Tuesday, February 2, 2016
For those of you exporting to Argentina, you know all too well how challenging customs clearance has been with the required prior approval by the Administración Federal de Ingresos Públicos (AFIP- Argentine Tax and Customs Authority) and the submission of a Sworn Affidavit of Intent to Import, commonly known as the “DJAI.”
As announced at the end of December 2015, the newly ushered in “Sistema Integral de Monitore de Importaciones,” (“SIMI” - Integral System of Import Monitoring), has taken the DJAI’s place as Argentina’s new import verification mechanism.
Unfortunately, despite the termination of the “DJAI,” a registration for an import license remains required for all imports, under 1 of 2 categories - either an “automatic import license,” or a “non-automatic import license.” Once obtained, these licenses remains valid for 90 days.
The processing and management of these licenses must now be done via SIMI, whose purpose is to also provide the Argentine government with a simple and transparent way to gather statistical information on imports.
Non-Automatic Import License
A non-automatic import license must be applied for where a shipment requires a prior approval. What determines whether or not a prior approval is needed turns on whether or not the article is included in the tariff of the Mercosur Common Nomenclature (“MCN”) which includes some, but not all, tariff numbers under the following chapters:
Chapters 28, 29
Chapters 34, 36, 39
Chapter 40, 42, 44, 48, 49
Chapters 51, 52, 54, 55, 56, 57, 58, 59
Chapters 60, 61, 62, 63, 64, 65, 68, 69
Chapters 70, 73, 74, 76
Chapters 82, 83, 84, 85, 86, 87, 89
Chapter 90, 94, 95, 96
Depending on the product’s tariff number, 1 of 15 different protocols for procuring the license must be undertaken, each of which requires the submission of data related to the goods itself and the exporter.
Automatic Import License
An automatic import license may be applied for where goods do not require a prior approval. Such application requires providing no less than 14 data points such as country of origin, FOB values, and product information.
What does this change mean?
The new SIMI system should streamline customs clearance into Argentina given the application of the non-automatic import license and the reduction in goods subject to prior approval.
If you export goods to Argentina, be prepared for the possibility that customs may come back asking questions in relation to the values you have provided as Argentina maintains a database of what it considers to be the import value of certain articles based on the history of values recorded by other prior imports of the same kind. Moreover, in the case of warranty or replacement parts, Argentina does not recognize that these articles have no value but will accept a lower value than that under a traditional sale.
It is therefore important that valuations remain consistent both for customs entry purposes as well as in the event a customs challenge related to the value, and hence the duties and taxes paid to the government, needs to be resolved.
It should be noted that Argentina customs has been known to look to historic import data and customer price lists of third party companies when making a challenge in an effort to collect higher tax and duty revenues.
Exporting to Argentina and experiencing shorter customs clearance times may be possible with some advance preparation. If this is something you would like to explore, post your questions and/or comments below.
Monday, January 25, 2016
During last week’s ACI customs conference held in Washington DC, I had the pleasure of presenting with two seasoned trade professionals, Ken Weigel of Alston and Bird LLP and Chris Colford of Mitsui & Co. (USA), on advanced topics in classification and compliance considerations.
In addition to nuances between the classification of a part that involved the same construction but had a different way of being installed, myself and Chris focused on other governmental agency (“OGA”) requirements, and the importance of understanding the impact that a product’s classification could have on packaging, labeling, and shipping requirements, as well as other necessary declarations, whether upon importing into the US or when importing into another country.
Key takeaways of reoccurring themes across panels centered on the following.
1. Emphasizing the importance of compliance to upper management.
Trade compliance is complicated and the costs involved can make it a subject that management may want to run away from. No surprise. Taking the explanation beyond the mere necessity to do so however, and showing the value that the investment in a compliance program brings to a company in whatever form it may, e.g., in terms of risk mitigation, reputation building, duty savings benefits etc., is key. If your company does not already have a Compliance Steering Committee, key organizational partners on this team include the Finance, Trade Counsel and the Transportation/Logistics roles.
2. Communication across the organization.
This is important for not only for compliance purposes but also for cost savings. I’ll give you two examples.
Example 1. Is a low duty rate better than a free one? Obviously it’s not, which is why where a company’s invested in the set up of importing under a free trade agreement ("FTA"), it’s imperative that the Purchasing Dept. be aware of this effort so that they don’t opt for buying a cheaper product from a country other than the one (or ones) eligible under the chosen FTA as the resulting duty liability could end up being greater than the cost savings of sourcing from that other country.
Example 2. The Marketing Dept. wants to highlight every feature in a big way, which is a good thing as that is what they are tasked to do. The problem is, if what they are promoting about the product is not actually truthful, the company can run into some issues of misleading advertising claims, which could lead to penalties and fines, but it can also lead to unnecessary spending in order to change the already-paid-for marketing that needs to be redone. Bottom line - make sure your departments are communicating with one another.
