Basics of Import Jon MahoneyFounder & PresidentThe Mahoney Group

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Jon Mahoney• Founder & President of The Mahoney Group• a unique Venture Catalyst firm specializing in initiating

the executive selling process, creating and executing high level new business campaigns that open doors to new corporate business through appointments with decision-making senior executives.

Executive Director of The Boston Irish Business Association• (BIBA) is dedicated to promoting the business interests

of its members in Massachusetts and abroad. BIBA is committed to fostering economic and professional growth among its network of business and political leaders, while retaining and strengthening their connection to Ireland and Northern Ireland

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On March 1, 2003, U.S. Customs and Border Protection, or CBP, was born as an agency of the Department of Homeland Security, merging functions of the former Customs Service, Immigration and Naturalization Service, Border Patrol, and Animal and Plant Health Inspection Service. Many changes took place in preparation for this merger and many have occurred since in order to safeguard U.S. borders against high-risk cargo, contraband, and unsafe imports. 5

AgendaParties involved in the Import ProcessDocuments required for an import shipmentModes of transportationHow to obtain a freight quote Advanced Manifest reporting system – overview of ISF filing Overview of Customs clearance – entry documents required Classification of imported goods Valuation methods for imported goods Other Government agency requirements Recordkeeping Liquidation Protests, Post Entry Amendments 6

Who is involved in the import transaction?

• U.S. Bureau of Customs and Border Protection• Air freight forwarder• Sea freight forwarder• NVOCC• 3PL• 4PL• Customs broker

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U.S. Customs & Border Protection

• CBP – works in conjunction with Department of Immigrations• Division of U.S. Department of Homeland

Security• “Guardians of our nation’s borders”• Responsible for ensuring that importers comply

with all laws and regulations when importing products into the U.S.• Responsible for collecting the appropriate

revenue due the U.S. through import duties• Enforcement branch for many other government

agencies

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Service Providers• Freight Forwarder• Air• Sea

• Non Vessel Operating Common Carrier• Integrator• Customs Broker• 3PL• 4PL

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Freight Forwarders - Air• Regulated by IATA-International Air Transport

Association in order to act as agent for airlines• Do not need to be IATA agent-can be anyone off

the street• Person or company that• Collects freight• Consolidates freight • Ships air freight• Generally a company can save money on

freight by shipping through a freight forwarder 10

Freight Forwarders - Ocean• Regulated and licensed by FMC-Federal

Maritime Commission under Shipping Acts of 1916 and 1984• Person or company that• Collects freight• Ships sea freight• Can also be considered an Ocean

Transportation Intermediary (OTI)

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NVOCC• Non Vessel Operating Common Carrier• Authorized by Federal Maritime Commission• Company that purchases space from a steamship

line and then sells that space to exporters• Consolidates and marks up

• Authorized to produce their own bills of lading• Accepts common carrier liability

• Can also be freight forwarders and considered an OTI

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3 PL• Third Party Logistics provider• Outsourced supply chain provider• Manages all or a significant part of an

organization's logistics requirements• Public warehousing• Contract warehousing• Transportation management• Distribution management• Freight consolidation

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4 PL• Fourth Party Logistics provider• Deeper informational technology skills and

analytical skills• More of a partnership than a supplier/customer

relationship• Many companies are looking at 3 PL & 4 PL as a

way to save money – replacing employees with outsourcing services

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Role of a freight forwarderProvides information or advice on importing – they are a

good resource for new importersActs as agent for importer and/or exporter – as such, the

importer/exporter can be liable for acts of the forwarder.Quote sea freight and/or air freight rates and services from

door to port or airport or doorMake arrangements to transport goods as instructed by

importer and/or exporter door to doorPrepare documents for transport in exporting country under

instructions of the exporter.Freight forwarder will purchase space from an airline or

steamship line and in turn sell that space to an importer.When goods arrive in the U.S., the freight forwarder will

