Our Office has extensive experience in working with Customs and International Trade regulations. We have written, and continue to write, extensively on topics related to international trade compliance through LawCustoms project.
Import Compliance Review
Your product or service may be regulated by a number of agencies in addition to Customs and Border Protection. Mere compliance with the basic Customs requirements may not be enough. Each government agency has its own unique set of reporting and licensing rules. Lack of compliance with these rules, even if unintentional, may result not only in monetary fines and loss of your product or service, but also in a criminal prosecution.
The nonexclusive list of the United States federal agencies potentially regulating or affecting your product or service includes, but not limited to:
- Alcohol and Tobacco Tax and Trade Bureau (of Department of Treasury)
- Agricultural Marketing Service (of Department of Agriculture)
- Animal and Plant Health Inspection Service (of Department of Agriculture)
- Bureau of Alcohol, Tobacco and Firearms (of Department of Justice)
- Bureau of Industry and Security (of Department of Commerce)
- Bureau of International Security and Nonproliferation (of Department of State)
- Census Bureau (of Department of Commerce)
- Consumer Product Safety Commission
- Copyright Office
- Customs and Border Protection (of Department of Homeland Security)
- Directorate of Defense Trade Controls (of Department of State)
- Environmental Protection Agency
- Federal Communications Commission
- Federal Trade Commission
- Fish and Wildlife Service (of the Department of Interior)
- Food and Drug Administration (of Department of Health and Human Services)
- Food Safety and Inspection Service (of Department of Agriculture)
- Foreign Agricultural Service (of Department of Agriculture)
- Import Administration (of Department of Commerce, International Trade Administration)
- Internal Revenue Service (of Department of Treasury)
- International Trade Commission
- Nuclear Regulatory Commission
- Office of Diversion Control (of Department of Justice, Drug Enforcement Administration)
- Office of Foreign Assets Control (of Department of Treasury)
- Office of Textiles and Apparel (of Department of Commerce, International Trade Administration)
- Office of the United States Trade Representative
- Patent and Trademark Office (of Department of Commerce)
Export Compliance Review
Product Properties Review
Almost all of the products for export are subject to declaration requirements with the Census Bureau. Many of the exported products may be deemed to have dual use applications (i.e. civilian and military), and fall under licensing jurisdiction of the Bureau of Industry and Security. Yet, other products for export may be deemed to have inherently military applications, even if exported by civilians for civilian use (e.g. security, sports, entertainment), and are subject to licensing authority of the State Department. Exports of medical and pharmaceutical products may require the approval of Drug Enforcement Administration, while high technology goods may be controlled for their encryption and computational capabilities. Even exports of waste and scrap can require approval for environmental and security reasons.
Trading Partner Review
In addition to export requirements that are attributable to product properties, exporters should be aware of political and economic restrictions at the country level and the entity level (i.e. a person or a company). An exporter may overcome these restrictions by acquiring a proper license or authorization.
Consumer Product Safety Compliance Review
A review of your product for the requirements mandated by the Consumer Product Safety Improvement Act of 2008 or any other Act enforced by the Consumer Product Safety Commission.
The scope of Consumer Product Safety Commission authority is broadly established to extend to any consumer product from which the risk of injury could occur. Potentially every consumer product that you import, sell, or distribute in the United States is subject to the Consumer Product Safety Commission regulations.
Consumer Product Safety Improvement Act of 2008 (CPSIA) imposed product safety compliance responsibilities on additional members in the supply chain, the importers and the manufacturers. Customs and Border Protection joined forces with Consumer Product Safety Commission to enforce provisions of CPSIA. As a result, the failure of your product to comply with CPSIA may result in the denial of admission of your products into the United States market. Even if your product is admitted, you are still exposed to liability for CPSIA non-compliant goods.
Harmonized Tariff Schedule
Proper determination of a Harmonized Tariff Schedule (HTS) for your product is one of the most critical aspects of your success as an importer. The customs duty of your product is dependent on the HTS. The applicability of a duty favorable trade agreement depends on HTS. Your product is scrutinized for multiple regulatory requirements, in part, based on HTS (e.g. antidumping / countervailing duties, FDA, FCC, … etc.). Your product’s visa and quota requirements are HTS driven. Even a country of origin can be a function of Harmonized Tariff Schedule. Proper application of the Harmonized Tariff Schedule is critical because the HTS directly affects your bottom line.
Export Control Classification Number (ECCN)
Export Control Classification Number, or ECCN, refers to a number which the exporter may be required to report to Bureau of Industry and Security for export control purposes. ECCNs are listed in the Commerce Control List. Subject to some exceptions, ECCN is reported by an exporter, or a forwarder on behalf of the exporter, prior to export of a product taking place. ECCN determines whether any export restrictions apply to your product based on the product itself, its place of ultimate destination, and the product’s value.
