Tuesday, March 31, 2009

The Customs Broker Examination, CH 3, Part 5: Developing a Preparation Plan

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday morning. Click here if you want to read the whole book right away.

Chapter 3: Methods of Study

Part 5: Developing a Preparation Plan

What to Study, How Often and How Much
The next chapter will help you in determining those Regulations, procedures, trade and tariff legislation upon which you should concentrate your efforts. Some Regulations will require extensive study and re-study and will require a significant amount of memorization (19 CFR 142 comes to mind, as do the General Notes to the HTSUS). Other chapters will require the ability to locate information quickly, as opposed to memorization (19 CFR 181, or the NAFTA section, is a notable example of this, due to the size and complexity of this Part).

What to study depends largely upon your level of experience. It is best in the early stages to follow the guidelines established in the Lesson Plan of the Boskage Preparation Course program. Later, you will want to concentrate on the areas where you are least successful. The later stages resemble a “seek and conquer” method of preparation. By taking and retaking sample tests, you discover areas of the law with which you are having difficulty. Then, using the resource materials provided in the course, and the government publications, the purpose of your study is to overcome problem areas.

How often you should study is more problematic. For some students, preparation for the CBE is a full-time occupation. For others, preparation for the CBE is secondary to a professional work schedule, domestic responsibilities, and child- rearing. For the latter, how often you should study is not nearly as relevant as how often you can study. When determining how often you should study, remember these words: consistency and frequency.

To optimize your preparation plan, you must be consistent. Pick a preparation plan and stick to it. The following plan can be used as a guideline; you can modify the recommendations to accommodate your own schedule. But whatever you do, you must be consistent. If you schedule three study sessions per week, strive to sit down with your resource materials three times per week. Don’t convince yourself that if you have a busy week and choose not to study, you can make up the time the following week. Doubling up on the hours you study in an attempt to recover from a week away from study can only be effective to a limited extent. In general, lost study time resulting in long periods where there is no preparation cannot be recovered.

Should you lose a week, don’t plunge in all the harder the following week – stick to your schedule and attempt to make the time up gradually over the next few weeks. Extend your usual one-hour session to one-hour and ten-minutes, for example, until the lost time is made up. But doubling each session results in diminished retention. If you fail to meet a scheduled study session, make the time up gradually over the next few weeks and resolve to be more consistent in future sessions.

How often you study will directly affect your progress. Shorter, more frequent sessions are better than longer, less frequent sessions. The best schedules include a 10- to 20-minute intense review session, followed (usually later in the day) by 50- to 60-minute study sessions 2-3 times per week. On the weekend, schedule one 2- to 4-hour session. This longer session can be used for taking one of the practice examinations.

From the time you begin your preparation until the examination day, a student should not allow more than two non-study days to pass. This is especially important for students who are not working in the industry and who will have no exposure to the regulations during non-study time.

As a rule, consider the learning process as a series of repeated exposures to the same material, each time deepening your understanding, each time becoming more familiar with the facts. It is only reasonable then that frequent review of the same material will increase retention and recall.

This concludes today's excerpt from The Customs Broker Examination.

Monday, March 30, 2009

Deductive Value

Welcome back to our series on "Methods of Valuation." Last week we covered the definition of Transaction Value of Identical & Similar Merchandise. Those two methods are similar to Transaction Value and are easy to understand. As you will see in our coverage of Deductive and Computed Value, the requirements become a little more complex.

Deductive Value is the fourth method of valuation. If the previous three methods are found to be inappropriate to use, then deductive value must be used. Generally, deductive value takes the merchandise sold after importation, and assigns value based on the price of the greatest aggregate quantity sold, with deductions made for profit, transportation and other expenses. Although it might not be noticeable now, determining the value gets more complex with each new method introduced. The following amounts should be deducted from the merchandise being appraised under the deductive method:

•Any commission usually paid or the addition usually made for profit and general expenses in connection with sales in the U.S. of imported merchandise that is of the same class or kind regardless of the country of exportation.
•The actual costs and associated costs of transportation and insurance incurred with respect to international shipments of the concerned merchandise from the country of exportation to the U.S.
•The usual costs and associated costs for transportation and insurance incurred with respect to shipments of the concerned merchandise from the place of importation to the place of delivery in the U.S.
•The customs duties and other federal taxes currently payable on the concerned merchandise because of its importation.

Note: Even though deductive value is the 4th method, computed value may be used before deductive if the importer requests it before entry and CBP approves it.

Example: Eagle Exporter manufactured and shipped widgets to its subsidiary in the United States; however, it was determined that the relationship influenced the price, and transaction value was not acceptable. Eagle Exporter only manufactured one kind of widget and only sold them to the U.S. subsidiary; therefore, transaction value of identical and similar merchandise was not an acceptable method of appraisement. The U.S. subsidiary would need to keep track of the sales for 90 days after importation, determine the greatest aggregate quantity sold at a certain value and make the proper deductions in order to determine the value for customs purposes. Since this information will not be available at the time of entry, the importer will need to consider participation in the reconciliation program or provide the information using another acceptable post entry process.

Join us next week when we explore computed value.

Saturday, March 28, 2009

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!

Friday, March 27, 2009

The U.S. Department of State – Directorate of Defense Controls

For the last few weeks, we have introduced you to some of the government agencies responsible for regulating exports. Last week we discussed the Bureau of Industry & Security. This week, we will introduce you to the U.S. Department of State, Directorate of Defense Controls (DDTC).

To protect national security, the U.S. Department of State, Directorate of Defense Controls (DDTC) is responsible for controlling export of defense articles and services under the United States Munitions List (USML). The DDTC controls and monitors various types of military related items, such as weapons of mass destruction, and various chemical and biological agents.

The Arms Export Control Act (AECA) provides the authority to control the export of defense articles and defense services. Promulgated under the authority of the AECA, these controls are found in the International Traffic in Arms Regulations (ITAR), which include the United States Munitions List, 22 CFR parts 120 through 130.

The USML generally consists of items specially designed or modified for military use; however, some items with non-military applications have been designated as ITAR controlled items. An “article” or “service” is subject to ITAR if (a) it is specifically designed, developed, configured, adapted or modified for a military application; and (b) does not have a predominant civil application; and (c) does not have performance equivalent to an article or service used for civil application. Defense articles and services are listed on the USML, 22 CFR 121.

All U.S. parties that manufacture or export defense articles, furnish defense services, or U.S. and foreign persons engaged in arms brokering are required to register with the State Department. Registration along with payment of a fee is required to obtain export licensing approval. Department of State approval of a license application is required prior to the export of defense articles or defense services. The DDTC is also responsible for providing information on commodity jurisdiction, which determines the export licensing authority between the Department of Commerce and Department of State. The State Department monitors the end use and end users of articles to prevent illegal exports of defense articles and technology transfers. The DDTC has the authority to approve permanent and temporary export and temporary import of “defense articles, defense services and technical data."

Next week, we will explore the Bureau of Census and Department of Defense.

Thursday, March 26, 2009

ITC Investigates Possible Patent Violations of Electronic Devices

In two separate cases, the United States International Trade Commission "ITC" has instituted an investigation of alleged patent infringement of certain electronic devices. The first investigation (337-TA-673) covers importation of handheld wireless devices including smart phones, cellular telephones and television remote controls. Filed by Saxon Innovations, LLC of Tyler, TX, the complaint alleges that the importation and sale of these items infringe on patents identified in the complaint.

