Monday, September 22, 2008

CBE Study Tip 10: Valuation

Customs Valuation (19 CFR 152) is one of the most complex parts of the regulations. This section is one of the most frequently tested on the exam, and the questions are often long and time consuming to answer. When reading Part 152, it would be wise to read each section slowly in order to understand the complex terms discussed. Pay close attention to any examples provided because they help explain and demonstrate the complicated concepts. Highlight important areas of text. Make notes and lists in the margins. Locate the valuation questions in old exams and work through the questions. Make sure to mark each section of the regulations that was used in determining the answers.

Click HERE to view an outline of the most important valuation information found in 19 CFR 152. Read and highlight these sections in your copy of the regulations. Take this outline to the exam with you for a quick reference tool.

Stay tuned to Boskage Trade News for more helpful hints on studying for the Customs Broker Exam! Please feel free to add your comments, suggestions for topics you would like to see covered and other useful information to the blog!

Monday, September 15, 2008

Customs Broker Exam Study Tip 9: How to Use the HTSUS – Part 2

Classification is a skill that takes time to develop, but the more effort put into the process, the faster one will become more proficient. The actual process of classification is very complex, almost like reading a foreign language. It is important for both experienced and beginner to understand that the strategy for answering classification questions on the brokers exam is a little different from the process used for classifying goods for your companies on a daily basis. The basic steps discussed are similar to those used in daily transactions, but there is more to the process for those classifying goods on a regular basis. On the exam, you won’t be able to consult with experts or use the Cross Rulings Database. Remember, the average time allotted per question on the exam is three (3) minutes. In actual practice, you would likely spend more than three minutes trying to classify a product. The primary difference between classification on the exam and classification in a business situation is that the exam provides five (5) possible answers and you know that one of those answers is correct. In real life, you aren’t provided with a set of answers in which you know for certain one is correct. Another difference is that classification questions found on the exam are intentionally complicated and sometimes tricky. Thus, there is a need for a slightly different strategy for answering the questions on the exam.

1. Carefully read the question and make note of the details.
The first step in answering any classification question involves a careful, thorough reading of the question and making note of the details provided. Some of the details may be critical to answering the question correctly. Remember, exam questions have been carefully worded and may be tricky, so some of the detail may be not be necessary. You may want to highlight the details as you read the question.

2. Look up each answer and eliminate those that are clearly incorrect.
The second step for answering classification questions is to look up all the answer selections and eliminate those that are clearly incorrect. This process may be more difficult than it sounds. Classification questions are typically written in such a way that all or most of the answers appear to be correct. The best way to answer them is by a process of elimination. Consider the following example.

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

Notice that the answers are found in two different chapters, so it is likely that we will be able to eliminate one of the chapters. Indeed, we can eliminate Answers D and E easily because Chapter 61 covers knit articles and our scarf is woven.

3. Read Chapter and Section Notes
The third step is to review the Section and Chapter Notes to make sure that there is not any information there that would preclude one or more answer. Section and Chapter Notes provide valuable information about what items are specifically included and excluded as well as useful definitions. Because of the time constraints, it would be easy to skip the Notes; therefore, the writers of the Exam intentionally include questions that require the applicant’s ability to use the Notes. Remember, the Notes can be long and many of them will not be related to the classification you are checking. You must learn to scan the notes for significant headings and keywords. If you still have several potential answers at this stage, the Notes may help you make a determination between them. You should do this even if you only have one answer remaining after the elimination step. If you have eliminated all answers but one when you reach this step, and find a Note that eliminates that answer, you will have to start over to find the answer you have eliminated incorrectly. Let’s go back to the scarf.

Answer B should be eliminated because the provision is for artificial fibers and our scarf if nylon, which is a synthetic fiber. If you did not know whether nylon was artificial or synthetic, Chapter 54 and 55 covering man-made fibers would help. It would appear that Answer A is the correct selection for our scarf; however, Chapter 62 Note 7 explains that scarves that measure less than 60 cm should be classified as handkerchiefs under 6213. This is a prime example of the importance of reading the Notes. If we had overlooked the Notes assuming that 6214.30.0000 specifically describing our product was correct, we would have answered the question incorrectly.

In most situations, you will be able to answer questions using these steps; however, there may be a few questions that require an additional step involving the application of the General Notes and/or GRI. For example, a question may require you to select the appropriate duty rate. Once you’ve located the appropriate HTS number, you will select a duty rate based on the country of origin. Given the origin, you may need to check the General Notes to determine if the country is included or excluded from certain free trade agreements.

Now that you are familiar with the organization of the HTSUS and have some tips on how to answer classification questions, it’s time to practice these skills. One of the best ways to practice for the exam is to take past exams. Old exams can be found on CBP’s website. For detailed instruction on classification and related topics, check out our online courses at

Stay tuned to the Boskage Trade News for more helpful hints on studying for the Customs Broker Exam! The next article will cover “Valuation”. We also welcome any suggestions on topics you would like to see discussed.

