Navigating the Importation Process - Tips for the New Importer

I remember one of my best friends telling me in college that she thought it would be fun to have an import business where of course, she got to do the traveling to find all of the wonderful treasures that she would sell in her shop.

I know that back then, we never could have imagined that there would be so many obscure rules, such as that articles made of wood might require a declaration from the USDA, or that beaded jewelry made of seeds from exotic forests might be subject to FDA regulations.

After all, how does an importing entrepreneur even know where to begin in terms of compliance with the law when most have little idea about the complexities of importing?

Nowadays, thanks to search engines like Google – which did not exist when we were in college (zoiks!) – getting information about importing is a much simpler endeavor. This of course, is both good and bad.

It is good in that basic importing information may be found online, but of course, not all information out there is equally correct.

The down side however, is that there is a presumption that a responsible importer would have been able to seek out information that pertained to their type of import and therefore ought to have dotted all of their proverbial “I’s” and crossed their “T’s.”

A failure to do so can lead to an accusation of negligence in the event of an importing “hiccup” or even worse, an allegation of fraudulent activity.

So where does a new importer begin?

Like people entering the country, the border is the front line of imported merchandise, and US Customs and Border Protection has jurisdiction over what is permitted to enter – and remain – in the country.

A few helpful links include the web pages on US Customs’ website (www.cbp.gov) under the “Trade” tab. Within this section is a link called "Basic Importing and Exporting" which further leads to information on US Customs import requirements as well as other federal agency requirements.

There is also a rather lengthy US Customs guide entitled “Importing into the United States – A Guide for Commercial Importers” as well as numerous “Informed Compliance” publications which offer both general importing information such as on the “Entry” of merchandise, and Tariff Classification, as well as more import specific information, such as on Eyewear, Textile and Apparel Rules of Origin, and Footwear.

More tips for new importers and exporters can be found here.

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

Classification and Marking of Watches

Earlier this week I found myself describing to my summer law clerk the difference between specific duty rates, such as a “per piece” rate like $0.40 cents per piece, and “ad valorem” duty rates, i.e. a percentage rate of duty, such as 6% of the invoiced value of the merchandise.

When it came to explaining that there are certain imports that are a combination of the two types of duty, I turned to watches whose classifications within HTSUS Ch. 91 can be made up of a combination of duty rates.

Watches are unique in the tariff for not only this reason but because they are subject to all kinds of different types of additional rules that other commodities are not subject to.

Take the marking requirements for a watch for example.

The “marking statute,” codified in 19 USC 1304, mandates the marking of every article of foreign origin of its country of origin.

Under Customs interpretation of the Marking Statute, the country of origin of a watch is based upon the country of origin of the movement of the watch, irrespective of whether the case, band, or other parts were produced in another country.

HTSUS Additional U.S. Note 4 to Chapter 91 of the tariff, provides for special marking requirements for watches as described in bold below.

There is an exception to these special marking requirements however, for those watches with movements with “opto-electronic displays” and cases designed for use with “opto-electronic movements.”

As liquid crystal display (LCD) and light emitting diode (LED) display watches are categorized as watches with an opto-electronic display, they are excepted from these special marking requirements.

Watch Movement: Must be marked on one (1) or more of the bridges or top plates to show the name of the country of manufacture; the name of the manufacturer or purchaser; and in words, the number of jewels, if any, serving a mechanical purpose as frictional bearings

Watch Case: Must be marked on the inside or outside of the back to show the name of the country of manufacture and the name of the manufacturer or purchaser

For more information on the classification and marking of watches, check out US Customs updated publication entitled “Classification and Marking of Watches and Clocks.”

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

OWIT International – A Supportive Network That Promotes the Growth of Women in International Trade

Recently, I had the pleasure of being a part of the annual global meeting for the Organization of Women in International Trade. My chapter (New York) had been intending to host this year's annual meeting and we purposely chose the date to have it during World Trade Week NYC.

As it turned out, May was a month of graduations, soccer and other sports playoffs, and weddings, among other activities. Being a network that is supportive of women (which does not mean only made up of women, as we also have male members), it was decided instead to have a video conference. While it was not as fun as a weekend in NYC, it was a great conference!

