Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the how to save duty by using Chapter 98 HTS classification webinar. My name is Nicole Gallanis. I'll be the host for the webinar today. And we're going to have about 45 minutes of content and presentation material with about 15 minutes of question and answer at the end, maybe 10 minutes depending on time. [Operator Instructions] Upon completion of the webinar when we end the session, I will be sending an e-mail out that will have a copy of the material presented today at the end of the survey that you complete. So the e-mail will include a link to a survey once you respond to the survey, it will direct you to a link to download the presentation that we're viewing today in the webinar. So now I'm going to go ahead and introduce our speakers. We have with us today, Madeleine Veigel. She's the Director of Customs for the Americas at Expeditors, Ted Henderson, Senior Adviser for Customs for the Americas; and Stephanie Holloway, Regional Manager for Customs for the Americas. With that, I will pass it over to them to get us started with the content.

All right. Thank you, Nicole, and thank you, everyone, for joining our webinar today. Welcome. I appreciate you joining. So this is part of our ongoing effort to provide useful information to really support your journey in managing a U.S. import ecosystem that really is not only compliant but also delivers maximum value for your company. So today, we're going to focus on a chapter of the harmonized tariff schedule of the United States that provides opportunities to minimize duty payment on certain types of imports. So this is actually we're revisiting this subject. We talked about this last year. We did a webinar on this topic, but a lot of folks asked if we could, like I said, revisit it. So today, we will be talking about Chapter 98 of the HTS U.S., the harmonized tariff schedule of the U.S. and which is appropriately titled Special classification provisions. We're going to be opening with a quick overview of Chapter 98, then we'll dig into the 5 key sub chapters in 98 that we're really going to focus on today. So you can understand the benefits, the risks, the obligations that are associated with each of those 5 sub chapters. And as a customs broker, we often get asked by our customers, whether they should take certain actions or if other importers are doing this, are they doing that. So we will provide a snapshot of how our Expeditors in part customers utilize some of these Chapter 98 sub chapters. And don't panic if you are one of those importers, we don't -- we will not them names. We're just going to give you a general view by subchapter. Also, you'll notice throughout the presentation, we do have links to certain resources that are embedded in the various slides along the way but also rest assured, we do close with a single page of resources at the end of the presentation. For those of you who might not have heard Nicole announced this at the beginning of the presentation, we will provide a copy of the presentation for you. So you don't need to frantically screen print, just sit back, take in the information. And finally, we are going to cover really a fair amount of information and a fair amount of ground in this 60-minute journey. So we simply will not be able to get into sufficient detail on maybe how this Chapter 98 provision might work for your particular article that you're trying to import. So once you've taken in all this information, please feel free to reach out to your local Expeditors folks and have a little bit more detailed conversation about how you might be able to save some duties in Chapter 98 classifications. So let's start off with a quick review of the HTS U.S, the harmonized tariff schedule. So this is -- for some of you, maybe a reminder, maybe news to others, but the basic harmonized schedule is a global document that's administered and controlled by the World Customs organization. So the basic document contains 97 chapters and it's intended to provide a uniform means to classify goods that might be imported or exported across any country's border. It's arranged in a pretty logical structure. It starts with the most basic goods, live animals in Chapter 1, and it progresses all the way through to Chapter 97 where we get into art and antiquities. Over 200 countries have all agreed to use these descriptions and the classifications at the 6-digit level in Chapters 1 through 97. When a country does adopt the harmonized schedule, they have the right to tailor the HS in order to provide more granular classification. So here in the U.S. we go down to the 10-digit level for statistical breakouts and duties at the 8 digit. But you also have the -- as a country, you have the opportunity to add additional chapters to address certain goods so that your country law that might have established certain duty conditions for the import of certain goods. You can identify that in the additional chapters. In the U.S. our adapted version of the harmonized schedule is known as the harmonized tariff schedule of the United States or simply, we're just going to call it the HTS. And in the U.S., we've added Chapter 98 for some special classification and provisions for imported goods. And then Chapter 99 has in place to address certain temporary legislation that Congress might have passed or modifications to duty rates, and may of us are very familiar with Chapter 99, because that's where we find the Section 301 trade remedy tariff. So typically we find 98 is the good guide chapter, where we find opportunities to save duty and then Chapter 99 highlights the areas where we end up paying a little bit more duty. So let's get to 98 and talk about that a little bit. The good news about 98 again is that it really is the one that minimizes or erases the obligation to pay duty on certain goods. So here you're going to see we've grouped the 23 sub chapters of Chapter 98 into 6 major groups. This is not an official government grouping, this isn't sanctioned by the WCO or U.S. Congress or anything else. This is an Expeditors grouping of how things kind of fall into certain categories. So first, we have a cluster of HTS under 98, the sub chapters that for goods that were previously imported. And we're going to talk a lot about those 3 areas. Next, we have personal exemptions, and we're not covering those at all. You'll see the items that are started along the way are the ones