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Trade Notices

Find HTS Codes

October 21st, 2009

Here’s a new HTS lookup service for anyone who’s ever had problems finding HTS tariff codes for their import or export shipments.

Basically, you can use it to look up tariff rates for any item with a keyword search, or by typing in the HTS number directly. There are a few software packages that you can buy to do this kind of lookup, but this one is free and you don’t have to signup or give out your email. I also imagine that they keep it up to date with the latest HTS versions, so no worrying about that.

Here’s the link to find hts codes

The free service is cool, but on top of that they also offer a downloadable version of the same database that powers their site. I’ve seen this same product go for $400+, and they have it listed for about that half price. If you need that kind of data for a larger import business or some other application (I use it on this site), then it’s a pretty good deal. Here’s the link to download the HTS database. If you find any other good uses for that data, let me know and I’ll list them on our sit

Trade Notices

BIS publishes Final Rule on Encryption Simplification

October 19th, 2009

10/15/2009 – BIS publishes Final Rule on Encryption Simplification

The Bureau of Industry and Security (BIS) published the interim final rule entitled ”Encryption Simplification” on October 3, 2008 (73 FR 57495). This rule finalizes that rule, corrects errors published in the October 3, 2008 interim final rule, and resolves inconsistencies in that rule identified by the public.

This rule is effective October 15, 2009.

BIS published the interim final rule entitled ”Encryption Simplification” on October 3, 2008 (73 FR 57495). This rule removed section 744.9 of the EAR, which set forth requirements for authorization from BIS for U.S. persons to provide technical assistance (including training) to foreign persons with the intent to aid a foreign person in the development or manufacture outside the United States of encryption commodities or software that, if of U.S.- origin, would be ”EI” controlled under ECCNs 5A002 or 5D002.

Section 744.9 was added to the EAR in 1996 when jurisdiction over dual-use encryption items was transferred from the Department of State to the Department of Commerce. However, other parts of the EAR that referred to section 744.9 were inadvertently not removed. Therefore, this rule removes these references in § 730.5(d), § 734.5(c), § 736.2(b)(7)(ii), and § 744.1(a)(1). In addition, other corrections are made to harmonize with revisions made in the ”Encryption Simplification” rule published on October 3, 2008. Some of the revisions in this rule are the results of requests for clarification from the public on the October 3 encryption simplification rule.

For a full summary of the Federal Register Notice, you can access the link below:

http://www.bis.doc.gov/news/2009/fr_10152009.pdf

Import, Trade Notices, US Customs

Importer Security Filing (ISF), aka “10+2″

March 31st, 2009

When does the ISF have to be filed?

  • Not later than 24 hours prior to loading of the shipment to the vessel at the foreign port of lading.

Does the effective date of Jan. 26th mean that any shipment which is departing from the origin port on or after Jan. 26th is required to have an ISF, or any shipment arriving in the USA after Jan. 26th?

  • The regulation is effective for any shipment loading to vessel at the origin port on or after Jan. 26th.

Do I have to present my complete set of shipping documents to you for ISF filing at that time?

  • No; the minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

What should the importer provide in order to accomplish the ISF filing?

  • The minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

Is the party actually receiving the freight the only one responsible for this filing?

  • NO! CBP has defined the responsible party as the “ISF Importer”. See the Assessment [PENDING] page for more on this.

Doesn’t Customs realize that this is not possible?

  • No. CBP does, however, recognize that this entails, or may entail, changes in some business practices. For this reason, there is a 12 month phased in compliance period.

So who files this?

  • A party meeting the requirements to file electronically can file on behalf of the ISF importer, or the ISF importer may self-file, provided they have the technological capability. This means being either ABI or AMS participants. The filer (aka agent) does NOT have to be a licensed US Customs broker ; it can be a freight forwarder or other interested party meeting the technological capabilities. A power of attorney is required in all cases where an agent is performing the actual filing.

Is this going to cost?

  • Yes! See the Assessment [PENDING] page.

If Freightgator files the ISF, what’s the fee?

  • See the Assessment [PENDING] page.

So do we need new powers of attorney for existing clients?

  • No.

What impact does the ISF have on Customs clearance?

  • None, provided that it has been done. For importers without a continuous bond in place, evidence of the filing will be required by FgL, if not done by FgL, so as to minimize the risk of punitive damages against the broker’s bond.

What is the impact on freight forwarders?

  • The only significant impact is that the AMS filing party will receive a DO NOT LOAD message if there is no ISF matched against the AMS bill of lading prior to the 24 hour cutoff. Depending on the processes ultimately created by all parties involved, there could be missed sailings due to missing ISF’s against shipments in a consolidation container.

After the shipment arrives in the USA, does it clear Customs again, or is this ISF in lieu of clearance?

  • The ISF is a security filing only, and is not the same as a clearance or release. Although the entry summary data can be filed in conjunction with the ISF, the customary entry/release procedures are unchanged.

How long does the ISF process take?

  • As of this writing, any estimate is speculative. The actual, total time will depend on several factors, such as when the data is received, and its’ accuracy and completeness. In theory, the minimum turnaround time would be about 5 minutes, accounting for data entry and ABI transmission to CBP.

