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 J’s.

Jettison
Jettison is the intentional throwing of cargo overboard to lighten the weight of a vessel to save the ship and its content. Although some contents are lost, the act serves the common good for the interests of the vessel, crew and remaining cargo.


J-List
The J-List is a list of items found in 19 CFR 134.33 that are exempted from individual country or origin marking; however, the outer containers/packaging must be marked.


Jurisdiction
Export commodities are generally regulated by the Department of Commerce or Department of State.

Commodity jurisdiction requests are made to determine whether an item or service is covered by the U.S. Munitions List (USML) and therefore subject to export controls administered by the U.S. Department of State pursuant to the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). The Directorate of Defense Controls (DDTC) is responsible for providing information on commodity jurisdiction, which determines the export licensing authority between the Department of Commerce and Department of State. The U.S. Department of Commerce has export control jurisdiction over the export of dual use items and items which have strictly civilian or commercial uses.

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 I’s.

In Bond
The In-Bond System, a part of CBP’s Automated Commercial. Merchandise that is in the custody of Customs and Border Protection (CBP) is considered to be "in bond." To transport goods under CBP custody, the carrier’s surety bond is obligated for safe delivery of the merchandise and for holding the merchandise until it is released from CBP custody by either consumption entry or exportation. If the carrier fails to fulfill its obligation to transport and retain merchandise until it is properly entered into the customs territory or exported, CBP will issue a penalty for payment of damages.

International Trade Data System
The International Trade Data System (ITDS) is a government project that works with participating government agencies (PGA) and Customs and Border Protection (CBP) for the development of the Automated Commercial Environment (ACE). Prior to ITDS and ACE, the trade community was required to submit documentation required by the various government agencies to each individual agency using a variety of different automated systems, various paper forms, or a combination of both. With ITDS and ACE, the trade community will submit standard electronic data for imports or exports only once to ACE. Then, the data will be distributed to the federal agencies that have an interest in the transaction. ACE serves as a government data collection and distribution facility, a "single electronic gateway" through which information required for processing import and export transactions can flow efficiently from the trade to agencies. This single transmission to the common database eliminates the redundancy of the over 500 forms required by the various government agencies. ACE is the system and ITDS is the process that leads to the system. The implementation of ITDS will be extremely beneficial for uniting all the government agencies and streamlining the import process. ITDS will facilitate pre-arrival, arrival, revenue accounting, and collection along with the capabilities to track licenses and permits, monitor trade transactions, query and report, and provide a single storage area for centralized data management.

International Traffic in Arms Regulations
The ITAR is administered by the Department of State to control the export of articles, services and technical data that are designed, developed or modified for military use. The ITAR is covered by 22 CFR §§ 120-130.

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.

Hazardous Materials
Hazardous materials are substances or materials that have been determined to pose a potential risk to health, safety, and property when transported. Goods normally falling into this category include those that are flammable, corrosive or poisonous. Cargo designated as HAZMAT must carry special warning labels, be properly identified and packaged, and meet other special requirements before being shipped.

Harbor Maintenance Fee (HMF)
The HMF is a fee paid on import shipments for use of ocean ports and is based on a percentage of value of the shipment. The current HMF is 0.125 percent of the value; however, there is a bill, H.R. 2355, that proposes and increase in the HMF from 0.125 percent to 0.4375. The HMF is paid at time of entry unless the goods enter into a foreign trade zone, where fees are paid quarterly. Fees collected are earmarked for use in improvement and maintenance of U.S. harbors. There is no maximum on the HMF collected per entry.

Horizontal Export Trading Company
A Horizontal Export Trading company is an export trading company which exports a range of similar or identical products supplied by multiple manufacturers who may be competitors on the domestic market. An export trading company formed by an association of agricultural cooperatives is the prime example of a horizontally organized export trading company.

