No one wants to really talk about trade compliance or acknowledge if it is lacking or non-existent. Not only is trade compliance an overwhelming and complicated mix of regulations, it is also something that puts most people to sleep! Often times employees think someone else is handling import compliance, but nobody is fully dedicated to it.
The fact of the matter is that import compliance needs to be prioritized before it is too late. As a business leader you need to know if your team needs import compliance training, and you can ask these 10 questions to find out if you need training:
- Do You Have Formal Policies and Procedure For Import Shipments?
- Do You Have A Training Program For ALL Employees Involved In The Import Process?
- Do You Have An Internal Control Review For Import Shipments?
- Are You Sure Your Classifications Are Correct And Have A Database With Rationales, Or Do You Rely On Your Customs Broker To Classify For You?
- Do You Audit Your Customs Entries?
- Do You Import Products That Require Clearance From Partner Government Agencies?
- Do You Participate In Any Free Trade Agreements?
- Do You Have A Record-keeping Program For Import Shipments?
- Are You Sure The Value You Are Declaring Is Correct And In Compliance With Customs?
- Are You Sure You Are Declaring The Correct Country Of Origin On Your Merchandise And Have It Appropriately Marked?
Thinking About Trade Compliance In Business
Customs takes compliance very seriously. If Customs finds anything not complying with the rules and regulations, you can face seizure of the merchandise, monetary penalties and even legal action.
One example of this is Satisloh. Customs had found that the company was providing false descriptions, tariff classifications and/or duty rates to CBP for entries of certain machinery and repair parts. Customs accepted an offer in compromise from Satisloh, but it still cost the company $3,320,425 for their violations.
Another example is a company importing children’s summer toys. The light dive sticks were found to be in violation of the Federal Hazardous Substances Act and bubble guns with lights and water cannons were found to be in violation of the Consumer Product Safety Act. Customs seized this entire shipment. These regulations are aimed at protecting consumers.
Trade Compliance needs to be at the forefront of any size business that imports shipments. Don’t let it become an afterthought.
No one wants to have a shipment held up, receive an unexpected audit notice from U.S. Customs, or receive a bill for a fine, penalty or liquidated damages. Having the proper training can be substantial cost savings for your company in many ways.
These 10 questions can help you determine if import compliance training is right for you.
1. Do You Have Formal Policies and Procedure For Import Shipments?
If your response is “No,” “Maybe,” or “I think so,” then it is time to take a look, and if you don’t have policies, you should invest in developing and establishing an Import Compliance Manual.
Once a compliance manual is developed, do not just put it on the shelf and say, “Yep, we have one” and check it off the list. To be a compliant importer and maintain reasonable care with Customs, you need to review your manual annually to ensure no changes need to be made and that the policies and procedures are current with CBP regulations.
If you don’t have a formal policy and procedure for import shipments, then you are not fully compliant and subject to risk. Having formal processes in place and the proper training is crucial to any import program.
2. Do You Have A Training Program For ALL Employees Involved In The Import Process?
Not all businesses have the luxury of one single person or even a dedicated group to oversee their customs operations.
Generally, import functions are divided up between several people, and it isn’t always their primary focus. Even a dedicated customs person or group still needs to have ongoing training.
The world of Customs is ever-changing to adapt to the evolving world. It is important to have employees that handle ANY customs business trained on the most current rules and regulations before you get hit with unexpected surprises from U.S. Customs.
Training is the best way to stay up to date to keep your business running smoothly and to protect it from being scrutinized by CBP. Customs rules and regulations can touch purchasing, finance, accounts payable, manufacturing, engineering, legal, and warehouse – to name a few.
All functions with import responsibilities should be trained appropriately. If you don’t have a training program for employees involved in the import process, then you need import compliance training.
3. Do You Have An Internal Control Review For Import Shipments?
Internal control reviews for import shipments are overlooked by most companies. It is crucial to be proactive with your import shipments starting at very beginning with your supplier/ vendor all the way through shipment delivery.
Knowing what is going on with your shipment and demonstrating reasonable care goes a long way. If you are ever part of a focused assessment by U.S. Customs, having internal control review policies and procedures can be a mitigating factor if any fines or penalties are issued by Customs.
Import compliance training can help you identify exactly what you need for an internal control review program and save you from the added stress of a customs audit.
4. Are You Sure Your Classifications Are Correct And Have A Database With Rationales, Or Do You Rely On Your Customs Broker To Classify For You?
It is the legal responsibility of the importer to have the correct classification when having a shipment cleared through Customs. An importer should NOT rely on the customs broker to classify items.
Brokers can only go by the description and might not know exactly what the merchandise is or does. Classification and correct merchandise descriptions are at the top of the list when it comes to Customs clearance.
