CB5u—Intro to U.S. Customs Brokerage, Part 5: Basic HTSUS Classification and Trade Agreements Overview
Subscriber price: $267.00, Non-subscriber price: $350.00
Estimated total study time: 15 hours 30 minutes
This the fifth of the six-part series of introductory courses in the practical work of U.S. customs brokerage work groups, and should be taken after completion of the prior 4 courses for proper continuity:
This course begins with the basic structure of the tariff and why it is important to use the right classification. Next, we talk about the way the tariff is written and the rules for interpretation. Finally, we address the special provisions in Chapters 98 and 99, conditionally free and reduced duties and special treatment, rates of duty and how to calculate it. This is in the context of the most basic classification for a terminal operator who uses a database to determine classification. If there is a question on which classification in the database to use, they will know how to look it up and have a basic understanding of why it is classified there. This course also addresses what to look for when deciding if special treatment is in order. Computation of duty is also included because it may be necessary for calculation of bond amounts or to determine if shipments exceed credit limits.
Important: This course can be taken out of sequence if so desired. If more than a basic understanding of classification is needed, or a refresher for a classifier is required for importing into the United States, please look over course C6u—U.S. Customs Tariff (HTSUS) Classification Basics. For an understanding of import or export classification to six-digits we suggest C5—Harmonized Tariff Classification.
Note: The actual processing of a customs entry is covered in Part 6 of this introductory course series.
Classification of Goods in the Customs Tariff
The Harmonized Tariff Schedule of the United States (HTSUS) is subdivided into various elements which together form the structure of the nomenclature. In order to perform accurate classification it is essential to understand the relation between the elements. In this lesson we will review these elements: sections, chapters, subchapters, headings, and subheadings.
(Estimated study time: 55 minutes)
- Introduction
- Background of the Harmonized System
- Reasons for Global Harmonization
- The Core Classification System for Participating Countries
- Periodic Harmonized System Updates
- Overview of the U.S. Classification System
- U.S. Obligations under the Harmonized System Convention
- Maintenance of the HTSUS
- The U.S. Nomenclature System
- U.S. Tariff Classification Determines Duty and Taxes
- The Importer is Ultimately Responsible for Proper Classification
- Most Commodities are Classifiable
- How Important is it to Get the Right Classification?
- Responsibility for Classification of Imported Goods
- Structure of the HTSUS
- Chapter and Heading Listing to the Rescue
- Sections are Divided into Chapters
- Headings and Subheadings
Notes, Language and Punctuation
The last element to look at in the structure are the notes. They are a very important part of classification and must be consulted in every case. First at the section level, then the chapter level, and finally at the subheading level.
Apart from the very structure of the Harmonized Tariff Schedule of the United States (HTSUS), classifying involves understanding language and punctuation. It is important to know the meaning of some Latin expressions, pay attention to punctuation, and be aware of the language of the HTSUS.
(Estimated study time: 55 minutes)
- Introduction
- HTSUS Section, Chapter and Subheading Notes
- Practical Application of Notes
- Parts of the Tariff Number beyond Six Digits
- Latin Expressions in the HS Represent Specific Concepts
- Text Punctuation Influences Meaning
- The Semi-Colon Meaning for Classification
- Text Punctuation and the Comma
General Rules of Interpretation - Rule 1 and 2
HTSUS Classification in the Harmonized Tariff Schedule of the United States (HTSUS) is governed by six HTSUS General Rules of Interpretation. The General Rules provide a uniform and mandatory system to read and interpret all the elements of the tariff. Knowledge and understanding of those rules is the single most important prerequisite to accurately classify goods. We begin with rules 1 and 2. Rule 1 shows us the legal elements - what to read vs. what not to read. Rule 2 expands the scope of headings to include goods that do not perfectly match the terms of those headings such as incomplete, unassembled, mixed or composite goods.
(Estimated study time: 56 minutes)
- Introduction
- The Operating System
- At a Glance...The Six General Rules
- The Rules Made Readable
- Classification Examples
- General Rule of Interpretation Number 1
- General Rule of Interpretation Number 2
- Rule 2 broadens the scope of the headings
- General Rule 2(a)
- General Rule 2(b)
General Rules of Interpretation 3 and 4
Rule 3 tells what to do when goods are classifiable in two or more headings. There are three parts to rule 3:
- Directs us to the heading whose text better identifies the goods.
- Advises when to use "essential character" to determine the proper heading. If neither of these work,
- Classification numerically in the last heading.
Then there is Rule 4, the rule to use when all else fails. It helps us classify things that cannot be classified anywhere in the HTSUS.