Agency Jurisdiction Product Review
If you import, export, or place your product in the U.S. marketplace you become subject to a multiple agency requirements. We live in the era of regulatory state, where almost all products are regulated for safety, security, quality and other reasons. Below are general non-exclusive examples of regulation by a product type.
Food Products: may be subject to labeling, reporting, registration, and licensing requirements by Health and Human Services, Agriculture, and Interior Departments. These requirements are enforced by Customs and Border Protection.
Household and Consumer Products: regulations may include labeling, material composition, pre-market testing and other regulatory requirements by Consumer Product Safety Commission, Federal Trade Commission, and other agencies. Regulations are enforced by Customs and Border Protection.
Textile and Apparel Products: may be subject to multiple reporting, labeling and safety requirements by Customs and Border Protection, Federal Trade Commission, Consumer Product Safety Commission, and other agencies. Quota and other non-tariff barriers may apply to imports.
Medical, Drugs and Pharmaceutical Products: may be subject to licensing, labeling, market pre-approval and packaging requirements by Drug Enforcement Administration, Food and Drug Administration, Consumer Product Safety Commission and other agencies. Requirements are enforced by Customs and Border Protection.
Chemical Products: may be subject to declaration and reporting requirements of Environmental Protection Agency. Certain chemicals are controlled by the State and Commerce Departments. Customs and Border Protection enforces laws of all these regulatory bodies.
Software, Computers and Electronic Products: licensing and registration may be required with Federal Communication Commission. Exports may be controlled for product encryption and computation capabilities. Additional requirements may be imposed by Food and Drug Administration (e.g. products using lasers). Requirements are enforced by Customs and Border Protection.
Military Products or Civilian Products with Possible Military Applications: exports, imports, and distribution within the United States may be controlled by State, Commerce, Justice and Treasury departments. Controls includes tax collection, licensing, registration and reporting requirements. Customs and Border Protection administers and enforces regulations of these Departments.
Industrial Products and Appliances: imports may be subject to antidumping and countervailing duties administered by International Trade Commission and Commerce Department. Certain equipment may be regulated by Environmental Protection Agency. Exports may be controlled for dual use reasons by State or Commerce departments. Customs and Border Protection enforces regulatory requirements.
Product Labeling and Marking
Improper labeling and marking of your product may result in the import denial, product recalls, regulatory penalties, and even a lawsuit for the failure to warn about potentially harmful or dangerous characteristics of your product. Many regulatory agencies devote a substantial amount of rule making and advisory opinion time to this topic.
Product labeling and marking includes consideration of size and place of the identifying mark or label. Additionally, one should consider the type of information listed and the order of listing. Whether information meets the applicable regulatory requirements and trade agreements to which the United States is the signatory.
Country of Origin Determination
If your product is wholly made and produced in one country, and thereafter brought directly into the United States, then there would be no need for this service. The country of origin is the country where the product is wholly made or produced. In a modern world, however, products are rarely made entirely from the products of one country in that same country. Very often a product is made in a number of countries with inputs from multiple countries. For example, the product may consist of an engineering work, raw materials, assembly, and packaging that all took place in different countries. To complicate the matters further, each country may be subject to a different trade agreements with their own unique country of origin rules. These rules may add an additional layer of analysis by providing a separate country of origin rules for a duty preferential purposes and for marking purposes (e.g. North American Free Trade Agreement). Additionally, each agency may have its own specific set of country of origin requirements (e.g. COOL’s multiple country by USDA, assessment of antidumping duties by Commerce for anti-circumvention reasons notwithstanding the country or origin).
Trade Agreements Applicability
Bilateral Free Trade Agreements
Trade agreements, also known as “Free Trade Agreements,” may provide customs duty and fee saving opportunities to eligible importers. Those who import under one of the trade agreements are able to import products into the United States free of duty and often free of merchandise processing fee. Taking advantage of the cost saving opportunities that trade agreements can offer, requires a meeting of certain eligibility requirements. These requirements differ from one agreement to another. One key element for eligibility purposes is the country of origin determination, which is unique to each individual trade agreement. Another key element is the product characteristics. Our Office offers its expertise to members of the trade community in determining whether your product qualifies for duty free and/or no fee imports to the United States under one or more trade agreements.
The United States has standing trade agreements with a number of countries including: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, South Korea (Republic of Korea).
Even if you already have imported your product into the United States from one of the above listed countries without the benefit of a free trade agreement, it may not be too late to obtain a refund of overpaid customs duties and/or fees through post-entry procedures.
Multilateral Trade Programs
The United States maintains multiple programs that extend preferential duty treatment to a number of countries based on the product category. As with bilateral trade agreements, each program has a set of unique qualification elements that should be individually evaluated. These programs include Generalized System of Preferences, Agreement on Trade in Civil Aircraft, Agreement on Trade in Pharmaceutical Products, Chemicals for Dyes, African Growth and Opportunity Act, as well as, many other special and temporary duty-free product specific provisions.
