Eco-Friendly & Trade Agreement Beneficiary Gifts

With the holidays upon us, there is no shortage of vendors here in New York City offering gifts and stocking stuffers for sale. 

As I try to buy gifts made using either an eco-friendly production method or one which derives from a sustainable production environment – in terms of the workers involved – I was pleased to learn of Nakate Project’s high fashion necklaces and bracelets from Uganda that not only meet both of these standards but are also a gorgeous gift that I would be happy to give to any of my friends.
 
NOTE: As these goods come from the African continent, duty free treatment for these and thousands of other products is available under the GSP and AGOA programs.  Just another good reason to source from Africa!

Having been examining quite a bit of jewelry and accessories at my office lately, I wondered about the tariff classification of Nakate’s paper beaded necklace, an image of which can be found here. 

As this jewelry is not made of, nor contains, silver, gold or platinum, it would not be considered jewelry of a precious metal.   It likewise has no gemstones or semi-precious stones.  It further is not made of any base metal.

It therefore does not fall into these categories for classification purposes.  Rather, it falls into the classification for “Imitation Jewelry.”

Interestingly, jewelry of this kind is classified based upon a cost per quantity measurement.  (As an aside, if anyone reading this has any insight into the historical reason for this, it would be great if you could share it with the rest of us readers!)

The tariff specifically provides that if the jewelry is

… valued not over 20 cents per dozen pieces or parts, then classification will be 7117.90.5500 (HTSUS 2012) which provides for “Imitation jewelry: Other: Other: Valued not over 20 cents per dozen pieces or parts: Other.”  The rate of duty will be 7.2% ad valorem.

 OR

… valued over 20 cents per dozen pieces or parts, then classification will be 7117.90.9000 (HTSUS 2012) which provides for “Imitation jewelry: Other: Other: Valued over 20 cents per dozen pieces or parts: Other: Other.”  The rate of duty will be 11% ad valorem.

 Now I don’t know about you, but these types of figures beg the question…what type of jewelry (nevermind the parts) is valued at less than 20 cents (USD) per dozen pieces?  Or in other words, what type of jewelry (not including children’s or of plastic) is only 1.67 (i.e., $0.0167) cents/piece?  Umm…and what is the quality like?

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

 

How to Classify a Composite Good - Key Chain Case Study

I was admiring key chains recently that were sold separately from their corresponding designer handbags.  Noting that the ring was of metal but the decorative part was of leather, I found myself wondering if it was considered a composite good under the tariff, i.e., the Harmonized Tariff Schedule of the U.S. (HTSUS).

A “composite good” is one composed of more than one material which can be either a mixture of materials in one (1) article, an article made up of different components (as in the case of this key chain), or even goods put up in a set for retail sale (which is a term of art by the way in customs-ease and may not mean what you might think it does – so ask someone if that question arises).

Since the key chain is a composite good, we look at the HTSUS’ General Rules of Interpretation (GRI) for guidance on how to classify it.  GRI 3(b) states that when goods are prima facie (i.e., appear to be) classifiable under two (2) or more tariff headings, classification shall be determined as if they consisted of the material or component that gives them their “essential character,” insofar as this criterion is applicable.

Endnote (IX) to GRI 3(b) explains that “a composite good made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole, but also those with separable components, provided these components are adapted to one another, are mutually complementary, and that together they form a whole which would not normally be offered for sale in separate parts.”

Customs has consistently held that, when a key chain has both a functional and non-functional component, it is the functional component which provides the article’s essential character.  (HRL 950636) Therefore, the ring component makes up the utilitarian part of the key chain with the leather portion deemed as being merely decorative.

Provided the metal key ring was of steel, the whole key chain would therefore be classifiable under HTSUS heading 7326.

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

FTC Proposed Updates to the Care Labeling Rule on Apparel – Only 2 More Weeks to Submit Your Comments

Only 2 more weeks remain for you to submit your comments related to the Federal Trade Commission’s (FTCs) proposed changes to the Care Labeling Rule.

