International Trade and Marketing for the Fashion Industries at FIT

The mission of ITM is to prepare students for entry-level managerial positions in international operations of fashion and related businesses, including import/export, legal and finance documentation, customs compliance, trade policies, management, marketing, sourcing, logistics, and international business ethics.

Last week I had the pleasure of meeting with Christine Pomeranz, the Chair of the International Trade and Marketing Program (ITM) at SUNY’s Fashion Institute of Technology. This is by far one of the coolest programs I have ever come across and given the volume of imports of textiles and apparel into the U.S., it makes perfect sense that this kind of program would be included in a school focused on fashion.

As soon as I walked onto the campus I instantly felt at home. The student body was lively, diverse and dynamic, and with student elections pending, I noticed creative fashion-focused “vote-for-me” signs, some of which were even inspired by famous designer logos. Seeing these surroundings completely put me at ease to discuss potential future adjunct faculty positions in the areas of International Trade Law or International Trade and Fashion Law with Chairwoman Pomeranz.

During our conversation I became evermore impressed with the ITM program’s focus and caliber. There are four (4) different “tracks” that students can follow. They are:

1. International Trade Law and Fashion Law
2. International Business Management
3. International Trade and Policy Management
4. International Marketing Management

Whichever track is chosen, all students in the ITM program must take core courses in international trade, international business transactions, global marketing, import/export regulations, and global sourcing, as well as taking a practicum in international trade or a senior internship. All of these are integral to a well rounded education in international trade if you ask me!

I truly enjoyed learning about the ITM program and look forward to the opportunity to be included as an adjunct faculty member. To learn more about the program click here. Check it out!

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

OWIT-NY Event on March 16, 2010 6 pm: "Transcendental Security"

Featuring Ken Wheatley MA, CPP, Sr. Vice President, Sony Electronics, Inc.

The Industrial Revolution, Quality Circles, and Product Design. Is "Security" or Enterprise Risk Management the next business transformation? Do you know what The Great Barrier Reef, Hair Growth, and Bad Supply Chain Security all have in common?

Do you know how to stop “The Drip” that could up-end your trade operations?

There are eight leadership skills. How might two of them be holding you, or your clients, back from having a world-class strategic security program?

Join us for a lively discussion and multimedia presentation on these and other aspects of transforming your business operations and transcending perceived obstacles. For starters, there are two questions Ken would like you to think about and send him your thoughts before the meeting:

Why does your company exist? Why do you (and your employees/co-workers) get up every day to go to work?

Please send your answers to him at: ken.wheatley@am.sony.com as soon as possible.

Date: Tuesday March 16, 2010.

Time: Networking and refreshments at 6:00pm. Program commences at 6:30 pm and concludes by 8:00pm.

Location: Law offices of Baker & McKenzie at the Grace Building, 1114 Avenue of the Americas (between Fifth and Sixth Avenues), New York, New York. The entrance is on 42nd Street directly across from Bryant Park.

Cost: $20 for OWIT members, students and government employees
$25 non-members

*MEMBERS PLEASE NOTE: Any OWIT-NY member accompanied by an importer, exporter, or freight forwarder will be awarded a free pass (valued up to $25) to a future OWIT-NY event.

To attend, register on-line by clicking on the “Events" section at www.owitny.org. Online registration is available up to 24 hours before the event. If you miss the on-line registration, you can choose to pay by cash or a check at the door provided there is still space available. Please note that the event is limited to 45 people.

Hope to see you there!

USITC Investigates Proposed Modifications to the HTSUS Regarding Chemical Weapons

April 9, 2010: Publication of preliminary report on the USITC website
May 21, 2010: Deadline for public comments on preliminary report
June 25, 2010: Submission of final report to the President

The U.S. International Trade Commission (USITC) has proposed modifications to the Harmonized Tariff Schedule of the United States (HTSUS) to address the control and monitoring of materials in international trade that are capable of being used as chemical weapons or for the production of chemical weapons.

The US tariff system is based on the World Customs Organization's Harmonized Convention System. Like many countries around the globe, being a signatory to this Convention means that when the WCO directs a change, member countries - of which the US is one - must implement the changes into their nation's tariff. In this case, the WCO's recommendations are scheduled to become effective on January 1, 2012.

The USITC is preparing and making available a preliminary report and a final report setting forth the proposed changes to the HTSUS that will be needed to maintain conformity between the tariff and the WCO's Harmonized System, including appropriate explanatory information on the proposed changes. The public is invited to submit any comments until May 21, 2010.