notify the importer or the importer’s customs broker.15

What to look for in selecting a freight forwarder

• First – terms of sale may dictate who selects the freight forwarder – if seller is paying the freight, he may use his freight forwarder.• Determine your needs as a company• Bigger is not always better• Cost is a factor but should not be deciding factor• Look at experience of forwarder• Examine willingness to answer questions and

provide additional information• Employee turnover rate• Training of employees 16

Additional factors in forwarder selection

• Meet the operations department, not just sales• Additional offices/branches/agents• References of other clients• Ask for a written quotation and compare to

others• Analyze ability to provide requested information

accurately and on a timely basis• Recommendations from other industry contacts• If importer is paying the freight, then issue a

routing order which indicates which forwarder all suppliers should use when shipping to the U.S.

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Customs Broker• Licensed and regulated by The Department of

Homeland Security• Must be U.S. citizen• Must be 21 years old• Must be of “good moral character”• Must have passed rigorous Customs exam and

background investigation• Acts as agent for importer – represents the

importer before U.S. Customs

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Customs Broker, cont.• As the importer’s agent, any and all

representations the broker makes to Customs will be held against the importer• Broker is licensed by Customs and must also

abide by the Customs laws and regulations• Brokers are considered experts by Customs and

can assist importers in all facets of the import customs clearance process.• Importer can chose to clear his own shipment or

designate a Customs broker to work on his behalf by issuing a Power of Attorney to the broker. 19

Broker, cont.• Importer is responsible for providing correct

information to Customs, not the broker• If you seek advice from the broker, you must

provide him with sufficient information for research purposes• If the broker provides you with advice, ask for it

in writing• Remember, the importer is liable for any and all

representations that the broker makes to Customs on his behalf. 20

Customs Brokerage OfficesBrokerage offices must have a licensed Customs broker on

premises at every office location that clears goods unless they specifically request an exemption from Customs.

Remote Location Filing provides brokers with the option of filing Customs entries in one location for goods imported in various ports throughout the U.S.

Advises on all aspects of importing, preparing and submitting entry documents, arranging proper payment of duties and taxes, obtaining surety bonds, obtaining release of goods, delivering cargo to its final destination and obtaining any relevant refunds available.

Most freight forwarders have a Customs brokerage department.

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Selecting a Customs Broker• Similar analysis to the freight forwarder

determination• U.S. Customs website includes listing of all

brokers• Freight forwarder may be broker• Recommendation from other importer• Check services available and worldwide network• Inquire about levels of expertise• Ask if the company has had any Customs

violations or problems22

Broker, cont.• Visit the office and meet the operations staff• Remember that the broker will be your agent

with Customs• All representations that the broker makes to

Customs will be held against you• Determine exactly what services will be provided

for the company’s “entry fee”• Will broker pay Customs duties up front – or is

importer responsible for timely payment of duties?• Again, cheaper is not always better• Include Broker Oversight/Audit as part of your

import compliance program.

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Freight Forwarder & Customs broker as one company

• Reduces time spent in document transfer• Reduces transfer fees• One company monitoring from door or

airport/port to door• Improves communication and responsibility• Ensure that both parties are able to do the

appropriate job for your needs• Be aware that they must be able to fulfill both

roles24

Incoterms Overview• The “E” term is the term in which the seller’s

obligation is at its minimum. Seller has to do no more than place the goods at the disposal of the buyer at the agreed place• The “F” terms require the seller to deliver the

goods for carriage as instructed by the buyer (buyer is responsible for freight)• Under “F” terms the named place of delivery is

on the seller’s side25

Incoterms, cont.• The “C” terms require the seller to contract for

carriage, i.e., responsible for payment of freight, on usual terms at his own expense. A location must be chosen by the two parties• Under “C” terms, the named place of delivery is

on the buyer’s side• The “D” terms require that the seller arrange for

delivery of the goods at an agreed place at the border or within the country of destination• DDP is the term in which the seller’s obligation is

at the maximum26

Insurance – most Incoterms do not provide for insurance• Air freight shipments: If not insured and there is

loss or damage, shipper is entitled to $20.00 per kilo or $9.07 per pound • Ocean Shipments: If not insured and there is loss

or damage, shipper is entitled to $500.00 per piece (containers, skids, pallets counted as one piece only)• Always be sure to include insurance in

negotiations 27

Pro Forma Invoice• From the Latin “in the form of” an invoice• Quotation for the goods for sale subject to

buyer’s approval • Best time to inform supplier if any special

documentation, licenses or terms are required so they can be included or excluded• This is a follow up from a purchase order

