Practicing Reasonable Care

How to Reduce Risk & Protect Your Company

The Customs Modernization Act makes Reasonable Care a legal requirement when importing into the United States.  Not watching your Reasonable Care duties doesn’t just leave you open to delays and confusion, it can lead to penalizing action taken against you and your goods.

In This Webinar, We’ll Discuss:

  • What reasonable care is and why it’s so important
  • What CBP is looking for
  • How to monitor your risk
  • How to protect your company
  • Specific topics
    • Classification
    • Valuation
    • Origin & marking
    • IPR
    • Forced labor

Webinar Handouts & Resources

Webinar Slides

Informed Compliance Publications

HTSUS

19 CFR

Customs Rulings Online Search System

CBP Forced Labor Website

Automated Commercial Environment

Customs Directive 3530-002A – Right to Make Entry

Quota Enforcement and Administration

AD/CVD Resources

BIS Website

NAFTA vs. USMCA

FROM NAFTA TO USMCA: ARE YOU READY?

We want to help your organization get answers to some of the important questions:

  • What are the key differences between NAFTA and USMCA?
  • When does the USMCA agreement take effect?
  • How long is my current NAFTA Certificate valid?
  • What should I do to prepare?

Webinar Handouts & Resources

USMCA Side Letters

Classification – Man vs. Machine

Classification under the Harmonized Tariff Schedule (HTS) can be a complicated and nuanced process, especially as you dig deeper into the tariff to the subheading and statistical levels. There are tools out there that allow you to expedite the process, but The Tool has yet to be invented that can beat out human analysis.

SCHEDULE B SEARCH ENGINE
The US International Trade Commission (US ITC) provides a searchable interface for the HTS while the Bureau of Census gives you a more robust decision-engine for Schedule B classification. There are merits to each, but they have their pitfalls as well – the only way to be sure requires a savvy user and some additional steps. Take this example, where function trumps form:

EXAMPLE 1: CHIA SEEDS AND PRIMARY USE CLASSIFICATION
If you enter “chia seeds” into the Schedule B search engine, you’re immediately taken to HTS subheading 1211.90. The heading description of 1211 is “Plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh, chilled, frozen or dried, whether or not cut, crushed or powdered”.

But what if you’re planting the chia seeds? The uses described in 1211 would not cover sowing – but another heading might. HTS heading 1209 provides for “Seeds, fruits and spores, of a kind used for sowing” and would be a more appropriate place to classify the chia seeds.

Relying on search engines here would have lead us to an incorrect classification, and potentially a different rate of duty!

INDUSTRY TERMINOLOGY
There are other pitfalls that require a more practiced approach in order to arrive at the appropriate classification. Industry terminology is not always in line with the HTS, and relying on items as they are described on a commercial invoice can be potentially disastrous.

EXAMPLE 2: SPICE RACKS AND SETS
An invoice listing a “Spice Rack” might contain both the rack AND the spices. U.S. Customs does not permit the classification of the spices as part of a set, and the entry would need to enumerate multiple classifications for each component – the rack and each individual spice.

Using automated searching to classify a spice rack might lead you to heading 7323 for “Table, kitchen or other household articles and parts thereof, of iron or steel”, but would completely ignore the spices themselves.

it’s all too easy to classify incorrectly by relying solely on industry descriptions. In a worst-case scenario, you may neglect to declare items that were imported – effectively smuggling items for commerce into the country, and the penalties for this can be severe!

EXPLANATORY NOTES
The World Customs Organization (WCO), framers of the HTS, acknowledge the ambiguity and uncertainty of the descriptions in chapters, headings, and subheadings. To that end, they supplement the HTS with the Explanatory Notes (“ENs”).

The ENs provide more thorough descriptions and examples for some of the more nuanced elements of the HTS. While not dispositive, the ENs are an accepted supplement to the HTS for Customs organizations around the world. Disputes can often be settled through application and citation of the ENs as supporting evidence in your classifications. Most of the electronic tools and applications available cannot incorporate the ENs into their analysis, leaving you without this extremely valuable source of analysis.

EXAMPLE 3: COMPUTERS AND THE EXPLANATORY NOTES
Computers are a tricky item to classify. If you search for “computer” in the USITC search engine, your results are 8423, 9017, and 9022 – Retail scales, Hand operated input devices, and computed tomography apparatus respectively. None of these adequately describe a computer. If we use the Schedule B search engine, we are prompted to identify if the computer is “At least with a central processor, input and output unit in the same housing” or “Other”.

