ENTR 4450 - Domain 3

FCA

Free Carrier (named place) -The seller delivers the goods to the carrier or another person nominated by the buyer at the seller's location or another named place.

nonnegotiable bill of lading

Nonnegotiable bill of lading (carrier can only deliver the goods to the consignee/buyer) a.k.a. a "straight bill of lading"

air cargo containerization

Two types of containers: -Lower deck containers: fit easily in the lower deck of a wide body jet -Air cargo pallet: items are attached to a pallet and then transported in a smaller jet; not as secure as lower deck containers

specially designated nationals list

a list compiled by the treasury department, office of foreign asset control

denied persons list

a list of individuals and entities that have been denied export privileges

Which entity publishes the incoterms? a) International Chamber of Commerce b) World Trade Organization c) World Customs Organization d) US Department of Commerce

a) International Chamber of Commerce

On the EEI, what is the Principal Party in Interest? a) The party in the U.S. that receives the primary benefit of the export transaction. b) The party in the foreign country that receives the primary benefit of the export transaction. c) Always the exporter. d) Always the importer.

a) The party in the U.S. that receives the primary benefit of the export transaction.

GRI 3

a) When two or more headings apply, use the most specific description --Can't use if no heading covers entire good, go to 3(b) b)Use the heading of the component which gives the good its essential character --Can't use if no essential character, go to 3(c) c)When faced with two still equally valid headings, choose the one which occurs last in numeric order

An air waybill is: a) a bill of lading used for air shipments. b) an insurance certificate for air shipments. c) the EEI filing for air shipments. d) the export control document for air shipments.

a) a bill of lading used for air shipments.

A negotiable bill of lading is also a(n): a) order bill of lading. b) ocean bill of lading. c) straight bill of lading. d) air waybill.

a) order bill of lading.

Assume a company is importing music boxes classified as 9208.10.0000. Also assume the music boxes fit inside a specially designed plastic case suitable to store the music box. Also assume there is a classification for plastic cases of 3919.20.2000. When importing these music boxes with the plastic cases, which harmonized code(s) would you use for the products? a)9208.10.0000 b)9208.10.0000 & 3919.20.2000 c)3919.20.2000 d)Neither - you simply list "multiple harmonized codes enclosed"

a)9208.10.0000

Assume a company is importing music boxes classified as 9208.10.0000. Also assume there is a harmonized code 9208.05.0000 listed as "music boxes for educational purposes". If the company decides both codes are equally description for their product, which code would be used when importing? a)9208.10.0000 b)9208.05.0000 c)9208.10.0000 & 9208.05.0000 d)Neither since there is a conflict

a)9208.10.0000

Assume a company is importing music boxes classified as 9208.10.0000? Also assume there is a harmonized code 9208.10.5000 listed as "parts of music boxes". The company is importing the music boxes complete with everything EXCEPT there are ornate legs the company adds which is manufacturers in the U.S. and glues to the imported music boxes. When importing the music boxes without legs, which code would be used? a)9208.10.0000 b)9208.10.5000 c)9208.10.0000 & 9208.10.5000 d)Neither since there is a conflict

a)9208.10.0000

A company in Beijing, China purchases machines from a manufacturer in Chicago, IL. The terms of sale are that any repair parts while a machines is under warranty, are to be replaced by the Chicago company at no cost. The Chicago company pays all freight, insurance, and taxes associated with shipping the parts to China. For such parts shipments, which Incoterm would be appropriate? a)DDP Beijing, China. b)DDP Chicago, IL c)EXW Beijing China d)EXW Chicago, IL

a)DDP Beijing, China.

When importing from the U.S., which harmonized code is used? a)HTSUS b)WCO HTS c)Schedule B d)Schedule B or HTSUS when allowed

a)HTSUS

A potential benefit to an importer of the CTPAT program is: a)Less frequent US Custom inspections b)Lower import duties c)Facilitate containerization d)Facilitate insurance claims in case of loss

a)Less frequent US Custom inspections

What is the growing concern about the use of EXW as an Incoterm? a)That the exporter is technically not responsible to clear the goods for exports, yet it may still have legal obligations related to export documents. b)That it can be very difficult to accurately calculate foreign duties. c)That it is primarily suited for non-containerized freight. d)It is simply too expensive for the seller.

a)That the exporter is technically not responsible to clear the goods for exports, yet it may still have legal obligations related to export documents.

What is EAR99? a)The export control classification for goods not specifically listed as controlled goods. b)The directory of all controlled goods subject to the EAR. c)The platform used to file for export licenses. d)The rules governing the sale of military goods.

a)The export control classification for goods not specifically listed as controlled goods.

In an international shipment, what is the role of a freight forwarder? a)To handle the primary logistics including the freight and insurance for a shipment b)To forward freight from rail to ocean. c)To collect payment for the sale from the foreign buyer d)To forward all freight damage claims

a)To handle the primary logistics including the freight and insurance for a shipment

Which of the above agencies uses the EAR -Export Administration Regulations? a)U.S. Department of Commerce b)U.S. Department of the Treasury c)U.S. Department of State d)U.S. Customs and Border Protection

a)U.S. Department of Commerce

Under the free trade zone program: a)a company can delay, eliminate, or reduce payment of duties b)a company can have 99% of its duties refunded should the product be exported c)a company can have a small portion of its duties refunded should the product be exported d)a company can have duties delayed or eliminated, but not reduced.

a)a company can delay, eliminate, or reduce payment of duties

The Code: 2120.92.3000, 2120.92.3000 is the? a)commodity number b)subheading c)chapter d)heading

a)commodity number

The CE mark is a: a)Product quality standard b)Product safety standard c)Proceduresstandard d)Document required to EU customs clearance

d)Document required to EU customs clearance

unverified list

A list of parties where BIS has been unable to verify the end-user in prior transactions.

entity list

A list of parties whose presence in a transaction can trigger a license requirement under the Export Administration Regulations.

