Friday, December 28, 2007

New Year’s Resolutions for International Trade Professionals

As we eagerly launch into 2008, the Boskage staff would like to share a few New Year’s Resolutions with you and provide an opportunity for you to share a few of yours with us. In a few weeks, we’ll take all of the suggestions received and create a complete list. We’ve started the list with the following resolutions.

As an active member of the international trade community, I commit to:

· Contribute my best efforts and quality to my company’s international compliance program.
· Abide by all government regulations, even when it’s a lot of work.
· Keep updated on current events through trade associations and industry publications.
· Participate in relevant educational opportunities.
· Share knowledge with and assist my colleagues.
· Keep our company’s name out of the “look who has done something bad” list.

It's your turn. Share your New Year's Resolutions with us!

Happy New Year from the staff at Boskage Commerce Publications!

Tuesday, December 4, 2007

CBP Introduces Revised Agreement

As the C-TPAT program evolves, changes to certain processes and procedures are necessary to improve the efficiency and effectiveness of the program. When applicants for membership in C-TPAT complete the online application in the Security Link Portal, they are required to accept the C-TPAT Agreement to Voluntarily Participate. In compliance with the SAFE Port Act, CBP created a revised agreement for C-TPAT participants. The new agreement updates the most recent version of the agreement to include the changes that have occurred since the introduction of C-TPAT in 2001. Current members are not required to sign the agreement or submit additional information; however, CBP encourages members to review the new agreement because continued membership indicates that the participant concurs with the new agreement.

Some of the revisions to the agreement include:
  • Use of the term “Partners” for all parties instead of carriers, importers, brokers, etc.

  • Addition of the requirement to cooperate with validation and re-validation process under Partner’s agreement.

  • Shortened version of the Partner’s agreement to comply with the program requirements in place of multiple statements in the old version about developing written and verifiable processes followed by the list of major processes.

  • Addition of the statement that CBP will conduct validation within one year of the Partner’s certification.

  • More CBP responsibilities than in the original agreement

  • Provisions for C-TPAT participants to verify information via Status Verification Interface

  • Opportunities for C-TPAT Partners to participate in the Mutual Recognition Program

We have included a link to each document so that you can review each and make note of the changes. Click on the appropriate link to view the old and revised versions of the C-TPAT Agreement to Voluntarily Participate:

(Old) C-TPAT Agreement to Voluntarily Participate
(Revised) C-TPAT Agreement to Voluntarily Participate

Thursday, November 29, 2007

2008 Government Publications

It’s that time of year again, when we field a number of questions about when the 2008 government publications will be available from Boskage.

The 2008 government publications are likely to be released within the first six weeks of 2008. The trade does not have an exact date of release because the government entities responsible for delivering these titles do not give out a release date in advance of publication. However, if the last three years are any indication of a trend, the ITC (HTSUS) Census Bureau (Schedule B), and Treasury Department (CBP Regulations) will release in mid to late January of 2008, and the Bureau of Industry and Security (Export Regulations) will release in late January to mid February of 2008. We’ll post blog entrys when each publication is released so that you’ll have the latest information.

Boskage stands ready to ship the new HTSUS and the rest of these subscriptions as soon as they become available. Order your subscriptions now to ensure your company will remain in compliance by using the most current editions of the required publications.

All subscriptions through Boskage include printed supplements throughout the calendar year for free*.

Click on the publications below for a complete description of the publication and pricing.

2008 Harmonized Tariff Schedule (HTSUS)
2008 U.S. Customs Regulations (19 CFR Title 1, Parts 0-199)
2008 Export Administration Regulations
2008 Updates to the 2007 Schedule B

Looseleaf editions include all shrink-wrapped pages and all updates.

Deluxe editions include looseleaf pages (with all updates) heavy-duty D-ring binder and indexing tabs.

*Supplements are included at this price. However, re-prints (any edition comprising more than 50% of the original) will be billed at cost.

Tuesday, November 27, 2007

Pass Rate For October 2007 Customs Broker Exam

From the CBP:

Number of candidates: 1387
Pass Rate: 9.2%

Credit was given to all for 4 questions.

Friday, November 16, 2007

CBP Posts October Exam Answers

After weeks of waiting, the answers for the October Customs Brokers Exam have been mailed to the anxious examinees and posted to the CBP website for the public. First, we want to congratulate all of you who passed! We would like to hear your comments about how you studied, what worked best for you and any other comments about the exam. Next, we want you to know that there appear to be some typographical errors related to references on the Exam Key dated November 13, 2007. Click here to view the correct references.

We were not surprised that questions were thrown out, but it was a little surprising that four questions were eliminated. Congratulations, everyone automatically answered four questions correctly and earned five free percentage points (4 x 1.25). Now all you need is 70 points, which equates to answering 56 questions correctly.

So what if you only answered 54 or 55 questions correctly? Should you give up and say “maybe next time?” No! Look at the answers to see if there are any questions that could be protested. You haven’t lost anything by protesting a question, but with the right protest, you may go from failing to passing and obtaining your license.

We have analyzed the questions and answers and found five questions that we believe could be subject to protest. Those questions are 19, 21, 42, 45 and 47. Click here to see the comments about Question 45. In future postings to the blog we will provide additional information about these potential protest questions. We welcome your comments and suggestions on these questions and any others you think might be subject to protest. Remember, you haven’t lost anything by filing a protest and you may save yourself the time and money necessary to take the test again.

