CBE 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 a 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.


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 2005 Exam may not be valid in 2010. 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.

I'm Gonna Tell!

Remember the old phrase you yelled at your siblings when one of them did something they weren’t supposed to do? I’m telling! Was there a benefit from telling Mom and Dad about the indiscretions of your sibling or were you stuck with the title of tattletale?

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new legislation protects whistleblowers who report violations of the securities laws to the SEC. The whistleblower could receive 10% to 30% of the total amount of monetary penalties collected in sanctions that exceed $1,000,000. Why is this important? The new legislation expands the coverage to include violations of the Foreign Corrupt Practices Act.

With increased enforcement actions, the recent trend of imposing higher fines and the poor economy, the financial incentive could draw out more whistleblowers. From this pool, we might find some who are interested in doing the right thing, some who are only in it for the money and a few disgruntled people who want to get even with former employers.

Let’s take a look at some potential awards. A recovery for the lowest penalty of $1,000,000 would result in a payment to the whistleblower of $100,000 to $300,000. On the other end of the spectrum, we find the largest FCPA penalty of $800 million imposed in 2008. If an individual had been responsible for reporting that violation, he or she might have received $80,000,000 to $240,000,000. Would a payment of $100,000 be worth becoming a whistleblower? How about $80,000,000? Your parents may not have given you anything for tattling on your siblings, but the federal government appears to be willing to provide some rewards for tattletales.

The Dodd-Frank legislation is one of many federal statutes that have been passed to protect whistleblowers for reporting various types of violations such as those related to the environment and employment laws. Click HERE for a list of whistleblower protections.

CBE 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.

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!

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.

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.


• 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. Commute
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
Do you really need an hour to eat lunch? Consider devoting a portion of your lunch breaks each to study. Eat lunch, then read or eat and read at the same time. 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 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.

Missing In Action: 19 CFR 163 Appendix

Last week, one of my colleagues asked where she could find a good copy of the list of required documents for recordkeeping. My first thought was to send her to the Appendix to 19 CFR 163, containing the (a)(1)(A) List. Trying to be helpful, I decided to send the link to a document that was nicely formatted for printing purposes. I clicked the CFR bookmark on my computer and was pleased to see the April 2010 version available. A PDF document containing only the list of documents would be preferable for her intended use, but I could not remember whether it was the TXT or PDF document that contained that information. Clicking on the preferred PDF file, I was surprised to see information for foreign trade zones . I must have mixed up my numbers and clicked on the wrong section of the regulations. Going back to the list, I clicked on Part 163 again and then on the TXT document for the Appendix. Again, I found information for Part 146 Subpart H of Title 19. I guess Part 163 Appendix containing the (a)(1)(A) List is missing in action or perhaps taking a vacation from the 2010 version of the regulations. Fortunately, I was go back to the 2009 version and send the link to the (a)(1) (A) List.

So, if you are looking for the (a)(1)(A) list in the 2010 version of Part 163 via GPO Access, don’t be surprised if you find foreign trade zone information. It appears to be a minor error in linking documents, so the (a)(1)(A) List should be back home where it belongs very soon!

CBP Trade Outreach Webinars

In an effort to provide timely information to the trade community, CBP periodically offers free webinars on a variety of trade topics. The trade can attend the live webinar or view the recorded versions over the Internet. Space is limited for the live webinars, so register early. Participants in the live webinar will be invited to submit questions to the chat area. The following webinars are currently available for viewing via the Internet. In addition to the webinar recording, CBP also provides the presentation copies in a separate PowerPoint or pdf document.

ISF/”10+2 Webinar for Small to Medium-Sized Companies

Objective: Help importers understand the importance of ISF
Recorded: Tuesday, June 29, 2010

CBP Outbound Issues

Objective: Provide information about CBP’s role in the export process, along with outbound procedures and regulations
Recorded: Thursday, June 10, 2010

CPSC Notices of Detention
Objective: Presentation of the new CBSC Import Safety Detention Policy

Recorded: Wednesday, June 2, 2010

Check the CBP website for opportunities to attend upcoming live webinars as well as new postings of completed webinars.

U.S. Importer Hung Up On Hangars

It’s unusual to read about importers getting caught doing bad things, but recently, a U.S. importer of steel wire garment hangers was arrested and charged with fraud, smuggling and other charges related to the importation of the hangers.

Arturo Huizar-Velazquez and Jesus de La Torre-Escobara allegedly imported Chinese-made hangers to the U.S. via a third country, claiming the third country as the country of origin to avoid payment of dumping duties imposed on hangers manufactured in China. If convicted, Huizar-Velazquez and de La Torre-Escobar face maximum prison terms of five to 20 years per count, various fines and the payment of any applicable dumping duties.

Senators Ron Wyden (D-Ore.) and Olympia Snowe (R-Maine) introduced S.3725 to reduce the evasion of U.S. import duties by certain importers. The Enforcing Orders & Reducing Circumvention & Evasion (ENFORCE) Act of 2010 will provide the International Trade Commission (ITC) and U.S. Customs & Border Protection (CBP) additional resources to combat schemes to avoid payment of dumping duties. The act will facilitate more cooperation and information sharing between Customs and the ITC and create a faster response timeline for investigation of alleged violations. The ENFORCE Act would give the U.S. government 60 days, after an allegation of evasion is presented, to determine whether there is a reasonable basis to believe an importer is attempting to evade an AD/CVD order. If an affirmative preliminary determination is made, the ENFORCE Act would require collection of AD/CVD duties in cash until the investigation is concluded.