U.S. Exports Should Include the Destination Control Statement

"These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations"

negotiable bill of lading

(can be bought, sold, or traded while the goods are in transit) a.k.a. an "order bill of lading" -Negotiable bills are commonly used with letter of credits

what factors help regional integration succeed?

- economic similarity - political similarity - similarity of culture and language - geographic proximity

Drafts

-Unconditional order in writing from one party to another -In an export, seller orders the buyer to pay a fixed amount of money as specified in draft.

ECCN Example

-0A982 Restraint devices, including leg irons, shackles, and handcuffs; straight jackets, plastic handcuffs; and parts and accessories, n.e.s. =Reason for Control: CC

container dimensions

-20-foot or 40-foot; 40-foot is more typical -Slightly more than 7 ½ feet wide and tall -Weight limit of 60,350 pound -Specialized containers: --Refrigerated containers --Bulky commodity containers --Open top containers --Ventilated containers --Insulated containers --Flat rack containers with two or more sides missing

list of reasons for licenses

-AT Anti-Terrorism -CB Chemical & Biological Weapons -CC Crime Control -CW Chemical Weapons Convention -EI Encryption ItemsFC Firearms Convention -MT Missile Technology -NS National Security -NP Nuclear Nonproliferation -RS Regional Stability -SS Short Supply -UN United Nations Embargo -SI Significant Items -SL Surreptitious Listening

BIS penalties

-Administrative cases: a civil penalty amounting to the greater of $250,000 or twice the value of the transaction may be imposed for each violation of IEEPA (International Emergency Economic Powers Enhancement Act) -Under IEEPA, thePresident can regulate, investigate, prohibit certain financial transactions following a declaration of an "unusual and extraordinary threat" originating outside the United States -For criminal violations: violators may be fined up to $1,000,000 and/or face up to 20 years of imprisonment -maximum penalties increased to $250,000 for civil violations and $1 million and 20 years' imprisonment for criminal violations

how harmonized system works

-All products are described by a ten-digit number that is broken down by chapter, heading, subheading, and commodity code -Subject to frequent changes as well as updates as in 2010 -Overseen by the World Customs Organization (WCO) -There is a harmonized code for everything exported traded globally -Numeric based coding system is used instead of words and industry specific terminology to avoid confusion

what is eligible for drawback

-Any product imported into into the U.S., and then exported, or incorporated into a product in the U.S. that is later exported -Can be complications

free trade zones (foreign trade zones)

-Areas designated by U.S. Customs to allow entry into the U.S. without importation -Allows for delay of import duties -Allows for destruction / testing to avoid import duties -Bonded warehouses not the same - but offer delayed import duties and good for re-exporting

choosing a freight forwarder

-Ask for company details and references -Nurture strong communication -Make sure both parties understand their responsibilities thoroughly

US Department of Commerce

-Bureau of Industry and Security (BIS) -What they do: --Controls exports of products / technology and lists of individuals and companies controlled

Group C / Main carriage paid

-CFR (only with non-containerized freight and waterway/ocean shipments) -CIF (only with non-containerized freight and waterway/ocean shipments) -CPT -CIP Second most responsibility for the seller

Shipper's Letter of Instruction

-Completed by the exporter for the freight forwarder -Contains essentially information associated with the shipment -Forwarded uses for related documents including bills of lading and Electronic Export Information filing through AES Direct

Importance of Tariff Classification - Exporter

-Compliance (export documentation, compliance with export laws) -Proper application of trade agreement Rules of Origin

Avoid DDP

-DDP assigned the role clearing the goods for import •Yet this has to happen in the buyer's country

Group D / Arrival

-DPU -DAP -DDP The seller has the most responsibility here

Quotation

-Details a price proposal from a seller to a buyer -Confirms the selling price of the goods -Confirms what costs are expected of the buyer -A quotation may or may not include freight to the buyer's country, but any freight items should be clarified -No specific format - often sent as an email or fax

why harmonized codes are needed

-Disagreements on products being shipped between nations can lead to higher import duties on products -International Harmonized Codes provide a way for different nations to classify products in the same way -This prevents disagreements between nations on the products that are being shipped. All countries "speak the same language" for international trade

BIS Export Licensing Terminology

-EAR: Export Administration Regulations -ECCN: Export Control Classification Number (to determine if a product is controlled) -CCL: Commerce Control List: details all the ECCNs -Commerce Country Chart: shows by country the specific limitations for that ECCN -Simplified Network Application Process Redesign (SNAP-R) to file an export license

Avoid EXW

-EXW assigns the role of export clearance to the buyer, and to load the goods on the carrier •Yet this has to happen in the seller's country

terms for any more or modes of transportation

-EXW: Ex-works -FCA: Free Carrier -CPT: Carriage Paid To -CIP: Carriage and Insurance Paid To -DAP: Delivered At Place -DPU: Delivered at Place Unloaded -DDP: Delivered Duty Paid

