ECCN, HS codes, tariff codes, ECL number, ITAR Category.
In the age of information, just about everything requires to be coded if for no other reason than to be processes by a computer. Unfortunately, very few systems use the same coding system, thus requiring knowledge of multiple coding systems in order to run a business. In International trade, using an incorrect code can lead to delays, result in higher duties having to be paid, or worse still, lead to seizures and penalties
Getting your products assessed by experts ensures that you have the correct classifications on hand to safely and efficiently manage your international transactions.
Impact to Business
We often underestimate the complexity and challenge and also the daily impact of selecting the appropriate HS codes, or the effect that certain HS codes will have on your delivery times to customers. The Customs departments of most countries, and in particular of the USA, will “flag” shipments based on the HS code provided. If the HS code is incorrect this could result in unnecessary delays. Providing an incorrect HS code may also lead to higher costs to your customer, who may then opt for a supplier that will provide more accurate data to avoid those additional duties or even penalties.
Imagine you quote your customer a per item cost of $20. However, on import you learn that there is an additional 20% VAT and another 5% duty (tied to those HS Codes, no applicable Trade Agreement). Plus, because of the Incoterm you agreed to, as part of negotiations, you would be responsible for covering those costs. Your $20 part just increased in price by 25%; a cost you did not factor into the quote price to the customer!
How we can help
Our extensive understanding of customs, trade agreements and the HS system enables us to work in collaboration with your team to review current systems in place and identify cost drivers and compliance. At Heroxx Logistix, we are always up to speed on the latest requirements that need to be met to move goods across borders with minimal delay.
In addition, our knowledge of the harmonized system allows us to confidently assign the correct as well as accurate classification to your product. And if necessary, challenge the classification assigned by others. We verify the country of origin and we document the approval process of the numerous agencies in the country of destination. We also provide full understanding of the Rules of Origin to enable you to benefit from applicable Free Trade Agreements.
Export Control Classification
The Export Control classification process is complex, often requiring engineering know-how in order to categorically select one classification over another, or to certify that no classification exists. This could lead to a decision not to apply for an export permit/license. The process is further complicated by the fact that while an item may not be export-controlled based on the ECL, it may yet be subject to control if it has sufficient US-origin content and is controlled under US law and US classification. It is also important to remember that a particular item may have different classifications or control status under the four North American export and domestic control regulations:
- CCL – Export Administration Regulations (USA)
- ECL – Export and Import Permits Act (Canada)
- USML – International Traffic in Arms Regulations (USA)
- DPA – Schedule to the Defence Production Act (Canada)
Impact to Business
The risks are immense – attempting to export a controlled item without requisite export authorisations generally results in immediate detention, monetary penalties, seizure, and ultimately can result in criminal proceedings. This is definitively not the place to cut corners!
While the various government agencies will gladly provide you with their opinion as to the controlled status of an item, keep in mind that a classification is always subject to interpretation. And in case of doubt, it may be easier for government bodies to impose a heavier burden on an exporter than to further research a product to ensure that it is not controlled. Once you have formally established a specific export or domestic control classification it is often hard to have that reversed or changed.
How we can help
We are experts at classification! We will provide you with a written assessment of your items outlining the reason why it is (or is not) controlled. Whenever appropriate we will make representations on your behalf to the relevant authorities providing the reasoning for such classifications. We can also provide, as required, expert witness services in court proceedings.
Qualifying to a Free Trade Agreement
Our extensive understanding of customs, trade agreements and the HS system enables us to work in collaboration with your team to review current justifications of origin for products that at first glance may not qualify. As part of our services we will provide you with the legislative backup to issue certificates of origin to benefit from free-trade agreement rates for goods destined to any country in which Canada and that country are FTA partners.
We also provide full understanding of the Rules of Origin of each agreement including the new United States-Mexico-Canada Agreement (USMCA), the European agreement (CETA) and other free trade agreements such as those with EFTA, Israel, Korea, Chile, Peru, Colombia, Costa Rica and Jordan.
We will provide you with the correct form, a written report outlining how your product qualifies, the full rule of origin, and any additional pertinent information including the existence of tariff rate quotas and options for raw material substitutions.
GET CLARITY ON WHICH CODES APPLY TO YOUR PRODUCTS
Classification is one of those things that need to get done correctly from the very beginning. With a clean database, regular maintenance and updates, there can be no confusion!