So far I've written quite a bit about international trade, but not much about beads. With the arrival of my shipment rapidly approaching it's time to change that.
Being a bead novice the first stop in my quest for basic information was the local library. There I found a rather worn, thin trade paperback by the name "A Handbook on Beads" by W.G.N. van der Sleen. Published in 1967, and out of print since the 1970s, this book is still an excellent resource for a bead beginner.
The first of the two parts of the book is all about terminology. This is where the real value of this work lies. Several pages of diagrams are included to illustrate bead shapes, different measurement points, patterns, and even production methods and materials. That many of the terms are given in 5 languages is an added bonus.
Part 2 of the Handbook contains overviews of different types of beads historically made in different regions. Again there are useful diagrams and for some regions chemical analysis of early beads by type (wound or drawn) and color is provided.
Overall I was impressed enough with the wealth of information in the book to track down a copy for myself. Given the age of the book copies in good condition are not always easy to come by. The copyright page in mine states that it was part of a run of only 1,000 from 1973, printed as a courtesy after the book was out of print. I have found no mention of later printings. Sadly, there will not be any updated editions either, the author passed away shortly after the original publication.
Title: A Handbook On Beads
Author: W.G.N. van der Sleen
ISBN: 0873870603
Sunday, December 25, 2011
Monday, November 28, 2011
HTS - Method and Madness
Most items being imported to the US need to be classified to determine what duty rate must be paid, whether the item is subject to import quotas, and even whether or not the item can even enter the country. The classification system used is known as the Harmonized Tariff Schedule of the United States - usually referred to as simply HTS(US).
The HTS is divided into over 90 chapters broken down by material, item type and primary usage which assign a 6-10 digit number to everything. In general a lower chapter number corresponds to items closer to a raw material state. Determining the correct classification for something can be as much an art as a science. With this in mind, let's first take a look at some of the General Rules of Interpretation.
General Rule 2(a) states:
"Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled."
This particular rule is not applicable in my case, but does mean that you cannot reduce the duty on an import by shipping it in pieces unless the parts are sent in separate shipments. In the eyes of customs a pile of bicycle parts that can be assembled into a bicycle are equivalent to one already assembled.
Rules 3 and 5 largely deal with the order of operations in trying to classify items, including how to handle mixtures or things that are only partially described by the applicable headings. Rule 3 also provides a tie breaker for determining the HTS code of an article that is equally described by multiple headings with the same level of specificity: use the one with the highest number.
The fourth rule is the shortest and in my opinion most straight forward. "Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin." In short, if your item simply isn't listed anywhere, classify it as the most closely related item that is.
I highly recommend reading the General Rules of Interpretation for yourself. There are 6 as of the writing of this article, though the PDF version also contains over 600 pages of General Notes - additional rules, updates, and exceptions.
Some items are very straightforward to locate in the HTS. Take glass beads for example. The entirety of Chapter 70 is dedicated to glass products, so that is a logical starting point. Heading 7018 covers "Glass beads, imitation pearls, imitation precious or semiprecious stones and similar glass smallwares and articles thereof other than imitation jewelry; glass eyes other than prosthetic articles; statuettes and other ornaments of lamp-worked glass, other than imitation jewelry; glass microspheres not exceeding 1 mm in diameter." Given that the first two words are 'glass beads', 7018 should be the correct heading. Determining the proper subheadings is similarly trivial in this case. 7018.10 covers "Glass beads, imitation pearls, imitation precious or semiprecious stones and similar glass smallwares." 7018.10 has three subheadings underneath it, neither of the first two apply, so we default to the last one, "other" giving a final HTS code of 7018.10.50 for glass beads.
A more difficult example is beads made of camel bone. Chapter 5 is for "Products of animal origin, not elsewhere specified or included," but does not contain any headings for finished bone products. It does however note that for the purposes of the HTS, 'ivory' means not only ivory in the traditional sense but teeth as well. To find an appropriate heading I searched prior customs rulings for the term "bone bead" and came up with heading 9601 - "Worked ivory, bone, tortoise-shell, horn, antlers, coral, mother-of-pearl and other animal carving material, and articles of these materials (including articles obtained by molding)." Reading through the few available subheadings leads to a final answer of 9601.90.60.
For truly unique items, it's safest to request that customs rule on the correct classification for your item. Information on how to request a ruling can be found at http://www.cbp.gov/xp/cgov/trade/legal/rulings/
The HTS is divided into over 90 chapters broken down by material, item type and primary usage which assign a 6-10 digit number to everything. In general a lower chapter number corresponds to items closer to a raw material state. Determining the correct classification for something can be as much an art as a science. With this in mind, let's first take a look at some of the General Rules of Interpretation.
