Becoming a Customs BrokerNorman Harris III, License Number 11389 Trade Learning Network
About The Instructor• Exam – Oct. 1987; passed 1st time with 86%• Licensed in Feb. 1989 (License #11389)• Teaching CHB training since 2009Why take the broker’s exam?
What is a Customs Broker?Customs brokers are private individuals, partnerships,associations or corporations licensed, regulated andempowered by U.S. Customs and Border Protection (CBP)to assist importers and exporters in meeting Federalrequirements governing imports and exports. Brokerssubmit necessary information and appropriate paymentsto CBP on behalf of their clients and charge them a fee forthis service.
About Customs Brokers• Must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise. Transcends to other government agencies• A Customhouse Broker (CHB) is a recognized expert• Does not have attorney/client privilege
About Customs Brokers Cont’d.• There are approximately 11,000 active licensed Customs brokers in the United States• 40% of more than 28,000 licenses issued since June 10, 1910 (Avg. 280 individual, corporate, partnership licenses per year)
About Customs Brokers Cont’d.• March 2, 1799 – in absence or sickness agent shall make entry• No regulatory requirement to use a Customs Broker• December 8, 1993 – Customs Modernization Act Establishes ‘reasonable care’ standard for importers
Section 484 of the Tariff Act (19 U.S.C. 1484)• The importer of record is responsible for using reasonable care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable the CBP to assess duties properly, collect accurate statistics, and determine whether other applicable legal requirements, if any, have been met• As part of the entry process, goods must be classified
Section 484 of the Tariff Act Cont’d. (19 U.S.C. 1484)• Prior to the Customs Modernization Act enacted on December 8, 1993, it was CBP’s responsibility to “classify” imported goods• CBP is now responsible for the final classification and valuation of the goods by a process called “liquidation” of the entry
Role of the Broker• As defined by our customers’ needs• Under regulatory responsibilities to CBP and other agencies• Act as agents of the importer and carry a fiduciary responsibility• The most regulated party in the supply chain• Must perform at higher standards of excellence
Informed Compliance PublicationWhat Every Member of the TradeCommunity Should Know AboutCustoms Brokers, January 2005http://www.cbp.gov/xp/cgov/trade/legal/informed_compliance_pubs/
What About Customs Brokerages?• Corporations, partnerships and associations must have a broker license to transact Customs business. Each of these businesses must have at least one individually licensed officer, partner or associate to qualify the companys license• Failure to have a qualifying officer or member (of a partnership) for more than 120 days will result in the revocation of the broker license
Who is eligible to become qualified as a Customs broker?To be eligible, you must:• Be a United States citizen at least 21 years old• Not be a current Federal Government employee• Possess good moral character
Assuming I am eligible, how do I become a Customs broker?• First, you must pass the Customs Broker License Examination• Second, you must submit a broker license application with appropriate fees• Third, your application must be approved by CBP
The Customs Broker License ExaminationQ: What is the Customs Broker License Examination?A: The Customs Broker License Examination is an open book/open testwith 80 multiple-choice questions based on designated editions of:• The Harmonized Tariff Schedule of the United States (HTSUS)• Title 19, Code of Federal Regulations• Specified Customs Directives• Customs and Trade Automated Interface Requirements document (CATAIR)
The Customs Broker License Examination Cont’d.Q: How long is the Customs Broker License Examination?A: You have four hours to complete the examination.
The Customs Broker License Examination Cont’d.Q: Where and when is the Customs Broker Examination given?A: This examination is normally given at CBP service ports (Ports)the first Monday in April and the first Monday in October. If thatMonday is a religious holiday, the examination will be given thefollowing Tuesday. The appropriate CBP port director must receivethe examination application and $200 fee at least 30 days inadvance of the examination.
The Customs Broker License Examination Cont’d.Q: What must applicants take to the Customs Broker Examinationsite?A: Each applicant is responsible for bringing proof of registration, apicture identification, and the recommended reference materialsto the examination.
The Customs Broker License Examination Cont’d.Q: Must I be a U.S. citizen to take this examination?A: Yes, you must be a citizen on the date of the examination.
The Customs Broker License Examination Cont’d.Q: What is a passing score?A: A passing score is 75 percent or better.
The Customs Broker License Examination Cont’d.Q: What if I fail the examination?A: You may retake the examination until you pass. You arealso entitled to submit an appeal of your examination scoreto CBP in accordance with 19 CFR 111.13(f).
Notice of Examination(08/23/2012) Notice of Examination for October 2012• This notice announces that U.S. Customs and Border Protection (CBP) will conduct the Customs Broker License Examination on Wednesday, October 3, 2012. To better accommodate applicants desiring to take the October 2012 broker examination, CBP has automated the CBP broker examination registration, (Form 3124E, “Application for Customs Broker License Exam”) and the payment and collection of the required examination fee.
