Presenter: LISA VICTORIA WALLER, CHB VICE PRESIDENT BDG International, Inc. 840 Tollgate Road Elgin, IL 60123 Tel: 847-760-0014 firstname.lastname@example.org
Credentials: Bachelors of Science- Illinois State University (International Business, emphasis of Eastern Studies) Licensed Customs Broker Certified Customs Specialist Certified Export Specialist IATA (International Air Transportation Association) Certified DG (Dangerous Goods) Certified Committee co-chair for Export Compliance of the CBFFAC Active Member of the NCBFFA
Current Events / Going GlobalImportance of understanding how the worldaround us effects each and every shipmentcoming in and out of the USA.
OverviewOverview: The role of Government agencies Duty Preferences Cargo Security Export issues Sample documents
Government AgenciesU.S. Senate / CongressDepartment of Homeland Security (DHS) U.S. Customs Border Protection (CBP)United States Department of Agriculture (USDA) Animal Plant Health Inspection Service (APHIS)Department of Health and Human Services Food And Drug Administration (FDA)Department of Commerce (DOC)Environmental Protection Agency (EPA)Department of Interior (DOI)U.S. Treasury, Office of Foreign Assets Control (OFAC)Department of State (State)Department of Defense (DOD)
Connection between U.S. Government and Foreign Governments? For every U.S. Government Department, Office or governing bodyThere is an equal governing body in each country that we import from or export to.Thus to understand your own country first will allow you to know what to look for in other countries.Commodity Specific – you will know quickly which governing bodieswill effect your commodity and industry.
World Trade Organization The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.The WTO and main Parliments of each country come together to decide on countries with special needs, and economies that need to be promoted. The U.S. Congress / Senate approve Trade Agreements, Trade Acts, Global Trade Decisions, and requests for specific Industry or Commodity duty preferences. The WTO is in charge of the Harmonize Tariff System. Each country belonging to the program will share the first 6 digits of the HTS system.
DUTY PREFERENCES The Office of U.S. Trade AgreementsThe U.S. trade strategy is to pursue multiple market-opening initiatives on a global, regional and bilateral basis, establishing models of success that can be used throughout all negotiations.What prevents a free trade agreement (FTR) from being passed: - local Lobbyist afraid that duty preferences will hurt the USA economy - Labor laws in the foreign country
Harmonize Tariff System Each product has its code
ClassificationThe duty will be based on a product as per the General Rules of Interpretation from the U.S. Regulations & Harmonize Tariff System http://www.usitc.gov/tata/hts/index.htm Sections, Chapters, Headings, Subheadings Chapters: 1-99 Living or Raw = beginning of the tariff Manufactured = at the end of each section and tariffEXPORT CODE IS CALLED: SCHEDULE B NUMBERhttp://www.census.gov/foreign-trade/schedules/b/index.html
Classification CUPS, PLASTIC 3924.10.2000 PLASTIC,PLATES, CUPS, SAUCERS...... 6.5% 3924.10.2000 39 = Chapter 39 covers plastics (there are 1-99 chapters) 24 = Tableware / Kitchenware or other household articles made of plastic .10 = Tableware or Kitchen ware 20 = Plates, cups saucers, soup bowls etc.
Export ComplianceHow is the data gathered?CBP regulates the data and reports to Census. Censusorganizes and analyzes the data and gives it to Commerce.- EEI – Electronic Export Information- AES – Automated Export System2009 versus years before?- Informed compliance vs. Enforced Compliance
Export Enforcement Act of 2007 http://www.bis.doc.gov/enforcement/eaarenewalbillfactsheet.pdfCriminal Max: Corporate Greater of $5millions or ten times value of the exports involved.Individual Max: Greater of $1 million(s) and 10 years of imprisonment
Export ComplianceWhat is the commodity? Commerce Control ListCan it be used for some other purpose? Dual usageWho are you selling it to? Embargoed countries (Cuba – for example) Denied partiesWhere are you shipping it? Do you know the end user? Will it be sold to another party? Do you have knowledge?Is your loading process secure? Illegal activity within your company?
1. SCREEN FOR DENIED PARTIES Background check on all partiesinvolved in the transaction.http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
2. KNOW YOUR ECCN NUMBER (EXPORT CONTROL CLASSIFICATION NUMBER) Checks for controlled products versus countries and partieshttp://www.bis.doc.gov/licensing/do_i_needa neccn.html
3. DESTINATION CONTROL STATEMENT 15 CFR 758.6The Destination Control Statement (DCS) must be entered on the invoice and on the bill of lading, air waybill, or other export control document that accompanies the shipment from its point of origin in the United States to the ultimate consignee or end-user abroad. The person responsible for preparation of those documents is responsible for entry of the DCS. The DCS is required for all exports from the United States of items on the Commerce Control List that are not classified as EAR99, unless the export may be made under License Exception BAG or GFT (see part 740 of the EAR). At a minimum, the DCS must state
DCS“These commodities, technology or software were exported from the United States in accordance with the Export Administration Regulations. Diversion contrary to U.S. law is prohibited.” (licensable goods may have an alternative statement)
Terms of SaleWhen will you be paid for your goods? How will you be paid?What method of payment will be used?
