Video Case

A. INTERNATIONAL CUSTOMS ORGANIZATIONS

1. World Customs Organization (WCO)

a. Created and administers Harmonized System Convention

b. Works with U.S. CBP and other international customs organizations

2. Homeland Security/Immigration and Customs Enforcement (ICE)

a. Law enforcement/Focus on anti-terrorism

3. Customs and Border Protection (CBP)

a. Does not support imports to extent that Dept of Commerce promotes exports.

b. Duties include:

i. anti terrorism activities (e.g. weapons trafficking)

ii. border security

iii. facilitation of lawful international trade and travel

iv. enforcement of US laws (including immigration and drug laws)

v. collection of duties

vi. processing entry of passengers/travelers

B. CUSTOMS OPERATIONS

1. Customs House Broker

a. Defined as: private company acting as a liaison/agent between US Customs and importers

b. Licensed by US Treasury

c. Use of broker not required but importer must post bond if one is not used.

d. Duties include:

i. Advises on technical aspects of importing (e.g. product classification, admissibility of product, quotas)

ii. Preparation and filing of Customs paperwork (i.e. formal entry documents) for importers

iii. Obtaining customs bonds

iv. Paying duties

v. Arranging release of merchandise

vi. Arranging delivery to importer’s warehouse/facility

2. Surety Bonds

a. Defined as: A deposit required with US Customs to ensure payment of duties, taxes, or other charges associated with the entry.

b. Features of bonds:

i. Types include

· Single Entry – valid for one entry for a specific transaction

· Continuous

· used for entries at multiple ports and/or several imports

· valid for one year

· automatically renewable

ii. Required for entries over $2,000

iii. Bond amounts

· Single – typically three times (3x) value of shipment (plus duties, taxes, customs) costs

· Continuous – generally $50,000 or 10% of total amount of taxes and fees paid in last 12 months

3. Drawback

a. Defined as: refunding of duties paid on imported goods and their derivatives if subsequently exported

4. Automated Broker Interface (ABI)

a. Automated system allowing large-volume importers to communicate with Customs

b. Allows filing of documents in advance of shipment/arrival of cargo

5. How to Become a Broker – omit (p. 202-204)

C. CUSTOMS ENTRY PROCESS

1. Requirements for entry - Not legally “imported” until

i. Goods enter port of entry

ii. Duties paid

iii. Customs authorizes delivery of goods

Continued

C. CUSTOMS ENTRY PROCESS (continued)

2. FOUR-STEP ENTRY PROCESS – Owner’s responsibility

a. Entry

i. Entry for consumption, or to be placed in bonded warehouse? Owner must decide within 24 hours of arrival

ii. If consumption – must file certain documents, including

· Entry manifest (Form 7533)

· Pro-forma or Commercial invoice

· Entry Summary (Form 7501)

· Bond

iii. Failure to file entry within 5 business days results in general order.

NOTE: General order (G/O) – goods sent to customs bonded warehouse at risk and expense of importer.

b. Valuation – determine value of goods (tariff/duty purposes)

c. Classification – classify goods using HS (very important)

d. Payment – pay applicable duties

3. ENTRY PROCESS – Customs responsibilities

a. Check and verify – check entry documents. Verify bonds

b. Examination – determine value of goods

i. Customs valuation (duties)

ii. Verify markings/country of origin

iii. Determine if prohibited items included

iv. Verify goods properly invoiced

v. Inventory – excesses or shortages?

c. Validation – checking classification of goods and assess of duties

d. Authorize entry – after documents/assessment is accepted

e. Liquidation

i. Final step allowing legal entry of goods after duties and charges paid.

ii. Importer notified of release of goods

D. HARMONIZED SYSTEM

1. Features

a. Defined as: an international, multipurpose, classification system designed to improve the collection of import and export statistics.

b. International versions of HS – 21 sections, 97 chapters

D. HARMONIZED SYSTEM (continued)

1. Features (continued)

c. US Harmonized Tariff Schedule (HTSUS)

i. Structure

· 22 sections, 99 chapters

ii. “Heading digits”

· 1st two digits = Chap

· 2nd two = Heading

· 3rd two = International subheading

· 4th two = US subheading

· Last two = US statistical subdivision (i.e. Stat Suffix)

iii. “Rate of Duty”

· Column 1 General – for MFNs not entitled to special tariff treatment

· Column 1 Special – applied based on trade agreements

· Column 2 – applied with “unfriendly” countries (i.e. Cuba, N. Korea)

OMIT “IMPORT QUOTAS” p. 221 through bottom p. 224.

E. WAREHOUSING

1. Free Trade Zone (FTZ) (a/k/a Foreign Trade Zone in the US)

a. Located outside the customs territory of countries in which they are located

b. Goods entered in FTZ duty free for display, assembly, storage, as long as they are not for domestic consumption

OMIT “Advantages of Using an FTZ” p. 226 to top of p. 230

2. Customs Bonded Warehouse

a. Building or secured area in a customs territory

b. Used for storage of dutiable goods imported into a country

c. Facility owner must post bond with US Customs

d. Facility owner liable if rules not followed

OMIT “Types of Bonded Warehouses” bottom of p. 230 to end of chapter