Archive for the ‘US Customs’ Category


 

What You Need To Know Regarding the Section 321 De Minimis Value Increase

Value price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On February 24, 2016 President Barack Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) (TFTE), also referred to as the Customs Reauthorization bill. This law addressed a bevy of trade topics, including the de minimis value for the entry of low value goods. Commonly referred to as Section 321, this legislative measure raised the Section 321 de minimis value from $200 or less to $800 or less. The Section 321 provision allows for low value entries, valued at $800 or less, to enter into the commerce of the U.S.duty free and without formal entry. For many importers this was very goods news as it reduced the amount of paperwork required on low value shipments, but it also created a potential compliance pitfall.

Section 321 Product Restrictions:

Goods requiring inspection as a condition of release, regardless of value, merchandise subject to Anti-Dumping / Countervailing duty (ADD/CVD), and certain products regulated by the following Partner Government Agencies (PGAs), may not qualify under Section 321:

  • Food and Drug Administration (FDA)
  • Food Safety Inspection Service (FSIS)
  • National Highway Transport and Safety Administration (NHTSA)
  • Consumer Product Safety Commission (CPSA)
  • United States Department of Agriculture (USDA)

Section 321 Daily Restriction:

As mentioned by authors Teresa M. Polino, Orisia K. Gammell and Julia L. Diaz in the Arent Fox LLP article Did You Know: The 2015 Trade Enforcement Act Can Save Importers Money?, “this increase applies to shipments of articles imported by one person (e.g., a company) on one day, other than in the case of articles sent as gifts from a person in foreign countries or in the case of articles accompanying and for the personal or household use of a person arriving in the U.S.”

Under this regulation importers are only allowed to take advantage of the Section 321 benefit on one single transaction per day.

Carriers may make a Section 321 claim in conjunction with their eManifest filing, subsequently reducing the amount of paperwork on such low value transactions.

Best Practices:

Ensure that your carrier is not making multiple Section 321 claims. Carriers may elect to make the Section 321 claim in order to expedite the clearance process being unaware of whether the importers daily allowance has been reached or not. To avoid hefty penalties it is recommended that shipment filings be highly regulated in the following ways:

  • Identify the particular shipment the Section 321 claim will be used each day
  • Request that a formal entry be made on all other entries
  • Use the services of one customs broker to ensure import/export transactions are filed in a consistent manner
  • Build strong communication lines with the logistics team including carriers, freight forwarders, and customs brokers

Have questions or comments regarding this provision and how you can ensure that you are taking advantage of Section 321 within the compliance guidelines? Leave them in our comments section below or email Ask Your Broker.

3 Steps to Importing a Road Vehicle into the USA

3 Steps to Importing a Road Vehicle into the USA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With the current exchange rate many Canadian used vehicles are being actively sourced by U.S. buyers. Importing a road vehicle into the U.S. can be difficult; however, we have broken down the process into these three easy steps:

1. Ensure the vehicle is admissible for import.

Vehicles will need to have both an Environmental Protection Agency (EPA) sticker and a Department of Transportation (DOT) sticker affixed to the vehicle. If the vehicle is 21 years old it is exempt from the DOT certification sticker. If it is over 25 years, it is exempt from the EPA certification sticker. If the vehicle is without a DOT sticker, it may still be eligible for import; however, it will need to be imported through a registered importer who is required to hold the vehicle for a minimum of 30 days after import. Vehicles with missing EPA stickers will need a letter of conformity from the manufacturer in order to import the vehicle. If a letter of conformity cannot be obtained the vehicle is not admissible for import into the U.S.

Additionally, if the vehicle holds a rebuilt or salvaged title it is not admissible for import into the U.S.

2. Create/obtain the required documentation.

Since U.S. Customs and Border Protection (CBP), the DOT and EPA are involved with vehicle imports, it is important to understand that each agency has specific documentation requirements. The following list of forms will need to be accurately completed and submitted:

  • U.S. Customs or Commercial Invoice
  • DOT Vehicle Declaration Form (HS-7)
  • EPA Vehicle Declaration Form (3520-1)
  • Copy of the vehicle registration

3. Have the vehicle steamed, sprayed or cleaned thoroughly before shipment.

The U.S. Department of Agriculture requires that the undercarriage of the imported vehicle be free of foreign soil to safeguard against importation of dangerous pests.