Group E / Departure

-ExW least responsibility for the seller

why do nations pursue economic integration

-Expand market size -Enhance productivity and economies of scale -Attract investment from outside the bloc -Acquire stronger defensive and political posture

drawback rates and dates

-Exporter usually receives full amount of duty as a refund, less a 1% handling fee -Products that need to be destroyed also qualify for duty drawback

reliance on freight forwarders

-Extremely important for small businesses or beginning exporters -They work with the containerization and booking of freight -Some will specialize in different areas, so many freight forwarders may be needed

terms for sea and inland waterway transport

-FAS : Free Alongside Ship -FOB: Free On Board -CFR: Cost and Freight -CIF: Cost, Insurance and Freight

Group F / main carriage unpaid

-FCA -FAS (only with non-containerized freight and waterway/ocean shipments) -FOB (only with non-containerized freight and waterway/ocean shipments) Second least responsibility for the seller

what to look for in your freight forwarder

-Forwarder background, history, ownership -Customer references -Specific areas of expertise and service offered -Foreign market strengths -Surface, air, ocean strengths -Import Services -Technology Support -Third Party Logistics (3PL)

For US Companies:

-Harmonized Tariff Schedule of the United States is for IMPORTS (HTSUS) -Schedule B is for EXPORTS

Ex: GRI 3(a)

-How do we classify Goober Grape if it were ~50% Peanut Butter and ~50% Jelly? -Two headings apply, but 3(a) states that we can't use either since neither cover the entire good 2008"peanut butter" 2007"fruit jelly" Go to 3(b) -There's nothing in Schedule B that refers to the combination of PB & J... -Two headings may apply, but 3(b) states that we can't use either -neither describe the good's essential character Go to 3(c) 3(c) states that we should use 2008...

Tax incentives for US Exporters: IC-DISC

-IC-DISC: Interest Charge Domestic International Sales Corporations -Essentially IC-DISCs are paperless companies created to obtain tax benefits for U.S. exporters -They earn a commission for the U.S. exports -Commissions kept outside the U.S. are not taxed until remitted to the U.S.

when is the EEI required?

-If a shipment contains multiple products with harmonized codes, some of which over $2500 and others less or equal to that, only those items over $2500 require EEI. -If an export license is required for shipment, so is EEI.

Insurance certificate

-Important for seller to ensure insurance has been arranged -Insurance amount established at CIF value plus an additional 10%

tariff schedules

-In most cases (depending on the Incoterm) the importer pays the import tariff -However, exporters should be aware of the expected import tariff -Most tariff schedules are online (start with www.export.gov) -tariff engineering

subheading

-Incorporates the first six digits of the ten-digit code -By this point, the descriptions are pretty complete. As an example with the heading: --03.02- Fish, fresh or chilled, excluding fish fillets and other fish meat of heading 0304 --Selected subheadings including ---Ex: 0302.12 -Pacific Salmon, Atlantic Salmon, and Danube Salmon ---0302.13 - Pacific Salmon -Note the heading includes most fish, but subheading details specific types of fish Represents the harmonized system code subheading -EX: Pacific salmon, Atlantic salmon and Danube salmon

Ocean bill of lading

-Issued by the steamship line with information provided by the freight forwarder -Exporter should understand how to read an ocean bill of lading to review costs and if applicable, that it complies with letter of credit requirements -Includes all shipping information including shipper, consignee, reference such as invoice number, vessel details, L/C number, labeling, and number of boxes

certificate of origin

-Main document for USMCA qualification -Prepared by producer/manufacturer

VAT - Foreign sales tax

-Most countries have a national sales tax -Many are "value-added" taxes: tax is applied at each stage of production and sales channel• Export only? Importer generally liable for VAT. -But ... if U.S. company is 'importer of record', they must pay VAT -Remember: ALL companies and products have VATso it is NOT an 'import' tax

NAFTA (canada, mexico, US)

-NAFTA passage (1994) was facilitated by the maquiladora program -U.S. firms locate manufacturing facilities just south of the U.S. border and access low-cost labor without having to pay significant tariffs. NAFTA has: --Eliminated tariffs and most nontariff barriers for products/services. --Initiated bidding for government contracts by member country firms --Established trade rules and uniform customs procedures. --Prohibited standards / technical regulations to be used as trade barriers. --Instituted rules for investment and intellectual property rights. --Provided for dispute settlement for investment, unfair pricing, labor issues, and the environment.

US Customs and Border Protection (CBP)

-No specific program -What they do: --Imports (border security) & Exports (AES Direct)

US Department of the Treasury

-Office of Foreign Assets Control -What they do: --enforce trade sanctions to countries and individuals

preference criteria

-Origin criteria which explains the way in which your product meets the USMCA Rules of Origin. Only goods that meet these criteria can qualify. -In general, most manufactured goods that qualify for USMCA satisfy the rules of origin pertaining to either preference criteria or criteria B or C.

Electronic Export Information (EEI) Filing through AES Direct / ACE

-Previously known as the Shipper's Export Declaration -Used to track exports, but linked to Export Controls -AESDirect is the website through which the Electronic Export Information (EEI) is filed. It is accessed through the Automated Commercial Environment (ACE) managed by U.S. Customs and Border Protection -AES Record not required if the total value of any single Schedule B number is less than $2,500 (invoice value plus inland freight)

C-TPAT & CSI

-Programs implemented after 9/11 to address increased security concerns

international documentation essential documents

-Quotation -Pro Forma Invoice -Commercial Invoice -Packing List -Electronic Export Information (EEI) - formerly Shipper's Export Declaration -Certificate of Origin, NAFTA Certificate of Origin -Insurance Certificate• Ocean Bill of Lading, Air Waybill -Drafts -Shipper's Letter of Instruction

containerization benefits

-Reduced shipping costs -Reduced damage to products -Reduced shipping risk and theft -Faster movement of goods

Container Security Initiative (CSI)

-Seeks to identify potentially high-risk freight in foreign ports before it reaches the U.S. -Working to make containers "tamper proof"

USMCA (US, Mexico, Canada)

-Signed by the three countries in November 2018. -Will replace NAFTA once it's ratified by the three countries' parliaments. -Only Mexico has ratified so far (June 2019). -NAFTA 2.0 with the following changes: --Country of Origin -75% domestic contents ( up from 62.5%) to qualify for zero tariffs --Labor provisions - 40-45% of automobile parts must be made by workers earning at least $16/hrby 2023 --US farmers get more access to Canadian dairy markets. --Intellectual property and digital trade - terms of copyright extended to 70 years (up from 50). --Sunset clause -agreement expires or sunsets after 16 years.