CBE Study Tip 4: Organization

Now that you have made the decision to take the October 2010 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 desk or your neighbor’s garage? All of the books are stacked on bookshelves. 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! Organization is another step on your journey to pass the CBE.

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 to 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 also. 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 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.

IPR - Product Identification Guides

Trademark and copyright holders that have created product identification guidelines can submit them to CBP electronically instead of providing hard copies to each port. The new electronic capabilities allow CBP to disseminate the information to all CBP personnel in a more efficient timely manner. Note that only the property rights that have been registered with CBP may be included in the guidelines.

The training guides provide an effective tool to assist CBP personnel in identifying counterfeit and piratical goods. CBP posted instructions on what to include in the product identification guides. The primary topics include

· Company Information
· Registration and Recordation Information
· Product Information
· Product Manufacture and Distribution
· Violation Information

The guide should contain photos that demonstrate the differences between legitimate articles and counterfeit articles. Product catalogs and links to web sites that provide pictures should also be included. CBP suggests that the guides be dated and updated for significant events such as additions for new registrations, changes in contracts or products, etc. The information contained in the training guides will be kept confidential. The guides are required to contain a disclosure provided by CBP on the inside front cover. Click HERE to view the detailed information about information CBP requires for the product identification guides.

CBE 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 lighter weight 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.

Trade News Update

FTA Tug-of-War

Introduced in April 2009, H.R. 1875 establishes an Emergency Commission to End the Trade Deficit. Concern about the impact of the growing trade deficit, the commission will examine establishment, administration and the impact of trade policies. The commission is charged with developing a trade policy to eliminate the U.S. merchandise trade deficit by January 1, 2019 and developing a competitive trade policy for the 21st century. The Commission must submit the plan no later than 16 months after the enactment of the Act. As part of this Act, The President is prohibited from submitting any free trade agreement or legislation implementing a free trade agreement to Congress until the Commission’s report has been delivered to Congress and the President. The House passed this bill on July 28, 2010.

On July 27, 2010, H.R. 1562 was introduced and requests the immediate implementation of the U.S. Columbia Trade Promotion Agreement, U.S. Panama FTA and the U.S. Korea FTA.

So, will the pending FTAs be implemented before HR 1875 puts them on hold?

Watch CBP on COPS - July 31st

The U.S. Customs and Border Protection will be featured on the Fox network television show COPS at 8:00 p.m. ET on Saturday, July 31.

Saturday’s episode, Protecting Borders and Stopping Crime show officers from San Ysidro Customs and Border Protection in California engaging in a sting operation to catch undocumented aliens coming into the U.S. Later, the officers halt a suspicious vehicle crossing the border, which eventually leads them to a major drug bust.

TSA: Certified Cargo Screening Program

Tick Tock! On August 1, 2010, the Transportation Security Administration (TSA) Certified Cargo Screening Program (CCSP) will require that 100% of all cargo shipped on passenger aircraft to be scanned before it can fly.

In 2007, Congress passed the Implementing Recommendations of the 9/11 Commission Act more commonly known as the 9/11 Act. The new law mandated that all cargo transported on a passenger aircraft be screened for explosives by August 1, 2010.

All cargo requires screening at the piece level. Skids and pallets must also be screened. To reduce the anticipated delays and costs at airline facilities, the TSA allows for screening at approved Certified Cargo Screening Facilities (CCSFs). You might be thinking that your cargo won’t be affected because it is shipped by an express carrier such as FedEx, UPS or DHL. While the majority of the cargo these companies handle may be shipped on cargo planes, they also use passenger aircraft. You should expect delays. Think about the lines and inspection process when you go through security at the airport and then picture the screening of every individual package. Check with your broker/freight forwarder for more information about your options for screening.

Click HERE to learn more about CCSP.

CBE Study Tip 2: 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 focuses on the various study aids and materials available to 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. Although not a frequent occurrence, almost all of the questions on the October 2009 came from the collection of previous exams.

2. DVD's, CD's & MP3’s
If you want the convenience of learning at your own pace, DVD's CD's and MP3’s allow you to study from the comfort of your home or office and may be reviewed as often as you like. CD's and MP3’s provide audio which is great for listening to during your daily commute or walk around the block. 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 fit your 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.

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.

CBP Posts New C-TPAT Risk Assessment Information

U.S. Customs and Border Protection (CBP) recently posted risk assessment information for C-TPAT on its web site. Along with this document, they also posted frequently asked questions (FAQ) related to the supply chain security risk assessment. The Supply Chain Security Specialists have been making comments related to specific risk assessment activities during validation and revalidation reviews.

Click HERE to view the "C-TPAT 5 Step Risk Assessment Process Guide"

Click HERE to view the FAQs.

For organizations that are members of C-TPAT, check the documents section in your secure portal for additional risk assessment documents and information from other workshops conducted earlier this year.

CBE Study Tip 1: Required Resources

If you plan to take the October exam, it is important develop a study plan that guarantees your chances of success. Boskage wants to help you achieve your goal of passing the exam; therefore, we are starting a series of articles to support you on your journey to success! Our first topic in this series focuses on exam resources.

The first step in your plan should be acquiring the required texts and study materials. These materials come in two categories, “required” and “study aids”. Required materials are those that students must have because questions on the exam have been selected from these sources. CBP lists the required materials in the Notice of Examination. The required materials are listed below and you should obtain them now if do not already have them. All of the required materials can be purchased from Boskage Commerce Publications.

Required Exam Resources

Harmonized Tariff Schedule of the United States (2010 version)
It is important to use this edition since questions often require the determination of the correct HTS number, duty rate and applicability of Free Trade Agreements, all of which may change slightly from year to year.