Customs Broker Exam Study Tip 8: How to Use the HTSUS – Part I

In Study Tip 7, we provided some suggestions on how to read the CBP Regulations. In this article, we provide some tips on the key components and arrangement of information contained in the Harmonized Tariff Schedules of the United States (HTSUS). The next article will provide some helpful information on how to answer exam questions.

If you want to pass the Exam, no subject is more important than classification. On each test, classification accounts for 15% - 25% of all questions asked. If you are not experienced in this process or have not dedicated sufficient study to this area, your chances of success are low. The good news is that by focusing on some basic skills, developing a strategy and answering questions from previous exams, both experienced and beginning students can achieve success! To begin your study of the HTSUS, you should familiarize yourself with the key components and arrangement of information found in the HTSUS and organize your book in a way that allows you to find information quickly. The following points will assist you with these tasks.

1. Familiarize yourself with the components of the HTSUS.
The HTSUS is similar to the CFR in that it is a reference text and not the type of book that is read from page one to the end. It is important to be familiar with the major parts to know where to look for answers and what information is the most important to read.

General Rules of Interpretation (GRI) – The GRI appear at the beginning of the HTSUS and provide the primary rules for classification.

General Notes – Covering over 500 pages, the General Notes provide instructions on special duty programs, free trade agreements, duty rates, and other information necessary for proper classification and calculation of duties. The first three General Notes are the most likely source of Exam questions; however, you should be familiar with the topics covered by all of the notes.

Section and Chapter Notes - Each Section and Chapter contains notes that appear at the beginning of each. Since these notes provide lists of goods specifically included or excluded from a particular section, chapter, heading or subheading and contain definitions of certain terms, it is important to read these notes when classifying imported products.

Classification Tables - The Section and Chapter Notes are followed by pages of tariff numbers along with descriptions of the products, duty rates and any special rates associated with the tariff numbers. They also contain footnotes and quota code information that can be pertinent in classification questions.

2. Familiarize yourself with the arrangement of the HTSUS.
In the HTSUS, goods are logically arranged so they appear in headings beginning with the most basic substances, and ending with more advanced manufactured goods. This progression is found within the chapters and in the sections.

Section 11 is a good example of the progression. As indicated by the title, this section contains listings for textile and textile Articles. Chapter 50 contains silk threads, yards and fabrics and Chapter 52 covers cotton threads, yarns and fabrics. Chapters 61, 62 and 63 contain articles that are manufactured from the silk, cotton and other raw materials covered in the previous chapters. Notice how the book progresses from a basic item—in this case silk and cotton—to the products obtained from the basic item.

3. Organize your HTSUS
Similar to the hints we provided for the CFR, consider using tabs for your copy of the HTSUS. If you are looking for the chapter on cotton and you know that it's in the middle of the book, having a tab with the chapter number and cotton may enable you to locate the exact chapter more quickly. Here are a few suggestions for using tabs.

• Place tabs to designate each of the 22 Sections, or
• Place tabs to designate each of the 99 Chapters, or
• Use both Section and Chapter tabs
• Use tabs to mark the GRI and each General Note.
• Consider using different color tabs to designate different sections.

Now that you are familiar with the key components and arrangement of information in the HTSUS, it’s time to learn techniques to answer exam questions. CBE Study Tip 9 will provide suggestions to help you prepare your strategy for answering classification questions on the exam. Stay tuned to Boskage Trade News for more helpful hints on studying for the Customs Broker Exam! Please feel free to add your comments, suggestions for topics you would like to see covered and other useful information to the blog!

Tuesday, September 9, 2008

President Signs New Consumer Product Safety Improvement Act of 2008

On August 14, 2008, the President signed into law Public Law No. 110-314, the Consumer Product Safety Improvement Act of 2008 (H.R. 4040). Because of the widely-publicized recalls of imported toys, the new law establishes stringent safety provisions for children's products. However, the new provisions include a broad scope of products other than toys and are projected to affect manufacturers, importers and other distributors and retailers of consumer products.

The new law also contains provisions relating to the administrative functions that have been delegated to the United States Consumer Product Safety Commission ("CPSC"), enhances the authority of the CPSC to order recalls, increases the amount of the civil penalties that the CPSC may impose, and has other miscellaneous provisions.

In addition to the new safety requirements, the civil penalties for non-compliance have increased to $100,000 for each violation with a maximum cap of $15 million for a related series of violations. The criminal penalties permit larger fines, up to five years' imprisonment, and forfeiture of assets associated with a violation. Additionally, directors, officers and agents may be criminally charged even if they were not aware of the violations. To promote compliance, employees who report violations, testify or otherwise provide assistance in CPSC enforcement proceedings, or who refuse to participate in an employer's illegal conduct will receive whistleblower protection.

