EAR99 and NLR…Are you sure?


From the archives but worth re-visiting. When the ECCN (Export Control Classification Number) comes up on export documents most shippers automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default exception. While these may be the correct entries, it is a good business practice to check and confirm.

As part of any Export Management Program, exporters need to make sure they are using correct commodity classifications and license exceptions. 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.  According to EAR part 732 “For items subject to EAR but not listed in CCL the proper classification is EAR 99. EAR 99 is a basket for items not specified under CCL and appears at the end of each Category on the CCL.”

For immediate assistance with exports contact mitch@52.91.45.227 .

Customs Broker Exam Prep

If you are planning to take the customs brokers exam in April you should be well into your preparations by now. In a previous post I shared the prep strategies that worked for me. Here is the info again with the key steps highlighted. Best of luck but don’t rely on luck.

According to CBP Customs and Border Protection passing rates for the customs brokers exam average only 3-11% nationwide. The test is given twice per year in April and October. It consists of 80 multiple choice questions and a passing grade is 75%. The exam is open book which makes it seem easy. However, the books consist of  the HTUS Harmonized Tariff of the United States and CFR 19 Code of Federal Regulations, totaling hundreds of pages. The difficulty is in being able to quickly access the right section for each question. It is a four hour exam so three minutes per question is not much time.

I took a prep course but, as good as it was, I would not have been able to pass the exam without additional study. I estimate that I spent about 50-60 hours on weekends leading up to the exam.

I used 6 previous exams and a 3 step process. In step 1 I took each test for accuracy, ignoring the clock. In step 2 I took the tests again in the same order, while timing myself to make sure I could finish within 4 hours. I believe that step 3 was the key to my success. For this phase I circled all the questions I had missed in steps 1 and 2 and created a separate mini exam which I took several times until I answered all the questions correctly.

Let shippers ship

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.


 

Export Compliance Alphabet Soup

When the ECCN (Export Control Classification Number) comes up on export documents many shippers automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default entry. While these may be the correct entries, it is a good business practice to check and confirm.   Logistics providers can offer expertise in these areas but the exporter bears primary responsibility for compliance.

As part of any Export Management Program, exporters need to make sure they are using correct commodity classifications and license exceptions. Your commodities may be listed on the  CCL (Commerce Control List) in which case EAR 99 is not valid.  If you are automatically using NLR and EAR 99 you may be at risk.  According to EAR part 732 “For items subject to EAR but not listed in CCL the proper classification is EAR 99. EAR 99 is a basket for items not specified under CCL and appears at the end of each Category on the CCL.”

Licensing is a function of both the ECCN and country of ultimate destination. If you determine that your commodity is listed on the CCL the next step is checking license requirements. Here is some info from the BIS (Bureau of Industry and Security) website:

Country Guidance

The country of ultimate destination is a key factor in determining license requirements administered by the Bureau of Industry and Security (BIS) pursuant to the Export Administration Regulations (EAR). BIS maintains the Commerce Country Chart to use in conjunction with other portions of the EAR to determine whether a license is required.  Please review Part 732 of the EAR for additional information on how to use the EAR, including the Commerce Country Chart.

For immediate assistance with exports contact mitch@52.91.45.227 .

Getting Started on Export Compliance

“Export 101” training videos are available to help exporters understand the rules governing the export process and to promote awareness by the Department of Commerce. These videos include four BIS-specific export control training videos. These videos are brought to you by the Census Bureau’s Foreign Trade Division and the International Trade Administration. Please visit the Bureau of Census Foreign Trade Division website to watch the entire series of Export 101 videos or go direct to the BIS-specific training videos:

Exporting Commercial Items: ECCNs and EAR99

The Commerce Control List and Self-Classification

Exporting EAR99 Items

Embargoes and Sanctions

Return to BIS Training Room Main Page

https://www.bis.doc.gov/index.php/compliance-a-training/export-administration-regulations-training/online-training-room?id=284

 

  

Customs Review Best Practices

An annual review of Harmonized Tariff codes 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.

Logistics Customer Service

From the archives

Logistics service providers point to their technological solutions and KPI’s (Key Performance Indicators) to add value for their clients. KPI’s are essential to the management of logistics providers as well as to their clients. Some customer service functions, however, are not as easy to measure. Clients of logistics providers include shippers, consignees, importers, and exporters. Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse company, you will need customer service assistance from time to time. Let’s differentiate:

Request for Information– shipment status, tracking and tracing, claims status, rate requests, invoice balance. This type of customer service is best obtained on line. Take the time to become familiar with your providers’ info systems so you don’t waste time on the phone or waiting for a call back. If your provider does not offer this type of info on line they are either inefficient or very small. To avoid frustration ask yourself if you just need information or action by your provider. Information is easier to get than action.

Action Needed- This level of customer service most likely requires human intervention. Examples include customs or regulatory delays, stopping or diverting shipments, credit issues, special pricing, or real emergencies. While no one likes calling an 800 number, it is a good idea to get your request into the provider’s system as soon as possible as a first step. The difficulty is in reaching the right contact and getting the action you need. If you use a 3PL you may be able to delegate the problem for their handling and have them provide timely updates. If you do not use a 3PL, then you need to manage the issue on your own. One mistake clients make is to rely on their  account rep for all customer service. Account reps are usually on the road and in meetings so this causes delays in action. Another mistake is to depend on the super efficient Mary, Debbie, or Bill in your provider’s office. Everyone takes vacations and sick days so don’t rely on one person for your customer service needs. A better way to get good customer service is to establish protocols with the help of your providers.

Protocols- Day to day logistics consists of planning, execution, and problem solving. Good planning is essential but not foolproof. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. I suggest developing a set of problem solving protocols for the most common issues in your supply chain. This approach will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing resources. They should be willing and able to give you relevant operations contacts along with phone and e mail info for your identified problem areas. Your account rep may be surprised when you ask for help developing protocols but they should welcome the opportunity. This method can be a big time saver for them as well. Get commitment from your providers to respond to your requests in an agreed to amount of time. You can update the protocols as needed. Make them a part of your review meetings with your account reps and you will get better customer service.

Finally, if your account rep says “Just call me”, don’t accept this response.

We help small and medium sized companies stay compliant with Customs and export regulations and manage logistics. Contact mitch@52.91.45.227

International Logistics Consulting; Licensed Customs Brokers