OVERVIEW WHAT IS A FREIGHT FORWARDER AND WHAT CAN THEY DO FOR MY BUSINESS? CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HARMONIZED TARRIF CODES

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2 OVERVIEW WHAT IS A FREIGHT FORWARDER AND WHAT CAN THEY DO FOR MY BUSINESS? CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HARMONIZED TARRIF CODES INCOTERMS BASIC EXPORT DOCUMENTATION ADDITIONAL RESOURCES

3 WHAT IS A FREIGHT FORWARDER? AN AGENT FOR THE EXPORTER PROVIDING SPECIALIZED KNOWLEDGE AND SERVICES.. CAN PROVIDE DOOR TO DOOR SEAMLESS MOVEMENT OF CARGO BY ALL MODES OF TRANSPORT AIR, OCEAN, ROAD, RAIL, CHARTER, HAND CARRY, ETC. IS LICENSED BY INTERNATIONAL AIR TRANSPORT ASSOCIATION FOR AIR CARGO AND FEDERAL MARITIME COMMISSION TO HANDLE OCEAN FREIGHT. PREPARES AND FILES REQUIRED EXPORT DOCUMENTATION SUCH AS BILLS OF LADING, AES ELECTRONIC FILING AND ROUTES APPROPRIATE DOCUMENTS TO SELLER, THE BUYER OR PAYING BANK

4 WHAT IS A FREIGHT FORWARDER? ADVISES MOST APPROPRIATE MODE OF CARGO TRANSPORT AND ALL COSTS ASSOCIATED MAKES ARRANGEMENTS WITH OVERSEAS AGENTS AND CUSTOMS BROKERS TO ENSURE GOODS AND DOCUMENTS COMPLY WITH LOCAL REGULATIONS FOR TIMELY CUSTOMS CLEARANCE AND DELIVERY.

5 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES THE INTERNATIONAL HARMONIZED SYSTEM (HS) IS ADMINISTRATED BY THE WORLD CUSTOMS ORGANIZATION AND SERVES AS THE FOUNDATION FOR THE IMPORT AND EXPORT CLASSIFICATION SYSTEMS USED IN THE UNITED STATES.

6 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES THE UNITED STATES (U.S.) IMPORT CLASSIFICATION SYSTEM, THE HARMONIZED TARIFF SCHEDULE (HTS) ADMINISTERED BY THE U.S. INTERNATIONAL TRADE ADMINISTRATION COMMISSION (USITC), AND THE U.S. EXPORT CLASSIFICATION SYSTEM, THE SCHEDULE B ADMINISTERED BY THE U.S. CENSUS BUREAU, FOREIGN TRADE DIVISION, BOTH RELY ON THE INTERNATIONAL HS CODES FOR THEIR 4- AND 6-DIGIT HEADINGS AND SUBHEADINGS

7 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES THE WORLD CUSTOMS ORGANIZATION UPDATES THE HS SYSTEM APPROXIMATELY EVERY FIVE YEARS. THE YEAR 2012 MARKED THE MOST RECENT HS REVISION, MEANING THE NEXT REVISION WILL NOT BE DUE UNTIL 2017.

8 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES SINCE GREATER COMMODITY DETAILS ARE NEEDED THAN THE 4- AND 6-DIGIT HS HEADINGS AND SUBHEADINGS, HARMONIZED SYSTEM (HS) CODES UNDER THE HARMONIZED TARIFF SCHEDULE (HTS) AND SCHEDULE B CLASSIFICATION SYSTEMS EXPAND THEIR SCOPE TO 10 DIGITS. HS NUMBERS AND SCHEDULE B NUMBERS WILL BE THE SAME UP TO THE FIRST 6 DIGITS AS THE IMPORTING COUNTRY'S CLASSIFICATION CODE.

9 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES A SCHEDULE B NUMBER IS A 10-DIGIT NUMBER USED IN THE UNITED STATES TO CLASSIFY PHYSICAL GOODS FOR EXPORT TO ANOTHER COUNTRY. THE SCHEDULE B IS BASED ON THE INTERNATIONAL HARMONIZED SYSTEM (HS) OF 6-DIGIT COMMODITY CLASSIFICATION CODES. THERE IS A SCHEDULE B NUMBER FOR EVERY PHYSICAL PRODUCT, FROM PAPERCLIPS TO AIRPLANES.

