Comment on LinkedIn
Heather Noggle • 2ndExport Compliance Data Expert | Master Data Integration Consultant | CEO Exits, Inc. | Helping Companies Manage Data4d • 4 days agoI’ve been working with a remote team for the last 14 years. We serve customers everywhere without a central location. Tips for the new home-based workers: 1) A regular meal in the middle of the day with the other humans around you does wonders. 2) Laundry and other small chores are great for brain processing. Do not feel guilty doing symbiotic chores/thinking. 3) You’ll need to remind yourself to move more often. 4) It’s very easy to lose track of time. You’re more productive at home – typically – and the movements and conversations of others aren’t present and cueing some of your own social behaviors. 5) This one’s new – stop reading about the Coronavirus every hour. I think this one I am directing at myself. Cheers to all. hashtag#remoteworkhashtag#remoteculture…
Mitch Kostoulakos, LCB Licensed Customs Broker, International Logistics Consultant
Agree….I have been working remotely for a number of years. What may come as a surprise is how much more productive you can be! Mitch Kostoulakos, LCB’S comment
Got Service?
When business slows down Logistics Service Providers (LSPs) must adjust staffing to match reduced volume and this presents challenges to their clients. Trusted LSPs and 3PLs are valuable resources for any business. They are the arteries through which supply chains function. Hopefully staffing cuts are temporary but, for now, they do add risk for clients.
Exporters, not LSPs, bear primary responsibility for compliance with regulations. In reality, though, many exporters rely on their freight forwarders to manage compliance for them. This has always been a mistake but even more so when the LSP reduces staffing. Documentation errors, misclassification, and failure to check licensing requirements are examples of the risk for exporters. Best practices in this area would be to review all documentation produced by LSPs, check shipments for “red flags”, and consider establishing a formal Export Compliance Program for the future. Here are some previous blog posts for reference:
Manage the Risk, 1/15/2020
How to Determine ECCN, 12/6/2019
Compliance Nuts and Bolts, 11/30/2019
Reviewed Your CI Lately? 11/3/2019
Red Flags, 9/29/2019 and 10/6/2019
Basic service levels are also impacted by LSP staffing cuts. Pick up and delivery routes will be combined so drivers are covering wider zones. This can mean late deliveries, missed pick ups, or late pick ups requiring overtime for the client. Remaining clerical staff may struggle to field customer service requests on a timely basis. Best practices here include gaining a comfort level with your providers’ on-line resources and developing problem solving protocols to save time. Blog posts for reference are:
Manage Your Carrier Relationships, 8/8/2019
Got Protocols? 4/6/2019
Need Help? contact mitch@52.91.45.227
LinkedIn Comments
Pete Mento • 2ndManaging Director Global Customs and Duties, Crowe LLP1d • Edited • 1 day agoYou can freak out a little about this: Everyone – and I mean EVERYONE engaged in cross border trade needs to do two things right now – learn everything they can about “Force Majeure” clauses AND start combing through all of their contracts to see where they are and how they will be impacted by them. Because that term is about to get swung around like a bottle of Jager at a bachelor party. Like Hunter Thompson always said – “When the going gets weird, the weird turn pro….” hS
Mitch’s Comment
good reminder to check the boilerplate
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.
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. I have written about compliance as risk management in previous blog posts. Here are a few:
- Manage the Risk, 01/15/2020
- Start off 2020 With a Customs Review, 01/09/2020
- Compliance Nuts and Bolts, 11/30/2019
- Red Flags, 09/29 and 10/06/2019
- Let Shippers Ship, 06/13/2019
Logistics consists of equal parts planning, execution, problem solving, review/adjust, rinse and repeat. If you find yourself spending a lot of time problem solving then planning and/or execution need to be improved. Trusted LSPs (Logistics Service Providers) and 3PLs are valuable resources. At the very least, however, they need to be managed through monthly or quarterly review meetings for which you set the agenda. Here are a few more blog posts for reference:
- Negotiate Value Before Price, 09/10/2019
- Managing Carrier Relationships, 08/08/2019
- Got Protocols? 04/16/2019
Don’t be an unmanager!
For help contact mitch@52.91.45.227
Are you taking the Customs Broker exam in April?
Posted on LinkedIn
Are you taking the Customs Broker exam in April? If you are planning to take the customs brokers exam in April you should be well into your preparations by now. Passing rates are usually in the single digits so the exam is not easy. However, a step by step study plan will give you confidence. I devised a simple method that worked well for me. Read the attached post for details and best of luck.
USMCA Trade Deal
I just participated in another very informative KPMG webcast. The topic was The USMCA Trade Deal- The Way Forward. Here are some highlights from my notes:
- USMCA is not NAFTA 2.0, it is much more complex
- Full ratification is expected by all 3 countries when Canada completes review by early March 2020
- In force 3 months later most likely July 2020
- Summary of outcomes includes 5 areas…. Labor, Dispute Settlement, Environmental Provisions, Intellectual Property Rights, Rules of Origin
- Overview of Agreement; 34 chapters, 13 annexes, 12 side letters
- Includes uniform regulations and marking rules (not yet released) for all 3 countries
In the biggest differences with the NAFTA agreement, USMCA includes new regulations in the areas of digital trade, e commerce, rules of origin, express shipments, de minimis allowance, and environmental standards. No doubt these changes will have a big impact on supply chains. Trade professionals will be challenged as they get up to speed.
What is Substantial Transformation?
Just participated in a KPMG Tax Watch webinar on Country of Origin- Substantial Transformation.
The presenters did an excellent job, as usual, covering a lot of detail. Some of the information served as a refresher to me, while other segments offered new material. Here are my takeaways:
- Marking rules of origin- Part 34….articles wholly obtained from one country.
- Rules of origin- Part 102…pertain to NAFTA and other FTAs
- Preferential rules of origin can be found in FTA General Notes…HTUS
- Other…Product of Jurisprudence applies substantial transformation test
- Note- 2 sets of rules can apply to same transaction…marking or tariff rules
Substantial Transformation Rule….used to determine country of origin if articles or components are not wholly obtained from one country…Does article have new name, character, or use?
- Change in character- altered physical characteristics of article or components. Were changes cosmetic? What was the process that resulted in change?
- Change in use- Is end use of article interchangeable with end use of components? Is end use of component predetermined at time of importation? What was the process that resulted in change of use? Predetermined end use generally precludes substantial transformation but subject to specifics of article/components in question.
- Change in name- this is the least compelling of the factors supporting substantial transformation. Do components retain original name after processing?
- Subsidiary/Additional Factors- extent and nature of operations (complex or simple); value added and/or cost incurred during transformation process; essential character of article (components transformed into finished product); change from producer to consumer good; tariff shift.
The Role of Software of Firmware
- Mere downloading of software or firmware does not generally result in substantial transformation.
- Software development location is given more weight than where downloaded.
- Software which enhances existing functionality is generally not considered substantial transformation.
- PCB manufacturing is complex and each situation needs to be considered separately re: Country of Origin and Substantial Transformation.
KPMG Recommended Action Steps for Importers
- Develop well documented analysis or obtain binding rulings before importation.
- Train suppliers and trade partners and communicate plans.
- Conduct periodic internal audits and risk assessments.
- Documents policies and procedures.
Manage the Risk
I’m always amazed when clients tell me that they leave export compliance in the hands of their shipping department.
If you are relying on your busy shipping department or your logistics service provider 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.
contact mitch@52.91.45.227 for assistance.
Start Off 2020 With a Customs Review
An annual customs review is a good business practice. Another good practice is 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 NAFTA) 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.