General Rule 2(a) states:
"Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled."
This particular rule is not applicable in my case, but does mean that you cannot reduce the duty on an import by shipping it in pieces unless the parts are sent in separate shipments. In the eyes of customs a pile of bicycle parts that can be assembled into a bicycle are equivalent to one already assembled.
Rules 3 and 5 largely deal with the order of operations in trying to classify items, including how to handle mixtures or things that are only partially described by the applicable headings. Rule 3 also provides a tie breaker for determining the HTS code of an article that is equally described by multiple headings with the same level of specificity: use the one with the highest number.
The fourth rule is the shortest and in my opinion most straight forward. "Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin." In short, if your item simply isn't listed anywhere, classify it as the most closely related item that is.
I highly recommend reading the General Rules of Interpretation for yourself. There are 6 as of the writing of this article, though the PDF version also contains over 600 pages of General Notes - additional rules, updates, and exceptions.
Some items are very straightforward to locate in the HTS. Take glass beads for example. The entirety of Chapter 70 is dedicated to glass products, so that is a logical starting point. Heading 7018 covers "Glass beads, imitation pearls, imitation precious or semiprecious stones and similar glass smallwares and articles thereof other than imitation jewelry; glass eyes other than prosthetic articles; statuettes and other ornaments of lamp-worked glass, other than imitation jewelry; glass microspheres not exceeding 1 mm in diameter." Given that the first two words are 'glass beads', 7018 should be the correct heading. Determining the proper subheadings is similarly trivial in this case. 7018.10 covers "Glass beads, imitation pearls, imitation precious or semiprecious stones and similar glass smallwares." 7018.10 has three subheadings underneath it, neither of the first two apply, so we default to the last one, "other" giving a final HTS code of 7018.10.50 for glass beads.
A more difficult example is beads made of camel bone. Chapter 5 is for "Products of animal origin, not elsewhere specified or included," but does not contain any headings for finished bone products. It does however note that for the purposes of the HTS, 'ivory' means not only ivory in the traditional sense but teeth as well. To find an appropriate heading I searched prior customs rulings for the term "bone bead" and came up with heading 9601 - "Worked ivory, bone, tortoise-shell, horn, antlers, coral, mother-of-pearl and other animal carving material, and articles of these materials (including articles obtained by molding)." Reading through the few available subheadings leads to a final answer of 9601.90.60.
For truly unique items, it's safest to request that customs rule on the correct classification for your item. Information on how to request a ruling can be found at http://www.cbp.gov/xp/cgov/trade/legal/rulings/
Sunday, November 13, 2011
The ISF
Part of the importing process for the USA is a bit of paperwork called the Importer Security Filing, or ISF for short. This will often be the first document submitted to customs for your shipment.
The ISF is one of the results of a piece of legislation called the SECURITY AND ACCOUNTABILITY FOR EVERY PORT ACT OF 2006 (SAFE Port Act for short). Title 2 of the Act, "SECURITY OF THE INTERNATIONAL SUPPLY CHAIN", particularly 203(a)(1), requires that customs "identify and seek the submission of data related to the movement of a shipment of cargo through the international supply chain" which resulted in an "interim final" rule published in the Federal Register on November 25, 2008 (73 FR 71730).
This rule spelled out 10 pieces of data an importer needs to submit, plus reiterated 2 pieces of data that ocean carriers were already required to submit for each shipment, leading to the "10+2" moniker for the ISF. Additionally, it spelled out the 24 hours prior to loading deadline for ISF submission. If you are using a customs broker they will have their own deadlines for turning over the information to give them time to complete the filing.
The 10 pieces of data needed for the ISF are:
All of these are relatively straightforward with the exception of the HTS numbers which I'll cover another time. It's possible for multiple items to be the same entity, though it varies with each individual situation. One of the most common cases where two data points could be the same is when purchasing from directly a factory - the seller and manufacturer/supplier are likely to be the same in that instance.
The rule requiring the ISF went into effect on January 29, 2009. For the first year "flexible enforcement" was in place and there were no penalties for late filing or mistakes provided a good faith effort and progress were being made toward compliance. In late January 2010 full enforcement was scheduled to go into effect with fines of $5,000 for each error as well as late or non-filing.
The ISF is one of the results of a piece of legislation called the SECURITY AND ACCOUNTABILITY FOR EVERY PORT ACT OF 2006 (SAFE Port Act for short). Title 2 of the Act, "SECURITY OF THE INTERNATIONAL SUPPLY CHAIN", particularly 203(a)(1), requires that customs "identify and seek the submission of data related to the movement of a shipment of cargo through the international supply chain" which resulted in an "interim final" rule published in the Federal Register on November 25, 2008 (73 FR 71730).