The provisions that are most important to importers and exporters include:

• Requirements for self-certification and testing for imported products that are subject to the CPSC rule, effective on November 12, 2008, and third-party testing and certification of certain imported children’s products with requirements for:

- Certificates furnished by the manufacturer for every imported consumer product subject to CPSC.

- Certificates from third-party testing for toys and children’s products.

- Certificates accompanying the product.

- Procedures for filing certificates electronically may be implemented.

• Prohibition of most exports of recalled, banned, hazardous or non-conforming products to other countries.

• Policies to utilize the ITDS and increase cooperation with U.S. Customs and Border Protection to prevent non-compliant products from entering the United States.

• Procedures to destroy non-conforming products that have been denied admission into the United States.

Provisions of general interest include:

• New definitions for toys and children's products.

The definiition of "Children's toys" now includes consumer products "designed or intended by the manufacturer for a child 12 years of age or younger for use by the child when the child plays."

- "Child care articles" are now defined as "a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 and younger, or to help such children with sucking or teething."

• Phased-in ban on lead all children’s products.

• Additional safety rules affecting toys and children's products, including permanent tracking labels, expanded warning requirements for choking hazards, and new rules for durable infant and toddler products to facilitate owner registration.

• More stringent recall procedures have been created by eliminating the right of a party recalling a product to elect whether they will offer a refund, repair or replacement for recalled products, and by permitting the CPSC to require a refund, repair and/or replacement as the CPSC determines to be in the public interest.

Since the provisions are likely to affect a vast majority of manufacturers, distributors and retailers, all parties are urged to read the new law and consult their attorneys and other experts to ensure compliance with the extensive changes.

Monday, September 8, 2008

Customs Broker Exam Study Tip 7: How to Read the CBP Regulations

From the time we were children, most of us were taught to read a book sequentially, from the first page to the last. When reading Title 19 of the Code of Federal Regulations (CBP Regulations) for the Customs Brokers Exam, you should break that rule. Yes, we really did suggest that you should not read the regulations from the beginning to the end, but that doesn’t mean that you shouldn’t read the entire book. The material contained in the regulations is very technical and often quite boring; therefore, it is not the kind of book you can read from cover-to-cover in a short time.

If you think this idea sounds crazy, pick up the book and read Part 4, containing approximately 45 pages. Only two questions from Part 4 have appeared on the last ten exams; that’s two questions in a total of 800 questions, which is less than 1% of the questions. This means you’ve just spent valuable time reading material that won’t likely be tested. On the other hand, Part 111 is one of the most frequently tested sections and it contains 15 pages. There have been 57 questions from Part 111 on the last ten exams, which means approximately 7.1% of the questions on each exam come from Part 111. Not only will you be reading information that is important for the test, but Part 111 provides requirements for customs brokers. Understanding the requirements for customs brokers is important for passing the exam and for persons who want to be brokers.

The CBP Regulations is a lengthy book, and often is difficult to read and understand; however, it is important for importers, brokers, and other parties involved in international trade to have a good understanding of this book. There are numerous reasons for reading, understanding and applying the regulations. For purposes of the exam, knowledge of the regulations reduces time spent looking for answers on exam day. CBP employees and other members of the trade community might tell you that all of the sections are equally important. This is true, but for the purposes of the exam, some sections are not as significant because they are not as heavily tested.

The key to reading the regulations is to match your reading schedule with your study plan. In most situations, this means reading the sections that are most heavily tested first and saving the sections that are rarely tested for later. For example, Week 1 of your plan may require you to read Part 111- Brokers, Part 141 – Entry of Merchandise and Part 142 - Entry Process. These three parts are included in the top five sections that have been tested on the last ten exams and make up about 16% of the total questions on each exam.

Another strategy might be to read sections that are related to each other by a common theme. For example, Parts 18, 114, 127, 132, 143, 144 and 146 contain information about types of entries and alternatives to entry. There are various strategies for reading the regulations. Use what works best for your study plan, but use your time wisely and avoid reading the book from cover-to-cover.

We would like to offer some other suggestions related to reading the regulations. First, use "tabs" to mark each part of the regulations. Colored tabs can be used to indicate more important or frequently used parts. Using tabs also makes certain parts easier to find which can be a time saver during the exam. Second, highlight important facts, which can be used later for making outlines, flash cards or other study tools. Third, make notes in the margins to help you remember certain fact or provide examples that might not be included. Fourth, memorize the titles of each part and/or associate that title with something that will remind you of the information contained in that part.

We welcome your comments on these suggestions and encourage you to add your own ideas to this forum so that other students studying for the exam can 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 discuss “How to Use the HTSUS” in the next study tip.

Tuesday, September 2, 2008

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 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 where the applicant intends to take the examination on or before the close of business Friday, September 5, 2008. Applications received after Friday, September 5, 2008 will not be accepted- NO EXCEPTIONS.

Click to print your application. Fill it out and take it over to your local CBP office today! If you are not close to an office, send it by express courier, today!