Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports, and one for logistics/transportation. This week, we continue with the P’s.

Pro Number
Short for progressive number, the “pro number” is used by carriers to identify a shipment for tracking and payment purposes.

Prior Disclosure
A prior disclosure provides a method for importers to report an instance of noncompliance with import laws and regulations. The importer must report the error before CBP discovers and notifies the importer of the noncompliance in order to take advantage of the prior disclosure process and receive reduced penalties.

Pre-shipment Inspection (PSI)
A few countries require goods and documents to be examined before export by an independent agency. Even when the inspection is optional, a customer may request it. Usually, countries where PSI applies have appointed one dedicated agency to perform the pre-shipment inspection. A freight forwarder or customer will be able to provide information on the arrangements.

Parts & Accessories

In keeping with our discussions on the Harmonized Tariff Schedule of the United States (HTSUS) and classification, this week we explore the differences between parts and accessories. Sometimes it is important to know whether the imported item is a "part" or "accessory" in order to properly classify the item. Some HTSUS provisions provide for parts and accessories, while others only provide for parts. The following information provides some guidelines to use when trying to determine if an imported good is a part or accessory.

Parts Criteria
· It cannot be used on its own; or
· It must be combined with other articles to be used; or
· It is an integral, constituent, or component part without which the article to which it is joined could not function; or
· It lends to the safe and efficient operation of the article; and
· It is identifiable by the shape or other characteristics as being an article solely or principally used as a part.

Accessory Criteria
· It may facilitate use or handling; or
· It may widen the range of use of the named article; or
· It may improve the operation of the main article; and
· It is not needed to enable the articles with which it is used to fulfill their intended function; and
· It is something nonessential but desirable that contributes to an effect or result.

The following items are either parts or accessories for a laptop computer. Try to determine the proper designation for each. Check back next Monday for the answers!

· Monitor
· Flash Drive
· Internal Hard Drive
· Textile Storage Case


Trivia Answers – February 1, 2010

1. Prior to the implementation of the new HTSUS in 1989, there tariff numbers consisted of SEVEN digits.
2. The Word Customs Organization maintains the international version of the HTS.
3. The Tariff of 1828 was also known as the Tariff of Abominations because of the detrimental effects it had on the southern economy.
4. The Tariff Act of 1930 is also known as the Smoot-Hawley Tariff Act of 1930.

Customs Broker Exam Study Tip 4: Organization

Now that you have made the decision to take the April 2010 Customs Broker Exam, it’s important to develop a study plan that guarantees your chances of success.

Some people are naturally good at organization; everything has a neat orderly place. Have you ever noticed your colleague’s desk or your neighbor’s garage? All of the books are stacked on bookshelves. Papers are filed away or neatly stacked. The tools are hung on a pegboard and two cars actually fit into the garage. On the other hand, you wonder how another colleague can find anything since his or her desk is covered with so many papers, books and other junk that you can’t even see a desk. The neighbor’s two-car garage won’t even hold a bicycle, let alone one car! Organization is another step on your journey to pass the CBE.

What is organization, why is it important and what can you do to become organized for the exam?

What is organization?

Organization is the systematic arrangement or assembly of objects in an orderly manner.

Why is organization important?

For the purposes of the studying for the exam, organizing your materials helps improve time management and increases your comprehension and memory. If your materials are organized, you will not waste time looking for a book or document that you need later on. Obtaining and organizing all of your materials will allow you to easily access information as you need it. This organization will save time on the day of the test.

What can you do to become organized for the exam?
1. Organize Required Materials - You will want to be able to access your materials quickly during the exam. Organizing the CBP Regulations and the HTSUS is easy, because they can be placed in binders so that you have two rather large books instead of a huge pile of loose paper. What remains are the stack of directives and the other supplementary documents required for the exam. If you haven’t purchased these materials already bound, then you may consider placing them together in a separate binder. You can include additional materials to that third binder later. It will be much easier to find information relating to the supplemental materials if they are placed together in one binder instead of having to shuffle through all of those documents stacked in a pile. In addition, placing those documents in a binder reduces the risk of one of them getting lost.

2. Label Required Materials – Consider using tabs to identify the chapters of the HTSUS. If you are looking for Chapter 61 and know that it's in the middle of the book, having a tab with the chapter number listed may help you to locate the exact chapter faster. Time is very important on the exam. We also suggest that you use tabs to mark each part of the regulations. Colored tabs can be used to indicate more important or frequently tested parts. Tabbing also makes certain parts easier to find and will save you time. Finally, you should consider using tabs on the supplemental materials you placed in the binder. As you add notes and other materials to the third binder, you will want to organize your notes so that you can easily locate them. Organizing your materials not only saves time, but it can also increase your comprehension and memory of large amounts of information.

Note: Even though you may use electronic versions of the HTSUS and CFR in your business, you must use the paper versions for the exam. It is a good idea to study using the paper versions to get used to looking up the information the same way you will on exam day.

3. Arrange Your Study Area – Remember the example of the colleague with the desk that looked like a disaster area? If that example sounds like your desk or study area, now is the time to clean it up. Don’t waste valuable study time digging through piles of paper. Get rid of the clutter in your study area and your office. If you have a desk or designated study area at home, create a special place for your study materials. If you study at the office, create a special place for your materials there also. If possible, create a study area that is comfortable and attractive. A bright cheery comfortable atmosphere will be more inviting for study than the dreaded cold gray metal desk with the uncomfortable wooden chair. Don’t get too comfortable; studying in the bed may result in sleep instead of productive study time.