10 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES SCHEDULE B NUMBERS ARE ADMINISTERED AND USED BY THE U.S. COMMERCE DEPARTMENT, CENSUS BUREAU, FOREIGN TRADE DIVISION TO COLLECT AND PUBLISH THE U.S. EXPORT STATISTICS. SCHEDULE B NUMBERS ARE REQUIRED TO BE REPORTED IN THE AUTOMATED EXPORT SYSTEM (AES) WHEN SHIPMENTS ARE VALUED OVER $2,500 OR THE ITEM REQUIRES A LICENSE.

11 CLASSIFICATION OF PRODUCTS, SCHEDULE B AND HTS CODES EXPORTERS NEED TO KNOW THEIR PRODUCT S SCHEDULE B AND HS NUMBERS FOR THE FOLLOWING REASONS: 1. TO DETERMINE APPLICABLE IMPORT TARIFF RATES AND WHETHER A PRODUCT QUALIFIES FOR A PREFERENTIAL TARIFF UNDER A FREE TRADE AGREEMENT; 2. TO FILE THE ELECTRONIC EXPORT INFORMATION IN THE AUTOMATED EXPORT SYSTEM (AES); AND 3. TO COMPLETE SHIPPING DOCUMENTS, SUCH AS CERTIFICATES OF ORIGIN AND OCEAN BILLS OF LADING.

12 WHAT ARE INCOTERMS? THE TERM, INCOTERMS, IS AN ABBREVIATION FOR INTERNATIONAL COMMERCIAL TERMS. THEY ARE A SET OF RULES WHICH DEFINE THE RESPONSIBILITIES OF SELLERS AND BUYERS FOR THE DELIVERY OF GOODS UNDER SALES CONTRACTS FOR DOMESTIC AND INTERNATIONAL TRADE. THEY ARE PUBLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE (ICC) AND ARE WIDELY USED IN INTERNATIONAL COMMERCIAL TRANSACTIONS. THE FIRST INCOTERMS WERE ISSUED IN THE MOST RECENT VERSION OF INCOTERMS, INCOTERMS 2010, WERE LAUNCHED IN SEPTEMBER 2010 AND BECAME EFFECTIVE JANUARY 1, 2011.

13 WHAT ARE INCOTERMS USED FOR? INCOTERMS PROVIDE A COMMON SET OF RULES TO CLARIFY RESPONSIBILITIES OF SELLERS AND BUYERS FOR THE DELIVERY OF GOODS UNDER SALES CONTRACTS. THEY APPORTION TRANSPORTATION COSTS AND RESPONSIBILITIES ASSOCIATED WITH THE DELIVERY OF GOODS BETWEEN BUYERS (IMPORTERS) AND SELLERS (EXPORTERS) AND REFLECT MODERN-DAY TRANSPORTATION PRACTICES. INCOTERMS SIGNIFICANTLY REDUCE MISUNDERSTANDINGS AMONG TRADERS AND THEREBY MINIMIZE TRADE DISPUTES AND LITIGATION.

14 WHAT ARE THE INCOTERMS 2010? THE TWO MAIN CATEGORIES OF INCOTERMS 2010 ARE NOW ORGANIZED BY MODES OF TRANSPORT. USED IN INTERNATIONAL AS WELL AS IN DOMESTIC CONTRACTS FOR THE FIRST TIME, THE NEW GROUPS AIM TO SIMPLIFY THE DRAFTING OF CONTRACTS AND HELP AVOID MISUNDERSTANDINGS BY CLEARLY STIPULATING THE OBLIGATIONS OF BUYERS AND SELLERS.