Terms of SaleOpen Account– 30 days, 60 days, etc.Sight Draft– Funds transferred upon sight of documents at the applicant bank.Time Draft– Funds transferred upon # days after sight of documents at the applicant bank
Terms of Sale Letter of Credit Contractual agreement between Shipper (Beneficiary), Consignee (Applicant), Beneficiary Bank and Applicant Bank– Confirmed - Guaranteed to be paid by the advising bank– Advised- Guaranteed to be paid the opening bank.
What are INCOTERMS?International Commercial Terms ICC (International Chamber of Commerce) 1936To simplify creation of internationalagreements, contracts.To develop a standardized way to speakglobal and define the words used equallyacross all cultures and languages
Incoterms assist:Understanding who is responsible topay for transportation to a certain point.Define who is responsible for paymentof documentation, packing and othercharges.
IncotermsWho will pay for the transportation? Global rules for a global sale !! EXW EX WORKS (named place)* FCA FREE CARRIER (named place) FAS FREE ALONGSIDE SHIP (named port of shipment)* FOB FREE ON BOARD (named port of shipment) CFR COST AND FREIGHT (named port of destination) CIF COST, INSURANCE AND FREIGHT (named port of destination)* CPT CARRIAGE PAID TO (named place of destination) CIP CARRIAGE AND INSURANCE PAID TO (named place of destination)* DAT DELIVERED at TERMINAL (named place of destination) DAP DELIVERED at PLACE (named place of destination)* DDP DELIVERED DUTY PAID (named place of destination)*
IncotermsWho will pay for the transportation? Global rules for a global sale !! EXW = E term (collect)/ least control for shipper FCA, FAS, FOB = F term (collect)/ less control for shipper CFR, CPT, CIP, CIF = C term (prepaid)/ more control for the shipper DAT, DAP, DDP = D term (prepaid) / most control for the shipper CIP and CIF = are the only terms that discuss insurance All other terms would require insurance to be discussed separately.Having less control does not automatically mean you have less liability.
Incoterms are not:They are not lawThey are not recognized bygovernment entitiesThey do not take the place of having aproper purchase agreement, salesagreement or order.
Purchase/Sales AgreementBetween the buyer and the seller there must be a formal Agreement.
Purchase AgreementThe Purchase Agreement documents the standard terms andconditions where you, the buyer, are contracting w /a seller inthe course of a business to business transaction, and includesthe following basic items payment and price warrantyorigin and destination sub-contractingsamples title and riskpackaging inspectiontesting indemnityconfidentiality terminationterms of shipping government regsLiablity and title Incoterms
Purchase Order ISSUE A PURCHASE ORDER orREQUIRE A PURCHASE ORDER
Proforma InvoicesProforma Invoice (purpose) FINAL DOCUMENT prior to actual documents Used to source funds Used to buy foreign currency in controlled markets Opening Banks use this document to open L/Cs. This document can not be used for customs clearance.
Proforma v. Commercial Invoices Commercial Invoices Importer will pay off this invoice. Customs clears freight using commercial invoices. Banks transfer money using the Commercial Invoice.
TransportationWho can assist with understandinghow to ship cargo and questions on the transaction?
International Freight Forwarders An agent for the exporter in moving cargo to an overseas. “Travel Agent for Cargo”Specializing in:- the import rules and regs of foreign countries- the export regulations of the U.S. government- the methods of shipping, and the docs related to foreign trade- Foreign to foreign moves- Pricing and rate negotiation via all modes of transportation- Agent for the Department of Homeland Security- Track and trace cargo- Resolve Challenges
Documentation (Export)• Shippers Letter of Instruction (SLI) or Shipper Transmittal Letter Power of Attorney Detailed Instructions to the forwarder SED Completion• Letter of Credit (if issued)• Hazardous Declaration (only used if cargo is a hazardous substance)• Pre-Shipment Inspection Certificate (e.g. SGS)
Customs BrokersCustoms brokers are organizations licensed, regulated andempowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports.Specializing in:- The import regulations of the U.S. government- Classification of commodities / trade agreements- All other government agencies that may be involved inthe import shipment- Releasing cargo at the warehouses- Deliveries of the cargo Domestically in the USA- Post entry processing- Government research
Documentation (Import) Power of Attorney Continuous Bond Classified Products The Customs Broker you designate must have a signed Power of Attorney, signed by an officer of the company. The Corporation must be Bonded under a Customs Continuous Bond. All products being imported should be classified in advance in order to ensure a smooth shipping process.
LiabilityRISKS: As the importer/exporter you are liable to follow the U.S. Regulations. You must ensure that your forwarder / broker are concerned about compliance. Customs Liability -Reasonable Care -Record Keeping -Correct Classification Risks of International Business Additional Fees not quoted Storage for Inspection Penalties and Fines Delays Loss - Damage - Missing Cargo Non-Payment by client
Advise, Audit and PlanningDevelop your compliance program Classification of merchandise Valuation of merchandise Country of origin Markings Export licensing issues Export licensing exemption Deemed Exports Embargoed country issues Compliance and Training
Thank you for attending today’s seminar.BDG INTERNATIONAL, INC