we'll really dig into. But personal exemptions for residents that are moving back or military personnel, things like that. Then there's another class of exemptions for specific groups. So U.S. government imports or foreign government imports or for religious groups or whatever the case may be educational imports. And then we have imports under bond. And the most common thing we all may be aware of, hopefully, is the idea of temporary imports under bond, TIB. And so we'll talk about that. And then you have this other collection of lack of anything else, other, other, other for those of you who know the tariff schedule. So this is things like 9911 for samples or 9817. There are certain special classification provisions. And then finally, there's a cluster of things that fall into 98 that are free trade provisions. So the USMCA, the new NAFTA, things like that fall under Chapter 98. So if we really dig in a little bit to the 98 special classification provisions, I want to highlight some general points as we're starting to get in here. First, you are not obligated to use you as an importer, any of us are not obligated to use Chapter 98 provisions. Chapter 1 through 97 really cover -- those are the traditional provisions that we're going to declare to U.S. customs and border protection for our imported goods. But you may choose to use 98 because again, there's an opportunity perhaps to save duties. And so that's why you want to do it. But do keep in mind that U.S. customs and border protection, they're going to perhaps take a little harder look at your use of those provisions. And so typically, 9801, tends to pop up on their radar, and they may ask questions about goods imported under 9801. So do be aware of the -- again, kind of the additional obligations, do understand that 98 has chapter notes just like every other chapter of the HTS. So please make sure that not only are you aware of the regulations that our 19 CFR Part 10, but also pay attention to the HTS and the chapter notes that go along and read those and understand it. Do you understand like anything, when you're classifying in 98, there may be separate provisions in 98 that you can use and use the one that makes the most sense, obviously. Before you go down the road of claiming 98, please make sure you are prepared to back it up and backup your claim because, again, like I said earlier, CBP looks a little bit harder at use of these special duty provisions as opposed to stuff in chapters 1 through 97. So make sure you've got the things that are necessary to back up your claim. The final thing I constantly try to remind folks about if you're goods are duty free in the HTS under Chapters 1 through 97, just use those provisions. By and large, I mean, there may be reasons to use 98, and I certainly understand that. But if you're using a duty-free HTS and Chapters 1 through 97, you have typically fewer regulatory obligations, fewer documentary obligations to substantiate your claim. So a lot of times, it just makes sense to go ahead and go with. If something is duty-free in Chapter 44, go with Chapter 44. All right. Now we can dig into some of the sub chapters and let's dig into everyone's favorite 9801. So 9801 is articles exported and returned, not advanced or improved in condition, and that's how we're underlying our emphasis on not. This is one of the most popular, and if you're looking at video, see my big air quotes. It's really one of the most commonly used provisions in 98 is 9801.00.10. So this is -- this is generally known or has been known for those who have been in the industry for a while as U.S. goods returned. The actual provision states that its products of the United States when returned after having been exported or any other products when returned within 3 years after having been exported without having been advanced in value or improved in condition by any process of manufacturer or other means while abroad. So you can see there, we have a reprint of the actual HTS. There are a couple of specific statistical breakouts here, but the general idea is that we're talking about a good that was exported and returned without being improved. This -- again, like I said, this -- we used to call this U.S. goods returned, and it used to only apply to U.S. goods. But the law was changed when the trade facilitation Trade Enforcement Act went into effect about 7 years ago. I personally love this modification to this provision. It was -- to me, one of the best things that came out of the TFTEA or the Trade Facilitation Trade Enforcement Act. I will tell you, as a former U.S. Customs officer, I would regularly get calls from importers basically yelling at me because they were explaining to me they had purchased a product, a good from another country, imported it, paid duty for whatever reason, had shipped it out to another country. And now they were bringing it back and they were going to have to pay duty again, and they were very frustrated about that. And so they want to share that frustration with me as a customs officer. I also know that when I did go out and join the dark side and become an importer, I had the same problem. I worked for a company that bought very expensive equipment that typically was made in either Japan or Germany. We imported in the United States, our very qualified sales force was very good about selling that. And so we would sell that equipment to maybe somebody in Brazil, ship it off to Brazil. And again, our wonderful sales force would say, hey, 2 years later, we have a new and improved version of this equipment. How would you like to buy the new and improved version and send back the old stuff, we'll buy it back from you. And again, we would import this piece of German equipment, this time from Brazil and once again have to pay duty on it. Even though we adjusted value and did things like that, at the end of the day, we got to pay duty twice on this stuff. So I have some very personal real-world experience with this change in the law, and I think it's fantastic. And if you get nothing out of this presentation, hopefully, you latch on to this if you weren't aware of it. This is really a great opportunity to bring back goods into the U.S. duty free, and it doesn't necessarily have to be just U.S. goods. It can be non-U.S. goods. So let's look first at kind of a high-level view of the changes a little bit deeper when we talk about non-U.S. goods. We can pop to the next slide, please, Steph. On