Thursday, December 16, 2010

US-Korea Trade Agreement Moves Forward, Could Signal More Trade Liberalization

By Edward Steiner

(Sandler, Travis & Rosenberg, P.A.)


The following article is excerpted from North American Free Trade & Investment Report (NAFTIR), also published by Thomson Reuters. Since 1992, key players in law, business, and government have relied on NAFTIR to stay on top of the legal and regulatory developments that critically impact companies involved in cross-border trade and investment in Mexico, the U.S. and Canada. For more information or to request a sample issue, go to:

http://www.wtexecutive.com/cms/content.jsp?id=com.tms.cms.section.Section_1013_sub_options

Also of interest is Mexico, Tax, Law & Business Briefing http://www.wtexec.com/mextlbtp.html

Even before the effects of the November midterm elections are being felt and the new slate of largely Republican members has been ushered in, the Obama administration is already reprioritizing its agenda and focusing on compromise. Trade policy, relegated to back burner status for much of the past two years, is re-emerging as an area in which the two parties can find a semblance of common ground.

Politics aside, trade is an important part of the American economy. In 2008, exports alone sustained over 10 million domestic jobs – jobs that often earn 13% to 18% more than the national average. The administration has launched a National Export Initiative (NEI) to double exports and add two million jobs within the next five years, and trade agreements are necessarily part of that initiative.

The recently agreed U.S.-South Korea free trade agreement (KORUS) could be the jewel in the NEI crown and a win, to some extent, for both sides of the aisle. The FTA with South Korea, America’s seventh-largest trading partner, would be the largest such agreement since NAFTA in 1994 and would eliminate tariffs on a majority (over 95%) of consumer and industrial goods within a five-year period. Now comes the hard part – the agreement has to move through the legislatures in both countries. Though there is optimism regarding passage of the agreement, there is also a not insignificant amount of opposition among lawmakers in both the U.S. and Korea, and finally implementing the long-stalled pact is far from a pro forma exercise.


U.S.-Korea Trade in Focus

The South Korean economy is the fourth-largest in Asia and the twelfth-largest in the world. It is home to multinational companies such as Samsung Electronics Co. and Hyundai Motor Co., which undoubtedly boost Korean export numbers. South Korean exports account for about half of the country’s gross domestic product. The primary products Korea ships abroad are semiconductors, automobiles and parts, computers, telecom equipment, petrochemicals and textiles. Many of these products arrive on the shores of the U.S., Korea’s second-largest export market.

Largely as a result of these high-value, high-tech products, the size and health of South Korea’s exports continue to grow, with November shipments to the U.S. alone increasing by 25.2% compared to 2009. November was the 13th month in a row Korea’s export sales increased, earning the country a $39.11 billion trade surplus since January. Exports are also benefitting from a weaker won, making South Korean goods cheaper on the international market.

U.S. exports to South Korea have been unable to maintain volume parity with U.S. imports from that country. While the U.S. enjoyed a $7.1 billion service trade surplus with Korea in 2008, in bilateral goods trade the U.S. ran an $11 billion deficit in 2009 and a $6.6 billion shortfall in the first nine months of 2010. The primary products the United States currently exports to South Korea are corn, petrochemicals, organic chemicals, industrial machines, semiconductors, and civilian aircraft and related parts. The National Association of Manufacturers (NAM) notes that manufactured goods account for over 80% of total U.S. goods exported to Korea and that these shipments sustained 230,000 U.S. jobs in 2008.

A study by the United States International Trade Commission (USITC) claims that gross U.S. goods exports to South Korea will increase by about $11 billion as a result of tariff cuts under the pending FTA alone. Imports, on the other hand, are expected to rise only by about $6.7 billion, helping to improve the U.S. trade deficit with Korea. Ironically, government analysis also predicts that an overall increase in trade as a result of KORUS may in fact cause the U.S. trade deficit with the rest of the world to rise.


Cars and Beef

The United States and South Korea concluded FTA negotiations in 2007, but concerns among U.S. lawmakers about access to the Korean market for automobiles and beef have stalled efforts to implement the agreement. Of the big three U.S. automakers, Ford was the most vehement in opposing the agreement, running advertisements noting that for every 52 Korean cars sold in the U.S. only one U.S. car is sold in Korea. Chrysler expressed similar concerns while General Motors, owner of South Korea-based Daewoo, did not comment. A study conducted by the United Auto Workers echoed Fords’ concerns. The UAW claimed that 70% of the 2009 U.S. trade deficit with South Korea - $8.9 billion – was due to the deficit in automobile sales.

