CES Customs Procedures & Risk Management 3 — Questions and Answers
Question 1: What is the purpose of an Import Security Filing (ISF), also known as '10+2'?
- To declare the value of imported goods for duty assessment
- To provide CBP advance cargo information at least 24 hours before vessel loading in a foreign port (Correct answer)
- To register importers in the Automated Commercial Environment system
- To certify country of origin for preferential tariff treatment
Correct answer: To provide CBP advance cargo information at least 24 hours before vessel loading in a foreign port
ISF requires importers to submit 10 data elements and carriers to submit 2 data elements to CBP at least 24 hours before cargo is loaded at a foreign port.
Question 2: Which of the following best describes 'deemed export' under EAR?
- Exporting goods through a third country to reach the ultimate destination
- Releasing export-controlled technology or source code to a foreign national in the United States (Correct answer)
- Shipping goods to a country under a general export license
- Transferring ownership of goods without physical movement across borders
Correct answer: Releasing export-controlled technology or source code to a foreign national in the United States
A deemed export occurs when controlled technology or source code is released to a foreign national in the U.S., which is treated as an export to that person's home country.
Question 3: Under ITAR, which category of items is subject to export licensing requirements?
- Dual-use commercial items with potential military applications
- Defense articles and defense services listed on the U.S. Munitions List (USML) (Correct answer)
- All items exported to countries under U.S. sanctions
- Agricultural commodities exported under government programs
Correct answer: Defense articles and defense services listed on the U.S. Munitions List (USML)
ITAR controls the export of defense articles and defense services enumerated on the U.S. Munitions List, regulated by the State Department's DDTC.
Question 4: A U.S. exporter receives an order from a company in Country A, but the end-user certificate names a company in Country B. This scenario raises concern about which compliance issue?
- Transfer pricing violation
- Transshipment or diversion risk (Correct answer)
- Anti-boycott regulation violation
- Foreign Corrupt Practices Act exposure
Correct answer: Transshipment or diversion risk
Discrepancies between the stated destination and the actual end-user location are classic red flags for transshipment diversion to an unauthorized destination.
Question 5: What is the statutory timeframe within which U.S. Customs must liquidate an entry after it is filed, absent specific exceptions?
- 6 months
- 1 year (Correct answer)
- 4 years
- 10 years
Correct answer: 1 year
CBP must liquidate a customs entry within 1 year of the entry date, with the possibility of extension up to 4 years under special circumstances.
Question 6: Which trade preference program grants duty-free access to the U.S. market for eligible goods from sub-Saharan African countries?
- Generalized System of Preferences (GSP)
- African Growth and Opportunity Act (AGOA) (Correct answer)
- Caribbean Basin Initiative (CBI)
- U.S.-Israel Free Trade Agreement
Correct answer: African Growth and Opportunity Act (AGOA)
AGOA provides eligible sub-Saharan African countries with duty-free and quota-free access to the U.S. market for thousands of product categories.
Question 7: When classifying a product under the Harmonized Tariff Schedule, what does 'essential character' determine?
- The country of origin for customs purposes
- Classification of composite goods or sets under GRI 3(b) (Correct answer)
- The applicable duty rate for preference programs
- Whether an export license is required under EAR
Correct answer: Classification of composite goods or sets under GRI 3(b)
GRI 3(b) uses 'essential character' to classify composite goods or goods put up in sets, typically determined by the component that gives the article its primary utility.
CES Customs Procedures & Risk Management 3
What is the purpose of an Import Security Filing (ISF), also known as '10+2'?