A Challenge to Shippers Who Would Never Dream of Controlling the Insurance
 

Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.

Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.

How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.

Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions

What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).

How will your claim be handled? If insurance is arranged overseas, will you be forced to  deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.

Every Shipper Needs Cargo Insurance

Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:

Ocean Carriers         $500 per shipping unit
A shipping unit may be defined as one ocean container.

Air Carriers                $9.07 per pound

Truckers                     $.50 per pound

The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.

 
 
 
[Billing Code 3290-F9]
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
 
Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices
Related to Technology Transfer, Intellectual Property, and Innovation
 
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of modification of action.
________________________________________________________________________
SUMMARY: In accordance with the direction of the President, the U.S. Trade Representative (Trade
Representative) has determined to modify the action being taken in this Section 301 investigation by postponing the date on which the rate of the additional duties will increase to 25 percent for the products of China covered by the September 2018 action in this investigation. As set out in this notice, the rate of additional duty for the products covered by the September 2018 action will increase to 25 percent on March 2, 2019.
 
DATES: On March 2, 2019 at 12:01 am Eastern Standard Time, the rate of additional duty will increase to 25 percent with respect to products covered by the September 2018 action.
 
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Assistant General Counsels Arthur Tsao or Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on customs classification or implementation of additional duties on products covered by the September 2018 action, contact traderemedy@cbp.dhs.gov.
 
https://ustr.gov/sites/default/files/enforcement/301Investigations/Notice_of_Modification_of_Section_301_Action.pdf
 
If you have questions or need assistance with this matter, please contact your BOC Representative.
  

Deal Reached for Delay in Increase of List Three Section 301 Tariffs
 
 
Although this announcement has not been published in the Federal Register at this point, the White House has announced that there is a 90 day delay from December 1 before the tariffs may increase to 25%.  Thus, there is a reprieve until March 1.  We will watch for the Federal Register formal notice confirming this, and will publish it once we see it. Meanwhile, below is an announcement from Customs attorney Paula Connelly.
Please contact your BOC Representative, if you have any questions.
 
LAW OFFICES OF PAULA M. CONNELLY
100 Trade Center
Suite 660
Woburn, MA 01801
781-897-1771, paula@connellycustomslaw.com
 
President Trump and Chinese President Xi Jinpeng reached a deal at the G20 Summit in Buenos Aires over the weekend which will suspend the proposed increase to 25% for products on “List Three” under the Section 301 investigation.   The tariffs will remain at 10% after January 1 as a result of China’s agreement to start purchasing a “very substantial” amount of agricultural, energy and industrial goods.
 
The U.S. and China will also begin negotiations on “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture” according to the report.  The parties have agreed to try to complete the transaction within the next 90 days.  If the agreement is not reached within 90 days, the 10% duties will then increase to 25%.
 
Thus, companies faced with a potential increase in the Section 301 duties to 25% now have a 90-day reprieve which began on December 1 and will end on March 1.  Keep in mind the 10% duties remain in place. 
 
In addition, there has been no discussion on removal of the List One and List Two tariffs which remain in place.
 
At this time, there has been no announcement concerning potential exclusion requests for products on List Three.  According to a White House official, they do not believe an exclusion process will be allowed for List Three items while at the 10% rate of duty.
 
Exclusion requests for products on List Two are due by December 18.  Exclusion requests for products on List One are no longer being accepted.
 
If you have questions or need assistance with this matter, please contact our office.
 
 
 

 
Are You Import/Export Compliant? 5 Best Practices
 
Importing/Exporting is a privilege – not a right. An Importer’s/Exporter’s failure to be compliant with all the U.S. rules and regulations that govern import/export business transactions can result in having those privileges immediately suspended. It does not matter if the importer, exporter, Customs Broker or freight forwarder is non-compliant because of his/her lack of industry knowledge or because of being disorganized, lazy, or apathetic towards the rules set forth, the result is the same – a loss of that privilege to import/export. To ease your concern of whether or not you are in sync with proper import/export compliance procedures, here are 5 Key Compliance Checkpoints Customs Border and Protection looks for:
 
Control Environment: Do you have your management’s commitment? Can you access Executives for needed resources?
 