An agreement reached in early December 2010, however, has some of these earlier critics rethinking their stances. Ford now supports the Korea FTA and, breaking with labor unions’ traditional opposition, so does the UAW, which claims the agreement will increase U.S. auto exports.

The December agreement includes some significant changes related to automobiles. The United States can keep its 2.5% auto tariff for five years, while Korea must immediately cut its auto tariff from 8% to 4%. U.S. 25% truck tariffs can be maintained until the eighth year after implementation of the FTA and must be phased out by year ten, while South Korea will cut its 10% U.S. truck tariff immediately. Finally, Korea must also immediately cut its tariff on electric cars from 8% to 4%, with both countries required to phase out such tariffs by year five. The new agreement also allows U.S. carmakers to sell in the Korean market up to 25,000 cars that fail to meet strict Korean safety standards as long as the autos meet U.S. standards. The obligation of U.S. car companies to abide by Korean fuel economy and greenhouse gas emission targets will also be eased, allowing U.S. autos that fall within 19% of the standard. Finally, the U.S. can levy a safeguard against any surges of autos from South Korea for up to ten years after all tariffs on a given product have been phased out.

The progress made on autos was not mirrored in the negotiations on U.S. beef products. Specifically, South Korea will maintain its import ban on U.S. beef sourced from cattle over 30 months old, which was first imposed because of a 2003 case of mad cow disease in Washington state. U.S. beef industry groups have indicated that this situation is not overly worrisome, as a 2008 U.S.-Korea protocol is already bolstering beef exports to Korea, which are expected to rise even further with the phase-out of the 40% Korean tariff under the FTA. However, Sen. Max Baucus (D-Mont.) said he is “deeply disappointed” with the lack of progress on the current ban, and he and other legislators from heavily agricultural states have indicated that they may not support the FTA until their concerns are addressed.

Outside of automobiles and beef, the KORUS agreement includes substantial long-term benefits for many other sectors of the U.S. economy. Perhaps most valuably, U.S. service companies will enjoy increased access to the $560 billion Korean services market, an industry in which the U.S. already enjoys a trade surplus with Korea. This includes accounting, health care, education, legal, finance and telecommunications services, areas in which the U.S. excels. In agriculture, U.S. food processors, ranchers and farmers will enjoy increased access to the Korean market, as high Korean tariffs will be eliminated along with other non-tariff barriers. With respect to manufactured goods, the National Association of Manufacturers expects the already large volume of U.S. manufactured goods exported to South Korea to increase by over one-third. Other notable provisions of KORUS include increased access to the Korean government procurement market, improved enforcement of intellectual property rights in Korea, and a requirement that Korea uphold and respect fundamental labor laws in such a way that ensures a level playing field for U.S. workers.

Edward Steiner is Director of Trade and Legislative Affairs for Sandler, Travis & Rosenberg, P.A., resident in the Washington, D.C., office. Mr. Steiner consults for a diverse client base of private industry, trade associations and foreign governments on a wide range of trade compliance issues including: consumer product safety, food safety, environmental protection and labor standards.

Congress, Santa Claus and Scrooge

Tis the season for children of all ages to make their wish list for Santa. On the top of some lists is the passage of the Omnibus Trade Act of 2010.

The Omnibus Trade Act of 2010 (H.R. 6517) was passed by the House on Wednesday. The bill extends several trade preferences programs and temporarily modifies duty rates on specific articles. If passed, the Omnibus Trade Act of 2010 contains several important trade provisions that include:

• extension of the Andean Trade Preferences Act (ATPA) and Generalized System of Preferences (GSP) until June 30, 2012.

• extension of the key Trade Adjustment Assistance (TAA) provisions until June 30, 2012

• various miscellaneous tariff bill (MTB) provisions.

The TAA, GSP and ATPA are scheduled to expire on December 31, 2010 unless they are extended. The bill must be passed by the Senate before it can be signed into law; however, there is some speculation that the Senate might not pass the legislation. With Congress ready to end the session for the holidays, some members aka Scrooges vow to keep it going through the weekend. Will Santa deliver the passage of H.R. 6517 or will it be left on the wish list for next year along with the Korea, Panama and Columbia Free Trade Agreements?