Noncontainerized Cargo (Breakbulk cargo)

-Some cargo must be sent breakbulk (corn, wheat) or as individual shipments (large truck) -Noncontainerized cargo is call Ro-ro freight: "Roll on, roll off" freight

US Department of State

-The Directorate of Defense Trade controls (DDTC) -What they Do: --Controls defense / military articles through the International traffic in Arms Regulations (ITAR)

$775,000 Penalty for Illegal Exports of Controlled Alloy

-The firm exported aluminum alloy to China, Singapore, Malaysia and Mexico without the required licenses. -The alloy is controlled under export control classification number 1C202 for nuclear nonproliferation reasons -The company also agreed to complete an audit of its export controls compliance program

international logistics solutions - 3 PLS

-Third-party logistics (3PL) --allows firms to outsource logistics needs to another company --Provide complete global solutions --Solves international logistics problems without further investment in warehousing, etc. --Using a 3PL can be turned into a competitive advantage

documentation issues

-Though some documents don't have a specific format (e.g. quotations, invoices) the required information is critical and must be accurate -Documents may repeat some of the same information but they each have their own purpose -Consistency and accuracy is essential

freight forwarder

-Travel agent for freight -Can become important trade partners -Specialize in logistics

how to obtain duty drawback

-Two restrictive requirements that legitimate claims must meet --Prior to exporting products, the exporter needs to file a drawback proposal with regional commissioner of customs --Exporter must maintain documentation to ensure compliance with drawback procedure

Door-to-door vs less than container load

-Typically, if a shipment will fill half a container, a full container may be used because costs will be similar -If not enough volume for half a container, then use Less than a Container Load

Duty Drawback

-U.S. companies may claim for a refund of import duties on products exported -Customs will retain a handling fee - generally 1%• Refund available even if a supplier imported the components -Documentation is critical -Does not apply to components used in manufacturing for exports to Canada or Mexico

Export controls key concerns

-US government wants to limit/approve shipments: --For specific products (dual use products, weapons, possible articles for terrorism) --To specific countries (eg. Cuba) --To specific individuals or parties (barred, denied, unverified individuals) ---Concerned with who imports, what is exported, and where exports are going

air waybill (air bill of lading)

-Used as the 'bill of lading' for air shipments and is issued by the air carrier -All air waybills are nonnegotiable - as such, it is not a document of ownership for the goods -Unless the goods are consigned to a third party like the issuing bank, the importer can obtain the goods from the carrier at destination without paying the seller

Importance of Tariff Classification - Importer

-Used by customs to establish regulations -Application of proper duty rates -Applicability of trade agreements -Determine whether Other Government Agency (OGA) regulations, licenses and or permits apply

Customs Trade Partnership against Terrorism (C-TPAT)

-Voluntary program available to U.S. manufacturers to certify their commitment to best practices in supply chain security -Main benefit is a lower number of cargo inspections, which increases the speed of shipments and reduces inventory costs

GRI 1: read the notes

-When you refer to the notes, they might send you someplace else --So, read the notes and follow their instructions•You may have to look elsewhere --The titles of sections and chapters are only a guide.

Blocked Suez Canal

-artificial sea-level waterway in Egypt connecting mediterranean sea and red sea -120 miles long rather than alternative 7k-8k miles -10% of global trade traffic -400 ships waiting on stuck cargo ship (for 5 days) -80-90 vessels a day $90

harmonized system

-consists of 22 sections divided into just under 100 chapters that correspond to the international system of numbering with each section and chapter being a general grouping of common products -for US companies: --Harmonized Tariff Schedule of the United States is for IMPORTS (HTSUS) --Schedule B is for EXPORTS

BIS Lists of parties of concerns

-denied persons list -unverified list -entity list -specially designated nationals list -debarred list -nonproliferation sanctions

structure of a harmonized number

-first 2 digits chapter -Up to:4 digit heading --6 digit subheading --8 digit: tariff item --The final two digits in a 10 digit number: statistical suffix

where to find the ECCN

-http://www.access.gpo. gov/bis/ear/ear_data.html -Start with the "Alphabetical Index to the Commerce Control List (CCL) " -Then click on the specific category as determined by the first number such as Category 0 if '0' is in the first place (as in the prior slide for ECCN 0A982)

international commercial terms

-incoterms -international rules for the interpretation of trade terms in foreign trade -made by international chamber of commerce (ICC) -mitigate costly misunderstanding between sellers and buyers -determine who is responsible for what between parties -used by exporters, insurers, bankers, and lawyers -establishes: the geographic location at which the buyer becomes responsible for the goods & who arranges for shipping, handling, insurance and inland freight costs

Ex: GRI 3(b)

-product: metal base plate of a clothes iron -Issue: classified as a misc. metal part or as an iron for pressing clothes =should be classified as an iron for pressing clothes since it is its essential function: 8516.40.000

Bureau of Industry and Security (part of Department of Commerce)

-this agency has responsibility for controlling goods and technology that could threaten US security if improperly exported -BIS also maintains directories of individuals and companies (parties) which have been identified by BIS as having engaged in activities that threaten U.S. national security, or for which BIS has been unable to verify their status.