This rule spelled out 10 pieces of data an importer needs to submit, plus reiterated 2 pieces of data that ocean carriers were already required to submit for each shipment, leading to the "10+2" moniker for the ISF. Additionally, it spelled out the 24 hours prior to loading deadline for ISF submission. If you are using a customs broker they will have their own deadlines for turning over the information to give them time to complete the filing.
The 10 pieces of data needed for the ISF are:
- Seller
- Buyer
- Importer of record
- Consignee
- Manufacturer (or supplier)
- Ship to party
- Country of origin
- Commodity HTSUS number
- Container stuffing location
- Consolidator (stuffer)
All of these are relatively straightforward with the exception of the HTS numbers which I'll cover another time. It's possible for multiple items to be the same entity, though it varies with each individual situation. One of the most common cases where two data points could be the same is when purchasing from directly a factory - the seller and manufacturer/supplier are likely to be the same in that instance.
The rule requiring the ISF went into effect on January 29, 2009. For the first year "flexible enforcement" was in place and there were no penalties for late filing or mistakes provided a good faith effort and progress were being made toward compliance. In late January 2010 full enforcement was scheduled to go into effect with fines of $5,000 for each error as well as late or non-filing.
Monday, November 7, 2011
International Freight in a Nutshell
What goes into moving store inventory from one country to another? To start with, large quantities of items, no matter what they are, get heavy and bulky fast. Dropping them into cardboard boxes and mailing internationally quickly becomes prohibitively expensive. If it's not a time sensitive delivery the most cost effective option is ocean freight.
The process for moving goods via international freight can be broken down into a few major areas:
For the inventory and packing part, it can be a sanity saver to have an agent on site to look out for your interests. I was lucky enough to have Gabi of catfluff.com overseeing the work. She even provided pictures!
Due to weight we went with sturdy metal boxes for packaging instead of cardboard. The average weight of the packed boxes is 28-29 kilograms (62-64 pounds), with the lightest around 10kg (22 pounds) and the heaviest a relatively back-breaking 34kg (75 pounds).
Once the goods are packed, invoices drawn up, and payments made, the exporter can work on clearing customs for the source country. If everything goes smoothly all paperwork will be approved quickly and you can move on to transporting your goods.
For transport on a cargo ship your items have to be packed into shipping containers. These come in a variety of configurations either 20 or 40 feet in length. Ships are more limited by container volume than weight. If your shipment isn't large enough to fill a container then it will be combined with others by a consolidator to make better use of space. Freight carriers bill by dimensional weight, meaning rate you pay are is larger of the cost by weight or the cost by volume. All freight is measured in metric units and rates are by metric ton (1,000 kilograms) or cubic meter. $100 per unit seemed to be roughly the going rate when I started this process. Transit times can usually be measured in weeks. Travel time from ports on India's west coast to New York City is just over 3 weeks.
Any shipment coming into the USA that is valued at over $2000 requires what is called formal entry. Formal customs entry entails lots of paperwork, a bond to cover duty and other fees, and a good amount of waiting. Some of the requirements are complex enough that there are licensed brokers who handle customs paperwork for a fee though it's completely legal to do your own filing and document running. Numerous government agencies get involved as well depending on what you're importing. The FDA, EPA, FWS and more can all impose additional requirements, fees, and inspections on your shipment. For my shipment the Fish and Wildlife Service's caveats could potentially come into play due to some of the beads being made of bone.
Once a shipment is finally released by customs, it has to be delivered. Many customs brokers will also arrange freight forwarding. Fees for this will vary with weight and bulk of your shipment, distance from the port, and whether or not the delivery address has a loading dock.
In the USA delivery is not the end of the line for shipments that went through formal entry. There is a process called liquidation during which customs reviews and finalizes all paperwork involved then closes the file on your shipment. Normal liquidation can take up to 1 year, though there are cases that can cause it to take longer. It's a very good idea to plan to hold on to any related paperwork for at least 5 years afterwards.
For a first time importer, you want to allow extra time for the whole process. Doubly so if the person you are buying from is not an experienced exporter. I started back in mid-September and as of November 1st my shipment was finally on a ship pulling out of port.
The process for moving goods via international freight can be broken down into a few major areas:
- Inventory and packing
- Export paperwork and customs
- Loading and transport
- Import paperwork and customs
- Delivery
For the inventory and packing part, it can be a sanity saver to have an agent on site to look out for your interests. I was lucky enough to have Gabi of catfluff.com overseeing the work. She even provided pictures!
Due to weight we went with sturdy metal boxes for packaging instead of cardboard. The average weight of the packed boxes is 28-29 kilograms (62-64 pounds), with the lightest around 10kg (22 pounds) and the heaviest a relatively back-breaking 34kg (75 pounds).