While it would be easier to choose “Other”, we first must understand the terms “central processor”, “input unit”, “output unit”, and “in the same housing”. The Explanatory Notes provide 7 pages of definitions and explanations to help you understand heading 8471, with specific inclusions, exclusions, and references to related headings that might further help you arrive at the correct classification.

The search engines may be able to give me an answer, but no Customs will accept “I didn’t understand what they were talking about, so just went with Other” as your explanation!

CROSS
But sometimes even the ENs are not enough. Most Customs organizations around the world provide legally binding rulings that definitively establish the classification of a product. In the US, these rulings are published in the Customs Rulings Online Search System (CROSS) and can be searched, read, and applied to your own classifications.

EXAMPLE 4: INSTRUMENTS OF INTERNATIONAL TRAFFIC AND CROSS
Pursuant to 19 USC 1322(a), “vehicles and other instruments of international traffic … shall be excepted from the application of the customs laws … “. This means that instruments of international traffic can be brought into the U.S. without entry or payment of duties or fees. But what qualifies as an “instrument of international traffic”?

CROSS Rulings HQ H026715 and HQ H024922 provide the analysis and explanation. “An article must be used as a container or holder; the article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic.” Then, “reuse has been held to mean using the containers more than twice”.

Using HTS search engines, one might arrive at the conclusion that steel containers of the type described in HQ H026715 should be entered under 7309 or 7310. Instead, these articles are exempt from all entry requirements.

MOVING FORWARD
So what does this mean for importers and exporters? By all means, take advantage of the tools available to you in this digital age – search engines, like those developed by the US ITC and the Bureau of Census can be extremely helpful and result in massive time savings. Other automated classification tools on the market, while each helpful in their own ways, would need to tie in all of the above and more.

No compliance process should be considered complete solely based on the use of these tools. An informed compliance program that incorporates both tools and understanding is integral to success.

In the U.S., it is ultimately your responsibility as the importer/exporter to ensure that all transactions are in compliance with the regulations. Star USA is ready to help you meet these obligations through education, process improvement, and strategic initiatives that keep you in compliance. Call us at 800-230-5554 or email us at service@starusa.org today! Visit us at starusa.org/compliance

$16,000 in Goods, $75,000 in Fines

It Happened twice in 2010. Teledyne LeCroy of Chestnut Ridge, New York, exported oscilloscopes from the U.S. to Beihang University of Aeronautics and Astronautics, also known as Beihang University, in Beijing, China. The Oscilloscopes were classified under ECCN 3A292 and controlled for nuclear non-proliferation and anti-terrorism reasons. These transactions contained multiple failures but two of them radically stood out:

Teledyne LeCroy failed to properly screen the BIS Entity List
Beihang University of Aeronautics was on one of the many government Sanctions lists that limited their privileges to receive US goods and technology. By not properly screening the customer, Teledyne exposed themselves and the United States to additional risks.

A license is required for the shipments but none was obtained
This item requires a license because of the destination country and the level of control associated with the ECCN. By avoiding the licensing process, Teledyne incurred significant fines when BIS learned of the shipment.

See the full settlement agreement and BIS order HERE.

Denied Party Screening
is an extremely important part of the Export process. The United States Government publishes 13 lists with whom they maintain restrictions on certain exports, re-exports or transfers of items. This can include products, embargoes and country sanctions. These lists are then integrated in to the Consolidated Screening List (CSL) which can be used to help comply with 15 CFR 736.2.

Export License Determination
can help your business understand the proper ways to expand into International Markets and avoid costly fines. Understanding whether your item falls under the ITAR or EAR is a crucial first step in license determination and exporting from the United States. Understanding the commodity, destination and end use are also factors that help drive these important decisions.

Responsibility
for conducting an Export Screening always falls on the Exporter of record. The Exporter of record is responsible for screening entities such as: the principal of a company, the recipient of the order, ultimate consignee, end user and sales people. To ensure compliance with U.S. regulations, exporters should have procedures that require screenings be performed at least annually and as needed upon bringing in new business partners.

Star USA
is an Industry expert and stands ready to help if you have questions regarding the screening process or other International Trade questions. For further information, please contact Nic Arters at 800-230-5554.

