Section V of the HTSUS - Mineral Products

Thank you for joining us for our series on classification. Last Monday, we explored the articles contained in Section IV of the HTSUS. Today, we will study the various commodities covered in Section V of the HTSUS. Having a good general knowledge of the products covered in each section and chapter will expedite the classification process and improve accuracy of your classifications.

Answer to Section IV Question
2106.10.0000
N065335
http://rulings.cbp.gov/index.asp?ru=n065335&qu=protein+powder&vw=detail


Section V covers chapters 25 through 27 containing mineral products. Some of the goods covered in these chapters are subject to the regulations of the EPA and DOT. Containing few chapters and limited in scope, this section of the HTSUS is not as frequently tested on the Customs Broker Exam.

Chapter 25 covers minerals such as salt, sand, quartz, chalk, granite and marble. Pay close attention to the Chapter Notes as some goods manufactured from articles in this chapter, such as chalk, are classified in other chapters. Without reading the Chapter Notes, one might accidentally assume that drawing chalk for children would be classified under 2509.00.2000 as “other chalk.”

Chapter 26 contains ores, slag and ash. In order to properly use this chapter, it is necessary to know the definitions of these terms.

Chapter 27 covers mineral fuels, oils and waxes such as coal, petroleum oils, paraffin and electrical energy. The Chapter Notes define motor fuel and petroleum oils along with some lesser-known terms. The Additional U.S. Notes also provide some interesting points. Have you ever wondered how electric energy is imported? This part also points out that petroleum jelly used for skin care is not included in Chapter 27. Imports of petroleum jelly, white mineral oil and paraffin wax are regulated by the FDA. Mineral oils and fuels are subject to EPA and DOT restrictions. TSCA (Toxic Substances Control Act) statements may be required for some goods. Flammable products must be appropriately labeled according the Federal Hazardous Substances Act. The labeling must distinguish between "extremely flammable," "flammable," and "combustible."

Question
What is the classification and duty rate for electrical energy?

The weekly classification blog will not appear next week due to the Labor Day holiday, but join us the following week on September 14 for the answer to this week’s classification question and a discussion of Section VI of the HTSUS. If there are any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com.

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.

Example:
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 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 four hours for taking the entire test or two 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 twelve exams contained 42 questions from Part 24. Fifteen of those 42 questions came from 19 CFR 24.23. Seven of the 42 questions came from 24.1 and five came from 24.5. 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.

Click HERE to see a sample of a highlighted page for the answers related to 24.5.

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 three 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.

Note:
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.

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.

1. 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 off studying for the exam. Do you see success or failure? Procrastination is not an option when you visualize success!

2. Poor planning is another culprit that sabotages achieving success. You must prioritize and create schedules to accomplish the tasks necessary to accomplish your goals. Once you make up your 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.

3. 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. Complete 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 or 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. Commuting

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 Breaks

Do you really need an hour to eat lunch? Consider devoting a portion of your lunch breaks each week to study. Take your lunch to work and study while you eat your sack lunch. 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.

Export Compliance Manager Issued $15,000 Penalty

Normally, we hear about BIS issuing penalties to export companies, but there may be a new trend in the works. Many of you are familiar with the conviction of the university professor for violation of Arms Export Control Act. This individual was sentenced to 4 years in jail and more in fines.

Most recently, the Commerce Department's Bureau of Industry and Security (BIS) issued a civil penalty to a U.S. manufacturer and an employee for unlicensed exports of certain semiconductor components. The manager for the manufacturer was issued a $15,000 civil penalty for making false and misleading statements to BIS Special Agents during the investigation of the company. This is one of the few cases in which a corporate export compliance manager has been assessed civil penalties. Exporters and their export compliance departments should take heed and invest some time in reviewing their compliance programs and educating employees at all levels of the consequences of violating export control regulations.

Here’s a question for our readers. Do you think the manager will end up paying the $15,000 penalty out of her pocket?