(Estimated study time: 1 hour 22 minutes)
- Introduction
- General Rule of Interpretation Number 3
- Two or More Headings Applicable to Mixtures, Composite Goods and Retail Sets
- General Rule 3(a) – Specific Description
- General Rule 3(b) – Essential Character
- General Rule 3(c) – Appearing Last
- General Rule of Interpretation Number 4
General Rule of Interpretation 5
From Rule 5 we will learn how to classify packing materials and containers. This will include containers specially made for articles, as well as reusable and non-reusable containers.
(Estimated study time: 16 minutes)
- Introduction
- General Rule of Interpretation Number 5
- Packaging and Containers Covered by Rule 5
- General Rule 5(a)
- General Rule 5(b)
General Rule of Interpretation 6
Rule 6 helps us determine the proper HTSUS subheading. We have learned that to find the proper heading we must apply Rules 1-5 in order. Now, to find the subheading, we must apply Rules 1-5 in order again at the subheading level.
(Estimated study time: 15 minutes)
- Introduction
- General Rule of Interpretation Number 6
Additional U.S. Rules of Interpretation 1(a) and (b)
The HTSUS Additional U.S. Rules of Interpretation are provided by the U.S. government to further clarify the GRIs. This lesson details the first two rules dealing with the use and purpose of goods.
(Estimated study time: 23 minutes)
- Introduction
- U.S. Additional Rules Also Affect HTSUS Classification
- Additional Rule 1(a) – Principle Use
- Additional Rule 1(b) – Actual Use
Additional U.S. Rules of Interpretation 1(c) and (d)
Continuing our discussion of the HTSUS Additional U.S. Rules of Interpretation we arrive at clarification for the classification of parts & accessories along with mixtures of textile materials.
(Estimated study time: 16 minutes)
- Introduction
- Additional Rule 1(c) – Parts and Accessories
- Additional Rule 1(d) – Mixtures of Textile Materials
Other Notes Specific to the Harmonized Tariff Schedule of the United States
The HTSUS contains notes in addition to those of the sections and chapters. There are HTSUS General Statistical Notes, HTSUS additional U.S notes, HTSUS General Notes and more! We will discuss each briefly in turn to give an idea of what they are and where to find them.
(Estimated study time: 23 minutes)
- Introduction
- Notes Specific to the HTSUS
- General Notes to the HTSUS
- General Statistical Notes at the Beginning of the HTSUS
- Other Statistical Notes Throughout the HTSUS
More U.S. Notes and Harmonized Tariff Schedule of the United States Information
HTSUS additional U.S notes often give definitions or qualifications useful in classifying specific products. The assessments will provide a couple examples of these. In addition, we will describe other parts of the tariff such as the appendices and statistical annexes.
(Estimated study time: 23 minutes)
- Introduction
- Additional U.S. Chapter and Subheading Notes
- Additional Information Found in the HTSUS
- HTSUS Change Record
- Preface to the HTSUS
- Notice to Exporters
- Appendices to the HTSUS
- Statistical Annexes to the HTSUS
- Alphabetical Index to the HTSUS and the Online Search Function
Special Harmonized Tariff Provisions in Chapter 98 - U.S. Goods Returned
In this lesson we review the conditions for U.S. Goods Returned, otherwise also known as U.S. Goods Returned(USGR). We will also touch on a few other provisions under HTSUS heading 9801 for articles to return to the U.S. with free or reduced duty. Heading 9802 provides provisions for reduced duty for goods exported from the U.S., repaired or altered abroad and then returned to the U.S. This includes repaired articles and articles imported with U.S. content.
(Estimated study time: 1 hour 9 minutes)
- Introduction
- Articles Previously Imported, Not Advanced and Re-imported
- Product Returned to the United States
- Documentation Required for Returned Product
- Documentation for Product Returned to the U.S. Valued at $2500 or less
- Documentation for USGR Valued $250 or Less and Certain Aircraft and Aircraft Parts & Equipment
- Documentation for Foreign and U.S. Goods Returned Valued $800 USD or less
- Documentation for Foreign and U.S. Goods Returned Valued $801 - $2500 USD
- Documentation for USGR Valued over $2500 USD
- Responsibility to Provide Documented Proof for USGR Claim
- Foreign Shippers Declaration (FSD)
- Consignee's or Owner's Declaration
- Manufacturer's Affidavit
- Documentation for Certain USGR Valued at $10,000 or Less
- Other Documents Providing Sufficient Proof of Export
- Documentation Requirements for Certain Aircraft Returned to the U.S.
- Documentation Requirements of Re-imported Goods Under Department of State License
- Articles Previously Imported Duty Paid, Not Advanced and Re-imported
- Articles Previously Imported Duty Paid, Not Advanced while Abroad, and Returned to the U.S.