The preliminary report will be forwarded to the President via the United States Trade Representative's office on or about April 9, 2010, and it will be made available for public inspection through the USITC's electronic docket (EDIS) and posted on the USITC website.

As described by the USITC, “the Harmonized System nomenclature provides a uniform structural basis for the customs tariffs and statistical nomenclatures of all major trading countries of the world, including the United States. The Harmonized System comprises the broadest principles of classification and levels of categories in the HTS, that is, the General Rules of Interpretation, Section and Chapter titles, Section and Chapter legal notes, and heading and subheading texts to the 6-digit level of detail. Additional U.S. notes, further subdivisions (8-digit subheadings and 10-digit statistical annotations) and statistical notes, as well as the entirety of chapters 98 and 99 and several appendixes, are national legal and statistical detail added for the administration of the U.S. tariff and statistical programs, and are not part of the international Harmonized System. The proposed changes included in this investigation are set out in a Recommendation promulgated by the World Customs Organization (WCO) on June 26, 2009, in order to update and clarify the international Harmonized System nomenclature.”

Written submissions should be addressed to the Secretary, United States International Trade Commission, 500 E Street SW, Washington, DC 20436. The USITC's electronic docket (EDIS) is where the public record for this collection of proposals may be viewed.

For more information, contact David Beck, Director, Office of Tariff Affairs and Trade Agreements (202-205-2603, fax 202-205-2616, david.beck@usitc.gov).

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

FMC to Initiate Rulemaking Relieving NVOCCs From Publishing Rates in Tariff

“Under the current economic conditions, the commission must use its expanded exemption authority to simplify the business processes of American companies, put cash back into businesses, and generate additional American jobs.” – Commissioner Rebecca F. Dye

In a 3 to 1 vote, the Commissioners of the the Federal Maritime Commission (FMC) voted last month to initiate a proposed rulemaking that would excuse Non-Vessel Operating Common Carriers (NVOCCs) from the requirement to publish in its tariff the rate it charges for shipping cargo.

"Tariff means a publication containing the actual rates, charges, classifications, rules, regulations and practices of a common carrier or a conference of common carriers. The term “practices” refers to those usages, customs or modes of operation which in any way affect, determine or change the transportation rates, charges or services provided by a common carrier or conference and, in the case of conferences, must be restricted to activities authorized by the basic conference agreement."
--46 CFR Part 520.2

As described by the FMC in its announcement about the vote, NVOCCs are “common carriers that act as intermediaries between their shipper customers and steamship lines.” In other words, they are not vessel operating common carriers, i.e., the ship operator themselves, but rather they work to coordinate the movement of the cargo in relation to the transportation needs of the shipper, while to the average person, often appears to be the carrier themselves.

NVOCCs also come under the designation of an Ocean Transportation Intermediary (OTI). Along with freight forwarders, these two parties make up the two intermediary cargo coordinating bodies available for use in overseas waterborne shipping. You can learn more about them in a prior blog post here.

Under the current federal maritime regulations, found in 46 CFR Part 500, NVOCCs must publish their rates in their tariff which is filed with the FMC. While the proposed rulemaking is intended to relieve NVOCCs from filing this information, it doesn't come without any strings attached – several other conditions will be imposed such as:

1. A continued requirement to “publish standard rules tariffs” that would contain the Terms and Conditions under which the carriage is governed
2. A requirement to provide these tariff rules for free to the public
3. A requirement that the rate charged for carriage be agreed to and “memorialized in writing” by the date upon which the cargo is received for carriage, and
4. A requirement that NVOCCs hold for a period of five (5) years documentary proof of the agreed upon rates and terms for each shipment, and upon request by the FMC, to make such records promptly available.

Keep in mind that while the FMC has voted to begin the process of creating a new rule, the practice of “notice and hearing” must still take place and this process takes time. In other words, just because the FMC is announcing this proposed change, there may be no changes for many months, and the final version, while close, may ultimately have slight variations. The FMC addressed this in a subsequent press release which can be read here.

The petition requesting this relief from filing was brought by the National Customs Brokers and Freight Forwarders Association and the FMC decision is widely supported by the shipping and intermediary, i.e., OTI, community.

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

Discrimination in the Tariff (HTSUS)? The Legality of the Tariff's Alleged “Disparate Impact” is Challenged in Court

This case immediately caught my attention as it is not often that I hear about constitutional protections in the context of international trade let alone “equal protection” under the tariff.

