3. Evaluate products for Free Trade Agreements and any products with special duty rates.
There are so many Free Trade Agreements (FTA’s) that it can be challenging to keep track of - and they often change just like HTS classifications. It is not just a one-size-fits-all for every agreement, and even within agreements, there can be different statues for different countries.
Trade agreements typically allow for reduced or duty-free treatment of goods, whereas trade barriers can increase duties or add other restrictions. The Section 301 duties implemented on Chinese origin goods in 2018 have been a huge topic for many US companies, and for many, their first exposure to their business being heavily impacted by a trade barrier. There are many complexities involved and it’s important to have as much detailed information as possible. A few good resources are: The United States Trade Representative website (USTR.gov), the US Customs Website, and the Federal Register.
Elements to consider especially when dealing with a product that is manufactured using inputs from several different countries of origin include: determining classification, valuation, and the regional content value. It’s crucial to partner with an expert to guide you through the details. Working with a licensed Customs Broker, like Laufer, or engaging with legal council may be necessary depending on the complexity of the commodities and supply chain.
4. Review your shipment documentation (commercial invoice, packing list, ISF data, etc.) to ensure it is clear and concise.
Clear commercial documentation is crucial to ensure shipments get through customs timely. Product descriptions on documents often trip up importers because to them, the description on the documents is very clear. However, importers must realize that often the person reviewing these documents does not know their company or the products being imported.
Like any other Customs process, there is a specific way that US Customs wants to see product information. They have very specific criteria and challenges occur when the documentation is not aligned or clear. A customs officer must be able to see clear descriptions of the goods, exactly what the item is, and what it is used for. Additionally, they must be able to see all parts of the transaction – including who the manufacturer is, importer, consignee, and shipping details between each party.
The goal of clear documentation is to avoid delays and ensure on time deliveries. Unnecessary holds and exams can be very costly, and with ocean and air freight rates soaring, keeping landed cost down is another benefit from doing a thorough review and having a robust compliance program in place.
5. Conduct a thorough review of potential Participating Government Agencies (PGA) or other special requirements.
In addition to US Customs reviewing documentation for goods coming into the United States, there are a whole host of government agencies that have additional requirements, paperwork, documentation, and pieces of data that must be recorded. Just like HTS classifications and trade programs, Participating Government Agency (PGA) requirements can be difficult to understand and are continually changing. There are many specific commodities and origins that have special requirements, and often multiple agencies can be involved.
Of the 26 government agencies that regulate imports, Laufer consistently works with FDA, USDA, EPA, and the CPSC on behalf of our clients. FDA was prominent for many importers in 2020 and we saw many frequent requirements changes, as well as a spike in enforcement from FDA especially with PPE goods at the onset of the COVID-19 pandemic. It was very complex to navigate during the first days of Covid compounded by the fact that the FDA also had some of their own challenges in navigating with EPA exactly what would be required and how.
Importers must investigate PGA requirements further and drill down in the detail to understand all that is involved with the impacted products they import. Each of the 26 government agencies have very specific requirements that change periodically. For example, Aphis (or USDA), has just updated their reporting to include many details which were not previously required. It comes down to knowing the product well and making sure that all regulatory requirements have been identified and satisfied prior to shipping to the US.
Stay tuned for next week’s final installment where we will cover:
- Review and Evaluate Incoterms
- Maintain sound record keeping practices - what documents to keep and for how long?
- Internal audits and working with third parties for mock audits.
Please contact our compliance experts or your Laufer representative for more information on any topic discussed in this week’s post.