CCA CATO Associate Regulatory Compliance 3 — Questions and Answers
Question 1: Which of the following best describes an 'antidumping duty' in US trade law?
- A duty imposed to counter illegal export subsidies provided by a foreign government
- A duty imposed when foreign goods are sold in the US below fair market value, harming domestic industry (Correct answer)
- A tariff applied to imports that exceed a predetermined quota threshold
- A fee assessed on hazardous materials entering US commerce
Correct answer: A duty imposed when foreign goods are sold in the US below fair market value, harming domestic industry
Antidumping duties are assessed when imported merchandise is sold at less than fair value (LTFV) in the US, causing material injury to a domestic industry.
Question 2: Under the Harmonized Tariff Schedule of the United States (HTSUS), what does the 'General Rate of Duty' column apply to?
- Goods eligible for preferential treatment under US free trade agreements
- Goods imported from countries with Most Favored Nation (MFN) / Normal Trade Relations (NTR) status (Correct answer)
- Goods subject to Section 301 tariffs
- Goods imported under Generalized System of Preferences (GSP)
Correct answer: Goods imported from countries with Most Favored Nation (MFN) / Normal Trade Relations (NTR) status
The General (Column 1) rate applies to goods from countries that have been granted Most Favored Nation or Normal Trade Relations status with the United States.
Question 3: A customs broker discovers that a client incorrectly classified an entry that was liquidated two years ago, resulting in unpaid duties. What is the standard statute of limitations for CBP to assess a duty deficiency?
- 1 year from the date of liquidation
- 4 years from the date of entry (Correct answer)
- 5 years from the date of entry
- There is no statute of limitations for duty deficiencies
Correct answer: 4 years from the date of entry
Under 19 USC 1514, CBP generally has four years from the date of entry to reliquidate and assess additional duties.
Question 4: Under the Export Administration Regulations (EAR), what is the significance of the 'de minimis' rule?
- It exempts small-value shipments from export license requirements regardless of classification
- It allows foreign-made items incorporating a small percentage of US-controlled content to be re-exported without a US license in some cases (Correct answer)
- It limits civil penalties to a minimum threshold amount
- It sets a floor below which exporters need not file Electronic Export Information (EEI)
Correct answer: It allows foreign-made items incorporating a small percentage of US-controlled content to be re-exported without a US license in some cases
The EAR de minimis rule allows foreign-made items incorporating 25% or less (10% for certain countries) of controlled US content to be re-exported without a US license under certain conditions.
Question 5: Which regulatory body must grant a license before a US company exports items controlled for national security reasons on the US Munitions List (USML)?
- The Bureau of Industry and Security (BIS)
- The Directorate of Defense Trade Controls (DDTC) (Correct answer)
- The Office of Foreign Assets Control (OFAC)
- US Customs and Border Protection (CBP)
Correct answer: The Directorate of Defense Trade Controls (DDTC)
The Directorate of Defense Trade Controls (DDTC) within the State Department administers the International Traffic in Arms Regulations (ITAR) and licenses USML items.
Question 6: What is the purpose of a 'first sale' valuation methodology in US customs?
- To value goods at the price paid by the US importer to the foreign seller
- To value goods at the earliest transaction price in a multi-tier supply chain, potentially lowering dutiable value (Correct answer)
- To use the manufacturer's suggested retail price as the basis for customs value
- To apply a standard government-set value for goods lacking commercial invoices
Correct answer: To value goods at the earliest transaction price in a multi-tier supply chain, potentially lowering dutiable value
First sale valuation allows importers to use the transaction price between the manufacturer and the middleman (rather than the middleman and the US importer) as the customs value, which can reduce duty liability.
Question 7: Under 19 CFR Part 163, how long must an importer retain records related to customs transactions?
- 2 years from the date of entry
- 5 years from the date of entry (Correct answer)
- 7 years from the date of entry
- 10 years from the date of entry
Correct answer: 5 years from the date of entry
19 CFR 163.4 requires importers to retain entry records for five years from the date of entry of the merchandise.
CCA CATO Associate Regulatory Compliance 3
Which of the following best describes an 'antidumping duty' in US trade law?