Wherever you may be in the purchasing process whether you are currently importing a vehicle or still in the contemplation stage and need assistance, please contact us.

Have you successfully or not quite successfully imported a vehicle into the USA? What has your experience been? Share it in our comments section below or email us at Ask Your Broker.

Why You Should Conduct an Internal Customs Compliance Audit for U.S. Imports

Internal customs compliance audit

The responsibility of an importer to exercise reasonable care when importing to the United States has been at the core of customs compliance since the implementation of the Customs Modernization Act (Mod Act) in 1993.

U.S. Customs and Border Protection has the expectation that importers must be knowledgeable and proactive in the conduct of their legal responsibilities. Unfortunately, as members of the trade community, we occasionally hear comments such as “I didn’t know”, or “My broker never told me”.  The bottom line is that it remains the importer’s responsibility to have a comprehensive understanding of their obligations to Customs.

While customs law can be quite complex and somewhat bewildering, there are a relatively small number of very specific areas that form an importer’s foundation of compliance.  As laid out in the U. S. Customs and Border Protection Informed Compliance Manual entitled Reasonable Care these specific topics are briefly outlined here:

 

Areas in which importers must exercise reasonable care:

All Transactions

  • Use of external or internal experts
  • Review of all customs documentation, inclusive of entry declarations, for accuracy
  • Consistency in same or similar transactions across ports and modes of transport
  • Appropriate adjustments or Prior Disclosures when errors are discovered

 

Merchandise Description and Harmonized Tariff Classification

  • Having procedures in place to ensure that you are fully knowledgeable of the products you are importing – composition, country of origin, etc.
  • Properly describing the merchandise to Customs according to regulations
  • Ensuring that you are providing the correct tariff classification of the goods
  • Verification of whether your goods are eligible for specific duty free status

 

Valuation

  • Procedures to ensure accuracy of your declared transaction value, per Customs regulations
  • Are your transactions between “related” parties, and if so, ensuring that you are declaring the correct values to Customs?
  • Assists, commissions, royalties, etc., declared as appropriate

 

Country of Origin / Marking / Quota

  • Reliable procedures in place to ensure that the country of origin is declared correctly on your entry
  • All articles imported into the U.S. must be marked with the country of origin/manufacture
  • Processes established to determine and ensure that all necessary documentation is provided at time of entry

 

Intellectual Property Rights

  • Ensure that you have the legal right to import merchandise that is protected by trademark or copyright

 

Miscellaneous Questions

  • Ensure that you are filing the correct type of entry and that all other gov’t agency reporting is attended to

 

Please bear in mind that this is the “short list”.

 

The Importer’s Role in Trade Compliance

An efficient and compliant import process starts with everyone involved understanding their role and responsibilities. It is crucial that importers:

  • Understand their risks and responsibilities
  • Establish processes that ensure that all reasonable care standards are met, and
  • Ensure that these standards are monitored and enforced, safeguarding your continued privilege to import

 

Without having the proper knowledge of the responsibilities of an importer, and ensuring that you are both in compliance and have evidence of your actions, you may be at a higher risk for:

  • Penalties
  • Liquidated damages
  • Various customs audits
  • Increased costs of doing international business
  • Supply-chain disruptions and delays
  • Losing your import privileges

 

On the other hand, being knowledgeable about the expectations and acting with the expected due diligence, while not guaranteeing that you are not subject to an audit, does provide assurance that you are taking full advantage of allowable reductions in duty. Should Customs come knocking, you are prepared with appropriate responses to their questions.

 

Why conduct an internal customs compliance audit?

A thorough internal audit will help identify areas of risk and lay the foundation for your customs compliance plan.

 

Pacific Customs Brokers strongly encourages and advises every importer to conduct regular internal audits on their Customs transactions, and to use the Customs guideline in developing their internal controls and standard operating procedures.  The above-mentioned informed compliance publication on Reasonable Care is a great starting point.

 

How Pacific Customs Brokers Can Help?

Without proper customs training or hands-on instruction a business’ internal auditor will find identifying risks or exposures challenging. Our Trade Advisors stand ready to assist you in conducting an internal audit, and in working with you to develop or recommend improvements to your internal controls.