Trade Terms Tuesday

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


Radio Frequency Identification (RFID)
In addition to theft prevention, RFID’s are used to identify and track unique items using radio waves. Typically, a reader communicates with a tag, which holds digital information in a microchip. RFID tags can be used to track container movements based on a radio frequency signal. RFID’s are being used to monitor, track and manage valuable assets during the transport, storage and delivery supply chain process. Use of RFID’s has grown in response to increased security requirements by CBP.

Reconciliation
Reconciliation is a CBP program that allows importers to make an entry that may contain incomplete information and file the information within the specified period. Entries subject to reconciliation must be flagged at the time of initial entry. There are certain restrictions on the transactions that are subject to reconciliation.

Reexport
Reexport means an actual shipment or transmission of items subject to export regulations from one foreign country to another foreign country. Under the EAR, the export or reexport of items subject to the EAR that will transit through a country or countries to a new country, or are intended for reexport to the new country, are deemed to be exports to the new country.

Section IV of the HTSUS

Thank you for joining us for our series on classification. Last Monday, we explored the articles contained in Section III of the HTSUS. Today, we will study the various commodities covered in Section IV of the HTSUS. Having a good general knowledge of the products covered in each section and chapter will expedite the classification process and improve accuracy of your classifications.

Answer to Section III Question
1515.29.0040
N022276
http://rulings.cbp.gov/index.asp?ru=n022276&qu=corn+oil&vw=detail

Section IV covers chapters 16 through 24, which contain prepared foods, beverages, liquor and tobacco. As you can see, we are progressing from the most basic substances, the live animals, plants and vegetables to goods that have been processed from these substances. Most of the goods covered in these chapters are subject to the regulations of at least one of the other government agencies such as the FDA, USDA, APHIS, ATF and IRS.

Chapter 16 covers meat and fish preparations such as sausage, caviar, tuna and packaged shrimp. Commodities from certain countries may be prohibited or restricted. Inspection Certificates must be issued by the foreign country for all shipments of meat and poultry products.

Chapter 17 contains products made of sugar such as glucose, fructose, maple sugar, molasses and candies not including cocoa. Some of the goods in this chapter are regulated by the imposition of quotas to help protect domestic sugar producers. Chapter 99 of the HTSUS provides quota information associated with sugars in this chapter.

Chapter 18 includes cocoa, chocolate and other products containing chocolate as a major ingredient. Merchandise in this chapter may be subject to quotas. Chapter 99 of the HTSUS provides quota information associated with articles of this chapter. In addition to the marking required by CBP, the FDA has special labeling requirements.

Chapter 19 covers processed foods of the bakery industry such as bread, dough, pasta, cakes, pastries, pizzas, chips and similar products. Be sure to read the Chapter Notes for exclusions. Certain products may be subject to quotas; quota information on products of this chapter may be found in Chapter 99.

Chapter 20 contains edible preparations of vegetables, fruits and nuts such as jams, pastes and natural fruit juices. The terms "homogenized and brix value" are defined in the Chapter Notes. Peanut butter and olives are subject to quantity restrictive quotas. In addition to the marking required by Customs, the FDA has special nutrition labeling requirements.

Chapter 21 includes miscellaneous edible preparations such as sauces, condiments, soups and ice cream. Chapter 21, Note 1 provides a list of products that are excluded from this chapter. Merchandise in this chapter must comply with FDA requirements. Mixed condiments, seasonings and ice cream may be subject to quotas. The FDA requires special nutrition labels.

Chapter 22 contains beverages and spirits such as bottled water, fruit juices, beer, wine, liquors and vinegar. Federal excise taxes are due at the time of entry on distilled spirits. These taxes can often be very expensive; therefore, importers of these commodities often make warehouse entries. In addition to the marking required by CBP, ATF has extensive labeling requirements and maintains pre-approval of all labels on alcoholic beverages.

Chapter 23 covers prepared animal feeds and other products unfit for human consumption such as pet and animal foods. In addition to the marking required by CBP, the FDA and individual states have special labeling requirements.

Chapter 24 includes tobacco and tobacco products such as cigars, cigarettes and wrappers. Products of this chapter must meet the strict requirements of ATF. These products require payment of an excise tax, in addition to the customs duties and are subject to special labeling and ingredient reporting requirements.