New Rules From BIS/DDTC

On June 3 of 2016, the Department of Commerce, Bureau of Industry and Security (BIS) issued a final rule (RIN 0694 AG32), and the Department of State, Directorate of Defense Trade Controls (DDTC), issued an intern final rule, making important changes to key definitions in the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), respectively. Both of these new rules have an effective date of September 1, 2016.

One of the reasons for these definitional changes is to more closely align the language in the EAR and ITAR in cases where both sets of regulations share the same purpose. In addition, the rules seek to update the EAR’s treatment of electronically transmitted and stored technology and software.

These rules update the definitions of the terms “export”, “re-export”, “release” and “retransfer” under both the EAR and the ITAR; dealing largely with controls over technology and technical data.

In addition, the BIS final rule adds or revises the following EAR definitions: “access information”, “foreign person”, “fundamental research”, “proscribed person”, “publicly available encryption software”, “published”, “required”, “technology”, “transfer”, and “transfer (in-country)”.

Transmission of encrypted data meeting the criteria of 734.18 of the EAR will not be subject to regulation under the EAR and the “sending, taking, or storing” unclassified technology or software that is secured using “end-to-end” encryption will not be treated as an export, re-export, or transfer.

The encryption standard must meet the minimum requirement of FIPS 140-2 (Federal Information Processing Standards Publication), or its successors.

Data must be encrypted before crossing national borders in order to qualify for this treatment. The means of decryption should not be provided to any third party and the data may not be decrypted outside the parties’ security boundaries.

The data cannot be stored in Russia or China, or a country subject to a US arms embargo.

A license or other authorization will be required to provide decryption keys or other access information. (What is being controlled is not the access information but rather when it is transferred in such a way that would lead to unauthorized access to the encrypted data.)

The BIS stated that providing a decryption key or other “access information” will only require the same type of authorization as applies to the underlying data if done “with knowledge” that it will result in an unauthorized release. (The BIS general policy is that only actual exports trigger controls, and not merely potential access.) This will be questionable when it comes to what level of responsibility a holder of access information has to keep it secure.

For ITAR, sending or taking technical data, including software object code, out of the United States to a foreign person regardless of encryption of the data will remain a regulated export under revised 120.17 of the ITAR. In addition, transfers to foreign subsidiaries of US companies are not exempt. Although the agency did amend an exception allowing certain transfers of technical data to US persons abroad, as long as appropriate security measures are in place.

The results of these new rules will provide a great benefit to many companies and it will also create a compliance risk because of the strict encryption requirements. As an example, the rules would require that only the exporter maintain the encryption keys, while it may be more efficient for the cloud service provider to do so.

If you have any questions about these or other customs matters, please contact Nic Arters at narters@starusa.org or at (419) 281-4100.

NAFTA Certificate of Origin

Much has been written about qualifying goods under the North American Free Trade Agreement (NAFTA) rules of origin. Because manufacturers are sourcing materials and components from around the world, it is often confusing to determine eligibility for NAFTA qualification.

In order to better understand qualification for a NAFTA Certificate of Origin (NAFTA COO), we sat down with the NAFTA team at Star USA, who creates thousands of NAFTAs each year, and asked them to provide additional insight into NAFTA COOs.

Q. What exactly is a NAFTA COO?

Basically, it is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA (North American Free Trade Agreement)

Q. Is a NAFTA COO required for shipments to Canada and Mexico?

It is never REQUIRED for shipments or crossing the border. Sometimes an importer or customer may request it, and if a claim is made for preferential treatment, there must be a valid certificate to back up the claim.

Q. What are the benefits of a NAFTA COO?

The certificate of origin helps qualify an item for duty free status under NAFTA.

Q. Who is responsible for completing the Certificate of Origin?

The exporter. Suppliers for goods to be exported may provide a supplier’s declaration, but the official NAFTA certificate is to be completed by the ultimate exporter of the goods.

Q. What is the shipper / exporter certifying by completing a NAFTA COO?

That the covered goods meet the rules of origin, and therefore, qualify for preferential rates.

Q. What is so difficult about NAFTA rules of origin?

For starters, every classification has its own rules. Incorrect information on a NAFTA regarding classification or otherwise can result in penalties from U.S. Customs and Border Protection. The section of the NAFTA in the HTSUS (General Note 12) is over 150 pages of specific rules.