Stay Informed of Changing Regulations

To help you better understand complex compliance issues and implement effective solutions we offer a comprehensive Trade Compliance Education program. Explore one of our upcoming in-person seminars, online webinars and/or hands-on workshops to learn more. In particular, you might be interested in Part 2 of the next  U.S. Trade Compliance Seminar Series that takes a close look at Customs Audits and Importing Inspections. Learn more and register here!

 

Do you have questions about conducting an internal customs compliance audit? Ask our Trade Advisors. Leaving your comments below or email Ask Your Broker.

Ignorance is Not Bliss – The Potential Perils of Antidumping and Countervailing Duties

Antidumping and Countervailing Duties

As an importer of foreign goods coming into the commerce of the United States, you already know how complicated the import formalities can be, and there is always more to learn. One subject that may not have appeared on your radar is that of trade laws such as Antidumping (AD) and countervailing duty (CVD).

 

What is Dumping?

Dumping occurs when a foreign producer sells a product in the United States at a price that is below that producer’s sales price in the country of origin, or at a price that is lower than the cost of production.

 

What are Countervailing Duties?

Foreign governments subsidize industries when they provide financial assistance to benefit the production, manufacture or exportation of goods. Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans at terms that do not reflect market conditions. Countervailing duties are assessed to counter the effects of the subsidies provided by foreign government to merchandise that is exported to the United States. These subsidies cause the price of such merchandise to be artificially low.

 

Measures of Protection for U.S. Industry

If a U.S. industry believes that it is being injured by unfair competition through dumping or subsidization of a foreign product, it may request the imposition of antidumping or countervailing duties by filing a petition with both Enforcement and Compliance and the United States International Trade Commission. Enforcement and Compliance investigates foreign producers and governments to determine whether dumping or subsidization has occurred and calculates the amount of dumping or subsidies.

According to the United States International Trade Administration, there are hundreds of antidumping cases for 44 US trading partner countries, including but not limited to countries as diverse as Argentina, Canada, Italy, China, Malaysia and Ukraine.  There are more active AD cases for goods manufactured in China than from any other country.

Products affected range from ironing boards to wooden bedroom furniture to ball bearings to engineered wood flooring, solar panels and cells; from honey to salmon, from shrimp to pasta to mushrooms. New cases are initiated frequently, while other cases are terminated.  AD rates can range from less than 1% to over 250% of the import value of the goods.

 

Customs Entry Requirements

With all antidumping cases, there are additional formalities and documentation that is required to be presented with the customs entry, no matter the AD rate. U.S. Customs and Border Protection will require that the customs entry include documentation certifying that you, the importer, are not being reimbursed by the manufacturer for the cost of the antidumping duties. Because AD cases are assigned based on information provided by the manufacturer to the ITA, and different firms may receive either higher or lower AD rates, it is important that you provide the full legal name and address of the actual manufacturer and the exporter, in order to ensure that the correct AD case is associated with your entry.

 

Customs Bond Underwriter Requirements

Due to the very high risks that U.S. customs approved bond underwriters assume when writing these required bonds, they are very likely to require that importers affected by antidumping regulations provide 100% collateral at the time of their bond application or roll-over. They will also require that the importer provide full financial information at that time. Providing collateral involves transferring either a certified check or a letter of credit, generally equal to 1-2 years of the importer’s continuous transaction bond. These funds or release of the letter of credit will be held by surety in order to protect them should there be an increase in Antidumping Duties (ADD) liability, and will not be returned to the importer until at least 180 days after the final entry has liquidated.  Many years can pass before an Antidumping case is closed, thus permitting liquidation of the entries.

Note: Depending on the importer’s history, volume and value of imports, the surety may require further collateral at any time.

 

Recommendations for Importers of New Products

You may well imagine that being unaware of a potential AD case on your product, discovering that your goods are subject to an unplanned additional duty can come as quite a shock, not to mention a tremendous expense.

Pacific Customs Brokers recommends that you contact your customs broker or attorney prior to making purchasing decisions for goods that are new to your firm.  Our Trade Advisory team can assist you with research on the dutiability of the product and advise on eligibility for reduced or duty free treatments, in addition to determining whether it may be subject to Antidumping duties.