Trade Terms Tuesday

General Average
General average is a maritime principle that allows a vessel owner to recover from shippers that have cargo on board the vessel for expenditures incurred to repair the vessel due to extraordinary events such as fires and collisions. Under the general average provision, the owners of any cargo on board a vessel that is damaged must share pro rata in general average to repair any damage done to the vessel. General average originated in the late 1600’s when the risk of sailing long distances was higher so the risks of the voyage were shared by all who had an interest in the safe and profitable journey of the ship.


General Order
Merchandise which has not been released by CBP after a certain period is considered to be “general order” when it is taken into the custody of the port director and deposited in the public stores, or a general order warehouse. Imported merchandise subject to entry requirements must be released within 15 calendar days after the arrival of the vessel, aircraft or other conveyance (19 CFR 141.5, 19 CFR 127). In the case of merchandise moved in bond, merchandise must be released within 15 calendar days after arrival at the in bond destination. Merchandise not cleared within the allotted time may be at risk for being placed in General Order Storage by CBP. The owner of the merchandise has 6 months from date of importation to claim the merchandise, make an entry and pay any charges due. After the expiration of the 6-month period, CBP may sell the merchandise at public auction.


GBS
GBS is an exception to an export license requirement found in 15 CFR 740 of the EAR. Each License Exception is designated by a three-letter symbol used for export clearance purposes. GBS is the three-letter symbol for the exception for Shipments to Country Group B Countries. (15 CFR 740.4) License Exception GBS authorizes exports and reexports to Country Group B (see Supplement No. 1 to part 740) of those commodities where the Commerce Country Chart (Supplement No. 1 to part 738 of the EAR) indicates a license requirement to the ultimate destination for national security reasons only.

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 F’s.

Force Majeure
Force majeure clauses are found in standard transportation contracts and usually excuse a party who breaches a contract because performance is prevented by an occurrence of an event beyond the party’s control. Generally, force majeure clauses cover earthquakes, floods, hurricanes and war. It is important to remember that force majeure clauses are intended to excuse performance only if the failure to perform could not be avoided by the exercise of due care by the breaching party.


Fallback Method
When imported merchandise cannot be appraised using transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in sequential order. The alternative bases of appraisement, in order of precedence, are the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with section 402(f) of the TAA, known as the “fallback method.” 19 U.S.C. § 1401a(a)(1).The fallback method is also known as derived value, the sixth and final true method of valuation. If all other methods are inappropriate, then derived value must be used. Derived value determines the dutiable value using a combination of the other five methods and allows the value to be "reasonably adjusted to the extent necessary."


Foreign Corrupt Practices Act (FCPA)
Administered by the Department of Justice, the FCPA makes it unlawful for any U.S. citizen or business to offer, pay, transfer, promise to pay money or anything of value to any foreign appointed or elected government official, foreign political party or candidate for foreign political office for a corrupt purpose. The FCPA does not prohibit payments made to facilitate a routine government action, one that a foreign official must perform as part of the job such as processing visas or other official documents. . A corrupt payment is one made to influence an official’s discretionary decision. In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business. Individuals and business entities can be criminally liable and punished by both fines and imprisonment. Civil penalties may also be assessed against firms and offices, directors, employees and agents.

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 E’s.

Export
An export is defined as any item that is sent from the United States to a foreign destination. “Items” include commodities, software or technology, clothing, building materials, circuit boards, automotive parts, blue prints, design plans, retail software packages, and technical information. Items can be sent by regular mail or hand-carried on an airplane. Items may be sent via facsimile to a foreign destination, software can be uploaded to, or downloaded from, an Internet site, or technology can be transmitted via e-mail or during a telephone conversation. Regardless of the method used for the transfer, the transaction is considered an export for export control purposes.

Explanatory Notes
Issued by the World Customs Organization (WCO), the Explanatory Notes provide detailed information, chapter-by-chapter; heading-by-heading, of what is included in and excluded from various sections, chapters, and headings in the HTSUS. Explanatory Notes are not part of the legal system; however, they do represent the views of classification experts.

Express Courier
An express carrier Transportation carrier, usually an airline, offers expedited delivery of small packages and documents and provides CBP clearance through the use of hubs, onsite CBP officials, and special entry processes.