Q. What is the main cause of penalties in a NAFTA document?

When the classification, qualification, or country of origin of a good was improperly determined.

Q. Who can sign the NAFTA COO?

Customs will question certification by any title they think may not have the authority or knowledge to represent the exporter. Anyone that knows the requirements, and that they are met, can sign the document; however there is great personal liability in signing a NAFTA, therefore, the person signing the NAFTA should be carefully selected.

Q. For how long should copies of the Certificate of Origin be retained?

For the US, the exporter is required to retain the original or a copy for five years from the date it is made. The importer is required to keep the certificate for five years after importation. These time frames differ for Mexico and Canada.

Exporters are being faced with a mountain of challenges in order to comply with NAFTA requirements and may require additional resources or knowledge. For further questions on NAFTA or anything else related to International Trade, our NAFTA Team can be reached by calling (800) 230-5554.

9801 Provision Change

While imports of returned goods to the U.S. are common transactions, they are also a major source of risk.

Historically, there has been a duty free exemption for U.S. goods returned under provision 9801.00.10 in the Harmonized Tariff Schedule, but it did not apply to all goods being returned.

Under that provision, the returned article had to be a product of the United States, better explained as being “made in the U.S. “Foreign made articles remained dutiable, even if duty had been paid on them before.

HTS 9801.00.10 further required that the article not be advanced in value or improved in condition while outside the US. This means that the exported item cannot be physically changed in any way that improves it, increases its value, or makes it into a different product.

In February of this year, the President signed the Trade Facilitation & Trade Enforcement Act of 2015 into law. One of the provisions of this legislation is to change the language of 9801.00.10.

The following wording was added to the text of 9801.00.10: “or any other products when returned within 3 years after having been exported.” This addition allows the classification to apply to articles returned to the U.S. as well as to articles exported within the last 3 years, regardless of origin.

As an example, a U.S. importer receives a motor from Japan and pays import duties on that motor. The U.S. importer then sends this motor to France. France then returns the same motor to the U.S. Importer. In this case, the U.S. Importer does not have to pay duty on the import from France.

Under the new law, the importer is prevented from paying duty twice, as long as it is within 3 years of the original import date.

It is worth noting that the previous requirements of articles not being advanced in value or Improved in condition while outside the U.S. still applies.

This new provision went into effect on April 25, 2016.

Documents or data required to prove an export in the last three years may include export invoices, packing slips, export bills of lading, air waybills, and extracts of the Electronic Export Information.

While this is good news for importers, they will still need to file an entry and meet the strict chapter 98 record-keeping requirements, including the retention of records to demonstrate that the subject items had, in fact, been exported from the U.S. within the preceding three years.

This expanded provision will eliminate the need to pay duties on many non-US goods that are being returned to the U.S.

Duty Drawback

What is duty drawback?

According to U.S. Customs, Drawback is the refund of Customs duties, certain Internal Revenue taxes, and certain fees collected at importation. The refund is administered after the exportation or destruction of either the imported/substituted product or article that has been manufactured from the imported/substituted product.

What is the history of it?

Drawback was initially authorized by the first tariff act of the United States in 1789 and was limited to specific articles that were directly imported and exported. Since then it has been part of the law, although from time to time the conditions under which it is payable have changed. It still functions, however, essentially as it was first written – drawback provides a refund of 99% of the duties and taxes.

Why have duty drawback?

The government provides drawback refunds as a way to help U.S. companies compete in foreign markets by eliminating some of the costs associated with importing goods into the U.S.

The rationale for drawback has always been to encourage American commerce or manufacturing, or both. It permits American businesses to compete in foreign markets without the handicap of including in its costs, and consequently in its sales price, the duty paid on imported merchandise.

Types of duty drawback:

There are several, but 3 of most common ones that apply to exporters are “manufacturing drawback”, “unused merchandise drawback” and “Rejected Merchandise”.

Manufacturing drawback – applies when duties are paid on imported goods and those goods are then used to make an item in the U.S. that is subsequently exported. To take advantage of manufacturing drawback, a company must first obtain a manufacturing drawback ruling from customs. For certain goods, there are general rulings that apply, in which case the company need only submit a letter of intent to customs to comply with the general ruling. Customs maintains a list of the general rulings as an appendix to its drawback regulations.

