Decode the Customs: Unpacking the Hidden Rules of US Imports

Machine Automated Transcript:

Hey folks we’re on for simply trade podcast we’re in for a good show today, this is going to be one, we’re gonna get into some little bit more details here on importing from Mexico and crossing the border there. And, and with this, we are not going to have a long introduction here. So Lalo, I want to defer it over to you and let you introduce our guests, and then we’re going to bring him on right away and start into our discussion. Yeah.So real quick. like Andy said, it is importing into the United States. And like details on that, not necessarily, exactly from Mexico, but because Adrian, our next guest, is on the US Texas border. He is a US Customs broker. That is just about everything he deals with, you know, and so anyway, so we’ll be talking about that. And there, there have always been a lot of questions even here at global Training Center. About those that relationship with US and Mexico units, kind of like what they say, Canada is the 51st state. So I mean, I guess sometimes people just consider Mexico like, Oh, it’s just across the border. I mean, it’s there’s, it’s just land why in our case here in Texas, it’s there’s a river between us, but you know, they don’t see it as big a problem. Like right now we’re being reminded a lot about do not bring flowers from Mexico for Mother’s Day. If they’re cut, they’re there sometimes okay, but if they’re pot it, forget it, you’re gonna lose them. You know what I mean? And so, you know, we’re reminded a lot about that. I guess we’re dating ourselves. So yeah, we’re recording this on Mexican Mother’s Day, by the way, on May the 10th. So. So anyway, Adrienne, go ahead. Let’s let’s go ahead and get started. Because I know you have a lot of content to cover.Yeah. Thank you, Andy. Lalo. Great. Being with you guys. And I’m seeing you everywhere. All the best events. So I’m always a pleasure to see you guys. So yeah, I want to I’m sorry, I wanted to start sharing my, my screen here.And by the way, if if y’all are listening to this, and you want to see the screen, then go to our YouTube channel, because that’s, we have the screens and like a webinar. Hey, free webinar, everybody. So basically, I’m going to speak a bit about important into the US, which may seem or it is sort of like a

basically, I’m going to speak a bit about important into the US, which may seem or it is sort of like a basic matter, right. And many, many of your viewers, Lolo may think well, this is so basic. I mean, I know this, I do this every day. So what is what is it to add? Right? Well, I mean, let’s talk about it, right? Because there are many aspects that in practice can be very complicated and can be very complex. And I always like to talk about the basics, because then we know and realize that the basics are not so basic, right? Once we start discussing and looking at the details, I’m always like to give out my info, just in case you guys have any questions. And when I’m gonna reach out with anything that you see, we’re also on social media. So this is our QR code. I mean, I guess you guys can post that. And if you guys can want to subscribe to our newsletters, social media, we love to see you guys there as well. So we started with from the beginning, of course, we still care. Evidently, customs asks all importer to exercise what they describe as reasonable care. We’re providing customs, any information related to classification valuation to these admissibility, and they define it as reasonable. But I think practice it goes beyond reasonable, right? It just means to do everything that is necessary to get customs correct and accurate information. So I’ve never heard someone say, say, well, it was not reasonable for me to give out the right classification evaluation that does not does not going to fly. Right. So we need to do what’s reasonable, and go beyond that. So I think that’s the beginning. And that’s the importance of that importers need to remember that whether they when they’re dealing with customs, they need to provide correct inaccurate information. Always right. And these are the main focus, but there are many others that we will continue discussing, of course, I think it’s important to note as well, what are CBP priorities right? What are they most looking at, of course, agriculture and quotas, anti dumping duties countervailing duties, and I put their trade remedies as well, because in my opinion, we are in the era of trade remedies section 31232 A one anti dumping countervailing duty. So all of that is a big deal. Now it has been a big deal. Some fronts in the last I don’t maybe 567 years. It wasn’t that the case before now it is and we need to make sure that we are correctly declaring our country of origin or HTS codes and correctly gain any anti dumping countervailing duties and any trade remedies if we have two very, very important that this is so complex in practice, but we’re gonna continue discussing it as well. That includes

on the trade remedies, you were talking about sanctions, and with so many different things going on. We’re Russia, Ukraine, we just talked about that. Later on, I did on another show. China’s situation, the China, Taiwan, you’ve got the terrorist activities with Iran, you got North Korea, and then you also have Hamas and all that going on. So with all of that, you need to vet what you’re saying is, have the right information, and do your due diligence up front. So that’s your basics things as you’re getting into this, because we’re gonna get into more advanced discussion here. Exactly.

