THE GENERAL AND STATISTICAL NOTES

Transcription

1 Customs Brokers Exam Review Session 10 Harmonized Tariff of the United States THE GENERAL AND STATISTICAL NOTES General Note 1, Inc. 1

2 General Note 2 Customs Territory of the United States The States (ALL 50) The District of Columbia Puerto Rico General Notes 3-32 Full rate (Column 2) General Note 3 (a) Rate of Duty Column 1 General Normal Trade Relations (NTR) Special Rates of duty under one or more special tariff treatment programs, Inc. 2

3 General Note 3 (b) Rate of Duty Column 2 Highest duty rate applicable and applies to: Cuba North Korea Full rate (Column 2) General Note 3 (c) Special Tariff Programs List List of special trade programs and the special indicators for column 1 Special. GSP...A,*, A+ APTA...B USAFTA...AU Etc., etc General Note 3 (d) Certain Motor Vehicles Manufactured in Foreign Trade Zones Covers rules and regulations for motor vehicles built in a foreign trade zone Duty Qualifications Foreign content Etc., etc, Inc. 3

4 General Note 3 (e) Corpse, casket and flowers Telecommunications Transmissions Exported and returned Business Records Articles from space General Note 3 (f) Commingled Goods Different duty rates Different values Packed together Cannot be verified without segregation Subject to highest rate of any part unless Lower rate if... Next highest rate if satisfactory proof that: Commercially negligible; not capable of segregation without excessive cost; will not be segregated prior to its use in a manufacturing process Not intended to avoid duties Or, rate of greater quantity present Value is less than the aggregate value if segregated, and Not capable of segregation without excessive cost; not segregated prior to manufacturing process Not intentional, Inc. 4

5 General Note 3 (g) Abbreviations Lists definition of all abbreviations used in the HTSUS $ = Dollars Doz. = Dozens D.C. = Direct Current No. = Number Etc, etc. Also see GSN 4 General Note 3 (h) Definitions entered entered for consumption withdrawn from warehouse for consumption rate of duty Etc, etc. General Notes 3 (i) and (j) GN 3 (i) Issuance of Rules and Regulations Authorizes the Secretary of the Treasury to issue GN 3 (j) Methods of identifying goods Sect y of Treasury authorized to prescribe methods of analyzing, testing, sampling... To determine...properties or characteristics of articles... For purposes of and law administered by US Customs, Inc. 5

6 General Statistical Notes 1. Reporting requirements What to put on 3461/ Statistical annotations and what they are: 2- digit suffix; units of quantity; 3. Statistical reporting number 4. Abbreviations; the weird ones 5. Reporting of exports Types of Duty Ad Valorem 5% based on NEV Specific $0.05/Dozen Compound 5% plus $0.05/Dozen Free of Duty Unconditionally Determining Duty Rate Depends on.. Country of Origin Time of entry Valuation = Country of Export Duty Rate = Country of Origin Time of Entry = Release by Customs, unless the facts tell you otherwise, Inc. 6

7 Country of Origin Substantial Transformation Name, use and character Textiles rules Israel Special Trade Programs Determined by the agreement Country of Export Sold or shipped with shipping taking precedence Used in Valuation No role in classification HTSUS Columns Rates of Duty GN 3 (a) (ii) 1 GN 3 (a) (iii) 2 General Rates for MFN or NTR nations: Germany, France, China, Great Britain, etc. Special Rates for countries qualifying for Special Trade Programs: GSP, CEBRA, AGOA, etc. GN 3 (b) Full rate and highest applicable Cuba, North Korea Preferential Trade Agreements and Programs Chapter 18 FREE TRADE AGREEMENTS SPECIAL TRADE PROGRAMS, Inc. 7

8 Trade Agreement vs. Trade Program Free Trade Agreement A reciprocal agreement between two or more parties Israel, Jordan, NAFTA, Chile, Singapore, Australia, Morocco, CAFTA-DR, Bahrain Special Trade Program A unilateral action on the part of the United States GSP, ATPA/ATPDEA, CBERA/CBI, CBPTA, AGOA Overview Present concepts common to all programs Rules of Origin Value Content Etc, etc Provide information for each program Rules of origin used Value content required Etc, etc Side-by-Side Comparison fta_comparison.ctt/fta_comparison.pdf, Inc. 8

9 HTS General Note General Note applicable to the program Located in the HTSUS Fully describes the details of the program Need to be read (except for the Tariff Shift tables!) General Note 7 CFR The location in the 19CFR of further information concerning the trade program In addition to GN 7, CBERA, or CBI, information is located in 19CFR Parts S P I Special Program Indicator Indicates goods eligible for a particular program Located in Column 1 Special Nuclear reactors are free of duty under these Trade Programs, Inc. 9