This rule requires manufacturers and importers to attach labels with care instructions for garments and certain piece goods, so consumers have reliable instructions for washing, dry cleaning, bleaching, drying and ironing their clothing.

The Care Labeling Rule, officially called the Rule on Care Labeling of Textile Wearing Apparel and Certain Piece Goods, has been in effect since 1971.  It requires manufacturers and importers to attach care instructions to garments.

The FTC is seeking comments on potential updates to the Rule, including changes that would:

1. Allow manufacturers and importers, if they so choose, to include professional instructions for “wet cleaning” – an environmentally friendly alternative to dry cleaning – on labels if the garment can be professionally wet cleaned;

2. Permit manufacturers to use updated ASTM (American Society for Testing and Materials) or ISO (International Organization for Standardization) symbols on labels in lieu of written terms providing care instructions;

3. Clarify what constitutes a reasonable basis for care instructions; and

4. Update and expand the definition of "dry clean" to reflect current practices and account for the advent of new solvents.

Comments can be filed electronically by clicking here as are instructions on how to file.  They must be received by November 16, 2012.

All comments received will be posted online here. (FTC File No. R511915)  The staff contact is Robert M. Frisby, Bureau of Consumer Protection (202) 326-2098 and questions about contributing and submitting comments may be directed to him.

Make your voice heard!

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

Building an Effective Internal Compliance Program

Whether it’s spelled out on a single page or makes up an entire manual, a basic compliance program is one where there are internal controls and procedures that implement compliance measures for those laws and regulations an entity must abide by in the day-to-day operation of the business.

Having an effective program is strengthened when there is a culture of accountability in which individuals understand the concept of compliance and their part within the compliance chain.

To be an effective compliance program internal controls and procedures need to be actively implemented and revised with key personnel updated on changes in practices.

 Not only is US Customs interested in seeing an importer’s compliance procedures when being audited or upon application to a voluntary program such as C-TPAT (Customs Trade Partnership Against Terrorism) or ISA (Importer Self Assessment), but it can also play a role in the mitigation of penalties when incidents occur that give rise to such assessments.

Be sure to put together a compliance program that fits your organization, implement it and update it regularly throughout the year.

Top compliance risks should be identified with resources allocated to address them accordingly. A common area of risk for an importer is that within its supply chain. Mitigation of risk can occur by an importer actually knowing where it’s cargo is coming from, who the actual supplier is and where the imported merchandise is going to.

Sounds simple (I know…) but these transactions are not always as clear cut as they would seem at face value.

 Some factors that can make a compliance program appear to be a failure include

·         A failure to tailor and update the program

·         Insufficient training and follow through of personnel

·         Inconsistent enforcement of internal procedures, and

·         An inadequate compliance culture

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

 

New US Customs “Centers for Excellence and Expertise” (CEE)

I attended a US Customs webinar yesterday that explained how the agency is in the process of setting up new “Centers for Excellence and Expertise” (CEE).  These centers – which are virtual – are intended to bring existing expertise together in order to facilitate trade on the part of US Customs and to align its procedures with modern business practices.

Of greater significance however, is that US Customs intends to assign each importer with an account at a CEE to route entry summaries through and to use these virtual environments to move non-revenue collection activity to a CEE for handling protests, the review of prior disclosures and other activities.  Revenue collection however, will continue to be done at the port of entry.

The creation of CEEs are part of US Customs’ “trade transformation efforts,” which also includes an overhaul of 19 CFR Part 111, which are the customs brokers regulations.

CEEs are meant to serve as an information resource for the importing community, be it a large or small importer or broker, US Customs itself, or another government agency.  Customs stated that it has created CEEs by industry in order to focus on industry-specific issues so it can better meet the challenges for that industry.  Unfortunately, with such few and broad categories (listed below) in relation to the thousands of types of imported merchandise, it is questionable as to how well this intention will be met.

The goals of the CEE are:

1)      To facilitate legitimate trade through effective risk management and to “segment” risk so as to get the “good actors” out of the way in order to focus on the riskier participants,

2)      To increase industry-based knowledge within Customs and to better understand the unique practices within an industry, and

3)      To enhance enforcement efforts and to partner with industry stakeholders in order to understand and address industry risks.

