July 2001 | How-To | Ten Tips

Dealing With Customs

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Many importers admit that understanding the U.S. Customs Service (USCS) process is like navigating a bureaucratic labyrinth. Here are some useful tips from importers familiar with USCS and its processes.

1. Know thy import specialist. In order to successfully negotiate the intricate parameters USCS uses to measure the import process, it is important to build and develop a solid working relationship with the import specialist assigned to monitor your particular commodity category. These specialists are the government agents who will flag a new product for intensive examination before releasing it into your custody.

2. Conduct informed compliance. To demonstrate that your company takes the concept of informed compliance seriously, you should ask USCS about the requirements to make import transactions go smoothly.

Remaining compliant with USCS is a tedious but rewarding task. A responsible attitude shows Customs that your company is proactive in terms of regulation compliance. Import specialists invite questions because it makes the process easier for all involved parties. It means fewer document rejects and less paperwork.

"I reported a shipment of visors that were mislabeled on the commercial invoice as hats," says Jennifer Gouette, import account manager and licensed broker, Drew Pearson Marketing, Hopkins, Minn. "In Customs' eyes, these were two different items with different rates of tariff duty. Due diligence will strengthen your reputation with Customs."

3. Circling the wagons—educate your purchasing department. Make sure your internal staff knows all applicable import rules. "You need to educate them on the Customs clearance process and the potential risks to the corporation for non-compliance," says David Rank, import/export compliance manager, Datacard Corporation, Minnetonka, Minn.

It is a good idea to include the purchasing department early in the process, especially when establishing a new overseas vendor. Buyers are most concerned with timely product delivery; Customs rules may not be their top priority.

4. Diplomatic relations—educate your foreign vendors. Foreign vendors need to understand the delays that can result if they do not provide all of the key information. "To address this issue, we instruct our purchasing department to have new vendors fill out our vendor form. Having this kind of information on file in advance of a shipment's arrival is critical to successful, efficient, and timely customs clearance," Rank explains.

5. Be a member of the a1A list. The a1A list, named after the paragraph of United States Code 1509 (a)(1)(A), specifically refers to records required by law or regulation for the entry of merchandise into U.S. commerce. Because the importer of record is ultimately responsible for its shipments, organized recordkeeping is a must. Many companies conduct internal self audits to remain compliant with the regulations.

"It is vital to adhere to the a1A list and ensure all documents are on file. Examples of necessary records include the entry packet and any statement, declaration, or electronically generated data related to the shipment," says Betty Hillstrom, director of global logistics and trade compliance, Artesyn Technologies, Eden Prairie, Minn.

6. Mr. Smith goes to Washington. It may prove useful to seek the assistance of the regional Strategic Trade Center (STC) specializing in your primary focus industry and USCS headquarters in Washington, D.C., to better understand how the government views your company's importing activities. With their support, a company may learn what target parameters Customs measures.

"This allows you to see how Customs views your operations and past port trends regarding your shipments," Hillstrom says. "You can track examinations, commonly used Harmonized Tariff Schedule of the United States (HTSUS) numbers, and which brokers are clearing your freight as specified by port."

7. When in doubt, seek a binding ruling. There may be times when USCS has a differing opinion on the product classification and duty rate found in HTSUS. If this is the case, it may be in the company's best interest to seek a binding ruling from USCS in New York City. Doing so will not only help resolve the issue, but may provide further information.

Just ask Rose Althoff, international logistics manager, Midwest of Cannon Falls, Cannon Falls, Minn. "I submitted five different garland styles for a classification ruling, and in doing so learned that each garland type required a separate classification number and duty rate based on the material composition," she says.

8. Know thy broker. If a company is not clearing its own shipments, it is important to consult with a licensed customs house broker. In order for brokers to best represent the company, they must understand its product line and business.

Mary Drexler, import coordinator, Pure Fishing, Spirit Lake, Iowa, hired a licensed brokerage firm and worked with its brokers to ensure they understood the products. The brokers classified the commodities, paid duties to Customs on Drexler's behalf, and guided shipments through the clearance process.

"We frequently receive new and different types of fishing products. Therefore, it is important to inform our broker of these products so he may make the proper clearance arrangements," Drexler says.

9. Mark it! The Code of Federal Regulations, Chapter 19, Part 134, requires Country-of-origin marking. USCS requires proper marking, such as "Made in China," because consumers have a right to know where an item is manufactured before they complete a purchase. If a shipment is not legally marked, USCS may delay the clearance process until all of the product is marked.

"For every purchase order we place, one of the vendor stipulations is to ensure that a square metal plate designating the country of origin is placed on each machine," says Judy Sqriggs, European Woodworking Machinery, Franklinton, N.C. "If the machinery is not properly marked, Customs will examine the shipment."

10. Know thy duty rates. Stay up to date with the most current regulations. This includes knowing the HTSUS chapters and corresponding explanatory notes that apply to your company's product line. Because classification codes and duty rates may change more than once a year, it is important to remain alert for accurate filing practices.

Classification codes have changed in the past for some of Swiss Link's military surplus products, notes Maurice Huffman, president. Being proactive and keeping the broker informed are the keys to a successful clearance process.

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