3. Conduct internal and vendor audits.
From sampling methods to managing expectations, the importance of reviewing the efficacy of internal processes and reexamining vendor performance to ensure compliance with contractual terms was highlighted across the conference panels.
Recommendations included to:
a) Put expectations into the service provider’s contract and to conduct an annual validation of them
b) Conduct a day+ long seminar to train them
c) Request necessary “proofs” on areas where questions could come back for verification by your business, e.g., certain export documents or a NAFTA certificate
Key takeaways aside, there were some other areas of interest which included the much talked about Trans-Pacific Partnership Agreement or “TPP,” and the questionable likelihood that it will actually come to fruition this year given that we are in an election year (and no one wants to have to vote on it), along with the usage of the Centers for Excellence and Expertise (CEE) and the notice that all importers will be tied one of the CEEs across the country by the end of 2016 based on the type of goods imported, at least that is what they are aiming for according to Susan Dalpe of CBP.
Lastly worth noting, while not all of the efforts for usage of the “single window” for import/export communications with the government are on track for timely implementation, one that is very much on track is that of the transition from the Automated Export System (AES) for export filings to that of US Customs Automated Commercial Environment (ACE).
Questions/comments? Post below or email me at firstname.lastname@example.org
Tuesday, January 12, 2016
It's a new year and that means it's time for new predictions by 35 Eco-Fashion "movers and shakers," including my own, as published by Ecouterre. What do you see on the horizon? Post below and let me know!
Saturday, January 9, 2016
Join Me at ACI's Import Compliance Conference Jan. 22, 2016 Where I'll be Speaking on Classification
I'll be speaking on a panel at this event on advanced classifications on January 22, 2015. You can enjoy a 10% discount when you register as my guest:
Colleagues and cohorts may use code S10-823-823L16.S. The discount is 10% off the regular price. Here is the event information page, and here is the registration page.
In addition to my presentation, ACI has provided that:
The agenda will cover the most critical compliance issues impacting your import operations. The program has been uniquely designed to delve into your most pressing compliance issues through practical insights, case studies, Q&A and hands-on exercises. Key sessions include:
- Advanced Topics in Customs Valuation- Focus on Post-Entry Price Adjustments, Related Party Transactions, Assists and Other Complex Issues that Can Lead to Costly Mistakes
- Advanced Topics in Classification – How to Decipher Intricate Classification Issues
- Statistical Sampling in Prior Disclosures: Understanding the Methods and Benefits while Avoiding Common Errors
- How to Properly Classify and Value Goods Related to Research & Development
Look forward to seeing you there!
Wednesday, January 6, 2016
Sunday, November 29, 2015
The negotiation of the Trans-Pacific Partnership Agreement (TPP) concluded in Oct. 2015 between its 12 member countries, which include the United States, Australia, Brunei Dar es Salaam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
The overarching objective of the TPP is to reduce, or eliminate, tariff and nontariff barriers across virtually all goods and services traded within the member countries with the goal being, in pertinent part, to
· Facilitate the development of production and supply chains
· Increase transparency across country specific trade laws
· Encourage the smooth process of customs and border procedures
· Open up domestic markets, and
· Raise living standards and support job creation.
It includes provisions specific to certain industries in order to promote a common regulatory approach across the TPP region, which includes medical devices, information and communications technology products, and pharmaceuticals to name a few.
It's also being angled by the U.S. Trade Representatives Office to support American workers, businesses and values first, and has a special provision designated to wearing apparel and textiles.
As stated on the USTR's website:
TPP’s Textiles and Apparel chapter will create export opportunities for Made-in-America clothes, fabrics, and yarns and support jobs in the United States. This objective is advanced by a “yarn-forward” approach that requires use of yarns and fabrics from TPP countries in end products qualifying for preferential treatment under TPP — with some flexibility so that American businesses and workers whose products depend on inputs not available within the TPP region can still benefit. The yarn-forward approach also will help to develop a regionally-integrated supply chain that will promote long-term growth and investment in this sector in the United States. The Textiles and Apparel chapter also secures close customs cooperation among TPP Parties to facilitate effective enforcement of the rules; and ensures that U.S. companies have access to temporary relief if an import surge causes, or threatens to cause, serious damage to their business.
Only time will tell if TPP will really boost U.S. origin exports and with the drafting of laws getting underway, that day will be here sooner than later. Stay tuned.
Monday, November 2, 2015
Interested in the behind-the-scenes inner workings of the movement of fashion from factory to sales floor? Come to this event!
Jacqui Wenzel, President, Kimora Lee Simmons KLS (Luxury fashion brand)
David Meir Sasson, COO, Derek Lam (Women’s designer clothing, handbags and accessories retailer)
Corey Weeks, Director Supply Chain, Hudson’s Bay Company (Chain of 90 department stores that operates across Canada
Moderated By Jacqueline Jenkins, Dean of Graduate Studies, LIM College.
Taking place at LIM College in Manhattan together with APICS-NYC, you can get your tickets online here:
See you there!