And the geopolitics is now a big part of trade, right, of trade policy. So we need to be focused and know what’s out there. What’s going on, who are we having as a country issues with because that translate to policy in terms of trade? So that’s a big deal right now, it wasn’t before. I mean, we think about it. We I mean, we didn’t seem the new stuff that directly impacted trade before. I mean, 510 years ago, I mean, it was like, kind of like, you know, trade, they said it was boring, right? Or it’s the same, not anymore. I mean, I don’t think it was boring, then. But it’s definitely not boring now. So we need to of course, be be mindful all of all of this safety of imported products, CBP is focused on safety of imported products. And here, I’m going to also start talking a bit about other government agencies, as importers, it’s very important that they realize that they are responsible for the safety of the goods, and that the goods comply with all eu s laws and regulations. That’s very important. And we see stuff going on. Sometimes that is very unfortunate we have regarding goods being imported into the US that then turn out to damage or even kill people. So it’s, I mean, it’s a, it’s a huge thing that we need to also be mindful as importers. And I can also say no to everyone, not because a good is

being sold in the US it means it’s safe, I can tell you that we need to be mindful as well as consumers, what are we buying? We see the name brand is can we trust that establishment? Can we trust the brand? Because I can tell you not because something is important means it’s safe. I mean, that’s reality. Right? Like it’s, that’s that’s another thing. Intellectual property. Of course, very important. The USA is one of the countries that hold the most intellectual property in the world. So of course, we need to protect that TPP to protect it, of course, revenue, money’s coming in a big deal now, much more now than before. There are a lot of duties to be collected. Now CBP wants to collect them as well. And as important. The first agency or the foremost agency in collecting revenues in the US is the IRS. The second one is CBP Southtowns, but rather a reasonable once once once we think about it, take sales and apparel, free trade agreements and special programs. And another one that I add forced labor, this is not officially a CP party, but I think it now is right along with trade remedy. So we and of course, as you mentioned, on the export controls, sanctions, do your politics, I think all of that becomes as well, a priority. Even if it’s not official, I think we also need to keep that in mind. So very, very important. So now, before importing to the US, why do we need to know what we need to talk about customs brokers, I mean, I think we should talk a bit about customs brokers, we are of course intermediaries between customs and the importer. And we do what is referred to as customs business, right. So that is what we do. If somebody if anybody does customs business on behalf of someone else, they need to be a licensed Customs broker, right and in the US, is not an obligation to use a customs broker. But nevertheless, more than 95%, more or less of entries are done by an
actual customs broker. Right. And so that’s interesting that I think that speaks about the value that we bring as customs brokers. And it’s important also, that importers understand that if they are receiving a service regarding any of this, they need to be mindful and make sure that the party that is giving them that information that they help is actually a licensed Customs broker, because that’s the law, right? I mean, we see this example regarding tariff classification. If somebody’s providing a 10 digit HTS code, according to CBP rulings, they need to be a licensed Customs broker. They can just be anyone, right? If it’s at the six digit level, no problem. It doesn’t have to be a licensed Customs broker. So there’s some very important details that we need to keep in mind. And you know, aside from the, I guess, the obvious entry filing, well of course, there needs to be a licensed Customs broker. But there are other aspects that we need to keep in mind. I suggest all the viewers to always keep in mind what arrangements are you getting into and with a consultant with another party with a customer with a supplier is is that going for and comply with the regulations that are specified? Also need to keep in mind that I think now, what is the role of licensed Customs broker? This is my opinion, right? We need to be support and to support and advice importers, right? I’ve heard some brokers, Sable, all I do is filing. I guess that’s fine. I mean, you know if that’s your agreement as an importer, and that’s what you need. Awesome, right. But I think brokers we need to go beyond just filing beyond just data input, right? We need to help importers properly declare the goods, right? We help them with classification, the scriptures waste quarries country of origin, that the merchandise is properly valued, right. That’s very important valuation, remember, revenue. That’s our focus, that’s PvP priority, also compliance with the regulations with the other US government agencies, safety of products that’s appropriate for CBP, we also need to advise importers, all the responsibilities now, we’re not experts, mostly on every other government agency, there are more than 50 that can regulate importations. So I don’t know I’m not an expert. everything right? FDA will I’m not an expert, FDA, but I can tell the importer, hey, you need to comply with this law with this regulation. Are you in compliance? Well, I don’t know the importance is I don’t know, well, here’s a consultant. Here’s what you can do. Right? And once you say I’m in compliance, okay, I need this five data points, right, which is the easy part. The hard part is being in actual compliance. That’s what you need to do. It’s not about the signature. It’s not about clicking the right button. It’s about being in compliance, declaring the five data points that CBP requires that usually the easy part, but it comes after being in compliance and all the hard work. I think that’s also very important. Also the correct declaration of compliance with free trade agreements, there are these programs that save us money, but we need to use them correctly.