- Re-imported Articles Exported under Lease
- Articles Exported and Returned
- Articles Exported for Scientific or Educational Purposes and Returned
- Articles Exported for Exhibition and Returned
- U.S. Goods Repaired, Altered, or Processed Abroad and Returned
- Classifications Applicable to Goods Returned after Alteration or Processing Abroad
- The Two-Step Process for U.S. Goods Repaired, Altered, or Processed Abroad and Returned
- Definition of Repairs and Alterations
- What are Not Considered Repairs or Alterations?
- Repairs, Alterations and Processes Completed in a USMCA Country
- Special Documentation Required to Declare Articles Repaired, Altered or Processed
Special Harmonized Tariff Provisions in Chapter 98 - U.S. Content
9802 provides provisions for reduced duty for goods exported from the U.S., repaired or altered abroad and then returned to the U.S. We have already discussed goods repaired or altered abroad so we will continue with articles imported with U.S. content and their conditions for re-importation.
(Estimated study time: 32 minutes)
- Introduction
- Articles with U.S. Content
- Classifications Applicable Articles with U.S. Content
- U.S. Content Articles in General
- Definition of Assembly and Acceptable Assembly Procedures Under 9802
- What are not Acceptable Assembly Procedures
- Valuation of U.S. Components
- Country of Origin Marking of Goods Assembled with U.S. Content
- U.S./Mexico Assembly Provision (Mexican Special Regime)
- Special Documentation for U.S. Content Articles
Chapter 98 Subchapter 8 (9808) - Importations of the United States Government (Government Contract)
There are some other Chapter 98 provisions, but the two additional classifications you will see most often will probably be from HTSUS headings 9808 and 9813. In this lesson we will review imports under government contract and talk a little bit about ITAR.
(Estimated study time: 39 minutes)
- Introduction
- Articles Imported under Government Contract
- Department of Defense Contract Articles
- Government Contract Articles Sold to Government Facilities or DCMCI-IC
- ITAR Direct Government Shipments
- ITAR Government Temporary Imports
Chapter 98 Subchapter 13 (9813) - Articles Admited Temporarily Free of Duty Under Bond (TIB)
In this lesson we continue on with the Temporary Import Bond provisions in Chapter 98. Closing a temporary bond is more important than opening one because if it is not closed properly, the importer may incur double the duties. It is just as important to recognize when a temporary import bond is required and whether it is more beneficial to the importer NOT to file under a TIB.
(Estimated study time: 32 minutes)
- Introduction
- Temporary Imports; Another Two-Step Process
- Importing under a Temporary Import Bond
- Documentation for Temporary Importation Bond Imports
- Additional Fees for Temporary Importation Bond Handling
- Cancellation of the Temporary Import Bond
Special Harmonized Tariff Provisions in Chapter 99
Chapter 99 provides temporary legislation for changes in the rate of duty charged upon import. We will review some of the circumstances to look into Chapter 99 for these special duty rates and some of the conditions for import.
(Estimated study time: 1 hour 0 minutes)
- Introduction
- Chapter 99 General Information
- General Tariff Classification and Entry Procedures for Goods Classified in Chapter 99
- Consult any Filing Instructions, Chapter or Subchapter Notes
- General Entry Filing for Goods Classified in Chapter 99
- When Quota Applies to Goods in Chapter 99
- CBP Rejects for Inaccurate Classification or Information in Chapter 99
- Post Entry for Goods in Chapter 99
- Order of Reporting for Multiple HTSUS Classifications (Column 29A)
Conditionally Free or Reduced Duty Rate Goods
Some goods have a condition that must be met in order to be imported duty free or with a reduced duty rate. In this lesson we will talk about special treatment based on importer, and disposition of goods.
(Estimated study time: 44 minutes)
- Introduction
- Tariff Treatment for "Conditionally" Free or Reduced Duty
- Special Treatment Based on Importer
- Special Treatment Based on Disposition of Goods
- Goods for Personal Use and Commercial Samples Exempt from Quota
Rates of Duty
In order to determine the proper duty rate it is important to be able to read all of the parts of the HTSUS. Different rates of duty columns mean different things. There are codes called special program indicator (SPI)s that increase or decrease normal trade relation (NTR) duty rates. It is also essential to understand certain circumstances where articles are exempted from duty or allowed to be commingled together. This lesson addresses all of these issues.
