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How to Catch a Blooper

Tue Apr 20 2010
David Johnson
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If you are reading this blog, I can safely assume that you are a human. As a human, I can also assume that you have made a mistake or two in your day. If you have happened to ever make one when filing your electronic documentation for an international shipment and then received a call from a friendly person in the Commodity Analysis Branch of the Foreign Trade Division questioning your reporting, you might be wondering why we decided to look at your particular shipment. Lets start with the basics.

The Technology

First, an editing program that uses powerful database manipulation software combs through every variable in every line of data and puts it up against a set of criteria that we call the Edit Master. The Edit Master is a data set that contains range values and requirements for each of the 17,736 Harmonized Tariff Schedule import codes and 8,894 Schedule B export codes. You heard correctly, there is a separate set of requirements for each different code. This is one of the reasons why if you ever speak with one of our commodity analysts they will want to find out, with as much detail as possible, what exactly you are shipping.

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How It Works

During the edit processing, if the program comes across a record that does not meet one of the criteria in the Edit Master, it will receive a flag code that identifies why it failed the edit program.These records are sent to a separate file for later review by an analyst. One of the most informative checks the program uses is to test the ratio between the value and quantity (unit value/price). Over the last twelve months, for both imports and exports, shipments with a unit value higher than our maximum Edit Master value was the number one reason for flagging a record. The value for the maximum and minimum unit value are constantly being updated based on market values and information gained from direct contact with shippers. If a shipment is flagged for having a value quantity ratio outside of our range, it does not mean that it is wrong, but it means that on average, a commodity with this classification does not have that high or low of a unit price.

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What Can Go Wrong and How to Avoid it

There are practically as many ways a person might misclassify their shipment as there are classifications. Some examples are misreading a heading description, not accounting for a subheading, classifying something as a machine when it is just a part of the machine; the list goes on and on. Well, today is your lucky day. I am going to tell you about a little tool that will make classifying your future shipments a breeze! Here it is: The General Rules of Interpretation (starting on page 3 of the pdf). The G.R.I. are how all commodities are classified. I find the rule that offers some of the best guidance is 3b (though the others are equally important, this one is useful for tricky commodities):

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[Composite commodities] shall be classified as if they consisted of the material or component that gives them their essential character. . .

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Of course, no classification will save you if you are including the cents in your reported value and it gets converted from $10,000.00 to $1,000,000; values are required to be reported to the nearest whole dollar without the cents. Trust me, we have seen it all.

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