Question
Classify “Vanilla Flavored Protein Powder” containing 75 percent soy protein isolate, 23 percent milk protein concentrate, less than 2 percent lecithin, and less than one percent silicon dioxide. The powder is usually added to a glass of milk, fruit juice or vegetable juice. It can also be used as an ingredient in baking, or it can be sprinkled onto cereals, salads or soups.

Join us next week for the answer to this week’s classification question and a discussion of Section V of the HTSUS. If there are any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com

What Should You Do If Your Exam Appeal is Denied?

Since the Wizard has received several questions about filing appeals for the Customs Broker Exam and the CIT recently decided a case involving an appeal, today's article addresses the options when an appeal is in process or denied.

If you’ve taken the customs broker exam and missed a passing score by a couple of questions, it’s likely that you filed an appeal with CBP. Good for you! It never hurts to appeal several questions if you only missed it by a few. The next dilemma rears its ugly head if the appeal is denied. First, your appeal may not be resolved prior to the next exam date. Do you gamble and not sign up for the exam? If you don’t sign up and the appeal is denied, you won’t be able to take the exam for another 6 months, which means it will have been a year since your first attempt. However, if you sign up for the exam and end up receiving approval and a passing grade on the appeal, then you may have spent $200 that is not refundable unless you are able to notify CBP of your intentions not to take the exam within two business days prior to the exam date. Let’s say you don’t sign up for the exam and your appeal ends up being denied. What next? If you want CBP’s decision reviewed, then you may request the review by submitting a request to the Secretary of Homeland Security within 60 days of the notice of CBP’s decision. Depending on the number of questions you appealed, this might be a good option; however, you are now coming up on the one-year anniversary of your exam. Do you apply to take this exam or do you wait, hoping that the Secretary of DHS will reverse the CBP decision? The gamble gets a little riskier since it has now been almost a full year since you first took the exam, and you might have passed up two opportunities to take and pass it. Consider the options! Pay $200 and take the test or wait on the results from your request for review by DHS?

Now, let’s assume that you were confident that DHS would approve the appeal and didn’t sign up for the exam, but DHS affirmed CBP’s decision. You still have options. You could file an appeal to the Court of International Trade. Understand that it has been a year since you first took the exam, and you have passed up two opportunities to re-take it. While you are filing the lawsuit and waiting to be heard by the CIT, the third exam comes up. Do you take it? While you are still waiting for the CIT to hear your case, a fourth exam comes along. Finally, the CIT hears your case and affirms the review by the DHS and CBP. Game over; you did not pass the exam. If you want a customs broker license, you must take the exam again. The next exam is just a few months away. Because of the length of time it takes to complete this process from the first appeal to CBP to the hearing by the CIT, you have waited almost 2½ years to take the exam since you first took the exam How much has this process cost you in time and money? Click HERE to read the real life example of Depersia v. United States, a case decided on August 11, 2009.

Filing an appeal is a great idea. Make strong arguments supported by as many facts and examples as possible. However, seriously consider the consequences of not taking the exam if you do not receive a favorable appeal and decide to pursue the review. It might cost less in time and money to retake the exam, and you might get your license faster!

To view other decisions decided by the CIT related to CBP’s denial of an appeal, click on the following case name. Only one of the following cases was decided in favor of the individual plaintiff.

Kenny v. United States
Dunn-Heiser v. United States
Harak v. United States
O’Quinn v. United States

Customs Broker Exam Study Tip 4: Organization

Now that you have made the decision to take the October 2009 Customs Broker Exam, it’s important to develop a study plan that guarantees your chances of success.

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

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

What is organization?

Organization is the systematic arrangement or assembly of objects in an orderly manner.Why is organization important?For the purposes of the studying for the exam, organizing your materials helps improve time management and increases your comprehension and memory. If your materials are organized, you will not waste time looking for a book or document that you need later on. Obtaining and organizing all of your materials will allow you easily access information as you need it. This organization will save time on the day of the test.

What can you do to become organized for the exam?