The second investigation (337-TA-672) involves electronic devices having image capture or display functionality. such as digital cameras and cellular telephones. Filed by LG electronics, Inc. of Korea, the complaint alleges that the importation and sale of these electronic devices infringe on patents identified in the complaint.

Additional complaints against similar articles have been filed and are awaiting action by the ITC. A list of the recent Intellectual Property (Section 337) complaints can be found on the ITC website. Status of current Section 337 investigations can also be found on the ITC website.
Within 45 days after institution of these investigations, the ITC will set a target date for completing the investigation.

Wednesday, March 25, 2009

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

Note to Our Readers: We try to post news articles on Wednesday; however news was a little slow this week. So, we decided to post another exam tip for those who are hard at work studying for the Customs Broker Exam on April 6.

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 details 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 there is not any information there that would preclude one or more answers. 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 is 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 bcpLearning.com.

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.

Tuesday, March 24, 2009

The Customs Broker Examination, CH 3, Part 4: Fact Sheets

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday morning. Click here if you want to read the whole book right away.

Chapter 3: Methods of Study

Part 4: Fact Sheets

Taking the sample tests will reveal sections of the regulations you need to study further. It is not necessary or advisable to study the regulations by beginning with the first Part and progressing sequentially to the end, because the regulations were not progressively constructed. There is no progressive relationship between one Part and each succeeding Part. It is not necessary to master Part 132 (Quotas) before attempting to understand Part 134 (Country of Origin Marking).

Deciding which Parts you study first – provided that you have a basic foundation of knowledge – should be dictated by the tabulated results of your sample test results. Start with the Part in which the greatest frequency of error occurs. Taking these early tests and creating written notes as you study and re-study troublesome sections in the HTSUS and CBP Regulations will help you compile an important learning tool: fact sheets.

How to Compile Fact Sheets
Beginning with your first study session, have by your side a blank legal pad, on which you will begin to compose a “fact sheet.”

“Fact sheets” are simple, easy-to-read summaries of regulatory or procedural facts (dates, penalty amounts, deadlines, dollar amounts; brief, one-sentence summations of certain key regulations, and so on.) Fact sheets are compiled in the course of study, but they must be created early in your study procedure and maintained throughout. Typing the fact sheets can reinforce your learning, and make them easier to read and edit.

You should compile your fact sheets in an organized fashion, keeping together all the facts you gather by topic – General Order Regulations, for example – so that as you review these fact sheets, you can review all the facts concerning General Order in one session.

The CBP Regulations and the HTSUS are by nature full of facts, samples of which appear below. For students who work in a brokerage office, many of the facts will be familiar to you immediately, because they are the type of facts you probably already recall each day during the course of classification and entry filing. You remember these facts because they are simple, and because your memory has been repeatedly reinforced as you encounter and re-encounter them.

When compiling these fact sheets, there is a common pitfall to avoid. Frequently, students will fail to write down a fact that they are certain they already remember and could not possibly forget. Who could forget, for example, that an entry summary must be filed within 10 working days following entry of the merchandise? But do not indulge in this discriminatory registry of facts. Because you are entering into an intense period of study in which you will confront volumes of new information, new concepts and many, many new details, the information which was so clearly affixed in your mind prior to your preparation for the CBE is likely to become clouded, confused, or lost altogether. Record everything on your fact sheets.

Fact sheets should contain the fact itself, the reference in the Regulations (or other source), and the general topic or category.

How to Use Fact Sheets
From the beginning, as you prepare your fact sheets, carry them with you everywhere. Make a bulleted list of various opportunities to study... train, bus, plane, doctor’s office, dentist, traffic jam, lunch, any time or any place you may have to wait. By using fact sheets, you can increase the amount of time you have available for study by 30% or more. You learn to study in increments of 15-30 minutes at a time. Fact sheets can be reviewed while you are waiting for a bus, for the water to boil, or for a phone call.

Begin reviewing your fact sheets the moment you begin to compile them. Waiting until you have prepared all your fact sheets before reviewing them is a mistake. They should be reviewed and even memorized during every available moment, up until the very last minutes before you take the CBE.

Repetition is one sure way to create an encyclopedic memory of common but applicable knowledge that will be readily retrievable in the examination room. Memory is created not only by the quality of an encounter, but by the frequency of the encounter with a particular fact. Even a brief glance over your fact sheets during breakfast or while waiting for a street light to change will increase the number of encounters with the fact and sharpen your recall.

But in order to keep these fact sheets memorable, your facts must be concisely and clearly written. Keep your statements brief, accurate, and in the simplest of language. Because you will be repeating your review of these simple fact sheets daily, you will begin to remember them in a way very similar to the way most of us remembered our multiplication tables as children, by being repeatedly shown multiplication combinations on flash cards. Remember, the secret of fact sheets is this: by repeating your encounter with a fact, you increase your recall.

Using Fact Sheets to Memorize the HTSUS and Regulations
Certainly one of the first types of fact sheets you can prepare should be a list of all the Parts of the CBP Regulations and a brief sentence describing what each Part covers. As previously noted, there are only 52 Parts to 19 CFR, Chapter I, not 192. Remembering what is covered in each of the 52 Parts is really not hard (you remember the names of all 50 states, for example).

To illustrate how you might compose this fact sheet, one entry on your CBP Regulations Part descriptions would be: “Part 114 – Carnets.” A similar fact sheet should be comprised of the various sections of the HTSUS (there are only 22) and the general category of products each section covers. Within two weeks after beginning your studies, you should be able to recount all of the HTSUS sections, generally what each section contains, and you should also be able to recount all of the Regulations’ Parts and what particular Regulations those Parts delineate.

What students who have never taken the CBE don’t know is that familiarity with the structure of the CBP Regulations and the HTSUS is as important as knowledge of what these texts contain. If you have never taken the CBE, do not underestimate the effectiveness of instant recall of what each of these Parts and sections contain. It will not only help you master your resource materials during the preparation process, but also give you the kind of drilled-in recall that will save you a good deal of crucial time during the examination itself.

It is obvious that not all the HTSUS or Regulations can be covered in these simple fact sheets and this is not the purpose of creating them. By creating fact sheets, you are simply attempting to identify common, relevant bits of information that can easily be committed to memory for the purpose of reducing the amount of research time required in the examination room.

Repeat, Repeat, Repeat
Again, repetition is the key to the method of study used in this course. Five one-hour sessions with the HTSUS and Regulations and fact sheets are far more productive than one five-hour session. Place one fact sheet near your bed. Review it right before you nod off. Pick it up first thing in the morning and review it again. Take it out during your lunch break, while you are waiting for a taxi or riding a bus. Alternate fact sheets frequently and keep the topics distinct.

Even ten minutes can be a fruitful time if you employ it by reviewing these easy-to-follow fact sheets.

This concludes today's excerpt from The Customs Broker Examination.

Monday, March 23, 2009

Transaction Value of Identical & Merchandise

Welcome back to our series on "Methods of Valuation." Last week we covered the definition of Transaction Value and provided some information about components that are included and excluded from value. If Transaction Value cannot be used, then the next two methods available are Transaction Value of Identical & Similar Merchandise.

Transaction Value of Identical Merchandise

Transaction value of identical merchandise is the second method of valuation. If transaction value cannot be used, then this method must be used. As its name suggests, this is the price that is paid for merchandise that is identical in every way to the merchandise being imported.

Identical means that the merchandise is:
· The same in all respects to the merchandise being appraised,
· Produced in the same country, and
· Produced by the same entity as the merchandise being appraised. and,
· Exported to the United States at or about the time that the merchandise being appraised is exported to the United States.
· If transaction value of identical merchandise cannot be used, then the transaction value of similar merchandise will be used.