 

Understanding Antidumping or Countervailing Duties

To learn more about Antidumping or Countervailing duties attend an upcoming H.S. Tariff Classification Workshop.

 

What are your thoughts on Antidumping? Are your products impacted by these duties? Please share in our comments section below.

 

How to Accurately Complete a NAFTA Certificate of Origin

How to Accurately Complete a NAFTA Certificate of OriginIn January 1994, Canada, the United States and Mexico launched the North American Free Trade Agreement (NAFTA) and formed the world’s largest free trade area. Its intent was to reduce trading costs, increase business investment, and help North America be more competitive in the global marketplace. In order for commodities produced in one of the three NAFTA territories to qualify for reduced duty rates, a valid NAFTA certificate must be provided. For items not wholly grown or produced of items wholly grown or manufactured in a North American Free Trade Agreement area, they must meet certain predetermined criteria in order to qualify for reduced duty rates. These criteria are found in the Rules of Origin section of the NAFTA Agreement.

Who is responsible for completing the certificate?

The NAFTA Certificate of Origin should be provided by the exporter to the importer to support the importer’s claim for duty-free entry. The form can also be provided by the producer for use by the exporter.

 

Types of NAFTA Certificates of Origin

There are two types of NAFTA certificates:

  1. Low Value NAFTA Certificate of Origin – used for shipments valued at less than $2,500 CAD
  2. NAFTA Certificate of Origin (Form B232E) – used for shipments valued over $2,500 CAD

Importance of a Valid NAFTA Certificate of Origin:

Correctly completing a NAFTA Certificate of Origin can be confusing for those who have never done it before or do not understand the requirements of each field. The NAFTA Certificate of Origin must be completed and certified by an authorized signatory of the producer or exporter of the goods who has enough knowledge of the information provided in all fields.

On a daily basis, customs brokers are faced with informing their clients of inaccuracies made when completing a NAFTA certificate. An incomplete or incorrectly completed certificate invalidates the ability to claim the lower preferential rate of duty that would have been awarded with a valid certificate.

Instructions on Filling out the Certificate of Origin

Below are the instructions outlining how to correctly complete each field of a NAFTA certificate, as well as some of the most common errors customs brokers identify when validating certificates.

1. Low Value NAFTA Certificate of Origin

The low Value NAFTA Certificate of Origin is a confirming statement that certifies the commodities in the shipment meet the requirements under the Rules of Origin specified by the NAFTA Agreement. It can only be used for shipments valued under $2,500.00 CAD; and contains no blanket period, therefore it must be completed for each individual shipment. It is a much more straight forward form to complete, requiring only the producer’s or exporter’s name, address and signature to be completed.

2. NAFTA Certificate of Origin (Form B232E )

Field 1 – Exporter Name and Address

State the full legal name, address (including country) and legal tax identification number of the exporter.

Legal tax identification number is:

  • In Canada –  employer number or importer/exporter number assigned by Revenue Canada
  • In Mexico –  federal taxpayer’s registry number (RFC)
  • In the United States  –  employer’s identification number or Social Security Number

Field 2 – Blanket Period

Complete field if the Certificate covers multiple shipments of identical goods as described in Field 5 that are imported into a NAFTA country for a specified period of up to one year (blanket period).

  • FROM – the date upon which the Certificate becomes applicable to the good covered by the blanket Certificate (it may be prior to the date of signing this Certificate).
  • TO – the date upon which the blanket period expires. The importation of a good for which preferential tariff treatment is claimed based on this Certificate must occur between these dates.

Common Error: It is not uncommon to find that the DATE field is completed inaccurately to reflect a blank period covering a year and one (1) day. 01/01/10 to 01/01/11 is in fact one (1) year plus one (1) day of the next year. To be sure that the blanket period is valid, this field must read the same year in both start and end date of the blanket period.

Field 3 – Producer’s Name and Address

State the full legal name, address (including country) and legal tax identification number, as defined in Field 1, of the producer. If more than one producer’s good is included on the Certificate, attach a list of the additional producers, including the legal name, address (including country) and legal tax identification number, cross referenced to the good described in Field 5. If you wish this information to be confidential, it is acceptable to state “Available to Customs upon request”. If the producer and the exporter are the same, complete field with “SAME”. If the producer is unknown, it is acceptable to state “UNKNOWN”.