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

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

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

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

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

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

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

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

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

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

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

MPF and Duty Preference Programs

The general rule is that the Merchandise Processing Fee “MPF” is due in the amount of $2 for each informal entry and 0.21% of the value for formal entries, with a minimum of $25 and maximum of $485. However, some of the Duty Preference Programs do not require payment of the MPF. For example, goods eligible for NAFTA are exempt from payment of the MPF, while goods eligible for MFTA are not exempt.

CBP has posted a new chart that shows each preference program and whether goods are exempt or not exempt from payment of the MPF. Click HERE to view the chart.

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports and one for logistics/transportation. This week, we continue with the Q’s. We have to admit, trying to find terms that start with “Q” was a little bit of a challenge! We would especially like to hear your suggestions for some export terms starting with “Q.”


Quay
A quay is the part of the wharf that is used for loading and unloading ships.


Quota
A quota is the limitation of the quantity of goods that may be imported into the U.S. during a set period under an absolute or tariff-rate quota system. (19 CFR 132.1) Quotas are established by Presidential Proclamations, Executive Orders or other legislation. Absolute quotas permit a limited number of units of specified merchandise to be entered or withdrawn for consumption during specified periods. Tariff-rate quotas permit a specified quantity of merchandise to be entered or withdrawn at a reduced rate during a specified period.


Qualified, Space (Space Qualified)
According to 15 CFR 772 of the Export Administration Regulations, the term "space qualified" refers to products designed, manufactured and tested to meet the special electrical, mechanical or environmental requirements for use in the launch and deployment of satellites or high-altitude flight systems operating at altitudes of 100 km or higher. Unless specifically provided for in the EAR, most space qualified goods are subject to jurisdiction and licensing by the DDTC.

Section III of the HTSUS

Thank you for joining us for our series on classification. Last Monday, we explored the articles contained in Section II of the HTSUS. Today, we will study the various commodities covered in Section III of the HTSUS. Having a good general knowledge of the products covered in each Section and Chapter will expedite the classification process and improve accuracy of your classifications.

Answer to Section II Question
0813.20.2000
NY A87809
http://rulings.cbp.gov/index.asp?ru=a87809&qu=NY+A87809&vw=detail


Section III is one of four sections that contains only one chapter. Chapter 15 contains products of animal or vegetable fats such as lard, fish oils, olive oil, coconut oils and other vegetable oils. Products of this chapter must comply with FDA requirements and may be subject to quotas. Since Chapter 15 covers both animal and vegetable fats, it wouldn’t have been appropriate to add it under Section I covering animal products or Section II covering vegetable products. Here is a question for our readers. Why couldn’t all of the animal fat have been included somewhere in Section I and all of the vegetable fat included in Section II?

Question
Classify a product described as California Corn Oil which is to be used as household cooking oil. The corn oil is 100% pure and was transformed into an edible oil by a special process which includes bleaching and deodorization.

Join us next week for the answer to this week’s classification question and a discussion of Section IV of the HTSUS. If there are any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com

Book Announcement: Export Compliance, by Nancy Wood Kouassi

Boskage is delighted to present our latest publication; "Export Compliance: A Practical Guide to Licensing and Controls", by outsourcetradegroup.com founder Nancy Wood-Kouassi.

The book is the perfect companion for the beginning to intermediate exporter, focusing on jurisdiction determination and licensing for both ITAR and EAR commodities. It's the book that Global Trade Networks calls "one of those books that export managers need to keep close by."

136 pgs. (c) Boskage Commerce Publications, Ltd. 2009

Click here for sample pages and more information.


Check out the Global Trade News review here.

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

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

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

Looseleaf

The looseleaf version is bulky; however, it can be easily updated when supplements are issued quarterly for the Regulations and in summer for the HTSUS. The print is larger than other versions, making it easier to read. There is also more room for making legible notes in the margin. If you use the looseleaf version, make sure you purchase a good quality binder so the pages turn easily and do not fall out of the binder.Looseleaf editions can also be used in a publication rack, which allows them to sit open on a desk. The pages tend to turn more easily with a publication rack, and the disadvantage of bulkiness is essentially negated. This makes publication racks a popular choice for exam day.