Example 1: Worldwide Ball Mfg produces golf balls in Germany and is related to Golf Discounters Ltd in the U.S. The relationship influences the prices between the parties. Worldwide does not sell its golf balls to any other U.S. companies. Sport Crafters in France manufactures golf balls that appear to be of identical construction and forwarded several shipments at about the same time as the shipment from Worldwide to Golf Discounters. The price of the golf balls from France cannot be used for appraisement of the current transaction because the balls were not manufactured in the same country or by the same manufacturer. If the balls had been produced in the same country by another manufacturer, the value may have been valid as identical goods if goods from the same producer as the goods being appraised cannot be found.

Transaction Value of Similar Merchandise

The term "similar" merchandise means merchandise that is:
·Produced in the same country, and,
·Produced by the same entity as the merchandise being appraised, and,
·Like the merchandise being appraised in its characteristics and component
·Exported to the United States at or about the time that the merchandise being appraised is exported to the United States.

Example 2: Worldwide Club Mfg produces golf clubs from titanium in Germany. Most of the clubs are made from 75% titanium and 25% steel; however, the less expensive models may contain slightly less percentages of titanium. Worldwide consigns 500 sets of its newest 75% titanium clubs to Golf Discounters in the United States. Since the clubs are consigned, no sale has taken place; therefore, transaction value is not appropriate. Worldwide also sells the same club made with 65% titanium and 35% steel to Giant Golf Warehouse in the United States for $50 per set. Since the clubs are manufactured by the same producer in the same country and are similar in characteristics with only a 10% difference in metal content, the value in the sale between Worldwide and Giant Golf would most likely be an acceptable basis for valuing the transaction between Worldwide and Golf Discounters.

If transaction value of Similar Merchandise cannot be used, then deductive value is the next option. Deductive Value will be the topic for next week's discussion in our Methods of Valuation series.

Friday, March 20, 2009

Department of Commerce – Bureau of Industry & Security

Last week we introduced the government agencies that regulate exports. This week and for the next few weeks, we will discuss one of the major agencies and the roles they play in the regulation of exports. This week’s spotlight is on the Bureau of Industry & Security (BIS).

As part of the Department of Commerce, the Bureau of Industry & Security (BIS) has oversight for regulation of exports and issues of national security and technology. In addition to evaluating and issuing licenses for export and re-exports of goods and technology, the agency strives to protect the national security and stop proliferation of weapons of mass destruction. Activities include enforcing export regulations, anti-boycott and public safety laws, providing ECCN assistance, determining commodity jurisdiction and issuing licenses for certain goods.

BIS is responsible for implementing, maintaining and enforcing the Export Administration Regulations (EAR). The EAR regulates the export and re-export of most commercial items as well as certain activities of U.S. persons. The EAR also applies to “dual use” items, meaning that they have civil as well as military or strategic use, and are not primarily for weapons or military related use.

Note: BIS does not control all goods, services and technologies. Other government agencies such as the Department of State have authority over exports that do not fall under BIS regulation. We’ll discuss some of these other agencies in the coming weeks.

As part of its goal to improve the knowledge and compliance of the export community, the BIS provides an informative website, instructive publications, seminars/webinars and other resources. The BIS web site provides a wealth of information such as:

•Definitions of key terms: Export, Deemed Export, CCL, ECCN and more.
•General Prohibitions
•License determination and application
•Online seminars on export control basics, recordkeeping
•Compliance tools such as denied party, unverified and entities lists and red flag indicators
•Export Enforcement statistics

Click HERE to check out the BIS, one of the key government agencies responsible for regulating exports.

Thursday, March 19, 2009

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 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!

Stay tuned to the Boskage Trade News for more helpful hints on studying for the Customs Broker Exam! The next article will provide the pros and cons of using the loose-leaf version of the CBP Regulations.

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 from the beginning to the end or cover-to-cover, starting with the first page. 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 odd, 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 on the test. 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 book is lengthy and often 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.

Wednesday, March 18, 2009

Bersin for CBP Commissoner?

Alan Bersin is rumored to be the top candidate for the next CBP Commissioner. Bersin was born in Brooklyn, New York, attended Harvard, then Oxford University as a Rhodes Scholar. He earned a law degree from Yale Law School in 1974. At 62, Bersin is currently the chair of the executive committee of the San Diego County Regional Airport Authority. Other noteworthy positions include:

· U.S. Attorney
· Southwest Border Representative
· Education Secretary State of California
· Superintendent San Diego City Schools
· U.S. Chair, Task Force on U.S. Mexico Border Region

Bersin is known for being tough on border crime. If recommended by DHS Secretary Janet Napolitano, the next step would be for President Obama to nominate Bersin who must pass a background check and receive Senate confirmation before taking the helm at CBP. Stay tuned.

Tuesday, March 17, 2009

The Customs Broker Examination, CH 3, Part 3: Taking Sample Tests

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday morning. Click here if you want to read the whole book right away.

Chapter 3: Methods of Study

Part 3: Taking Sample Tests

This book includes appropriate questions from past examinations. Some of the regulations, HTS numbers and duty rates may have changed since these examinations were given, but the changes are actually very few and will not interfere with your study.

The changes are actually very easy to identify. Students fear changes in the regulations more than they should (though it is still best to have the edition of the regulations listed in the Notice of Examination on the CBP website). The intent of the regulations has changed very little in recent years. The most noticeable changes usually occur when a tariff number or duty rates changes. Much is made of changes by those who work in the industry. Because they have developed a successful sequence for solving particular importation cases, change is much more disruptive for the working broker (or the student with extensive experience in the industry) than it is for a student newly encountering importation law and regulation.

The tests included with this book are reproductions of actual tests given by CBP. The date the test was given is shown at the beginning of the test. Answers are also provided at the end of the CBE so you can check your answer against the answers approved by CBP. Next to the answers are the regulation citations, that is, the sections of law, regulation, tariff, or bulletin where the answer can be found.

Why Take Sample Tests?
Sample tests give the student a goal. The student can actually schedule, study and check progress by establishing test score benchmarks. A student might establish a goal of 60% correct ten or eleven weeks before the actual test, then increase the percentage weekly until test day. Failure to meet pre-designated test targets would be motivation for intensified study or for study in a particular area of difficulty.

Sample tests also provide a starting point for group discussions, or for discussions with a tutor, import specialist, or other expert in the field. Since many students find it helpful to study with other students, or to obtain the advice of a licensed broker or import specialist (an import specialist is someone employed by CBP who has an expertise in general import procedure and concentrates on a particular class or division of importations), the solving of a test problem can focus the explanation and uncover the source of the student’s confusion about the correct answer. Few explanations are more illuminating than those that come from actual test cases.

But perhaps most important, these sample tests represent the best indicator of your study progress. By taking these examinations in simulated conditions, and then re-taking them as your study progresses, you will build your confidence, you will steel your self against examination anxiety, and you will ascertain – by the results you repeatedly achieve – which areas you must concentrate on in the course of your study to prepare yourself sufficiently for the real examination.

Sample tests bear a unique authority. For the student, the sample tests before them were the actual tests taken by hundreds of broker aspirants across the country; they were the very tests others prepared for – just as the practicing student is preparing – for their CBE. These were the very tests they wondered about, worried about, and conquered, just as the practicing student will wonder and worry about the actual test that he or she will conquer. Success on these sample tests gives the student the confidence needed to pass the actual examination.

