U.S. Goods Return

One of my favorite stores is Costco because they have an incredibly great and free return policy. No questions asked, no BS, just take the product back for a refund within the allowed period. That easy and free return policy encourages me to spend more money with Costco than any other supermarket. Returning goods is mostly hassle free when it's being done through your local grocery store or shopping mall. Now let us talk how returning goods work when doing importation business with U.S. Customs Board of Protection. Returning goods back to the origin country where they are made after importing into the US is not so easy once they have been cleared to enter the Country. As an importer, it is important that all steps are followed and you do your homework to be sure all goes smooth and that the compliance guidelines are followed.

Here is a scenario: A Canadian company bought goods from a U.S. company several months ago. They received their shipment and the goods were refused by the buyer because they did not meet their product specifications. All the packages and products remain the same. The goods can be returned to the U.S manufacture. Is this duty-free U.S. Goods return? The answer is yes.

Per 19 CFR 10.1, the HTSUS code 9801.00.10 is a special classification used for the duty-free importation of “Products of the United States when returned [to the USA] after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.” The last two digits of 9801.00.10 classification vary.  They are based on the length of exportation or importation of the article or on the original HTSUS classification of the article

So, based on the scenario above, what if they Canadian company accepted the goods and a few months later they wanted to return them back to the US? They re-processed the goods and re-manufactured them into a more advanced product since they've had them. Would these same goods qualify as a US goods return? The answer is no.

CBP Form 311

When clearing returning U.S. goods through Customs and Border Protection (CBP), the importer should file the CBP form 311- declaration of Free Entry of American Goods Returned and hand back to your customs broker. Please make sure that your manufacture has never applied the manufacture drawback on the item. The official form can be found here

Manufacture's Affidavit

For formal entries valued more than 2500 USD, manufacture's affidavit is also needed to further prove the ownership of the goods. U.S. Customs requires the affidavit to be on the U.S. manufacturer's letterhead and it must be signed by a C-Level corporate officer from the U.S. manufacturers facility. A properly worded manufacture's affidavit that is complained of 19 CFR 10.1 can be requested from your local customs broker.

Foreign shipper's declaration of US Goods return

This is completed by foreign shipper who ships the goods to the United States. CBP requires a declaration by the foreign shipper indicating that the products were not advanced in value or condition while outside the U.S. The form also needs to be signed by a C-level corporate officer from the foreign shipper company.

Proof of U.S Export

Another document will be deemed sufficient proof of export from the U.S. for U.S.-manufactured goods or foreign-origin goods provided that the information contained therein proves an export: a copy of the entry into the foreign country, U.S. export invoice or bill of lading/airway bill, or Electronic Export Information or Automated Export System filing the exemption.

If you are ready to ship a U.S goods return product, we would highly suggest starting to prepare the needed docs before you ship out. It takes some time to get the corporate officers signature. And you certainly do not want your shipment to experience delays.

American Lamprecht Advisory: IMO 2020

We want to keep you updated of the new regulations impacting our entire industry as of 1st JAN, 2020.

What is It?

The International Maritime Organization (IMO) has ruled that from 1st JAN 2020, that they will put a cap on Sulphur emissions for the marine sector in international waters. The marine sector will have to reduce Sulphur emissions by over 80% by switching to lower Sulphur fuels or by installing scrubbers. The current maximum limit for fuel oil Sulphur of 3.5 weight percent (wt%) will fall to 0.5 wt%. That is the largest one-time regulation in transportation fuel ever undertaken.

Why is everyone talking about fuel?

The marine sector consumes about 3.8 million barrels of fuel per day, responsible for half of the global fuel oil demand. The cost difference between IMO compliant and non-complaint fuels is significant. Ship operators that now need to change to a different fuel type, will now compete for fuel directly with truckers, railroads and airlines.

Who will be affected by IMO 2020?

It is expected to be a disruptor for the entire maritime industry. However, the level of impact is expected to vary from region to region, based on ship size, fuel cost and carrier readiness. The impact should start to be felt from Q4 of 2019 onwards. It is expected to last for a few years, as the shipping sectors adapt to the new rule.