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Pro Forma Invoice RequirementsSeller’s name and address

Buyer’s name and address

Any intermediate consignee info

DateExclusive reference

numberComplete and accurate

description of goodsQuantity of goods

Price including currency

Terms of salePayment termsExpiration date for

quoteMode of transportApproximate shipping

timeMay say subject to

change without notice29

Commercial Invoice • Seller’s demand for payment in exchange for the

sale of goods• Issued by seller to buyer• Required for Customs clearance in a commercial

sale • Used to assess Customs duty and taxes• Used in preparation of entry, insurance claims

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Requirements for Commercial InvoiceU.S. Customs has specific regulations pertaining to

commercial invoices filed with a Customs entry19 CFR 141.86 addresses these requirements:

Name and address of sellerName and address of buyer in U.S.Full and adequate description of goods in EnglishComplete quantityValue of goodsShould also include terms of sale, value of assists if

any, statutory deductions if anyOther additional requirements are found in this

regulationImportant to have a thorough and complete invoice

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Packing ListPrepared by seller stating contents of each packageAssists importer to ensure that all goods are receivedAssists insurance claims of loss or damageShows reference numbers, date, shipper, consignee and

description of items similarly to commercial invoice and other documents

Shows line by line where each item on commercial invoice is packed

Shows type of packaging and dimensions, gross weight, net weight, marks and numbers on outside of box

Should be fastened to outside of each carton to ensure that it remains with shipment

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Preparing for a Quote-Air Import

• Shipments always rated by kilo• Based on greater of actual weight or dimensional

weight• Flown on cargo airplanes or passenger airplanes

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Dimensionalizing Freight• Length x Width x Height (all in inches) x number

of pieces divided by 166 = dimensional weight in pounds• Dimensional weight in pounds divided by

2.20462 = dimensional weight in kilos OR• Length x Width x Height (all in inches) x number

of pieces divided by 366 = dimensional weight in kilos

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Information needed for air import quote

• Pieces and weight (indicate pounds or kilos)• Dimensions• Origin and destination• Pick up and/or delivery requested• Payment terms and if letter of credit• Customs clearance included or not• Remember that you will pay on the higher of

the actual weight or the dimensional weight.35

Important information for quote• Special instructions: particular delivery date

needed, routing requested, insurance (provide value and commodity), hazardous materials, DDP (provide value, commodity and delivery address), any documentation required (banking, certificate of origin, inspection, etc.)

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Air Freight QuoteAir freight rate: rate

per kilo normally (may be a minimum charge)

Airline handling feesEntry feeTransfer feesDelivery feesPick up may or may not

be included (should indicate door or port to door or port)

Freight forwarder’s handling fee

Fuel SurchargeSecurity feesCharges for any other

services or documents requested

Expiration date of quote

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Quote, cont.• Fuel Surcharge• Security fees • Charges for any other services or documents

requested• Additional fees based upon Incoterms used – i.e.,

Delivered Duty paid would include local delivery, duty and clearance fees• Expiration date of quote

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Quote, cont.• Quote is based on information given. If actual

shipping details change, price may change.• If time or price sensitive indicate that to freight

forwarder at time of quote• Consolidation service, IATA service, Priority

service• If needed by a particular date, try to leave as

much time as possible in case of weather, airline or Customs delays• Get your quote in writing

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Quote, cont.• Arrange for pick up with supplier or freight

forwarder here• Freight forwarder will need pick up address,

company name, contact name and phone number, pieces, weight, air or ocean, any service requirements• Freight forwarder’s agent at origin airport books

with airline

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Documents for freight forwarder

• Any required export documents from origin country• Commercial Invoice• Packing List• Any other relevant documentation – certificates,

licenses, permits, etc.