When to Take Sample Tests
Having obtained, marked, and re-organized your source materials, the first step in your study – as unbelievable as it may sound – is to test yourself by taking the sample examinations included with this book or by using the exams in your study plan computer program.

Note: If you are using the Boskage Commerce Study Plan, it is best to complete the Introduction section of the program before attempting a test.

Whether you are a 2-month novice or a 12-year veteran, taking a test early in your course of study is a must. Follow the rules for test-taking as they are explained in the front of the tests. Try to recreate the actual test-taking environment and conditions as accurately as possible. That means you should have only copies of the HTSUS, the CBP Regulations, required commercial directives, and your notes available while you are taking the practice examination. Be sure to adhere to the proper time allocation, and, of course, don’t have the answer sheet in the room with you when you are taking the test, or you will find yourself referring to it after every difficult question.

Find a secluded, quiet spot in which you can take the test without distraction and without threat of interruption. If you can’t spare 4 hours to take the complete test, you might consider answering 40 questions in 2 hours or 60 questions in 3 hours. However, you should take several complete 4-hour exams, to simulate the real situation.

The ultimate purpose of practice tests – beyond simulating the CBE itself – is to highlight areas of the Regulations and the HTSUS in which you are particularly weak. Wait too long to begin taking the practice tests and you will not have sufficient time to remedy this situation. Taking the test first should not discourage or encourage, but rather be viewed simply as a study technique to improve your final score.

How Often to Take Sample Tests
It is highly recommended that you take at least one of the enclosed tests at the end of every other week of study. It should not be the same test each time, but rotated to present different questions. In this regard, you would significantly benefit from the Boskage study plan, because it contains six prior tests – 480 practice questions. This broader range of questions not only keeps testing practice from becoming monotonous, it will give you a deeper understanding of the CBP Regulations and classification techniques. The study plan also provides commentary on why each answer option is correct or incorrect. It also makes charting your progress easier and more accurate.

What the Sample Test Results Reveal
Even in the event that you are a gifted test-taker and are able to achieve a high score each time, continue to retake practice examinations in an effort to keep your memory sharp in the final weeks going into the CBE. There is no clearer path to understanding both the type of questions asked on the CBE and the areas of concentration in the HTSUS and the Regulations than taking and re-taking the past examinations.

As you take them, compare your answers with the answers included in the answer sheets. Keep a tally of the questions you answer incorrectly and note which section of the Regulations or the HTSUS the true answer comes from. By keeping a tally, you will be able to make more accurate conclusions about which sections you need to study more intensively. You may find, for example, that 30 percent of your incorrect answers come from 19 CFR, Part 113, the Part on Surety bonds. In your next study section, concentrate your study on this Part until it is as readily understood as the other sections or Parts you have mastered.

Remember that as you take these sample tests, you are sharpening not only your memory (questions that recur on subsequent tests are remarkably similar), you are also sharpening your test-taking skills and your facility with the research materials, the Regulations and the HTSUS. For this reason it is absolutely necessary that you adhere to the restrictions noted at the beginnings of the tests

This concludes today's excerpt from The Customs Broker Examination.

Monday, March 16, 2009

Methods of Valuation

Last week we introduced you to the topic of valuation of imported goods. For the next few weeks, we will discuss the methods of valuation. There are six major methods that can be used to determine the value, however, the methods must be used in order, as appropriate, and in accordance with the regulations.

Derived value (lowest on the hierarchy), for example, cannot be used until each of the other methods have proven inappropriate. It is important for international trade professionals to be familiar with not only the different methods of valuation, but also the order in which they may be applied:

• Transaction Value
• Transaction Value of Identical Merchandise
• Transaction Value of Similar Merchandise
• Deductive Value
• Computed Value
• Derived Value

Transaction Value
Transaction value is the first method of valuation to be considered when determining the value of an import shipment and the most common. Transaction value is the price actually paid or payable for the imported goods, with additions made for any dutiable items not included, or deductions made for any non-dutiable items included. Transaction value is simply the price that is paid for the merchandise. Remember, it is important to determine the correct value because duties are usually based on a percentage of value.

Additions to the Price Actually Paid or Payable
The transaction value of imported merchandise is the price actually paid or payable for the merchandise when sold for export to the U.S., plus amounts equal to:

• Packing Costs
• Selling Commissions
• Assists
• Royalties or License Fees that the buyer is required to pay directly or indirectly as a condition of sale of the imported merchandise
• Proceeds of any subsequent resale or use of the imported merchandise that accrue directly or indirectly to the seller.

Charges Not Added to the Price
• International Freight and Insurance
• Discounts
• Buying Commissions - When determining the transaction value, buying commissions that are added to the price actually paid or payable for the imported goods must be listed separately from the price of the goods in order to remain non-dutiable.
• Costs for transport and construction/maintenance after import
• Customs Duties and Taxes

Transaction value cannot be used when
• there is no sale, such as consignments, leases or free-of-charge shipments,
• sales are not made at “arm's-length” such as related party transactions, and
• restrictions on disposition or use of imported merchandise substantially affect the value of the merchandise.

We will continue our series on valuation next week with a brief discussion about Transaction Value of Identical and Similar Merchandise.

Saturday, March 14, 2009

Customs Broker Exam Study Tip 6: Taking Previous Exams

Taking past exams is an important part of any study plan. Persons studying for the Customs Broker Exam have an advantage because past exams are available for students to review. The exams provide information about the types of questions and format of the test. So, now that you have discovered this gold mine of information, what should you do with it?

1. Familiarize yourself with the test format.
It is not necessary to sit down and take a complete test of 80 questions the first time you review the exam. Take time to read a few questions and become familiar with the way the questions are constructed. Practice looking up answers in the HTSUS and Regulations. Watch out for questions containing the words “NOT”, “MAXIMUM”, “EXCEPT” and other words that appear in all capital letters and bold text. Pay close attention to the terminology. Some questions may contain answer options that appear to be the same such as 10 working days and 10 calendar days. Don’t get in a hurry and select the first answer that contains “10” in it.

Imported merchandise must be entered within _________ days after landing from the vessel, aircraft or vehicle.

A. 10 calendar days
B. 10 working days
C. 15 calendar days
D. 15 working days

The correct answer is C. Part 142.2(a)

2. Take practice exams in simulated test environment.
Do your best to recreate the actual test-taking environment and conditions. Find a quiet spot location to take the test without distraction and threat of interruption. Use only the written reference materials and notes allowed on the exam. Do not use any electronic device other than a battery-operated calculator. Allocate 4 hours for taking the entire test or 2 hours if taking half of the exam. The exam contains 80 questions and the time allotted is four hours, which averages out to three minutes per question. You may take less time on some questions and more on others, but it will be impossible to finish the test if you spend 10 minutes on each question.

3. Review your results.
In addition to preparing you for the test format and testing conditions, taking practice tests as part of your study plan builds confidence and allows you to find areas that need more concentrated study. Compare your answers with the answer sheet. Review the questions you answered incorrectly and keep track of the sections of the regulations and HTSUS the correct answer comes from. If you find most of your incorrect answers come from the HTSUS, then devote more time to studying the HTSUS lessons and answering classification questions. If you find that you missed more answers from Part 152 on valuation, then spend more time studying valuation and answering valuation questions. Devoting extra time studying the topics related to the questions missed on the practice exam is a great way to improve your score on the next practice exam and the real exam.

