Interview with Pacific Customs Broker Discussing Common Importing Mistakes
Pacific Customs Broker is the customs broker I have used ever since I began importing, and in fact, I also rely on their freight forwarding division, PCB Freight Management tohelp move almost every LCL and FCL shipment once it hits the port. They have offices in both Canada and the U.S., which is part of the reason I love them because they help me with shipments entering either Canada or the U.S. Breanna Leininger of Pacific Customs Broker has been generous enough to help answer some of the most common customs questions importers have. Dave: I think most of our readers understand the basic functions of a customs broker, helping to pay and remit duties for imports. What are some of the other services a broker like Pacific Customs Brokers can perform, especially for the smaller importer? Breanna: Even if you do not plan to use a customs broker to transact business on your behalf, guidance and advice from a customs broker in the planning stages can help mitigate risks related to your cross-border business. Some areas customs brokers can help importers include:
- Providing advantageous advice on terms of sale
- Making recommendations on countries of origin from which to source
- Providing advice on tariff classification and entry types
- Assisting in the decision making and compliance process
- Delivering the best solutions for your business
- Making you more competitive in the marketplace and
- Helping you gain a more positive relationship with both Canada Border Services Agency and U.S. Customs and Border Protection.
- Commercial invoice
- Copy of the bill of lading, or airway bill
- Arrival notice for air and ocean shipments
Along with a commercial invoice and Arrival Notice, a Bill of Lading is standard documentation your customs broker will request from you for Ocean ShipmentsOne piece of advice for importers with ocean shipments is to request an electronic release from the overseas supplier on the bill of lading. Often new importers are surprised when their containers arrive, clear U.S. Customs but they are unable to pick up their goods because the warehouse or container yard requires the Original Bill of Lading (OBL). If an OBL is required the document will need to be couriered from overseas to the importer. The importer will then have to sign the OBL and courier the document to the steamship line in order for the goods to be eligible for pick up. This can take days, even weeks sometimes, and in that time the goods have started to incur storage charges and this can get very expensive. Importers gain an immediate cost savings when they make the request to have the electronic release on the bill of lading. Dave: That’s great advice about having your shipments electronically released. I request for almost all of my shipments to be “Telex Released”. Can you explain what exactly a custom’s bond is and how it impacts importers? In order to ensure the revenue due to the US government, US Customs requires that every entry be secured by a bond. This can be met in two ways:
- A single entry bond is just that – a bond that covers a single shipment. These can be purchased through a surety company. If you choose this option, it is best to have a customs broker apply for the single entry bond in conjunction with the entry filing in order to ensure that everything matches and that you are properly covered. If you plan on having more than one entry this option can get quite expensive.
- The next option, and also the most cost-effective if you plan on having multiple shipments in a year, is to purchase a continuous bond. This bond type covers all import transactions for a full year from the date of issue. It is important to note, if you are shipping via ocean you will be required to have a bond in place for both the U.S. Customs entry and the Importer Security Filing (ISF). This is where single entry bonds can get quite expensive because the bond cost nearly doubles for each shipment. A continuous bond will cover both the entry bond requirement and the ISF bond requirement. On ISF transactions, an importer is only allotted five single entry ISF bonds in a lifetime by the surety. Once the five ISF bonds are used, the importer will be required to purchase a continuous bond should they endeavor to continue shipping via this mode of transportation. Simply put, to save time and money the best option is the continuous bond.
What do sugar, baby clothes, and coat hangers have in common? They’re all highly regulated products for import.Dave: What does U.S. customs check for in regards to labeling upon entry to the U.S.? I believe they check for country or origin markings, but do they check for safety labels (i.e. suffocation warning labels) and other labeling? Breanna : One thing that importers should understand is that all goods, domestic or foreign, must meet U.S. requirements in order to be introduced into the commerce of the United States; this includes all labeling requirements. On imported merchandise, these goods must meet country of origin labeling requirements for U.S. Customs as well as labeling requirements set forth by any applicable Partner Government Agencies. In addition to targeting for security, U.S. Customs is tasked with collecting accurate statistics, any and all duties, taxes and fees owed to the U.S. government on imported merchandise, as well as ensuring that all applicable U.S. laws have been met at the time of importation. They do this by examining shipments and enforcing all labeling laws. If goods fall under the scope of one or more Partner Government Agencies those agencies may also examine shipments to ensure that labeling laws have been met. Dave: If someone is concerned their product might be subject to special regulation, documentation, and or labeling, who can they contact to confirm? Can a customs broker help? If so, how is this charged? As a flat fee, an hourly fee, etc? Breanna : If someone unsure of the regulations surrounding the import of their product, the first point of contact should be a professional customs broker. A customs broker can assist with researching product admissibility and tariff classification on a transactional basis, and they can also assist in reviewing a catalogue of items. With regard to how this service is charged, it all comes down to the scope of work. A variety of factors such as the complexity and the level of expertise required play a role in determining the fees. Pacific Customs Brokers often assists importers who have been shipping for many years, have had issues and would like to do a compliance review, as well as first time importers who may have a single transaction. Dave: I think we all know of an importer who has a Supplier classify items at very reduced values (and worse, get away with it) to avoid import duties. How does U.S. customs guard against this and if one is caught under classifying products, what are the most common penalties involved? Breanna : U.S. Customs and Border Protection guards against this in several different ways.
- The first is a review at the single transaction level. This could be at the time of entry, or it could be down the road. U.S. Customs employs many entry and commodity specials who carefully review important transaction for compliance and if a discrepancy has been found they will often issue a Request for Information, also referred to as a CF28. U.S. Customs can also issue a Notice of Action, referred to as a CF29, where they require the importer to make the correction. This is also often accompanied by a duty increase bill.
- The next means is a full U.S. Customs Audit. This is a review of all import transactions. Should an importer be subject to an audit they will also have to prove to U.S. Customs that they are adhering to all import regulations such as recordkeeping requirements, and they must prove that they have been using what U.S. Customs defines as “Reasonable Care”. When looking at the prospect of a U.S. Customs audit, it is not a matter of if an importer will be audited, it is when.
- U.S. Customs and Border Protection – to stay up-to-date on U.S. Customs business
- Customs Rulings Online Search System – to research product admissibility
- United States International Trade Commission – For a digital copy of the HTSA for classification as well as current U.S. government regulations
- Visit the ‘Your Broker Knows’ Blog
- Sign up for our weekly trade newsletter
- Learn more at one of our many trade compliance education sessions
- Phone: 877.332.8534 (USA) or 888.538.1566 (Canada)
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- Blog – We invite you to visit the ‘Your Broker Knows’ Blog to learn more about trade and customs compliance. Leave us a comment or send us an enquiry at [email protected].