Right? That is very important is not just about oh, US MCA sure, like what do I Where do I sign, right?

It’s not just about signing, it’s about doing the actual work behind the qualification of your goods, right. And also, of course, proper record keeping, I always tell customers and my colleagues that regarding compliance around improving with customs is not what you know, is what you can prove. You always need to have proof of all the creation that you make into customs. I think that’s pretty important. I think that is what importers should request, or their licensed Customs broker with the understanding that in CBP eyes, the importer is the ultimate party responsible, but you need help, right? You need somebody to be there with you, to guide you. And I think a good customs broker can can can provide that support. But I think that’s also important. We also support of course, work with CVP. You know, I always tell my colleagues that our customers, I mean, can come and go, right, we don’t want them to go, we want only them to come. But reality is that sometimes we lose customers because of many different aspects, right? Many, many different reasons. But the party that we always work with and will always be on our side as CBP. So we also need to have a good relationship with CBP, we need to be in compliance with what CBP requires of us. Because ultimately, the way that we can give our customers the best service is to have a good relationship with CBP, I cannot think about a broker Okay, given their importers and customers a good service with a bad relationship with CBP. So we need to be in good relationship with CBP are always with what they request from us record keeping responsible supervision. If we speak about the importers role and responsibilities, we talked about reasonable care, we’ll be talking about customs brokers responsibilities, then we talk about responsible to provision. So that was the fines, our role and what we need to do, right, we need to make sure that our employees are doing everything they need to do, just as if we were the ones doing the work. Of course, we brokers can do every single entry, but we need to make sure that the entries are being done correctly, and how they should be right. Just as if we were the ones doing them. So that I think that’s the message from from CBP. Right. And there are other stuff coming in, we have now continuous training, we need to be mindful of our cybersecurity. So there are all these new aspects that we also need to be mindful regarding what CVP as from us brokers, so think guys on the left, I think that’s also very, very important right. Then, of course, another aspect that I think is very important to keep in mind is right to make entry so we need to always be mindful that only the importer of record has the right to make entry right and a importer of record is for the most part the owner or purchaser of the goods or a licensed Customs broker. I guess that’s the exception we brokers can be the importer of record. Now if we are the importer of record brokers then we are responsible for everything compliance payment, all that. So I think brokers seldom want to be the importer of record. I mean, but I’ve seen situations where a broker or the importer of record because they can’t be right TVP also makes it very clear that a nominal consignee cannot be the importer of record but that they can designate a customs broker and I’m gonna continue being usually a carrier, you know, trucking company, somebody that is just moving the goods right up Water. If they’re not a broker, then they are considered a nominal constantly. They cannot be the importer of record. Right. So I think that’s important. And in essence, owner and purchaser means any of the following, it means that the party has sufficient financial interest. And that’s where we see the rulings go. When CBP is gets asked about right to make entry, they analyze if the party has sufficient financial interests, of course, the incoterm the terms of sale, or irrelevant, right at the moment of importation, who owns the merchandise, who’s the seller, who’s the buyer, that’s very important. That’s also very interesting. And it gets complicated when we have multiple parties to the transaction. We have a plant in Mexico that sells to a company in Hong Kong, that company Hong Kong sells to accompany in Panama. And that company in Panama sells to the final us buyer. So who has the right to make entry, it can get complicated, right? Well, where’s the sale taken out? Right? Who owns the merchandise at a time of importation, who’s the seller who’s the buyer, so if you have a complex arrangement, in that sense, it’s always a bicycle, to make sure that you are fulfilling the requirements of the right to make entry regulations, regarding importer of record, I think that’s pretty important. And we see those complex arrangements, more and more, you know, we have this big multinationals that have a print company here, but then the actual seller is the another company, and then they kind of do three, four sales before actually bring to us we see that a lot now. So just you know, I think it’s also something to keep