This checklist component requires that a commitment to compliance is clearly demonstrated by yourself, your company’s management team, and your hired Customs Broker. This commitment is validated by having a formal statement of your corporation’s policy regarding CBP protocols. In addition, organize an actual, formal, visible Customs Group who can collaborate with your other departments as needed and who have access to your Executives (who need to be knowledgeable regarding key import statistics and suppliers).
 
Further, if your management is truly in sync with being compliant, your company will also have a statement from its Board of Directors that designates authority and responsibility to the Customs Group handling your import transactions.
 
Risk Assessment: Do you have internal goals that manage and/or reduce risks?
 
This factor requires you to be proactive and able to identify and analyze potential risk, as well as be able to develop internal goals to handle those risks. It is imperative that you conduct pre-entry reviews and compare them to the goals you have established to ensure any risk is reduced and/or eliminated. Have a plan to determine specifically how risk areas will be managed.
 
Control Activities: Do you have formal policies?
 
It is imperative that you conceptualize, implement, and update formal policies and procedures for your import management team so that goals are clearly established. Verify the accuracy of the internal control manual; modify controls that aren’t effective or efficient and share changes and updates with your Customs Group. Specifically and clearly define (in your job descriptions and staff expectations) who is accountable for what. In addition, another control activity encompasses developing compliance requirements for your suppliers. You will need to develop purchase agreements and controls to ensure that all transactions through CBP are accurately processed, valid, and properly authorized. When applicable, have your suppliers provide regularly reporting information. Another point under this section is establishing an organized, user-friendly recordkeeping program.
It should create a detailed audit trail commencing at production control all the way through payment to the border entry.
 
Information and Communication: Do you provide formal training programs?
 
You cannot expect the absolute best (and complete, error-free import compliance transactions) from your employees if they were never trained properly. It is your responsibility to ensure they receive current and ongoing training. In addition, you must be sure all staff members consistently receive any/all updated corporate, industry, and/or CBP information.
 
Monitoring: Do you conduct internal control reviews?
 
In order to assess the performance quality of your various import/export-related business units, you need to periodically review them through announced and unannounced audits.
 
To be successful (and compliant) as an Importer, encourage a team environment among all the individuals involved in the import process. Foster a sense of cooperation, communication, and collaboration with CBP Client Representatives; encourage your team to view them as partners in the whole process.
 
 
 
 
Please let your BOC Representative know if you have any questions, or need any help, with compliance. We are here to help!

Dear BOC Customer,
 
Due to the new US Government increased tariffs, BOC is offering its clients three options in regard to managing the new increased U.S. Customs Duties and Taxes paid on imported cargo:
 

1. Sign up for the free ACH direct pay program with U.S. Customs. This is the most secure, compliant and economical option. It is free, and customs gives you extended monthly credit terms.

2. Pre-pay BOC duties via ACH before arrival and release of the goods.

3. Pay BOC an outlay fee of 5% on all duties (min $25) with NET 10 days terms.

 
In regard to the ACH direct pay advantages, please note the below.
 

1. Eliminates the “pass through” person and you pay customs directly. This assures customs get paid timely and in full.

2. When using US Customs’ ACH Direct along with the optional Periodic Monthly Statement (PMS) payment program, the direct importer will net longer payment terms on average than the credit terms BOC allows.  ACH direct Periodic Monthly Statement gives the direct importer the ability to pay duties for goods that are released during a given month as late as the 15^thworking day of the following month.  This not only provides additional flexibility in the management of your working capital but provides significant cash flow advantages with some entries getting up to 45 days credit depending on the day the entry is cleared.

3. 68% percent of all duty payers are utilizing Periodic Monthly Statement as it is now an industry “best practice”.

