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Making Free Trade Agreements Work for You (NAFTA, CAFTA, TPP, etc.) August 8 th , 2016 Rennie Alston Tom Gould
Making Free Trade
Agreements Work for You
(NAFTA, CAFTA, TPP, etc.)
August 8th, 2016
Rennie Alston
Tom Gould
Making Free Trade
Agreements Work for
Importers of Record
Rennie Alston, CEO
American River Group of Companies
Rennie Alston
Chief Executive Officer
American River Group of Companies
Mr. Alston is Chief Executive Officer of American River Group of Companies and
President of American River Brokerage Services Ltd., a premiere international trade
and logistics consulting firm. He is also the founder, CEO, and President of The
Alston Group. Mr. Alston is regarded as a premiere Customs Regulatory expert,
licensed customhouse broker, and Global Security Specialist, who holds over thirty
years of interactive work experience with the Bureau of Customs and Border
Protection.
In 2010, Mr. Alston received his Master Certification from the International Chamber
of Commerce in Paris, France as a Master Trainer of the International Commercial
Terms. Mr. Alston has provided Incoterms training for the United Nations global
purchasing and procurements managers from all four regions of the globe. Mr.
Alston began his career with United Customs Inc. as an import manager. He later
became a senior account representative for The Wilson Group USA. Mr. Alston then
served nine years as Brokerage Manager for Nippon Express USA. Respected and
noted throughout the international trade community, Mr. Alston is considered an
expert in the area of Customs Regulatory issues and Compliance Management.
Roles and Responsibilities
• Importer of Record- To provide correct and
complete information to CBP necessary for
compliant entry declaration reporting.
• Customs Broker- To obtain correct and
complete information from the importer of record
necessary for compliant declaration reporting.
• CBP- To reach a final determination of value
and classification on imported articles
Common Practices of
FTA Management
• Importers allow their customs brokers to make FTA claims on their behalf based on origin factors listed on the commercial invoice
• Purchasing departments source goods without clear understanding of the origin eligibility factors for the specific FTA agreement
• Brokers assume that Importers have done their due diligence on the eligibility status for FTA declaration
• Importers rely on common knowledge rather than compliant knowledge of FTA eligibility
Compliant Practices of
FTA Management
• Informed compliance on specific eligibility criteria for each Free Trade Agreement being considered by the importer
• Detailed discussions with foreign supplier on their ability to meet documentary requirements of eligibility
• Foreign supplier mock sample review of eligibility evidence in advance of product procurement
• Advisory ruling review with commodity specialist or Center of Excellence and Expertise on supporting evidence criteria
What Should I Do?
• Ensure that you have properly classified your product with an
accurate HTSUS number
• Review the FTA agreement respective to your articles
requirements
• Meet with your supplier and discuss their experience with
FTA declarations in the past
• Review suppliers history for providing supporting information
based on previous CBP requests for information.
• Factory visit to identify key persons with knowledge of
pertinent facts to assist with future requests for
documentation evidence
Brokerage Provider Support
• Broker is a resource for entry declaration and advisory comment
• Specifications related to the FTA qualifications should be held with licensed person in charge and not the common entry writer or customer service personnel
• Broker should have full information of the importer’s intent to claim FTA status prior to filing the entry
Commercial Invoice Origin
Statement
• Country of origin is an invoice requirement
• Invoice statement of origin does not meet the eligibility requirements for FTA declaration
• Certificate of Origin should accompany the commercial invoice as a demonstration of eligibility verification not as an entry requirement
Verification Continued
Process
• There should be a compliance verification
process in place that affirms each specific
shipment qualifies and continues to qualify
for a Free Trade Agreement declaration.
• FTA affirmations are not a one and done
effort!
CBP Enforcement
• CBP will issue penalties for false
statement, acts, and omissions related to
false FTA declarations
• CBP understands that common practices
of lack of proactive verifications results in
many false claims
Best Practices
• Informed compliance and education and training on FTA eligibility requirements
• Proactive factory compliance assessment reviews for eligibility affirmation
• Proactive documentation reviews with foreign factory
• Proactive Brokerage meetings for concurrence of filing
• CBP Rulings on FTA eligibility
• Internal compliance assessments on FTA entry presentations to CBP
• Continued FTA audit reviews to ensure continued practices of compliance management is in place
Making Free
Trade Agreements
Work For You
Tom Gould
Sandler Travis & Rosenberg
Tom GouldSenior Director, Customs and International Trade
Sandler, Travis & Rosenberg, P.A.