4. Create a Study Schedule - Your schedule will depend on your experience and learning style. Someone who is new to importing may need to devote more time than someone who has more experience. Some students may need study that is more individual while others may prefer some group or interactive activities. Regardless of your preferences, you will be required to do a great deal of reading. Some people require more structure so reading, tests and other assignments are provided on a regular basis. Others may prefer to create schedules that suit their schedules. Just remember that it is important to allow plenty of time for reading and taking practice tests. If you work full time and wait until two weeks before the exam to start reading the regulations, you may find yourself burned out and struggling on exam day. We’ve provided a few examples that may help you when creating your schedule:

• Consider how many weeks you plan to devote to study. If you have 16 weeks to study, then you will not need to read as much each week; however, if you only have eight weeks to study, you will need to read a little more each week.

• Divide the reading into manageable sections. You may consider reading similar sections together. For example, you might want to read and study the requirements for brokers and entry in one week. This would include Parts 111, 141 and 142. You may want to devote another week to the various types of entries and alternatives to entries.

• Determine how many practice tests you want to take and designate dates and times to take them. Students should take at least one complete 4-hour test and are encouraged to take more than one.

Now that you have placed the required exam materials in binders with tabs, arranged your study space and created a schedule, you are ready to begin your studies.

We welcome your comments on each of these articles. Share what has worked for you or what hasn’t worked so that others will benefit from your experiences.

Check the Boskage Trade News regularly for more helpful hints on studying for the Customs Broker Exam and other useful news for international trade professionals! We will explore “Time Management” in the next study tip.

Update: Iran Sanctions Bill

Imports of carpets from Iran may be prohibited in the near future. Last week, the Senate passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act (S.2799) which expands the Iran Sanctions Act of 1996. The Act prohibits the U.S. government from contracting with companies that export sensitive communications technology to Iran and provides codification of the U.S. ban on trade with Iran. In December 2009, the House passed the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2194). Although the bills contain many of the same provisions, they must be reconciled in conference to work out differences and passed again by the Senate and House before it can be signed into law by the President. The Senate version contains export control provisions, not included in the House bill. There are also several amendments proposed. Stay tuned for more!

Click HERE to read S.2799
Click HERE to read H.R. 2194

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports, and one for logistics/transportation. This week, we continue with the O’s.

Open Top Container

An open top container is similar to a regular freight container; however, it does not have a rigid roof. The open top container may have a flexible or removable cover constructed of plastic or canvas material.

Open Account
In an open account transaction, credit is granted to the buyer without any security. Goods are shipped to the buyer without any guarantee of payment. This form of payment is the most risky to the seller, so it is important that the buyer has an excellent payment history and/or references from other parties with whom the buyer has done business.

Offsets

An offset is a compensation practice that foreign governments or companies require U.S. businesses to enter into as a condition of purchase. These arrangements tend to be reciprocal. For example, as part of a purchase agreement of $10 million worth of aircraft parts, the seller agrees to purchase $10 million of electronic equipment from the buyer's country.

Tariff Trivia

In keeping with our discussions on the Harmonized Tariff Schedule of the United States (HTSUS) and classification, this week we are providing a few tariff trivia questions.

1. Prior to implementation of the new HTS in 1989, how many digits were found in the old tariff numbers in the Tariff Schedule of the United States?

2. What organization is responsible for maintaining the international version of the HTS?

3. Which tariff act was known as the Tariff of Abominations? Why?

4. By what other name is the Tariff Act of 1930 known?

Check back next Monday for the answers!

Customs Broker Exam Study Tip 3: Using Looseleaf and Bound HTSUS and Regulations

Let’s face it; the materials necessary to study for the Customs Broker Exam are burdensome. Who wants to carry around a bunch of big heavy books? While it’s possible to use online versions while studying, we don’t recommend that you make a habit of this practice. Why? Because you cannot use the online version of the Regulations or HTSUS on the day of the exam. You will also want to make notes in your materials and highlight key words, phrases and sections. Use the online versions after you’ve passed the exam or when you need a quick answer to a client question and you have the online version readily available.

Now that we’ve determined that printed versions are best, what are the options? There are three primary options, looseleaf, paperback (perfect binding) and coil bound.

Looseleaf

The looseleaf version is bulky; however, it can be easily updated when supplements are issued quarterly for the Regulations and in summer for the HTSUS. The print is larger than other versions, making it easier to read. There is also more room for making legible notes in the margin. If you use the looseleaf version, make sure you purchase a good quality binder so the pages turn easily and do not fall out of the binder.

Looseleaf editions can also be used in a publication rack, which allows them to sit open on a desk. The pages tend to turn more easily with a publication rack, and the disadvantage of bulkiness is essentially negated. This makes publication racks a popular choice for exam day.

Paperback/Perfect Binding

The Regulations produced using perfect binding resemble smaller paperback versions of the loose-leaf version (The paperback HTSUS is the same size as the looseleaf). The cover is made from heavier paper and is glued together at the spine with strong flexible glue. These books are lighter and slightly less expensive than the loose-leaf versions; however, they cannot be updated. If you are going to use the book regularly and make notes in the book, these might not be the best options. However, if you are looking for a book that is easy to carry for quick reference, then the paperback edition would be an excellent choice.

Coil Bound

Coil binding is commonly used for publications that are frequently opened so that the pages lie flat or back-to-back. Generally, binding is accomplished by punching holes along the entire length of the spine of the page and winding a wire through the holes to provide a fully flexible hinge at the spine. Coil bound versions are smaller and lighter weight than their looseleaf counterparts are (they are the same size as the perfect-bound). Coil binding is similar to looseleaf; however, the pages cannot be removed and they cannot be updated.

For persons taking the exam, we suggest that you consider the looseleaf book or a coil bound version. Both books are sturdy, and the primary differences relate to the ability to update the looseleaf version versus the ease of carrying the coil bound version.

Click HERE to view the various binding options for the CBP Regulations.