in mind. So what else also customs bonds. So the way the CBP makes sure that the importer fulfills all the regulations, all the responsibilities, and that they are going to pay what they owe is via a customs bonds, right, we will have a custom bond, which is sort of like an insurance that benefits the US government, it doesn’t benefit the importer, it benefits the US government. Right. So that’s also our requirements, we see that of course, companies that import every day, they will usually have what is referred to as a continuous bond, which is a bond that is valid for a whole year. And if there’s a company that imports every now and then once a year, twice a year, well, they may go with a single entry bond, right. Very important aspect as well. It’s very important that US also importers understand their responsibilities under the bond, they have a contract, they have an agreement with customs, that they will present the merchandise they will fulfill all the requirements that they will present all the information that if CBP finds that they are not in compliance, that they will return the merchandise to CVPs possession. So all of that is very important to know. And another aspect that is also very important is having the right bond amount we see sometimes company there are now pay more duties. And it turns out their bond is not covering the amount of duties that day or what a certain time. And CBP doesn’t like that. So my suggestion is always make sure that your bond amount is always above what you owe CBP and that at any given time, right? Repenting, if you are paying duties every week, or you’re paying duties every month, just make sure that the amount is not over your bond amount. If it’s over your bond amount, CBP is not gonna like that, they’re gonna say, hey, you know, you owe me 100,000, but your bond is worth 50,000. I don’t like this. Because if you don’t pay, I want to be out of $50,000, you need to increase your bottom out. And it’s best to do it proactively. Because CVP tells you then you have limited time, right? And if the surety company wants your financial, so they want collateral or they have questions, then you can run out of time. And you’re suckered into trouble. So always keep our minds mindset of Well, what did I pay last year to the formula, which is here, but also keep your eyes on the future? What am I expecting to pay in the future as well? If you know you’re going to increase payment of duties because of trade remedies, maybe then you need to increase your bond amounts proactively. So you don’t want into trouble. I think that also important. And also we new bonds, something we see customers saying, Oh, I forgot to renew my bond. So many, many times. That’s fast. We can do it the same day, many times industry company has questions, then that’s a problem, right? Sure. The company’s not not always HSR thrice. They may say, Well, let me see who’s the importer? Who are they? Do they have money or not? Right. So they may ask more questions. So we see that a lot as well. Well,

with what you’re saying is these are basic fundamental building blocks that you’re looking at. And folks is that out of everything that Adrian has been saying, if you have questions up to this, get some experts reach out, you can reach out to Adrian or Lal or myself will point you in the right direction will either respond to you directly or get you the right party. But the key here is that in doing international transactions, it’s not just a willy nilly easy thing to do. There’s a lot of things that you need to have in place, processes, procedures, policies, your your financial situations and All of that regarding the bonds and whatnot. So, as

Adrienne said, you don’t necessarily need a customs broker to make an entry. You can do it yourself, but it’s like, it’s like,

it’s like doing your own taxes.

I was about to say that I was about to say that I was gonna say, my kids are, are early enough in their

I was about to say that I was about to say that I was gonna say, my kids are, are early enough in their career where things are not complicated. And yeah, they can do their own taxes. But there’s no way that you and I, Andy and Adrian are going to do our own taxes, because we know different

incomes, different revenues. Yeah, for us. I mean, it fits Yeah, and some, the benefit that we provide as brokers is that we have many customers, and by the time that we are having been in business, 1050 years, we mostly have seen a little bit of everything, right. So we know what to do. Many importers, they just have certain industries, certain type of commodity, and they may not be aware of other stuff once they start growing. So that’s the value I think we provide. You’re saying, You know what, this is what I do every day all day. Let me do it for you. And we don’t charge honestly, in my opinion, we don’t charge that much considering all that we can do for you. For the importers. Exactly. CBP has also been mentioning that, hey, there’s a lot of vague descriptions, which is again, guys, so we’re saying this is basic, but it turns out that the basic is not doesn’t mean that it’s covered. Right. So so a good, correct description is so basic, but then CBP saying, Now, hey, I’m seeing that obey descriptions. importers don’t do that. Brokers don’t do that. Right. filers don’t do that gave me good descriptions, always make sure that you are providing good descriptions. These are examples of descriptions that Canadian customs actually but I think that they’re equally valid for US Customs. These are big descriptions and appropriate descriptions, electronic goods, electronics, that is not a good description to keep customs. Well. What electronic, what are you talking about? Oh, this is a computer. This is a monitor. This is a television, mobile telephone DVD player. Oh, now I get what you’re importing right? Machines. Well, what kind of machine right? Well, it’s a sewing machine, a printing machine. All Okay, now I understand metal? Well, what what kind of metal? What are we talking about? There’s many types of metals. So in reality, that’s a description that we sometimes see. And other worse than those, I guess, you know, consolidated commodities. So what are you talking about? Right? So make sure always that you have a good description. A good description is a description, in my opinion that describes your product at the commercial level. But also that CBP can link it to an HTS code. So those kind of things, the middle, I mean, you you can be on each side entirely right? You can use a code, right? Well, that’s a commercial item that you do a 24. No, no, no, no, I don’t need that. Right. But also, you shouldn’t use the exact HCS. Description. Motors and other other others. After

