- Vendor and partner vetting
The global market has changed, and companies have had to react and adapt quickly. Importers who have been importing the same set of goods for the last twenty years, now suddenly, have altered their business model. Product lines are shifting and changing due to market conditions, tariffs, or other opportunities (such as PPE during the Covid-19 pandemic).
It is more important than ever to only work with trusted partners. Those who operate with full transparency, have international trade certifications and/or CTPAT status are even better. Yet, vendor and partner vetting are something that companies often just do not think of. It is not as straightforward as finding an overseas supplier who offers the best cost and turnaround time. Those are all important consideration, but vetting must be done to make sure they have not been flagged for any reason – otherwise, when the product arrives in the United States, the import could be stopped or rejected if that manufacturer is on a list of bad actors. Additionally, importers should fully understand the financial transaction from end to end.
- Review to ensure full control over product information and HTS classifications.
We often find that importers have a lot of incorrect assumptions regarding the process of HTS classification - “Oh, my shipper does that…” or “I get that from my shipper”. From the view of U.S. Customs and Border Protection (CBP), the importer is responsible for, not just being familiar with their products, but being the expert and are expected to identify exactly where that product falls in the Harmonized Tariff Schedule (HTS) and what the classification is. If anything is incorrect and results in additional duty, additional restrictions, required licenses, that all comes back to the Importer of Record (IOR) not the supplier.
Things do change and just because a particular HTS Code was assigned ten years ago, it may not be applicable or valid today. We have seen customers attempt to utilize tariff classifications on their documents which do not even exist anymore. This particularly came to light in 2018 when the China tariffs were rolled out. Suddenly, importers were forced to take a detailed look at their HTS databases that had not been updated in years. Many companies were unprepared and unaware if they even had an HTS database, if they met record keeping requirements, how to classify a product and or who was responsible for that at their company.
Failure to maintain and critically review a HTS parts database may result in missed opportunities to establish compliance controls and miss potential opportunities to claim a more favorable duty category. Importers need to know that their parts and HTS databases should be reviewed and be partnering with customs experts so that they are continuously reviewing and monitoring their documents. It might be a little bit more difficult to go back through an entire database, but at minimum this should be done at the time of onboarding new product, which is a really a great time to check for any sort of special duty privileges that may have been previously overlooked.
Stay tuned for next week’s installment where we will cover:
- Evaluate products for Free Trade Agreements and any products with special duty rates.
- Review your shipment documentation (commercial invoice, packing list, ISF data, etc.) to ensure it is clear and concise.
- Conduct a thorough review of potential Participating Government Agencies (PGA) or other special requirements.
Please contact our compliance experts or your Laufer representative for more information on any topic discussed in this week’s post.