Notice of Examination Cont’d.• Applicants must apply and pay the applicable fee ($200) on line (24 hours a day/7days per week) at the web address noted below until 12:00 p.m. (noon/Eastern Daylight Time), Monday, September 10, 2012. Payments must be by debit cards that can be used as a credit card or credit card only. ( Application )• Applicants who need assistance in completing the form, or have questions concerning payment may send an email to email@example.com or may contact the CBP Pay.gov Help Desk at (317) 614-4964.
Notice of Examination Cont’d.• Applications and fees that are submitted directly to the service port or CBP Headquarters will not be accepted and will be returned to the applicant. The purpose of the examination, is to ‘determine the individual’s knowledge of Customs and related laws, regulations and procedures, bookkeeping, accounting, and all other appropriate matters, necessary to render valuable service to importers and exporters.’
Notice of Examination Cont’d.• Applicants requesting Americans with Disabilities Act (ADA) accommodations may send supporting documentation by close of business (5:00 p.m. Eastern Time), Wednesday, September 5, 2012 via email to Sharon.Daye@dhs.gov, via fax to (202) 863-6540, Attn: Sharon Daye or by mail to: U.S. Customs and Border Protection Office of International Trade Broker Compliance Branch 1400 L Street NW Washington, DC 20229-1143
Notice of Examination Cont’d.• As noted in Title 19 of the Code of Federal Regulations part 111.13(b): In order to be eligible to take the broker examination, an individual must (on the date of the examination), be a U.S. citizen, 18 years of age, and is not an officer or employee of the U.S. Government.• The examination will be administered at various locations. Applicant will be notified of exam location and may contact the service port for additional information.
Notice of Examination Cont’d.• Any applicant who files an application and subsequently wishes to withdraw from the exam, must submit a written notice of withdrawal to the CBP service port noted on the application, by COB, Friday, September 28, 2012. Refunds will be processed within 60 days after the scheduled exam.
Notice of Examination Cont’d.• On the day of the examination, after the test administrators have closed the doors to the examination room, applicants will not be permitted into the examination room and will not be allowed to sit for the examination. There will be no exceptions. Please allocate sufficient time for travel to the examination site, as no exceptions will be made for traffic delays, late trains, or similar incidences.
Notice of Examination Cont’d.• The Customs Broker License Examination consists of 80 multiple-choice questions. A score of 75 percent is required to pass. The examination lasts 4 hours. Exam topics may include: Entry, Classification, Country of Origin, Trade Agreements, Value, Antidumping/Countervailing Duty, Broker Responsibilities, FP&F, Protests, Marking, Prohibited and Restricted Merchandise, Drawback, Intellectual Property Rights, and other subjects pertinent to a broker’s duties.
Notice of Examination Cont’d.• Applicants should bring the reference materials noted below and any other pertinent reference materials to the examination. The use of any other versions of the listed references other than those recommended is at the applicants own risk.
Notice of Examination Cont’d.• Applicants should bring the reference materials noted below and any other pertinent reference materials to the examination. The use of any other versions of the listed references other than those recommended is at the applicants own risk. • Harmonized Tariff Schedule of the United States • Title 19, Code of Federal Regulations • Customs and Trade Automated Interface Requirements (CATAIR) • Instructions for Preparation of CBP Form 7501 • Directives
• Harmonized Tariff Schedule of the United States (2012 version, No Supplements)• Title 19, Code of Federal Regulations (revised as of April 1, 2012 Parts 0 to140, 141 to 199)• Customs and Trade Automated Interface Requirements (CATAIR) • Appendix B – Valid Codes • Appendix D – Metric Conversion • Appendix E – Valid Entry Numbers • Appendix G – Common Errors • Glossary of Terms• Instructions for Preparation of CBP Form 7501 (July 24, 2012)• Directives • (3550-055) Instructions for Deriving Manufacturer/Shipper Identification Code • (3550-079A) Ultimate Consignee at time of Entry or Release • (3530-002A) Right to Make Entry • (3510-04) Monetary Guidelines for Setting Bond Amounts
Notice of Examination Cont’d.• Applicants must provide their own reference materials.• Examinee may use any written reference material; however, use of any electronic device during the exam (i.e., laptops, iPads, smart phones, personal digital assistants (PDAs), etc.) is prohibited.• Cell phones, pagers, and other communication devices may not be used inside the examination room.• Any applicant caught cheating will be removed from the exam.