2.Title 19, Code of Federal Regulations (revised as of April 1, 2009) Parts 0 to140, 141 to 199
Last year, CBP included Parts 200 to End on the Exam; however, it appears that these will not be required for the October 2010 Exam.

Part 149 covering ISF was added to Title 19 in 2009, so the new material would be a great target for this exam.

3. Customs and Trade Automated Interface Requirements (CATAIR)

• Appendix B - Valid Codes
• Appendix D - Metric Conversion
• Appendix E - Valid Entry Numbers
• Appendix G - Common Errors
• Appendix H - Census Warning Messages
• Appendix L - Drawback Errors
• Glossary of Terms

4. Instructions for Preparation of CBP Form 7501 (8-30-2005)

5. Submission Changes for Supplemental Information Letters and Post Entry Amendments

6. Remote Location Filing Eligibility Requirements

7. Directives
• 3510-004, Monetary Guidelines for Setting Bond Amounts
• Amendment to 3510-004 for Certain Merchandise Subject to Antidumping/Countervailing Duty Cases
• 3550-055, Instructions for Deriving Manufacturer/Shipper Identification Code
• 3550-067, Entry Summary Acceptance and Rejection Policy
• 3550-079A, Ultimate Consignee at time of Entry or Release
• 3560-001A, Census Interface-Processing Procedures
• 5610-002A, Standard Guidelines for the Input of Names and Addresses Into Automated Commercial System (ACS) Files

Note: The use of any versions of the listed references other than those recommended is at the applicant's own risk.

Seeing this list of resources on paper and as a stack of documents on your desk can seem quite overwhelming. We’ll discuss organization of your materials in an upcoming article. Stay tuned to the Boskage Trade News for more helpful hints on studying for the Customs Broker Exam. The next article will cover the second category of exam resources, the “Exam Study Aids”.

CBP Posts Notice of Exam for October 2010

U.S. Customs and Border Protection posted a notice to its web site announcing the October 2010 Customs Broker License Exam. The exam will be held at various locations on Monday, October 4, 2010. Contact your local port office to verify testing locations. Applications (CBP 3124E) and the exam fee of $200 must be received on or before Friday, September 3, 2010. Applicants should bring the following reference materials to the exam. Please note the appropriate editions for the HTSUS and CFR.

- Harmonized Tariff Schedule of the United States (2010 version)
It is important to use this edition since questions often require the determination of the correct HTS number, duty rate and applicability of Free Trade Agreements, all of which may change slightly from year to year.

- Title 19, Code of Federal Regulations (revised as of April 1, 2009) Parts 0 to140 and 141 to 199
Last year, CBP included Parts 200 to End on the Exam; however, it appears that these will not be required for the October 2010 Exam.

Part 149 covering ISF was added to Title 19 in 2009, so it is a target for this exam.

- Customs and Trade Automated Interface Requirements (CATAIR)

• Appendix B - Valid Codes
• Appendix D - Metric Conversion
• Appendix E - Valid Entry Numbers
• Appendix G - Common Errors
• Appendix H - Census Warning Messages
• Appendix L - Drawback Errors
• Glossary of Terms
  

- Instructions for Preparation of CBP Form 7501 (8-30-2005

-Submission Changes for Supplemental Information Letters and Post Entry Amendments

-Remote Location Filing Eligibility Requirements

- Directives

• 3510-004, Monetary Guidelines for Setting Bond Amounts
• Amendment to 3510-004 for Certain Merchandise Subject to Antidumping/Countervailing Duty Cases
• 3550-055, Instructions for Deriving Manufacturer/Shipper Identification Code
• 3550-067, Entry Summary Acceptance and Rejection Policy
• 3550-079A, Ultimate Consignee at time of Entry or Release
• 3560-001A, Census Interface-Processing Procedures
• 5610-002A, Standard Guidelines for the Input of Names and Addresses Into Automated Commercial System (ACS) Files
  

It’s time to get ready for the next Customs Broker Exam! Click HERE for a complete list of the Boskage study plans and products designed to help you study and pass the exam! Remember, there is no substitute for actually reading and studying the required materials. Visit the Boskage Trade News Blog for additional for import/export news updates, articles about specific trade topics and helpful posts related the Customs Broker Exam!


NEW:
The online course with a dedicated instructor and online discussion forum started July 12th. It’s not too late to get started. Click HERE to check it out!

Welcome DAP & DAT!

After much work by the ICC appointed experts, Incoterms® 2010 is scheduled to be launched in September and go into effect on January 1, 2011. Used in international and domestic contracts for the sale of goods, Incoterms help parties avoid misunderstandings by clearly identifying the obligations of the buyer and seller.

Although the book has not been officially released, a few details have been provided for the public. The 2010 edition will include 11 terms instead of the 13 in the previous edition. We welcome two new terms to the list of 11, DAT and DAP. We say goodbye to DAF, DES, DEQ and DDU. In addition to the 11 rules, Incoterms® 2010 includes:

· Information on security-related responsibilities for shipments.
· Guidance for the use of Incoterms in domestic trade.
· Notes and graphics to assist users in selecting the correct rule for the transaction.
· Information about the use of electronic procedures.