Representatives from chapters around the country participated, and other international branches joined in on the call as well, including representatives from Canada, Peru, Switzerland, Kenya and Mexico.

Serving as the Vice President to the New York chapter, and having been a member for about 4 years now – 3 of which have been on the Board of Directors - I have seen the rapid development that has occurred with OWIT-NY thanks to technology. A focus on using technology to further promote the organization and to advance its agenda to, for example, educate its members and friends in the trade community via webinars, was a large part of the discussion during the video conference.

We acknowledged the success of the webinars for both developing our members as well as the organization, and the benefits of collaborating with entities providing technology-based services, such as the trade data provider, Import Genius, with whom OWIT members will get a discount on the cost of services from.

In addition, it was recognized that the development of OWIT-International’s Facebook and LinkedIn profiles, which serve to advance our marketing efforts as well as to promote awareness about the organization, have been valuable tools worth putting further resources towards.

The collaboration and caliber of women was impressive and I feel lucky to be a part of such a dynamic and talented group of women.

For more information on OWIT International, click here.

For more information on OWIT-NY click here.

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

2011 World Trade Week and OWIT-NY Wine Tasting Event This Tuesday

World Trade Week kicks off tomorrow at 8:30 a.m. in Room 14-220, on the 14th Floor at Baruch College, which is located at 55 Lexington Ave. in Manhattan.

Every year, the New York region’s trade and transportation community comes together in May to celebrate World Trade Week with a full agenda of educational seminars, global business networking events, and an awards breakfast that recognizes exemplary contributions in the field.

The Awards Breakfast, scheduled for May 16th, recognizes outstanding companies that have grown through global expansion. The Organization of Women in International Trade (OWIT-NY) will be exhibiting at the breakfast as this is one of the best market places to meet fellow international traders and to learn the latest trends in our industry.

I will be at the OWIT-NY exhibit booth from 8:30 a.m. and encourage you to stop by and say ‘hello!’

As part of World Trade Week, OWIT-NY is having an event this Tuesday, May 17th entitled, “Emerging Markets Wine Tasting.” The evening will consist of a presentation and wine tasting of 6 wines (a mixture of red, white and dessert) from 6 different emerging wine-producing countries. During the tasting presentation there will be a selection of Murray’s cheeses and breads to complement the wines.

If you’re interested in attending, be sure to register soon as there are only a few spots remaining. You can register at www.owitny.org and click on the “Events” tab.

I will be there this Tuesday and I hope you can make it out too!

Date: May 17, 2011
Time: Wine presentation 7:30 pm – 8:30 pm followed by networking and personalized wine shopping with Morrell's wine expert
Location: Morrell Wine and Spirits Store
One Rockefeller Plaza (49th Street between 5th and 6th Avenues)
New York, NY
Cost: $50 for members and $55 for non-members

For more information on other World Trade Week events, click here.

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

U.S. Customs Newly Updated Valuation Encyclopedia!

I’m pleased to announce that US Customs recently made available the latest version of its Valuation Encyclopedia! This sort of news is fantastic (and exciting - I know that sounds nerdy…) because us members of the international trade community depend on updates from US Customs to maintain certain standards which the agency expects of us under our informed compliance responsibilities.

While a prior version of the Encyclopedia existed, it only went up to 2003 and there has not been an updated manual available for nearly 7 years.

Let me give you a little bit of background about importing.

Pursuant to the Customs Modernization Act, it is now the responsibility of the importer of record to use “reasonable care” to “enter,” “classify,” and “value” the goods and provide any other information necessary to enable US Customs to properly assess duties, collect accurate statistics, and determine whether all other applicable legal requirements are met.

When goods are imported into the Customs Territory of the United States (the fifty states, the District of Columbia and Puerto Rico), they are subject to certain formalities involving US Customs. In almost all cases, the goods are required to be “entered,” that is, declared to US Customs, and are subject to detention and examination by Customs officers to insure compliance with all laws and regulations enforced or administered by US Customs. As part of the entry process, goods must be “classified” (determined where in the U.S. tariff system they fall) and their value must be determined.