What does IMO 2020 mean for our mutual business?

Growing demand for the new fuel type is likely to result in increased prices. The ocean carriers are unable to absorb the increased cost, so it’s expected that such costs will be passed on to the cargo owners. Based on that, either ocean freight rates will increase, or a surcharge will be implemented to recover such cost increases.

Will there be uniformity in the fee structure?

We are expecting to see a highly diversified way of carriers passing this cost along to the maritime industry. Therefore we are also expecting that there will be differences in amounts that Shipco will be forced to pass along to our customers. For FCL it will be a similar structure of how we are charged by carriers. For LCL shipments, we will review our average utilization and break the fee down to a CBM or TON additional that then is added to the invoice.

For additional information, please feel free to contact your local American Lamprecht Team.

Tariffs on All Remaining Imports from China to Begin Sept 1 along with the exemptions with no grace period

President Trump has announced that beginning Sept. 1 he will impose a 10 percent additional tariff on virtually all of the remaining $300 billion worth of goods imported from China that are not already subject to Section 301 tariffs (List 4 goods).

Initial indications are that the 10 percent tariff, which would be in addition to any other applicable tariffs, will be applied on the entire list (See attached “USTR 301 Proposed List 4”) of 3,805 full and partial subheadings announced in May. The Office of the U.S. Trade Representative said at that time that this list covers all apparel, footwear, and manufactured textile products, among others, but excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals. A Federal Register notice providing additional clarifying details is expected shortly.

Based on experience with List 3 goods, it is not expected that requests to exclude specific products from List 4 will be accepted while the tariff rate remains at 10 percent. If this rate is increased to 25 percent, which could happen if the administration deems it necessary to gain additional leverage in the ongoing U.S.-China trade talks, an exclusion process could be established.

The Office of the U.S. Trade Representative has issued a notice stating that the additional 10 percent tariff on List 4 imports from China will not be imposed on certain products that were removed for health, safety, national security, and other factors. A list of these products is available here. (See attached “USTR 301 Products Removed from List 4)
Additionally, the tariff will be delayed until Dec. 15 for products on List 4B. Those products are in the following tariff groups: cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
For products on List 4A, the tariff will go into effect Sept. 1. USTR also intends to conduct an exclusion process for products subject to the tariff.
- USTR List 4A (effective Sept. 1, 2019)  (see attached “List 4A Effective Sept 1, 2019”)
- USTR List 4B (effective Dec. 15, 2019)  (see attached “List 4B Effective Dec 15, 2019”)

The following additional details concerning the Section 301 additional 10 percent tariff that will be imposed on List 4 goods imported from China have been made available by the Office of the U.S. Trade Representative.
- The tariff on List 4A goods (see attached “List 4A Effective Sept 1, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Sept. 1. Such goods must be entered under HTSUS 9903.88.15.
- List 4A includes HTSUS numbers for which China’s share of U.S. imports from the world is less than 75 percent.
- The tariff on List 4B goods (see attached “List 4B Effective Dec 15, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Dec. 15. Such goods must be entered under HTSUS 9903.88.16.
- List 4B includes HTSUS numbers for which China’s share of U.S. imports from the world is 75 percent or greater.
- 25 HTSUS numbers (See attached “USTR 301 Products Removed from List 4) proposed for inclusion on List 4 have been removed based on health, safety, national security, and other factors.
- Any List 4A or 4B product eligible for admission under domestic status that is subject to the 10 percent tariff and admitted into a U.S. foreign-trade zone on or after the effective date of that tariff may only be admitted as privileged foreign status.
- The 10 percent tariff does not apply to List 4A or List 4B goods for which entry is properly claimed under a provision of HTSUS Chapter 98, except for goods entered under HTSUS 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80. For HTSUS 9802.00.40, 9802.00.50, and 9802.00.60, this tariff applies to the value of repairs, alterations, or processing performed abroad. For HTSUS 9802.00.80, the tariff applies to the value of the article less the cost or value of such products of the U.S.

