Nuts & Bolts

LinkedIn Comment- Classification Speed

Amy Breeman, MBA, LCB

I have applied to a couple of positions, along the lines of a classification specialist and trade consultant/manager. One of the key questions that I have been noticing is the amount of time it takes for you to make a classification. If for instance it is a product I had no idea about, I would do a thorough look up of the product, look up the HTS, GRI, notes, CROSS. It may take 10 to 15 minutes depending on how much a rabbit hole you can go down. I am very methodical when doing a classification, and some may call this too much time.

I had never found a question like this 5 to 10 years ago when applying for brokerage or other positions where classification was part of the job. What are your thoughts. Is this a fair question for employers to be asking?

Mitch Kostoulakos, LCB

10-15 minutes is reasonable for a thorough classification…certainly this is offset by faster classifications for commodities which are very familiar to you….better to be accurate than fast

Regulatory Updates

2 Classification Lists? Check This Out

If you are maintaining separate parts lists for HTS and Schedule B codes this could be a time saver. Check out the Notice to Exporters on the Harmonized Tariff Schedule (2021 Basic Revision 7).

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.

Contact mitch@52.91.45.227 for classification help.

Nuts & Bolts

Are You Unmanaging?

Many of my clients are hard-working owners or operators of small businesses. They don’t have in-house compliance or logistics expertise so must wear several hats. Day to day activities or unexpected issues take up most working hours. As a result, functions such as logistics planning and import/export compliance are often unmanaged or left completely to LSPs (Logistics Service Providers).

Making sure that your business is in compliance with import and export regulations is good risk management as well as good business. Think of it as insurance. A few basic steps can make a big difference and can be implemented quickly.

Ad Hoc Logistics can provide step by step guidelines, train your employees, and set up sustainable procedures. Recent consultations included our copyrighted programs:

Exporting for Smart People- Because You’re No Dummy

Red Flag Screening

A to Z of Managing Logistics

Contact mitch@52.91.45.227 for a no obligation discussion.

Nuts & Bolts

Amateur Importing

Clients often say “we’ve used the same harmonized codes for years” and “our products 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 need updating. If they are also 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 2020 HTS was revised 28 times. The 2021 version already lists 7 revisions. Here are the links to the changes. 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.

2021 Basic Revision 7

2021 Basic Revision 6

2021 Basic Revision 5

2021 Basic Revision 4

2021 Basic Revision 3

2021 Basic Revision 2

2021 Basic Revision 1

2021 Basic Edition

Nuts & Bolts

October 2021 CBLE

Planning to take the October Customs Broker License Exam? Hopefully you are well into your preparations by now. If you would like study tips contact mitch@52.91.45.227. Best of luck !

From the CBP website:

The next Customs Broker License Exam (CBLE) will be offered both in-person and remotely on Thursday, October 21, 2021. Exam Registration will open on August 23, 2021 and close on September 21, 2021.

Here are the reference materials for the exam. They will be provided electronically on exam day:

Harmonized Tariff Schedule of the United States (Basic Edition 2020) (HTSUS) Harmonized Tariff Schedule PDFs (usitc.gov)

Title 19, Code of Federal Regulations (19 CFR 2020, revised as of April 1, 2020) (Parts 1 to Part 199)(CFR 0-140)(CFR 141-199) Code of Federal Regulations (Annual Edition) | govinfo

ACE Entry Summary Instructions Version 2.4a ACE Entry Summary Instructions | U.S. Customs and Border Protection (cbp.gov)

Right to Make Entry (RTME) Directive 3530-002A 3530-002A Right to Make Entry | U.S. Customs and Border Protection (cbp.gov)

ACE Entry Summary Business Rules and Process Document (Trade-External) (ACE BRPD) (Version 10.5 – Section 1 through 12 only) March 2021 ACE Entry Summary Business Process | U.S. Customs and Border Protection (cbp.gov)

https://www.cbp.gov/trade/programs-administration/customs-brokers/license-examination-notice-examination

Nuts & Bolts

Those Annoying Compliance Geeks

The current logistics environment is as challenging as I have ever seen. Tight capacity in trucking, containers not available where needed, astronomical ocean rates, and shortages of critical components. These are just a few of the problems confronting supply chain managers on a daily basis. So it is understandable that compliance may be taking a back seat at the moment. Who has the time or energy to deal with that annoying compliance person? As a proud compliance geek, let me offer the following.

Compliance is about attention to detail, consistency, process, and oversight. I guarantee that your compliance folks are not trying to practice “sales prevention”. The goal is to complete transactions the right way, avoid customs or logistics delays and reduce exposure to fines and penalties. However, there is no doubt that complying with all of the agencies involved in international trade generates a lot of red tape and can be frustrating.