Paperback/Perfect Binding

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

Coil Bound

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

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

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

Hide & Seek

Let’s take a brief break from the seriousness of our daily business and enjoy a little game of hide and seek. Drug traffickers are getting more creative as they will try almost anything to smuggle illegal drugs into the U.S. Now you can take a few minutes to turn off your law-abiding citizen’s brain and temporarily convert it into the ingenious mind of a drug smuggler. Thinking like a criminal, answer the following question.

Where would you hide cocaine, marijuana or other illegal drugs so that they could be imported without CBP Officers finding it? All types of strange places have been used for drug smuggling, so you need to come up with something new.

A. Stuffed in snakes that had the proper Cites Permits for Fish & Wildlife
B. Packed in the tires of your car
C. Hidden in your favorite DVD
D. Stuffed inside frozen sharks
E. Mixed inside large bags of M&M candies
F. All of the above
G. None of the above

This was a trick question. Don’t worry; this is one question you won’t likely see on the Customs Broker Exam! Notice the question asked where “you” would hide the illegal drugs. We know that “you” would never do something illegal and risk your career, so option G might be the best answer. However, we did ask you to think like a criminal and select an answer, so that might make Answer F the correct option. If you selected Answer G, then you can go back to your job now since “you” would not try to smuggle illegal drugs. If you selected Answer F, there may be a new career in drug smuggling waiting for you. Just think, you can set your own hours, wear casual clothes and travel. If you get caught, you’ll be served three meals a day while residing in government housing – the kind with bars on the windows.

We hope you enjoyed this game of Hide & Seek and learned a little about some of the many creative ways criminals try to smuggle drugs into the U.S. Join us on Thursday for another helpful tip on taking the Customs Broker Exam!

Trade Terms Tuesday

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


Proof of Delivery (P.O.D.)
Issued by the carrier, the proof of delivery confirms the time of delivery, full delivery address, and the name and signature of the person who accepted a shipment.

Post Entry Amendment (PEA)
The Post Entry Amendment is a program designed by CBP to allow importers to make corrections to entries (other than informal entries) prior to liquidation by filing a quarterly tracking report (QTR) for certain errors or an individual amendment letter if the error is excluded from filing on the QTR.

Proliferation

Proliferation is defined as “a rapid increase in number.” For purposes of export control it refers specifically to a rapid increase in the number of deadly weapons known as weapons of mass destruction (WMD). Weapons of mass destruction are weapons that can produce devastating results when delivered in a single strike. They include nuclear, chemical, and biological weapons.

2010 Government Publications Now Available For Purchase

Boskage Commerce Publications is now taking orders for the 2010 editions of the major international trade government publications.

Get them now to ensure compliance and 1-day delivery immediately upon government release.


The Harmonized Tariff Schedule of the United States (HTSUS) - The essential government-issued import tariff manual for use in classifying imported merchandise for rates of duty, quota, restrictions, and special programs.



The Customs Regulations (19 CFR Ch 1., Pts. 0-199) - Government-issued reference contains all U.S. CBP Regulations for importers, brokers, and transportation-related companies.



The Export Administration Regulations - A compilation of official regulations and policies governing the export licensing of commodities and technical data, including the Commerce Control List.



Schedule B - Statistical classification of commodities exported from the United States. For use by shippers in reporting export shipments from the U.S.


All of these books are also available on searchable CD-ROM.

Section II of the HTSUS

Thank you for joining us for our series on classification. Last Monday, we explored the articles contained in Section I of the HTSUS. Today, we will study the various commodities covered in Section II of the HTSUS. Having a good general knowledge of the products covered in each Section and Chapter will expedite the classification process and improve accuracy of your classifications.

Answer to Section I Question
0511.99.2000
N021209
http://rulings.cbp.gov/index.asp?ru=k87544&qu=rawhide+dog+chew&vw=detail


Section II covers Chapters 6 through 14, which contain vegetable products in various forms such as fresh, frozen, etc. Most of the goods covered in these chapters are subject to the regulations of at least one of the other government agencies such as the USDA, APHIS and the FDA.