When it comes to classification, the best approach is to have the proper training and knowledge of the general notes, section notes and explanatory notes for the United States Harmonized Tariff Schedule. If your classification is incorrect, then it could lead to the wrong duty and taxes being paid or even declaring a Free Trade Agreement that can’t be claimed.
It can also result in delayed shipments, increased inspections by U.S. Customs, or even fines and other penalties. Having the proper training can give you the confidence and skill to classify your items correctly and accurately- a critical aspect of import compliance.
5. Do You Audit Your Customs Entries?
What do you do with the Customs entries that your broker sends you, or do you even get anything… besides a bill? Do you know what to look for when and if you review them? It is important to establish a process when these documents are sent from your broker.
A procedure should be in place for handling any errors and reporting those to Customs. It is better to let Customs know about the error first, instead of them detecting it. If you don’t audit your Customs entries, you are putting the company at an increased risk for errors, delayed shipments, and potential violations.
Training on how to properly audit entries can help you avoid these things and identify inaccuracies and issues with your broker before Customs identifies them for you.
6. Do You Import Products That Require Clearance From Partner Government Agencies?
Your employees may need some additional training and knowledge for additional requirements for your goods. Do you import medical goods, food products, laptops, chemicals, cleaners, alcohol?
Do you know what other government agencies require or whether they regulate any of the merchandise you import? Not knowing what is required or how to clear the shipments can lead to delays in getting your shipments delivered to you or your customers.
Import compliance training can help you determine if your products need additional clearance from partner government agencies.
7. Do You Participate In Any Free Trade Agreements?
Do you already take part in Free Trade Agreements (FTA) or think that maybe your goods could possibly qualify for a Free Trade Agreement?
This is another area that requires training to know the rules and regulations on each of the FTA’s. Free Trade Agreements are a great money-saving tool that businesses can take part in and pay little to no duty when importing from a country with a Free Trade Agreement in place.
The regulations can be complicated, especially if you don’t have an expert in your company that knows how you can take advantage of the Free Trade Agreements.
Not knowing what or how to do so accurately could lead to additional information being requested by Customs and a loss in potential duty savings. Proper training in this area is essential to ensure that you are demonstrating reasonable care in claiming any Free Trade Agreement.
8. Do You Have A Record-keeping Program For Import Shipments?
Importers are required to retain documentation for their import shipments.
- Do you have a policy and procedure on how and where these documents are kept?
- Do you know what documents you need to keep and for how long?
- Are your employees aware of Customs regulations on recordkeeping?
If your answers are no, maybe, or kind of- then you need some training. Don’t wait for Customs to send you an audit request or a request for documentation on a certain entry.
If you don’t have a proper recordkeeping program and fail to maintain, store or retrieve a record demanded by Customs, then you could be assessed an administrative penalty for EACH document that is not produced, which could end up very expensive.
9. Are You Sure The Value You Are Declaring Is Correct And In Compliance With Customs?
Valuation is another extremely important factor when it comes to Customs entries and clearance. Declaring the correct value for Customs is essential in compliance because it determines the duty rates.
If you fail to declare the correct amount, you could end up with an additional bill when Customs liquidates the entry.
- Do you know there are six different methods to determine the value of merchandise?
- Do you know which method Customs prefers?
- Are you positive that your values are accurately declared when your shipment clears Customs?
If you are unsure if the value of your declaring is accurate, you could definitely benefit from import compliance training.
10. Are You Sure You Are Declaring The Correct Country Of Origin On Your Merchandise And Have It Appropriately Marked?
Making sure that the correct country of origin is reported is very important for U.S. Customs clearance. The country of origin can dictate several other factors for entry.
- Do you know what those factors are?
- Did you know that all articles being imported need to be properly marked with the country of origin?
- Do you know if your goods go through a substantial transformation that would change the country of origin?
If articles are not marked properly, they could be subject to additional duties. You could also face fines or penalties, not to mention significant delays with your shipments. Being trained in import compliance can help you know what factors the country of origin dictates and how to ensure your goods are properly marked.
We Work With You For Customs Compliance At Each Step!
Customs is an ever-changing world, and there is a lot to stay on top of. If you don’t have a dedicated person or group overseeing your Customs compliance, you could be in for a rude awakening just around the corner.
It only takes one shipment to have violations, and it could unleash a can of worms that you don’t want to open. Having the proper training can help you be more compliant and less likely to be assessed fines and penalties. If you have any concerns with your import compliance, contact us for a free consultation.
Shawna Karajic is a Trade Compliance Specialist for Export Solutions -- a full-service consulting firm specializing in U.S. import and export regulations.