Unused merchandise drawback – called “same condition” drawback—applies when goods are imported into the U.S. and then exported without being changed. In most cases, the drawback need not be claimed on the exact goods that were imported if the exported goods are commercially interchangeable with the imported goods. Unlike manufacturing drawback, no drawback ruling is required before filing an unused merchandise drawback claim. However, the exporter must provide prior notice to Customs of its intent to export. Depending on the circumstances, customs may waive this prior notice requirement.

Rejected drawback – Rejected merchandise drawback is available when imported merchandise not conforming to sample or specifications, shipped without consent, or determined to be defective at the time of import is returned to Customs custody within 3 years of the date of import and is exported or destroyed.

Who may claim duty drawback?

The exporter (or destroyer) shall be entitled to claim the drawback. The exporter or destroyer may waive the right to claim drawback and assign such right to the importer or any intermediate party.

NAFTA Provisions on drawback:

NAFTA drawback applies to goods imported into Canada or the United States and subsequently exported to the other country (i.e., Canada or the United States) on or after January 1, 1996.

The NAFTA provisions on drawback and duty deferral applies to goods imported into Canada

or the United States and subsequently exported to Mexico, or imported into Mexico and subsequently exported to Canada or the United States, on or after January 1, 2001.

How to Request It?

Drawback is a benefit that must be applied for via a drawback entry. The exporter of record has the primary right to claim drawback, however, this right is assignable to the manufacturer. The manufacturer may also obtain an assignment of import rights from his supplier when necessary. The filer must be able to establish the facts of import and export and legal right to claim drawback through appropriate records.

Payment

When a claim has been completed by filing all required documents, the entry will be liquidated by the port director to determine the amount of drawback due. Drawback is payable to the exporter unless the manufacturer reserves to himself the right to claim the drawback.

Star USA will help analyze your current import and export activity to determine if you are eligible for unclaimed refunds from U.S. Customs. If you qualify for drawback, we will set up your compliance program and manage the entire process for you as necessary.

Contact Star USA to learn more about how to claim duty drawback. Phone us at: 800-230-5554

The SOLAS Shipping Effect

One of the latest buzz words in the shipping world is “SOLAS”. It has been called a controversial convention established by the International Maritime Organization (IMO) and is wreaking havoc for shippers, ports, 3PL’s and more.

In order to better understand SOLAS, we sat down with Nic Arters, Manager of Security and Export Controls at Star USA, and asked him to provide additional insight into the twists and turns of this new requirement and what it means for our international trade industry.

Q. Nic, what exactly is SOLAS?

A. SOLAS stands for Safety Of Life At Sea. It is a new requirement that involves the weight of a container that will be loaded onto a ship for export. In a nutshell, any shipping container leaving from any port in the world must be accompanied by a shipping document that lists the verified gross mass weight of a container. Currently, that is not a requirement for shippers.

Q. Why is this new requirement such a big deal?

A. When the SOLAS amendment goes into effect, the shipping industry will have to scramble to ensure accurate weight reporting; a costly endeavor in time and money. The regulations describe two methods for verifying the gross mass of a container:

Method 1 – which requires weighing the container after it has been packed, or

Method 2 – which requires weighing all the cargo and contents of the container and adding those weights to the container’s tare weight as indicated on the door end of the container.

As you see, shippers can still satisfy the requirements and not be burdened with having to find a scale each time. One important thing to note is that under either Method, the weighing equipment used must meet national certification and calibration requirements.

Q. What started all this, anyway?

A. There has always been a risk of cargo ships capsizing if container weights are not accurate. The reality is that mis-declared weights contribute to maritime causalities, such as what occurred in 2007 with MSC Napoli, or in 2015 with a feeder ship in the Port of Algeciras. Safety is the ultimate goal of these regulations, that is why it’s part of the name.

Q. So who is really responsible for the reporting of the container weight?

A. The shipper. All responsibility is falling onto the shippers as the carriers will be holding them responsible. However, the task could be passed along to a third party. Ultimately though, the shipper is on the hook for making sure the requirements are met. If they do not, delays and demurrage are inevitable.

Q. When will this amendment go into effect?

A. The current deadline is July 1st, however I am aware of many U.S. Exporters that have been asking the Coast Guard to defer this date. Exporters are afraid they will face a competitive disadvantage against foreign exporters.