this, we kind of tried to simplify it and break it out into 2 areas. As we've always known, U.S. goods can be returned anytime and that hasn't changed with the change in the law. So the U.S. goods can -- have been exported 10 years ago, 5 years ago, 1 year ago, whatever, we can return those at any time. Typically, the documents we're going to provide to customs if they want substantiation as our imported declaration, the foreign shipper declaration and maybe a manufacturer's affidavit. On non-U.S. goods, again, they must be returned within 3 years of the date of export, all right? So we have that 3-year window that for whatever reason, we ship something to another country, but we need to bring it back now for a variety of reasons. And in that case, we can use 9801 and take advantage of this duty free. And typically, the document obligations are an importer declaration of foreign shipper declaration and maybe proof of export as well as it goes. All right. So let's talk a little bit really more about the necessary documentation for this provision. Really want to emphasize the documentation requirements here. And I'm going to emphasize this 2 different ways. One as an importer and also as a customs broker. So CBP issued updated guidance about this provision after the law changed. And when TFTEA came and the change to allow for non-U.S. goods, shortly after that, they issued updated guidance on this provision while we're all waiting for the actual -- the regs to change the regulations to be updated appropriately. So one of the things that CBP included in their guidance was very specific expectations to us -- to all customs brokers, but anyway, to a customs broker and it's that we are obligated to communicate to our importer customers on the necessary documentation to support 9801 claims. So if you feel that we're asking questions about your shipment when you direct us declare under 9801, please know that we are obligated to meet CBP's requirements to exercise responsible supervision control, which is kind of the customs broker equivalent to your importer requirement to exercise [indiscernible]. So I promise you, your broker isn't trying to harass you if they ask some follow-up questions about a 9801 claim. -- it's part of our obligation in customs eyes of what we're supposed to do. So real quick, let's talk about some key documentation requirements. As the regulations are written and as the guidance is written, that there are -- if you're going to file a declaration for goods valued over $2,500, there should be a supporting declaration by the foreign shipper, and there should be a declaration from the owner, consignee or agent. Those are both broken out in full detail, and you can see we have a hyperlink here in this presentation to 19 CFR 10.1, so you can see the recommendation samples that customs has, they have sample forms in there of what they expect on that. You can just copy those or come up with your own version, however. So that is an expectation for goods over $2,500. For U.S. goods that are valued over $2,500 entered 3 years after export and not marked with the U.S. manufacturer name and address, a manufacturer's affidavit may be required. All right? And there's a protocol for that. It needs to be on your corporate letter head signed by a corporate officer or you if you have power of attorney to act on behalf of your corporation and it's attestation about the goods being manufactured, grown, et cetera, in the U.S. Proof of export is sometimes required. So that could be for U.S. or non-U.S. goods, and you can establish that by maybe providing an entry declaration into a foreign country, maybe your export invoice, a copy of your EEI, your AES filing, things along that line. At the end of the day, and it is specifically articulated in the regulations, CBP has the option to waive any of these requirements. They may or may not waive them. So my guidance to you is absolutely be prepared, particularly if you're dealing with stuff over $2,500 to have your foreign shipper declaration and your U.S. imported declaration prepared. The most common challenges that constantly come up is that people don't have the documentation to support that 9801 claim. So that's -- we'll talk about that here in a second. The other thing you have to be careful of -- and again, I go back to taking a look at those section chapter notes and the regs, there are certain things that you can't claim 9801 on. And it's kind of obvious. You imported goods, you claim drawbacks. So you got your money back. And then you don't get to bring them back duty free. The expectation from the government is you're going to pay duty again on that or maybe the goods were made in an FTZ. Anything subject to internal revenue tax, that's another area you don't get to file 9801 on because of the tax issues. So that's the quick view. I do want to review a few things. For those of you who've never had the pleasure of having custom scrutinize a declaration made under 9801, let's kind of talk through the typical process of how it goes. So typically, when customs sees a 9801 claim, and they want to ask questions about it, they will send you a customs Form 28. And on the next slide, we'll show you what that process looks like as the 28 is issued. I'm hoping -- here it comes. All right. So this is pretty standard. It's actually a boilerplate that customs uses. And again, you're going to have a copy of this presentation. But really, they're just -- they're looking for that substantiation, the documentation that goes with it. And the wonderful thing about this forum is it's actually 2 pages and typically as it comes into you. So here's all the things that -- this is one of our importers and you can see we've blocked out the names of the innocent there. But the importer received this document and customs was saying, we're looking for the documentation, the importer didn't provide it. And consequently, customs took action. And basically, when custom says, we don't like your 9801 claim, they go back to Chapter 1 through 97, and that's what they did in this case. And they classified the goods appropriately and 84 assess duty and MPF and everything else against the goods. So this is a pretty standard protocol that customs follows. And again, ideally, you have your documentation together and you never have to worry about dealing with this particular scenario. So that's 9801. We're going to move on to 9802. Madeleine.