10 General Rules of Origin Wholly obtained, 35% value added with substantial transformation Wholly obtained, Tariff Shift &/or Regional Value Content Furniture Parts Beneficiary Country Enough Shift? Enough Value Added? Wholly Obtained Wholly obtained or produced in the region or country or countries covered by the trade agreement. Tariff Shift HTSUS heading 0805 HTSUS heading 2007, Inc. 10

11 Regional Value Content 35% only 15% of US cost and value count towards 35% Build up, Build down Transaction value, net cost Ways to calculate the beneficiary countries contribution 35% Only Direct costs: Actual labor Dies, molds, tooling Depreciation Not included: Profit General expenses Business overhead The sum of the cost or value of materials produced in the beneficiary country plus the direct costs of processing must equal at least 35% of the article. 15% of US cost and value count towards 35% Direct costs: Actual labor Dies, molds, tooling Depreciation Not included: Profit General expenses Business overhead In this case, part of the 35% requirement can be from the United States. In addition, some programs allow the beneficiaries part to be made up from other countries in the program or even other programs!, Inc. 11

12 Build Down Method Formula: = AV - VNM AV AV VNM Regional Value Content (as a %) Adjusted Value (for Customs purposes) Value of non-originating material acquired and used by producer Example Build Down Example $30 Producer $ AV - VNM = AV $ - $30 $ = 70% Build Up Method Formula: = V0M AV Regional Value Content (as a %) VOM AV Value of originating material acquired and used by producer Adjusted Value (for Customs purposes) Example, Inc. 12

13 Build Up Example Producer $40 Originating = $60 $ VOM = AV $60 $ = 60% Build Up, Build Down Review Build down Uses value of non-originating material to calculate Usually 45% regional value content Build up Uses value of originating material to calculate Usually 35% regional value content Exporters or producers can choose either method Net Cost Method Formula: = NC - VNM NC NC VNM Regional Value Content (as a %) Net cost of producing the product Value of non-originating material acquired and used by producer Example, Inc. 13

14 Net Cost Example Foreign Parts $90.00 Producer $230 $ NC - VNM = NC Each unit sold for $ Non-originating parts cost $90.00 Total cost of manufacture is $ $ $90.00 $ = 49% Regional Value Content Transaction Value Method Formula: = TV - VNM TV TV VNM Regional Value Content (as a %) Transaction value or sales price Value of non-originating material acquired and used by producer Example Transaction Value Example Foreign Parts $90.00 Producer $230 $ TV - VNM = TV Each unit sold for $ Non-originating parts cost $90.00 Total cost of manufacture is $ $ $90.00 $ = 61% Regional Value Content, Inc. 14

15 Net Cost and Transaction Value Review Net Cost Uses value of non-originating material vs. total cost of product to calculate Usually 50% regional value content Transaction Value Uses value of non-originating material vs. sale price to calculate Usually 60% regional value content Usually, exporters or producers can choose the method exception example would be related companies = 49% with NC - Fails = 61% with TV - Passes Documentation & Notification CBP 28 CBP 29 Level of Documentation at Importation Verification Notification Determination Notification Transit/Transshipment Direct Shipment Must be shipped directly to the US and not enter the commerce of a third country. Transshipment, or passing through a third country is OK., Inc. 15

16 Merchandise Processing Fee Advises whether the merchandise eligible for the trade program preference is also exempt or not exempt from the Merchandise Processing Fee Remember, the MPF is that 0.21% charge based on the entered value of the goods as described in 19CFR Part 24.23, For this exam only Not allowed Simple combining or packaging operations Mere dilution with water or other substance + = The Special Programs And now it is time to fit the previous elements into the Special Trade Programs, Inc. 16

17 Watch this space For even more Special Trade Programs that will be added in the future South Korea Colombia Panama And who is next?? UAE Thailand 2013 Logistics Training Systems Chapter 19 19CFR, Part 10 ARTICLES CONDITIONALLY FREE Temporary Importation Under Bond Bond is required ( 10.31(f)) Two times the duty 110% of the duty Time limit (HTS, Chap 98, Sub III) One (1) year from import date Two (2) one year extensions ( 10.37) Except show cars ( ) Six months only with NO extensions Subchapter III, U.S. 1(a), Inc. 17

18 In it Comes, Out it Goes Regular entry CBP3461/CBP7501 Attach statements What comes in must go out Can be converted to/from other entry TIB s are cancelled, not liquidated Proof of disposal Information located in and Chapter 98, Subchapter III. Other Questions from Part 10 Articles for Institutions U.S. Government imports Imports < $200 and gifts End of Session 10, Inc. 18