GRI 2(a)

-treat incomplete/unfinished articles as if they were finished goods --as long the article has the essential character of the finished good --Ex: bike without wheels -treat unassembled / disassembled articles as if they were assembled goods --Ex: Unassembled TV cart

The Four Key US Agencies

1) U.S. Department of Commerce - Bureau of Industry and Security (BIS) --Controls exports of products/technology & Lists to Check 2) U.S. Department of the Treasury - Office of Foreign Assets Control (OFAC) --Enforce trade sanctions to countries and individuals 3) U.S. Department of State - The Directorate of Defense Trade Controls (DDTC) --Controls defense / military articles through the TheInternational Traffic in Arms Regulations (ITAR) 4) U.S. Customs and Border Protection (CBP) --Imports (border security) --Exports (AES Direct)

The Four Required Fields for Each EEI / AES Direct Filing

1)Shipment Information: includes a variety of required fields including: • Origin State • Country of Destination • Departure Date • Conveyance Name (vessel or carrier name) 2)USPPI - U.S. Principal Party in Interest: the person in the U.S. that receives the primary benefit, monetary or otherwise, of the export transaction. 3)Ultimate Consignee • The company receiving the shipment in the foreign country 4)Commodity line: the Schedule B (or in most cases HTS U.S. is also allowed)

Bills of LadingIssued by the Carrier (ocean or air) to:

1)serve as a receipt for the cargo 2)act as a contract for the transportation of the goods 3)act as a document of possession (title) --negotiable bill of lading --nonnegotiable bill of lading

debarred list

A list compiled by the State Department of parties who are barred the International Traffic in Arms Regulations (ITAR) from participating directly or indirectly in the export of defense articles

Harmonized code sections

Arranged in 21 Sections -Contains 99 Chapters --I: Live Animals; Animal Products --IV: Prepared Foodstuffs --VIII: Hides and Skins --XI: Textiles and Textile Articles --XVI: Machines and Mechanical Appliances --XVIII: Optical; Measuring; Medical or SurgicalInstruments and Apparatus

political union

By encompassing both political and economic integration, the union effectively transforms itself into one country

tariff engineering

Changing or reconfiguring what is imported to minimize import duties

GRI 5(a)

Containers: Specifically shaped containers suitable for repetitive use, and presented with the good, are classified with the good. Otherwise, they are classified on their own. Example: camera case

CFR

Cost and Freight (named port destination) -The seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

DAP

Delivered at place (named place of destination) -The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the destination. The seller bears all risks involved in bringing the goods to the named place

DDP

Delivered duty paid (named place of destination) -The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on arrival and ready for unloading at destination. The seller bears all costs and risks involved in bringing the goods to destination and is obligated to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Harmonized Code Sections

EX: Sect 1: Live Animals and Animal Products --Ch 1: Live animals --Ch 2: Meat and Edible Meat Offal --Ch 3: Fish and Crustaceans, Molluscs and Other Aquatic Invertebrates --Ch 4: Dairy Produce; Birds' Eggs; Natural Honey; Edible Products of Animal Origin, Not elsewhereSpecified or Included --Ch 5: Products of Animal Origin, Not Elsewhere Specified Or Included

GRI 4

Most Akin: If no appropriate heading, classify the good as you would the most similar good in the tariff.

GRI 5(b)

Packing material: Packing material and containers are classified with the good if normally used for packing the good and not suitable for repetitive use. Otherwise, they are classified on their own. Example: bag of pretzels vs. mug with pretzels inside

subdivisions

Represents statistical subdivisions -EX: Commodity code for Chinook (king)Salmon

heading

Represents the heading in that chapter -Incorporates the first four digits of the ten-digit code -The initial job of classifying a product should focus on finding its heading, not its section or chapter. -The heading will begin to identify if it is the correct area of the harmonized code -EX: Fish, fresh or chilled, excluding fish fillets and other fish meat of heading 0304

GRI 6

Rules 1 - 5 are used to determine the heading. Repeat the process to determine subheading and so on.

nonproliferation sanctions

Several lists compiled by the State Department of parties that have been sanctioned under various statutes

What to do when more than one harmonized code seems to apply?

Then you turn to the six general rules of interpretation (GRIs)

Which of the following would be an example of a suitable export control statement to the be used on a commercial invoice? a) "These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items. b) "These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations." c) "This shipment has been duly exported within the control of U.S. export regulations." d) "This shipment has not been duly exported within the control of U.S. export regulations. As such any re-routing must receive DDTC permission."

b) "These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations."

All air waybills are: a) clean. b) non-negotiable. c) negotiable. d) order.

b) non-negotiable.

What is the purpose of the Shipper's Letter of Instruction? a) To inform a freight forwarder a shipment is ready to export. b) to provide all the essential information regarding an export so the forwarder can correctly execute the shipment and if required, complete the necessary documents. c) To establish the Incoterm to be used with the shipment so the carrier is aware of its responsibilities. d) To provide background information on the shipper so the forwarder can classify the exporter as a 'known exporter' and then file for an export license.

b) o provide all the essential information regarding an export so the forwarder can correctly execute the shipment and if required, complete the necessary documents.