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Manifest Information• Used in consolidations• Prepared by freight forwarder• Accompanies master air waybill• Given to airline, fastened to outside of pouch

containing house air waybills• Lists shipments included in consolidation• Shows air waybill number, commodity

description, pieces, weight, licensing information 42

Packaging goods for shipping• Instruct supplier that packaging needs to protect

against breakage, stacking, dampness, poor storage, rough handling, pilferage and weather• Weight should be evenly distributed• Pack on pallets if suitable to facilitate handling,

count pieces • Pallets should not be built like pyramids• If do not want pallets broken down or double

stacked, mark the freight in addition to the waybill

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Labels• Each piece of freight should have complete

shipper and consignee names and addresses, including country• Conceal if high value shipment or highly

desirable commodity to avoid pilferage• Appropriate markings and hazardous labels and

directional arrows and instructions• Country of origin• Weight, dimensions and number of pieces

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Ocean Import Quote• Almost all ocean import shipments are

transported in sea freight containers• Usually 20’ or 40’ long and under 8’ wide• Note- U.S. DOT inspects container chassis to

ensure safety

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Ocean Freight Quote, cont.• Shipment large enough to require or preferred to

be in a 20’ or 40’ container is called FCL (Full Container Load)• Driver delivers the container, shipper should

inspect condition of container upon arrival. Shipper should count number of pieces. Shipper seals container and notes seal number and container number

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Quote, cont.• Generally less expensive to ship one 40’

container than two 20’ containers • When you load FCL as long as you do not exceed

maximum weight allowed, you may load as you want• Freight should be packaged and reinforced to

avoid movement and damages within container

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Quote, cont.• Shipment not large enough to require or not

necessary to ride in its own container is called LCL (Less than Container Load) • Freight is picked up loose by truck and

delivered to a CFS (Container Freight Station) for containerization

• Often consolidated in container with other freight going to the same destination port• Freight should be properly packaged and labeled

to avoid damage or loss48

Quote, cont.• FCL shipments are given flat rates per container

for ocean freight and terminal handling charges• LCL shipments are charged by weight or

measure• Charges by weight are by every 1000 kilos or

2,200 pounds • Charges by measure are by every cubic meter

or 35.32 cubic feet

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Preparing an Ocean Freight Quote

• Commodity• Pieces and weight (indicate pounds or kilos)• Dimensions if not FCL or type of container if FCL • Origin and destination• Pick up and/or delivery requested• Payment terms and if letter of credit• Customs clearance included or not

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Quote, cont.Freight forwarder’s

handling feeFuel Surcharge

(sometimes called Bunker Surcharge)

Currency Adjustment Factors

War risk feeEquipment Imbalance

SurchargeTerminal Receiving

ChargesAny special port

chargesSecurity feesCharges for any other

services or documents requested

Cutoff, sailing date, ETA

Expiration date of quote

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Quote, cont.• If LCL can be up to one week between ETA and

delivery date, FCL 2+ days• Arrange for pick up with supplier or freight

forwarder• Freight forwarder will need pick up address,

company name, contact name and phone number, pieces, weight, ocean or air, any service requirements• Freight forwarder’s agent books with steamship

line52

Documents needed• Any export documents in country of origin• Commercial Invoice• Packing List• Information for Importer Security Filing -

IMPORTANT• Any other relevant documentation such as

license, permit, certificates

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Ocean Bill of Lading• Document used as contract between shipper and

consignee• Prepared by freight forwarder • Sent by fax or courier to steamship line• Steamship line processes and indicates sailing

date after vessel sails• Three bills of lading stamped “On Board” and

signed

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What is required?• There will be two “filings” – one by the vessel

operator/steamship line and one by the Importer or Importer’s agent.• This is an Advanced Manifest reporting program.• For most data elements, the filing must be done

24 hours prior to loading of the container.• There are several exceptions – including vessel

stow plans and container status messages.• Interim final rule has taken some of the trade

community’s suggestions.55

Data Elements RequiredManufacturer (or

supplier) name and address

Seller (or owner) name and address

Buyer (or owner) name and address

Ship-to name and address Container stuffing

location Consolidator (stuffer)

name and address Importer of record

number/foreign trade zone applicant identification number

Consignee number(s) Country of origin, and Commodity Harmonized

Tariff Schedule number

(1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S;

(2) container status messages, which report container movements and changes in status (e.g., empty or full).