Note from the Wizard:
The Wizard is taking a leave from Oz to follow the yellow brick road, so this will be the Wizard’s last posting on Boskage Trade News blog. It’s been a pleasure to write this blog and interact with the readers for the last two years.

Wednesday, December 8, 2010

“Un” Happy Holidays for Internet Counterfeiters


After the big sales on Black Friday following Thanksgiving Day, retailers claim to have the best deals of the season available for online shoppers on Monday, also known as Cyber Monday. Online shoppers looking for bargains didn’t find them on 82 commercial websites found to be offering illegal counterfeit goods and copyrighted works. As part of Operation In Our Sites coordinated by the National Intellectual Property Rights Coordination Center (IPR Center) seizure orders were executed against these 82 domains on Cyber Monday.

The government operation targeted online retailers of counterfeit goods, which included sports equipment, footwear, handbags and athletic apparel. Illegal copies of copyrighted DVDs, music and software were also targeted. Federal agents made undercover purchases from various online retailed suspected of selling counterfeit goods. Some of the goods were shipped directly to the U.S. from other countries using international express mail. Once the goods were confirmed to be counterfeit, seizure orders were obtained. When accessing these websites now, users will see a banner notifying them that the website/domain has been seized by federal authorities.

Protection of intellectual property encourages creativity that is essential to continued growth and success of our economy. Without protection, companies and individuals may not be as willing to invest the time and money necessary to develop innovative new products that enhance, and in many cases, save our lives. Without proper enforcement, manufacturers may produce lower cost inferior goods by violating the trademark, copyright and patent laws. Some of these inferior goods such as pharmaceuticals could be hazardous to consumer’s health because they are not manufactured under the same regulations and processes as the patented or trademarked goods.

The IPR Center and the Department of Justice Task Force on Intellectual property (IP Task Force) work to eliminate the growth of intellectual property violations. They encourage involvement from the holders of IPR to assist them in the fight against this growing problem. To learn more about these efforts, visit the IPR Center at http://www.ice.gov/iprcenter/ and the IP Task Force at www.justice.gov/dag/iptaskforce/.

Monday, December 6, 2010

President Announces Agreement on US-Korea FTA


Last week, the U.S. and Korea resolved the automotive and agriculture issues that stalled the last round of discussions. Farmers will see an increase in exports of agricultural products and American automotive manufacturers will have more access to the Korean market, which will keep more Americans working. The new agreement reduces the duties on U.S. automotive imports into Korea from 8% to 4%, with complete elimination of duties by the fifth year. Because of reduced tariffs, the agreement is expected to increase annual exports of U.S. goods by up to $11 billion and support at least 70,000 American jobs. South Korea will have greater access to U.S. markets and our products. Reduced tariffs will make American goods more affordable for personal and business use in Korea. Supporters of the agreement hope that the required changes will be made quickly so it can be submitted to Congress early in 2011 and passed by Congress in the spring.

Click HERE to read more about the agreement.

Tuesday, November 30, 2010

Air Cargo Humor


The local newspaper asked for comments and suggestions concerning the use of more instrusive pat downs at airport security checkpoints. Suggestions included sending all baggage by express courier or a new baggage only airline for more efficient and faster service, having the military take over security, boycotting the airlines and inviting the Israelis to design our systems. The one that caught my attention was a little extreme, but definitely innovative. Instead of a scanning device, the booth passengers step into would become a detonating device. If explosives were detected, they would be detonated within the confines of the booth. The next announcements broadcast over the PA system would be for cleanup in the security area and the availability of seat on Flight 123.

While a little extreme for use on human beings, perhaps it is not so farfetched for packages. What if all packages or even just those suspected of containing explosives or coming from high risk areas passed through a detonation booth. If the machine detected explosive materials in packages like the ones containing the ink cartridges, the package would be immediately detonated within the confines of the booth. If that process slowed the flow of packages, the suspect package could be removed from the flow and taken to the specially designated detonation booth. If we are going to 100% scanning of packages, would the chance of innocent packages being blown to bits outweigh the cost of the new technology and the increased success in thwarting terrorist attempts? Perhaps the new detonating booth is already on the drawing board and coming to an airport and/or cargo facility near you!