15 WHAT ARE THE INCOTERMS 2010? GROUP 1. INCOTERMS THAT APPLY TO ANY MODE OF TRANSPORT ARE: EXW EX WORKS FCA FREE CARRIER CPT CARRIAGE PAID TO CIP CARRIAGE AND INSURANCE PAID TO DAT DELIVERED AT TERMINAL DAP DELIVERED AT PLACE DDP DELIVERED DUTY PAID

16 WHAT ARE THE INCOTERMS 2010? GROUP 2. INCOTERMS THAT APPLY TO SEA AND INLAND WATERWAY TRANSPORT ONLY: FAS FREE ALONGSIDE SHIP FOB FREE ON BOARD CFR COST AND FREIGHT CIF COST, INSURANCE, AND FREIGHT

17 INCOTERMS 2010 DEFINITIONS YOU CAN FIND MORE INFORMATION AND COMPLETE DEFINITIONS OF INCOTERMS 2010, AS WELL AS WATCH A FREE WEBINAR AT

18 BASIC EXPORT DOCUMENTATION PRO FORMA INVOICE EXPORT PACKING LISTS COMMERCIAL INVOICE CERTIFICATE OF ORIGIN DANGEROUS GOODS DECLARATION SHIPPER S LETTER OF INSTRUCTION ELECTRONIC EXPORT INFORMATION (EEI) FILING (FORMERLY KNOWN AS SHIPPER S EXPORT DECLARATION)

19 PRO FORMA INVOICE A PRO FORMA INVOICE IS AN INVOICE PREPARED BY THE EXPORTER BEFORE SHIPPING THE GOODS, INFORMING THE BUYER OF THE GOODS TO BE SENT, THEIR VALUE, AND OTHER KEY SPECIFICATIONS. IT ALSO CAN BE USED AS AN OFFERING OF SALE OR PRICE QUOTATION.

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21 EXPORT PACKING LIST CONSIDERABLY MORE DETAILED AND INFORMATIVE THAN A STANDARD DOMESTIC PACKING LIST, AN EXPORT PACKING LIST LISTS SELLER, BUYER, SHIPPER, INVOICE NUMBER, DATE OF SHIPMENT, MODE OF TRANSPORT, CARRIER, AND ITEMIZES QUANTITY, DESCRIPTION, THE TYPE OF PACKAGE, SUCH AS A BOX, CRATE, DRUM, OR CARTON, THE QUANTITY OF PACKAGES, TOTAL NET AND GROSS WEIGHT (IN KILOGRAMS), PACKAGE MARKS, AND DIMENSIONS, IF APPROPRIATE. BOTH COMMERCIAL STATIONERS AND FREIGHT FORWARDERS CARRY PACKING LIST FORMS. A PACKING LIST MAY SERVE AS CONFORMING DOCUMENT. IT IS NOT A SUBSTITUTE FOR A COMMERCIAL INVOICE. IN ADDITION, U.S. AND FOREIGN CUSTOMS OFFICIALS MAY USE THE EXPORT PACKING LIST TO CHECK THE CARGO.

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23 COMMERCIAL INVOICE A COMMERCIAL INVOICE IS A BILL FOR THE GOODS FROM THE SELLER TO THE BUYER. THESE INVOICES ARE OFTEN USED BY GOVERNMENTS TO DETERMINE THE TRUE VALUE OF GOODS WHEN ASSESSING CUSTOMS DUTIES. GOVERNMENTS THAT USE THE COMMERCIAL INVOICE TO CONTROL IMPORTS WILL OFTEN SPECIFY ITS FORM, CONTENT, NUMBER OF COPIES, LANGUAGE TO BE USED, AND OTHER CHARACTERISTICS.

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25 CERTIFICATE OF ORIGIN THE CERTIFICATE OF ORIGIN (CO) IS REQUIRED BY SOME COUNTRIES FOR ALL OR ONLY CERTAIN PRODUCTS. IN MANY CASES, A STATEMENT OF ORIGIN PRINTED ON COMPANY LETTERHEAD WILL SUFFICE. THE EXPORTER SHOULD VERIFY WHETHER A CO IS REQUIRED WITH THE BUYER AND/OR AN EXPERIENCED FREIGHT FORWARDER.