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Freight Arrival in U.S.• Freight forwarder in U.S. receives pre-alert and

documents from overseas office, airline/steamship line or importer• Customs entry can be filed only by the actual

importer or a licensed Customs broker with a power of attorney• Freight forwarder requests name of broker from

importer of record• If freight forwarder is not broker, they advise

clearing broker to pick up documents usually via courier 57

Demurrage/Storage• Time spent past the given “free time” used to

load or unload a vessel and move the goods of the pier/warehouse.• Generally, importers have 5 days to enter their

goods.• Charges are based on the time that the ship

owner is delayed

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Importer of Record• The importer of record is responsible for

providing Customs with the correct information pertaining to the import entry• Customs recognizes an importer by its Federal ID

number• All correspondence and communication

pertaining to a Customs entry will be sent to the importer of record

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IOR, cont.• If a broker acts as the importer of record on a

company’s behalf, they will receive all correspondence from Customs• However, the importer can still be responsible for

compliance with Customs laws as the ultimate consignee• Tip for the wary: Never let the broker act as the

importer of record!• If you use an expedited carrier always ensure

that you are listed as the importer of record and provide them with a power of attorney 60

Ultimate Consignee• For each Customs entry, the name address and

Federal ID number must be reported to CBP• Defined as the “party in the U.S. to whom the

overseas shipper sold the imported merchandise”• Often times will be the Importer of Record• Ultimate consignee can still have liability to

Customs for violations • Incoterms can factor into this – particularly if a

company is buying on a Delivered Duty Paid basis and the foreign supplier acts as the Importer of Record. 61

Power of AttorneyCustoms broker must have valid power of attorney

to clear any shipment through U.S. CustomsDifferent from export power of attorney and must

be signed by officer of company or individual designated to sign by a corporate officer.

Can have expiration date or can be revoked at any time by separate writing.

Review all POA’s prior to signing to ensure that you want to delegate all such powers/tasks to the broker.

No need to issue a POA to every company that handles your freight.

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Surety Bond• Customs requires importer to post a surety bond

as an insurance policy that guarantees that Customs will be paid all duties, taxes and other fees associated with entry• Your Customs broker can either provide you with

a single entry bond or help you to apply for a continuous bond

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Bonds, cont.• Single Entry Bond-Each shipment is cleared

under an individual policy• Entry can not be done paperless thus delaying

shipment release approximately one day• Continuous Bond-A policy that covers the

importer for one year• Depending on the company’s volume, it may be

cheaper to obtain a continuous bond

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Entry ProcessBroker receives documents from airline, freight

forwarder or importer or shipperShipper or importer should e-mail documents to the

broker for faster clearanceProvides an opportunity for broker to pre-clear the

shipmentTo check and see if shipment is listed in AMS

Broker prepares entry documents including the proper HTS (Harmonized Tariff System) classification from information on the commercial invoice and discussions with the importer of record.

Broker and importer should review all documents for accuracy prior to filing the entry.

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Entry Process, cont.• Customs brokers are generally very experienced

in working with the Harmonized Tariff Schedule.• It is important to note that by law, it is the

importer’s responsibility to properly classify and value its products, not the broker’s responsibility.• It is best to provide the broker with the

classification for your products.• Remember, the broker acts as the importer’s

agent66

Entry Filing - Electronic• Current systems is the Automated Brokerage

Interface (A.B.I)• Computer system that links all Customs brokers

to U.S. Customs. The majority of entries are filed through the ABI system.• Broker enters required information including

importer of record, importer’s IRS number, manufacturer/supplier, classification and value, flight details and other data elements needed to complete the entry documents for filing. 67