4. Highlight all answers in the CBP Regulations.
As you review the exam questions answered, highlight the correct answers in your copy of the regulations. This will reinforce your knowledge of the regulations and the highlighted information tends to stand out on the page when you are looking for it. Even though the questions for each exam may be worded differently, the answers will still be found in the same texts. The last eleven exams contained 33 questions from Part 24. Ten of those 33 questions came from 19 CFR 24.23. Six of the 33 questions came from 24.5 and six came from 24.1. By marking the answers in those three sections, you reinforce the information in your mind and you will be more likely to spot the answer quickly when looking for it on the actual exam.

5. Answer test questions as a regular part of study.
In addition to taking practice tests, set aside some study time once or twice a week to answer questions from other exams that you are not using for the simulated practice. Since each question is allotted an average of 3 minutes, you could plan to spend 30 minutes answering 10 questions from an older exam. You could do this exercise four times a week and have completed half of one exam in a week. Alternatively, you could allot one hour and answer 20 questions at a time. If you did this four times a week, you would have completed an entire exam. This exercise will give you practice managing time. Additionally you will gain familiarity with the question, answer formats, and increase your knowledge of the materials.


When taking old exams, be alert for possible inconsistencies in the answer selections. Tariff numbers and duty rates have changed over the years. A tariff number that was listed as a possible answer on the October 2003 Exam may not be valid in 2009. When calculating the duty rates to determine an answer, you may find a slight variance because of the reduction in duty over the years. With the addition of new free trade agreements, duties have been reduced and eliminated for certain countries.

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.

Friday, March 13, 2009

U.S. Government Agencies and the Regulation of Exports

The U.S. Government controls exports for reasons of national security and foreign policy. It is important for exporters to have a good understanding of the government agencies that enforce export laws and regulations as well as the requirements of each. This article introduces the various government agencies and provides a brief overview of the regulations they enforce and primary responsibilities.

Department of Commerce – Bureau of Industry & Security (BIS)
• Export Administration Regulations (EAR) 15 CFR 730 – 774
• Facilitates trade and administers export controls for commercial and dual-use items not regulated by the USML.
• Issues export licenses. Dual-use items are those goods that possess both commercial and military or proliferation applications.

Department of State - Directorate of Defense Trade Controls (DDTC)

• Arms Export Control Act 22 U.S.C 2778
• International Traffic in Arms Regulations (ITAR) 22 CFR 120 – 130
• Issues Export Licenses
• Products designed or modified for military use
• Commodity Jurisdiction: DOS determines export licensing jurisdiction between DOS and DOC
• Authority to approve permanent and temporary export and temporary import of “defense articles, defense services and technical data”.
• An “ARTICLE” or “SERVICE” is subject to ITAR if
a) it is specifically designed, developed, configured, adapted or modified for a military application; and
b) does not have a predominant civil application; and
c) does not have performance equivalent to an article or service used for civil application.
• A defense article or service will be listed on the United States Munitions List (USML) 22 CFR 121

Department of Commerce – Census Bureau
• Compiles trade statistics via Automated Export System (AES) and provides the export information to BIS & DDTC who use the information for export control
• Foreign Trade Regulations (Title 15 CFR 30).
• Census does not issue licenses or “authorizations to ship product”.

Department of Defense
• Technical Advice concerning national security
• Defense Technology Security Agency DTSA
• Reviews certain percentage of licenses from DOS

Department of Homeland Security – CBP
• Cargo Security
• Trade Statistics

Department of Treasury – OFAC
• Regulates trade and financial transactions with embargoed countries
• 31 CFR 500-596
• Administers and enforces economic and trade sanctions against targeted foreign countries, terrorism sponsoring organization and international narcotics traffickers.

Over the next few weeks, we will learn a little more about each department and their export control responsibilities.

Thursday, March 12, 2009

Customs Broker Exam Study Tip 5: Time Management

Now that your study materials and workspace are organized, it is time to discuss time management. Students often feel overwhelmed by the amount of information to be learned in order to pass the exam. Some people feel like they do not have enough time to do all they want to do, so finding additional time to study for the Customs Broker Exam seems like an impossible task.

Have you ever noticed how some people seem to have a natural ability to get things done without appearing stressed out, while others are often late in completing tasks and appear to be rushed all of the time? Have you ever thought that certain people accomplish more because they don’t have to work full time, or they don’t have children or they have more money? Even if those reasons were true, it doesn’t change the fact that everyone has the same amount of time each day. The difference is in how you choose to use your time. Time cannot be bought or saved. Once time is gone, you cannot get it back. Your ability to pass the exam as well as accomplish other goals begins with how you manage your time.

What are some of the causes of time management problems? Three of the most important causes of problems related to time management are procrastination, poor planning and wasting time.

Procrastination is a tendency to avoid a harder or less pleasant task in favor of doing an easier one. Procrastination often results in added stress due to missed deadlines or last minute preparation to meet a deadline. No one needs or wants additional stress and stress is not good for our health. Visualize what will happen if you procrastinate by putting of studying for the exam. Do you see success or failure? Procrastination is not an option when you visualize success!

Poor planning is another culprit that sabotages achievement of success. You must prioritize and create schedules to accomplish the tasks necessary to accomplish your goals. Once you make up our mind to take the exam, you must create a study plan and make it a priority. Of course, most aspiring brokers have full time jobs and personal obligations; however, by creating a plan and schedule that allots specific time for study, you can ensure success by following that schedule. You can’t expect to pass the exam unless you make the effort.

Wasting time is one of the biggest problems exam students face. When too much time is spent doing things that are unproductive, you rob yourself of valuable time that could be spent studying for the exam. It may not be the activity itself that is unproductive, but the amount of time spent doing the activity that creates the problem. If you like watching television, watching one favorite show is not unproductive because it provides relaxation and a sense of well-being. However, watching several hours of television to avoid studying is unproductive. Playing a game on the computer for 15 minutes is not necessarily unproductive because it provides a break from the routine that gives your mind a rest. However, playing computer games for hours robs you of time that could have been spent studying.

What can you do to improve time management in order to pass the Customs Broker’s Exam?

The tools and methods adopted to manage time wisely will largely depend on the amount of individual’s experience with issues covered on the exam, learning styles, ability to grasp and retain new information, work schedule and other personal issues. We have provided a few suggestions below. At the end of this article, you can comment on these and provide some ideas of your own.

• Create a Calendar
Your calendar should allocate time for work, study, exercise, meals, family and personal time. Set a regular time for study. You may want to check off the items completed each day and keep track of time spent on each task.

• Identify Priorities
Prioritize tasks and create a “To Do” List. Compete the most important tasks first. If not all tasks are completed, putting off the least unimportant task isn't procrastination, it's probably good prioritization.

• Learn to Say “NO”
Explain to people that you must study to pass the test and you will be available in a few weeks. Six to eight weeks of intense study is a small commitment of time when you think about the rewards of passing the exam and the amount of free time you will have when you no longer need to study.

• Make Time For Family
Set aside special time for family each week. Remember, quality over quantity. Your family will appreciate the time you spend with them and be more understanding of your need to study when you devote special time for them.

• Set Aside Time for Exercise
Regular exercise reduces stress and promotes good health. Exercise can provide a welcome break from your studies by giving your mind a chance to relax and think of something else. Your choice of exercise can be anything from gardening, walking around the block to a game of softball or a workout at the gym.

• Limit Unproductive Activities

Reduce the amount of time spent on the phone, watching television, reading email, playing computer games, etc. There will be plenty of time for these activities when you finish the exam. Take the necessary phone calls, but do not use the phone as an excuse for not studying.