The Incoterms are arranged in two categories as follows:

Any Mode of Transport
CIP - Carriage and Insurance Paid
CPT - Carriage Paid To
DAP - Delivered At Place
DAT - Delivered At Terminal
DDP - Delivered Duty Paid
EXW - Ex Works
FCA - Free Carrier

Sea and Inland Waterway Transport Only
CFR - Cost and Freight
CIF - Cost, Insurance and Freight
FAS - Free Alongside Ship
FOB - Free On Board


Starting in late September 2010, the U.S. Council for International Business will offer a series of one-day seminars to familiarize U.S businesses with the new rules. Classes will be taught by Incoterms expert and appointed member of the revision team, Frank Reynolds. Attendees will receive a copy of the official ICC Incoterms® 2010 book and a companion book, Incoterms® for Americans®, as well as comprehensive seminar notes. Click HERE to view the seminar.

New Trade Agreements on the Horizon

We take a little break from the discussion of current trade agreements to give you a preview of the various agreements that are currently being considered.

U.S. –Korea Free Trade Agreement

The KORUS FTA was signed by the Republic of Korea and the United States in 2007, but has not been approved by Congress. This agreement would the first U.S. free trade agreement with a North Asian country and could be the catalyst for other agreements in the region. Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products would become duty free within three years of the date the FTA enters into force, and most remaining tariffs would be eliminated within 10 years.

There are still some issues to be addressed before President Obama will present it to Congress. Some of the concerns involve leveling the playing field for U.S. workers and manufacturers in the automotive and beef industries.

Click HERE to read the final text of the agreement.


U.S. – Colombia Free Trade Agreement

The U.S. –CFTA was signed in 2006 and is also awaiting approval by Congress. The Colombia FTA will immediately eliminate approximately 80% of tariffs on U.S. exports, with all remaining tariffs phased out over ten years. The Colombia FTA also includes important disciplines relating to customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.

This agreement created more concern because of the blatant disregard for human rights and violence against workers in Colombia. The AFL-CIO opposed the agreement until the Colombian government could show sustained improvements in this area. The implementation of this act was delayed in 2008 when it was removed from the ‘Fast Track” timetable. President Obama opposed this agreement during his campaign; however, he met with Colombian President Alvaro Uribe in June 2009 and asked the USTR to work with Colombian representatives to move the agreement forward.

Click HERE to read the final text of the agreement.

Click HERE to read the U.S._CFTA: Economic and Political Implications (April 2010)


Trans-Pacific Partnership

The United States entered negotiations for a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement to create a high standard, broad-based regional trade agreement and expand American exports in the Asia-Pacific region. The first round of negotiations took place from March 15-19 in Melbourne, Australia. The second round took place from June 14-19 in San Francisco, CA. During this meeting, approximately 25 U.S interested parties were represented, including AFL-CIO, FedEx, National Farmers Union and the U.S. Chamber of Commerce. There are currently eight partner countries - Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, the United States, and Vietnam. Negotiations are expected to extend into 2011.

Click HERE to read additional information about the TPP.

Oil Spill Dredges Up The Jones Act

--UPDATE--

Since this article was originally published, the U.S. accepted 22 offers of assistance from 12 countries. Click HERE for information about the offers.

Many Americans may be wondering why no one has come to help us contain the oil spill. Within a week of the explosion, 13 countries offered assistance from vessels and crews with experience in removing oil spill debris. The State Department acknowledged that it received 21 offers of assistance from 17 countries. However, a 1920 law, the Jones Act, foreign vessels and crew are not permitted in U.S. waters.

The Merchant Marine Act of 1920 (P.L. 66-261) is a federal statute that regulates maritime commerce in U.S. waters and between U.S. ports. Section 27, also known as the Jones Act, requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and containing crews of U.S. citizens and permanent residents. At the time this law was enacted, there was a need to support the U.S. merchant marine industry; however, this law favors labor unions and hinders free trade, especially for agricultural products by increased shipping costs.

So, it’s not that other countries don’t want to help; our laws don’t allow them to help. Last week, Senator John McCain introduced legislation that would repeal the Jones Act. A notable point in his speech was the reference to an ITC study in 2002 that showed repeal of the Jones Act would have an annual positive effect of $656 million. Click HERE to read about some of the benefits McCain highlighted in his speech.

The Administration has the ability to grant a waiver of the Jones Act; however, this has not been done. Therefore, some Senators have put forward legislation to waive the Jones Act during emergency situations such as this one; however, McCain proposes to permanently repeal the Jones Act to avoid situations like this one and saving consumers hundreds of millions of dollars
The Maritime Cabotage Task Force, a lobbying group representing Jones Act carriers, shipyards and dredgers seem to support a waiver. The task force said that if foreign-flag vessels are needed for cleanup within domestic waters, it would not oppose waivers to the Jones Act.

The big question still looms like the oil in the Gulf. Will a waiver or repeal happen in time to provide some relief in the Gulf?

Share your thoughts with us by taking the poll located on the top right corner of the page.

Free Trade Tuesday - DR-CAFTA

The Dominican Republic – Central America Free Trade Agreement (DR-CAFTA) is a multilateral agreement between the U.S. and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Dominican Republic. The agreement is designed to develop economic relations and encourage trade between the parties through the reduction and elimination of tariffs and other barriers to trade. When launched in 2006, DR-CAFTA immediately eliminated tariffs on more than 80 percent of U.S. exports of consumer and industrial products, phasing out the rest over 10 years. DR-CAFTA does not have an expiration date and all duties should be completely phased out by January 1, 2025. The agreement also eliminates the payment of the 0.21% merchandise processing fee for qualifying articles.

The DR-CAFTA uses a methodology similar to NAFTA, CFTA, and AFTA to determine whether a good qualifies for preferential tariff treatment; however, the responsibility for providing information to substantiate the claim is on the importer. A certificate of origin is not required to be presented in order to obtain benefits, unless requested by CBP. The U.S. Commercial Service maintains a sample form, which is similar to the NAFTA Certificate. Click HERE for some interesting CAFTA trade information on exports to and imports from CAFTA countries.