Q. So it is the Coast Guard that will implement and enforce this?

A. Not really. The U.S. Coast Guard cannot hold shippers responsible for not providing container weight documentation. The amendment actually calls for the carriers to hold shippers responsible, to the point of not allowing any container without the VGM (Verified Gross Mass) to board a vessel. In fact, U.S. Coast Guard Rear Adm. Paul Thomas recently told a packed TPM Conference that “They are not mandatory under SOLAS, they are not mandatory under any U.S. regulation. It says that right on top — these are non-mandatory guidelines”. That seems to make things pretty clear in theory but all it really does is muddy the waters. The best thing a shipper can do is being implementing steps to ensure compliance with the regulations.

Q. Who does this new requirement affect?

A. Everybody – shippers, carriers, forwarders, ports, terminals, 3PL’s, you name it!

Q. Any final comments about SOLAS?

A. SOLAS is a huge issue. Over one hundred countries are affected, including the U.S., Canada, and all of the European Union. Questions about who will incur the cost of weighing and who will do the weighing, along with proper documentation, will require dramatic changes to the export industry. The best thing you can do is begin to understand what your current practices are, compare those with the SOLAS requirements and prepare an action plan that moves your company into compliance by the deadline. If this is ignored, I think there will be a lot of angry shippers.

SOLAS regulations are posed for major impacts on the entire shipping Industry. Shippers are being faced with a mountain of challenges in order to comply with these new regulations and may require additional resources or knowledge. For further questions on SOLAS or anything else related to International Trade, Nic can be reached by calling (800) 230-5554.

Top 5 NAFTA Errors

Canada, Mexico and the United States maintain measures imposing criminal, civil or administrative penalties for violations of their laws and customs procedures, including those related to NAFTA.

Here are the top 5 NAFTA errors to watch out for:

1. Completing a NAFTA when you don’t actually need one — (either you’re not the exporter, or your product is not dutiable)
2. Assuming “US Origin” is the same as an “originating good under NAFTA” — (not the same)
3. Completing a NAFTA incorrectly — (Preference Criterion, Producer, Net cost errors rolled into one)
4. Missing Records — (Substantiation is the rule)
5. Misapplying the NAFTA Rules and Exceptions — (RVC vs. Tariff Shift)

NAFTA is basically telling the government that you’re not going to pay them. They therefore have the responsibility to maintain the integrity of the program through protocols written into the treaty itself. You absolutely do not want customs agents from another country performing an on-site audit at your facility. They take the responsibility of upholding the treaty – and collecting any rightfully owed duties & fees – very seriously.

1. Unnecessarily completing a NAFTA

We see companies do it all the time, not realizing that all you’re doing is exposing your company to unnecessary risk. Since NAFTA is never a regulatory requirement, all that is accomplished is that your company has taken on additional risk without gaining any benefit.

If you don’t understand the circumstances when a NAFTA is beneficial and appropriate, it’s probably time to get some help with the do’s and don’ts of the NAFTA.

[Some of the rules I’m talking about here are: 434s for domestic transactions (Annex 504), imports under $1,000 (Annex 503), and non-dutiable HTS items.]

2. Assuming “US Origin” is the same as an “originating good under NAFTA”

NAFTA has very specific rules that determine eligibility that apply to products of U.S., Canada, or Mexico origin. Are you aware of the eligibility requirements that make one U.S.-manufactured product NAFTA-eligible while another is not?

The rules of origin are laid out in Annex 401 of the treaty; if your product does not meet the necessary threshold, regardless of where it was manufactured, your product may not be eligible for preferential treatment.

3. Completing a NAFTA incorrectly

Common errors on NAFTA certificates may be inviting extra scrutiny and potentially audit. Customs agencies for all three member countries routinely evaluate NAFTA documentation and use some of the most frequent mistakes as indicators to trigger inquiries and audits.

Applying certain Preference Criterion, Producer, or Net Cost information can raise or lower the bar of your obligations. Do you know when to use Preference Criterion B instead of C? Are you inadvertently increasing your burden of proof by using NO(3) in column 8? Should you be using the Net Cost Method or is it better to use Transaction Value for your products in key circumstances? Is your good described appropriately and specifically enough to allow customs agencies to recognize how the NAFTA correlates to entry and commercial documents? These, and more, are all critical questions.

4. Missing Records

NAFTA is a voluntary program, but once you make the claim you have all the burdens and responsibilities outlined in the treaty. What records do you have and how quickly can you produce them? How specific are your claims and can you meet the threshold of substantiation?