• Leading expert in the design and
management of simple, easy to use and
compliant import programs, with a special
emphasis on Free Trade Agreements and
special claims.
Making Free Trade
Agreements Work For You• Each Free Trade Agreement has
processes within the agreement which
importers can take advantage of if they
are aware of the unique individual
processes. This session is intended to
point out some of these items and help
you take advantage of them.
Tariff Engineering
• Change product or raw materials to take advantage of FTA rule
• Don’t source materials that shift from FTA if less expensive sources available not in region
• Train product managers, buyers and sourcing teams– Benefits of sourcing from FTA countries
– When to source materials in FTA country
• Document your procedures
GSP
• Double Substantial Transformation
– Transform a component to a new “name,
character or use”
– The entire value of the new component is
counted in the 35% requirement
– Transform the component to a product
NAFTA Preference Criteria D2
• Product does not meet tariff shift rule
• Rule has no RVC option
– imported into NAFTA unassembled, or
– non-originating parts have same classification
as finished product
• May use RVC
NAFTA Preference Criteria E
• ADP goods and their parts that do not
originate are considered originating upon
importation into the territory of a NAFTA
country from the territory of another
NAFTA country
• See GN 12(u)
Temporary Preference Levels (TPL)
• Limited availability quota program
• FTA duty rate even though the finished
good fail to qualify for FTA
• Watch fill rates
Singapore Integrated
Sourcing Initiative (ISI)
• Considered originating goods
– Classified in and described in GN 25(m)
– When imported into the US from Singapore
– Shall be considered originating
Remanufactured and
Recovered Goods• Recovered goods – parts the result of:
– Complete disassembly of used goods into individual parts
– Cleaning, inspecting, testing or other processing of those parts as necessary for improvement to sound working condition … in order for such parts to be assembled with other parts in the production of a remanufactured good
• Remanufactured good - an industrial good assembled in…– Entirely or partially comprised of recovered goods;
– Same life expectancy & same performance standards as new
– Same factory warranty as a new good
• Different FTAs have different rules
• Some don’t have remanufactured and recovered provisions
De Minimis• If the value (or weight)
– Of all non-originating materials
– Used in the production of the good
– Do not tariff shift
– Is less than (7% NAFTA, 10% CAFTA, SG, AU, CL, PE, KR, CO, PA
– Product may still qualify for FTA
• Cannot use de minimis in RVC calculation requirements of this note.
• There are always exceptions
Packing & Packaging
• Packaging for retail sale– If classified with the good
• Disregarded for tariff shift
• Originating or non-originating for RVC
• Packing for shipment– Disregarded for tariff shift
– Disregarded for RVC
• Check the FTA rule
Fungible Goods and Materials
and Inventory Methods• Fungible
– Interchangeable for commercial purposes
– Have essentially identical properties
• If originating and non-originating fungible materials are comingled– Origin may be based on an inventory management
method
– FIFO, LIFO, Averaging…
• Check the FTA rule
Indirect Materials• Indirect Materials
– A good used in the production, testing or inspection of a good but not physically incorporated into the good
– A good used in the maintenance of buildings or the operation of equipment associated with the production of a good
• Fuel and energy; tools, dies and molds; spare parts and materials used in the maintenance of equipment or buildings; lubricants, greases, compounding materials and other materials used in production or used to operate equipment and buildings; gloves, glasses, footwear, clothing, safety equipment and supplies; equipment, devices and supplies used for testing or inspecting the goods; catalysts and solvents
• Any other goods not incorporated into but a part of the production
• Often considered originating without regard to where it is produced
• Value is the cost on the books
Repair and Alterations
• 9802.00.40/50 - & SPI
• Duty free if returned to the US after repair
or altereation in FTA country
• Regardless of the origin of the goods
Quantify Your Value
• ACE reports– Add duty rate if no FTA claim
– Calculate duty saved
– Calculate MPF saved
• Quantify the cost of– You & your team
– Systems
• Report to management often
Making Free Trade
Agreements Work For You
Tom Gould
Sandler Travis & Rosenberg
213-453-0897