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27 DANGEROUS GOODS DECLARATION EXPORTS SUBMITTED FOR HANDLING BY AIR CARRIERS AND AIR FREIGHT FORWARDERS CLASSIFIED AS DANGEROUS GOODS NEED TO BE ACCOMPANIED BY THE SHIPPER S DECLARATION FOR DANGEROUS GOODS REQUIRED BY THE INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA). THE EXPORTER IS RESPONSIBLE FOR ACCURACY OF THE FORM AND ENSURING THAT REQUIREMENTS RELATED TO PACKAGING, MARKING, AND OTHER REQUIRED INFORMATION BY IATA HAVE BEEN MET.

28 DANGEROUS GOODS DECLARATION FOR SHIPMENT OF DANGEROUS GOODS IT IS CRITICAL TO IDENTIFY GOODS BY PROPER NAME, COMPLY WITH PACKAGING AND LABELING REQUIREMENTS, WHICH VARY DEPENDING UPON THE TYPE OF PRODUCT SHIPPED AND THE COUNTRY SHIPPED TO. MORE INFORMATION ON LABELING/REGULATIONS IS AVAILABLE FROM THE INTERNATIONAL AIR TRANSPORTATION ASSOCIATION OR DEPARTMENT OF TRANSPORTATION - HAZMAT WEBSITES.

29 DANGEROUS GOODS DECLARATION FOR OCEAN EXPORTS, HAZARDOUS MATERIAL REGULATIONS ARE CONTAINED IN THE INTERNATIONAL MARITIME DANGEROUS GOODS REGULATIONS.

30 SHIPPER S LETTER OF INSTRUCTION THE SHIPPER S LETTER OF INSTRUCTION IS ISSUED BY THE EXPORTER TO THE FORWARDING AGENT AND INCLUDES SHIPPING INSTRUCTIONS FOR AIR OR OCEAN SHIPMENTS. NOT A REQUIRED DOCUMENT, BUT I STRONGLY RECOMMEND USING WITH ANY FREIGHT FORWARDER TO AVOID ANY MISINTERPRETATION OF INSTRUCTIONS.

31 EEI FILING VIA AUTOMATED EXPORT SYSTEM ELECTRONIC EXPORT INFORMATION (EEI) IS THE MOST COMMON OF ALL EXPORT CONTROL DOCUMENTS. IT IS REQUIRED FOR SHIPMENTS ABOVE $2,500 USD, PER ANY SINGLE SCHED B # COMMODITY AND FOR SHIPMENTS OF ANY VALUE REQUIRING AN EXPORT LICENSE. IT MUST BE ELECTRONICALLY FILED VIA THE AES DIRECT ONLINE SYSTEM, WHICH IS A FREE SERVICE FROM CENSUS AND CUSTOMS.

32 EEI FILING VIA AUTOMATED EXPORT SYSTEM *NOTE: THE EEI IS REQUIRED FOR SHIPMENTS TO PUERTO RICO, THE U.S. VIRGIN ISLANDS AND THE FORMER PACIFIC TRUST TERRITORIES EVEN THOUGH THEY ARE NOT CONSIDERED EXPORTS (UNLESS EACH SCHEDULE B ITEM IN THE SHIPMENT IS UNDER $2,500). SHIPMENTS TO CANADA DO NOT REQUIRE AN EEI EXCEPT IN CASES WHERE AN EXPORT LICENSE IS REQUIRED. (SHIPMENTS TO THIRD COUNTRIES PASSING THROUGH CANADA DO NEED AN EEI.)

33 ADDITIONAL RESOURCES TO LOCATE A FREIGHT FORWARDER LOCATE A BROKER OR FREIGHT FORWARDER LOCAL BUSINESS TELEPHONE LISTINGS UNDER FREIGHT FORWARDER OR TRANSPORTATION NUMEROUS ONLINE PRIVATE LISTING SERVICES

34 ADDITIONAL RESOURCES SCHED B AND HTS CODES WORLD CUSTOMS ORGANIZATION UNITED STATES INTERNATIONAL TRADE COMMISSION UNITED STATES CENSUS TRADE/SCHEDULES/B/INDEX.HTML

35 ADDITIONAL RESOURCES EXPORT BASICS AND BEYOND EXPORT.GOV US COMMERCIAL SERVICE US SMALL BUSINESS ADMINISTRATION OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

36 THANK YOU!