Monday, November 22, 2010

Recent News In International Trade


CBP Requests Comments on CBP Form 28


On November 17, 2010, U. S. Customs and Border Protection issued a request for comments regarding CBP Form 28. The Request for Information, CBP 28, is used as an informal method for CBP to request and review import records when they need additional information not provided by the documentation submitted.

The comments should address:
(a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
(b) the accuracy of the agency's estimates of the burden of the collection of information;
(c) ways to enhance the quality, utility, and clarity of the information to be collected;
(d) ways to minimize the burden including the use of automated collection techniques or the use of other forms of information technology; and
(e) the annual costs burden to respondents or record keepers from the collection of information (a total capital/startup costs and operations and maintenance costs).

Comments should be submitted to U.S. Customs and Border Protection, Attn: Tracey Denning, Regulations and Rulings, Office of International Trade, 799 9th Street, NW., 5th Floor, Washington, DC 20229-1177.



H.R. 6410 Introduced - Requires 100% Screening on All-Cargo Aircraft


On November 16, 2010, a new air cargo security bill was introduced into the House of Representatives. H.R. 6410, the "Air Cargo Security Act," would require systems to be established for the inspection and screening of cargo traveling on all-cargo aircraft "operated by an air carrier or foreign air carrier in air transportation or interstate air transportation." The bill would require that the screening for cargo intended for all-cargo aircraft "provide a level of security commensurate with the level of security for the screening of passenger checked baggage." The bill also provides for training for air cargo handlers and regular inspection of air cargo facilities. consequences imposed for a facility not in compliance

If the bill is approved, 50 percent of the cargo intended for all-cargo aircraft will be inspected no later than 18 months after enactment and 100 percent screening of the cargo within three years of enactment.



Failure to Comply with OFAC Subpoena Results in $225,000 Fine

OFAC issued a subpoena to Pinnacle Aircraft Parts, Inc. related to an investigation into the company’s involvement in the sale of a jet engine that may have been ultimately destined for Iran. In response to the subpoena, Pinnacle did not supply a copy of an email that indicated the engine was destined for Iran. Obviously, the email might have shown awareness by the company, which could have provided the basis for criminal prosecution.

Although the email in question was provided to Pinnacle’s attorney, it was not included in the submission of documents requested by OFAC. Pinnacle decided not to produce the email based on the advice of counsel; however, they are legally responsible for compliance with the subpoena and the actions of their agents. The end result – a $225,000 fine issued by OFAC. The penalty was slightly mitigated based on Pinnacle’s reliance on the advice of counsel and prior good record.



FTA Update

The Generalized System of Preferences (GSP) and the Andean Trade Preference Act/Andean Trade Promotion and Drug Eradication Act (ATPA/ATPDEA) are scheduled to expire on December 31, 2010. Possible extension of these acts is being discussed in the House and Senate.


The U.S and Korea have not reached a final agreement on the U.S. - Korea FTA. Terms that have been subject of much discussion include unrestricted imports of automobiles and beef into South Korea. Given the impasse, an agreement will not likely be reached this year. President Obama pledges to keep moving forward so that this agreement may be ready for Congress in early 2011.



SAVE Award Winner

In 2009, President Obama introduced the SAVE Award (Securing American’s Value and Efficiency). The program seeks ideas from federal employees on how the make government more effective and efficient. Over 18,000 entries were received. The winner was Trudy Givens who works for the bureau of Prisons in Wisconsin. Trudy suggested“opt in” features for the approximately 8,000 copies of the Federal Register being mailed every day. Statute requires the government to make hard copies available; however, most of the public views them online. If recipients are allowed to opt-in to receive hard copies, the government could save printing and postage costs.

As this year’s winner, Trudy will have an opportunity to meet the President to discuss her idea with him. All of the SAVE Award submissions have been sent to the agencies for potential action and inclusion in the 2012 Budget. Last year, a total of 20 SAVE ideas representing millions of dollars in savings made it into the President’s FY2011 budget.



"If You See Something, Say Something"

The Department of Homeland Security announced the expansion of the “"If You See Something, Say Something" campaign. The phrase was originally implemented by New York City’s Metropolitan Transportation Authority after 9/11 and has spread to other cities across the country. The newest campaign encourages travelers and employees in the hotel industry to report indicators of terrorism, crime and other threats to the proper law enforcement authorities.