Thursday, November 8, 2007

Foreign Suppliers Can Help Importers

Foreign suppliers are often overlooked in the import process, yet they must perform certain tasks in order for the foreign goods to be allowed entry into the U.S. Sometimes foreign entities are only familiar with the laws of their own country and do not realize that the U.S. has laws that are different. The manner in which the foreign supplier fulfills their obligations can expedite or delay the import process. If the importer provides the foreign supplier with instructions about preparation of documents, country or origin, cargo security and other requirements, then the foreign supplier will have a better understanding and the tools to help them help you.

Wait a minute! You may be thinking that you don’t even have time to train your own staff and other departments in your organization. How can you be expected to train foreign suppliers? However, it’s not that hard and the small investment in time will make your life easier because the quality of the documentation and compliance with the company’s requirements will be improved.

Here are some suggestions on how you can educate your foreign suppliers.

1. Provide the foreign suppliers with standard guidelines for import shipments. The guidelines can be published online, provided with each purchase order, or some other method. You may also want to collaborate with others in your supply chain, such as buyers and logistics, to create a document that covers the importation of these products from the time an order is placed to the time payment is made. What should be included in those guidelines? The following is a brief list of items that should be addressed:

A. Company Contacts
Your guidelines should provide names, phone numbers and email addresses for key contacts related to imports, exports and logistics.

B. Documents
This section should provide a list of all documents that are required for your shipments along with any specific requirements for each document. For example, the commercial invoice is a key document and it is important for the foreign supplier to know what information is required to be included on the document. You could include a link to 19 CFR 141.86 or provide the list in your own format. If your company imports goods from a NAFTA country, remember to include the production of the CBP 434 NAFTA Certificate as a required document.

C. Country of Origin Marking
The requirements for country of origin marking should be explained along with any special requirements your company may have for marking of the merchandise and packaging. Since failure to mark or improperly marked merchandise creates additional work for the importer and potential penalties from CBP, some companies include a provision for charge-backs for improper marking. Provide a list of responsibilities for the supplier to assist them in marking the merchandise correctly.

D. Valuation - General
Determining the value for goods is difficult enough for importers, so explanation of these requirements to the foreign suppliers may be even more difficult. Consider introducing this topic with a summary of the importance of declaring the value and being able to support these calculations if requested. Then provide a list and brief explanation of the key components of value such assists, commissions, packing and related parties. If you are aware that certain components affect your shipments, such as related party transactions, place more emphasis on these topics.

E. Free of Charge Goods
Include some brief instructions on the proper declaration for free of charge goods. It is important for foreign suppliers to properly declare the values for the free of charge items they send and it will save you time having to contact the supplier to obtain the values in order to obtain release of the goods from CBP. The supplier may have difficulty understanding the importance of declaring accurate values since the good are being supplied free, so a good explanation and example may help get the point across.

F. Repaired Goods
Explain that imported merchandise that is subsequently exported for repairs and re-imported could be charged duty on the entire value of the shipment unless the return shipment is properly identified as being “repaired goods returned.” The foreign supplier responsible for the repairs must complete documentation that provides the value of the goods and value of the repair. Explain that for purposes of paying Customs duties, it is irrelevant that the goods may have been under warranty or that the repairs are performed at no cost to the importer.

G. Packaging and Labeling
In addition to the country of origin markings, each company will have specific packaging and labeling requirements based on the type of products imported. You should include information such as size and type of boxes, pallets and special marking required on the cartons.

H. Transportation
While transportation issues may not be the responsibility of the Import Compliance Department, your Logistics Department may want to contribute to these guidelines. This section usually contains information about the use of ocean and air carriers, as well as forwarders. You may want to specify carriers and when it is allowable to ship air versus ocean.

I. C-TPAT Security Requirements for Suppliers
For those companies that are members of C-TPAT, you must assess the security policies, procedures and processes of your business partners. Use this section to convey your company’s commitment to C-TPAT and provide links or references to the relevant C-TPAT Security Criteria for Manufacturers.

J. Accounts Payable
This section should include the requirements for submitting invoices for payment and provide the methods of payment used by the company.

2. Check out the bcpLearning courses.

The basic suite of courses contains a short course designed specifically for foreign suppliers. This course describes the basic process of importing for a U.S. company from beginning to end. The course then focuses on the roles of Foreign Suppliers in the process, including complying with C-TPAT guidelines, providing complete documentation packages, and preparing documents for express courier shipments. This course also includes a foreign supplier guidelines document, which describes the information included in this article and additional topics in more detail.

Monday, October 29, 2007

Is Your Company Still Thinking About C-TPAT Membership?

Are you one of the importers, brokers or other trade participants who hasn’t signed up for C-TPAT? What are you waiting for? Although participation in C-TPAT requires commitment of time and resources, the initial steps for participation are much easier now than they were for early members. The pioneers of the early C-TPAT programs didn’t have the benefit of the resources that are available now. As a result of hard work by the trade and CBP, companies contemplating C-TPAT membership today have a wealth of resources available to them. So, let’s take a look at some issues that companies consider when looking at participation.

Why Companies Should Participate in C-TPAT

C-TPAT is not mandatory and participation may not be necessary for companies that rarely import and export; however, C-TPAT has numerous benefits and some of the other companies in your supply chain may require that you join in order to do business with them. Other reasons to join include:

· Participation demonstrates good corporate citizenship.
· Participation reduces potential for negative publicity and protects your company’s image.
· Procedures required for participation assist in reducing inventory loss and increases the visibility of the supply chain.
· Membership provides expedited cargo release.
· C-TPAT requires participation by nearly all of the business units within an organization, which promotes increased understanding and cooperation between departments.
· Participants receive reduced numbers of cargo inspections.
· Membership is a prerequisite for account-based processes such as Importer Self-Assessment.

