International Trade News Summary

GSP Extended
On December 28, 2009, the President signed H.R. 4284 , which extends duty-free treatment under the Generalized System of Preferences (GSP) Program and Andean Trade Preference (ATPA) Program for one year through December 31, 2010. In addition, several countries will be added and removed from the Generalized System of Preferences.

• Maldives has been re-designated as a beneficiary country under GSP.
• Trinidad and Tobago’s designation as a beneficiary country under GSP will terminate January 1, 2010.
• Cape Verde will be removed from the list of least-developed beneficiary countries under GSP effective Jan. 1, 2010.
• Croatia and Equatorial Guinea will lose their designation as beneficiary developing countries under effective Jan. 1, 2011.


First Sale Rule Not Heavily Used
The U.S. International Trade Commission (USITC) reports that approximately 2.4% of U.S. imports were valued using the "first sale rule" to determine transaction value of the goods. Because of CBP’s proposal to change the way import calculations are made to determine transaction value from the first sale to the last sale, the USITC was charged with conducting a review of the use of the first sale methodology. Although some of the most frequent users include textile, apparel, and footwear importers, some importers used "first sale" when no duties would be paid.

Use of the "First Sale Rule" for Customs Valuation of U.S. Import is available for review on the ITC’s web site. The ITC conducts investigations and independent analyses on specific issues, but makes no recommendations concerning policy.


CPSC – Give and Take
While some children’s products were temporarily postponed from the independent testing requirements and companies were given a little flexibility to meet the new lead requirements, the CPSC also fined a company $1.25 Million for violating the lead paint ban. Click HERE to read more about the requirements of the Consumer Product Safety Improvement Act.

Trade Compliance New Year's Resolutions

Don't forget about our first monthly blog contest. We have already received some great responses!

Submit your New Year’s Resolutions related to trade compliance to wizard@boskage.com by 12:00 PM EST December 31, 2009.Winners will be notified via email by January 6, 2010. A list of the top answers and the names of the winners will be published in the blog on January 7, 2010.

Prizes

1st Place - $75 Amazon.com Gift Card

2nd Place - $50 Amazon.com Gift Card

3rd Place - $25 Amazon.com Gift Card

Section XVIII of the HTSUS

Thank you for joining us for our series on classification. Two weeks ago, we explored the articles contained in Section XVII of the HTSUS. Today, we will study the various commodities covered in Section XVIII 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 XVII Question
Classify a hubcap used on a Ford Focus.
Answer: 8708.70.6045

Section XVIII covers Chapters 90 through 92, which consist of optical, photographic, measuring, medical apparatus, clocks, musical instruments, and parts of these products. Some of these goods may be subject to FDA and FCC regulations.

Chapter 90 covers a wide variety of equipment such as lenses, eyeglasses, telescopes, movie cameras, photocopiers, x-ray machines and gauges, as well as parts of these articles. Chapter 90 Note 2 provides details about how to classify "parts and accessories" for the products in this chapter. Chapter 90 contains a large number of articles, which are subject to the rigorous registration, and approval process of the FDA. Equipment with radio frequency capabilities must be accompanied by the FCC 740.

Chapter 91 covers clocks, watches, parking meters, watchbands, and other parts. Commercial invoices for products of this chapter require additional information. Additional U.S. Note 4 sets forth the special country of origin marking requirements. Generally, CBP considers the country of origin of a clock or watch to be the origin of its movement, not the country in which it was assembled. Special provisions are allowed for watches and clocks assembled in insular possessions. Classification of watches and clocks is a little more difficult than some of the other chapters.

Chapter 92 covers the importation of stringed instruments, keyboards, woodwinds, percussion, electrical instruments, music boxes and whistles. Toy instruments are excluded from this chapter.

Question:
Classify a collapsible music stand for use with a violin

Join us next week for the answer to this week’s classification question and a discussion of Section XIX 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

Trade Compliance New Year's Resolutions

Welcome to our first monthly blog contest. In keeping with the spirit of the season, we invite our readers to submit their New Year’s Resolutions related to trade compliance. Remember, a resolution is a commitment made to a project designed to produce improvement or other advantageous result.

Prizes
1st Place - $75 Amazon.com Gift Card
2nd Place - $50 Amazon.com Gift Card
3rd Place - $25 Amazon.com Gift Card

Entries must be submitted to wizard@boskage.com by 12:00 PM EST December 31, 2009.

Winners will be notified via email by January 6, 2010. A list of the top answers and the names of the winners will be published in the blog on January 7, 2010.

House Passes Extension for GSP & ATPA

The U.S. House of Representatives approved H.R. 4284, to extend the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA) for one year, until December 31, 2010. The Senate is also expected to approve this extension before the break. The programs will expire on December 31, 2009 unless legislative action is taken.