Tuesday, November 9, 2010

Focus on Fakes


Have you ever seen someone at a flea market selling Rolex watches for $70 or NFL shirts for $5? If it sounds too good to be true, then it probably is too good to be true. Intellectual property comes in many forms, from writings of an author to the new product developed by an inventor. Federal law provides rights to owners of these writings, products and processes to protect them from being misappropriated by others.

Protection of intellectual property encourages creativity that is essential to continued growth and success of our economy. Without protection, companies and individuals may not be as willing to invest the time and money necessary to develop innovative new products that enhance, and in many cases, save our lives. Unfortunately, unethical criminal behaviors have created an increase in counterfeit and pirated goods that inhibit creativity and threaten profitability of legitimate creators. Trade in counterfeit goods such as CDs, clothing and drugs cost the true owners around the world billions of dollars annually.

Today's technological advancements and the ability of foreign manufacturers to produce lower cost goods present unlimited opportunities for distribution of goods that are authorized by the IPR owner. However, this same technology and low cost production provide the same opportunities for supplying products that infringe on intellectual property rights. For example, anyone with a computer equipped with a CD and/or DVD burner and a stack of discs can illegally copy and distribute protected works, such as music and movies.

Both the domestic and international protection of intellectual property has become increasingly more difficult. While the U.S. has well-defined laws for protection of intellectual property, not all countries provide or enforce the protection of intellectual property. This lack of protection and enforcement has led to widespread unauthorized copying and use of unlicensed marks to supply the market with goods that violate intellectual property rights.

Some of the statistics provided by CBP show that footwear, clothing, purses and electronics are some of the most frequent items imported in violation of intellectual property rights. Goods such as soaps, pharmaceuticals and electronics can be safety hazards and pose dangers to consumers if not manufactured according to our standards. China was the top trading partner for IPR seizures in FY 2009 accounting for 79% of the total value of goods seized. Footwear was the top commodity seized in FY 2009, which accounted for 38% of the entire value of infringing goods.

The enforcement of intellectual property rights has become one of CBP’s top priorities. CBP is dedicated to protecting against the importation of goods, which infringe/violate
Intellectual Property Rights (IPR). The aggressive enforcement program devotes substantial resources to target, intercept, detain and seize goods in that violate intellectual property laws. CBP has an online reporting system that allows the public to report potential violations, eAllegations.

Click HERE to check out this interesting shopping website, then cast your vote using the poll at the top right side of the page.

Would this website be something that CBP might have an interest in?

__Yes
__No
__I’m going shopping!

Monday, November 1, 2010

Will Terrorist Threats Change Cargo Security Rules?


Thanks to tips from Saudi Arabian authorities, two boxes containing explosive devices were quickly found and taken into custody without any injuries or damage to property. A question many of us may be contemplating is how these recent events affect importers, exporters, carriers and individuals.

The bombs found in the toner cartridges late last week serve as a wakeup call that Al Qaeda is alive, active and has found a new target – cargo carriers. Previously, it was thought that passenger aircraft were more likely targets. These packages did travel on passenger planes; however, they were destined transport via FedEx and UPS, known for shipment by cargo-only aircraft.

While experts are not 100% certain, they believe that the intent may have been to detonate the bombs in flight. Cargo shipped on passenger aircraft has been subject to more intense screening than cargo on freighters; however, the recent events will likely increase the level of screening for all cargo on all air carriers. Yemen pledged to tighten security at all of its airports and to inspect every piece of cargo and luggage at the airports.
CNN reports that cargo carriers such as, FedEx and UPS will be required to perform more thorough inspections before accepting any package. What else can be done to prevent other potentially deadly shipments?

Increased inspection slows movement of cargo and increases cost. Hopefully, our allies will support a higher level of scrutiny, as the hatred against Americans endangers their own citizens. Regardless of where the bombs were intended to detonate, they could have exploded anywhere along the journey. With increased focus on Yemen, will Al Qaeda set up shop in a country receiving less scrutiny?

Notice that this terrorist event was not an example of a breach of security related to a major importer or exporter. The packages were not shipped to or from an importer or exporter that would normally participate in C-TPAT or other security programs, but instead a shipped from an individual to a synagogue. To complicate matters more, the terrorists are using more sophisticated at techniques to disguise the bombs. There is some question as to whether the bombs would have been found even if the packages had been screened using x-rays, dogs or other techniques.