The Encyclopedia is therefore, a compilation of US Customs rulings on different valuation topics, such as the method for determining valuation, e.g., the "transaction value" or "deductive value" methods, as well as detailing which factors might make up the value of an importation.

In addition to this, there is a collection of US Customs rulings, grouped by category of a particular valuation issue, which may serve as a reference to one looking for guidance on how US Customs would treat a particular valuation matter.

The Encyclopedia is only for information purposes of course, and any binding determination sought by an importer can only be accomplished though a request for a ruling.

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

Revised CPSC Rule on the Retesting of Compliant Clothing Textiles

In response to multiple requests from the clothing textile industry to reduce the need to retest clothing textiles already tested and found to be in compliance with CPSC regulations, it has amended its rule with respect to flammability testing.

Effective today, April 22, 2011, the Consumer Product Safety Commission (CPSC) has revised its terms under which the agency will accept flammability test certifications for children’s products based on third party accredited test labs.

Specifically, it will accept, for children’s product certification purposes, tests conducted by accredited third party labs since August 18, 2009 (pursuant to 16 CFR Part 1610).

CPSCs rationale was based simply upon the nature of the wearing apparel industry, in that it recognized there could be a significant time lapse between fabric testing and the actual making of a garment.

At issue, was the acceptance of tests undertaken by a now-CPSC-accredited test lab, prior to its accreditation, but after August 18, 2009. Testing under these circumstances has been referred to by the CPSC as “restrospective” testing.

Rather than causing these already tested fabrics to undergo subsequent tests, however, CPSC has instead revised its position on “retrospective” testing in order to reduce the need for redundant testing.

In order to avoid the retest and issuance of new certifications, the following conditions* must apply:

• At the time of product testing, the product was tested by a third party conformity assessment body that was ISO/IEC 17025 accredited by an accreditation body that is a signatory to the ILAC–MRA;

• The third party conformity assessment body’s application for testing using the test methods in 16 CFR Part 1610 is accepted by the CPSC on or before November 16, 2010;

• The product was tested under 16 CFR Part 1610 on or after August 18, 2009;

• The accreditation scope in effect for the third party conformity assessment body at the time of testing expressly included testing to 16 CFR Part 1610;

• The test results show compliance with the applicable current standards and/or regulations; and

• The third party conformity assessment body’s accreditation, including inclusion in its scope of 16 CFR Part 1610, remains in effect through the effective date for mandatory third party testing and manufacturer certification for conformity with 16 CFR Part 1610.

* CPSC Docket No. CPSC-2010-0086, 76 FR 22608 (4/22/11)

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

Advance Filing of Cargo Data (AMS)

I attended a conference recently on international law at St. John’s University Law School. Actually, it was nice to get out there as I had yet to visit the campus despite having considered going there for law school back in the 1990s.

One of the panelists, specifically referencing the DOHA Development Agenda, spoke about how, in his estimation, international trade law was designed as a counter-terrorist measure. For more on DOHA, click here.

Counter-terrorism activity is the number one initiative of US Customs and in furtherance of this, it has a requirement (one of many) that it must receive, by way of it’s Automated Manifest System (AMS), information pertaining to a shipment before the cargo is either brought into or sent from the US by any mode of commercial transportation (sea, air, rail or truck).

According to US Customs, the cargo information required is that which is reasonably necessary to enable high-risk shipments to be identified for purposes of ensuring cargo safety, security, and the prevention of smuggling, pursuant to the laws enforced and administered by the agency. The specific inward foreign manifest (advance filing of cargo declaration - AMS) requirements are contained in 19 CFR 4.7 and 19 CFR 4.7a.

In true US Customs form, a failure to do this will lead to a penalty which is called a “liquidated damage.” Of course, through the mitigation process a party assessed a penalty may seek a reduction, which can be mitigated to as little as 10% of the claim, though from correspondence from US Customs on a case I recently handled, mitigation to this level is unlikely unless that party is a member of C-TPAT.

Does C-TPAT membership, or the lack thereof, sound like a reasonable basis for deciding on a penalty mitigation?

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