As it stands, nine (9) industry groups were identified by Customs for which nine (9) CEEs are to be created.  Four (4) of them have already opened, listed as the first four (4) in the list below, and importers are already welcome to solicit participation in one of them.

Open CEEs:

1)      Electronics (Long Beach, CA)

2)      Pharmaceutical Health and Chemicals (New York)

3)      Automotive and Aerospace (Detroit, MI)

4)      Petroleum, Natural Gas and Minerals (Houston, TX)

Unopened Centers:

5)      Apparel, Footwear and Textiles

6)      Base Metal and Machinery

7)      Consumer Products and Mass Merchandising

8)      Industrial and Manufacturing Materials

9)      Agriculture and Prepared Products

For more information, you can check out this Federal Register Notice at 77 FR 52048 dated August 28, 2012, access a .pdf version here), or email US Customs directly at cee@cbp.dhs.gov.

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

Join Me Tomorrow Oct. 9th at F.I.T. for a FREE Event on Trade, Africa and Fashion!

Time: 6:30 - 8:30 pm
Location: Fashion Institute of Technology, Seventh Avenue at 27th Street, John E Reeves Great Hall

A panel will discuss Africa's emergence as a source of creativity in the fashion industry and the role the industry and other non-traditional players have in leading the sustainable development of the continent to significant business growth.

Moderator:
Ms. Tanya Cole, Foreign Service Officer of the U.S. Commercial Service USEAC

Panelists:

- Ms. Roberta Annan, Project Developer for L'Uomo Vogue's Rebranding of Africa issue, Chair of the Government Liaison Committee of Fashion 4 Development (F4D)

- Ms. Adiat Disu, President of Adiree Public Relations and Founder & Director of Africa Fashion Week

- Mr. Lexy Mojo-Eyes, President and CEO of Legendary Gold Limited, Founder of Nigeria Fashion Week

- Ms. Janice Sullivan, Chief Executive Officer, Edun

This event is presented in collaboration with the Global Trade and Technology Center and Ms. Janiece Greene, Consultant.

Hope to see you there!

AGOA Renewal Recommendations Sought by USTR

Submit Your Comments By October 11, 2012

For 2012, there are 40 Sub-Saharan African countries which have been designated as beneficiary countries under the African Growth and Opportunity Act (AGOA).  This means that articles, including certain textile and apparel products, made in these countries are eligible upon importation to the US for duty-free treatment.

The US Trade Representative’s Office (USTR) has requested comments in order to develop recommendations on AGOA country eligibility for the 2013 calendar year.

In order to qualify as an AGOA beneficiary country is, among other things, the establishment (or progress towards) a market based economy, governance by the rule of law, the right to due process, and political pluralism.  In addition, economic policies to reduce poverty, a system to combat corruption and bribery, and the protection of internationally recognized worker’s rights are also required.

USTR is also interested in identifying countries and the extent to which child labor is used.

Where the US President determines that a beneficiary country is not making continual progress in meeting the eligibility requirements, he must terminate the designation of the country as a beneficiary of AGOA.

Countries under consideration for 2013 are the State of Eritrea, Democratic Republic of Congo, the Republics of South Sudan, Madagascar, Zimbabwe, Equatorial Guinea and Sudan, Somalia, and the Central African Republic which are not currently beneficiaries under the AGOA.

Public comments in connection with the annual review regarding country eligibility in relation to the above criteria, and also with respect to child labor, are requested for submission online at www.regulations.gov .  Enter the “docket number” USTR-2012-0026 on the home page (and click “search”) so that the case can be pulled up. 

You can thereafter find a reference to this notice by clicking “Notice” under the header “Document Type” on the search-results page and click on the link entitled “Submit a Comment.”

If you are unable to make a submission, or have a question related to an attachment or a confidential submission, you may contact Don Eiss, Trade Policy Staff Committee at (202) 395-3475.

All other non-technical or procedural questions should be directed to Constance Hamilton, Deputy Assistant U.S. Trade Representative for Africa, Office of the USTR at (202) 395-9514.

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