Made in Vietnam or Made in China?

To get around the punitive tariff treatment, Vietnamese officials say China is intentionally mislabeling its products as "made in Vietnam".

"Dozens" of products have been identified, Hoang Thi Thuy, a Vietnamese Customs Department official, stated in Media, and goods like textiles, fishery products, agricultural products, steel, aluminum, and processed wooden products were most vulnerable to the fraud. "It will sabotage Vietnamese brands and products and it will also affect consumers. We could even get tariff retribution from other countries, and if that happens, it will hurt our economy," Foreign Minister Pham Binh Minh told the Vietnamese National Assembly last week.

Marking of the country of origin is super important in the importing It could be easy but it could be very complicated sometimes. For instance, phones and other electronics are tricky to have an origin country. You have a South Korean camera and RAM, a Japanese screen, a Taiwanese SOC, using Chinese PCB and miscellaneous electrical components (resistors, capacitors LED's, diodes, etc). All the components put together in Vietnam with American software on top. What is the country of origin? The thumbs of rule for determining the country of origin in 19 CFR Part 134.1

"If the article in question is not wholly manufactured, produced, or grown within a single country, then we must consider the source or origin of any component or material that is used in the manufacture, production, or assembly of the good, and whether the further work or material added to an article in a subsequent country effected a “substantial transformation” on that part, component or material, so as to render such other country the “country of origin” of the end product. "

***substantial transformation is a processing of foreign input result in an article with a new name, charter or use ***

.

Keep your financial transaction record and Country of Origin certificate

My current company has a coffee trading company importer client who sources coffee beans worldwide, particularly in GSP or Tariff preferred countries. Even importation document fully complained, the U.S custom still selects some shipment to the exam. One time they bring in coffee beans from Nicaragua in Central American and claim Dominican -Republic-Central America ( CAFTA-DR). The U.S custom sends a notice of action to request more information for this entry even it was admitted to the US 3 months ago. To properly trace back the growth in Nicaragua, the U.S Custom looks for affidavits from the growers of the product, as well as any affidavits from any middle-men (if a cartage company was used, etc.). In this case, a proof of payment transaction, such as check copy or wire transfer copy to manufacture, can be sufficient documentation to prove the product origin. Good that the importers keep the financial transaction record well. So the payment proof together with the country of origin certificate, they are well accepted by U.S custom.

The consequence of failure to mark COO

• CBP Officials may demand re-delivery and remarking to CBP custody at importer's cost even the shipment is released and admit to USA.
• Articals not properly marked will be subject to additional 10% of duties of final apprised value.
• CBP will issue liquidated damages to importers if the products cannot be redelivered
• Up to $5000 or 1 year imprisonment for any intentional removal, defacement, destruction or alteration of a marking of the country of origin.
• Increase the chance to exam importer;s subsequent shipment.

Country of origin marking is always one of the top focus in CBP checking list, particularly if the entry is related to Antidumping/Countervailing, quota/ Visa restriction, NAFTA, GSP, tariff preferential agreement, government procurement, etc. If any of these is being claimed, please make sure you have the certified country of origin ( the exporter can apply it from Chamber of Commerce), a properly formatted invoice with the country of origin word stuffing and consolidation parties that make sense to U.S Custom. The more completed information you can pass to your broker, the better chance you will have shipment clear in a timely manner.

Have questions? Let us chat!

By: Coco Yang / Licensed Customs Broker; ALTJFK Offices

HOW TO READ 7501 ENTRY SUMMARY TO FIND OUT HOW MUCH YOU PAY FOR DUTY, TAX AND OTHER FEES

I examine all my customs entries line by line. I question every line item that I am not familiarized before, to make sure I am not fooled by these acronyms.

Today I would like to show you some key elements you should pay attention to your 7501 entry summary for your the importation of each of your goods so you have a clear idea what duties and fees you are paying for.

You will first want to be navigated to the middle section where says 27- 28,29,30,31,32,33,34 ,35, 37,38,39,40. These sections give you a clear break down of the duties, taxes and miscellaneous fees.