Thank you so much, Ted. Yes. So I'm going to be talking about a couple of other sections of Chapter 98, starting with 9802. So these are articles and 9802 has 2 kind of main sections that I'm going to be talking about. But these are for articles exported and returned and this time having been advanced or improved abroad. So both 9802 and here's the 2 main examples, 9802.0040 and 9802.0050. And again, these are articles that were -- that are being returned to the U.S. after having been exported to be advanced in value or improved in condition, usually for -- they're being exported for some type of repair or alteration. So an example of this can be, hey, I've got a watch here in the U.S. I need to send it back to Switzerland to have it repaired and then you send it to Switzerland, Switzerland repairs the watch and then the watch is reimported into the U.S. And when you reimport the watch back into the U.S. as an example, you were only paying duty on those repairs or alterations. So that's the key. You're not paying duty on the whole entire watch again, but you're just paying duty on the repairs or alterations. So that's the key. Here, it's broken out this tariff on repairs or alterations made pursuant to a warranty or others that may -- other repairs or alterations that are not subject to a warranty. But the main point is that you're paying duty only on those repairs or alterations that are done. It doesn't have to be a U.S. origin good. So that's kind of a key of this tariff provision. But one very important point is that, hey, -- in that example, where I'm sending that watch over to Switzerland to be repaired. Let's say the Swiss manufacturer said, "Hey, I don't think I can really repair this. I'm just going to replace the watch. I'm going to just send you back a new watch. If that were the case, then you cannot claim 9802.0040, for example, or 9802.0050, cannot make -- you cannot use this tariff provision, because substitution or product placement is not allowed. So you have to be really careful that the product isn't being replaced with the same product. If that's the case, then you'd have to pay duty on that entire product. It has to be the one you originally sent over, and that's the one that got, that was repaired or altered and comes back. So that's the key here. Okay. Stephanie, can maybe go to the next slide. So just as Ted was explaining for 9801, you also have to have your documentation in order to claim 9802. And there is also a declaration that you need to have on file. And again, here, under 19 CFR 10.8(a)(1) and 19 CFR 10.8(a)(2). You see the links here. It will take you to examples that customs has put together of what this declaration would look like. And there's 2 parts to it. Just like under 9801, the first part of the declaration is done by the person who is completing the repairs or alterations. So let's say, in the watch example, the Swiss manufacturer there is completing the first part. And he or she is declaring, "Hey, I've actually been the person or party that has made this repair for example, to the watch, and they also have to note the marks and numbers of the watch, the description of the actual repairs that were being done, the full cost of the actual repair or alteration and then the total value of the article after the repair has been done. So that first part is, again, done by the person who is doing the repair. And then the second part is done by you as the owner, the importer, consignee or agent, as you will be importer and you would actually confirm that, yes, that is the person in Switzerland who actually made the repair to this watch and you would put your name, signature, address, et cetera. And you'll see that in the examples that CBP provides. So besides, of course, this declaration that you must have handy, there could be other documentation that customs will ask about of course, with this -- when you claim this provision. So documentation is key and Ted pointed this out earlier in the presentation. But again, with 9802, it's similar. You have to -- customs may ask, hey, I want to see proof of when you actually exported that watch out of the U.S. And I'd like to see proof of the foreign customs entry into Switzerland or the -- and the commercial invoice and maybe the original foreign bill of lading or airway bill. So the documentation, again, is key. And that's what again, as some of the common challenges, right? You need to make sure that you have the documentation available that you have the proof of export that you have the proof of origin, the warranty records and that is going to be key in order to claim this provision. And of course, that you're tracking that the -- again, going back to the watch example that the watch that you shipped is actually the watch coming back. So whether that be done by serial numbers or some other type of reference number, you do need to make sure that it's actually the one that was exported is coming back. And that it can be verified again with the right level of documentation. So again, documentation is key. You also have to make sure that the foreign -- the manufacturer overseas isn't making a change that's going to cause the entire identity of that product to change, hence, the classification to change. So you have to be careful that some type of alteration, it's not becoming such a big alteration that, again, you're changing classification of the good or it's becoming something else. If that's the case, you couldn't claim this provision. And then also drawback can't be claimed. And of course, that would make sense. You can't claim -- if you've claim drawback on this, then you wouldn't be able to reclaim this particular provision. So again, documentation is key and that will be the same with this next provision of 9802. Again, articles exported and returned, advanced or improved abroad. This is kind of the other large section of 9802 that is popular 9802.00.80. And here, the big difference is that in this case, you are shipping goods overseas, but they have to be U.S. fabricated components that you're shipping to another country. And then within that country, they are taking those fabricated components, and they are assembling them. And the key word is that these goods are being assembled. And you will see at the end of this presentation, we're going to give you -- Ted mentioned this earlier, lots of links to different documentation to help you. And U.S. customs actually has a document called foreign assembly of U.S. components under 9802.00.80, and they have a bunch of really good information in this document, including what is considered assembly