Following on from the previous question. The company decides to begin manufacturing the music box legs in Brazil. When importing 1000 of the music box legs, which code would be used. a)9208.10.0000 b)9208.10.5000 c)9208.10.0000 & 9208.10.5000 d)When importing parts of more than 1000, U.S. Customs will classify.

b)9208.10.5000

Which of the following would be an example of violation of U.S. export controls? a)A U.S. company ships goods by ocean to China using a Mexican ocean carrier. b)A U.S. company ships goods to a distributor in Mexico and the distributor then ships the goods to Cuba. c)A. U.S. company ships goods to a distributor in Mexico and the distributor then ships the goods to China. d)A. U.S. company ships goods by air to South Africa using a Chinese airlines.

b)A U.S. company ships goods to a distributor in Mexico and the distributor then ships the goods to Cuba

Under the duty drawback program: a)A company can delay, eliminate, or reduce payment of duties b)A company can have 99% of its duties refunded should the product be exported c)A company can have a small portion of its duties refunded should the product be exported d)A company can have duties delayed or eliminated, but not reduced.

b)A company can have 99% of its duties refunded should the product be exported

Custom Trade Partnership Against Terrorism (CTPAT) is: a)Mandatory for all U.S. exporters b)A voluntary program which certifies the security of a company's Supply Chain to the Customs and Border Protection c)Mandatory for all U. S. importers d)Only applies to Over The Road Truck shipments

b)A voluntary program which certifies the security of a company's Supply Chain to the Customs and Border Protection

During an ocean voyage the ship's captain determines that for the ship's safety, twenty five (25) containers must be thrown overboard to save the ship from imminent danger. For most international shipments, which statement is true? a) Only shippers with containers that were thrown overboard share equally the loss of the value of the overboard containers b)All shippers with containers remaining on board share equally the cost of the value of the containers thrown overboard to save the ship. General Average Insurance would protect them from such financial risk. c) Each shipper with a lost container will be liable for the value of their own container d)Since it was a decision specifically declared by the ship's captain, no Shippers face potential loss as they revert to the ship transporting the containers

b)All shippers with containers remaining on board share equally the cost of the value of the containers thrown overboard to save the ship. General Average Insurance would protect them from such financial risk.

Which of the following incoterms would mean the main carriage and insurance is paid by the seller? a)FAS b)CIF c)FOB d)EXW

b)CIF

Breakbulk cargo is: a)Cargo broken down into pallets b)Cargo is too large, or not suitable for a container c)Any cargo shipping by air d)Cargo requiring specialized care as it is easily damaged

b)Cargo is too large, or not suitable for a container

The practice of moving freight between rail, train, truck, etc. is a)Containerization b)Intermodalism c)Increasing freight costs d)Lowering import duties

b)Intermodalism

A product manufactured in the US using foreign materials a)Will not qualify for USMCA duty free treatment b)May qualify for USMCA duty free treatment c)Will qualify for USMCA duty free treatment d)Will qualify for USMCA duty free treatment to Canada but not Mexico.

b)May qualify for USMCA duty free treatment

MERCOSUR is an agreement concerning trade on the continent of: a)Asia b)South America c)Europe d)Africa

b)South America

Import duties are an example of a)Quantitative trade barriers b)Tariff barriers c)Qualitative trade barriers d)Non-tariff barriers

b)Tariff barriers

board bill of lading

cargo placed aboard vessel and is signed by master of vessel

Which of the following is a true statement regarding import duty and VAT? a)They are both taxes applied to imports b)They are both taxes, but import duty applies to imports and VAT is generally applied to all products c)They are essentially the same thing d)Import duty is applied to imports, VAT is applied to exports

b)They are both taxes, but import duty applies to imports and VAT is generally applied to all products

When would a US company be liable to collect/charge for VAT? a)When it is the exporter of record b)When it is the importer of record c)When it invoices above $1200 d)Never - it is an overseas function only

b)When it is the importer of record

The multinational organization that was created to help promote global trade is a)International Monetary Fund b)World Trade Organization c)World Bank d)United Nations

b)World Trade Organization

The primary purpose of U.S. export control regulations is to a)ban the exports of military goods, ban the exports of products related to crime, and ban exports of products related to the nuclear industry. b)control the exports of particular goods, control who can be sold to, and control where exports can be sent. c)protect the confidentiality of the exporter. d)ensure exports comply with U.S. embargoes.

b)control the exports of particular goods, control who can be sold to, and control where exports can be sent.

The Code: 2120.92.3000, 2120.92 is the? a)commodity number b)subheading c)chapter d)heading

b)subheading

When a parent company makes an inter-company sale to a foreign subsidiary, it may invoice the products at any price, as long as: a)the price does not result in a loss on the eventual sale by the subsidiary. b)the price can be shown to be the same price for a similar sale to a non-subsidiary. c)the landed price matches the retail price. d)the price does not result in a loss on the sale by the parent.

b)the price can be shown to be the same price for a similar sale to a non-subsidiary.

The most standard ocean container is how many feet long? a) 10 b) 25 c) 40 d) 50

c) 40

A primary purpose of an international quotation is to: a) confirm the freight costs to the foreign country. b) confirm the freight and insurance costs to the foreign country. c) confirm the selling price of the goods. d) confirm US eligibility to sell the goods.

c) confirm the selling price of the goods.

A non-negotiable bill of lading is also a(n): a) order bill of lading. b) ocean bill of lading. c) straight bill of lading. d) air waybill.

c) straight bill of lading.

When creating a pro forma invoice: a) the format should look exactly like the quotation. b) the format should look essentially like the packing list. c) the format should roughly follow the commercial invoice but marked 'pro forma'. d) all pricing should be in the currency of the exporting country.

c) the format should roughly follow the commercial invoice but marked 'pro forma'.

