Lateral thinking

Many Countries' tariff listings are now on-line which is very helpful.  Even better many of them have search fields so that you can simply put in the name of a product.  What could be more straightforward?   All is not as simple as it seems. 

Just try putting ‘teddy bear’ into the search field.   Do you get a code for that loveable furry friendly soft toy?  No! You get all sorts of headings for ball bearings.  

This illustrates the difficulty in using product descriptions in such search engines.

What do you need to type in if you want the code for that loveable teddy bear?

Toys representing animals or non-human creatures – stuffed!

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Been Dumped Lately?

Did you know that finding the right tariff classification and therefore finding the current duty rate is not always the end of the story?   

Some products are subject to anti-dumping duty (ADD) as well.   This can more than double the basic import duty.   This does not apply only to luxury goods, products as simple as ironing boards can qualify and ADD can be implemented almost overnight.   It pays to keep up with the latest news.   

You have been warned!

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The one and only

Some manufacturers and retailers make arrangements with dealers to be the sole agent or distributor for their goods in a particular country or state.  These arrangements may not be publicised internationally but are often legally binding. They can be commercially enforced and in some countries are enforced by the Customs Authorities at the place of importation. 

The first you may hear about this is when your imported goods are detained in Customs or when they go on sale in the country and the sole agent makes a fuss to the manufacturer or retailer.  Something that can be a minor upset or a major marketing and PR disaster.

If you are a reseller take care to look into this before you commit yourself.

Precious Treasure

Many people will be familiar with the export licensing of electronics, technology and weapons but this week a different kind of export licensing achieved its purpose.

The export licensing of cultural goods in the UK follows a different process to ‘normal’ export licensing but is just as rigorous.  It does though involve a rather different approach for items sold for export.   A process which I have had cause to understand in detail during my career!

 

This process was demonstrated with the gold and turquoise ring that once belonged to author Jane Austin and was recently purchased by singer Kelly Clarkson.

Under the export licensing rules Kelly Clarkson was stopped from taking the ring out of the UK by a temporary export ban.  The ban was put in place to allow interested parties in the UK to raise the money to buy the ring and thus keep in the UK what was considered an important piece of UK heritage. In this case the Jane Austen’s House Museum managed, by public donation and within the strict time limit, to raise the money needed to purchase the ring and it is now theirs to keep.

The export licensing of cultural goods can apply to any object of almost any age if it is judged to be of sufficient national interest – buyer beware!

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Upgrade anyone?

Electronics are often the source of difficulty in international trade but aside from the obvious issues one that is often ‘forgotten’ is the problem that upgrades can bring.   

Having gone to enormous trouble to obtain a tariff classification and export licence for the original item, product development and customer feedback will often lead to the development of a new, improved version.

 

However, what appear to be improvements or extensions to existing functionality can in Customs terms change the classification and the export licence class of the product.  This can mean a change to the tariff code and an invalidation of the export licence.

The result?

An inability to export any of the product until a new export licence is obtained 
An increase in import duty and VAT
Delayed product launches
Unhappy customers

The solution?  Teamwork!


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Cooking up chaos!

I watched a cookery program today which just brought home to me how easy it is to bring chaos to the supply chain.  The chef was using ‘banana shallots’ and ‘egg plant’.    What fun that would be on a shipping invoice particularly in the hands of someone for whom English is not their first language!

Of course ‘banana’ refers to the shape of the shallot – not some genetically modified weird vegetable and ‘egg plants’ are otherwise known as aubergines.

Sometimes it is really important to look carefully at what you write and how others might interpret it.

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Rubies are red

Progressively over the last year most of the sanctions imposed on the movement of goods to and from Burma (Myanmar) have been removed.  But one that remains is in USA legislation that prohibits the import of rubies and jadeite from Burma unless they are personal effects or they had previously been imported to USA before the sanctions were enacted.   

This sanction causes consternation as many people in the jewellery trade have a vague idea that ‘things’ from Burma are forbidden in the USA.   For example Burmese sapphires are not subject to the sanctions whereas Burmese rubies are.  

Don’t look for logic just go read the rules or ask a specialist!

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Country confusion

Almost all shipping documents mention the countries of origin and destination (I say almost all because I have seen shipping invoices with complicated addresses that somehow missed off the country altogether!).   

Most adults would tell you that the country of origin was where the goods came from and the country of destination was where they were going to.   

Ask some school children where things come from and they will tell you the name of the local supermarket!

Ask a procurement person and they will probably tell you the origin was the country from which they bought the goods.  

But in the world of Customs, origin means the country where the goods were actually made and in today’s global market that does not necessarily mean the place they were bought nor does it mean the place where they were shipped from.  Documentation does not always make this clear.  Of course items that were assembled in several different countries bring their own special issues!

Why does it matter?

Some ‘origins’ can confer a significant discount in import duty and tax if certain criteria are met.

So next time you glance at a document and copy down the ‘origin’ of the goods you might pause to wonder if you are wasting an opportunity to save money.

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Rewards for some

I once had a consignment of ‘tombstones’ to import.

Now these caused trouble on many levels – was there a religious element, had someone died?

Made of marble, big and heavy but they were with a courier company?  Something did not add up.

A lot of phone calls and emails later I had some answers.

They were being imported for a party – in fact a rewards ceremony. Further investigation revealed that these tombstones were not made of marble but of plastic and were only 6cms tall. The names on the tombstones were actually the names of winners of a scheme intended to celebrate exceptional employees.