A recent independent study conducted by the University of Virginia on behalf of U.S. Customs and Border Protection reported that “95 percent of respondents indicated they are likely to remain in C-TPAT.”

What Will it Cost?

The expenses vary depending on the current procedures in place; however, some of the common areas that require the most investment of time and money include:

· Improvement or implementation of physical security features such as electronic access, cameras, fences and other security procedures,
· Maintenance of the physical security features and security officers, and
· Training and education for staff.

How Can Boskage Help?

Third parties can assist importers, brokers and carriers in creating C-TPAT programs; however, no one can do C-TPAT for you. Boskage provides some excellent tools that will make the process easier and less expensive.

The Corporate C-TPAT Manual for Importers contains over 100 policies and procedures that address each of the security criteria. Although the manual was written for importers, the format and most procedures can be altered to work for brokers.

The manual contains policies, procedures, and a summary for all of the C-TPAT criteria for importers and are arranged in the same order as provided by CBP in the Security Link Portal. Just take the information you compiled from the questionnaire and other sources and create your narrative using our examples. Once you are satisfied the narratives adequately reflect the status of your operations, enter them into the portal.

In addition to the policies and procedures, the manual contains a C-TPAT Project Plan and Organizer to assist you in organizing your C-TPAT process from the time you decide to apply for membership through your first annual review of processes and procedures. The Project Plan outlines processes and provides helpful hints to keep your project moving forward. The Organizer in spreadsheet format will help you to assign projects and keep track of due dates.

Click HERE to view the Table of Contents and a Sample Procedure.

In addition to the procedure manual, Boskage offers an online C-TPAT training course that can be used to explain the entire process to employees and helps satisfy education and awareness requirements. Even if your company has already applied and been accepted as a C-TPAT member this course will help your employees understand the process involved in becoming a member and the responsibility of importers once they obtain membership. C-TPAT is an ongoing process for organizations involved in international trade. If your organization has not applied for C-TPAT membership, this course will provide valuable information on the requirements for membership.

Click HERE to view information about bcpLearning’s C-TPAT Compliance Course.

Don’t Forget Export Compliance!

For years, export professionals said that exporting was simpler than importing, but I never believed them. When working with imports, you only need to consider U.S. laws. Considering the Code of Federal Regulations, the USC, HTSUS and the information published by Customs, that’s more than enough to keep track of.

Compare that with working with exports. Not only do you have to consider all of the U.S. regulations enforced by the BIS, Department of State and Commerce Department, but you also have to consider the laws of the countries where you export products. One thing that is similar is responsibility. Just as importers are responsible for the declarations made to Customs, responsibility for export compliance rests with the exporter.

Penalties - Don’t Let Them Happen to You

Export penalties are on the rise. The Bureau of Industry and Security publishes a report listing the names of parties who have violated the export laws and the amounts of the penalties. To see the list of violators, go to the BIS web site where they have a publication titled, “Don’t Let This Happen to You.”

Not only are the penalties high, there is a proposal to increase the current amounts. The table below shows the current and proposed amounts for violations of export laws. As an additional penalty, companies may be barred from exporting for a period of time.
Current EAA PenaltiesProposed EAA Penalties
Criminal Maximum(Corporate)$1 Million or 5 times the value of exports involved
$5 million or 10 times the value of exports involved
Civil Maximum(Corporate)$11,000 per violation (prior to March 2006)
$50,000 per violation (after March 2006 under IEEPA)
$120,000 for national security violations
$500,000 per violation

How Much Does Export Compliance Cost?
Exporting is a necessity to survive in today’s global economy. Undertaking appropriate due diligence, training and export compliance measures is required to be competitive and successful. While third parties may be able to assist in compliance efforts, exporters cannot outsource liability for compliance. Even sophisticated international companies have found that failure to abide by U.S. Export Control laws and regulations can result in confiscation of goods by customs and the assessment of substantial civil and criminal penalties.

Companies involved in exporting must be fully aware of their responsibilities under the Export Administration Regulations. It is the responsibility of the exporter to be up to date on the U.S. EAR and to comply with U.S. laws governing export transactions.

So, how much does export compliance cost? With the current penalty structure at $1 million for criminal penalties and civil penalties at $50,000, the better question might be "what is the cost of non-compliance?" If you hire the right people and implement the proper procedures, the cost to maintain compliance is much less than the cost of non-compliance. That’s why it’s important to be aware of the costs and consequences of not being informed about exporting.

Click HERE to check out our export publications.

Click HERE for more info about Export Compliance.

We are currently looking for new authors to develop eLearning courses and compliance procedures. If you have experience in export compliance and the ability to translate regulations into an understandable format, please click HERE.

Wednesday, October 17, 2007

Potential Answers for the October 2007 Customs Broker's Exam

As many people sit on pins and needles waiting to see the answers posted for the most recent Customs Broker’s Exam, our very own Wizard has taken the exam and provided a list of possible answers and related regulations where the answers were found. We never know when CBP will post the answers and the wait feels like forever. The answers for the April 2007 Exam were not posted until the middle of June leaving many people little time protest questions and receive answers prior to the October exam.