Chapter 6 includes live plants, trees, bulbs, roots, cut flowers and ornamental foliage as well as bouquets and arrangements of the flowers. Importations in this chapter must comply with the USDA regulations. Live plants and flowers are subject to inspection by APHIS to ensure that no harmful insects and other pests that could damage agriculture are introduced into the United States.

Chapter 7 covers the importation of edible vegetables such as potatoes, tomatoes, mushrooms, corn and herbs. These vegetables may be fresh, dried, chilled, steamed or frozen and processed, but not otherwise prepared. Products of this chapter must comply with the regulations of the FDA and USDA. Some products in this chapter are subject to additional restrictions such as tariff rate quotas.

Chapter 8 includes fruits and nuts. Products of this chapter may be fresh, dried, chilled, steamed, boiled or frozen, but not prepared. Articles of this chapter are subject to the regulations of the FDA and USDA. Certain products may be subject to tariff rate quotas. The EPA may be concerned with pesticide residue on fresh fruit and nuts.

Chapter 9 covers coffee, teas and spices such as vanilla, cinnamon, cloves and various blends. Imports covered by this chapter are subject to FDA regulations and some importations are prohibited.

Chapter 10 covers the importation of raw cereals such as wheat, corn, barley, oats, rice and other grains. Products of this chapter must comply with the regulations of the FDA, USDA and EPA. The Chapter Notes list several restrictions regarding the types of products that can be classified in this chapter.

Chapter 11 includes milled cereals, such as flour and worked grains. Products of this chapter must comply with the regulations of the FDA USDA and EPA. Some products of this chapter may be prohibited from importation from certain countries.

Chapter 12 pertains to oil seeds and miscellaneous grains, seeds and fruits such as soybeans, peanuts and sunflower seeds. Products of this chapter must comply with the regulations of the FDA, USDA and EPA. Quotas may apply to some products.

Chapter 13 covers products made from insects, plants and other organic sources that occur naturally and are gelatinous when moist but harden when dry. Products of this chapter must comply with the regulations of the FDA and TSCA.

Chapter 14 includes plaiting materials such as bamboo, rattan, reed, raffia and broomcorn. Imports must comply with the requirements of the USDA. Restrictions on commodities from specific countries may apply. USDA and FWS Permits may be required. Packaging should prevent infestation by insects.


Question
Gordon’s Geriatric Groceries imports whole dried prunes preserved in sorbic acid and sold in sealed pouches. What is the classification of the prunes?


Join us next week for the answer to this week’s classification question and a discussion of Section III of the HTSUS. If there are any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com

C-TPAT Container Inspection Video

Check out the video of the 2009 Training Seminar Container Inspection Presentation. This 12-minute video can be used as training for your employees. By opening the link provided below, you will be able to save the video to your computer for your later use.

https://ctpat.cbp.dhs.gov/images/videos/Container%20Inspection.wmv

Ask the Wizard

Each Friday, the Wizard joins us to share an answer to one of the questions asked by our readers.

Question:
What jobs are available for licensed customs brokers?

Most customs brokers work for corporate customs brokerage organizations or freight forwarders; however, an increasing number of brokers are being hired by importers. Additionally, some brokers consider self-employment or consulting. Talk to people in various positions to determine which ones interest you and the requirements for obtaining those jobs.

Some of the typical jobs customs brokers find include:

• Import Supervisor or Manager
• International Compliance Manager or Director
• Import Buyer
• Contracts Manager
• Consultant
• Classification Specialist
• Foreign Trade Zone Administrator
• Regulatory Compliance Analyst
• Auditor
• Global Trade Compliance Manager
• Software Developer
• Customs Brokerage Sales

Do you have a question for the Wizard? Submit your question by clicking on the link in the space for “Ask the Wizard.” See you next Friday!

Customs Broker Exam Study Tip 2: Exam Study Aids

In our first study tip, we discussed the importance of obtaining all of the required resources that are necessary to take the exam. This study tip will focus on the various study aids and materials that will help you prepare for the exam.

The percentage of people who pass the Customs Broker Exam the first time is low, ranging from 3% to 25%. While it is possible to pass the Customs Broker Exam using only the required exam materials, most people find using a variety a supplemental materials and exam study courses significantly increases their potential of passing the exam. The use of additional study materials also improves comprehension and makes better use of limited study time.