The trade should follow these trade programs in 2010, as discussion by the House indicated that significant reform of these trade programs will be discussed in 2010.

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we 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 I’s.


Intermodal
The use of more than one mode of transportation for a journey. A container may be shipped by multiple modes such as ocean, rail and truck.


Intellectual Property
Term that describes inventions or other discoveries that have been registered with government authorities for the sale or use by their owner. Intellectual property rights are the ownership of the right to possess, otherwise use or dispose of products created by human ingenuity.


Intent to Deny (ITD) Letter
A letter informing the license applicant:(a) Of the reason for BIS's decision to deny a license application; and(b) That the application will be denied 45 days from the date of the ITD letter, unless the applicant provides, and BIS accepts, a reason why the application should not be denied for the stated reason.

Boskage Announces Monthly Contest

Each month Boskage Commerce Publications will post a question on the Boskage Trade News Blog, offering a prize based on the question. Deadlines for answers and prizes may vary from month-to-month. Generally, prizes will be offered for the top three answers or first three correct answers, depending on the type of question. Prizes and instructions for entering the monthly contest will be announced with each question. Boskage employees and their relatives are not eligible. Stay tuned for the first question coming on December 17th!

Trade Compliance News

10 + 2 Enforcement Begins January 26, 2010

Mark your calendars! Full enforcement of the 10 + 2 Importer Security Filing (ISF) starts on January 26. On Tuesday, at the Trade Symposium, Acting Commissioner Ahern stated that the least punitive informed compliance mechanisms such as warning letters and increased inspections for ISF violations would be used in the beginning. CBP doesn’t want to hold the cargo hostage, and they don’t necessarily want your money – they want the data. Supply the data and you get the cargo. The clock is ticking and the trade has had a year to prepare for the full implementation. It can take anywhere from 30 to 60 days to initiate the changes necessary to produce the required information, so if you haven’t started or are not actively participating, don’t delay.


New: Import Safety Commercial Targeting and Analysis Center (CTAC)

The CTAC is a new CBP facility designed to streamline and enhance federal efforts to address import safety issues. In addition to the focus on preventing terrorism and crime, another goal is to protect our citizens from unsafe products. With the increased incidents of lead based paint in toys and tainted food found in imports from China and other countries, safety of imported goods has become more important. The CTAC will be staffed by approximately 30 employees from the various participating agencies, including CBP, ICE, FDA, FSIS and CPSC.


Annual Report for Counterfeit Goods Seizures Published

Last week, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement announced that in fiscal year 2009 they made 14,841 seizures of counterfeit and pirated goods with a total domestic value of $260.7 million. Goods from China accounted for the largest amount seized by country and footwear was the top commodity seized. Not only does the importation of counterfeit goods cause economic harm, but these goods also pose safety concerns. Three of the top ten categories of commodities seized also posed possible safety or security risks. Check out the report and various statistics online.


BIS Proposes Elimination of Most Paper Documents

On December 4, 2009, the Federal Register published a proposal by the BIS to eliminate the use of most paper documents sent to parties doing business with the agency. The documents affected by the proposed rule include:

· Export and Reexport Licenses
· Notices of denial of License Applications
· Notices of Return of a License Application without Action
· Classification Results
· License Exception AGR Notification Results
· Encryption Review Request Results.

The proposed rule would require modifications to the EAR and make changes to the recordkeeping requirements. Comments on the proposal must be received by BIS no later than February 2, 2010.

CBP Trade Symposium 2009 - Wednesday Update

On Tuesday afternoon, CBP kicked off the 2009 Trade Symposium for attendees in Washington and the inaugural webcast. On Tuesday, attendees heard good news that CBP will use informed compliance mechanisms such as warning letters and increased inspections for ISF violations starting on January 26, 2010. Acting Commissioner Ahern stated CBP would be using the least punitive methods when the full compliance phase begins. On Wednesday, this was repeated by Richard DiNucci. He also stated that CBP would be looking for evidence of progress in the implementation of ISF during the flexible enforcement period as one of the primary mitigating factors. CBP doesn’t want to hold the cargo hostage, and they don’t necessarily want your money – they want the data. Supply the data and you get the cargo. Instead of using the catch phrase from the movie Jerry McGuire - "show me the money" the new phrase for CBP should be "show me the data."

The first glitch for those attending by webcast came before the session on International Property Rights Enforcement. The webcast disappeared into cyberspace, so we missed the IPR and ISA presentations. The good news is that the ISA presentation is available on the CBP web site.

