Goods of Crimea are of Ukrainian Origin US Customs Reminds Us

The U.S. position on Crimea is clear and this sentiment was echoed throughout the customs community in a country of origin marking message it published on April 23rd that stated that goods originating in Crimea are products of the Ukraine.

This means that for country of origin labeling on any product, including that which is on clothing labels, if it is made in Crimea it is of Ukrainian origin - ONLY.

After reminding us of the law requiring that the English name of the country of origin must be marked, U.S. Customs specifically stated that the:

“Growth, production, or manufacture of a good in Crimea is growth, production, or manufacture of a good in Ukraine.  Goods which are the growth, product, or manufacture of Crimea and other areas of Ukraine should be marked as ‘Product of Ukraine’ or ‘Made in Ukraine’.  If the container of the imported good is marked, it may be marked, ‘Contents made in Ukraine’ or words similar in meaning.”

“So what happens if it’s accidentally marked as “Russia” or some other country?” you may be asking yourself?  Pain (in the wallet).  Or at least, a headache for the importer, as goods not correctly marked will also be subject to additional duties of 10% of the final appraised value unless exported or destroyed under Customs supervision prior to liquidation.

So, referendum of not.  Goods of Crimea are of Ukrainian origin.  Period.

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Rising to “Official” Importer Status – Now What?

From essential oils to women’s jewelry, I’ve spoken with many small business owners whose enterprises are growing, so much so that the time has come from merely carrying back foreign articles for sale in their suitcases to actually becoming a commercial importer.

So who do you share the news with?  Well, with any good news you may want to share it with your loved ones, however you actually need to share it with US Customs and that is achieved through the submission of an "Importer ID Record," which is Customs Form 5106 (CF 5106) and may be found here.

Being an “official” first time importer, you would use this form to identify yourself to US Customs as such.  The form is also used if you are using an Importer Number for the first time, or if you have not engaged in any customs business within the past year.

The CF 5106 can also be used if there is already an importer number on file but there is a change in the name or address currently on file.

Importantly, this form has an extra box on the top of the first page to check if you also want your address updated at US Customs Fines, Penalties and Forfeitures Office.  I can’t tell you why it’s not automatically updated with that office, but I can tell you that a failure to do so via this form can leave an importer “on the hook” for the payment of a penalty for which no response had been made for mitigation or remission (i.e., “cancellation,” in everyday language) purposes.

In other words, saying that you never received a copy of the notice will not serve as a valid excuse for non-responsiveness if this form was not properly filed.  

One final note of importance is that where an importer has a continuous bond on file with US Customs, a rider must accompany the CF 5106 as well.  For more information on an importer’s bond requirements, see my article dated Sept. 16, 2009 here.

 Questions/comments?  Post below, email me at clark.deanna@gmail.com, or tweet/follow me on Twitter @fashcompliance

Focused Assessments and Compliance Improvement Plans

Importers are chosen for a Focused Assessment (FA) audit by US Customs for any number of factors related to, inter alia (i.e., “among other things” in everyday language), the type of products imported, the gross dollar value of annual imports, or the way in which entry summary declarations have been prepared.

Where Customs finds that an “unacceptable risk” exists following the completion of the first part of an FA, known as the “Pre Assessment Survey” (PAS), it is not uncommon that it will recommend that the importer prepare a Compliance Improvement Plan (CIP). This plan is prepared by the importer and is supposed to address what types of corrective action the company will take in order to correct the deficiencies identified by Customs, as well as to ensure future compliance.

Examples of deficiencies that could be dubbed an “unacceptable risk,” include that of an incorrect classification, and hence, the issue regarding the payment of the correct amount of duties arises, the lack of inclusion in the dutiable value of something known as an “assist,” which could be the additional cost of a hanger provided to the foreign vendor by the importer, or a failure to have the requisite approvals in the entry packet for the usage of another company’s logo on a product.

The rule is that where an importer elects to implement a CIP, it has a conditional period of six months from the date of the audit report to implement the CIP. Be aware that although this is the rule, a CIP may be asked of an importer where only the draft conclusions to the PAS exists, and the importer is still awaiting the final results from the PAS.

Since Customs does not consider that unacceptable risks are necessarily eliminated until the CIP has been implemented and shown to be effective, preparing the CIP once deficiencies have been identified officially in the draft PAS, and more importantly, implementing internal control procedures once a “risk” area has been identified so as to resolve it, are both areas to promptly take action on.

For more information on customs audits generally, click here.

Questions/comments? Post below or email me at clark.deanna@gmail.com