Field 4 – Importer’s Name and Address

State the full legal name, address (including country) and legal tax identification number, as defined in Field 1, of the importer. If importer is not known, state “UNKNOWN”; if multiple importers, state “VARIOUS”.

Field 5 – Description of Goods:

Provide a full description of each good. The description should be sufficient to relate it to the invoice description and to the Harmonized System (HS) description of the good. If the Certificate covers a single shipment of a good, include the invoice number as shown on the commercial invoice. If not known, indicate another unique reference number, such as the shipping order number.

Tip: For a blanket certificate, part or item numbers identifying each commodity covered by the certificate should be included to guarantee that there is no confusion as to which products are covered and which are not.

Field 6 – H.S. Tariff Classification Number:

For each good described in Field 5, identify the H.S. tariff classification to six digits. If the good is subject to a specific rule of origin in Annex 401 that requires eight digits, identify to eight digits, using the H.S. tariff classification of the country into whose territory the good is imported.

Tip: Applying accurate H.S. tariff codes requires in depth knowledge of the commodities being imported, the Customs Tariff and NAFTA Rules of Origin. If you are unsure if the code is correct, contact a customs broker before completing the certificate.

Field 7 – Preference Criterion:

For each good described in Field 5, state which criterion (A through F) is applicable. The rules of origin are contained in Chapter Four and Annex 401. Additional rules are described in Annex 703.2 (certain agricultural goods), Annex 300-B, Appendix 6A (certain textile goods) and Annex 308.1 (certain automatic data processing goods and their parts).
Note: In order to be entitled to preferential tariff treatment, each good must meet at least one of the criteria below.

A) The good is “wholly obtained or produced entirely” in the territory of one or more of the NAFTA countries, as referred to in Article 415. Note: The purchase of a good in the territory does not necessarily render it “wholly obtained or produced”. If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(a) and 415)

B) The good is produced entirely in the territory of one or more of the NAFTA countries and satisfies the specific rule or origin, set out in Annex 401, that applies to its tariff classification. The rule may include a tariff classification change, regional value-content requirement or a combination thereof. The good must also satisfy all other applicable requirements of Chapter Four. If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(b))

C) The good is produced entirely in the territory of one or more of the NAFTA countries exclusively from originating materials. Under this criterion, one or more of the materials may not fall within the definition of “wholly produced or obtained”, as set out in Article 415. All materials used in the production of the good must qualify as “originating” by meeting the rules of Article 401(a) through (d). If the good is an agricultural good, see also criterion F and Annex 703.2. (Reference: Article 401(c))

D) Goods are produced in the territory of one or more of the NAFTA countries but do not meet the applicable rule of origin, set out in Annex 401, because certain non-originating materials do not undergo the required change in tariff classification. The goods do nonetheless meet the regional value-content requirement specified in Article 401(d). This criterion is limited to the following two circumstances:

D-1) the good was imported into the territory of a NAFTA country in an unassembled or disassembled form but was classified as an assembled good, pursuant to HS General Rule of Interpretation 2(a); or

D-2) the good incorporated one or more non-originating materials, provided for as parts under the HS, which could not undergo a change in tariff classification because the heading provided for both the good and its parts, and was not further subdivided into subheadings, or the subheading provided for both the good and its parts and was not further subdivided.

Note: This criterion does not apply to Chapters 61 through 63 of the HS (Reference: Article 401(d))

E) Certain automatic data processing goods and their parts, specified in Annex 308.1, that do not originate in the territory are considered originating upon importation into the territory of a NAFTA country from the territory of another NAFTA country when the Most-Favoured-Nation Tariff rate of the good conforms to the rate established in Annex 308.1 and is common to all NAFTA countries. (Reference: Annex 308.1)

F) The good is an originating agricultural good under preference criterion A, B or C above and is not subject to a quantitative restriction in the importing NAFTA country because it is a “qualifying good” as defined in Annex 703.2, Section A or B (please specify). A good listed in Appendix 703.BB.7 is also exempt from quantitative restrictions and is eligible for NAFTA preferential tariff treatment if it meets the definition of “qualifying good” in Section A of Annex 703.2.