• Make Good Use of Unproductive Time

1. Waiting
At one time or another, you will find yourself waiting for something. The wait may be anywhere, from the doctor’s office or at an airport, to an unanticipated event, such as a traffic jam. Anticipate circumstances that are likely to create unavoidable delays and be sure to have your notes handy. You can make great use of that time to study. Instead of being upset because you were stuck in the airport for two hours because your plane was late, you can be excited that you were able to devote two more hours to your studies.

2. Commute
Whether it’s by train or car, most people have some type of commute to work. Use the commute time to listen to the audio lectures on CD. Turn that hour spent in a traffic jam into productive study time.

3. Lunch
Do you really need an hour to eat lunch? Consider devoting three of your lunch breaks each week to study. Treat yourself to a nice lunch out at the end of the week.

• Reward Yourself
Set daily, weekly and monthly goals. When you have achieved a goal, reward yourself. It may be as small as allowing yourself 30 minutes of television or spending 30 minutes playing a video game to something more significant such as a vacation or cruise after receiving news you passed the exam.

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 explore “Using Previous Exams” in the next study tip.

Wednesday, March 11, 2009

How Will CBP Spend $980 Million?

U.S. Customs & Border Protection will receive $980 million of the $2.8 billion awarded to the Department of Homeland Security under the American Recovery and Reinvestment Act. How will CBP spend this windfall of funds?

$720 million for construction and renovation of land border ports of entry. This includes expansion and reconfiguration to make room for new scanners and identification checking equipment.

$100 million for Non-Intrusive Inspection (NII) technology

$100 million for border technology on the southwest border. Most of the 661 miles of the physical fence has been completed. CBP will use the $100 million to construct towers containing cameras, sensors and other communication equipment that will feed information to the border patrol control centers. Construction is expected to begin in April.

$60 million for tactical communications equipment and radios

Visit the Department of Homeland Security web site to see how funds are allocated to other DHS departments and to check up on how, when and where the tax dollars are being spent.

Tuesday, March 10, 2009

The Customs Broker Examination, CH 3, Part 2: Preparing Source Materials

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday morning. Click here if you want to read the whole book right away.

Chapter 3: Methods of Study

Part 2: Preparing Source Materials

Memory Versus Facility With Resource Materials

There are two types of competency being tested in the examination room. First is your competency in recalling information about CBP Regulations – how quickly you can recall the information, how accurately, how appropriately. For this reason, a certain amount of memorization is required. You will have to build a memory of CBP facts. This memory can occur naturally, as it does for most people, through the day-to-day encounter with a variety of products and instances typical of a customs broker’s office, or memory can be forced by rote repetition, by creating fact sheets, by drilling on certain key figures, dates, deadlines, fine amounts, and so on. But in either case, the CBE will be much more difficult without a sizable, quickly accessible storehouse of memorized information from which to draw during the highly-pressured hours in the examination room.

Key to passing the CBE is your competency in recalling information about CBP Regulations. How quickly and accurately you can recall the information is an important factor in determining your chances of success. You will have to build a memory of CBP facts.

Testing your memory is only part of the CBE, however. There is another type of competency being tested in the examination room, namely, your competency in researching the correct answer in the HTSUS or the Regulations. No one answers all 80 questions from memory. A significant percentage of them are answered based upon examination-room research. This is a test of your familiarity and facility with the texts themselves. The assumption is that a licensed broker must be able to handle both the common elements of importation – facts that are committed to memory – and the uncommon elements of importation which must be researched.

For example, most test-takers can answer certain factual questions about the entry process, but few can provide precise details about an act of forfeiture or seizure — an act that occurs rarely in the course of daily customs brokerage activities. For this reason, the student must demonstrate the ability to research quickly in a manner indicative of close familiarity with the research materials, i.e., the Regulations and the HTSUS.

The following information will help you prepare your research materials to enhance even the most competent student’s efforts. It will help you reduce search time and therefore provide more examination room time for difficult questions that require consideration.

Tips on Preparing Your Resource Materials
The government editions of both the HTSUS and the CBP Regulations, your primary study texts, are without index tabs. It is recommended that you purchase a set or two of the plastic rectangular type.

Once you have obtained tabs, tab each of the 22 major sections. You may prefer to tab each chapter instead of or in addition to the 22 major sections. You should also mark the beginning of the General Notes, the General Rules of Interpretation, and the Additional U.S. Rules of Interpretation.

Continuing through the book, mark (if possible) each section with its generic title. Section XI, for example, would be marked simply “Section XI – Textiles.”

Some students index their HTSUS books further with a different type of smaller, colored, outside index tab marked separately with each of the more commonly referenced chapters, such as Chapter 62, “Articles of apparel and clothing accessories, not knitted or crocheted.” Using this method, Section XI would have additional index tabs, perhaps marked with the same color as the major section and thereby indicating that they are part of Section XI. Whether or not you index each chapter is up to you, but tabbing the section headings themselves somehow is a must.
Next, you should index your copy of the Regulations by tabbing each Part. Whether or not you also index each subpart with a different type tab is up to you, but because they are fewer, and the reference is more frequent, it seems to make more sense here than it did in the HTSUS and is advisable.

19 CFR lists hundreds of Parts, but because of changes in the CBP Regulations, many Parts have been taken out or were never included in the first place. The number of tabs you use should correspond to the sections commonly referred to on the CBE. A listing of these sections appears later in this guide.

Many students also find that the published index for both the HTSUS and the CBP Regulations is hard to locate quickly. These students would recommend moving the indexes to the very front of both volumes and purchasing a heavy-duty D-Ring binder. The key is to obtain a binder strong enough and large enough to contain the HTSUS without binding, breaking, or tearing pages. Some students find using a sturdy metal publications rack makes finding information in the HTSUS easier to locate.

This concludes today's excerpt from The Customs Broker Examination.

Monday, March 9, 2009

Valuation of Imported Goods

Valuation is the process of determining the worth of an imported product for the purposes of calculating the amount of duty payable and making the declaration to Customs and Border Protection. Appraisement, also known as valuation, of imported merchandise is an important part of the import process. CBP places a great deal of attention on appraisement, and it is a frequent area of investigation in compliance reviews. Even though the invoice from the foreign supplier may state one amount, there may be additional costs that are not included that should be included for customs purposes. Importers and brokers often look at the total value listed on the invoice, and never think about all the components that may be included or not included in that value. Some of the components belong in the total value, while others do not. Determining what components of the price should be included in the dutiable value, and which should not, is the key to effective appraisement

Even though the broker usually generates the CBP 7501 containing the information about value, the broker can only report the information provided by importers. The importer is legally responsible for reporting the value of imports to Customs and Border Protection. This obligation makes sense because the importer initiates the purchase of imported products, pays for them and is in the best position to know the details about the transaction that created the import. Brokers also need to know about valuation because brokers are the "specialists" on customs issues and are hired by importers to assist them in facilitating transactions with CBP. Brokers can be excellent resources when importers need assistance or guidance with valuation issues. If you need help with your taxes, you might go to an accountant for assistance. If you are an importer and you need help with your imports, you might go to a broker or other expert. Both importers and brokers must use reasonable care in fulfilling their responsibilities for the entry of imported merchandise and both should develop a good understanding of valuation rules and regulations. Some of the tools available for learning about various valuation issues include:

• Title 19 Code of Federal Regulations, Part 152 (19 CFR 152)
• Title 19 United States Code, Part 1401a (19 U.S.C. 1401a)
• U.S. Customs Rulings
• Bona Fide Sales & Sales for Exportation to the U.S. (ICP)
• Buying & Selling Commissions (ICP)
• Customs Valuation Encyclopedia (ICP)
• Customs Value (ICP)
• Proper Deductions for Freight & Other Costs (ICP)

Note: You will see the terms "appraisement" and "valuation" used interchangeably throughout our discussions on valuation.