Implemented by the TSA, Congress mandates that 100 percent of shipments on passenger planes go through screening; however, the rule does not apply to packages on cargo planes, those not carrying passengers. The rules for cargo on passenger aircraft cover domestic and outbound international flights. Air cargo security processes and regulations vary by country. Congress intended for this rule to cover international inbound flights, but it is taking more time for the U.S. to convince other countries to agree to and implement a similar air cargo inspection processes. Cargo carriers such as UPS and FedEx have their own set of security rules and processes. Cargo may not be inspected, depending on the shipper, destination, origin or other information that triggers suspicion.

On a final note, another issue to consider is the use of stolen identities to ship the bombs. The two women originally arrested in the plot have been released, claiming their identities had been stolen. Along with more intense security exams, the use of stolen identities should be a big concern. Wouldn’t the terrorists like to claim victory by shipping explosives using an American’s identity? If you’ve ever been the victim of identify fraud, can you imagine what it would be like to have your name associated with a terrorist plot? The hassles you endured from collection agencies, the bank and vendors would pale in comparison.

Stay tuned! This incident is likely to generate more robust security measures for all cargo, including packages shipped cargo planes.

Tuesday, October 26, 2010

CBP to Launch Two Pilot Programs November 1, 2010

The Center of Excellence and Expertise (CDE) and Account Executive (AE) pilots are being launched to improve and strengthen CBP’s relationships with the trade and business partners.

The CEE pilot will work with the pharmaceutical industry to better facilitate trade and risk management practices for the industry. The group will explore opportunities to work with other government agencies involved in importation of pharmaceuticals. The AE pilot will work with partners in the electronics industry to facilitate trade and compliance with import requirements. One of the goals is to fine-tune the account-based approach for the low risk trade partners so that CBP can focus on the higher risk companies.

CBP will also use the online trade community to provide input. Click HERE to view Our Border, A Border Civic Network, the online group specifically mentioned in the announcement.

Wednesday, October 20, 2010

BIS Requests Comments on Understanding the EAR


The overhaul of U.S. export controls and the National Export Initiative “NEI” focus on expanding trade opportunities for SMEs created an opportunity for the Bureau of Industry and Security “BIS” to solicit information from various groups about their overall experience with the Export Administration Regulations “EAR”.

The BIS seeks comments from the public concerning small and medium enterprises’ “SMEs” understanding of and compliance with export controls relate to the EAR. The BIS will use this information to determine the need for changes that will improve the SMEs’ understanding of and compliance with the EAR, without inflicting undue burdens that affect their ability to be competitive.

The BIS invites comments that identify


·issues and makes recommendations regarding SMEs’ awareness and understanding of the EAR, as well as their experiences complying with the EAR;

·the principal challenges SMEs face in trying to comply with the EAR, including any challenges that SMEs uniquely face and approaches to overcoming these challenges.

·the value of current BIS outreach, education and counseling to SMEs in understanding and complying with the EAR;

·ways to improve or expand SMEs’ awareness, knowledge and understanding of the EAR and increase their capacity to comply with them; and

· data, including comparative international data, that support comments and recommendations related to items above; and that provide examples of effective methods of administering and enforcing export controls with special attention to SMEs.


Comments may be submitted by email, fax or mail by December 6, 2010.
Click HERE for information on how to submit comments.

Wednesday, October 13, 2010

Trade News Summary

We’ve been so busy with the Customs Broker Exam for the last week; we thought it would be nice to catch up on some of the news outside of the exam.

CBP Announces ACE Webcast
As part of the ongoing ACE Outreach Events, CBP will host a free webcast about the Automated Commercial Environment on Wednesday October 27, 2010 from 1:00 – 2:30 p.m. (EDT). CBP Executives will cover a variety of topics, including how ACE will impact your business, the short term priorities, as well as future of ACE, and CBP’s commitment to making ACE a reality for everyone.

