Chapter 12

customs broker

an authorized agent, licensed by federal law, to act for and on behalf of importers in making entry of goods

composite goods

in the GRI, these are articles made of different materials or components

commercial invoice

is required for all shipment intended for sale or commercial use in the United States

country of origin

that country from which an imported article is said to have originated according to specific rules (known as rules of origin)

importing

the entering of goods into the customs territory of a country

preferential rules of origin

those applicable to: (1) goods traded within a free trade area or customs union, (2) goods imported from countries that receive special tariff treatment pursuant to a trade agreement (such as the WTO Agreement on Government Procurement), or (3) good imported under a trade preference programs for developing countries

global supply chain

an integrated international network of logistics, communications, finance, and trade relationships designed to take a product from inception through production and delivery to customers

same-condition drawback

A drawback of duties paid on imported goods that are re-exported in the "same condition" as they were imported, provided they were not significantly altered

ad valorem tariff rate

this is based on a percentage of the value of the articles imported

tariff schedule

a listing of specific items, coded numerically and described by name or use

manufacturing drawback

a refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years; this is the most common drawback in the US, which is designed to encourage US manufacturers to export

specific tariff rate

a specified dollar amount per piece, or unit of weight or measure

liquidation

the final computation and assessment of the applicable duty on entered goods by Customs

substitution drawback

drawback of duties paid on imported goods may be received by a U.S. firm that imports goods and then exports other goods of the "same kind and quality"

domestic or regional value content test

a type of value-added test; this is "the other" common preferential rule of origin; this requires that some minimum percentage of the value of materials and direct processing operations be performed in a country in order for it to have "originated" there

rule of relative specificity

if an article can be classified under two or more headings or subheadings, it must be classified under the one that most specifically--most narrowly--describes the article with the greatest degree of accuracy and certainty (GRI 3a). This is common with goods that are made of several materials or components

essential character

if two or more headings or subheadings each describe only certain materials or components in composite goods, the article must be classified under the heading that describes the material or components that give the article THIS

dutiable value

the customs value of goods entered into any country which must be reported by the importer-of-record to national customs authorities at the time of entry

rules of origin

the legal rules used to determine the country of origin of imported products; they are found in trade agreements, national statutes, and the regulations of customs authorities; they are enforced by authorities, and penalties are severe for willfully misstating a country of origin or procuring a false country of origin certificate from an exporter or supplier

ultimate purchaser

the person in the US who receives an imported article of foreign origin--every article must be legibly, indelibly, and permanently marked in English in a conspicuous place and in such a manner as to indicate the name of the country or origin of that article

informal entry (pg. 330)

the process by which personal and commercial shipments valued at $2,500 or less may be cleared

production assists

these are goods, services, or intellectual property furnished by the importer to a foreign producer, free or at a reduced price, for use in producing merchandise for import into the United States

entry process

this is administrative, and all commercial shipments must go through this process -- it is supervised by national customs authorities and informally referred to as "clearing customs"

(civil) customs fraud (pg. 333)

this is far more serious than negligence; a fraudulent violation exists where there is clear and convincing evidence that the importer KNOWINGLY (or with wanton disregard for the facts) made a materially false statement or omission while entering or attempting to enter goods into the United States

notice of adjustment

this is sent to the importer when Customs at the port of entry determines that additional duties are owed

General Rules of Interpretation (GRI)

this is used to determine a tariff classification, which is the first step in determining the dutiable status of an article; found at the beginning of the tariff schedule

prior disclosure (pg. 334)

when Congress has enacted a statute to encourage importers to voluntarily report their own possible violations of the customs laws

tariff engineering

the process of modifying or engineering a product prior to importation, or importing it at an earlier stage of manufacturing, for the purposes of obtaining a lower rate of duty

non-preferential rules of origin

those applicable to imports from developed countries that receive normal tariff treatment (or that have "normal trade relations" as discussed in earlier chapters)

foreign trade zones (FTZs)

are legally defined sites--warehouses and manufacturing facilities--operated pursuant to legislation and under government license, that are legally "outside" the customs territory of the country they are in

informed compliance

refers to "softer" mechanisms designed to place the burden of voluntary compliance on importers

port of entry

refers to any place when customs or immigration authorities permit the entry of goods or people; these are usually sea or ocean ports, river ports, airports, or other types of inland ports

enforced compliance

refers to the active investigation of customs violations and the prosecution of violators

formal entry

refers to the administrative process required to import goods into the customs territory of a country

tariff-shift rule

states that the country of origin is the last country in which all "inputs" (raw materials, component parts, etc.) into the finished article underwent a required change in tariff classification

binding ruling

(pg. 336)

dutiable status

.. of goods (in this chapter, the term "goods" may also called "articles" or "items") refers to the legal status of imported goods at the time of entry for purposes of compliance with the tariff and customs laws

substantial transformation

US courts have long held that THIS occurs when the original article loses its identity as such and is transformed into a new and different article of commerce having "a new name, character, or use" different from that of the original item

contract manufacturing

a business arrangement in which the production of goods is contracted or "outsourced" by one firm to a manufacturing firm, often overseas; assists are often used here

compound tariff rate

a combination of both ad valorem and specific rates

drawback

a refund of duties already paid on imported goods when the goods (or other goods manufactured from the original goods) are reexported or destroyed

transaction value

in the US, this is the price actually paid or payable for the merchandise when sold for export to the US ... plus the following amounts if not included in the purchase price: (1) packing and container costs (2) selling commission paid by the buyer (importer) to or for an agent of the seller, (3) the value of any "assist" as defined below, (4) any royalty or license fee that the buyer is required to pay as a condition of sale, and (5) the proceeds of any subsequent resale of the merchandise that accrues to the seller

principal use

in the United States, this is the ordinary use to which articles of the same class and kind as those being imported are usually put and which is greater than any other single use of the article

rejected merchandise drawback

is allowed for imported merchandise that was shipped without consent, is defective, or does not conform to specifications or to samples (e.g. zippers that do not zip)