Duty Payment

Harmonized Tariff Schedule of United States ( AKA: HTSUS ) number in section 29 is unified 10 digits number that determines your commodity goods duty rate. You can find the respective duty rate and calculated duty dollar amounts in section 33 and 34.

I suggest every importer should do some good research before placing international orders. Inaccurate tariff number misrepresentation can be very risky to your business. Either you overpay the duty payment that you could have avoided on you you short pay the duty payment and then when US Customs audit or liquidate your entry, you end up paying back the difference anyway plus any applicable interests and penalties.

Tips on saving duty payment : Duty rate is only based on dutiable invoiced value. In another word, not-dutiable charges including freight charges, insurance cost, booking fee, etc. If you pay the charge to the seller and it is not related to products, you should separate them in the invoice so that your broker can make proper non-dutiable payment deduction. Section 32 B CHGS means non-dutiable charges

Internal Revenue Taxes

If you import tobacco and liquor, you will find applicable Internal Revenue ( AKA I.R) tax rate in section 33 C and Internal Revenue tax dollar amount in section 34

Anti dumping or Countervailing Fee

Certain products such as in-shell pistachio nuts from Iran, Diphosphonic acid from China is subject to Antidumping. If your importing product is subject to AD/CD fee, you should think twice before you import because these fees are quite high. You can find AD/CV fee in section 33 B, AD/CV case number in section 29 B

Merchandise Processing Fee

Merchandise Processing Fee （ AKA: MPF), often neglected by us, is a mandatory fee charged by U.S Board of Protection to process the importation of your goods.

If your commodity worth USD 2500 or more, MPF formal entry fee is 0.3464% of your dutiable invoiced value or minimum 26.67$ whichever is higher OR 0.3464% of your dutiable invoiced value or maximum 508.7$ whichever is lower.

If your commodity worth less than USD 2500, MPF informal entry fee is a set fee and ranges from $2.00, $6.00 or $9.00 per shipment.

You will find MPF fee in the area beneath section 29.

Harbor Maintenance Fee

Harbor Maintenance Fee ( AKA: HMF), often neglected by us too, is a mandatory fee charged by U.S board of Protection for majority Ocean Cargo. It is deposited into Harbor Maintenance Trust fund, from which Congress may appropriate amounts to pay for harbor maintenance and development projects and related expenses. \

Regardless of your entry type, HMF is 0.125% of your dutiable invoiced value.

You will find HMF fee in the area beneath section 29

Other Fee

There are some other miscellaneous fees like cotton fees, sugar fee, beef fee, potato fee, pork fee, mushroom fee, etc. Check with your customs broker for the details. These fees will be listed in the area beneath section 29.

A 7501 entry summary is like a financial statement to outline the duty, taxes and miscellaneous fees that you are paying for. Next time when you get a bill from your broker, don't forget to always ask for your 7501 entry summary!

Domestic Transportation Talk

Diesel Fuel Prices

+0.3%$2.97 / gallon national average.

Jan 27 - Feb 12 - Even though arctic temperatures drove prices up in certain lanes last week, national average rates fell for vans, reefers and flatbeds. Demand, however, has not declined, as total freight volume was higher in January than in December. Last week load-to-truck ratios increased for all three equipment types.

A Troubled Landscape

There has been a definitive shift in liability exposures experienced by property brokers, freight forwarders and direct shippers over the last few years. For example, a domestic load involving serious injury or death used to be settled within the limits of a trucker’s auto policy. Additionally, a lawsuit may have followed against the carrier resulting in a judgment for the injured party. However, recent landmark settlements have involved not only the carrier but the transportation intermediary, customs broker and the shipper as well. Many of these cases have successfully obtained judgments in excess of $5,000,000 from the intermediaries involved. (source: Roanoke Trade)

Use the below information to help determine the best approach to selecting a trucking carrier for LTL, FTL and Drayage:

Verify the Carriers Authority

            Use the FMCSA website to verify the information provided by the carrier.

https://safer.fmcsa.dot.gov/CompanySnapshot.aspx

Each carrier must have a USDOT number and MC number. Request copy of their Authority. Enter number on website and verify that carrier is active and addresses match etc.