We invite you to post your answers, explanations, arguments and other comments. Obviously, Boskage Commerce Publications cannot guarantee the accuracy of these answers since CBP has the one and only answer key, but the Wizard has an excellent record of achieving a score of better than 90%.

Click HERE to view a copy of the Wizard’s answers for the October 2007 Exam!

Note: The Wizard had the most difficulty answering the questions highlighted in purple.

Tuesday, October 9, 2007

Trade Trivia: CBP Top Importer Errors

Have you ever wondered how CBP auditors know exactly where to look for importer violations? How do they get to be so smart? Actually, it’s not a big secret. After performing thousands of assessments, CBP identified a list of errors that are typically found during these reviews.

In case you were wondering about the most common errors and what Customs will be looking for when they come knocking on your door, we’ve provided the list. If you really want to test your trade smarts, try listing the errors you think are the most common before looking at our list, then see how close your list matches CBP’s list. If you haven’t reviewed these areas in your company lately, you might want to go take a look.

Common Importer Errors Identified During Focused Assessments:

· Manufacturing Assists
· Additions to Price Actually Paid or Payable
· Non Dutiable Costs
· Merchandise Classification
· Special Trade Programs
· Classification Claims under 9801 and 9802
· Related-Party Transactions
· Buying Commissions
· Recordkeeping

Click HERE for more detail on each of these errors.

Tuesday, October 2, 2007

Brokers Breaking the Law

Now that the Customs Broker’s Exam is over, those who passed the exam will be notified and a background investigation will be performed. Will this investigation uncover anything that would prevent any of the aspiring applicants from receiving a license? Even after you receive your license, it comes with the responsibility to continue to obey Customs laws and regulations. For those who are considering taking the exam, you too must consider your actions because certain deeds could prevent you from obtaining your license.

Those of you who have studied for the exam are quite familiar with the grounds for denial or revocation of a broker’s license found in 19 CFR 111.16 and 19 CFR 111.53. The provisions of the regulations that are the focus of this article are related to criminal, dishonest or unethical conduct along with violation of any law enforced by Customs and knowingly aiding in the violation of Customs laws.

As you read this, many of you may be thinking that we're foolish to suggest that a Customs broker would commit a crime and risk losing his or her license. Are we foolish? No. Regrettably, the actions of just a few brokers created the opportunity for this discussion.

In June 2007, licensed customs brokers were among 29 people arrested for participating in a scheme to import counterfeit goods such as Nike shoes, Rolex watches and other goods. Those arrested included distributors, freight forwarders, customs brokers, owners and managers of customs-bonded warehouses, and managers of a customs exam site. These people were named in criminal complaints for conspiring to smuggle more than 950 shipments of high-quality knockoffs through New York City, Long Beach, Calif., Texas and other ports of entry. The counterfeit goods were estimated to have an approximate value of $700 million if authentic. Officials said it was one of the largest plots in recent history involving corrupt Customs brokers. The government licenses the brokers to inspect paperwork provided by importers and to clear merchandise for delivery to wholesalers. If found guilty, the defendants face prison sentences of five to 20 years. Additional information about this incident can be found on the ICE web site.

Customs and Border Protection (CBP) enforces laws relating to the protection of trademarks and copyrights. Articles that infringe on a properly registered trademark or copyright are subject to detention and/or seizure. Infringing articles may consist of articles that use a protected right without the authorization of the trademark or copyright owner or articles that copy or simulate a protected right.

Articles bearing marks that are counterfeit or that inappropriately use a federally registered trademark are subject to seizure and forfeiture. The importation of articles intended for sale or public distribution bearing counterfeit marks may subject an individual to a civil fine if the registered trademark has also been recorded with CBP. Articles bearing marks that are confusingly similar to a CBP recorded registered trademark are subject to detention and seizure. As you learned from the above incident, participants can also be arrested and charged with a crime that carries a prison sentence.

If a client or other party contacts you about importing counterfeit goods “Just Say No.” The next time a street vendor tries to tempt you to purchase a pair of Nike athletic shoes or a pair of Ray Ban sunglasses at a price that is too good to be true, think about the consequences and “Just Say No.” Obtaining that Customs Broker’s License is hard work, so don’t jeopardize your license, opportunity to make a living or reputation by participating in counterfeiting or any other illegal activity.

Monday, September 24, 2007

Pack Your Bags: The Exam Materials Checklist

With the exam less than a week a way, it’s time to start thinking about what to pack for the exam. You will be using most of these materials up until the day before the exam, so it’s impossible to pack them too much in advance of the actual test. However, you can use the practical checklist we’ve created to make sure that you have everything on the list packed in your heavy-duty tote bag, large cardboard box or other container the night before the exam. If you are like most people, you may be a little nervous prior to the exam so you don’t want to run the risk of forgetting something important or being late because you couldn’t find your calculator, pens or other materials. Packing everything on your checklist the night before will help you relax and reduce unnecessary stress.

Click on the link below to view and print your Customs Brokers License Exam Materials Checklist. You can customize this list to add specific items that you plan take to the exam. No matter what you plan to take, make sure to use the checklist to ensure you have each item packed and ready to go the night before the exam. Remember, electronic devices such as laptops and cell phones are prohibited.

The Exam Materials Checklist.

Tuesday, September 18, 2007

How Will Your Organization Comply With 10+2?