Fortunately, those of us attending by webcast were able to rejoin the live sessions starting with the keynote address by Jane Holl Lute. Next came a lively and informative presentation on C-TPAT. Key takeaways from this session include the following:

· The C-TPAT member’s responsibilities do not end after validation.
· One of the biggest reasons violations occur is that procedures were in place and NOT followed.
· It’s not over when the cargo crosses the border. A large number of violations occur in transit from the border to the final destination.
· Technology is great, but you must know how to use it
· The most commonly breached criteria are conveyance, container, business partner and personnel security.
· The highest contributing factor for breaches is internal conspiracy.
· The most frequent location of compromise is in transit from the border.
· For those with procedures in place, those procedures were not followed in 83% of the incidents.
· If you have procedure and they aren’t followed, CBP will suspend you.
· The presentation contained a great list of best practices for carriers.

To wind up the day, we heard about ISF from a variety of perspectives including representatives from importers, shippers, carriers, trade associations and brokers. A lot of great information was presented by each speaker. One comment about ISF recordkeeping caught the Wizard’s attention. The comment was made that there was no mention of recordkeeping in the ISF rule, but the trade should consider keeping related documentation for five years. CBP addresses this same issue in the ISF FAQs, but uses a little stronger language to encourage maintenance of the records.

“The new regulations do not contain specific record keeping requirements other than retention of powers of attorney (see 19 CFR 149.5(c)). However, ISF parties should retain records necessary to demonstrate compliance with ISF filing requirements. In addition, the general 19 U.S.C. § 1508 recordkeeping requirements may be applicable to the ISF filer.”

One could also argue that 19 CFR 163.1 (a) and the Appendix to Part 163 imply that all records may not be specifically listed, but if they are related to an importation, they should be maintained. We’d like to hear your thoughts on maintaining records for 10+2 filings. The Wizard would maintain them. Better safe than sorry! Along with "show me the data" we can add "show me the records."

We’ll see you out in cyberspace for the last day of the symposium on Thursday. Kudos to CBP for the stellar organization for this year’s event and to the speakers for the insightful and informative presentations

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 H’s.

House Air Waybill (HAWB)
The house air waybill is issued by a freight forwarder for air freight shipments.Bills of lading are contracts between the owner of the goods and the carrier. The HAWB contains all the information found on an air waybill such as description, quantity and weight. This document is a contract between the shipper and freight forwarder.

Harmonized Tariff System (HTS)
The Harmonized Tariff System (HTS) is an international system for classifying goods to determine tariffs on imported goods. At the international level, the HTS contains 22 Sections with 97 chapters. The U.S. version has two additional chapters. The sections generally cover a specific industry such as food, chemicals or machinery. Although the U.S. uses 10 digits for import transactions, the HTS is identical internationally to the first six digits. Along with the country of origin, the HTS number determines the duty rate for imported merchandise. The addition of the suffixes by the U.S. allows specific data to be transmitted to Census for analysis.

HOLD WITHOUT ACTION (HWA)
A designation placed on an export license to review the exporter’s application or shipment under consideration. License applications may be held without action only in the limited circumstances described in §750.4(b) of the EAR.

Section XVII of the HTSUS

Thank you for joining us for our series on classification. Last week, we explored the articles contained in Section XVI of the HTSUS. Today, we will study the various commodities covered in Section XVII 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.

Section XVI Question
Classify a hydraulic accumulator used on a forklift truck.
Answer: 8479.89.9865
See NY D83615

Section XVII covers Chapters 86 through 89 consisting of railway locomotives, vehicles, aircraft, ships, boats and parts of the foregoing articles. Pay special attention to Section Note 2, which explains that “parts” and parts and accessories for certain articles found in this section are not, classified in this section. For example, a switch used in a an airplane is a part/accessory of the plane, but is not classified as such because Section Note 2(f) states that electrical goods are not classifiable as parts to articles in this section. Section Note 3 provides guidance for classifying parts that fit into more than one heading; the principal use of the part will determine classification.

Chapter 86 covers locomotives, track fittings and fixtures and rail containers. Some articles in this chapter may require compliance with the regulations of the Federal Railroad Administration (FRA).

Chapter 87 includes a wide variety of vehicles, including cars, fire trucks, motorcycles, bicycles and wheelchairs. Pay special attention to the definition of tractor found in Chapter Note 2. Chapter Note 4 and U.S. Note 2 provide guidelines for classification of bicycles. Products of this chapter may be required to comply with the regulations of the DOT, EPA and CPSC. New or used motor vehicles and specified parts must be accompanied by a completed HS-7 form from the DOT. Bicycles are regulated by the CPSC. EPA regulates emission standards. Not all "parts" of vehicles are classified in Chapter 87. For example, engines used in vehicles are classified in Chapter 84.