Notes:

  • This criterion does not apply to goods that wholly originate in Canada or the United States and are imported into either country.
  • A tariff rate quota is not a quantitative restriction.

Field 8 – Producer:

For each good described in field 5, state “YES” if you are the producer of the good. If you are not the producer of the good, state “NO” followed by (1), (2), or (3), depending on whether this certificate was based upon:

(1) your knowledge of whether the good qualifies as an originating good;

(2) your reliance on the producer’s written representation (other than a Certificate of Origin) that the good qualifies as an originating good; or

(3) a completed and signed Certificate for the good, voluntarily provided to the exporter by the producer.

Field 9 – Net Cost:

For each good described in Field 5, where the good is subject to a regional value content (RVC) requirement, indicate “NC” if the RVC is calculated according to the net cost method; otherwise, indicate “NO”. If the RVC is calculated according to the net cost method over a period of time, further identify the beginning and ending dates (DD/MM/YY) of that period. (Reference: Articles 402.1, 402.5)

Common Error: Many NAFTA certificates are found to be invalid due to the exporter stating the actual cost of the commodities in this field. As stated above, the net cost field is not asking for actual cost of the good but which method is being used to ascertain that the commodities being imported meet the NAFTA Rules of Origin.

Field 10 – Country Of Origin:

Identify the name of the country (“MX” or “US” for agricultural and textile goods exported to Canada; “US” or “CA” for all goods exported to Mexico; or “CA” or “MX” for all goods exported to the United States) to which the preferential rate of customs duty applies, as set out in Annex 302.2, in accordance with the Marking Rules or in each Party’s schedule of tariff elimination.

For all other originating goods exported to Canada, indicate appropriately “MX” or “US” if the goods originate in that NAFTA country, within the meaning of the NAFTA Rules of Origin Regulations, and any subsequent processing in the other NAFTA country does not increase the transaction value of the goods by more than 7%; otherwise indicate as “JNT” for joint production. (Reference: Annex 302.2)

Common Error: The NAFTA certificate is invalid and ineffective if the commodities listed are not produced in a participating country in the agreement. Many people do this so that whoever is clearing the goods knows where the items are made. However, the correct thing to do is indicate the country of manufacture on the invoice and back up the NAFTA qualifying items with a NAFTA certificate.

Field 11 – Certification:

This field must be completed, signed and dated by the exporter.  When the Certificate is completed by the producer for use by the exporter, it must be completed, signed and dated by the producer. The date must be the date the Certificate was completed and signed.
In many cases, the number of pages is left blank or it is signed by a person in an administrative position. The Canada Border Services Agency (CBSA) has been known to question the validity of the certificate when signed by someone with questionable knowledge of the information.

 

How long should copies of the Certificate of Origin be retained?

Valid NAFTA certificates used for the relief of customs duties must be kept as part of the importer’s records that are required to be kept for seven (7) years following the customs clearance.

 

Pacific Customs Brokers and NAFTA

Pacific Customs Brokers offers a wide range of FTA related services and resources.

Free Trade Agreement Advisory Services:

  • FTA Concierge Services  – For clients with time constraints, we offer convenient FTA Concierge Services. We can solicit FTA certificates directly from your exporters allowing you to do what you do best – run your business.
  • Tariff Classification Consulting – We offer expert analysis for clients seeking guidance on tariff classification. You may know the ins and outs of your business, but we know the intricacies of trade and always look out for our clients bottom line.

NAFTA Workshop and Webinars

  • NAFTA Workshop – In this full-day workshop we will provide you with a comprehensive field-by-field guide to completing a NAFTA certificate. We will assist you in understanding product eligibility, rules of origin, common errors and the importer’s responsibilities under the program to maximize savings.

Learn more or register now!

  • NAFTA Webinar Series – Join this two-part webinar series to learn about rules of origin under the North American Free Trade Agreement. Each part in the series is 75-minutes in length and will clarify a common assumption that all products manufactured in Canada, the United States or Mexico are eligible for duty free status.

Learn more or register now!

If you have any questions regarding NAFTA certificates post them in our comments section below or email us at Ask Your Broker.