According to the majority decision by the U.S. Court of Appeals for the Federal Circuit in the case of Totes-Isotoner Corp. v. U.S., (Slip. Op. 09-1113) on February 5, 2010, the government has broad power to discriminate when it comes to tariffs, similar to that in taxation. [p. 17]

Totes unsuccessfully attempted to pursue and prevail on an Equal Protection claim, asserting that because different tariff rates were imposed on “men's” gloves versus “other” gloves, the Harmonized Tariff Schedule of the U.S. (HTSUS) unconstitutionally and unlawfully discriminated on the basis of age or gender.

The Court first discussed the “Article III standing” requirements, which are set forth in Article III of the U.S. Constitution, and whether Totes had a viable “case or controversy” for which the Court could provide a remedy. If no finding of standing were found, the Court would not have been able to hear the case.

To est. Art. III standing, a plaintiff must demonstrate that

1. It has suffered an injury-in-fact
2. There is a causal connection between the government's conduct and it's injury-in-fact
3. Its injury is redressable by the court

The court did find Art. III standing by way of “jus tertii (Latin, for “third party rights”) standing,” which is found when a third party, such as Totes, can demonstrate:

1. a close relationship to the party whose right it (Totes) is asserting;
2. that an injury-in-fact has been suffered by the jus tertii; and,
3. that the “first party” is hindered from filing its own claim.

In addition to standing, Totes needed to demonstrate it also had “prudential” standing, which was defined by the Court as meaning that the “interests of the affected parties must also arguably be within the zone of interests to be protected or regulated by the statue or constitutional guarantee in question.” Totes-Isotoner Corp., supra, at p. 7 (citing, Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 396 (1987).

After a long discussion regarding the development of today's HTSUS and how it is the result of multilateral agreements, negotiations, and trade concessions, the Court stated that it could not assume there was an intent to impose gender based discrimination between one article (men's gloves) versus another (“other” gloves, which women's gloves would fall into) from the mere fact of a disparate impact, as opposed to a showing of a Congressional intent to discriminate.

To support this claim, the Court reflected on how variations in duty rates may come from the product type and country of origin, the impact on the domestic industry of the place where it is manufactured, or the result of concessions made for other unrelated trade advantages.

In addition to this, the Court eluded to not wanting to open up a “Pandora's Box” of tax claims ranging from sales, income, and property taxes, the last of which may have been placed on “items which are discriminately consumed by any identifiable group,” such as in the case of Bray v. Alexandria Women's Health Clinic, 506 U.S. 263, 270 (1993), wherein it was discussed that “a tax on wearing yarmulkes is a tax on Jews...[and that] some activities may be such an irrational object of disfavor that if they are targeted, and if they also happen to be engaged in exclusively or predominantly by a particular class of people, an intent to disfavor that class can be readily presumed.” Id. at 18.

Unlike the Bray case, the provisions challenged by Totes in this case were found not to be facially discriminatory and that Totes failed to make a sufficient allegation of the government's intent to discriminate between male and female users. By merely claiming that there was a disparate impact, Totes' complaint had failed to state an equal protection claim.

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

Understanding the Harmonized Tariff Schedule of the United States (HTSUS) – Part I

The Harmonized Tariff Schedule of the United States (HTSUS) is used for determining the classification and duty rate of an import into the U.S. Sometimes an item is specifically stated in the tariff, such as frozen waffles, which come in under HTSUS Subheading 1905.32.0029. Other sweets that are imported frozen, such as “crème brûlées,” discussed in Customs Ruling HQ H023498 (3/9/09) and described as a “baked custard” upon cooking, are not so readily classifiable.

Classification is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of a good shall be “determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require,” the remaining GRIs 2 through 6 may then be applied in sequential order.

Using the example of the crème brûlées, we look at HTSUS Heading 1905 which provides:

1905 Bread, pastry, cakes, biscuits and other bakers’ wares, whether or not
containing cocoa; communion wafers, empty capsules of a kind suitable
for pharmaceutical use, sealing wafers, rice paper and similar products:

Under the specific HTSUS subheading for the crème brûlées, subheading 1905.90.9090 provides:

1905.90.90 Other:
1905.90.9090 Other …

When an import cannot be easily classified, looking at the terms of the headings, section or chapter notes as per the GRIs, and/or utilizing the the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) will help interpret the headings of the tariff so as to find an appropriate classification.

The ENs, “although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level.” See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

As explained in Customs Ruling HQ H023498 (3/9/09), the ENs to heading 1905, HTSUS, state, in relevant part:

“This heading covers all bakers’ wares. The most common ingredients of such wares are cereal flours, leavens and salt but they may also contain other ingredients such as: gluten, starch, flour of leguminous vegetables, malt extract or milk, seeds such as poppy, caraway or anise, sugar, honey, eggs, fats, cheese, fruit, cocoa in any proportion, meat, fish, bakery “improvers”, etc. Bakery “improvers” serve mainly to facilitate the working of the dough, hasten fermentation, improve the characteristics and appearance of the products and give them better keeping qualities. The products of this heading may also be obtained from dough based on flour, meal or powder of potatoes.