Antidumping and Countervailing Duties
Scope Ruling Filing with Commerce Department
Regular U.S. import tariff duties are often measured in single (9% or below) and sometimes in double digits (usually below 20%). Antidumping and countervailing duties can easily jump into triple digits (over 100%). Due to high financial stakes, many importers prefer certainty about the applicability of antidumping / countervailing duties to their products.
Documentation Filing with Customs and Border Protection
Products that are subject to antidumping duties require special documentation. Incomplete or improperly filed documents may result excess duty assessment and result in a substantial loss to the importer.
Federal regulations administered by Customs and other regulatory agencies prescribe the type of information that should appear on a commercial invoice. The level of required disclosure may increase, depending on the type of merchandise in question. Vague or incomplete invoices may delay clearance and increase importation costs.
If your product is destined for export, regulations may prohibit or require the making of certain statements on the commercial invoice or other shipping documents. Special attention should be given to invoices for products exported under license (export control statement) and products going to nations in the Middle East and North Africa (anti-boycott provisions).
The amount of duties, fees, and taxes that you pay for your imports is directly related to the merchandise value you declare. Therefore, the proper valuation technique is important because it directly affects your revenue. Customs primary, and probably preferred, method of value reporting is the value of merchandise actually paid or payable. This method is also known as transaction value method. Transaction value approach, however, does not fit all importers. Many importers payment structure is uniquely attributed to them. Your payments may be made through third parties (e.g. agents), or your products may be brought on consignment, or your import may be a mere intra-company transfer.
Certificates, Licenses, Declarations, and Permits
Customs may require documents in addition to ones that comprise a traditional entry packet (e.g. form 7501, form 3461, commercial invoice, packing list, and bill of lading for regular consumption entries). Depending on the product, list of documents can range from CPSC conformity certificate to FWS import permit to USDA Lacey Act reporting form. Some documents are not required, but not filing them may leave you exposed to substantial revenue liability (e.g. antidumping non-reimbursement certificate).
Price, quantity and product information may change after the product had already cleared Customs. The product may also need to be exported or destroyed. Consequently, the importer may owe duty or may request a refund for duties and fees already paid. Several procedural mechanism are available to the importer to deposit or claim a refund for duties.
Post Entry Amendment. This procedure allows an importer to request a refund for overpaid duties, to report any inconsistencies, and to deposit additional funds for under-paid duties and/or fees. This procedure is only available for entries that are not liquidated (usually 314 days after conditional release of the merchandise).
Protest. Once an entry is liquidated, an importer may no longer use Post Entry Amendment process to request a refund. The importer may utilize protest procedure instead. The protest is only available for review of decisions that are favorable to the importer (e.g. overpayment of duties to Customs) and can only be filed within 180 days after the liquidation.
Duty Drawback. Under the duty drawback program, you may be eligible to receive duties that you paid upon importation, if you subsequently export or destroy the product, or in some situations even if you export commercially interchangeable product. The amount of duty refund can be 99% or even 100% under NAFTA.
Prior Disclosure. The process permits importer to deposit additional duties and fees owed that occurred through negligent, grossly negligent, or fraudulent conduct. The process involves scope audit, file review, duty calculation, as well as, feasibility of the disclosure.
Reconciliation. The program allows importers to reconcile entries to properly account for changes in information (e.g. valuation, classification) after the entry. Under reconciliation program, importer may declare to Customs the information available at the time of import, and later furnish the amended information to Customs. To take advantage of this program, the importer should give advance notice to Customs.
Privacy and Confidentiality
The advent of information age ensured that trade data is cheaply and readily available. Internet and communications perpetuated rise in data providers that specialize in marketing your trade data to your competitors in the convenient form. For example, one of the data providers – Panjiva – offering in addition to “raw customs data” a “track competitors” feature as well as shipment by port of entry and by supplier information. Other providers offer similarly detailed statistics of data you submit to Customs and Border Protection. Among these providers are: Zepol, Import Genius, Datamyne, PIERS, Tradeinfo365, Infodrive India, Cybex, Manifest Journals, Zauba to name a few. Customs and Border Protection makes the vessel manifest data available to the public, including aforementioned trade data providers, for a fee. The data sold by Customs to the public includes following vessel information:
- Carrier Code
- Vessel Country Code
- Vessel Name
- Voyage Number
- District Port / Port of Unlading
- Estimated Arrival Date
- Bill of Lading Number
- Foreign Port of Lading
- Manifest Quantity
- Manifest Units
- Weight Unit
- Shipper Name
- Shipper Address
- Consignee Name
- Consignee Address
- Notify Party Name
- Notify Party Address
- Piece Count
- Description of Goods
- Container Number
- Seal Number
Importers and exporters may limit information that is disclosed or sold to the public by submitting a written request to Customs. If an importer or an exporter makes the request to limit the public information disclosure, Customs will exclude the data fields highlighted in bold from the public access.
We provide training material and prepare prospective exam takers to sit on and pass Customs Broker Examination.