Although the final rule has not yet been published, 10+2 has already become a hot topic of conversation in international trade news. The SAFE Ports Act of 2006 requires Custom and Border Protection (CBP) to find a method to discover and report data elements to identify high-risk imports for inspection. The “10+2” requirement is being developed as a mechanism to obtain this information prior to the loading of ocean cargo at foreign ports. CBP has been working with various trade groups such as AAEI, COAC, NCBFAA, ICPA and others to formulate requirements that will provide the most useful data with the least amount of intrusion, expense and effort from the trade.

The current proposal will require importers of products shipped as ocean cargo to supply CBP with ten additional data elements 24 hours prior to loading:

· Manufacturer Name and Address
· Seller Name and Address
· Container Stuffing Location
· Consolidator Name and Address
· Buyer Name and Address
· Ship to Name and Address
· Importer of Record Number
· Consignee Number
· Country of Origin of the Goods
· Commodity Harmonized Tariff Schedule Number

In addition to the 10 data elements outlined above, CBP will require ocean carriers to provide two additional data sets to complete the security filing.

· Vessel Stow Plan
· Container Status Messages

Because the 10+2 elements are not found in one document or location, collection of this information will likely result in additional work and increased cost for the importer. The new requirements create questions for importers.

1. Who will be responsible for submitting this data?
The answer to this question will depend on structure of each importer’s organization. In the draft documents, the importer is responsible for the first ten elements and the carrier is responsible for the other two. The importer may select a broker or other trade intermediary to act as the reporting party; however, there may be additional costs incurred from the broker for this service. The importer may develop a process that that combines the collection of 10+2 elements with the information necessary for the customs entry and other compliance requirements. Some importers may take this a step further by self-filing customs entries. The bottom line is that the data must be collected and reported and someone must be assigned responsibility for this new task.

2. Will your company be able to provide all of this information 24 hours before your ocean cargo is loaded?
Looking at the importer’s list there are pieces of information that are more readily available because they are currently required for the entry summary. The country of origin is required on the commercial invoice and for the entry summary. The importer also knows its own importer number. On the other hand, the name and address of the consolidator and the container stuffing location may require a little more work, as this information is not required on any Customs documentation or for recordkeeping. While the HTS number is required on the entry summary, there may be situations in which not all of the information is known about the product when it is shipped; therefore, the importer may not have completed the classification process. We’ll provide some suggestions on how to start collecting this data at the end of this article.

3. What will happen if data elements are not transmitted?

Until the final rule is published, this question will continue to invite additional questions. If the data is not transmitted, will the container be detained? What if only one element is missing? Will importers and carriers be tempted to make up data? How will the data be verified? As you can see, there are more questions that will hopefully be addressed in CBP’s final document.

4. Why can’t someone create one set of data elements that will be acceptable for all international uses?
After the 10+2 security filing rule is passed, there will be two sets of data elements required for movement of cargo, yet the data is not consistent. The
WCO SAFE Framework is designed to facilitate trade and to protect against the threats of terrorism internationally. However, the WCO SAFE Framework contains reporting requirements that do not match the 24-Hour or 10+2 requirements. Having multiple sets of required data creates additional collection and reporting costs. It would be beneficial for all parties if an agreement could be worked out that would reduce the duplication and create more uniform reporting requirements.

The final rule is likely to be published in the Federal Register this fall, possibly in October. After the final rule is published in the Federal Register, CBP officials have stated that they plan to implement the 10+2 program over 12 month period to allow the trade to make changes to software, procedures and physical processing. Collecting and filing the data elements will require improved communication and cooperation between carriers, importers, brokers and other trade participants. The trade community has been working together to find ways to obtain and report the information. Even though the processes and procedures vary from importer to importer, the following list provides some useful suggestions for importers to consider:

1. Work with purchasing and other supply chain personnel to develop mechanisms to collect the data. The purchase order and other contracts are an ideal place to start because they are often used to provide information to sellers and they can be used to require that the seller supply certain information.

2. Develop processes that will link classifications to purchase orders. Many importers have systems that will match the HTS number to the purchase order as specific parts are listed. For importers that do not have HTS numbers assigned to all parts, the purchase order could be used to start the classification process so that the HTS number is available before the product is shipped.

3. Work with the information technology department to develop methods to capture and retain required data. There may be interfaces with carriers, brokers and other trade partners available to transfer this information, which will reduce administrative costs involved in developing new programs.

4. Participate with others in the trade community to share best practices.

5. Check the
CBP web site and other sources of information regularly for updates.

Thursday, September 13, 2007

New Import Safety Group Publishes Strategic Framework

The Interagency Working Group on Import Safety was established by Executive Order on July 18, 2007, to conduct a comprehensive review of current import safety practices and identify actions to promote, improve and enforce safety standards on imported products. The establishment of this group was prompted by the recent dangers found in some toys, pet food ingredients and seafood; however, the working group is also concerned with the safety of all imported food, health products, tires, toys and other products. Chaired by the Department of Health and Human Services’ Secretary Michael O. Leavitt, the working group is comprised of officials from 12 federal agencies with responsibilities related to import safety.

The group’s first order of business was to review the current safety processes and procedures and identify some of the current industry best practices. The result was a 22-page preliminary report issued on September 10 that introduced a strategic framework outlining the steps necessary to implement cost efficient risk-based approach to improve the safety of imported products.