this, is that one of the largest use descriptions that is not appropriate is parts, you know, there’s always parts. And to me, and I’m like, okay, auto parts, computer parts, chicken parts, it makes a difference on how you’re going to clear it. I mean, is it is animal products, is it? Is it a part of a robot? Is it a part of automobiles? Who are what? So you’ve got to put a description that in my opinion, the general rule is, it needs to be sufficient. So that a, you know, say a sixth or eighth grader can look at it, read it, and know what that is keep it simple. And you go from there, and then you know, then you can get more detailed in the commercial invoice. But even in that it’s like, don’t don’t keep it vague. You know, you’ve got to, and don’t just use part numbers, either. That doesn’t do you any good.

Definitely. And, you know, this is in addition to your correct HTS code, of course, but it’s in addition to right, it doesn’t mean you’ll have a greater HTS code, then the description can be anything. No, of course that doesn’t. That’s not. That’s not right. Right. So So yeah, definitely, right. valuation, I find that in practice, this is basic as well, that can get very complicated, right in practice. And I have found that in practice, many importers don’t know the valuation method. I mean, they don’t have a grasp or correct grasp on their valuation method is very important that as an importer, you know your

valuation method, and that you can support that valuation method to customs if you are asked, right. Of course, we know that the basic one is transaction value, it goes to an order, right you use transaction value. If you can’t, then you go down until you can find a valuation method that you can use. But I see the many companies in the multinational industry law Makela industry claim to use transaction value, but they don’t have an actual transaction. They don’t have an actual sale. Because these are you know, maquilas sending raw materials for them to be back with Barbarin in Mexico and then sent back and so no, you can’t use transaction by If there’s no transaction, there was no actual sale, you need to use another method, right. And then many companies use computed value, which in my opinion is sort of like the simulated transaction value, you can hold your cost everything, you know, you put it together, you just you tell customs, you know what, I don’t have a sale, buddy, if I will be selling the goods, this is the value that I will give it. And it’s going according to regulation, of course. So valuation guide is, of course, very basic. But in practice and DeLallo, I see a lot of questions about valuation, especially as companies have complex relationships with their suppliers, they have different Mikey loads, different company, different plants, a lot of all over the world. And it gets complicated. So always have a good grasp on your valuation method. And if you need to use the reconciliation prototype, right, which is where you took us Sunday, at the time of entry, there’s, there’s value is provisional, this is the best I have, but customs, I promise, I will give you the exact amount at a later date. And I will do it. But that’s what reconciliation is for. Sometimes I hear customers say, Well, you know, yes, my value varies, but it’s just 5% of the round. So who cares? Right? Well, I mean, I don’t know any regulation that says it has to be, even if it’s 5%, it doesn’t matter if it’s not exact. I haven’t seen it, maybe somebody has, please tell me. But as far as I know, custom said you need to give me the right x value amount for your goods, right? Because I don’t accept you paying less duties that you should, or whatever accept you give me a wrong statistical number that I need for my own analysis for Congress and the government. Right? As far as I know. So guys, valuation needs to be exact needs to be correct. And the proper valuation method needs to be used. Right. So yeah, another thing that is basic, but in practice, very complex case, very closely related is, of course, if you are related party transaction, first of all, because that’s that’s something that we declare in the interest summary, yes, related party or not related parties. And second, because they have that that affects how CVP sees or wants to validate your valuation method. You say, Well, if I’m a related party, can I use transaction value? Yes. But CBP may have questions, does the prevailing party transaction affect the value or not prove to me importer that he may view our related party, the transaction the value is not affected? It’s just as if it wasn’t related right? Many companies can do it many companies can too they say, You know what, no, I do give my own company a pointer in the US preferential rates. Okay, I guess you can do that. But in terms of valuation, you need to make sure that you use the right amount right. And here is when divided by the the fiscal aspect of it the IRS side Mexico side aspect with and separated from customs requirements, that may not be the same requirements. You may be good with the IRS, but you may be wrong with customs. So that’s something that also companies need to understand. And I see so many sometimes not many times sometimes finance department saying I’m good because the IRS says what says we’re fine. Well yeah, the IRS but what about CVP right, remember different focus different focus. So always also something that needs to be considered usmca Right. US MCA as we know, again, this is basic, I guess, right? You need to do your analysis. But in practice, it can be difficult to do variety us MCA analysis, right? Because vom we have many different vom, vom can change, value can change, suppliers change country of origins of suppliers can change. So we have all of this of changes that can occur anytime

define what BLMs Oh, Bill of Material, or

apologize. Yes, yes, your bill of material is the recipe for your final goods, right how many items of

apologize. Yes, yes, your bill of material is the recipe for your final goods, right how many items of this data the other you need to create your finished goods. So in my opinion, a good and correct Bill of Materials creates an EC us MCA analysis.