because you have to be very careful that you -- that the goods aren't being altered in some completely different type of good. So assembly -- customs has some verbs that are key here in the document. Assembly is welding, soldering, riveting, force fitting, gluing, laminating, sowing or the use of fasteners. Those are examples that they give. So it's really important if you're looking at using this provision to make sure that it's truly assembly being done, and that's laid out in this document. So the 3 key areas here for this tariff provision are that, again, the goods were exported in condition ready for assembly, okay, without further fabrication that they haven't lost their physical identity okay, so that the whole form of the article isn't going to be changed. And that it hasn't -- that the goods aren't going to be advanced in value or improving condition abroad except really by just being assembled. And there are some operations that can be done as part of the assembly process and some operations that are incidental to the assembly process or that can be part of the assembly process are cleaning, lubricating, painting. Again, this is laid out in the 9802 document from U.S. Customs. There are other operations that are not incidental to the assembly process. And those -- you have to be careful of that, that's not being done, otherwise you will not be able to claim this provision. So be very careful again about looking at what is assembly and are there any other operations that are being done that may be incidental or not incidental to the assembly process. And again, that's laid out in the document. The thing here, again, going back to these fabricated components, I think this first example here under the FAQ is extremely important. Look at raw materials like plywood, sheet metal, textile, fabric in bolts. These are raw materials. And these -- for these materials, obviously, they are not fabricated components because these types of materials, obviously would need to be made into something else. So this would not be -- you couldn't say, hey, I'm going to ship over a bunch of U.S. plywood and it's going to be assembled in another country. It would need to be fabricated into something else. So again, that would not count as a fabricated component, okay? Raw material would not count as fabricated components. So you need to be very careful about that. And then how is this declared on the customs declaration. So it would be broken out as 2 different lines, 1 line would be the HTS of the assembled product when it comes to as the assembled product comes back into the U.S. with the HTS for that assembled product. And then the 9802 would be broken out in a separate line, and it would -- that would equate to the U.S. fabricated components. Because the key here is that when you bring the assembled goods back into the country, you're paying duty on that assembled good, but you're going to be pulling out the value of the assembled -- the U.S. fabricated components, okay? So that's the key. You're not paying really duty on the whole -- you are paying duty on the whole assembled product. However, you're able to break out and pull out the actual U.S. fabricated components. So hence, you're paying lesser duty. So again, I guess, in summary, be very careful that it's only assembly being done and be very careful that it's only U.S. fabricated components that you're sending over in order to be assembled. Okay. Stephanie, I think we can go to the next slide. And again, here, too, documentation is key, just like the other Chapter 98 provisions. Here too, you need a declaration, a separate declaration like with 9802.0040 and 50. This declaration or an example of it can be found under 19 CFR 10.24(a)(1) and 10.24(a)(2). Again, this is broken out into 2 parts. The first part is filled out by the assembler. And again, they are confirming that, yes, all I did was assemble these fabricated components and that -- and they would then declare that. They would also note the marks and identification numbers, they would give the description of each component, the quantity, the value at the time of export and then the port and data of export from the U.S. and the name and address of the manufacturer. That's actually shown again when you go into that link and you look at the example provided by U.S. customs. And then you, as the importer would endorse that, you would endorse the fact that, yes, this was the assembler overseas. And again, these were just confirming that the only assembly was done by -- with U.S. fabricated components. So again, you can imagine that U.S. customs may want additional information. They may ask further about the assembly descriptions. Again, you have to be really careful that it's just assembly being debt, as I mentioned earlier. They may want to see, of course, a list of the U.S. components and their unit costs, a little bit more information, and other specific cost data. Again, a lot of this gets spelled out in the -- in this declaration under 19 CFR 10.24, but U.S. Customs could ask as even for more detail if you're going to use this provision. And again, like some of the other Chapter 98 provisions, documentation, there could be -- the common challenges are documentation, right, making sure that you can prove that these U.S. fabricated components were actually exported, when they were exported and then the foreign -- obviously, the foreign assembly declaration. And again, that you're importing the items that were actually exported. This time, they're assembled, but that you're actually -- those were the goods that -- the actual goods that were exported that those were the goods that are actually -- that they actually have been assembled. And again, you need to do this through export documentation, commercial invoices, proof of origin. And so it's really important, again, to have the proper documentation and you can tell the story in case U.S. customs wants more information if you claim this particular tariff provision. Okay. We will leave 9802 and go on to 9803. And 9803 is substantial containers or holders. And what is substantial, okay? And you see that immediately over to the right-hand side, that means that it can be used repeatedly and used a significant number of times in international traffic. So probably when we think of 9803, we really think of -- and it's highlighted here in bold right in the middle, this refers to instruments of international traffic. That's the most common -- and really the most common example of an instrument of international traffic is a container like a 20- or 40-foot container that shipped back