(Estimated study time: 51 minutes)
- Introduction
- Rates of Duty
- Unit of Quantity
- Duty Columns
- Duty Column 1
- Duty Column 2
- Column 1: Special Rates of Duty
- Duty Exemptions
- Commingling of Goods
Most Common Trade Agreements - GSP and USMCA
Trade agreements have conditions for importing that must be met in order to receive the free or reduced duty rate. Here we review the two most common, GSP and USMCA.
(Estimated study time: 52 minutes)
- Introduction
- Generalized System of Preferences (GSP) Overview
- Articles Designated as Eligible for the Generalized System of Preferences (GSP)
- General Note 4—Products of Countries Designated Beneficiary Developing Countries for Purposes of the Generalized System of Preferences (GSP)
- Identifying Articles under the Generalized System of Preferences (GSP) in the Tariff Schedules
- Status of the Generalized System of Preferences (GSP); Expiration and Retroactive Renewal
- The USMCA Decision
- Understanding USMCA Rules of Origin
- Determining USMCA Eligibility
- USMCA Entry and Refund Processing
- Claiming USMCA at Entry
- USMCA Post Entry Refunds
Trade Agreements for Africa, Australia and the Pacific Islands
In this lesson we talk about the general requirements for various trade agreements and requirements for those specific to the regions of Africa, Australia and the Pacific Islands.
(Estimated study time: 1 hour 6 minutes)
- Introduction
- General Requirements for Special Treatment after Import
- African Growth and Opportunity Act (AGOA) Background
- Articles are Designated as Eligible for the African Growth and Opportunity Act (AGOA)
- Identifying Articles under the African Growth and Opportunity Act in the Tariff Schedules
- African Growth and Opportunity Act (AGOA) and Section 201, 232, 301
- U.S.-Morocco Free Trade Agreement (UMFTA) Overview
- U.S.–Australia Free Trade Agreement (UAFTA) Overview
- Compact of Free Association Overview
Trade Agreements and Special Treatment for Asia
In this lesson we review the requirements for trade agreements specific to Asia. These include BFTA, ILFTA, JFTA and SFTA.
(Estimated study time: 59 minutes)
- Introduction
- Free Trade Agreements for Asia
- United States-Bahrain Free Trade Agreement (UBFTA)
- U.S.-Bahrain Free Trade Agreement (UBFTA) Overview
- U.S.-Bahrain Free Trade Agreement Documentation Requirements
- United States-Israel Free Trade Area (ILFTA)
- U.S.-Israel Free Trade Area Implementation Act of 1985 (ILFTA)
- U.S.-Israel Free Trade Area (ILFTA) Documentation Requirements
- United States-Jordan Free Trade Area Implementation Act
- U.S.-Jordan Free Trade Area Overview
- U.S.-Jordan Free Trade Area Documentation Requirements
- United States-Korea Free Trade Agreement (UKFTA)
- U.S.-Korea Free Trade Agreement (UKFTA) Overview
- U.S.-Korea Free Trade Agreement Documentation Requirements
- United States-Oman Free Trade Agreement (UOFTA)
- U.S.-Oman Free Trade Agreement (UOFTA) Overview
- U.S.-Oman Free Trade Agreement (UOFTA) Documentation Requirements
- United States-Singapore Free Trade Agreement (SFTA)
- U.S.-Singapore Free Trade Agreement (SFTA) Overview
- United States-Singapore Free Trade Agreement Documentation Requirements
Trade Agreements for the Americas Other than USMCA
To continue the coverage of the trade agreements, in this lesson we first cover the many agreements specific to North, Central and South America. The agreements for study in this region are CBERA, CBI, CBTPA, CAFTA, Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE Act), ATPA, ATPDEA and CFTA. USMCA, a commonly used trade agreement, was discussed in a previous lesson.
(Estimated study time: 1 hour 4 minutes)
- Introduction
- Free Trade Agreements for Central America
- Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)
- CAFTA-DR Overview
- CAFTA-DR Free Trade Agreement Documentation Requirements
- Free Trade Agreements for South America
- United States-Chile Free Trade Agreement (UCFTA)
- U.S.-Chile Free Trade Agreement (UCFTA) Overview
- U.S.-Chile Free Trade Agreement (UCFTA) Documentation Requirements
- United States-Colombia Trade Promotion Agreement
- U.S.-Colombia Trade Promotion Agreement Overview
- U.S.-Colombia Trade Promotion Agreement Documentation Requirements
- United States-Panama Trade Promotion Agreement
- U.S.-Panama Trade Promotion Agreement Overview
- U.S.-Panama Trade Promotion Agreement Documentation Requirements
- U.S.-Peru Trade Promotion Agreement
- U.S.-Peru Trade Promotion Agreement Overview
- U.S.-Peru Trade Promotion Agreement Documentation Requirements