And back in my day when I was doing software for for, for NAFTA, we used to call them costed Bill of Materials one step further, right? Because you also need to include the non tangible items like labor overhead assists and all that because that that value goes into the product determination. Correct?

Definitely, in especially, that’s important, because if you have regional value content requirements, then values and costs come into play, right? If it’s only timeshift, maybe you can ignore those because well, it’s tariffs shift. So I look at direct materials, the HTS code of direct materials versus DHCS code of my finished good, but if you’re talking about regional value content, then now okay, you get into cost. And of course, costs need to be correct, right? It’s not like Well, I kind of think that labor is this amount, so I do qualify Oh, no, that’s gonna get you in trouble, maybe right if you’re overstating the value added in the region, and that gives you a qualification that you shouldn’t have. So again, that’s what also very important to keep in mind. Again, I see in practice many challenges because we are in a challenging environment by that. I mean, I don’t think it’s because people want it to be hard. It’s just because we are in a complex environment, where we have many different goods, and a different bill of materials, many different suppliers at many different levels. And that gets complicated. So, of course, usmca very important, usually, you know, big companies, medium companies, big companies, they understand this, but I see many times that smaller companies and entrepreneurs, they don’t understand us MCA requirements, and they just sign the certification. Well, that can get you in trouble very easily, of course. And, you know, just keep in mind, right. I won’t go over in detail this guy’s but this is actual, an actual request for information from CBP, right? Where CBP says okay, you are declaring usmca. Now, you need to provide me with this. So, everyone watching this, you need to be ready to provide customs with all of these to support your USMC a claims again, with CBP is not what you know, what you can prove, right is not that you want, don’t tell me you qualify, prove to me that you qualify. Right. And also, CBP does not want to look at the spreadsheet that you prepare today, right? Or the format that you’ll be printing right now, to show me No, no, send me your business documents, your processes, and the document that you support your qualifications on a day to day basis by what you did, what did you use on every day, right? And everyday business? Don’t prepare something for me right now, right? No, no, no, show me what you do every day that that proves to me that you have a good process. If you’re rushing to do the analysis right now the meat that proves to me that you’re not taking care of what you need to do. Right. So I think that’s also important. And so yeah, it can be scary, it can be scary, especially, and many companies say Galleon habit here is awesome. That’s That’s what you should do. If you don’t feel comfortable, prevent presenting this information, you need to get comfortable, of course with this right. Very important. We see more and more audits from CBP, you know, we see that relationship between China, Mexico and the US China sending goods to Mexico, Mexico gives them value added and then send us to the US. So is that value added enough regarding us MCA regarding substantial transformation. So all of that CBP knows, CBP is going to check right, so very important. My opinion, this is this is a very important, you know, challenge that we have right now. And also, of course, US trade remedies. I think we are in the era of trade remedies. And we have several, they can be quite challenging to determine something more straightforward. Well, you have a, you have a good HTS code, you go to a list, if your product falls there, there’s no exceptions you need to pay, right? And I guess that’s the easiest if, if it’s not easy, right? But again, it’s basic, but not easy, right? You need to of course it clear correctly. Any US trade remedies and pay that are more complex anti dumping countervailing duties, assessment can get very complex, right? You need to look at the case you need