To register, please click on the URL listed below to access the registration form:https://apps.cbp.gov/te_registration/?w=37


Don’t Lie to the BIS
Section 764.2(g) of the EAR prohibits persons from making false or misleading statements or concealing materials facts to the BIS, CBP or official of any other U.S. government agency. During an investigation, the CEO of a company allegedly told agents that he didn’t know a particular company was on the Denied Persons List; however, it was discovered that the company in question actually told the CEO they were on the list. The CEO was personally fined $52,000 for violation of 15 CFR 764.2(g). Don’t let this be you!



Public Citizen: New Trade Data Center Launched
As part of its Globalization and Trade area, Public Citizen launched the new Trade Data Center, a collection of searchable databases providing information on how various trade policies affect jobs, the community and more. Take some time to check out this collection of resources.


CBP Jobs
Just in case anyone is looking for a job, a quick scan of USAJOBS shows the need for quite a few people in the following positions. I don’t know about you, but if I were an auditor, I would be looking to into what I need to do to become an I.T. Specialist.

· Lead I.T. Specialist $102,721
· I.T. Specialist $71,674
· Telecommunications Specialist $57,408
· Management and Program Analyst $47,448
· Chemists $31,315
· Auditor $27,431

Tuesday, October 5, 2010

October 2010 Customs Broker Exam - Preliminary Answers

Determining potential answers for the broker's exam questions after the test is different in a few key ways from taking the test, but none is more key than the fact that we have more than four hours. That means that we can take the time to research as much as we need to in order to get the most accurate (though still unofficial) document possible to all of you. Our first attempt may have some mistakes, but they will be corrected as new updates are posted. With that said, we're not finished yet -- BUT we do have most of them completed.



Click here for the preliminary unofficial exam answers.


As always, remember that these answers represent only our opinion. The official answers will come from Customs and Border Protection in a few weeks and will be posted on their site. In other words, we probably answered the majority of the questions correctly, but these answers do not guarantee whether or not you've passed; it merely is presented as a helpful tool for broker students who are (quite understandably) eager to have any idea of where they stand.

If you would like to share your answers, explanations and comments, we invite you to post them as comments to this blog; however, we ask that comments be professional and to the point. We cannot respond to all of the comments, but this forum will provide you an opportunity to converse with each other. Remember, we do not have the official answers. You’ll have plenty of time to argue with CBP if you disagree with their answers.

Happy browsing!

P.S. We cannot post the questions because the copy we received had a lot of markings on it.

Friday, October 1, 2010

Pack Your Bags: The Custom Broker Exam Checklist


With the exam just a few days away, it’s time to start thinking about what to pack for the exam. You will use most of your resource materials up until the day before the exam, so it’s impossible to pack them in advance of the actual test. However, you can use the practical checklist we’ve created to make sure that you have everything on the list packed in your heavy-duty tote bag, large cardboard box or other container the night before the exam. If you are like most test takers, you may be a little nervous prior to the exam, so you don’t want to run the risk of forgetting something important or being late because you couldn’t find your calculator, pens or other materials. Packing everything on your checklist the night before will help you reduce unnecessary stress so you can relax.


Click HERE to view and print your Customs Brokers License Exam Materials Checklist. You can customize this list to add specific items that you plan take to the exam. No matter what you plan to take, make sure to use the checklist to ensure you have each item packed and ready to go the night before the exam. Remember, electronic devices such as laptops and cell phones are prohibited.


Wanted: October 4 Exam Copy
(We received a copy of the exam and hope to post preliminary answers Tuesday afternoon.)

In order for us to post “preliminary” answers for the exam, we need a copy of the exam as soon as possible on Monday afternoon. Do we have any volunteers to scan and email the test or fax it? Email would be best, but we’ll be happy with a fax too!

Email: andrew@boskage.com
Fax: 269-673-5901

Wednesday, September 29, 2010

Is Self-Filing For Everyone?


With increased pressure to reduce costs and justify staff, importers often consider the option of self-filing entries. There are some advantages that immediately come to mind such as reduced entry fees and more control, but what about the disadvantages? Importers normally check the broker’s work as part of their compliance program. If the importer files the entry, who checks the importers work? We all make mistakes. We’d like to open up the forum and hear from our readers. What are the advantages and disadvantages of self-filing. Post your comments to this blog. We’ll publish the comments. In two weeks, we will create a list of advantages and disadvantages submitted by our readers.

Take our Self-Filing Poll located at the top right side of the page.