and forth across -- from the U.S. to one country back again. That's probably the most common example. But there are other types of substantial containers or holders and some others that are spelled out here are like polypropylene bags, general merchandise totes, collapsible steel racks, hangers, those could also be substantial containers or holders used for international traffic. The key is to confirm, hey, is this particular container can it actually be claimed under 9803? And one good way to validate that is to go into customs rulings online search system, if you're not certain, also known as cross -- most commonly known as cross and you can search for all types of binding rulings. And in particular, you can search to see, hey, was there a binding ruling done on this particular container so that I can see if I can actually claim it under 98 -- under this tariff provision, 9803. So that's a good way to check and see whether -- if you have any questions about, hey, can this container -- can I actually claim 9802 through this container? Let's see. If we go to the -- Stephanie, I think we can go to the next slide, please. So Tier 2, there is some necessary documentation that has to be in place, a certificate issued by the foreign shipper. And this is actually -- there's an example of this at this link and find it under 19 CFR 10.7(c). And again, here, the foreign shipper makes a declaration that, hey, to the best of their knowledge, they're saying that this container is a substantial container or holder and that it's shipped back and forth to the U.S. from the U.S. And so that certificate should be on file. So again, I think one of the biggest things with using this provision is, hey, am I actually -- can I actually -- the container that I'm shipping back and forth, can it actually be claimed under 9803? And so again, you can check and cross, as I mentioned in the slide before this. If you don't find the container or that a binding ruling was issued against the container or for the container that you're thinking of putting under that tariff provision, then you can also request a binding ruling from customs. The one other thing to remember is that there is, if you are using and claiming 9803, this is a -- there is a C3a type bond, which is a stand-alone bond, it's always continuous and that also has to be in place if we're going to claim container as an instrument of international traffic. So on to the -- this other tariff provision I'm going to talk about, this is a popular one 9813 articles admitted temporarily free of duty under bond. So the key here with TIBs is that you can bring -- you can import a good into the United States, you can -- it can remain within a certain period of time in the U.S. but it has to be exported or destroyed. And if that's the case, then you do not have to pay duty. So no duty has to be paid for a TIB. But as you can imagine, there are some strict stipulations in order to claim 9813. Here, we just have a snapshot of not all the 9813 provisions, but just a subset of 9813 provisions, but you'll begin to see what kind of goods are imported under a TIB. So it can be articles to be repaired, altered or processed in some way. It could be samples solely for use of taking orders. It could be articles intended solely for testing or experimental purposes. It could be professional equipment or tools of the trade, other articles of the special design for temporary use. Recently, one example is a company here in the U.S. They were importing an electric vehicle that they're hoping to sell here in the U.S. And so they imported it under a 9813 provision, a TIB provision because of their plan to bring it in here temporarily to show their customer and then to reexport it. So there are different types of goods that can be brought in under this provision. The key is that you can only keep the goods in the United States for a certain period of time. Normally, it's 1 year from the date of import but you can ask for extensions. And you can ask for up to 2 extensions as long as it does not exceed 3 years from the date of imports. So that's the key. Goods cannot be here any longer than 3 years, and that is based on requesting extensions. If you don't export the goods after the -- within the time period or you don't destroy the goods within the appropriate time period then customs can issue liquidated damages. And we have a link also to Section 5.7 in the business rule and process document, which spells out the procedures really for temporary import bonds or TIBs and also a section on liquidated damages. So the key is making sure that you're exporting -- obviously, you're destroying the goods within the time period. Otherwise, you will have to pay liquidated damages. And the same if -- obviously, if you accidently lose the product, that would also -- obviously, you'd also be subject to liquidated damages there. So this particular provision, again, and I will go -- I think we can go to the next slide, Stephanie. The documentation, of course, again is key, just like with these other Chapter 98 provisions. At the time of entry, some of the things that you're going to have if you're going to claim 9813 you would obviously claim the appropriate TIB HTS, the 9813 tariff subheading, but also what the actual classification is of that good if an entry were to be done. So you need both. You also need a statement of use what the item is going to be used for. And then you're going to be declaring that it's not being put up to any other -- it's not going to be used for any other purpose and imported for sale, meaning that you're going to sell the product here in the United States. So that, you have to also declare. And then at the time of export, you have to be very careful and make sure that you have all proof of export or destruction if you end up destroying the goods that is really, really important and because customs may ask for that backup. And then when you do export or if you decide to destroy the goods, they may -- customs may say, hey, they want to examine the goods beforehand. And so if that's the case, then you need to complete customs form 3495 articles under a special bond. So again, the most common challenges, and that's really important is communication, making sure you're keeping track of these TIBs between yourself, the broker and customs. And if you need help managing the extension request, you can also run an ACE report, ES-008. And that is very helpful if you've got a lot of TIBs that you're filing and different brokers involved. So anyway, I think I've gone a little bit long. Stephanie, I will hand the baton to you.