The report begins by summarizing import statistics and providing background information. Next, an analysis of the existing conditions resulted in list of deficiencies and challenges which include: obtaining comprehensive information to address import safety, coordination of safety and security measures, acquiring additional authorities to address and implement effective safety measures, obtaining adequate product information, and creation of systems to share information between federal and state systems and addressing circumvention to avoid U.S. restrictions on certain goods. From this analysis, the group formulated three organizing principles and the implementation for the Strategic Framework. The principles of the Strategic Framework consist of prevention, intervention and response. The report advises implementing these principles through six “building blocks” that include:

· Advance a Common Vision
· Increase Accountability, Enforcement and Deterrence
· Focus on Risks Over the Life Cycle of an Imported Product
· Build Interoperable Systems
· Foster a Culture of Collaboration
· Promote Technological Innovation and New Science

The initial provisions of the Strategic Framework proposed by the Working Group are similar to the principles of C-TPAT, which require a shift from the reliance on individual inspections to a risk-based program where importers certify that their supply chain uses the best practices and CBP validates this through random inspections. Like C-TPAT, this risk-based program will help ensure that safety is built into the processes and products throughout the supply chain from point of manufacture in the foreign country to point of delivery in the U.S.

As a result of the initial report, the Working Group has two events currently on the agenda: a public meeting in October and the publication of an action plan in November. Stay tuned to this blog and the agency’s web site for new developments from the Working Group on Import Safety.

Tuesday, September 11, 2007

April Exam: Harder Than October?

Over the years, stories about the Customs Broker Exam have circulated within the international trade community to the point that people cannot tell whether the stories are fact or fiction. Unfortunately, it is often difficult to verify the validity of these stories. We thought it would be nice to share a common exam rumor that we have heard over the years and provide some useful statistics that may help clarify this story. We'll start with a comment that was posted to this blog in August.

Comment: The October exam is always easier than the April exam.

If the October exam were always easier than the April exam, no one would take the April exam. Let's take a look at some statistics based on previous exams. We've posted the exam pass rates on two different charts below. Chart 1 shows the pass rates for each exam for the last 20 years, starting in 1987. In 20 years, there were 12 years in which the October exam had a higher pass rate than the April exam. This equates to a pass rate being higher on the October exam 60% of the time. Chart 2 shows the pass rates for the last five years. In five years, there were three years where the October exam pass rate was higher than the April exam. Again, we have a higher pass rate on the October exam 60% of the time. A percentage of 60% is not significant enough to substantiate a claim that the October exam is always easier than the April exam. One could also state that the October exam is more difficult than the April exam 40% of the time.

Pass Rate Data: Chart 1
Pass Rate Data: Chart 2

But that doesn't tell the whole story. If you look at the average pass rate over that span, you'll find the following statistics:

April: Average pass rate - 22.7%

October: Average pass rate - 25.75%

Thus, we can see that over the past 20 years, the variance between April and October's average pass rates is just 3% - a negligible variance.

Another important consideration is the ever-changing structure of the test. When evaluating the difficulty of a test and comparing the pass rates, it is important to compare apples to apples and oranges to oranges. Changes made in the structure of the exam may account for changes in the degree of difficulty and therefore affect the pass the rate.

Let's take a look at some historical information about how the structure of the exam has changed over the years:

April 1987 - April 1997 Changes
100 Multiple Choice Questions
4.5 Hours
References: HTSUS and Customs Regulations

October 1997 Changes
85 Multiple Choice Questions

April 1998 Changes
80 Multiple Choice Questions
4 Hours

April 2005 Changes

References: HTSUS, Customs Regulations, CATAIR and Directives
Exam Questions Arranged by Subject

April 2006 Changes

References: Other documents added

As you can see from this list, the number of questions, structure, references and time allowed have all changed in the last 20 years. While the multiple-choice format has stayed the same, the references allowed and number of questions have changed significantly. All of these changes could potentially affect the pass rate. Thus, comparing the results of an exam given in 1987 to the pass rate of an exam given in 2006 might not provide the most accurate conclusions.

So, with that in mind, let's look at the average pass rates since April 1998 - the last major structural change to the exam.

April: Average pass rate - 19.0%

October: Average pass rate - 19.9%

So, when examining the statistics, we can see that the facts do not substantiate the claim that the April exam is always more difficult. In fact, when taken over the last 9 years, the average pass rates between the two months is almost identical.

Have you heard a good story about the Customs Broker Exam? We invite you to share some of the stories you've heard and comment on others that have been posted.

Notice to Students Taking the October Exam

Typically, the October Customs Broker License Exam uses the Customs Regulations (19 CFR Chapter I) from the previous year. However, this year, Customs & Border Protection (CBP) has made the unexpected decision to test this year's editions.

Because of this, we've created a special supplement to the 2006 Special Study Edition of the U.S. Customs Regulations. You can use it to make your book up-to-date as of April 2007, in accordance with the recommendations of Customs & Border Protection for the purposes of the October 2007 Licensure Exam. For your convenience, this supplement is printed on brightly colored paper, and the updated sections on each page have been indicated by a box around the affected text.

If you ordered the 2006 Special Study Edition from Boskage as part of the exam reference package for the October exam, you will automatically receive this supplement free of cost. Anyone else interested in updating their 2006 Study Edition should contact us for more information.

Tuesday, September 4, 2007

Tips for Answering Classification Questions on the Customs Broker Exam

With the October exam just a few weeks away, there are lots of aspiring broker applicants working hard to learn as much as possible. While there is no substitute for studying the Customs Regulations and the Harmonized Tariff Schedule, we’ve come up with a few helpful strategies that might make your studies easier. Our first tip involves a method of answering classification questions on the exam.