Compliance managers must have the authority to stop shipments when red flags appear. In order to ensure independence compliance folks should not be in the supply chain, finance, or marketing chain of command. Better reporting relationships would be with the legal department, CEO, or COO.

Consider just a few of the details that can make or break a smooth transaction:

Harmonized Codes to the full 10 digits including heading and sub heading. It is very easy to transpose digits.

Schedule B Codes, ditto

ECCN , Alpha numeric, number, letter, followed by 3 numbers. Example 4A994. Then followed by sub paragraph level and don’t forget the dot between the last number and the sub para.

License Exceptions are designated by 3 letter codes and must be compatible with the ECCN listed.

COO, Country of Origin markings and proper codes on documents and AES filings. Best not to guess here. Have you ever entered CH for China?

Valuation must be determined accurately and is best covered in a separate post which I have done on 05/09/2019.

These are just some of the basics. We could also mention commodity descriptions, red flag screening, incoterms, and plenty of other details. So, hats off to the compliance teams.

For assistance contact mitch@52.91.45.227

Nuts & Bolts

LinkedIn Comment- Spare Parts Inventory

Tony Rodriguez• 1stPresident & Owner, Daniel Penn Associates. LLC

Part 1 – How to get a grip on space parts inventory management for your maintenance organization. #assetmanagementinsights#maintenancestrategyhttp://ow.ly/UCd050FzfWS

Mitch Kostoulakos, LCB Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant

Hi Tony, thanks for an informative post. Can I suggest adding HTS (harmonized tariff schedule) codes to the CMMS? This step can facilitate sourcing of imported parts.

Regulatory Updates

ADD/CVD Overview

For Your Customs Reference File:

ADD/CVD Anti-Dumping Duties and Countervailing Duties

Anti-dumping (ADD) and Countervailing duties (CVD) are intended to protect the US manufacturing industry from foreign manufacturers flooding the market at artificially reduced prices. Dumping occurs when foreign companies sell goods in the US at less than fair value.

Countervailing situations are when a foreign government gives their companies tax breaks and subsidies allowing them to sell goods cheaply in the US. ADD and CVD lead to foreign undercutting of US manufacturers prices.

Anti-dumping duties are calculated at a company-specific level, where the duty amount makes up for the difference between the foreign manufacturer’s price and fair market value. In these cases, certain companies have been identified, investigated, and additional duties have been charged on their products. Countervailing duties are determined on a country-specific level, and the duty rates counteract the subsidy or tax breaks given to the foreign manufacturer by their government with the intent of leveling the playing field.

When either of these situations occur, petitions are filed by U.S. manufacturers or businesses with the Department of Commerce (DOC) which, along with the US International Trade Commission (USITC), opens an investigation. If the results are positive, U.S. Customs and Border Protection (CBP) withholds liquidation of entries and collects ADD/CVD duties. The entries are not liquidated until the DOC instructs CBP headquarters to do so. CBP procedures affecting US importers A positive result; an investigation which finds evidence of injury to the US industry, triggers CBP procedures which affect US importers. For an Anti-dumping (ADD) case CBP issues a case number beginning with (A), Case # A…. for a particular manufacturer. Importers and/or customs brokers then must report the case number on every entry (CBP form 7501, block 29) pertaining to this manufacturer. CBP will also look for evidence of bond during their investigation. If determined guilty, CBP will set the penalty and retroactively collect additional duties through the bond. These additional duties are determined by ITC and DOC with CBP as the enforcing agency. Procedures for countervailing duties (CVD) are similar to those for anti-dumping duties (ADD): Investigation, case number beginning with (C), retroactive penalties. The difference is that under CVD the foreign manufacturer is subsidized by their government. 

How to determine if a commodity falls under ADD/CVD

Your customs broker should be able to help you determine if a commodity falls under ADD/CVD. Further, you can review the scope of ADD/CVD orders to determine whether the merchandise falls under the scope of an order. The scope of AD/CVD orders can be found in several places:

• Federal Register notices from Commerce, available at

https://enforcement.trade.gov/frn/index.html

https://www.cbp.gov/trade/priority-issues/adcvd/antidumping-and-countervailing-duties-adcvd-frequently-asked-questions

Nuts & Bolts

13 Flags For Shippers

Ad Hoc Logistics followers know that we always recommend an Export Compliance Program (ECP) as a best practice for companies of all sizes. At the same time, however, we recognize that implementing an ECP is a daunting task and is often a “back burner” project.

The export compliance process should begin early in the order cycle and not be delegated to a busy shipping department. However, shippers can be a last line of defense if they know the 13 key red flags to look for. Our 90 minute presentation can train your shippers on the basics.

Contact mitch@52.91.45.227 for info.

International Logistics Consulting; Licensed Customs Brokers