Next Monday we will discuss the methods of valuation. If there are any specific import topics you would like to see discussed in the blog, please feel free to post a comment or send your suggestions to inquiries@boskage.com.

Thursday, March 5, 2009

The Customs Broker Examination, CH 3, Part 1: Acquiring Source Materials

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday and Thursday morning. Click here if you want to read the whole book right away.

Chapter 3: Methods of Study

Part 1: Acquiring Source Materials

Developing an Overview
This book is written for students who have a singular interest in research of Title 19 CFR, Chapter I, Parts 0-199, otherwise known as the CBP Regulations (often referred to as the “Regulations”, or “19 CFR”) and the Harmonized Tariff Schedule of the United States (HTSUS) for the purpose of passing the Customs Brokers Examination (CBE). Preparation for the CBE should not be confused with the task of mastering the law and putting it into practice in the field of international trade. The latter effort involves different knowledge, different skills, and a different – perhaps never-ending – period of development. Having the necessary knowledge and skill to pass the test is not the same as having the necessary knowledge and skill to serve as a licensed customs broker.

Nor are the skills that help you excel in the field of customs brokerage necessarily the same ones that will help you pass the examination. While actual experience is helpful, the key to success is a thorough knowledge of the regulations.

The information in this chapter will help you begin your study of the resource materials required to pass; it will help you modify resource materials; it will help you design a study plan that is right for you; and it will help you execute your study plan with confidence. It is just as crucial for the experienced student to follow the techniques presented in this course as it is for the inexperienced student who has no knowledge of the field.

Acquiring Source Materials
The goal is to achieve a score of 75 percent or greater on the CBE. To do this requires understanding, memorization, and familiarity with the examination resources. The most crucial publications are the CBP Regulations and the Harmonized Tariff of the United States (HTSUS), but by no means are they the only resources available for use while studying for the CBE. The first step in the process is to develop a list of the resources required, and then obtain the information itself.

The CBE is based upon a handful of trade and tariff acts from which the CBP Regulations and the HTSUS are written. Obtaining the acts themselves can be helpful, but is not necessary. The Regulations and the HTSUS (along with certain selected directives from CBP) contain all the requisite information, and the official Notice of Examination will list all required resources for each examination.

It is important to remember that to be effective, your study will be systematic and disciplined. The basic principles of preparation are presented here. You should follow those principles to achieve your goal, modifying them to fit your own time requirements and ability. Hopefully, you will not deviate far from the principles themselves. First, acquire all resource information material, and then, using the information provided here, dissect the resource material and eliminate unnecessary sections. For example, certain parts of the CBP Regulations are rarely tested and will not need to be studied in depth.

Before beginning this course, you should obtain your own editions of the HTSUS and the CBP Regulations. Make sure you use the correct editions specified in the Notice of Examination – incorrect editions could result in your not being able to find the correct answers. Do not use an office copy that must be returned each day or someone else’s copy that cannot be modified. You will be referring to the editions constantly as you study. The copies you use to prepare for the CBE should be yours and yours only. In the course of your studies you will mark the pages, make notations, summaries, and cross-references as you study and re-study their contents. Many students index and rearrange them for the sake of convenience; but to be successful, you must become as familiar with them as possible and using the same edition from beginning to end can help.

Government editions are preferable to privately published editions. The quickest way to obtain a copy and to make certain that updates and revisions are received in a timely manner, and that you are advised when new editions are available, is to contact:

Government Subscriptions:
Boskage Commerce Publications Ltd
P.O. Box 337
Allegan, MI 49010
(888) 880-4088
(269) 673-7242
FAX (269) 673-5901

19 CFR, Parts 0-199
19 CFR is the most studied text for preparation and the most referred to after your license has been obtained. It is the section of United States Regulations that specifically addresses the regulations under enforcement by CBP. A codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government, the Code of Federal Regulations is divided into Titles that represent broad areas subject to Federal regulation. Each Title is divided into chapters that usually bear the name of the issuing agency. You will be studying from the first chapter of Title 19.

Each title is further subdivided into Parts covering specific regulation areas. 19 CFR is published in two versions. The first is in two paperback volumes and not updated. It is published annually, although the release date varies from summer to late fall. The second edition is looseleaf, unbound, 8-1/2 x 11", and drilled for inclusion in a standard three-ring notebook.

Although there are advantages to both editions (e.g., the bound edition is more compact and easy to carry), the looseleaf subscription edition is preferable because it is not only easier to handle during your course of study – larger format and capable of lying flat, – it also is purchased as a “subscription,” insuring that as 19 CFR is updated and revised as a result of the various agencies and legislative bodies of the government, the updated supplements or changes are sent to the holder of the subscription and are the surest method of remaining current.

The looseleaf edition of 19 CFR also allows tabbing and reorganization of the text. Most students find it preferable to move more essential Parts of the Regulations to the front where they can be found quickly, for instance.

The only way to update the paperback edition is through the Federal Register. But if the purchaser of the single, bound copy of 19 CFR does not subscribe to the Federal Register to receive changes in the Regulations, the edition quickly becomes outdated.

Source Material Note: Historically, only Chapter I of 19 CFR (covering parts 1-199) has been used as a source material for the CBE. Recently, however, Customs and Border Protection has announced that a number of other source documents will be used as potential sources for CBE questions.

Currently, selected sections of the CATAIR (user instructions for the Automated Broker Interface), the revised instructions for the new form CBP 7501 and several other selected directives may be tested on the Customs Broker Exam. However, for each examination, the only authoritative resource list will be found in the official Notice of Examination.

Obviously, the minor sources are very specific in scope. All should be studied in case a question on their respective subjects should arise, at which point the student should easily be able to research the correct answer.

Maintained by the USITC, the HTSUS is published pursuant to the 1988 Omnibus Trade and Competitiveness Act of 1988 and is the product-by-product listing of all the rates of duty for goods entering the U.S., as well as the source for statistical nomenclature for reporting statistical information required on importation documentation. The HTSUS also contains certain rules governing such specific duty treatments as the Generalized System of Preferences(GSP), the Automotive Products Trade Act, the North American Free Trade Agreement (NAFTA), the Caribbean Basin Economic Recovery Act (CBERA), the US-Israel Trade Agreement, the US-Australia Trade Agreement, and the Andean Trade Preference Act (ATPA).

The HTSUS is in a constant state of change, continually revised, updated, corrected, and supplemented throughout the year to document changes in (or as a result of) tariff rate revisions, changes in product descriptions, quotas, Presidential Proclamations and legislative activities.

Like 19 CFR, the HTSUS can be purchased as a subscription, giving the subscription holder the most current edition available. Updates and supplements are sent to the address of the subscription holder as they are published.

This concludes today's excerpt from The Customs Broker Examination.

Wednesday, March 4, 2009

Report Export Violations to BIS

In order to enforce export regulations, BIS relies on its partnerships with the trade community. Information provided by the public often helps BIS investigations. Similar to the import version called e-Allegations, managed by Customs & Border Protection, the Bureau of Industry & Security offers the export version of tattling on suspected violators. Located on the BIS web site, informants can submit information related to possible export control, Fastener Quality Act (FQA), Chemical Weapons Convention Regulation (CWCR) or boycott related violations. For example, if you suspected that a business was intentionally classifying products under EAR99 to avoid the required licensing, that information could be reported to BIS online.