If the importer does not have a continuous bond, will a single entry bond suffice for ISF purposes?

  • No. The importer must have a continuous entry bond in force, or the new ISF bond which CBP has authorized. However, at this time, no information is available from FgL’s sureties as to the availability & pricing of this bond. Alternately, the ISF filer may use its’ own bond (i.e. the broker’s bond). See Fees for information on pricing. NOTE: CBP has suspended the bond requirements for the duration of the flexible enforcement period, being Jan. 26th, 2009 through Jan. 25th, 2010.

Is freight which is merely transiting the USA (imported but then exported under inbond conditions (IE, T&E)) required to have a security filing?

  • Yes; the primary difference between IE/T&E cargo and regular imports is that only five data elements are required. Please see the CBP presentation for a glimpse of this information.

If CBP is not issuing Do Not Load messages for failure to file timely, and is also not assessing penalties, what incentive does an importer have to file?

  • CBP will be issuing “report cards” to filers & importers as the flexible enforcement period progresses. These reports will demonstrate, in an enforced compliance phase, whether or not parties are negligible in compliance improvement, and thus, whether or not penalties will be enforced during the initial enforcement phases.

Does the AMS bill of lading have to be filed before the ISF?

  • NO! The ISF can be filed at any time, irrespective of the AMS status. The ISF filer is notified of the bill’s AMS status at the time of filing (either on file or not); if the bill is not on file, ABI will hold the ISF for 30 days.

Chinese trade practice typically has manufacturers exporting through licensed exporters, who in effect become the shipper/selling party. In this case, the actual manufacturer may not be known. How does this affect the ISF requirement to supply the information for the manufacturer?

  • The current regulation allows for the use of the party currently required by existing rules for standard entry procedures. In short, this means that we can use the shipper/selling party as the manufacturer for ISF purposes.
Export, How To, Import, US Customs

Import Duty on Returned Items

June 4th, 2008

Question

Do I have to pay import duty on items that have been exported from the United States that are being returned?

Answer

If you have an item that was previously resident in the United States, but for some reason was exported and is now being returned, be sure to inform US Customs about its status. Items previously exported are often considered duty free! This means that although you might have to pay a small entry fee, your goods will not be assessed taxes as a percentage of their value.

The logic behind this duty free status is simple – US Customs wants importers to pay an import tax at least once on items not made in the United States. That means that in general you can claim a duty free status under chapter 98 of the US Harmonized Tariff Schedule on items that were either made in the USA, or had already been imported previously.

When might this apply?

This scenario might come into play if:

  • one of your products was exported, used in a foreign country, and is now being returned;
  • you’re exporting something for repair;
  • your item was exported as an exhibit for a trade show or similar;
  • your item is a “tool of trade” used abroad temporarily.

Gotcha’s to avoid:

  • Just because your entry is duty free does not mean you can avoid filing import paperwork. You might also be subject to processing fees.
  • If your item was “advanced in value” while overseas, you will probably owe duty on the value of the improvement. Example: you exported a car made in the US and had a French radio installed. When the car returns, you will owe duty on the value of the radio but not the car.
  • Depending on the product, there may be a three year window between the exportation and duty free re importation of your item.
Trade Notices

ITAR Export Compliance

May 28th, 2008

If you’re one of the small minority of businesses that exports military and ITAR controlled products overseas, you’re not going to find much to help you on our site – sorry.

You can download the International Traffic in Arms Regulations (ITAR) from our site, but there’s not a lot of discussion on how to use it or when it’s important.

Instead, I recommend that you check out our sister site ExportRules.com. They specialize in ITAR Compliance, export training and information for exporters of military goods.

If you’re a real compliance die-hard, check out their Sample Export Compliance Manual. It’s one of the best products I’ve seen for the development of military export compliance programs.

If that isn’t comprehensive enough for you, here’s an alternative ITAR manual

How To, Import, Q&A, US Customs

What are Import Taxes?

April 28th, 2008

Import tax or import tariffs (also known as import duties) in the United States generally refer to the taxes and fees charged by US Customs when importers bring goods into the country. They are assessed by government employees with US Customs at the port of entry, and are paid by the importer of record.

All goods entering the United States are subject to the same import procedure and the same tariff (tax) assessment, although every product has its own duty rate and some have a duty rate of zero!

Import taxes are the second largest source of revenue for the United States behind the Internal Revenue Service.

In addition to being revenue source, import taxes are used to control domestic market conditions and as a political tool. US Customs and the US International Trade Commission will raise and lower import taxes on particular goods to give domestic producers an edge over foreign imports. To exert political pressure, certain countries may be assigned a higher duty rate on their exports or may be embargoed (locked out) to prevent trade.

The primary criteria for import tariffs and taxes are:

  • Country of origin
  • Commodity type
  • Intended use

and are determined using the US Harmonized Tariff Schedule, a yearly publication listing duty rates for a wide variety of import commodities. The USHTS also includes procedures and guidelines for determining import tax rates.