4. Most custom brokers are now charging a fee on duties because of the large percent increases on the monies being outlaid due to the new import tariffs. BOC will also be implementing an outlay fee program in 2019. Starting January 1, 2019, all customers will be charged a 5% outlay fee for any duty outlay unless duties are prepaid before arrival or the customer has joined US Customs’ ACH direct program.

 
Thank you for all your support and the partnership to date. We appreciate you considering to join the US Customs ACH Direct and PMS programs. Please contact your local BOC Office or Sales Representative with any questions.
 
Thank you,
BOC International, Inc
 

Highlights from BOC’s Port Tour and Logistics Seminar on Friday, October 19, focusing on Industry Updates and 301 Tariffs
(see previous BOC Blasts for additional details – visit www.bocintl.com to access previous BOC Blasts)
 
Tariff List 3 – currently at 10%; scheduled to rise to 25% on 1/1/19 (see previous BOC Blasts for additional details) – there is no intermediate tariffs at this point, until/unless something changes, ie, all products on List 3 are an additional 10% now, 25% January 1.
 
Tariff List 2 – the final date for filing a request for exclusion from List 2 is December 21, 2018. It is strongly recommended, if you make an exclusion request, to NOT just complete the request form, but to really make a case for why an exclusion should apply – make sure your reason fits into one of the reasons provided.
 
From the Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2018-09-18/pdf/2018-20246.pdf
“each request specifically must identify a particular product, and provide supporting data and the rationale for the requested exclusion. USTR will evaluate each request on a case-by-case basis, taking into account whether the exclusion would undermine the objective of the Section 301 investigation. Any exclusion will be effective starting from the August 23, 2018 effective date of the additional duties, and extending for one year after the publication of the exclusion determination in the Federal Register. In other words, an exclusion, if granted, will apply retroactively to the August 23 date of the imposition of the additional duties.”
 
Reasons include (in summary):
 

• Whether the particular product is available ONLY from China
• Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor
• Whether the particular product is strategically important or related to “made in China 2025” or other Chinese industrial programs

 
Tariff List 1 – the exclusionary period has closed, no more requests are being taken.
 
Changing country of origin to avoid additional tariffs – It is permissible to move production to another country, not China. However, if you are looking to make a country of origin change, you cannot simply move the product through another country. That is not sufficient to change the country of origin. CBP looks at where a “substantial transformation” takes place, ie, did the product change sufficiently in the other country to now make it country of origin Taiwan, instead of China.
 
Apply for a binding ruling if you are not sure. CBP is NOT going to look at these types of issues in the favor of the Importer making a change and avoiding the tariffs, without it being clear that another country really is the country of origin (not China).
 
From US CBP Information Center:
 
The term “substantially transformed” means, with respect to a good(s) or a material(s), changed as the result of a manufacturing or processing operation so that:
 

• The good(s) or material(s) is converted from a good that has multiple uses into a good or material that has a limited uses
• The physical properties of the good or material are changed to a significant extent
• The operation underdone by the good(s) or material(s) is complex by reason of the number of processes and material involved and the time and level skill required to perform those processes
• The good(s) or material(s) loses its separate identity in the manufacturing or processing operation

 
For further information on what constitutes a substantial transformation or to ensure your goods are eligible for the provision, contact an Import Specialist at the port through which the goods will be imported.
 
Time of Entry – 19 CFR § 141.68 – this is the area where there still seems to be a lot of confusion, even within CBP and among different ports; we are seeing the law being interpreted differently, with regards to the increased tariffs. Importers want their goods to have been entered prior to the September date for the new tariffs. However, some ports have used date of entry filing, but others have used actual arrival date into the first US port. BOC has seen, first-hand, entries being handled both ways. BOC will do everything we can to help clarify the situation for you, but we are not attorneys. If you have legal questions, you may want to consult your attorney.
 