Entry processing• Many entries are automatically released as

paperless but some entries are automatically flagged by the computer due to commodity or origin of goods, etc.• Since September 11, security has become the

priority for Customs and there are now more paper entry reviews and examinations• New importers or single entry bonds always

require paperwork to be submitted• Most shipments will be released paperless which

means that paper entry documents do not need to be reviewed by Customs but must be maintained by broker. 68

Entry Process• If entry documents are required, paperwork is

sent via courier to Customs office at airport or seaport• Upon review of documents Customs can decide if

they need more information or if they want to do an examination• If examination is required, the broker will be

notified and if necessary, goods may need to me moved to a Container Examination Station (at importer’s expense) 69

Entry Process – payment of duties

• Entry summary and duty must be filed with Customs within 10 days from date of release.• Some importers have their own statements or

pay directly with their own check• If entry summary or duty is late, a liquidated

damage claim will be assessed against the importer• Some Customs brokers will pay the duties on

behalf of the importer and then bill them• It is important to determine whether or not the

broker will pay the duties on the importer’s behalf

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ACE – Customs System of the FutureCurrently Customs is encouraging importers and

brokers to participate in the ACE Program (Automated Commercial Environment- New electronic environment for Customs)

Currently in prototype/testing phase but CBP has expanded application period for importers/brokers.

ACE provides a “single screen” for business to interact with CBP and all government agencies on import/export requirements

It will replace the ABI system when testing phase is complete.

Due to cost increases, the system is taking longer to implement than originally planned.

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Protests• Legal mechanism to challenge a decision of

Customs• The following can be protested:• appraised value of merchandise• classification, rate of duty• charges, exactions, interest• liquidation/reliquidation of an entry• refusal to pay a claim for drawback

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Classification under the Harmonized Tariff Schedule

• All import and export codes used by the U.S. based on the Harmonized Tariff System (HTS)• Harmonized commodity description and coding

system used by 177 countries worldwide• The system provides for uniformity in

classification of products through the first 6 digits of the provision

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Valuation of merchandise• All merchandise imported into the United States

is subject to appraisement. The Trade Agreements Act of 1979 (the Act) sets forth the rules for appraisement of imported merchandise• The Act sets forth six different methods of

appraisement, and their order of preference• Under the Act, the preferred method of

appraisement is transaction value

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ATA Carnets• Admission Temporaire/Temporary Admission• U.S. Council of International Business• Gives one year, duty free admission of product

for specific purpose• May include: tools of trade, advertising

materials, samples not for sale, demonstration items, trade shows• For list of ATA Carnet signatory countries see:

www.atacarnet.com/ata-carnet-countries.htm• To apply for a carnet: www.carnetsonline.com

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Quotas• Regulate quantities of some products in to the

U.S.• To protect U.S. industry• Some examples: Candies, chocolates, cotton,

peanuts, sugar, textile products• Absolute Quotas-Restricted quantity of

commodity is allowed in the U.S. within some time period

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Prohibited & Restricted Merchandise• 19 CFR Section 12 deals with merchandise

prohibited from import into the U.S.• This section also addresses other agency

requirements that must be met for imports of certain products• Prohibited merchandise includes switchblade

knives, certain pre-Colombian monuments, fur sealskins, immoral articles, products made by convict, forced or indentured labor• Restricted merchandise includes chemicals, some

textiles, electronic, food products – generally require some type of other government agency requirements for release.

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Country of Origin marking• All goods (or their containers) imported in to the

U.S. must be clearly marked with the country of origin• Exempted items are listed in The Customs

Regulations of the United States 19 CFR 134 “J List”• Goods must be marked so that the ultimate

purchaser will know origin. • Ultimate purchaser can vary depending on

circumstances of transaction.• Goods imported for use in manufacture by the

importer may be exempt from marking (outer container must be marked)

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Country of origin marking, cont.• It is the importer’s responsibility to ensure that

imported goods are properly marked with the country of origin• Importer should relay this information to its

foreign supplier• U.S. has the most restrictive country of origin

marking laws in the world• If a product is not marked with the country of

origin, it can be detained by Customs and the importer will need to remark it. • Failure to comply can result in seizures and

penalties79

Other Government AgenciesCustoms acts as the enforcement branch for a number

of different government agencies. Food & Drug Administration-Responsible for any edible

product (for human or animal consumption), cosmetics, drugs, medical equipment, some electronics.