Thank you, Madeleine. Okay. We're going to go ahead and wrap up this kind of in-depth part. I'm going to talk about subheading 9811 and 9817.85. So these are first samples and prototypes which, of course, samples are not prototypes, prototypes are not samples, but they're kind of in that same genre. So we group them together. So 9811 over on the left there, you can see it's talking about samples. So to qualify for this provision, your item either needs to be valued less than $1 that's being imported or marked and mutilated in a way that it can't be resold after being received by you. The intent of this provision is to really solicit orders and for the final buyer in the U.S. to see what they would be purchasing. There are specific marking instructions for wearing apparel and footwear, and you'll find those links at the end, if you want to go down that whole. So this is a great way to import samples and not have to pay duty on them. There is a whole section on prototypes. So this was a change that the U.S. government put in actually in 2000, I believe, where they were really trying to make sure that importers had access to see prototypes to get access for development testing, product evaluation, et cetera, and not have to pay double duty on them. So you're able to use this provision as long as it's imported in noncommercial quantities. And of course, most of the time, you can't actually sell it, okay? So let's look at these ones a little bit more closely. So necessary documentation for the samples provision. It definitely needs to state samples on the invoice. And it has to provide a value. So it doesn't have to be less than $1 because remember, it's either or, but it should show the value of that sample in the state it's in. It also does not need to show the final value of the product. It's just what does that value? What is that sample valued at? And then for prototypes, customs has in their regulations, and I have a link there showing that if requested, you might need a proof of actual use document and there's a link to that. So just circling back, common challenges and Ted touched on this. There's a lot of ways you're not obligated to use these provisions for samples or prototypes. And sometimes it's not even in your best interest. So with that, on the right-hand side there, if you are importing samples, there's a lot of different options. So you could use this provision, you might want to consider a TIB, like what Madeleine just talked about under 9813, a carnet, which we have not even touched on, you might even just want to do a regular entry or an entry type 86. So there's a lot of different options that you need to think about. And it really depends on the sample you're importing. And then how much control do you really have to make sure it gets exported or destroyed? Or does it really fall out of your hands, you might just need to do a regular entry on it? So with that, I want to show -- this is kind of my favorite part, show what people are doing. So we often get asked hey, what's the benchmarking? What are other people doing in the industry? So with that, I put together some data. So this is all based just on Expeditors customs data that we clear coming into the United States. So on the left-hand side, you can see about 15% of our importer base uses a Chapter 98 provision. So if you are using Chapter 98 provisions, you are in that 15%. And if you're really exploring and trying to figure out or you're not using them, you're not alone. There's a lot of folks that don't choose to use them and you don't have to. On the right-hand side, if they do choose in that 15%, a lot of them are just using one. So that's about 80%, just use 1 provision and the remaining about 20% use 2 or more. So which ones are most popular? Chapter 9801 is extremely popular. As you can see, that's over half. And then 9802 and 9803 account for about 75% of the Chapter 98 numbers that Expeditors sees. I looked and trended this over a period of time to see if there was any other changes or if this is fairly consistent. And I did see that it's fairly consistent with the most notable change being in 2017 when customs opened up Chapter 9 -- or I keep saying chapter, section 9801 for non-U.S. goods with that 3-year allowance. So that was a bit of a spike. But otherwise, these numbers remain fairly consistent year-over-year. So there's a subsection 9817 that we only touched on prototypes. It is definitely worth looking at. There's about 30 provisions, if I remember correctly that are kind of a hodgepodge. They are all over the place. This is the other, other, other bucket. I put on here the most common ones that we see. And then you can see by the stars over on the far right, how popular they are amongst our importers. So prototypes by far is the most popular. And you can see other ones on here as well. And it is worth your time, I think, to just look through there and see if you have anything that falls into any of these 9817 provisions. These also, as many of you might already know, you'll want to do some additional reading on them, mainly because they have some intricate details to them. So the very bottom example is often called festive items and what a symbol of motif is and what you can use this for is very clearly defined and debated, and these are -- if you want a good time, go read cross to see if Santa is in or out for festive gear, is angels, right, all of those types of things. So those are all available for you to use, and I would encourage you to go look at them. The last chart I have here is by CEE. So customs assigns every importer to a center of excellence and expertise. So that's what the acronym CEE. So hopefully, you know which one you're in. And if you look over to the left, you can see the CEEs and then actually see how popular using Chapter 98 provisions are. So some of them just lend themselves more adeptly. I don't think that's a terrible word to use here. But the Chapter 98 provisions tie in better for certain industries, and you can kind of see that play out here or maybe they just have a more established history of using them. But at the very least, I put, hey, in these industries, which 98 provision is used the most and then what's your second most. And that's a great starting place. Just to review those and see, hey, do I have anything that falls into these chapters that I want to use and hopefully save duty on? So this -- if you take away nothing else, this would be a great place to start and just see if anything, would qualify for your imports. So with that said, as Ted mentioned, we grouped together all of the resources. So any time, of course, that you are saving money, it takes some effort, right? It's just like taking a write-off on your taxes. Most of the time, you need documentation, you just can't declare out of fit air that you donated thousands of dollars to a certain nonprofit. So you really want to read and understand what you're taking on. And almost all of these are also tied to specific regulations that would be worth reading. And I tried to color code them so that you could easily see which provisions throughout the presentation is tied to which resources. And then lastly, this is a credited for all of you that have your CCS through the NCBFAA Educational Institute. So this will be in the slide deck. So you can take a screen shot right now or just wait for it to come. But if you need this, you have it right here, and we're happy to provide that for you. So with that, I think we're going to do some open questions. So I'm going to stop sharing here. And Sila, I'll turn it over to you.