CBE Study Tip 12: CBP Directives

For many years, the Customs Brokers Exam only required the use of the HTSUS and the CBP Regulations; however, in 2004, CBP expanded its scope of materials to include Customs Directives and other reference materials. These materials are important because they provide guidance on activities brokers perform that aren’t included in the regulations. Since their addition, these resources have comprised 8% to 10% of the total questions on the exam. Because of the number of resources, it’s difficult to predict specific areas for testing. The best thing to do is to study all of it. We’ve provided the key highlights for the four most frequently tested supplemental resources.

1. Instructions for Preparation of CBP Form 7501

Although most entry summaries are completed electronically, it’s important to have a good understanding of the information contained in this document. By reading these instructions, you can complete a CBP 7501 by hand without the assistance of a computer. You should keep this document handy and review all blocks because it has been one of the most frequently tested supplemental resources since the implementation of the new CBP 7501 format in September 2005. Become very familiar with each block number, so you can easily reference it. Block 2 (Entry Type Code) and Block 31 (Net Quantity) are easy targets!



2. CD 3510-004 - Monetary Guidelines for Setting Bond Amounts

The purpose of the bond is to protect the revenue and ensure compliance. The amount of a bond is calculated using information on the bond application, the criteria in Part 113 of the CBP Regulations and the guidelines in this directive. This directive provides standardized guidelines for computing the bond amounts for all types of bonds. For the exam, it’s important to know how to calculate single entry and continuous bonds.

The first type of bond is the Activity 1, Importer or Broker Continuous Bond. The minimum amount of a bond in this category is $50,000.

For importers paying zero to $1,000,000 in duties and taxes, the bond should be computed as 10% of the duties and taxes paid for the previous calendar year and issued in increments of $10,000.

For importers paying over $1,000,000 in duties and taxes, the bond should be computed as 10% of the duties and taxes paid for the previous calendar year and issued in $100,000 increments.

The next type of bond is the Activity 1, Importer or Broker Single Transaction Bond. This bond is valid for one shipment and is computed in an amount not less than the total entered value of the merchandise plus all duties, taxes and fees, unless the merchandise falls into a special category. If the merchandise is subject to other government agency requirements such as the FDA or FCC, the bond will be computed in an amount of at least three times the total entered value of the shipment. In addition, the district director may set the single transaction bond amount at 10 percent of the total entered value for unconditionally free merchandise, which is not subject to the previously mentioned categories.

Note:
Not all of the government agencies are included in the list that requires a bond in the amount of three times the value of the shipment. If your goods are not regulated by one of the government agencies on the list, then the single entry bond will be written for value plus duty.




3. CD 3550-055 - Instructions for Deriving Manufacturer/Shipper Identification

Questions involving the manufacturer’s identification code “MID” should be some of the easiest to answer. Not only does this directive provide instructions on how to construct the code, but the information is also included in the CBP Form 7501 Instructions. Just memorize the rules for deriving the MID.

This code is commonly referred to as the MID or Manufacturer Identification Code. This technique is also known as keylining. On the broker’s exam from October 2005, a question required knowledge of the term keylining.

Customs requires the formation of a code from the name and address of the manufacturer.
The MID contains five components that are added together without spaces to create the code. The code can be up to 15 characters in length. The five components consist of the following information:


· Two letter abbreviation for the country of origin
· First three letters of the first name of the manufacturer
· First three letters of the second name of the manufacturer
· First four digits of the street address, and
· First three letters of the city name.

There are some general rules to consider.

· Ignore all punctuation
· Ignore single character initials. and
· Ignore the words “a”, “an”, “and’, “of”, and “the”.



4. 3550-067 - Entry Summary Acceptance and Rejection

Customs Directive 3550-067 provides guidelines for uniform acceptance and rejection of entry summaries. Five major areas of interest in this directive include the following:

· Collections Processing – Rejections
· Acceptance Review and Summary Processing
· Processing of Rejected Entry Summaries
· Time Limit
· Rejection Effect on Entry Summary Filing Time

This information is a little more complicated to grasp, so read each of the major areas and highlight key information.


Although we didn’t cover all of the directives and supplemental materials, they are not any less important. Remember the advice from the beginning of the article - the best thing to do is to study all of it.

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 to find more useful news for international trade professionals! As soon as the Wizard obtains a copy of the test and has time to work out some preliminary answers, we’ll post them here for your review and comments.