Although both the BIS reporting and e-Allegations are designed to punish violators with the assistance of the trade community, there is one big difference – confidentiality. The CBP program promotes confidentiality, stating that information may be submitted anonymously. The BIS program requires the submitter to provide a name and phone number. So, those who contemplate reporting a potential violation to BIS must consider the consequences of the loss of confidentiality when making the decision. What would you do?

Tuesday, March 3, 2009

The Customs Broker Examination, CH 2, Part 2: Combating the Effects of Anxiety

The following is an excerpt of The Customs Broker Examination, by Scott Warren Taylor and Andrew Moxon. This book is a part of the Customs Broker Exam Preparation Course from Boskage Commerce Publications. We'll be posting a large excerpt here, with new posts every Tuesday and Thursday morning. Click here if you want to read the whole book right away.


Part 2: Combating the Effects of Anxiety

How to Begin to Combat the Effects of Anxiety
The most effective method for avoiding the mental debilitation of anxiety is: concentrate on the specific steps available to achieve your goal, and avoid dwelling on how you feel.

It is always troubling to discover how frequently those who are most plagued by anxiety are also imaginative people. In the hands of anxiety, an imaginative mind becomes a high-powered tool of torture. By itself, anxiety constructs a room of terror, but it is our imagination that animates the room. Our anxiety begins by positing the question: What if I fail? Then the imagination takes charge and begins to create scenarios of failure: What will my boss look like when I tell him? What will my spouse say? My friends? How do I feel about failing? And so on. We actually visualize ourselves talking about our failure with our co-workers. This visualization sparks the physical feeling of anxiety, and, following the physical response, we visualize even more terrible scenarios of our failure. In the clutches of anxiety, these visions become more and more powerful and harmful. These more acute visions, fueled by an active imagination and replete with heavy doses of anxiety, show us ever more increasingly horrible implications of our inability to succeed. This, of course, creates more anxiety. We are swept by our own efforts into a whirlwind cycle of doubt, visualization of our doubts played out, conception of failure, our conceptions visualized, intensified anxiety, re-visualization, and so on. We are Dorothy from Kansas, swept up in a cyclone of our own imaginings while the visions become progressively more and more frightening.

Concentrate on the Methods of Action Toward Success
Most of us are accustomed to considering and reacting to our feelings as they occur. Usually our feelings are appropriate, constructive, important, and human responses to life. If they are powerful enough, they inspire us to some form of action, and most of the time this action is for the good. The common expression “my feelings got me into trouble” is not particularly accurate, nor particularly true. In and of themselves, our feelings rarely get us into trouble. What does get us into trouble are the actions we choose in response to those feelings. True feelings are little more than spontaneous reports about the world around us and how we fit in that world.

So if it is true that feelings generally help us determine our place in the world, why is it that anxiety is so destructive? It is, after all, little more than a feeling. The answer can be uncovered by considering that anxiety, not having a direct object, tends to be an inert emotion; that is, the feeling of anxiety tends to lead us to destructive inaction rather than constructive action. Dwell long enough on the vision of failure in your attempt to pass the CBE and you will no doubt contrive a plan to avoid taking the test in the first place. Anxiety could be nothing more than a defensive mechanism against the possibility of confronting a major failure in our career. It is for this reason that the logical response to feelings of anxiety associated with the CBE is to concentrate all your thoughts on methods of action toward success. Consequently, this book is designed to provide a specific strategy toward success, and by concentrating on the details of this strategy and visualizing over and over again the steps toward success in specific, you will supplant those destructive visions that fuel anxiety. The result will be success.

Create a Habit
In this instance, what you are choosing consciously to do is to create a habit of responding to anxiety, not with visions of horror, but with visions of action – positive, directed action. You will so bombard your imagination with the details of success that these details will take on the character of an automatic response, and just like the soldier in the field in the face of combat, you will respond automatically with what you have been repeatedly trained to do. It is very difficult and usually unsuccessful to attempt to quell feelings of anxiety by conscious, generalized arguments about the invalid nature of the emotion, or the silliness or immature nature of it. Anxiety is best conquered by specifics.

How many of us have clicked off the lamp by our beds and found ourselves hurled into a world of anxious torture. “This is silly,” we say to ourselves, “I’ve got to get to sleep and stop this nonsense.” We slam the door on these nasty visions and squeeze our eyes shut in stout determination to stop this nonsense. After all, we are doing all we can to try and pass the CBE, and if we fail, we just fail, that’s all, it’s not the end of the world. There’s always another chance to take the test, it’s not the end of the world – but then . . . maybe it is the end of the world. It is the end of the world! Whereupon a new anxious vision enters by a side door.

The best way to combat these feelings is simple. When you feel the beginnings of anxiety – and this assumes that you have reached the point where you can recognize the early warning signs of anxiety – begin visualizing some solid method, perhaps a method you have learned in this book, that will further your chances of success. For example, there is a section in this book that discusses what you should bring with you to the examination room. Try for a moment to imagine what the room will look like. Imagine yourself poised outside of it, ready to go in. What are you wearing? What are you carrying? Imagine your copy of the CBP Regulations (19 CFR), the Harmonized Tariff Schedule of the United States (HTSUS), imagine your calculator. Zoom in on one of the keys, say, the “memory save” key, if it has one, even the number “two” key. You may actually have to struggle a bit here. The tugging of the anxiety habit is strong. You may have to force yourself to continue to imagine positive methods toward success. Imagine yourself entering the room. Imagine that it is very cold in the room. Imagine yourself, before finding a chair, pointing this out to the CBP official supervising the examination. And so on.

If you have properly prepared your fact sheets and chapter part headings with summaries, you can take them out and review them at the onset of an anxiety attack. You can imagine yourself in the act of determining a test strategy after seeing the test for the first time. The point is that you must envision the specifics of your successful method in the same fashion that your anxiety inspires you to envision the specifics of the consequences of failure.

Great golfers know the secret of visualizing their shots before they take them. If they need a long drive with a little fading slice at the end, they actually see the ball doing just that. See yourself in complete command in the examination room. See yourself executing some of the advice in this book. See your broker’s license as it will look when you first open the mail. Make the examination appear to you in the way your desire to pass would have it appear. This kind of mental preparation must be part of your foundation for success.

It is important to note the role a pre-planned schedule has in combating anxiety. If you schedule your time carefully – planning when you will have group sessions, when you will have a session with your tutor, when you will review, etc. – and become committed to that plan, you break time down to manageable sections. You introduce duty to your method of handling anxiety. There are things you must do. You must meet your tutor at 7:00, you must study at 9:00, and so on.

Take an aggressive approach to anxiety. Plan your study time and stick to it. You may even want to consider rewarding yourself when you do. If you become anxious and cannot sleep, get up and take one of the sample examinations or review 20 fact cards. Once again, you are replacing feelings with action. In short: act, don’t feel.

1. Accept the possibility of anxiety and begin managing it now.
2. Concentrate on the specific steps available to achieve your goal. Avoid dwelling on how you feel.
3. Replace visions of failure with visions of specific actions.
4. Review texts or fact sheets to help avoid feeling anxious, and to help build positive habits.
5. Design a schedule for all your preparation efforts. Write the schedule down and stick to it.

This concludes today's excerpt from The Customs Broker Examination.