While the rules for classification are the same, the approach to classification on the exam is a little different from the approach importers and brokers use when classifying their products. Why? Classification questions on the Customs Broker Exam are designed to encourage a high level of attention to the details, and you have a limited time to answer them. Additionally, the correct classification is provided on the Customs Brokers Exam and all you have to do is select the right one. In reality, importers and brokers are not provided with five options from which they can select the correct answer, thus the process is a little more complicated. Understanding the information provided in the question is the key to being able to select the correct answer. To make sure you don't miss any information, try this technique when classifying questions on the exam.

Step 1: Make a list of the information provided in the question. Making a list should help you remember all of the components and reduce the tendency to focus on one or two of the components listed in the question.

Step 2: Skim section and chapter notes for specific exclusions. The Section and Chapter Notes often provide information that specifically includes or excludes a product from a certain provision. Customs often tests the applicant’s classification knowledge by asking questions that will require consulting these notes.

Step 3: Eliminate obvious incorrect answers. Once you have a list of key components and look up the classifications provided, you will be able to eliminate some of the answer selections easily. The selections can normally be narrowed down to two.

Note: Steps 2 and 3 may be used together. Sometimes you can eliminate answers without consulting the chapter notes, but in other situations, you may need to consult the chapter notes in order to eliminate answers.

Step 4: Select the best classification. If you’ve followed these steps, the correct classification should be clear. At worst, you should have narrowed the selection down to two possible answers. Make sure you haven’t overlooked a note and select the best answer. You can always come back and review this question if you have time at the end of the exam.


Example 1

What is the classification of a woven nylon scarf measuring 55 cm x 50 cm?

A. 6214.30.0000
B. 6214.40.0000
C. 6213.90.1000
D. 6117.10.2030
E. 6117.10.6020

Step 1: Make a list of the key information about the item to be classified.

1. Woven
2. Nylon
3. Scarf
4. 55 cm x 50 cm

Note: In this example, we were able to easily eliminate two obvious incorrect answers before reading the notes.

Step 2: Eliminate obvious incorrect answers

1. We can eliminate Answers D and E because Chapter 61 covers knit articles.

2. Answer B is incorrect because nylon is a synthetic fiber. If you didn’t know nylon was a synthetic fiber, you might have difficulty eliminating this one. Now you know why it’s a good reason to bring a dictionary with you! If you look up “nylon” in the Alphabetical Index, you’ll find it refers you to “synthetic fibers.”

3. It would appear that Answer A is the correct answer for our scarf since the provision provides for scarves and Answer C provides for handkerchiefs; however, it would be a mistake to quit here without reading the Chapter Notes.

Step 3: Skim section and chapter notes for specific exclusions. Chapter 62 Note 7 states that scarves that measure less than 60 cm should be classified as handkerchiefs under 6213. Since the scarves in the question are under 60 cm, then Answer A is incorrect.

Step 4: Select the best classification. We have eliminated all of the answers except C, which is the best answer for this question.

Example 2

What is the classification for baby girls' cotton dresses woven (not knitted) of 100% cotton for babies with a height of 96 cms?

A. 6209.20.1000
B. 6204.42.3060
C. 6204.49.5010
D. 6204.42.3020
E. 6204.42.2000

Step 1: Make a list of the key information about the item to be classified.

1. Baby girl's dress

2. Woven

3. 100% cotton

4. Babies Height 96 cm

Step 2: Eliminate obvious incorrect answers

1. Answer C is incorrect because the provision is for "other" materials and our dress is cotton which has its own provision.

2. Answer D is incorrect because the provision is for corduroy and our dress was not described as such.

3. Answer E is incorrect because our dress is 100% cotton and does not contain flax.

If we were in a hurry, it would be tempting to select Answer A that provides for babies clothing of cotton, right? What about the height? Just because a garment may be described as a dress for baby girls doesn’t mean it is classified as a babies’ garment.

Step 3: Skim section and chapter notes for specific exclusions. Chapter 62 Note 4a states that babies’ garments are for babies with a height not over 86 cm. Our dress is for a baby of 96 cm; therefore, it will not be classified as a baby's dress even though we call it a baby dress and it is for a baby. Answer A is incorrect because the provision is for babies.

Step 4: Select the best classification. Answer B is correct because the provision is for a girl’s dress of cotton.

Example 3

What is the classification for peaches preserved in syrup, packed in retail containers each holding less than 1.4 kg, and entered on July 31?

A. 0809.30.2000
B. 0811.90.8080
C. 0812.90.9000
D. 2008.70.1020
E. 2008.70.2020

Step 1: Make a list of the key information about the item to be classified.

1. Peaches
2. Preserved in syrup
3. Packed in retail containers <> 8 or 20.

Step 3: Eliminate obvious incorrect answers

1. Answer A is incorrect because preserved peaches are no longer fresh.

2. Answer B is incorrect because these peaches are not frozen.

3. Answer C is incorrect because these peaches are suitable for consumption.

4. Answer D is incorrect because the product is described as peaches and not nectarines.

Step 4: Select the best classification. Since we have eliminated four of the five selections, the remaining answer should be the correct one. This HTS 2008.70.2020 provides for peaches that are otherwise prepared or preserved in containers less than 1.4 kg., which matches our description.

Note: Sometimes Customs adds facts to the question that are irrelevant in arriving at the answer. Notice that the entry date of July 31 is irrelevant to the correct answer in this example. You should list all of the elements provided, but remember that some of the elements may be irrelevant.

Let us know what you think. If you have another method that works for you, please share it with us!

