Annual State of the Port: San Francisco

The local San Francisco Bay Area Customs Broker And Forwarders Association hosts an annual “State of the Port,” dinner program to discuss and review statistics.

Wednesday’s event welcomed a new Association president, a speech by FDA Director Barbara Cassens and Port Director, John Leonard.

Some of my favorite highlights from the event:
- A couple seated at my table drove all the way from Reno, NV, about 218 miles east of California for the seminar. The man, Jim Ijams heads the operations for a logistics company that imports guns, trophies and munitions. It’s a rare treat to meet someone with so much insight and stories about shipments stuck in FDA.

- FDA Director Barbara Cassens is a woman with so much enthusiasm and energy for her work. She had just returned from Washington DC before coming to the event. I asked how she could have so much energy and seem full of life. Her response when asked why she looked so radiant and happy: “life is short and you have to live,” is a helpful reminder on why we have to love our work or we won’t survive. She has a strong passion for food imports. Her enthusiasm doesn’t go unnoticed at work: many colleagues have asked her why she’s always smiling. She loves that her job with the FDA is different every day and to work with an amazing team.

- Is it amusing or weird that so many people at the program jokingly told me to leave the business while I can? One man said leave before I stay 20 years and become bald like himself. It’s those endearing comments that I love about the people in my industry.

- It’s rare that a public announcement that a certain Customs official isn’t retiring generates applause. His expertise is highly valued in the community.

- Area port director John Leonard’s presentation highlighted interesting statistics about imports and the broker’s exam pass rates

- The April 2009 pass rate was 11.6 percent. October 2009 was 6.9 percent. Leonard commented it was the lowest he could remember. Yikes. This generated hilarious comments from the audience including: “you might as well become a lawyer. Even the bar exam is easier.”

- A man asked Mr. Leonard to read the red print on import statistics. Mr Leonard stated all imports were down by 20 percent.

- His presentation highlighted the hard work on CBP officials cracking down on illegal and seized air mail importations. It’s crazy the lengths people will go to smuggle in plants and animals. Opium is the most common drug Customs seizes. It’s found hidden in broom handles, drums and ointments.

- A man from West Africa attempted to bring in a live rat, wood chips and animal parts. He didn’t make it past Customs officials. The man killed the rat instantly.

- There are 38 individual licensed brokers in the Port of San Francisco vs 106 corporate broker license holders.

 

Travel and international trade

A couple of people including neighbors and a really nice manager at work have suggested I try blogging. It’s been almost a year since my last post on how to study for the broker’s exam. I wanted to try writing something more personal yet stick to the international trade theme.

Travel is one of my favorite activities. I love the adventure, the unknown, the challenge of learning a city’s new transit system and streets and meeting people in coffee shops. (hat tip to Ben Casnocha for inspiring the idea.) Upon successful passing of the Customs and Border exam and almost a year of studying I chose to reward myself by taking a two week trip to Boston and New York City. I flew to New York City but opted to take the Greyhound bus cross-country.

New York City isn’t by any means foreign to me. I spent a summer there covering business news at the Associated Press and a visit to see my sister who lives in Queens is required. But I’ve been fascinated by Boston for the last few years. There’s no particular reason except I know it’s a major port city and a magnet for international trade activity. My neighbor Rhett Mundy also used to run an Asian antiques shop on Newbury Street. It’s now located in the heart of North Beach.

While in Boston I took a day trip out to Salem and toured the Peabody Essex Museum upon the recommendation of someone on the street. It turned out to be a better investment than the more popular Salem Witchcraft Trial tour! My $15 admission fee included a fascinating collection of Asian export art. Not directly related to international trade was an exhibit on 88-year-old Iris Apfel, also known as the Rare Bird of Fashion. She styles her own outfits from jewelery purchased at flea markets in Morocco and through her travels to China and Italy.

Some observations, facts and notes about international trade in Boston. New York and Salem (these are notes from my visit to the museum and walking tour of the wharf):

- Salt, seafood and apples were just some of the goods exported in return for Chinese furniture such as gorgeous wooden dressers

-the replica tall ship Friendship can be found at the Salem harbor. It was originally built in 1797 and served as a trading ship with goods from around the world.

- Author Nathaniel Hawthorne of the Scarlett Letter worked at the Customs House in Salem before becoming a famous writer. The outside display indicated he collected duty on imported goods.

- In the US we seem to take for granted how relatively affordable cell phones, clothing, electronic items and more. A traveler visiting from Brazil came with an empty suitcase. He bought a digital camera, cell phone, clothes and small gifts for family to bring home. The price of these items were 3X less than what they are in Brazil.

- The Brazilian visitor asked me if trade is supposed to make goods accessible and affordable then why are big ticket items so expensive in his home country. I didn’t have an answer.

- It’s incredible the impact of trade on our food systems. Another hostel traveler from Atlanta who buys grass-fed beef from Wal-Mart explained the meat is wet-aged on the ship. What a concept- beef aged in vacuum-packed bags as it arrives to grocery stores.

- During an early morning run in Astoria Park I found myself talking to a man named Joseph who was surrounded by three Golden Retriever dogs. He formerly worked as a production designer in textiles. He remembers sending samples designs to Chinese factories and the high quality of the output surprised him. The workers were efficient and had a sharp attention to detail in constructing garments.