Department of Agriculture- Responsible for meat and dairy products, anything living (livestock, wild and domestic animals, insects, plants, bacteria), seeds and some plant products, wood packaging materials

U.S. Fish and Wildlife Service- Certain living animals, products made from animals, fish, etc.

Federal Communications Commission- Radios, televisions, VCRs, computers that emit radiation

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OGA, cont.• Federal Trade Commission-Household

appliances, textile products, use of “Made in USA”• Department of Transportation-hazardous

materials, automobiles, tires• Environmental Protection Agency-Pesticides,

chemical substances• Consumer Products Safety Commission-General

consumer products – lead paint issues, toys81

RecordkeepingImporters must maintain entry records for 5 years

from date of entry.Must to be able to produce records for Customs

within 30 days of request.If storing in an alternative method, i.e., CD Rom,

microfiche, etc., you must seek Customs approval prior to transferring to the other method.

When maintaining records, always review what you receive from your broker. Make sure that you receive a copy of the CF 7501 and rated commercial invoices.

This is particularly important if you use express carriers.

Also- keep your liquidation notices.It can be costly to obtain copies of entry documents

from brokers!

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Recordkeeping, cont.• Entry documents include invoices, packing list,

bills of lading, purchase orders, CF 3461 and 7501.• 19 CFR 163 (a)(1)(A) list is detailed list of

documents to be maintained.• Always check your brokers work when you

receive the documents from your broker.• Its best to establish a filing system and maintain

a separate file for each shipment.83

Penalties• Remember, CBP is an enforcement agency.• Penalties can be assessed for failure to comply

with regulations.• 19 USC 1592 is the primary penalty provision for

Customs violations.• Failure to use reasonable care is tantamount to

negligence.• When in doubt, seek the advice of an expert and

always obtain advice in writing.84

Security Programs• Since September 11, 2001, border security has

become Customs number one issue.• U.S. Customs Service is now the Bureau of

Customs and Border Protection, part of the new Department of Homeland Security.• The goal is to “push back” the borders so that

CBP knows what is in a shipment before it leaves a foreign country.• Container Security Initiative - US CBP is

stationed at overseas ports and prescreens containers prior to loading. 85

Knowledge is the Key!• As an importer, you must abide by the laws and

regulations of the Customs Service• Do not rely on your broker to keep you apprised

of all changes that may effect your import business• “My broker does that” is no excuse for failure to

comply• Attend seminars, training, etc.• Visit the CBP’s website at www.cbp.gov• Keep open lines of communication with your

foreign suppliers 86

Seems so easy – Is that all there is?• Lots of things can effect the importing process:• Incorrect Documentation - the shipper is

unfamiliar with U.S. Customs requirements.• Failure to comply with other government

agencies requirements, including FDA, FCC, Department of Agriculture, Fish & Wildlife, Consumer Product Safety Commission.• Incorrect classification, country of origin

declaration or marking, or value at the time of entry.• Errors by the Customs broker or freight

forwarder.• Delays, etc. beyond the importer’s control

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Questions?

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Paula ConnellyThe Law Office of Paula ConnellyPaula M. Connelly is a principal in the Law Offices of Paula M. Connelly, a law firm specializing in Customs and international trade matters.  She has been practicing law since 1991 and prior to working as an attorney, worked as a licensed Customs broker for several customs brokerage companies in the Boston area.  She has over 20 years experience in Customs and International Trade matters and works with numerous importers and exporters in addressing and resolving import and export compliance issues.

(a Granddaughter of Donegal (Devine))

www.connellycustomslaw.com+781-897-1771

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Jon MahoneyFounder & PresidentThe Mahoney Group

www.mahoneygroup.net+617-480-4437

jon@mahoneygroup.net

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