To all who sat for the May 1st CBLE (Customs Broker License Exam) you may now have your weekends back. I know from experience that you are feeling both relief that the exam is over and anxiety about your results. CBP advises that you will be notified of your score in 2-3 weeks. The pass rate for the previous two exams was 34% for October 2023 and 5.5% for April 2023.
I sometimes advise prospective candidates and would be interested in hearing your impressions of the May 1st exam.
I have always advised clients that export compliance equals good risk management. Furthermore, compliance functions should be viewed as value adds rather than as a cost center. Whether or not a formal ECP (Export Compliance Program) is implemented, there are a number of best practices that are essential for any company involved in international trade.
As noted in recent posts, compliance is often a “back burner” project for several reasons including: Don’t know where to start, lack of C-level commitment, reluctance to allocate resources, too small to worry about compliance, no previous problems, or just plain inertia.
While the ROI for export compliance will vary for individual firms, we can identify an overall value proposition easily surpassing the costs involved in implementing a program.
Risk Management– avoid the cost of fines and penalties which can reach $1 Million for criminal violations. Think of compliance as insurance.
Save Time/Save Money– export compliance means less re-work or follow up of requests for information from customers, government agencies, or forwarders.
Make Money/ Grow the Business- basic competence in exporting enables expansion to international markets. Compliance problems will cause customs delays and be an impediment to growth.
Enhance the Brand– similar to ISO certification and C-TPAT, an ECP demonstrates professionalism. Show customers and prospective customers that you know what you are doing.
Let’s get started!
Contact mitch@adhoclogistics.com for help with export compliance.
Importers, if you have been relying on your suppliers for HTS classifications of your products check this September 2022 CBP ruling. Briefly, it states that suppliers are not qualified to provide HTS classifications unless they employ LCBs (Licensed Customs Brokers), even with a disclaimer that the information is advisory.
Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. Pursuant to 19 U.S.C. § 1641(b)(1), “[n]o person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license . . . .”
https://rulings.cbp.gov/ruling/H290535
The ruling includes the following language which explains that classifying to the six digit level is not considered customs business:
We note, however, that CBP has consistently held that classifying goods to the six-digit level of the HTS is not customs business and does not require a customs broker’s license. This level of classification “does not constitute customs business because the six-digit HTS provision is insufficient for entry.”
Contact mitch@adhoclogistics.com for classification help.
I recently posted about common self-imposed roadblocks to implementing an ECP (Export Compliance Program). The process certainly starts with management commitment. As noted CBP and BIS are ramping up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.
One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), bears ultimate responsibility for compliance.
Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Compliance must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.
In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP (Export Compliance Program), compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.
All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.
So once again; “Who’s responsible?”
Contact mitch@adhoclogistics.com for immediate assistance.
If you are scheduled to sit for the CBLE (Customs Broker License Exam) on May 1st your preparations have most likely included practice exams as well as a deep dive into the HTS tariff and customs regulations. Not to mention blood, sweat, and tears.
Let me suggest also reviewing the notifications on the CBP website so that you don’t have an unexpected complication on exam day. The notifications include details about Covid restrictions, reference materials allowed, and ID/Proof of Citizenship requirements. There are separate sections for remote and in-person test takers.
You will find the info under this link:
Look for the heading It’s Exam Day !
Best of luck on May 1st !
The value of an Export Compliance Program (ECP) has been well documented in this previous Passages post.
Exporters, what has prevented you from implementing an Export Compliance Program? Here are the most common self-imposed roadblocks:
An effective Export Compliance Program includes these elements: Management Commitment, Risk Assessment, Export Authorization (Agency Jurisdiction), Record Keeping, Training, Audits, Handling Export Violations (Corrective Action), and Build and Maintain an ECP Manual.
The most essential element, by far, is Management Commitment. C-Level executives must allocate resources, communicate the importance of an ECP throughout the organization, and hold everyone accountable. Without strong management commitment and involvement, you will end up with a weak program.
In addition to C-level commitment, compliance professionals know that an effective ECP must also include sufficient funding, well defined and documented responsibilities, on-going training, and internal audits. Weak ECPs lack some of these elements and are simply window dressing or paper programs.
In some cases, exporters may be under pressure to put a program in place quickly, with the focus on creating the ECP manual. This approach ignores the foundation needed for an effective program. The likely result will be a glossy manual that will sit on the shelf and have negligible impact on operations.
In-house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels or in the wrong chain of command. With or without a formal ECP, compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Written protocols for resolving issues and releasing holds require C-level or legal approval.
All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.
Finally, do not self-blind on export compliance. It is time to get started.
In previous posts we have noted 3 common causes of customs delays: vague or incomplete descriptions, questionable valuations, and lack of IOR contact info on commercial invoices. These are the easy fixes. The real complexity in international trade is due to the many different regulations applying to destination countries.
Customs delays in other countries are problematic for exporters, requiring a lot of time and effort to resolve. Best practices in exporting include due diligence and research when shipping to a country for the first time. The Country Commercial Guides published by the International Trade Administration are an excellent no cost starting point. Here is the link:
https://www.trade.gov/ccg-landing-page
Contact mitch@adhoclogistics.com for assistance.
Most managers or owners of small/medium companies wear many hats and usually do not have in-house compliance expertise. As a result, major projects such as implementing an Export Compliance Program go on the back burner. But ignoring compliance is not an option!
Let me suggest 3 spring cleaning best practices that will help you get started :
1) Scrub your parts list to make sure HTS and Schedule B codes are valid. The tariffs change periodically and we have found obsolete or invalid codes on 100% of clients’ parts lists. Once identified these codes can be updated and lists maintained.
2) Check the CCL (Commerce Control List) Index to see if your commodities are listed. Exports must show the correct ECCN (Export Control Classification Number) in order to determine if a license is required. If you are automatically using EAR99 and NLR you are at risk of violation.
3) Set up procedures for checking common “Red Flags” such as denied parties lists, entities lists, and unverified lists. BIS (Bureau of Industry and Security) has up to date info on their website.
Ad Hoc Logistics can help you manage these tasks.
Contact mitch@adhoclogistics.com
Screening export shipments has become routine for most companies involved in international trade. Export software packages can perform this task or it can be manual; using the Consolidated Screening List https://www.trade.gov/consolidated-screening-list or individual lists. No one wants to do business with the bad guys. However, the routine nature of export screening makes it likely that upper level management is not involved in the process.
We always emphasize the role of C- level executives in compliance. Here is where C-level leadership is important:
SUPPLEMENT NO. 3 TO PART 732 – BIS’s “KNOW YOUR CUSTOMER” GUIDANCE AND RED FLAGS
(3) Do not self-blind. Do not cut off the flow
of information that comes to your firm in the
normal course of business. For example, do not
instruct the sales force to tell potential customers
to refrain from discussing the actual end-use, end user, and ultimate country of destination for the
product your firm is seeking to sell. Do not put
on blinders that prevent the learning of relevant
information. An affirmative policy of steps to
avoid “bad” information would not insulate a
company from liability, and it would usually be
considered an aggravating factor in an
enforcement proceeding.
For help with exports or developing an ECP (Export Compliance Program) contact mitch@adhoclogistics.com