Verify Carrier Safety Rating

            Use the FMCSA website to verify safety data.

            https://ai.fmcsa.dot.gov/SMS/

This will give you a basic snapshot of carrier. Safety rating, number of trucks, types of violations, etc. Decide if carrier is good enough for Lamprecht freight and save docs. to show that you reviewed the information.

Verify Insurance

Request certificate of insurance from carrier showing American Lamprecht Transport, Inc. as certificate holder. Carrier should have $1,000,000 Liability minimum and $5,000,000 if HAZMAT. Most carriers only have $100,000 cargo. Some states require a workers comp. $500,000. General Liability is good, but most carriers do not have a policy.

Remember to tell your customers and friends about our Truck Freight Brokerage Service. Send quotes and requests to LGS@Lamprechtusa.com

Chain of Command and Open-Door Policy: How they work together in Corporate Culture

Chain of Command is a term I learned long ago from my Air Force days.  They teach this in the military early on and stress the importance of it, especially of it's use during periods of War.  Essentially, the chain of command is the line of authority and responsibility along which orders are passed within military ranks and between different units.  Orders are passed down the chain of command, from higher ranked military personnel to lower ranked military personnel until those orders are received by those who implement them.  Similarly, requests move up the chain of command until they reach the individual who has the authority to make decisions regarding a particular type of request. This being said, even a chain of command is practiced in Corporate Culture.  As an employee, no matter where I'm employed, I respect and expect those with proper authority to take charge and make decisions with confidence based on the position they hold while simultaneously taking directions and orders that are passed down to me.

Now that we have established a chain of command, lets examine open-door policy.  Many companies I've worked for like to say they have one, and lets be honest, in their minds they think it's a great sell and is popular. But is it all just a sham?  Speaking from experience, I think it's simply lip service, I mean lets be real!  This means that I can speak to the company CEO at any time and my voice will be heard? I can literally speak to my boss about my opinions or suggestions and be heard and be taken seriously?  From my experience, open-door policy is a program implemented but is very limited in practice to mean much of anything.  Some of my managers doors HAVE been open, just so long as I'm respectful, and by respectful I mean "respectful" with an opinion or suggestion that fits in with their OWN policies and rules. 

Lets discuss further, what is a true open-door policy?  What does it really mean to me? Does it mean I can go into the office of my boss and tell him or her your company sucks?  Does it mean I can say absolutely anything without the fear of being reprimanded for what I say? And what if i go to my boss's boss and tell him or her that my boss sucks?  Let's examine further, what about the other way around?  What if my boss's boss comes in and tell me that my boss sucks or the company sucks?  Should him or her even be speaking to me like this?  Shouldn't they be going to their boss directly?

I know what an open-door policy means to me, and when our company began instituting it I had an epiphany. It truly does mean different things to different people, although I'm not quite sure why it has to be so complicated.  But for all intense and purposes lets take a look at the definition. Feel free to google it yourself, but I'll give you the short version right here straight from Wikipedia:

1. An open-door policy is a communication policy in which a president or supervisor leaves their door "open" in order to encourage openness and transparency with the employees of that company. 
2. As the term implies, employees are encouraged to stop by whenever they feel the need to meet and ask questions, discuss suggestions, and address problems or concerns with management. 
3. An open door policy is typically intended to foster an environment of collaboration, high performance, and mutual respect between upper management and employees.
4. An open door policy means, literally, that every manager's door is open to every employee.  The purpose of an open-door policy is to encourage open communication, feedback, and discussion about any matter of importance to an employee. 

Although I do like the definition that Wikipedia gives, it fails to mention one thing....does an open-door policy mean that the boss or CEO could come to his/her employees of the company and also openly address problems or concerns or ask about problems or concerns?  This part isn't mentioned at all, should we assume it isn't part of the definition?  Or is it that the definition assumes no permission is needed by the boss/CEO to ask anyone anything?