DR-CAFTA - Key Facts
Expiration: N/A
HTS General Note: GN 29
Imported Directly: No additional production allowed. Must stay under Customs control.
SPI: P
De Minimis:
· 10% - Non Textiles (Value)
· 10% - Textiles (Weight)
· Some Exceptions
Origin Criteria:Tariff Shift, RVC - Build-up/Build-down, Accumulation
MPF: Originating Goods Exempt
Countries: El Salvador, Nicaragua, Honduras, Guatemala, Dominican Republic, Costa Rica, United States
Related Regulations: 19 CFR 10. 581

Who Is Looking At Your Credit Report?

Most of us realize that when we borrow money, creditors access our credit reports to determine whether to lend us money. But who else looks at our credit and why would they need information about our credit?

First, you should be looking at your credit report at least once a year to check for accuracy, especially with the rise of identity theft. Reviewing your credit report once a year and knowing your rights are some of the most important steps you can take to safeguard your credit and privacy.

Credit reports are a gold mine of information about consumers. They contain Social Security number, date of birth, current and previous addresses, telephone numbers (including unlisted numbers), credit payment status, employment, even legal information. However, they do not medical information. In the case the report is requested by an employer or potential employer, it will not contain information related to age, marital status or race.

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) allows consumers to request a free copy of their credit report annually from each of the three credit bureaus - Equifax, Experian, and TransUnion. Reports can be ordered online at http://www.annualcreditreport.com/.

So, why are you reading about this in an international trade blog? Good question. There are two reasons – your employer and the government.

The federal Fair Credit Reporting Act (FCRA) and state laws restrict who has access to your sensitive credit information and what uses can be made of it. The following is a list of parties that can access your credit report. Pay close attention to 4, 6 and 8.

1. Parties considering granting you credit.
2. Landlords.
3. Insurance companies.
4. Employers and potential employers (but only with your consent).
5. Companies with which you have a credit account for account monitoring purposes.
6. Those considering your application for a government license or benefit if the agency is required to consider your financial status.
7. A state or local child support enforcement agency.
8. Any government agency (limited usually to your name, address, former addresses, current and former employers).

Let’s take a look at employers first. Some of our readers may be looking for a new job or a promotion with their current employer. Some employers use credit reports to screen applicants as a general indication of an applicant’s financial and personal integrity, while some also review them when considering promotions to sensitive positions. For those of you who are members of C-TPAT, look at your business partner and personnel requirements. In the best practices materials, CBP suggests verification of financial soundness of business partners and background checks including financial history on employees. Therefore, if your employer is a member of C-TPAT, it is likely that they have reviewed your credit report. This should also put you on notice that if you apply for a new job with another company, they may also review your credit report. If you are looking for a job, this is another good reason to review your credit report and correct errors that you may find. Note that employers and potential employers may only check your report if you provide permission. Do you remember reading the small print in one of those documents you signed?

Next, we will look at the government. For those of you who are taking the Customs Broker Exam or are awaiting your license, guess what? CBP wants to review your credit report too! Although not specifically included in the CFR, CBP states that the background investigation includes a review of character references, credit reports and arrest records. This review relates to business integrity, which is specifically referenced in 19 CFR 111.14. Question 15 on the CBP 3124 asks about debt and bankruptcy. While negative information on the credit report might not disqualify you from obtaining your broker’s license, it’s another good reason to check your report and try to fix any inaccurate entries. Notice that the government does not seem to need your consent to probe into your background. The signature block does not give them permission to perform the background check; it just certifies you have provided accurate information.

If you want to know who has been looking at your credit report and review your credit history, it’s time to request your report. In addition to the information about your credit, you will find that the report contains information on any credit inquiries within the past 12 months.

What Is PS-Prep?

The trade community is quite familiar with C-TPAT, the joint government-business program to strengthen the supply chain and border security; however, there is another government-private sector partnership that is starting to receive some attention, PS-Prep.

PS-Prep is a partnership between DHS and the private sector that allows private organizations to obtain certification by DHS for emergency preparedness programs. Similar to C-TPAT, the program is currently voluntary.

Title IX of the 9/11 Commission Act of 2007, the Department of Homeland Security (DHS) is required to develop and implement a voluntary program of accreditation and certification of private entities to encourage private sector preparedness, including disaster management, emergency management and business continuity programs. While this program will not prevent disasters, PS-Prep seeks to enable businesses to respond and recover from a disaster in an efficient effective manner. Private sector entities such as companies, not-for-profit corporations, hospitals, universities, etc. may be certified by an accredited third party to verify that the entity adheres to one or more preparedness standards adopted by DHS.

The final standards for the program were published in the Federal Register on June 16, 2010. There are currently three accepted standards for the program:

ASIS SPC. 1-2009 – American Society for Industrial Security
British Standard 2599-2.2007 – British Standards Institution
NFPA 1600:2007/2010 - National Fire Protection Association

DHS is responsible for monitoring the effectiveness of the program and make improvements and adjustments to PS-Prep as needed. For a nation trying to recover from a recession, floods, oil spills and other woes, the new program is likely to generate a few questions and comments from the trade community.

Free Trade Tuesday - Singapore

Implemented in 2004, the United States-Singapore Free Trade Agreement (SFTA) eliminates tariffs on most goods originating in the United States and Singapore over a maximum transition period of ten years. There is no expiration date and duties on eligible goods should be phased out by 2013.