First of all, let me just say holy moly guys are asking really great doses of questions that Stephanie and I have been feverishly researching. So thank you for all of those. I'm going to start with maybe one that's a little bit more easy to get us warmed up, but there were quite a few questions in the chat on how the 98 tariffs work with MPF and HMF? And if you can utilize this to save duty there as well. So someone would like to speak to that.

Well, I definitely can, but I thought Ted was going to and then he took a big drink of coffee. So I guess he is just opting out. I would say, yes, they can help you save MPF and it's just really balancing just like my little analogy that I just put in at the end about taking a reduction or a deduction on your taxes. What's it worth it to you, right? How much energy do you want to put in to responding to a CF28 for those MPF savings? And for some people, the answer is going to be a resounding yes. Other people are going to say, no, no, no. I would rather just pay the MPF. So it's really just a personal preference, and I don't think it's a one-size-fits-all answer. You just need to balance how much effort you want to put it into saving that money.

Awesome. Thank you, Steph. Okay. There's another couple of questions in the 9801 space specifically. First is someone was asking for a little bit of clarification on the 3-year import requirements with 9801, if they apply to all of the HTS codes to 9801. And I believe that's actually specified in each HTS code there. But if you happen to have something that might otherwise supply for 9801, there was a repair that was discovered after that 3-year period and needs to be dealt with at that time. Is there any way to still use 9801 at that time?

I'm about to raise my coffee cup. But no, it's no real quick at 9801 provisions, if it's U.S. goods, they can come back at any time. If they are goods not -- other than U.S. goods, again, that 3-year rule applies for non-U.S. goods only. And there may be other provisions under 9802 or other reasons that you might -- that you could look at for repair of goods. So do keep that in mind that really the idea of 9801 is purely for goods that went out and for whatever reason you need to bring them back. And it can be any reason like I said in our -- my former case as an importer, we were buying back goods or we were repairing goods any number of odds-and-ends. But it's a 3-year only for non-U.S. goods. There's that additional 3-year thing for U.S. goods and really that's just more about providing additional documentation and if they're not marked properly and, and, and. But generally speaking, U.S. goods can come back anytime, non-U.S. goods must be 3 years after date of export or prior to date of export -- from date of export in that 3-year frame. I need more coffee. Sorry.

There's never enough. That Is a complex topic. Okay. On a similar vein in the 9801 space, if you're importing -- reimporting something where the total value is under $2,500, do we still need to get the manufacturers affidavit and/or owners declaration?

The regulations specifically state over $2,500 and customs has been pretty clear. They have not been -- the customs does have the authority to ask for declaration data, additional declarations at any point, but really they don't -- they have not appeared to be going after anything related to under $2,500, and they've made some public statements about that as well. So they're pretty clear that they're really worried about things over $2,500.

Great. Okay. I don't think we're going to get to all of these. So I'm going to pick one that I think is pretty interesting and topically relevant for how technology is shifting. But somebody is asking, hey, we're importing a 3D model. Is that something that would fall under samples or a prototype classification?

There really isn't -- I can tell you that it's pretty broad in what you can do there. So it doesn't have to be a 1-dimensional or 2-dimensional, 3-dimensional whatever. If it fits under the provision as a prototype for sample, it should be good. I know we're out of time here. So for folks that we haven't gotten to your answers -- or your questions, typically, we download these and then we will try to get these back out to you. Nicole, you probably were going to say that as we close out. So it's all back to you, Nicole, sorry.

No. No. Thank you guys for answering all the questions that came through. There were quite a few and for the great information presented. We will be sending out the survey via e-mail, look out for an e-mail from me after the webinar shortly here. And I did throw a link for a webinar that we have upcoming tomorrow for planning your supply chain for 2024. We have Kara Mahoney and Adam Kord from our leadership team presenting that one. So try to tune into that, if you can. It's going to be a great session. But thank you again for joining this webinar today and all of our previous webinars throughout this past year. We do have one more coming up in December as well. So we'll get that information out. So with that, I'd just say thank you for joining, and thank you to our team for all the valuable information. Appreciate it.

Thank you, everyone. Hope you have a great day.

Thank you, everybody. Take care. Bye.