Wednesday, August 29, 2007

Last Chance To Apply For The October Exam!

The deadline for filing applications to take the October exam is just a few days away. If you are planning to take the October Customs Broker License Exam, don’t let this important deadline pass! All exam applications and the exam fees of $200 must be received and accepted by CBP at the service port (see the link on the right sidebar for a listing of ports) where the applicant intends to take the examination on or before the close of business Friday, August 31, 2007. Applications received after Friday, August 31, 2007 will not be accepted- NO EXCEPTIONS.

Click here (PDF) to print your application. Fill it out and take it over to your local CBP office today! If you aren’t close to an office, send it by express courier, today!

Don’t wait or it will be too late!

Tuesday, August 28, 2007

Say "Good-Bye" To Our Old Friend The SIL

On August 21, CBP announced that the Supplemental Information Letter (SIL) procedure would be discontinued and the Post Entry Amendment (PEA) processing test would be extended for another year starting August 21. This change means that the PEA is the only procedure for making post summary adjustments to entries prior to liquidation.

What does this mean to importers and brokers?

The elimination of the SIL means that importers and brokers will not be able to simply write a letter and submit it to CBP any time they find an error. The PEA procedures require that certain errors be reported using the individual amendment letter, while other errors must be reported using a quarterly tracking report. With all of the demands placed on the importer and broker, it can be difficult to for them to keep track of the errors that must be reported using the individual letters and which ones must be added to the quarterly tracking report. We’ve tried to make this task a little easier for you by creating a chart of each type of error and the appropriate method of reporting. (This chart is taken from our Importer's Policy and Procedure Manual, a regularly-updated compliance tool.)

To view this chart and the official announcement from CBP, please click on the links below.

PEA Individual Amendment Letter & Quarterly Report Requirements (PDF)

CBP: Modification and Extension of the Post-Entry Amendment Processing Test (PDF)

Thursday, August 16, 2007

2007 HTSUS Print-Ready Supplement

Print Supplement Status?

We've received a lot of calls about the July Supplement to the 2007 HTSUS, so we want to make sure we address it here: At this time the International Tariff Commission (ITC) has no plans to issue a printed supplement to the 2007 HTSUS, with sources citing not enough changes to warrant releasing printed pages. Instead, the ITC is making the changes available online.

The changes were released in two revisions, and can be viewed by clicking the links below.

Revision 1 (Effective 4/6/2007)
Revision 2 (Effective 7/2/2007)

Hint: Click on 'Change Record' to simply see a listing of the changes.

Want A Supplement Anyway? No Problem!

We know that some of you will want to keep your printed editions up-to-date, even though there is no official printed supplement. As a service to our customers, we've compiled all pages contained changes as listed in the change records into one printable document! This unofficial Print Supplement will fit easily into your existing book, and will allow you to modify your printed looseleaf editions with all the most recent changes.

Click here to download your Print Supplement!


Here are some hints for a smooth update:

1) For best results, print out on 3-hole punched, 8.5” x 11” paper.

2) If your printer allows, we recommend that you print out this document 2-sided (in other words, printed on both sides of the page). The supplement is over 300 pages long, so make sure you have enough paper before you start!

3) Printing on a paper color other than white will allow the supplement pages to stand out inside your base HTSUS book.

Disclaimer: The information contained in the supplement was received from agencies of the United States government. Neither the Editors, nor Boskage Commerce Publications, Ltd., nor the writers, shall be responsible for any errors or omissions in the contents of this book. The text may or may not contain information that is in accordance with U.S. law or regulation. This book attempts to provide accurate and authoritative information concerning the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

Wednesday, August 15, 2007

Customs Broker License Exam - Deadline and Notice of Examination

Attention all broker exam students.

Here are two items that you'll want to be aware of as you prepare for the October Exam.

1) The Notice of Examination has been posted. Click here to view the full notice of exam, including the official list of the editions and texts to be tested.

There are two main changes from the April 2007 Exam. These are: a) the addition of a short document titled Submission Changes for Supplemental Information Letters and Post Entry Amendments; and b) the use of of the April 2007 edition of the U.S. Customs Regulations (19 CFR, Ch. 1).

Many of you have purchased our October 2007 Exam Reference Package, which included the 2006 edition. If you purchased the Exam Reference Package, you are in luck! We are developing an update right now that will get your 2006 edition up-to-date and exam-ready. We'll have it sent to you in the next couple of weeks, automatically, at no extra charge.

If you did not purchase the Exam Reference Package from us, you are STILL in luck! We'll make the update pages available as a free printable download online. Watch this blog for notification of availability.

2) The deadline for application is approaching! You'll want to have your application and fee in to the Customs Service Port at which you intend to take the Exam no less than 30 days before the Exam. For the October 1, 2007 Exam, that date is August 31. Here's the statement on CBP's website:

All exam applications and exam fees ($200) must be received and accepted by CBP at the service port where the applicant intends to take the examination on or before the close of business (COB) Friday, August 31, 2007 to be considered. Applications received by CBP after COB Friday, August 31, 2007 will not be accepted- NO EXCEPTIONS. Applications and fees submitted to CBP Headquarters will be returned.

Click here to view the Notice of Exam.
Click here to view and print the Rules for the Exam.
Click here to print an Exam Application.
Click here to view and print Submission Changes for Supplemental Information Letters and Post Entry Amendments
Click here for a listing of Customs Service Ports

Click here for information on the Exam Reference Package
Click here for information on our Exam Preparation Courses