A bill of lading acts as a title document meaning: a) Which party takes the risk. b) what is the country of origin. c) which party can take possession of the goods. d) who owns the goods when shipment begins.

c) which party can take possession of the goods.

Following on from the preceding question, if later the company realized it needed more plastic cases without the music box as replacements for customers that have lost their plastic case, which harmonized code would you use when importing the cases? a)9208.10.0000 b)9208.10.0000 & 3919.20.2000 c)3919.20.2000 d)Neither - harmonized codes not needed for packing cases

c)3919.20.2000

How many forms of Economic Integration are there? a)27 b)2 c)5 d)50

c)5

According to US marking rules: a)Packing boxes must identify the consignee and the country of export b)Packing boxes must identify the consignee and country of origin c)All products not exempted by law are required to have the origin of the product on the product itself d)Ocean containers must identify port of embarkation

c)All products not exempted by law are required to have the origin of the product on the product itself

US duty drawback is: a)Applied equally for all countries of import / export. b)Applied equally for all countries of import / export other than European Union. c)Applied equally for all countries of import / export other than Canada and Mexico. d)Only available within members of the United Nations Convention for the International Sales of Goods

c)Applied equally for all countries of import / export other than Canada and Mexico.

A company in U. K. sells their products to a company in Kenya, East Africa. The Kenyan Buyer to receive the products at the port of Mombasa will pay for and arrange ALL transportation from origin to destination. The U.K. company has their manufacturing facility in London, where it will ship from. Which Incoterm should be used? a)EXW Mombasa b)FCA Mombasa c)EXW London d)CIF London

c)EXW London

A Korean customer has requested a U.S. shipper take responsibility and pay the freight and insurance for a ro-ro order from Quincy to be loaded on board a ship in Long Beach. Which Incoterm would be appropriate? a)EXW Long Beach, CA b)FAS Long Beach, CA c)FOB Long Beach, CA d)FCA Long Beach, CA

c)FOB Long Beach, CA

When comparing the harmonized codes across many countries, they will be similar up to a)First two digits b)First four digits c)First six digits d)First eight digits e)All ten digits as they are 'harmonized"

c)First six digits

USMCA (formerly NAFTA) agreement is what form of Regional Economic Integration? a)Common Market b)Customs Union c)Free Trade Area d)None of the above

c)Free Trade Area

The tariff applied to any product imported into the United States is determined by its: a)NAICS designation b)Export Control Classification Number (ECCN) c)Harmonized Tariff System Number (HTS) d)Electronic Export Information Filing

c)Harmonized Tariff System Number (HTS)

The following are some of the improvements in the new USMCA agreement from NAFTA EXCEPT: a)To Qualify for zero tariffs, products must have 75% domestic contents b)US farmers will get more access to Canadian dairy markets c)Intellectual property and digital trade - terms of copyright are at 40 years. d)Agreement expires or sunsets after 16 years.

c)Intellectual property and digital trade - terms of copyright are at 40 years.

What is the role of the IC-DISC program for U.S. exporters? a)It can defer federal taxes. b)It can reduce federal taxes. c)It can reduce or defer federal taxes. d)It provides legal protection in cases of accounting fraud.

c)It can reduce or defer federal taxes.

In the Harmonized Code, Chapter 7 is titles "Edible Vegetables and Certain Roots and Tubers". When classifying a vegetable, one thing for sure is that: a)It will be classified somewhere in Chapter 7 since 'vegetable' is in the title b)It will be classified in Chapter 7 as long as the proper noun for the vegetable is found in Chapter 7 c)It may or may not be classified in Chapter 7 depending on the section or chapter notes. d)It may or may not be classified in Chapter 7 depending on the General Rules of Interpretation.

c)It may or may not be classified in Chapter 7 depending on the section or chapter notes.

The US governmental agency responsible for negotiating and implementing free trade agreements is the: a)Commercial Service b)International Trade Administration c)Office of US Trade Representative d)Customs and Border Protection

c)Office of US Trade Representative

An Ad Valorem Duty is a duty applied based on a)Product weight b)Product size c)Product value d)Product quota

c)Product value

VAT in most countries is a: a)Value added tax -applied to all imports b)Value added tax -applied to all services c)Tax essentially acting as a national sales tax d)Tax essentially acting as a manufacturing tax

c)Tax essentially acting as a national sales tax

The Code: 2120.92.3000, 21 is the? a)commodity number b)subheading c)chapter d)heading

c)chapter

CIP

carriage and insurance paid to (named place of destination) -The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place. The seller must pay the costs of carriage to bring the goods to the destination. In addition, the seller is required to obtain minimum insurance coverage. Should the buyer wish to have more insurance protection, it will need either to agree with the seller or to make its own extra insurance arrangements.

CPT

carriage paid to (named place of destination) -The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place. The seller must pay the costs of carriage necessary to bring the goods to the destination.

economic union

common market policy + members more fully integrate their economies by coordinating their economic policies

CIF

cost, insurance, and freight (named port of destination -The seller delivers the goods on board the vessel. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage. The seller is only required to obtain minimum insurance coverage. However, should the buyer wish to have more insurance protection, it will need either to agree with the seller or to make its own extra insurance arrangements.

common market

customs union policy + members also eliminate barriers that restrict movement of factors of production among themselves

Assume an importer arrives at a port to collect goods shipped to them and the bill of lading is currently consigned to a bank. What will happen when the importer requests the goods? a) Assuming they say they have paid for the goods, they will be able to take possession. b) As long as they have a copy of the commercial invoice, they can take possession. c) As long as they have a copy of the pro forma invoice, they can take possession. d) They will not be able to take possession until the banks endorses the bill of lading to them.

d) They will not be able to take possession until the banks endorses the bill of lading to them.