Some people learn better by actually doing a task, while others need to read the instructions or hear the instructions. Determining your style of learning and how you learn the best is the key to studying for the exam. If you do not have time to go to lectures, you may prefer correspondence or online courses. If you comprehend better by hearing the information, you may prefer audio lectures or classroom instruction. You should seriously consider the time you have to commit to studying and your learning style when selecting study courses and training materials. We have listed just a few options for using supplemental study aids and courses here.

1. Past Exams
Taking the past exams is a good way to become familiar with the format and types of questions that appear on the test. Using past exams as a study aid also helps you learn the materials, boosts confidence, shows your progress, as well as areas that need improvement.

2. DVD's and CD's
If you want the convenience of learning at your own pace, CD's and DVD's allow you to study from the comfort of your home or office and may be reviewed as often as you like. CD's provide audio which is great for listening to during your daily commute. The DVD's usually simulate a classroom environment, but the advantage is that you can view the lectures at your convenience rather than commute to a class.

3. Online Study Courses
For students who want the convenience of studying at their own pace, online courses provide instruction, examples, quizzes and other tools that are usually available 24/7 anywhere you have an Internet connection.

Boskage Commerce Publications offers a variety of courses, study plans and other materials designed to fit different learning styles, experience levels and needs of students. Click HERE to view a variety of materials and courses. Consider your learning style as you review each of these options. We sincerely believe you will find that one or a combination of several can fityour needs perfectly; however, we may be able to customize plans to fit your needs. Be sure to check out the Customs Broker Exam Room Guide, a perfect resource for regular study and use on test day. This coil bound book contains all CATAIR sections, Directives and miscellaneous resources that will be tested on the upcoming exam. The Guide also includes quick-reference fact sheets such as Incoterms, trade program indicators, types of appraisement, acronyms, CBP fees and more. The October 2009 edition contains a summary of the antidumping and ISF regulations which was added to the testing materials this year.

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. We also welcome any suggestions on topics you would like to see discussed.

Customs & Border Protecton News

Today's blog provides useful information recently posted on the CBP web site.

1. CBP Announces 2009 Trade Symposium

The 2009 Trade Symposium is scheduled for December 8 – 10, 2009, and will be held at the Walter E. Washington Convention Center in Washington, DC. Additional information regarding registration procedures and symposium details will be made available in the early fall.

2. CBP Posts Schedule of Future ISF Outreach Events

CBP will offer ISF training in the following cities during the month of August
· Philadelphia, PA - Wednesday August 19, 2009
· Seattle/Tacoma, WA - Wednesday August 19, 2009
· Boston, MA - Wednesday August 26, 2009
· Houston, TX - Wednesday August 26, 2009

ISF training will take place in September for the following cities; however, the dates have not yet been announced. Click HERE to check for updates.
· Baltimore, MD
· Long Beach, CA
· Miami, FL
· Charleston, SC
· Chicago, IL
· Oakland/San Francisco, CA
· Norfolk, VA
· Newark, NJ
· Washington, DC

3. CBP Provides Guidance for Validating the Power of Attorney

Since the POA is instrumental in the movement of imported cargo into the United States, it is important for brokers to ensure the validity of each POA. To assist brokers in this effort, CBP issued some guidelines for brokers to validate the power of attorney and demonstrate reasonable care. These steps are not mandatory but do demonstrate some suggested methods for verifying validity.

· To the greatest extent possible, have POAs completed in person so the grantor’s personal identification (driver’s license, passport, etc.) can be reviewed.
· Check applicable Web sites to verify the POA grantor’s business and registration with State authorities.
· If the principal uses a trade or fictitious name in doing business, confirm that the name appears on the POA.
· Verify that the importer’s name, importer number and Employer Identification Number (also known as the Federal Tax Identification Number) on the POA match what is in ACS.
· Check whether the POA grantor is named as a sanctioned or restricted person or entity by the U.S. Government. (See the Bureau of Industry and Security, U.S. Department of Commerce.)

