study tips.

My January post about due diligence in compliance included reviewing updated HTS and Schedule B codes. Another best practice is to check your ECCN codes and License Exceptions. Chances are you have been using the same ECCN and License Exceptions or EAR99 and NLR as default entries.

Here is some recent info from BIS (Bureau of Industry and Security) about changes to ECCN and License Exceptions. While this notice may not apply to you, the point is that ECCNs and License Exceptions can change. For help contact mitch@52.91.45.227.

1/12/2022
87 FR 1670

Information Security Controls: Cybersecurity Items; Delay of Effective Date

On October 21, 2021, the Bureau of Industry and Security (BIS) published an interim final rule that establishes new controls on certain cybersecurity items for National Security (NS) and Anti-terrorism (AT) reasons, along with a new License Exception, Authorized Cybersecurity Exports (ACE), that authorizes exports of these items to most destinations except in the circumstances described in that rule.  That rule was published with a 45-day comment period, which ended on December 12, 2021, and a 90-day delayed effective date (January 19, 2022). This rule delays the effective date of the interim final rule by 45 days (March 7, 2022).  This action does not extend or reopen the comment period for BIS’s previous request for comments on the interim final rule.

Rebecca Dabkowski•

Trade Compliance Director at Cambridge Isotope Laboratories, Inc

Keep filing your EEI to PR and USVI.

Mitch Kostoulakos, LCB 

Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Disappointing that US territories are treated as foreign countries.

From the CPB website

Announcement – Customs Broker License Exam Date

The next CBLE will take place on Wednesday, April 27, 2022. Exam registration will open on Monday, February 28, 2022 and close on Monday, March 28, 2022.

The April 27, 2022 CBLE will be offered on-site only; U.S. Customs and Border Protection (CBP) will not offer a remote exam in April 2022.  CBP is dedicated to the ongoing modernization of the CBLE and intends to offer a remotely-proctored option at a later date.

If you are planning to take the exam and would like some study tips contact mitch@52.91.45.227

While working with a client on exports to Canada, we have found that the Canada Border Services Agency (CBSA) maintains a robust, user friendly website. Here is a link that may be helpful for traders:

https://www.cbsa-asfc.gc.ca/import/guide-eng.html

For help with exporting contact mitch@52.91.45.227

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:

Parties who believe they may have committed a violation of the EAR are encouraged to submit a Voluntary Self-Disclosure (VSD) to BIS. VSDs are an important indicator of a party’s desire to bring their export activities into compliance, and also may provide important information to BIS helping to identify foreign proliferation networks. Parties submitting VSDs may be eligible for significant reductions in administrative penalties, and those with well-implemented EMCPs may expect further significant reductions of administrative penalties. Procedures for submitting VSDs may be found in Section 764.5 of the EAR. The procedures detailed in Section 764.5 do not apply to VSDs involving violations of the antiboycott provisions of the EAR. Procedures for submitting VSDs for boycott violations are found in Section 764.8 of the EAR.

Contact mitch@52.91.45.227 for assistance in submitting VSDs.

Did you know?

Exporters may use HTS codes in place of Schedule B. Go to https://hts.usitc.gov/current and choose the view tab. As always, there are exceptions, but you may be able to avoid toggling between lists. If you are maintaining separate parts lists for HTS and Schedule B codes this could be a time saver.

From the tariff:

For reporting exports, the provisions of this HTS publication may generally be used in place of the reporting codes of Schedule B on the Shipper’s Export Declaration, or under the program for electronic reporting of exports. Except as noted below, the statistical reporting numbers in the HTS (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 preferential tariff treatment should not be included.

Contact mitch@52.91.45.227 for help with Schedule B or HTS codes.

An annual customs review is a good business practice. 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:

 Contact mitch@52.91.45.227 if you need help.

Classification– review annual updates to Harmonized Tariff 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.

https://www.bloomberg.com/news/articles/2021-12-16/trudeau-orders-top-ministers-to-take-harder-line-on-u-s-trade

I’m not an economist (nor do I play one on TV), but this can’t be good. Canada is the US’s largest trading partner for exports and in the top 3 for imports. Supply chains linking the two nations are relatively short and logistics less complex.