Posted on LinkedIn today:

Customs entries on imported merchandise involve calculating duties and taxes based on commodity classification (HTS), country of origin, and entry value. In most cases the commercial invoice or CI value is used for duty calculation. In situations where the transaction is not so clear Customs has established an appraisement hierarchy to determine entry value. The details can be found in US Customs and Border Protection (CBP) regulations 19 CFR part 152. Here is a summary:

Appraisement Hierarchy

1) Transaction Value- actual invoice value

2) Transaction Value of identical merchandise- same country, same class and kind

3) Transaction Value of similar merchandise- same country, commercially interchangeable

4) Deductive Value – start with US retail selling price and deduct commissions, transportation, insurance, duty/tax, and value of further processing

5) Computed Value- sum of the following. Importer can request computed instead of deductive.

Cost of Materials

Cost of Labor

Cost of Packaging

Profit

Overhead

G&A

6) Value if other values cannot be determined- if the value of imported merchandise cannot be determined it will be appraised on the basis of a value derived from the methods set forth in parts 152.103 thru 152.106.

Posted on LinkedIn today:

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.

From the BIS website:

An export of technology or source code (except encryption source code) is “deemed” to take place when it is released to a foreign national within the United States. See §734.13(b) of the Export Administration Regulations (EAR).

Technology is “released” for export when it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.).

Per Part 772 of the EAR, technology is specific information necessary for the development, production, or use of a product.

Assuming that EAR99 does not apply and no license exception is available, U.S. entities must apply for an export license when: (1) they intend to transfer controlled technologies to foreign nationals in the United States; and (2) transfer of the same technology to the foreign national’s home country would require an export license.

Posted on LinkedIn:

The China tariffs have resulted in customs continuous bond saturation or near saturation for importers. Continuous bond amounts are calculated using 10% of the total duties, taxes, and fees paid for the previous 12-month period. The minimum continuous bond allowable is $50,000 USD, which covers up to $500,000 USD in duties, taxes, and fees to US Customs and Border Protection(CBP).

If your bond begins to approach saturation, you will be notified by either CBP, your customs broker, or the surety company. Upon notification your company has fifteen days to increase the amount of the bond. If your company’s bond becomes saturated and rendered insufficient by CBP, your company will not be permitted to import goods into the United States until a new bond with a higher limit of liability is established.

The amount of the new bond is a management decision based on input from customs brokers, procurement staff, finance, and insurance carriers. Best to be proactive and check your bond sufficiency now.

Posted on LinkedIn today:

If you are relying on your logistics service providers or your busy shipping department for export compliance you may be at risk. Both upper management commitment and front line training are essential parts of an Export Management & Compliance Program. While risk management always gets C level attention, export compliance is often a mid-management or lower level function.

Fines and penalties for violations should make export compliance a basic part of risk management. Best practices, including an EMCP, 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/.

BIS offers a number of on-line courses at no cost. Check them out under the Training and Compliance tab and get started!

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.

Posted on LinkedIn today:

FOB really? A good commercial invoice includes clearly specified Incoterms. Incoterms are rules (not laws) used to facilitate global trade. They were created and are administered by the International Chamber of Commerce and are updated every 10 years. Incoterms 2010 published by ICC Services Publications, Paris. Did you know that, in the 2010 version of Incoterms, FOB applies only to ocean and inland waterway transport? Take the time to review your international documents for accuracy. For help contact Mitch@52.91.45.227

Posted on LikedIn today

When the ECCN (Export Control Classification Number) comes up on export documents many exporters automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default exception. These may be the correct entries but it is a good business practice to check and confirm. 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.

January is a good month to review harmonized codes. The United States International Trade Commission updates the Harmonized Tariff Schedule of the United States at least twice per year.

Using obsolete codes can result in customs delays and inaccurate  duty assessments so it is a good business practice to check the tariff. While you are at it are you sure EAR99 and NLR apply to your exports?

For assistance contact mitch@52.91.45.227

Posted on LinkedIn

The recently enacted China 301 tariffs, along with increased Anti-Dumping and Countervailing Duty cases, are impacting continuous bond sufficiency. Several clients have reached saturation requiring big increases in their bond amounts. A good risk management practice for importers suggests addressing continuous bond amount before it becomes an issue.

The United States International Trade Commission has updated the Harmonized Tariff Schedule of the United States effective 01/01/2017.

It is a good business practice to review your Harmonized codes at least once per year to make sure you are using the most up to date classifications. For help with your codes contact mitch@52.91.45.227

https://hts.usitc.gov/current

 

 

 

If your company is depending on a busy shipping department for export compliance you may be at risk. Let shippers do what they do best by moving the freight.  Export compliance should be a front end  and not a back door process.
While risk management always gets C-level attention, export compliance is often a mid-management or lower level function. Fines and penalties for violations are significant enough to make export compliance a basic part of risk management. Violations of the Export Administration Act (EAR) may be subject to both criminal and administrative penalties. Criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation and $120,000 per violation in cases involving items controlled for national security reasons. Violations are posted on the Bureau of Industry and Security (BIS) website which makes adverse publicity a deterrent for any corporation. In addition, compliance issues can expose companies to regulatory scrutiny by government agencies, including Customs and Border Protection (CBP) and Departments of State, Commerce, and Treasury.

Contact mitch@52.91.45.227 for help with compliance.

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