4. CBP Selects Brokers for Self-Assessment Pilot Program

U.S. Customs and Border Protection (CBP) selected four customs brokers from 26 applicants to participate in the Broker Self-Assessment Outreach Pilot program announced in April 2009. The BSA is based on the Importer Self-Assessment Program (ISA) initiated in 2002. CBP plans to use the pilot program to assist the agency in determining whether to formally implement the BSA program and what changes might be needed to ensure its effectiveness.

5. CBP Issues Update to ACE Portal Reports Dictionary

The second version of the ACE Portal Reports Dictionary has been completed. Formatted as a PDF file, the Reports Dictionary is available on the CBP web site. The dictionary will also available by the end of August under the “Help Folder” when running ACE Reports. There is a separate dictionary for brokers, carriers, importers and sureties.

The ACE Portal Reports Dictionary is a reference guide of the most frequently accessed Account Profile, Account Management and Transactions reports designed to enhance the understanding of reports for ACE users, to assist in identifying the report that best fulfills a particular business need and to encourage the overall use of the reporting tool. The dictionary defines each report and its corresponding data objects, making it easier for ACE users to identify specific reports to meet their data requirements. The dictionary also provides the exact location of each report in the ACE reporting tool, the categorical classification of each report, the standard report filters/prompts and a description of each data object contained in the report.

Trade Terms Tuesday

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

Over, Short, and Damaged (OSD)
OSD is the term used for a report that lists discrepancies between the bill of lading and the actual merchandise received. Receiving “more” of a product than listed on the lading is an overage. If goods are “missing,” then the shipment is short.

Other Government Agencies (OGA)
OGA is an acronym used to indicate the involvement of agencies other than CBP without specifying those agencies. Examples of other government agencies include the FDA, USDA, FWS, CPSC, DOT, FCC and more.

Office of Foreign Assets Control (OFAC)
As part of the Department of Treasury, OFAC regulates trade and financial transactions with embargoed countries. OFAC administers and enforces economic and trade sanctions against targeted foreign countries, terrorism sponsoring organizations, international narcotics traffickers and other threats to national security.

Section I of the HTSUS

Thank you for joining us for our series on classification. Last Monday, we discussed the differences between parts and accessories. Today, we will start our exploration of the various commodities covered in each section of the HTSUS. Having a good general knowledge of the products covered in each Section and Chapter will expedite the classification process and improve the accuracy of your classifications.

Section I covers Chapters 1 through 5, which contain live animals, meat, fish, dairy produce and other products of animal origin. Most of the goods covered in these chapters are subject to the regulations of at least one of the other government agencies such as the USDA, APHIS, FDA and FDA.

Chapter 1 covers the importation of live animals such as horses, cattle, pigs, sheep, goats, poultry and other birds. Importers may be required to obtain permits and veterinary certificates.

Chapter 2 covers the importation of meat such as fresh, chilled or frozen cuts of beef, pork, poultry and rabbits. Importations of meat and meat products from some countries are prohibited. Additionally, the FDA has specific marking requirements for meat products. Note that this chapter excludes fish and similar products covered in Chapter 3.

Chapter 3 provides for the importation of fish, crustaceans and other aquatic invertebrates such as live fish, frozen fish, filets and other meat. The FDA imposes additional packaging restrictions on raw seafood.

Chapter 4 covers the importation of dairy products, eggs, honey milk and cheese. Some products are subject to quotas and special licensing requirements. In addition to the marking conditions imposed by CBP, FSIS and APHIS have specific labeling requirements on some products.

Chapter 5 covers the importation of miscellaneous animal products such as human hair, natural sponges, organ and animal products not otherwise classified. Some products such as ivory and sea turtle products are prohibited entry into the United States. All shipments containing products of wildlife must be cleared through a designated FWS port. Click HERE to view the designated clearance ports.

Question
Classify a beef flavored rawhide dog chew. These dog treats are made from the layer of cowhide beneath the skin, also known as parings, a waste product of the tanning process.

Join us next week for the answer to this week’s classification question and a discussion of Section II of the HTSUS. If you have any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com