The rules of origin for goods that are not wholly obtained from the United States or Singapore are based on a tariff-shift method and/or regional value-content method similar to the rules under NAFTA. When it is necessary to use the RVC, SFTA uses a “build-up & build down” calculation. A notable difference in the SFTA is that the responsibility is on the importer, rather than the exporter, to demonstrate that a good qualifies for preferential tariff treatment. Eligible goods are designated by the letters "SG" in the Special subcolumn.

Special Requirements

Generally, under the SFTA, a non-textile good will qualify for preferential tariff treatment as a "product of Singapore" if:

• The good is wholly obtained or produced entirely in Singapore, the U.S. or both, or,
• Each non-originating material used in the production of the good imported from Singapore undergoes the specified tariff shift, or the good otherwise satisfies applicable Regional Value Content.

Goods that qualify for preferential tariff treatment are not subject to the Merchandise Processing Fee (MPF), though textile merchandise entered under TPL numbers 9910 will still be subject to MPF.


Tariff Preference Levels (TPLs) have been established for certain apparel products of cotton and man-made fibers, to allow entry under a reduced duty rate up to a specific quantity of goods that are not originating goods. Once that quantity is reached, the product is dutiable at the column 1 rate and MPF is due. A valid preferential Certificate of Origin/Eligibility (Certificate) is required whenever a TPL claim is made. This Certificate must be an original and must be filed with the entry documents. If a good does not qualify as originating under SFTA or under the established TPLs, but it is still considered a product of Singapore, then the normal column 1 rate would apply, and MPF is due.

SFTA - Key Facts

Expiration: N/A

HTS General Note: GN 25

Imported Directly: Yes - unloading/reloading in third countries allowed. No additional production allowed.

SPI: SG

De Minimis:

• 10% - Non Textiles (Value)
• 7% - Textiles (Weight)
• Some Exceptions

Origin Criteria:

• Tariff Shift
• RVC - Build-up/Build-down
• Accumulation

MPF: Originating Goods Exempt
Countries: Singapore, United States
Related Regulations: 19 CFR 10.501 – 10.570

A Customs Fairy Tale and Importers Nightmare

Once upon a time, there was a large importer of computers and parts. The computer equipment lived in a large brick warehouse called a foreign trade zone (FTZ). When the computer equipment left the FTZ, the importer entered the secondary batteries for notebook computers as automatic data processing machines under 8471, which was the same HTS code as the notebooks. The classification carries a free rate of duty. The importer was very happy!

One day while the importer was minding their own business, Customs and Border Protection Officers came knocking on the door. The officers demanded that the importer change the classification of the batteries to other storage batteries under 8507 and a 3.4% rate of duty. The importer was not happy!

The importer tried to explain that customers ordered the notebook containing the primary battery and then had the option of ordering additional items such as the secondary battery. The standard notebook package contained the computer, primary battery, power cord and operator manuals. When secondary batteries were ordered, they were tossed in the box and classified under the same provision as the computer.

The officers didn’t like this explanation and a big argument ensued. The importer and officers could not come to an agreement, so they decided to let a judge decide what they should do. The judge took out his rulebook and cited the General Rules of Interpretation, and something about common meaning. He also used a big book call the Explanatory Notes to help him decide. He told the importer and officers if they didn’t play nice together that he would throw that big book at them!

The importer offered two reasons why their classification was correct. First, they argued that the secondary batteries were functional units of the notebook. Just in case the judge didn’t like that idea, the importer added that the batteries should be classified as a component of the retail set under GRI 3(b). The importer was hopeful!

The judge took these arguments into consideration and tossed them both out. The batteries couldn’t be functional units because they are not essential to the performance. The primary function of the computer is served by the primary battery that is already encased in the computer. In reviewing the argument that the batteries are a component of a retail set under GRI 3(b), things started to look better for the importer, as the secondary battery helps meet a particular need or carries out a specific activity required by GRI 3(b). However, the judge dug a little deeper and discovered that 3(b) requires that the merchandise be “put up” together with the other components. The importer argued that the batteries were put up with the rest of the components, but the judge got out the big book, which explained that “put up” means that the goods are offered together for retail sale or displayed or shown together for retail sale. The batteries were offered for sale as individual units and customer could purchase one or more secondary batteries, along with other items when purchasing the notebook. The additional items were tossed in the box that already contained the computer. The judge ruled that the batteries should be classified under 8507 and told the importer and agents to play nice in the future.

The End!

Click HERE to read the true story this fairy tale was based on.

Free Trade Tuesday - AGOA

Implemented in 2000, the African Growth and Opportunity Act provides for the duty free entry of certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences program, as well as, the duty and quota-free entry of certain textile and apparel articles that meet certain specific production requirements. The AGOA is intended to encourage economic growth in more than three dozen sub-Saharan countries. This program will be in effect until September 30, 2015.

The origin criteria under AGOA are similar to that of GSP. In order to be eligible special duty treatment under AGOA, an article must meet the following criteria:

·The article is imported directly from a designated beneficiary country.

·The sum of (1) the cost or value of the materials produced in one or more designated beneficiary countries, plus (2) the direct costs of processing operations performed in the designated beneficiary country, or in one or more members of an association of countries which is treated as one country, is at least 35 percent of the appraised value of the article.

·Up to 15 percent of the 35 percent local value content requirement may be attributable to the cost or value of materials produced in the United States.

·Origin will not be based on simple combining or packaging operations or dilution with water or another substance, as these processes do not materially alter the characteristics of the article.