If you use the Net Cost method, can you verify the amounts paid or payable? Do you have written, provable documentation from your suppliers to satisfy the Tariff Shift requirements?

5. Misapplying the NAFTA Rules and Exceptions

Some of the NAFTA Rules outlined in Annex 401 can be complex in application, with more than one way to qualify a good. Sometimes the rule is very straightforward but complex in its execution. Even customs agents have misapplied the rules – are you equipped to know and understand the rules and facts, and do you possesses the evidentiary requirements sufficient to defend and substantiate a claim when the need arises? If the answer is not an unequivocal “yes”, your company could have 5 years of exposure to back duties and interest as well as criminal, civil, or administrative penalties.

Remember, the NAFTA document is only as good as all the data and signatures contained within it!

Contact Star USA to learn more about how to correct NAFTA mistakes with the least applicable penalties. Phone us at: 800-230-5554

Meditation Goes On The Road

Truck driving is a stressful job. Long hours, crazy schedules, traffic delays, changes in delivery times, alternate routes, all add up to a lot of stress. Since stress can affect a driver mentally and physically, it is important to avoid and curtail stress as much as possible.

Meditation can be one way to relieve stress easily and quickly. The idea of meditation is gaining such great acceptance in the trucking industry that trucking companies are hiring consultations to train truckers on how to meditate and the benefits of meditation. (It is said that just spending 15 minutes a day in meditation can produce a sense of clarity and focus.)

There are several types of meditation activities; however, the most popular one is called “Mindful Meditation”. During this meditation, your mind does not focus on anything in particular, but rather you allow your mind to wander from one thought to the next. You may think about your dog, the rate of your breathing, the sound of the rain, or any number of things. The key is to develop skills in noticing inner and outer experiences.

The important factor about meditation is setting aside the time to do it. Set a time aside to meditate, either the night before going on the road or perhaps the morning before. Lunch time at a rest area could also be a time to meditate. Whichever time you choose, your physical and mental being will thank you for it!

Efficient Loading Bays

Loading bays need three key elements for success; efficiency, safety and speed. A bottleneck in any of these means potential loss of time and money. Here are a few quick tips for better loading and unloading of trailers:

1. Have your dock areas clearly numbered.

Truckers save time when they know they are to back up to door # 2 and can clearly see the dock numbers from their tractor cabs. It is also good to have slanted lines painted or marked to expedite alignment when backing up.

2. Have your staff be efficient with the red and green lights.

If you utilize red and green lights for ready and not-ready indicators, be sure the lights are illuminated quickly as the status of the load changes. Require your warehouse shipping and receiving staff to change the status of the lights as soon as possible. Do not inconvenience a trucker who is ready to pull out by allowing the red light to be on while the warehouse personnel go get coffee.

3. Invest in good tools of the industry.

Dock bumpers, bright curbs, dock lights and wheel chocks all encourage and support safety. Do not forget the value of good exterior and interior lighting in the docking areas also. Well illuminated docks help drivers maneuver their rigs for parking and backing up quickly and safely. To keep dock entry areas secure, yet allow for air movement in hot weather; consider folding, scissor-style security gates.

Container Inspections. Are you next?

A notification that your ocean container is being held by U.S. Customs Border Patrol is no laughing matter.

Despite the obvious problems associated with container retention; such as time lost in receiving goods and fees associated with the retention, other elements play key roles in getting the containers released and on their way to you, the importer.

To counter act terrorism, the Customs Border Patrol (CBP) has the right to examine any shipment imported into the United States and as the importer must bear the cost of such cargo exams. Not only must the importer incur all costs, but the importer is also required to make the goods available for examination.

CBP exam fees vary, depending upon the size of the freight. In addition, other expenses could include fees in moving the cargo to and from the exam site, fees associated with storage of the container, and fees to reload your container for delivery.

While CBP does not disclose the examination information to the community due to national security risks, elements that do play a role for examination are the shippers, the tariff numbers, the country of origin, labeling issues, and the country of export, to name a few.

What can you, as an importer, do to reduce the risk of cargo examination?

First, if your business qualifies, consider becoming CTPAT certified. CTPAT (Customs and Trade Partnership Against Terrorism) is a voluntary organization that will not only ease your cargo’s entry into the United States, but will also provide you a CBP advocate should any problems occur.