Trade Notices

Importing Knock-off Purses

November 29th, 2007

This question came in response to the post entitled What is a Foreign Trade Zone?

Sandra asks

This customs thing is very confusing to me, but I keep reading more and more to try to understand.I am going to be very up front. I like to sell mirror image designer handbags like LOTS of other people do.I just do’t understand how they get shipments thru customs without getting caught. But this letter may explain some of it. Can anyone put imports in a FTZ warehouse? How does that work?

My response

If you’re trying to sell knock-off purses that infringe on someone else’s trademark, then your shipments are probably going to get seized by Customs. One of the duties of the CBP is to protect against counterfeit goods and an FTZ is not a way around that. An FTZ is more of a quarantined holding area for special case shipments. The goods are allowed into the special US warehouse where you can work with them to some degree, but the are not allowed into the commerce of the United States (aka sold in the US) until they pass through the Customs process.

I can’t tell you 100% where the bags you see people selling are coming from, but I imagine that they either slip by Customs, are smuggled in, or are different enough from the trademark holder that they are allowed in.

Import, Logistics, Q&A, US Customs

What is a Foreign Trade Zone?

November 29th, 2007

A foreign trade zone is a warehouse on US soil that acts like limbo for imported goods. If you have something that can’t come into the country, is just stopping off before being shipped to another country, or needs to operate outside of standard Customs procedures, a Foreign Trade Zone (FTZ) might be the way to go.

Example: I worked with a customer one time importing textiles (T-shirts) from China for sale in the US. As many textile importers will tell you, there is an import quota on Chinese textiles that caps the total amount they’re allowed to import into the US each year. Unfortunately, this importer’s agent failed to advise his customer that his category’s quota for the year had been filled. The end result was 50,000 embroidered T-shirts held at the port of Long Beach California that could not be cleared through Customs.

As you can probably guess, the solution I recommended was a Foreign Trade Zone. By warehousing the goods in an FTZ on US soil, the importer was able to avoid shipping his goods back to China (and all the costs that would incur) and was first in line when quota was re-opened the following year.

Not a totally pleasant experience for the importer, but a lot better than the alternative!

Import

Importing Process

November 13th, 2007

Paying Duty: The importer is ultimately responsible for paying any duty owed on an import. Determining duty can be very complicated, and while shipping services will often give an estimate for what the duty rate on an item might be, only Customs can make a final determination about what is owed. You should not be misled into thinking your purchase price includes duty because the seller cannot say with absolute certainty what the duty will be. As a rule, a purchase price that includes shipping and handling does not include duty or any costs associated with clearing the goods through Customs. First time importers are often surprised by bills they receive for duty, U.S. Customs merchandise processing fee, and something referred to as “customs fees,” which are actually charges for the services of the broker who cleared your goods through Customs.

How you pay duty depends on how your goods were shipped. If your goods were shipped through the International Postal Service, you will need to pay the mail carrier and/or go to your local post office to pay any duty and processing fees owed when your package arrives at that post office. If your goods were sent by a courier service, that service will either bill you for the duty they paid on your behalf or require payment on delivery.

If your goods were sent by freight, there are two possible scenarios for paying duty.

  • If no arrangements were made to forward the goods to your door, you will need to either clear them through Customs yourself, in which case you will pay duty directly to Customs at the port where your goods arrived. Alternatively, you will need to arrange for a broker to clear your goods. If you hire a broker, they will bill you for their services and any duty they paid on your behalf.
  • If arrangements were made to forward your goods to you, you will be billed for any duty owed, and for the services of the broker who cleared them through Customs.

Reminder: Customs holds the importer – YOU – liable for the payment of duty not the seller.

Import, Q&A

Sample Import Requirements

November 13th, 2007

Question

I am interested in importing single samples of furniture from Bulgaria as showroom pieces. Each piece is valued at 90-150 Euros and I would like to find out the approximate import tax. The pieces are not for resale.

Answer

Importing samples into the United States allows companies to receive example goods from overseas and choose from multiple vendors before committing to larger import quantities. It’s a common practice and an excellent method for determining quality, transit times, and estimating a budget.

When importing a sample shipment, keep the following in mind

Sample goods are classified under chapter 98 of the US Harmonized Tariff Schedule, a chapter designated for specialty import provisions. Most imported samples are classified under HTS number 9811.00.60. Samples classified in this way must not be valued over USD $1 or must be permanently marked, torn, perforated, or otherwise mutilated so that they are not suitable as a saleable item.

Example sample mutilations and markings

  • Drilling a one inch hole into the bottom of a tennis shoe would make it unsuitable for sale and would allow it to be imported as a sample.
  • Indelibly marking by carving or etching a surface of a piece of wooden furniture where it would be conspicuous and in plain sight with the words “Sample: Not for resale” would meet the marking requirements of classification 9811.00.60.
  • Including a permanent tag, sewn in a conspicuous place, with the words “Sample: Not for resale” on cushions and upholstered furniture would meet the sample marking requirements.

Duty

Sample imports classified under HTS classification 9811.00.60 and meeting the above requirements for marking are free of duty from any country of import.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.