AGOA Key Facts

Expiration: 9/30/2015 - GSP Provisions
HTS General Note: GN 16
Imported Directly: Yes
SPI: D
De Minimis: 10% Weight - Textiles
Origin Criteria: 35% - with 15% U.S. Origin Content Allowable, Substantial Transformation MPF: No Exemption
Countries: Click for list.
Regulations:
19 CFR 10.211
10.178a

Export or Outsource - Does Your Heart Care?

When most people think about international trade, they picture goods moving across borders. What does it mean to export a service? What is the difference between exporting services and outsourcing jobs?

Export.gov defines exports as goods and services produced in one country and sold in other countries in exchange for goods and services, gold, foreign exchange, or settlement of debt.

Export.gov defines activities such as banking, telecommunications, advertising, data processing, and consulting as services. Service industries account for approximately two-thirds of the economic activity of the United States and for an increasing percentage of U.S. exports. Therefore, when a U.S. accounting firms contracts with a Swedish company for the U.S. firm to perform accounting services on behalf of the Swedish firm, we have a service export.

Merriam-Webster’s Online Dictionary defines outsourcing as the procurement of goods or services needed by a business or organization under contract with an outside supplier. Therefore, when a company in the U.S. creates a call center in the Philippines to provide customer service to its customers, this activity is called outsourcing.

So, maybe exporting and outsourcing aren’t the same, but they could be related because some of the same services that are being sold to other countries, such as accounting and data processing are also being outsourced.

What is being outsourced to foreign countries? Call centers for numerous companies are located all over the world. Just try to get technical help with your Internet or computer and you’ll likely be talking to someone in India or the Philippines. However, Sen. Charles Schumer, D-N.Y. introduced legislation earlier this month that proposes a charge to U.S. companies for calls transferred to a foreign call center. This proposal opens up another can of worms that should test the difference between exporting and outsourcing. Is there an actual service being exported or has this service been outsourced? It may depend on where the initial call is actually answered? If one argues that it is an export, then the proposal may meet with some constitutional challenges under the Export Clause of the Constitution.

U. S. colleges and universities as well as businesses often outsource some of the eLearning development work to India.

One of the newest and most controversial outsourcing ventures is called “medical tourism.” Medical tourism is a term that describes overseas travel for medical treatment and other health care services. Could U.S. citizens be required to travel to foreign countries for medical services? At some of the hospitals in India, U.S. trained doctors can perform heart surgery for $6,000, while the same surgery costs around $100,000 in the U.S. What’s next on the list? So far, I think home improvement projects may be safe. It’s not likely that someone in the Philippines will be able to fix my broken air conditioning unit today.

What does America need to do in order to export more and outsource less when it comes to jobs and services? It might be impossible to export or outsource some personal services such as cleaning and home maintenance, but if we continue to outsource certain services to other countries, what will Americans do? What will we export?

By the way, all of the bcpLearning courses are created and managed using U.S.A. labor. When you contact our support center or call our office, you are talking to someone in the U.S.A.

Recent Suspensions of Export Privileges

As reported in the Federal Register on June 9, 2010, the Bureau of Industry and Security recently suspended the export privileges of the following parties and revoked licenses issued to them under the Export Administration Act or the EAR. Don’t let this happen to you!

Joseph Piquet of Port St. Lucie FL was convicted in May 2009 for conspiracy to purchase high-tech military and dual use electronic components for shipment to Hong Kong and China without the required export licenses. His export privileges have been suspended until May 14, 2019; however, it’s not likely he’ll miss them since he still has another four years to serve on his prison sentence.

Aaron Robert Henderson doing business as Valhalla Tactical Supply of North Liberty, Iowa pleaded guilty in September 2009 for knowingly and willfully exporting sighting devices from the U.S. to Taiwan and Afghanistan without the required licenses. Sentenced to time served and $100 payment to the Crime Victims Fund, his export privileges have been suspended until September 18, 2019.

Shu Quan-Sheng of Newport News, Va. pleaded guilty and was convicted for illegally exporting space launch technical data and defense services to China, as well as offering bribes to Chinese government officials. Export privileges have been suspended until April 10, 2014, however, he won’t likely miss those privileges with approximately three years left to serve on his prison sentence. He is also listed on the Department of State’s Debarred List.

Free Trade Tuesday: NAFTA RVC

In order to determine NAFTA eligibility, a regional value content (RVC) calculation may be required. The RVC is a calculated percentage of the value of the product that represents its North American content. RVC must be calculated using either transaction value or net cost.

For example, plastic boxes classified under 3923.10 made from imported resins of 3901.20, must meet RVC even though it satisfies the tariff shift requirements. . The main areas of the tariff schedule that require a Regional Value Content calculation are automobiles, chemicals, footwear and machinery.

Under the transaction value method, the calculation is made on the value of non-originating materials as a percentage of the transaction value of the goods, which is the total price paid for the good, with certain adjustments for packing and other items. See 19 CFR 152 for additional information on transaction value. The value of the non-originating materials is calculated as a percentage of the invoice price actually paid for the goods. Because the transaction value method permits the producer to count all of its costs and profit, the required percentage of RVC under this method is higher than under the net cost method. Transaction value cannot be used when there is no sale, in some related party transactions and for certain motor vehicles and parts.

Transaction Value Formula: RVC = [(TV-VNM)/TV] X100

TV Example:
An electric curling iron (8516.32) is made in Mexico from Japanese hair curler parts (8516.90). Each curling iron is sold for $4.40; the value of the non-originating curler parts is $1.80. [(4.40-1.80)/4.40] X 100 = 59% The hair curler will not be considered an originating good under this method, since the required RVC is 60%.