Once the goods are packed, invoices drawn up, and payments made, the exporter can work on clearing customs for the source country. If everything goes smoothly all paperwork will be approved quickly and you can move on to transporting your goods.
For transport on a cargo ship your items have to be packed into shipping containers. These come in a variety of configurations either 20 or 40 feet in length. Ships are more limited by container volume than weight. If your shipment isn't large enough to fill a container then it will be combined with others by a consolidator to make better use of space. Freight carriers bill by dimensional weight, meaning rate you pay are is larger of the cost by weight or the cost by volume. All freight is measured in metric units and rates are by metric ton (1,000 kilograms) or cubic meter. $100 per unit seemed to be roughly the going rate when I started this process. Transit times can usually be measured in weeks. Travel time from ports on India's west coast to New York City is just over 3 weeks.
| Shipping route for India America Express |
Any shipment coming into the USA that is valued at over $2000 requires what is called formal entry. Formal customs entry entails lots of paperwork, a bond to cover duty and other fees, and a good amount of waiting. Some of the requirements are complex enough that there are licensed brokers who handle customs paperwork for a fee though it's completely legal to do your own filing and document running. Numerous government agencies get involved as well depending on what you're importing. The FDA, EPA, FWS and more can all impose additional requirements, fees, and inspections on your shipment. For my shipment the Fish and Wildlife Service's caveats could potentially come into play due to some of the beads being made of bone.
Once a shipment is finally released by customs, it has to be delivered. Many customs brokers will also arrange freight forwarding. Fees for this will vary with weight and bulk of your shipment, distance from the port, and whether or not the delivery address has a loading dock.
In the USA delivery is not the end of the line for shipments that went through formal entry. There is a process called liquidation during which customs reviews and finalizes all paperwork involved then closes the file on your shipment. Normal liquidation can take up to 1 year, though there are cases that can cause it to take longer. It's a very good idea to plan to hold on to any related paperwork for at least 5 years afterwards.
For a first time importer, you want to allow extra time for the whole process. Doubly so if the person you are buying from is not an experienced exporter. I started back in mid-September and as of November 1st my shipment was finally on a ship pulling out of port.
Thursday, October 27, 2011
Taking the Plunge
Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable. ~Sidney J. Harris
Regret is a powerful thing, it leaves you wondering what if and more over and over again. I've decided it's time to stop playing the what if games and start taking chances to make life better. This isn't the first big chance I've signed myself up for, but in some ways it's both the most exciting and terrifying yet.
So what did I do? I agreed to put somewhere between 4 and 6 months of living expense money on the line and buy the inventory of a liquidating bead store in India. I've never been to India. Or Asia for that matter. In fact, I've been to exactly two countries in my lifetime and they're both in North America with a huge demilitarized border in between them. I also know very little about beads.
Why beads if I don't know anything about them? To start with it's something radically different than what I've done before. Jewelry also seems to be selling well, though I don't have the knack for making it myself. If I can help a few jewelry makers come up with interesting new pieces then I'd consider that a small victory. Doubly so if I happen to make a bit of money while doing it. I also can't think of a much better excuse to learn the difference between a bicone and a briolette than having an enormous pile coming to sort through and describe.
There's more than just learning about beads involved in this venture. I'm learning a lot about international trade. As a first time importer some aspects of what's involved in the process seems anywhere from archaic to paranoid to just plain weird. I'll talk about that more another time. For now, hello, World! A new bead vendor is on the way!
Regret is a powerful thing, it leaves you wondering what if and more over and over again. I've decided it's time to stop playing the what if games and start taking chances to make life better. This isn't the first big chance I've signed myself up for, but in some ways it's both the most exciting and terrifying yet.
So what did I do? I agreed to put somewhere between 4 and 6 months of living expense money on the line and buy the inventory of a liquidating bead store in India. I've never been to India. Or Asia for that matter. In fact, I've been to exactly two countries in my lifetime and they're both in North America with a huge demilitarized border in between them. I also know very little about beads.
Why beads if I don't know anything about them? To start with it's something radically different than what I've done before. Jewelry also seems to be selling well, though I don't have the knack for making it myself. If I can help a few jewelry makers come up with interesting new pieces then I'd consider that a small victory. Doubly so if I happen to make a bit of money while doing it. I also can't think of a much better excuse to learn the difference between a bicone and a briolette than having an enormous pile coming to sort through and describe.
There's more than just learning about beads involved in this venture. I'm learning a lot about international trade. As a first time importer some aspects of what's involved in the process seems anywhere from archaic to paranoid to just plain weird. I'll talk about that more another time. For now, hello, World! A new bead vendor is on the way!
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