A commercial invoice used when exporting: a) should follow the UNCISG format. b) should follow the NAFTA format when applicable. c) has no specific format, but the UNCISG is preferred. d) has no specific format.

d) has no specific format.

International documentation a) has very specific formats that must be followed. b) always must be translated into the language of the importing country. c) is far more simple than domestic documentation. d) in most cases has no specific format, but accuracy is critical.

d) in most cases has no specific format, but accuracy is critical.

A bill of lading can act as both a _______________, and a __________________. a) proof of insurance, contract for the transportation of the goods b) packing list, contract for the transportation of the goods c) receipt for cargo, proof of insurance d) receipt for cargo, contract for the transportation of the goods

d) receipt for cargo, contract for the transportation of the goods

In general, an Electronic Export Information (EEI) filing via the Automated Export System (AES) within the Automated Commercial Environment (ACE) is required if the total value of any single Schedule B number is greater than a)$500 b)$1000 c)$1200 d)$2500

d)$2500

In a bonded warehouse: a)A company can delay, eliminate, or reduce payment of duties b)A company can have 99% of its duties refunded should the product be exported c)A company can have a small portion of its duties refunded should the product be exported d)A company can have duties delayed or eliminated, but not reduced.

d)A company can have duties delayed or eliminated, but not reduced.

What is CSI? a)The incoterm for ocean containers b)The incoterm for air containers c)A program designed to lower the risk score of importers d)A program designed to make ocean containers safe, and less likely to have dangerous goods placed in them

d)A program designed to make ocean containers safe, and less likely to have dangerous goods placed in them

To determine if goods are subject to the EAR you must first refer to the: a)Commerce Country Chart. b)EAR99. c)Schedule B listing. d)Commerce Control List.

d)Commerce Control List.

Which incoterm has the LEAST transportation responsibility for the BUYER: a)FOB b)CFR c)EXW d)DDP

d)DDP

Assume a product is under U.S. export controls. What does this mean? a)The product cannot be exported .b)The product can be exported. The export simply needs to be documented. c)The product may be exported, but permission from the U.S. government will be required. d)Depending on the country of import, the product may be exported. Whether U.S. government permission is required depends on the country of import.

d)Depending on the country of import, the product may be exported. Whether U.S. government permission is required depends on the country of import.

The purpose of USMCA preference criteria is to: a)Determine if a company qualifies b)Determine if an importer qualifies c)Determine if the country qualifies d)Determine if the product qualifies

d)Determine if the product qualifies

If your product being exported, is under export controls, you will consult Bureau of Industry and Security (BIS) to obtain the a)Schedule B number b)Harmonized Tariff System Number c)NAFTA Preference Criterion d)Export Control Classification Number

d)Export Control Classification Number

If a shipper in Quincy, IL is to make an ocean container destined for Hong Kong available at a Quincy warehouse and clear the goods for export, which Incoterm is most appropriate? a)FOB Quincy, IL b)EXW Hong Kong c)EXW Quincy, IL d)FCA Quincy, IL

d)FCA Quincy, IL

Quotas are example of a)Quantitative trade barriers b)Tariff barriers c)Qualitative trade barriers d)Non-tariff barriers

d)Non-tariff barriers

When exporting from the U.S., which harmonized code is used? a)HTSUS b)WCO HTS c)Schedule B d)Schedule B or HTSUS when allowed

d)Schedule B or HTSUS when allowed

The Code: 2120.92.3000, 2120 is the? a)commodity number b)subheading c)chapter d)heading

d)heading

Forms of economic integration

from low degree of economic integration to high -free trade area -customs union -common market -economic union -political union

combining intermodalism and containerized

has increased efficiency and lowered shipping costs globally

DPU

delivered at place unloaded (named place of destination) -The seller delivers when the goods are unloaded and are placed at the disposal of the buyer at a named terminal at the named port or place of destination. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

ExW

ex works (named place) -The seller delivers when it places the goods at the disposal of the buyer at the seller's location or at another specified place. The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export.

FAS

free alongside ship (named port of shipment) -The seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.

FOB

free on board. (products delivered with all transport charges paid) -The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

customs union

free trade area policy + members also adopt common trade policies toward nonmember countries

Harmonized Code - Binding Rulings

http://rulings.cbp.gov/ useful and often underutilized tool that enables importers and other interested parties to get merchandise classification decisions from CBP that are binding on all future shipments of the products ... importers use the code to determine the duties due on imported products

Harmonized Code - Sch B

http://www.census.gov/foreign-trade/schedules/b/ -10 digit number used in the US to classify physical goods for export to another country. Sch B is based on the international harmonized system (HS) of 6 digit commodity classification codes

chapter

in which a commodity is classified -EX: Fish and crustaceans, molluscs and other aquatic invertebrates

free trade area

members remove tariffs and other barriers to international trade among themselves; however, each member may establish its own trade policies with nonmember countries

intermodalism

moving containerized freight between different modes of transport

containerization

moving freight in standard containers

clean bill of lading

no indication of damage or shortages

obligations

what the seller and buyer has to do (who organizes carriage, insurance, clearances, etc)

risk

where and when the risk transfers from seller to buyer

costs

which party is responsible for which costs

Harmonized Code - HTSUS

www.usitc.gov -harmonized tariff schedule of the United states code -10 digit import classification system that is specific to the US. HTS codes, also called HTS numbers are administered by the US international Trade Commission (ITC)