The Examhttp://www.cbp.gov/xp/cgov/trade/trade_programs/broker/broker_exam/exam_and_key_downloads/Section I: ClassificationSelect the classification for a hand-operated mechanical floor sweeper, notmotorized, with a plastic handle and cover. The sweeper contains aninternal trash receptacle that is filled as the sweeper is pushed across theroom and the brushes cause the trash to be swept into the receptacle.What is the correct classification of the floor sweeper? • 8479.89.2000 • 9603.90.8040 • 8479.89.6500 • 9603.90.8050 • 8479.89.7000
The Exam Cont’d.http://www.cbp.gov/xp/cgov/trade/trade_programs/broker/broker_exam/exam_and_key_downloads/Section I: ClassificationWhat is the correct classification of men’s woven dress shirts of 85%cotton, 15% Jute, and one color in warp and filling? • 6105.10.0010 • 6205.20.1000 • 6205.20.2016 • 6205.20.2021 • 6205.20.2026
The AnswersQuestion Answer Citation1. E HTSUS Chapter 84, Note 1(g) and 9306.90.80502. E HTS GRI 1 and 6205.20.2026
Applying for a Customs Broker LicenseQ: When may I apply?A: Assuming you are eligible, you may apply after you passthe Customs Broker License Examination.
Applying for a Customs Broker License Cont’d.Q: How long after passing the examination can I wait toapply for a broker license?A: You must apply to a CBP port director within three yearsof the date of the letter notifying you that you passed theCustoms Broker License Examination.
Applying for a Customs Broker License Cont’d.Q: What are the fees for a broker license application?A: There is a $200 application fee (plus a fingerprint checkand processing fee).
Applying for a Customs Broker License Cont’d.Q: Where do I apply?A: Apply to the port where you want to transact Customsbusiness as a broker.
Broker License Application ReviewQ: Who reviews broker license applications?A: There are three levels of review. First is a multi-agencybackground investigation. Second, the CBP port director reviewsthe background investigation and any other pertinent information,and forwards a recommendation to CBP Headquarters inWashington, D.C. Finally, CBP will carefully evaluate eachapplication, and the Assistant Commissioner, Office ofInternational Trade, will advise the applicant whether his or herapplication is approved.
Broker License Application Review Cont’d.Q: Who reviews broker license applications?A: There are three levels of review. First is a multi-agency backgroundinvestigation. Second, the CBP port director reviews the backgroundinvestigation and any other pertinent information, and forwards arecommendation to CBP Headquarters in Washington, D.C. Finally,CBP will carefully evaluate each application, and the AssistantCommissioner, Office of International Trade, will advise the applicantwhether his or her application is approved.
Broker License Application Review Cont’d.Q: What does the background investigation include?A: Each broker license applicant must undergo a backgroundinvestigation that includes a fingerprint analysis and a reviewof character references, credit reports, and any arrest record.Arrests or convictions do not necessarily preclude theissuance of a license.
Broker License Application Review Cont’d.Q: How long does the license application process take?A: The length of time it takes to complete the license applicationprocess can vary depending on multiple factors. Some of thefactors include but are not limited to the amount of differentlocations the applicant has lived in, the workload of the agentconducting the background investigation and the national securitythreat level. An application can take from 8 to 12 months toprocess.
Broker License Application Review Cont’d.Q: Is there an appeal if a broker license application isdenied by CBP?A: Yes. Appeal procedures are outlined in 19 CFR 111.17.
The CoursePrevious industry experience can be a disadvantage, just beaware, it’s all about the regulations and other materialspecified in the exam notice.• Rule Number 1: Read all of 19 CFR Parts 1-140 & 141-199• Rule Number 2: Read the Chapter Notes to the Harmonized Tariff Schedule (HTS)• Rule Number 3: Use the indexes in both 19 CFR and the HTS
Study Tips• Don’t make it any more difficult or confuse yourself, stick to the material• Know where to find the information, don’t try to memorize everything• Highlight key words, not whole sections• Pay close attention to the words ‘may’ and ‘shall’• Tab the beginning of each section• Use the index• Practice exams last, different philosophy
Pace Yourself• Keep a logical, methodical study plan• Estimate the number of hours required; Read for an hour, divide by the total number of pages in the regulationsExample: (1 to 140) 842 pages + (141 to 199) 647 pages = 1489 pages 1489 pages / 20 pages per hour = 75 hours 7.5 hrs per week
Please Note• Be aware of the exam notice deadline for registration• Requirements for taking the broker exam 19 CFR 111.0 – Scope• Materials: www.boskage.com• Private tutoring is available
Course SyllabusClass Description 19 CFR ReferenceClass One Introduction Requirements for Taking the Broker Exam 111 Broker Compliance 111 HTS Home AssignmentClass Two Powers of Attorney 141.31-46 GRI/HTSUS Classification 152 Binding Ruling Requests 177 http://www.usitc.gov/elearning/hts/menu/