Sanctions and Embargoes: How are they Different?

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Most of us have heard of the terms “sanctions” and “embargoes”. They are often used interchangeably, but they are quite different.

Trade sanctions target specific types of transactions, as in a prohibition to sell arms to a specific business, country, government or regime. An embargo represents a complete prohibition of all trade activities between countries.

Sanctions and embargoes are political tools used throughout the world.

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Topics: Best Practices

The Test We Love to Hate: The Customs Broker License Exam

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Well, it’s that time again and even though it has been 15 years since I sat down to take “THE TEST,” it still gives me butterflies just thinking about it.

So, if you are taking the U.S. Customs Broker’s Exam on April 4th, whether it is for the first time or the fifth, I thought it would be nice to take a few minutes to remind ourselves why we take the test and what the best study tips are.

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Topics: Best Practices

Duty Drawback – Not Just for Returns

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Fancy cocktail toothpicks, yoga pants that do not leave much to the imagination, cell phone cases that are no longer in style, and cars that were washed and detailed by Hurricane Sandy while waiting at the port are just some of the items that were imported into the U.S. with the intention of being sold. Instead, they were disposed of and drawback claimed on the duties and fees paid.

People usually think of Drawback as merchandise that is imported duty paid, then exported without entering the commerce of the U.S. However, if the merchandise is not sellable due to damage or defect (or poor taste) the merchandise may be returned to the foreign vendor or destroyed in the U.S. and a claim for drawback of duties paid can be filed. Often it is more cost effective for a foreign supplier to write off the merchandise as a loss and pay for a destruction rather than bear the costs of shipping the items back to the country of origin. This is most common when the items are damaged beyond repair (water-filled automobiles), seasonal (holiday sweaters) or just plain out of date (last years’ cell phone case). 

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Topics: Best Practices, Duty Drawback

My Favorite Kind of Duty Drawback

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What do treadmills, party decorations, stereo equipment, and fun, sleeved blankets have in common? 

These are all products that have appeared on duty drawback claims that have been filed with U.S. Customs. Many everyday products that are sold in the U.S. are also sold in other countries. Items that are imported duty-paid into the U.S. prior to moving to their final destination outside the U.S. are eligible for a duty refund. 

If a company wants to import 6,000 fun, sleeved blankets in November the company must pay U.S. duty and fees on all 6,000 blankets. If the company has the intention of only selling 1,000 in the U.S. for holiday family pictures and chooses to send 5,000 to Canada for the start of indoor curling season, the company can get a refund of 99% of the duties and fees paid on the 5,000 blankets exported to Canada to warm those stylish curling fans. 

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Topics: Best Practices, Duty Drawback

Free (Trade) Lunch

Free (Trade) LunchWhen I was growing up my father had a few signs posted on the door of his office and one that said ‘There is no such thing as a free lunch’. As a young child, I remember being confused by it and once I understood its implication as a teenager I was annoyed by it. It implied that I was going to have to actually do something to get something good. When seeing what often happens with Free Trade Agreements (FTA) usage in Asia, I sometimes think of that phrase and wonder how companies, and trade compliance officers, forget that they have to actually do something to reap the benefits of the FTA. 

In the past couple months there have been a few public announcements by Customs agencies in Asia related to investigations into misuse of some of the FTA in the region as well as other preferential duty programs. In Thailand, a special investigation is trying to collect over $400 million USD in retroactive duties and penalties from a couple of global automotive companies. This is an unprecedented amount of money. In India, a global consumer electronics company is on the line for over $45 million USD due to apparent violations of the ASEAN-India FTA. 

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Topics: Best Practices, Risk