to read it, because HTS codes provided in the case are for reference only, you need to go beyond that you need to make sure that and then you need to look at your components. Do you have any any risk of your components falling into a trade remedy action, then if so, then you need to analyze what is referred to as substantial transformation? Are you substantially transforming that component into a new good in Mexico, for example, so that now you don’t need to worry about section 301? Are you doing that or not? In practice, we see a lot of challenges with this as well, because it is hard it is challenging, substantial transformation. It is case to case analysis, case by case basis, and it can get very, very complex. We have others section 232 Section Two a one. There’s a lot of pressure in the steel and aluminum industry right now in Mexico. So, you know, very interested in this guy, so I’m not sure we can do a whole seminar on each slide maybe. But again, these are the basics that are not so basic, right? I’ve shared with you, with your viewers some consultation tools to further research and and check their goods and make sure that is if you’re you need to declare something you declared me as a customs broker. If you say that a good is country of origin Mexico, and you don’t tell me more than I won’t know that is subject to trade remedy. I need importers to tell me or ask me right. Same with anti dumping countervailing duties we do get warnings, right? But it’s like well, here’s the warning importer. I mean, you want Did you act on it? Or? No, I’m good. Okay. I mean, again, I mean, we, we are broken, we’re here to help. But at the same time, we’re not we’re not enforcers, right? I mean, I won’t go there, William Porter and grab them and say, Are you sure? Are you sure you’re in compliance? Well, I mean, I mean, that just inform you and help you. But then if you tell me you’re in compliance, then I believe you unless it is obviously false, then of course, I cannot I cannot proceed. But if if you told me if you assure well, then we proceed by, I think those are something to keep in mind. Ah, something very also complex force labor. Again, we need to be mindful of forced labor component goods that are have a port or a completely manufacturer with forced labor are prohibited into the commerce of the US. And this is a huge challenge, because now companies need to have a complete tracing of the whole supply chain. And it’s a huge undertaking, that’s why we’re seeing this new tools come out. Based on a lot of information AI, that can track you and help you get to the source of your of your, of your suppliers to the final, right down to the atom, that this is directly coming from CBP, you need to know right down to the atom, that you’re gonna make sure you’re good is not manufactured with forced labor at that the atom level. So that’s, that’s something to keep in mind,

this is becoming more and more of an issue where the enforcement is ramping up in greater efforts on dealing with forced labor. So it’s one of these that, again, you do your basics, as we’re getting into that, you’re gonna have to prove that your goods were manufactured with good manufacturing practices and all that and not the use of force labor, you can’t do that. If your goods are stopped at the port, and you’re just now checking things out you’ve got to go through is what we’re talking through here is some of the basic fundamentals. And this is a big factor. Now that is should be a fundamental, where you are vetting your suppliers and your your products and the components of those products. And where are they going through your tier one, tier two and tier three type suppliers, you’re going to have to work with your Manage manufacturer, all the way down. So yes,

very, very important. And, yes, is this a big challenge? For sure. And what are the focus of EPS here are some goods that are that I know are cbps Focus. But again, we don’t need to we shouldn’t wait for CBP to tell us. CBP wants importers to be proactive, making sure that they don’t have any good in their supply chain, and you fracture with force labor. Again, very, very, very challenging. Here are other resources that I gave viewers. They can you know, access EVPs web pages and, and I think also traceability tools, which even CBP uses them. So I mean, my suggestion is, well use the tools that CBP uses, right, that is how you know what CBP seeing, right? I guess that’s the way but I know that in