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 D’s.

Denied Persons List (DPL)
The Bureau of Industry & Security maintains the DPL, a list of persons and business entities to which U.S. Exporters may not ship goods. Exporters are responsible for checking this list to ensure that all export transactions are properly authorized.


Duty Drawback
Duty Drawback is a process that allows a refund of all or part of customs duties paid on imported merchandise, which is subsequently exported. Exporters of rejected or unused imported goods, or goods manufactured with imported components may receive a refund of 99% of duties paid against those components upon exportation of the goods. The purpose of drawback is to encourage American exports and manufacturing. The drawback regulations are found in 19 CFR 191.


Dead Heading
Operation of a vehicle without a load of cargo is called dead heading. The term is used most frequently in the trucking industry to refer to the return trip from delivery of cargo or driving an empty to a location to pick up cargo. Deadheading is avoided when possible for cost efficiency and maximization of resources.

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 C’s.


Commerce Control List (CCL)
Included in the Export Administration Regulations, the Commerce Control List identifies all dual-use commodities, software, and technologies subject to the export licensing process as well as the conditions under which those commodities, technologies, and software may be exported.

Carnet
A carnet is a customs document that allows the holder to carry or send goods into certain foreign countries temporarily without paying duties or posting bonds. A carnet serves as both the entry document and a CBP bond.

Currency Adjustment Factor (CAF)
The CAF is an ancillary freight surcharge or adjustment imposed by a carrier to offset foreign currency fluctuations. The CAF is usually a percentage of a published rate. While freight rates are normally fixed for a specified period, the CAF is subject to daily revisions based on the fluctuation of currency.

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 B’s.


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


Buying Commission
A buying commission is a component of valuation and consists of any monies paid to the buyer’s agent, who is controlled by, or works on behalf of the buyer. The most important distinction between buying and selling commissions is the amount of control exercised by the importer over the agent. The more control a buyer has over a "buying agent," the more likely it is CBP will find that a bona fide buying agency relationship exists.


Backhaul

The backhaul is the portion of a transportation trip that returns the carrier’s equipment to the origin point. The backhaul can contain a full, partial, or empty load. An empty backhaul is called deadheading.

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday the blog will feature three trade-related terms. In order to reach out to our diverse readership, we will provide one for exports, one for imports and one for logistics/transportation. This week, we start with the A’s. Even though we have three different terms this week, the terms are somewhat related because they all represent an electronic process.


Automated Export System (AES)
The Automated Export System (AES) is the electronic method used to transmit the required export information and manifest information directly to Customs & Border Protection. Prior to AES, the declaration was submitted using the paper, Shipper’s Export Declaration (SED). AES was designed to assure compliance with and enforcement of laws relating to exporting, improve trade statistics, reduce duplicate reporting to multiple agencies, and improve customer service. Penalties may be imposed for incorrect submissions.


Automated Commercial Environment (ACE)
The Automated Commercial Environment (ACE) is the new account-based processing system designed to consolidate and automate border processing to enhance border security and foster our Nation's economic security. ACE supports account-based import processing. Customs and the trade are able to use ACE to facilitate processing and analysis of entry activities in the aggregate rather than on a transaction-by-transaction basis. ACE reduces labor-intensive efforts and improves compliance efforts for both brokers and importers. ACE improves communication between CBP and the trade community, allows the trade to access their own trade data, and allows for sharing information with other government agencies.


Automated Manifest System (AMS)
The Automated Manifest System is an electronic cargo control and release notification system for air, sea, rail and truck carriers. AMS is used for cargo inventory control and cargo release notification. AMS interfaces with Customs Cargo Selectivity and the In Bond System, which expedites the flow of cargo and entry processing and provides participants with electronic authorization to move cargo. AMS also reduces the need for paper documents and expedites the processing of manifest and waybill data, thus allowing cargo to move from one point to another in less time. The National In Bond System, incorporated within AMS, provides a means of tracking and transporting merchandise from one port to another within the United States.