Second, be sure your paperwork is in order. Correct and complete import documentation, along with timely filing, will give you a solid legal posture for any questions from CBP.

ISPM15 – Understanding the Rule

ISPM 15 rules are a regular part of International Trade. Knowledge of these rules is a must when dealing with International transactions.

These rules are intended to prevent the spread of plant pests and diseases throughout the world when shipping international ocean freight using packing materials and supply containing wood.

While wood pallets are cheaper, readily available, and more customization is available than plastic or metal, exporters do face the responsibility of ensuring that they are also avoiding the spread of pests that can cause ecological nightmares. Four main pest culprits loom on the horizon as a concern for wooden pallets and containers; the Elm Bark Beetle, the Emerald Ash Borer, the Asian Long-Horned Beetle, and the Power Post Beetle.

Failing to take the steps to ensure that your wooden pallets are pest-free can cause disruptions for your supply chain, upset your cross-border customers, and most likely reduce your bottom line financials.

Heat treatment is the most commonly accepted method of treating wooden pallets. If you do not have the kilns to heat treat pallets and wooden containers, the next best step is to purchase your pallets from a business that ensures they have been treated and are properly marked with the ISPM-15 standard.

There are very strict enforcement policies at the U.S. border points that wooden pallets are marked by registered suppliers of wood packaging. Pallets that are not certified will be held at the border and will have to be replaced.

For more information, please contact Star USA, Inc.

Using Facebook to Increase your Exports

A large portion of Australian exporters have taken to Facebook in order to build customers in target markets.

The 2015 DHL Export Barometer survey examined the use of social media such as Facebook, LinkedIn and Google+ and discovered that export sales were boosted through their use.

The findings indicated that 38 percent of Australian exporters overall use social media to generate sales.

Instagram, an online mobile photo-sharing, video-sharing and social networking service, is also rising in popularity, up from 18 percent to 29 percent.

Social media provides the opportunity for generating leads, performing market research and encouraging sales with the “Buy Now” button.

Generally, smaller companies use social media more than large corporations.

With the popularity of Facebook, it’s utility for sales deserves serious consideration.

Top 5 Tips When Preparing for a CTPAT Validation

Your company has just been notified by your CTPAT Supply Chain Security Specialist (SCSS) that they want to perform a site audit at your business location in the near future.

You feel fairly confident that you have all your security practices in place, but you do not want to run the risk of not being compliant.

“What will CTPAT be looking at the most closely”, you asked yourself. While CTPAT rarely gives any business partner a 100% score on an audit, there are some key factors to have in place before their visit.

1) Have your documentation ready that indicates how your business meets the minimum security requirements for your type of business. This includes seal logs, visitor log sheets, completed business partner assessments, a risk analysis sheet for the regions of the world in which you do business, and internal security procedures sheets for employee building access, key accesses, and human resource hiring and firing practices. These are just a few of the documents that should be able to be presented in hard copy form to the Supply Chain Security Specialist.

2) Make sure your staff actually performs the tasks that the documents say they perform. It is not enough to just say you do background checks on potential employees, you must actually show that you do them. Are your gates really locked or do you just say they are? Are your trucks and trailers really inspected or do you just indicate they are?

3) Pictures are worth a thousand words. Take pictures of your physical security practices around your premises. Pictures of locked windows, cameras, fences, outdoor and indoor security lighting, container seals, no parking signs, employee and visitor parking signs, are all good for verification to CTPAT that you have security practices in place.

4) Have your team prepared. Have the Human Resource manager ready with documents that verify employment background checks. Have your shipping and receiving manager ready with testimonies to truck and trailer inspections, driver identification logs, and container seals locked up. Have someone ready to discuss supply chain security training of the employees. The more well prepared the team is to receive CTPAT, the more smoothly things will go.

5) Have a Risk Assessment document ready to give to CTPAT. CTPAT wants to know that overall, a business has evaluated their international supply chain risks from every angle, including the risk level of countries that you do business with. A risk assessment is required by CTPAT, but each company is free to determine the best way to evaluate and document the various risks of their foreign trade business. The document should include financial risks, terrorism risks, human-trafficking risks and more.

The key to a successful CTPAT site audit is to be well prepared with policies, practices, and procedures in place that are documented and verifiable. The rest is…shall we dare say…a piece of cake.

Contact SGT to learn more about how to become CTPAT Certified and how to protect your imported goods. Ph: 800-230-5554