In international trade you learn something new every day!

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Are you related?

The price of goods listed on shipping documents is used to assess duties and taxes.  Commercially the first thought between related companies would be that goods should be transferred between them at discounted or net prices.  This is not however, the view of customs authorities.   The rule is that prices must be at ‘arm’s length’.  This means that the price of goods listed on the shipping documents for customs purposes must be the same as if the transaction was between companies that have no relationship at all.

There are of course detailed rules about how the price must be calculated and what can and cannot be left out of the price for customs purposes.   The more global trade becomes the more likely it is that companies are related in some way so take care with your relations!

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A simple mushroom?

Not much to discuss here from a customs point of view? 

In the EU tariff mushrooms are classified under:

06 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

02 Other live plants (including their roots), cuttings and slips; mushroom spawn

07 Edible vegetables and certain roots and tubers

09 Other vegetables, fresh or chilled

Mushrooms and truffles

Mushrooms

Flap mushrooms

Cultivated mushrooms

10 Vegetables (uncooked or cooked by steaming or boiling in water), frozen

Mushrooms

11 Vegetables provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption

Mushrooms of the genus Agaricus

Mushrooms

Mushrooms, excluding mushrooms of the genera Agaricus, Calocybe, Clitocybe, Lepista, Leucoagaricus, Leucopaxillus, Lyophyllum and Tricholoma, provisionally preserved in brine, in sulphur water, or in other preservative solutions, but unsuitable in that state for immediate consumption, for the food-canning industry

Mushrooms and truffles

12 Dried vegetables, whole, cut, sliced, broken or in powder, but not further prepared

Mushrooms, dried, whole or in identifiable slices or pieces, for treatment other than simple repacking for retail sale

Mushrooms, wood ears (Auricularia spp.), jelly fungi (Tremella spp.) and truffles

Mushrooms of the genus Agaricus

20 Preparations of vegetables, fruit, nuts or other parts of plants

01 Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar or acetic acid

Mushrooms

03 Mushrooms and truffles, prepared or preserved otherwise than by vinegar or acetic acid

Mushrooms

Of course you need to take care not to be confused – 0722 04 wine in bottles with ‘mushroom’ stoppers…..

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Artistic Touch

I learned something new today.  Henri Julien Félix Rousseau  (1844 – 1910) the French Post-Impressionist painter in the Naïve or Primitive style was also known as Le Douanier (the customs officer) because of his job before he retired at the age of 49 and took to painting full time.  Whilst employed by the Government he collected taxes on goods entering Paris.

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Juice anyone?

Just walk into any large supermarket in the UK and you will see rows of different cartons and bottles of a variety of fruit juices.   Now how many of you would suppose that for example all cartons or bottles of orange juice are equal in customs terms?   Juice is juice right?

Wrong!   Next time you pick up a fruit juice give a thought to customs tariff classification.  Actual composition is everything and no that doesn’t just mean percentage of actual fruit juice.

Some cartons of ‘juice’ are actually classified as flavoured water!

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Can you blame them?

I recently came across this excellent description of goods on a shipping invoice: -

‘Ivory 2 meters’

That’s it, that’s all it said – no tariff code, no anything.  

How could anyone be surprised that Customs were interested to find out if they were shipping elephant ivory in contravention of the Convention on International Trade in Endangered Species  (CITES).    Needless to say the goods stuck in customs and the only one surprised was the shipper.

What was actually being shipped?    2 meters of Ivory coloured cotton fabric.

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Freeports?

Today I was asked a very good question – is a Freeport free?  The answer is yes and no.

Freeports are areas where special customs rules apply.

Generally goods may be held in a Freeport without the payment of import duty or tax such as VAT.  This is the only respect in which they are free.

The companies within the Freeport will charge for storage, processing and documentation.  So no they are not ‘free’.

Equally they are not free of rules or regulations and these rules and regulations can be very different in different Freeports and amongst other things they govern how goods can be removed from the Freeport, what can happen to them while they are there, and what duties and taxes will be levied if they are eventually imported into the host country.

Free ports in Switzerland are said to house some of the biggest art collections in the world.   Stored without import duty or tax until a collector, having viewed the item in storage, chooses to buy and import it. 

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U Who?

Ahead of tonight's football match between England and Ukraine lets just get the countries sorted out.

The Customs Country Code for Ukraine is not UK.
UK is short for United Kingdom of England, Northern Ireland, Scotland and Wales.
But the Customs Code for the UK is GB.
The Customs Code for Ukraine is UA.
UA is not the Code for the United Arab Emirates.
The Code for the UAE is AE.

Got that?!

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Bejewelled

During my piano lessons this morning (yes I teach piano as well as import / export) it occurred to me to wonder how many of my shipping friends would appreciate the challenge of providing a tariff classification for a functional grand piano that is also a million dollar work of art and contains a player system and electronics.

Take a look at this link to see what I mean ..New York Serenade piano

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A Hangover for Moldovans?

The people of Moldova may be drowning their sorrows at losing to England tonight in an unwelcome wine lake!  Russia is apparently blocking imports of their wine to dissuade them from forming closer trade ties to the EU.

Did you know that wine was Moldova's biggest export and Russia it's largest customer? Have you ever tried Moldovan wine - what was it like?

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