Chapter 88 covers gliders, airplanes, spacecraft, helicopters and flight simulators. Products of this chapter may be required to comply with the regulations of the FAA and EPA.

Chapter 89 pertains to ships, yachts, pleasure boats, rafts and buoys. Chapter Note 1 provides instructions for classifying hulls and other vessels not having the essential character of any specific vessel. Products of this chapter may be required to comply with the regulations of the U.S. Coast Guard. Customs must be notified of the date of arrival of all foreign-built pleasure boats.

Question:
Classify a hubcap used on a Ford Focus.

Join us next week for the answer to this week’s classification question and a discussion of Section XVIII 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

Ask the Wizard: Are Gifts Duty-Free?

Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. This week, we had a timely question about gifts.

Question
Do I have to pay duties on gifts sent to me by relatives in France? Who pays duty for gifts that I send them?

As we enter the season of shopping and gift-giving, this is an excellent question for us to discuss. If your friends and family send gifts from foreign countries, such as France, you will be able to receive them duty free if the value of the gift does not exceed $100. If one box contains gifts for more than one person, each recipients name must be marked on the package. The outer carton or wrapping must be marked with the fair retail value and description of the contents, such as shoes, sweaters, shirts , etc.. The package should also state that the contents include gifts.

Example of correct marking of a gift package.

To: Mary Smith
123 Main Street
Anywhere, USA 10001

Contents: Gifts
Chocolate Candy $10 USD
Women’s Wool Sweater $35 USD
Ceramic Dog Figurine $15.00


Note: The duty exemption for gifts does not apply to "gifts" mailed to oneself or mail-ordered from the United States.

CBP does not collect any duty on exports; however, there may be restrictions on exporting certain articles and exporting to certain countries. Value, documentation and allowable items vary from country to country. The foreign country's government determines duty requirements for imports into their country. Contact the embassy for the recipient's country to obtain information about what goods may be sent to their country, and what their duty exemptions are for gifts. Some of the carriers also provide information about the requirements for other countries.

Now that you are equipped with CBP requirements for imports and exports, send those packages to your friends and family overseas and sit back and wait to receive a few packages from your loved ones. The Wizard is watching the mailbox and listening for the doorbell in anticipation of the arrival of those gift packages!

Sleeping Giant Awakens - Has First Meal!

With so much focus and worry over the potential ISF penalties set to become effective in 2010, many importers may have forgotten about the Lacey Act. Well, the sleeping giant awakened with a ravenous appetite, which it promptly satisfied by taking a bite out of an importer in Tennessee.

Administered by the USDA’s Animal and Plant Health Inspection Service (APHIS), the Lacey Act combats trafficking in “illegal” wildlife, fish and plants. The Lacey Act requires submission of a declaration at the time of import for a wide variety of products such as live plants, lumber, paper, products containing plant material such as furniture, tools, sporting goods, printed matter, musical instruments and textiles. Importers are required to report the species of plant/wood, value, quantity and country of origin.

The sleeping giant (U.S. Fish & Wildlife) sunk its teeth into a manufacturer in Nashville, TN for its first known meal. According to press reports, federal officials were looking for evidence that the company is using illegally harvested wood imported from Madagascar, which is prohibited under the Lacey Act. FWS agents seized wood, products, computers and electronic files. The company is known for its environmental sustainability efforts and stated that it is fully cooperating with the Fish & Wildlife officials.

Penalties for violations of the Lacey Act range from forfeiture of goods to fines of up to $500,000. If the company or individual is found to have knowingly engaged in the trade of illegally sourced wood, prison time could be imposed.

Although it is early in the investigation, this should be a wake up call for all importers concerning the importance of maintaining, reviewing and verifying the sourcing arrangements involving products regulated by the Lacey Act. The giant may be full from that first feast, but it will soon be ready for another meal. Don’t let it feast on your company. Click HERE to learn more about the Lacey Act requirements.

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 G’s.

Gantry Crane
A gantry crane lifts heavy objects by a hoist and is usually mounted on a frame or structure spanning an intervening space and often travels on rails or rubber tires. Gantry cranes are especially suited for lifting heavy objects such as ships' engines.

Gray Market Goods
Gray market goods are foreign-made articles bearing a genuine trademark or trade name identical with, or substantially indistinguishable from, one owned by a United States person or a corporation which are imported without the authorization of the U.S. holder. The marks are genuine and authorized by the trademark owner, but only for use for sale in a country other than the United States.

General Prohibitions
The General Prohibitions summarize the obligations of exporters under the EAR. Part 736 of the Export Administration Regulations lists 10 General Prohibitions describing certain exports, reexports and other conduct that are prohibited without a license or license exception.