This heading includes the following products:
* * * *
(11) Certain bakery products made without flour (e.g., meringues made of white of egg and sugar).”

Using the ENs for guidance, Customs explained that in a recent prior ruling (HQ W968393, 7/16/08), it had concluded that

“The text of heading 1905, HTSUS, provides for “other bakers’ wares” which, when read in the context of the entire clause of which this expression is a part, leads us to now find that the term “other bakers’ wares” refers to baked goods (or wares) other than the “bread, pastry, cakes, [and] biscuits” specified in the heading. In addition, based on the heading text and the examples provided by the ENs, it appears that goods of heading 1905, HTSUS, are consumed “as is” and are not incorporated into other food items.“

Taken in conjunction with the marketing literature submitted by the importer, Customs concluded that the crème brûlées were manufactured goods offered for sale by one who specializes in the making of pastries, akin to bakery products made without flour, such as meringues made of sugar and egg whites, as described in EN 19.05 (A)(11)). In addition, the crème brûlées being fully baked upon importation were thus, ready for consumption “as is,” as opposed to being incorporated into other food items. Customs therefore concluded that they constituted bakers’ wares and were classifiable in HTSUS heading 1905.

In a future post I will explore the rule of “Ejusdem Generis,” another means for interpreting the tariff, and its application for making a HTSUS determination.

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

Remote Location Filing and District Permits

The Final Rule, which can be found at 74 FR 69015, sets forth the final changes to the Customs regulations that govern RLF, which went into effect on January 29, 2010.

I have found myself thinking about the particulars regarding district permit requirements for Customs Brokers, and with the effective date having kicked in on Jan. 29, 2010 for the "Remote Location Filing" Final Rule, I figured I would explore this a bit in the blog.

Remote location filing (RLF) allows a customs broker holding a national permit to file entries for merchandise from a location other than where the goods arrive. This means that a broker in New York can file an entry in the port of Long Beach despite not having a district permit there.

Generally, with certain exceptions (listed below), a district permit must be obtained by a customs broker for each district in which it intends to conduct customs business. [19 CFR 111.19(b)]  An applicant for a district permit must have a place of business at the port where an application is filed and must exercise responsible supervision and control over it once a permit has been granted. [19 CFR 111.19(d)]  Thus, subject to the exceptions below, a permit will be required where customs business in not conducted electronically.

Per 19 CFR 111.2(b)(2)(i)(C), "A broker may electronically file entries for merchandise from a remote location, pursuant to the terms set forth in Subpart E to Part 143 of this chapter, and may electronically transact other customs business even though the entry is filed, or other customs business is transacted, within a district for which the broker does not have a district permit."
 
Exceptions to the District Permit Rule applies to brokers who have a national permit [issued under 19 CFR 111.19(f)], which allows them to act in another district without obtaining a district permit when: [19 CFR 111.2(b)(2)(A-D)]
 
1) An employee of the broker is placed in the facility of a client for whom it conducts customs business for
2) Filing electronic drawback claims
3) Electronically filing entries from a remote location pursuant to Subpart E (i.e., 19 CFR 141.61 through 141.69)
4) The importer of record appoints a broker to represent it on any issue arising out of an entry (that was accepted by Customs) which does not possess a permit in which the representations are made
 
Some of the benefits to RLF include:
1) No restriction to either the port of arrival or port of filing for a physical exam
2) Allowing for an exam to occur at the port nearest the cargo's final destination
3) The electronic management and control of Customs cargo data by the filer, and
4) The accurate electronic tracking of cargo

Keep in mind however, that pursuant to 19 CFR §143.45, “[w]hen filing from a remote location, an RLF filer must electronically file all additional information required by CBP to be presented with the entry and entry summary information (including facsimile transmissions) that CBP can accept electronically. If CBP cannot accept additional information electronically, the RLF filer must file the additional information in a paper format at the CBP port of entry where the goods arrived.” [19 CFR §143.45]

In addition, while there are currently more than 250 participating RLF ports, not all ports are equipped to handle RLF procedures, however, Customs is in the process of evaluating additional ports and welcomes recommendations for further ports to be directed to the Customs RLF Program Manager at remote.filing@dhs.gov. For a current list of RLF operational ports, and additional RLF information, click here.