Wikipedia has it right, that the purpose of a "true" open-door policy is to encourage open communication, feedback and discussion about any matter of importance to any employee no matter what position they hold within a company. All people who work in a company are considered employees.  The definition does therefore include upper management.  If it didn't, the definition would read, "As the term implies, employees, with the exception of management employee,...".  But they never excluded management employees, so, taking the definition at it's literal meaning, the purpose of the open-door policy would extend to the CEO or any manager being free to speak to anyone in the company.  One would also assume, if you go by strictly what the definition reads, that any communication from any employee in an open-door policy should happen without fear of being reprimanded or retaliated against.

I've discovered since the policy went into effect, that some employees would like to say something to the CEO, but they don't dare upset their direct boss who happens to report directly/indirectly to the CEO. They fear retaliation for doing so.  Much worse, if the CEO calls them or ask them to come to his office, they exhibit being visibly uncomfortable.

An open-door policy is only an open door policy if it is intended to meet the standard of having open lines of communication, feedback and discussion of any matter of importance including matters of disagreement.  Management can easily mis-interpret their employees speaking to their boss's boss as a threat to their authority, and if the manager feels it is a threat, then they don't truly have an open-door policy.  A manager who feels threatened and is upset with an employee speaking to the boss's boss, is a form of reprisal no matter how you look at it, even if it isn't explicit.

It's also not an open-door policy if the boss's boss undermines the authority of his subordinates in any way.  So, lets examine what it means to undermine the authority of a manager with a subordinate employee.

Does it undermine authority if the boss's boss acknowledges he/she is not a fan of something their boss is doing, or that the boss's boss is not in agreement with a policy or action of their boss? Some would argue that it indeed undermines someone if the big boss has an opinion conflicting with the opinion to whom the employee reports too. Would you agree this creates some sort of a dilemma?  My answer would be no, there should be no dilemma. You can't have any person's decisions, opinions, or thoughts limited by the position they hold within a company, and at the same time, honestly maintain that your company has an open-door policy. The undermining of authority does not occur when the boss's boss has an open and free exchange that expresses his/her thoughts which don't agree with the boss of the subordinate.  Undermining authority, in my opinion, can only begin when he allows his/her authority to be higher or greater than the authority of the person the employee reports to. An opinion is just that, an opinion and not an action!  An opinion is also not a direct order or a command to follow.  It is just an opinion to be shared rightfully in a free and open exchange of ideas. After all, open and free exchange of ideas is what an open-door policy is all about. If everyone who is part of a conversation can't speak freely, then you really have a one sided and disingenuous conversation.  That is in turn, not a true open-door policy.

To have a true open-door policy, the corporate culture has to be healthy enough to foster the healthy environment where people can agreeably disagree.  A company that thrives to have an open-door policy does not seek to quite dissent or disagreement. Doing so would put them at risk for increased intolerance towards others ideas resulting in less productivity and a non conducive work environment. For it to actually work, the corporate culture must be a culture where the company demands employees have respect for opinions that aren't in line with their own. Respect means that anyone is free to have a different opinion, and free to voice that opinion, regardless of the position they have in the company and to whom they share the opinion or opposing views with.  A true open-door policy can also only work if the chain of command is strictly enforced by management.  If an employee does not report directly to the manager, then the views, opinions, agreements or lack of agreement should not be interpreted as a directive. If by chance any employee tries to surpass the chain of command by using the open-door policy, it is incumbent on all parties to immediately call it out and make the correction.

In summary, having an open-door policy is an amazing thing but only if it's a true open-door policy.  Think of the Supreme Court of the United States. The nine justices are made up of people who have totally different opinions and view points, they are constantly agreeing to disagree as part of their everyday activities. However, this healthy environment is essential for them to operate and find common ground to work together towards solutions for the greater good. As a company, having an open-door policy demonstrates your accessibility, encourages open lines of communication and ideas, allows fast access to important or just happening situations and creates an overall closer working relationship with it's employees. My door is always open, how about yours? :)


Written by: Laura Skrobanek