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.

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