RVC using net cost is calculated as a percentage of the net cost to produce the merchandise. Net cost represents all of the costs incurred by the producer, minus expenses for sales promotions, royalties, shipping, packing costs, and non-allowable interest costs. The percentage content required under the net cost method is lower than under transaction value because of the exclusion of certain costs from the net cost calculation.

Net Cost Formula: RVC = [(NC-VNM)/NC] X100

NC Example:
The producer of the curling iron in the TV example states that the cost is $3.90, which includes $0.25 for shipping and packing. There are no costs for royalties, sales promotion or non-allowable interest. The net cost is $3.65. [(3.65-1.80)/3.65] X100 = 50.1% The hair curler would be considered originating, since the required RVC is 50% when the net cost method is used.



Answer to NAFTA Tariff Shift Question 6/1/2010

First, we should look up the HTSUS number provided to make sure it is eligible for duty-free treatment from Singapore. We find the symbol "SG" in the Special subcolumn which indicates that the HTSUS is indeed eligible for duty-free treatment if the non-originating items satisfy the tariff shift. Turning over to General Note 25, we find the tariff shift must be from any other chapter to Chapter 96. All of the non-originating products on our list EXCEPT the toothbrush meets this requirement; therefore, the kit it not eligible for special treatment under the Singapore FTA.

General Trade News

It's been a slow week in trade news, so today's blog contains some interesting tidbits of general interest.

Summer Travel

With schools adjourning for the year and summer on the way, people are planning vacations. Airports will see an increase in travelers for the summer months. If you are planning to fly for personal or business, check out the Summer Travel Tips provided the Transportation Security Administration. Be sure to click on the link that provides additional information on how to pack to get through the line faster! Here’s an additional tip from the Wizard. If you are traveling some place warm, wear sandals. They are easy to slip off and on when going through security!


Importer v. Broker

It’s not uncommon to hear about importers and brokers suing U.S. Customs & Border Protection, but the news of importers suing customs brokers is rare. Recently, an importer filed a suit under the Lanham Act against a customs broker in Savannah, Georgia. The suit alleges that the broker failed to use “reasonable care” and their actions resulted in the furtherance of the distribution and sale of counterfeit goods. This is an unusual case, since CBP normally places the majority of responsibility on the importer. It will be interesting to learn more about the facts of this case see how it and a similar case filed by the same importer in New Jersey are resolved.


Illegal Exports of Electronic Components

In May, two Chinese nationals and a corporation owned by one of them were found guilty of conspiring to violate U.S. export laws and illegally exporting electronic equipment from the U.S. the China. For more than 10 years, some of the illegal exports were sent to Chinese military entities and included items such as military radar equipment and global positioning systems. Documentation produced revealed that the defendants and employees had knowledge that the restricted goods were being shipped to China without the required export license. The Chinese nationals each face 20 years in prison, $1 million in fines and deportation after serving their sentence. The corporation was fined $1.9 million dollars. Here’s a question from the Wizard. How much of that money with the government actually collect?

Update on Request for Increase in Informal Entry and De Minimis Amounts

In April 2009, the Express Association of America (EAA) made a request to CBP for an increase in the informal entry amount from $2,000 to $2,500 and the de minimis amount for express couriers from $200 to $800. Just over a year later, Congressman Bill Owens introduced H.R. 5375, a bill to change the de minimis amounts under 19 U.S.C. 1321 from $200 to $1,000. Owens believes the increase would encourage economic developmen and reduce the number of entries filed. The current $200 limit was established in 1993 and has not been adjusted for inflation in 17 years. According to the EAA web site, CBP is working on the Notice of Proposed Rulemaking related to increases proposed last year. Projected publication for comments is late summer or early fall. Maybe by this time next year, we will have a resolution to these requests!

NAFTA Tariff Shifts

Determining origin for free trade eligibility can be a complex and time consuming task. Use of the global economy often results in raw materials from multiple countries being shipped to one country for manufacture. Does the inclusion of a non-originating good eliminate the finished good from receiving benefits under a free trade agreement?

A non-originating article may be considered originating if that article undergoes a tariff shift. When a rule of origin is based on a change in tariff classification, each of the non-originating materials used in the production of the goods must undergo the applicable change in tariff as a result of production occurring entirely in the territory of one of the parties to the agreement.

This means that the non-originating materials are classified under one tariff provision prior to processing, and classified under another upon completion of processing. The specific rules of origin found in each of the agreements define exactly what change in tariff classification must occur for the goods to be considered "originating." A change in tariff classification may be from one heading in a chapter to another heading in the same chapter. In some cases, the list in GN 12(t) specifies that a shift must be from one specific chapter to another specific chapter.

Example 1- Heading Changes:
A good which will be classified in Chapter 17, under 1704, needs only to have been changed into heading 1704 from any other heading, which may include headings 1701, 1702, or 1703.

Example 2 -Chapter Changes:
In order for a good which is to be classified in Chapter 5 to be eligible under NAFTA, the good must have been changed into a good of Chapter 5 from any other chapter of the HTSUS.

Try the following problem on your own. We’ll provide the answer next week when we examine regional value content (RVC). For additional information, CBP posted a good explanation of tariff shifts on their web site. Although it is geared towards textile importers, the explanations and examples are helpful.

A travel kit imported into the U.S. from Singapore is classified under HTS 9605.00.0000. The kit contains components that originate in the U.S. or Singapore except for the following non-originating items?

· A plastic case classified under HTS 3923.10
· Sewing thread classified under HTS 5204.20
· Sewing needles classified under HTS 7319.90
· Toothpaste classified under HTS 3306.10
· A toothbrush classified under HTS 9603.21

Is the kit eligible for special treatment under the U.S. – Singapore Free Trade Agreement?