19 CFR § 141.68 defines “Time of entry” as the following:

1. When entry documentation is filed without entry summary.When the entry documentation is filed in proper form without an entry summary, the “time of entry” will be:

• The time the appropriate CBP officer authorizes the release of the merchandise or any part of the merchandise covered by the entry documentation, or
• The time the entry documentation is filed, if requested by the importer on the entry documentation at the time of filing, and the merchandise already has arrived within the port limits; or
• The time the merchandise arrives within the port limits, if the entry documentation is submitted before arrival, and if requested by the importer on the entry documentation at the time of submission.

142. When entry summary serves as entry and entry summary.When an entry summary serves as both the entry documentation and entry summary, in accordance with  142.3(b) of this chapter, the time of entry will be the time the entry summary is filed in proper form with estimated duties attached except as provided in § 142.13(b).
143. When merchandise is released under the immediate delivery procedure.The time of entry of merchandise released under the immediate delivery procedure will be the time the entry summary is filed in proper form, with estimated duties
144. Quota-class merchandise.The time of entry for quota-class merchandise will be the time of presentation of the entry summary or withdrawal for consumption in proper form, with estimated duties attached, or if the entry/entry summary information and a valid scheduled statement date (pursuant to  24.25 of this chapter) have been successfully received by CBP via the Automated Broker Interface, without the estimated duties attached, as provided in § 132.11a of this chapter.
145. When merchandise has not arrived.Merchandise will not be authorized for release, nor will an entry or an entry summary which serves as both the entry and entry summary be considered filed or presented, until the merchandise has arrived within the port limits with the intent to unlade.

BOC NOTE: “within the port limits” is where the argument/disagreement seems to be happening, and Ports are not applying this standard consistently.

President Signs Miscellaneous Tariff Bill (MTB) Act of 2018 – Cuts or Eliminates Tariffs on 1,660 Items
By John Brew, Frances Hadfield, Aaron Marx & Edward Goetz on September 14, 2018
 
On September 13, 2018, President Trump signed the Miscellaneous Tariff Bill (MTB) Act of 2018 (MTB), which temporarily reduces or eliminates import duties on specified raw materials and intermediate products used in manufacturing that are not produced or available domestically. It is intended to ensure that U.S. manufacturers are not at a disadvantage to their foreign competitors when sourcing manufacturing components.
 
The American Manufacturing Competitiveness Act of 2016 (AMCA) directed the International Trade Commission (ITC) to establish a process for the submission and consideration of MTB petitions for duty suspensions and reductions. It required the ITC to submit preliminary and final reports on the petitions to the House Committee on Ways and Means and the Senate Committee on Finance (Committees). The ITC’s preliminary report was submitted on June 9, 2017 and the final report was submitted on August 8, 2017. On September 4, 2018, the House agreed to Senate amendments, moving the legislation to the president for signature. The current MTB petition cycle is now complete. The next MTB petition cycle, for 2021 through 2023, will begin not later that October 15, 2019.
 
The duty suspensions and reductions are effective for goods entered or withdrawn from a warehouse for consumption on or after October 13, 2018, which is 30 days after the date of the enactment.  The suspensions and reductions will last until December 31, 2020. All of the MTB provisions are in subchapter II to chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). This language was added in a Federal Register Notice on August 16, 2018 (83 Fed Reg 40,823 at page 40,825). The notice also created a new U.S. Note 20(c) to Subchapter II of Chapter 99, HTSUS.
 
Of the 1,660 items are covered by the new law, roughly half are produced in China. Therefore, overlap between the MTB list and the Section 301 tariffs in effect, and those being considered exists. Goods originating in China are still subject to relevant Section 301 tariffs.  On August 21, 2018, U.S. Customs and Border Protection (CBP) issued a message stating, “Products of China that are covered by the Section 301 remedy and that are eligible for special tariff treatment…or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 25 percent ad valorem rate of duty imposed by headings 9903.88.01 and 9903.88.02.