practice is challenging. And I think CBP could do better as well, regarding communication and enforcement and being open and transparent with with with importers. I’m sure many people have pointed this out before, and I’m sure you’ll get better by it go better, once we get a better grasp of the requirements, and the expectations. Other government agencies, I, we spoke about this already. There are many agencies, right? More than 50 can regulate importation of goods, very important that importers, make sure that they are in compliance that they and it’s not compliance, it’s not given me broker, the 235 data points that I’m asking No, is making sure that your compliance with the regulations and the law at the detailed level, right. And once you’re in compliance, then give me the information. ECC, right? Usually just Oh, yeah. This is this is what you need to do. That’s it. But again, the important part of this has to be in compliance. Statistically, the agency that regulates the most amount of goods in the US has FDA. And you can do make make sure that we’re in compliance. Again, as brokers, we tell importers, hey, you need to be in compliance with FDA with this particular law, and you’re in compliance. Well, yes, right. Well, what is the details other than to tell me Ah, well, maybe up I don’t have that expertise, but I can recommend on the consultant that can give you that expertise, and then you can come back to me and once you’re ready, I can help you with a importation. So, you know, that’s what I try to do. You know, we’re not experts at the detailed level, but we should be able to tell you their responsibilities, at least at the CBP perspective at the federal level to import goods into the US. So also important, many people get surprised when they find out that certain goods are regulated by FDA, slash like a Laser, or plates, or containers that go in contact with food that yeah, they are regulated cosmetics. That’s a big deal one that has always been regulated, but now more some more requirements right now for cosmetics. And some people get surprised, right? Well, I guess that’s our job as brokers to inform the ban importers need to do their own job and making sure they’re in compliance. And again, I cannot speak about the importance of this. Very, very important, we have seen very unfortunate cases of people dying, or getting permanent damage because of unsafe goods in the US. So we need to be very mindful and careful with this, for sure, be part of their shipment mid basic again, but we need to make sure that you’re providing the correct mid, if you’re in the textile industry, you will need to provide the mid of the actual manufacturer of the goods the manufacturer that gives you the goods, its country of origin and a few words and we come have the global entity identifier, you program coming in in the next few years. But my suggestion by now get your DUNS number you l e i identifier and a GL n number. Get it now. So you have it ready. Don’t wait to the last minute once we have implementation because I can tell you right now, this websites book is saturated, there will be delays and everybody is going to be rushing to it now very important the mid. Here’s more information and of course, if anyone wants to reach out, they can do so. The termination of country of origin very important that employers understand the difference between preferential Rules of Origin and non preferential preferential USN such as the rules of the US MCA or in Spanish, the MEK non preferential use for all other purposes. And CBP uses the substantial transformation standard. So if you are at risk that you’re good is subject to a US trade remedy. Maybe because it was manufactured using a component that is subject to a US trade remedy. You also need to do what’s referred to as substantial transformation, which in in practice, substantial transformation is more important than maybe preferential rules of the US MCA because a preferential rule can give you a 5% savings or 10% savings. But if some structural transformation indicates that you’re good is considered a Chinese good, you may pay up to 25%. Right. And if you are subject to anti dumping countervailing duties, hundreds of percents 400 300% easily right, of course, anti dumping countervailing duties, I put an asterisk because that we need to look at the case, the scope, we may need to ask the Department of Commerce gets a bit more complicated. Regarding anti dumping countervailing duties, but again, this is again, basic in essence, but in practice very, very complex. I want to give you guys this slide as well. We have physical rules for marking part one or two rules for marketing purposes only. But if you’re in the presence of possible trade remedies, such as section three one to three two to one input us also need to do was referred to substantial transformation. And if you can get seemingly contradictory results, such as my goodness, physically, Marcus, Mexico, but in the 75, a one is Chinese for the purposes of pain section

301. Right. And it is it qualifies for us MCA you can see that and we do see that. So again, we need to have the mindset that we have three different analysis that can give us possibly, or seemingly contradictory results. Hopefully CBP fixes this in the future. They have this this this initiative of unifying section, a one or two rules with substantial transformation requirements that can get better but country of origin marking, they’re important to correctly mark your goods basic that we see sometimes not being done correctly. Marking can should be done correctly as well. Crossing US Customs. Remember, crossing customs is just the start of everything, right? It doesn’t mean you’re off the hook. It doesn’t mean that CBP authorized, it just means that CBP deem that at the moment that you cause could be released. The all the good stuff comes afterwards. Documentation, making sure that you have documentation that you need. And that you present it please give us give us complete invoices, right? With everything that you that we need. And then we can have you the entry for you in five minutes or less. But if the invoice is not complete, then we need to ask questions. What is the escrow? What is the country of origin, the description it doesn’t, it’s too vague, right? Remember that, and then that delays your shipment. If you give me everything I need, then you have an entry right away. And of course we can help you with anything you need before that and afterwards. They think that’s a role before and after importation at the time of importation. Get the info, it was fast, but before it can help you afterwards as well of course, and then we can take all the times you need right i At the end, we are here to serve you. But at the time of importation, my suggestion is have everything that we need right? record keeping. This is, of course, basic, very important is not what you know, was you can prove CBP in general trust us, right, we submit electronic information. But CBP says, Yes, but I can ask for proof anytime, usually within five years. So, you ready? Right. We brokers need to keep records. importers need to be records, keep records, and other parties as well. And then finally, liquidation. And so I went kind of fast, but I think we made it right guys. So thank you. The landlord’s Always a pleasure. And, you know, Thanks again, guys. Oh,

to our folks, that was a very fast rundown of importing in the US. And there’s a lot there. But Adrian, thank you so much for what you have done. Obviously, we’ve got a time constraint here. So folks, we appreciate you. This is one that you can flag for educating your staff. It’s one that hopefully your new hires that are into your department and whatnot, this is a good one to take a look at, come back to and and go through the contact informations there as well. And if you have any questions, definitely reach out to Lalo or myself and we’ll be glad to point you in the right direction on all of that. With that. I guess we need to I know this is short, but Adrian, thank you so much. My pleasure. Have a good one.

Let’s see each other soon.

All right. Yes. Thank you, Adrian. We have a good one.