 

How to study for the Customs and Border License Exam

UPDATE: Long overdue good news: I officially passed the April 2009 exam. The results were pending while Customs reviewed my appeal. A very nice person from Customs called me two days before the October 2009 exam to tell me I didn’t need to study anymore. I won the one point needed to pass. Thanks to all my classmates, Renata Pearson, my family and friends who supported and taught me more than I could possibly know. I’m indebted to so many people and feel very fortunate.

My application was submitted to Customs. The license number is pending until completion of the background check.

A few weeks ago I took the U.S. Customs and Border Protection License examination. The open-book exam consists of 80 multiple choice questions based on version of several reference materials:

United States Harmonized Tariff Schedule

Code of Federal Regulations 19

specific customs directives

Customs and Trade Automated Interface Requirements document (CATAIR)

The exam is one of several requirements to become a Customs Broker. For more information, CBP provides specifics.

I was extremely nervous and scared about taking the exam a second time. The first time was challenging without exposure and experience to entry processing. And the thought of failure ie: not passing lingered in my head for several months. But talking to family and friends reminded me to believe in my abilities and squash self-doubt.

Despite common myths about the exam, it’s a straightforward test that challenges your ability to think quickly, find the appropriate regulatory cite and accurately distill the vague language. And all of this in 80 minutes! It’s very doable if you are strategic and plan carefully.

After spending the last few months studying at the office late at night, going to class, studying on my own and with a variety of classmates, taking at least 6 practice exams not including old quizzes, I’m excited at how much stronger I understood the concepts. So I’m sharing what I learned in hopes others who study and take the test can succeed.

Disclaimer: I am not a licensed customs broker. All advice should be used at your own discretion. For more information on classes check the Customs Broker Forwarder Association of Northern California for prep courses. The class is taught by a licensed customs broker who brings passion, dedication and hard work to teach students how to understand the regulations. The pass rates are very high in this course.

Tips on studying for the Customs and Border License Exam

- Set aside a time and day to study
A set schedule creates good habits that stick and succeed. Look for a quiet place free from distractions such as the television, computer, Internet, music and people. You need to be completely focused to study the thick language of the law. I found the break room at the office with the spacious long tables and isolation worked best. Studying in a room away from the office eliminated distractions such as nearby chatter, the Internet (huge time waster) and looking at work projects. Highlight, mark, tab, cross-reference citations in the informed compliance publications with the regulations. The extra effort and time to do this will reinforce the material in your brain.

- Start studying 6 months to a year in advance
This is my second attempt at taking the test. I took the prep course from CBFANC last year and learned an enormous amount about customs brokerage. Using the same textbook from the CBFANC prep course I used their schedule as a guideline and started my reading a month in advance. It’s near impossible to finish the reading following the course schedule unless you’re a speed read. By starting earlier there is less pressure to cram all the material in the short amount of time. This also allowed me to spend more time underlining, writing and highlighting in my book key areas to prepare questions.

- Create your own cheat sheets and print references from CBP site
The exam allows you to bring any printed reference material. Use this to your advantage! I created cheat sheets on free trade agreements, merchandise processing fee exemptions, harbor maintenance fee and general guidelines. The CBP website also contains all kinds of charts, facts, figures and printouts on fees, penalties and other topics. Print anything that looks relevant. Create a separate binder (1 1/2 to 2 inches thick) or use an extra catalog ring for those reference materials. I highly encourage printing out the informed compliance publications especially on textiles. They are a wealth of information in explaining the different fibers, yarn forward rule and preferential trade agreement qualification.

- The index is your friend and practice, practice and practice
The index is a very useful tool when taking the exams (actual and practice). It can be used to look up key words for classification or to find a listing of service ports. Some people tend to forget it’s another helpful tool. Also take at least 6 previous exams. These can be found on the CBP site along with an answer key. I also would write key words in questions I missed repeatedly in the sections in big bold letters and highlight after scoring the test.

- Cross reference and mark your books
I mentioned earlier that cross-referencing the regulatory cites with the informed compliance reinforces the material. There are many overlaps especially in CFR 19 Section 141, 181 and 191. Be on the lookout for key words repeated in those and additional sections. Mark and write heavily in your books. These are your study materials. I’d write the classification answer next to the appropriate HTS in the tariff even for obvious questions.

- Study with a variety of students
Group study can be effective and everyone can benefit from learning how others understand the same concepts. I took BART, carpooled or borrowed a car to study with 5 different classmates. Each person gave me an unique perspective on how to classify, conquer valuation questions and distill the complicated free trade agreement texts. I learned patterns and tricks in the multiple choice questions to solve classifications. Along the way I picked up time saving tricks that shaved a minute or two. If meeting at a central location is impossible there is Skype, three-way calling on cell phones (difficult to hear) or Screen Share programs. I recommend setting a schedule and calling classmates to study on the phone. This helps with regulatory questions. It’s doable with valuation but harder to see the breakdown of additions and deductions.

- Create flashcards
I created flashcards to memorize the Code of Federal Regulations and their corresponding cite in the Tariff Act of 1930 (Customs Law Handbook). I also used them to test my knowledge of key dates such as how many days to make entry or how many years merchandise can be stored in a warehouse. They’re also easy to carry when you’re on the bus, walking home or have extra time to spare while waiting for an appointment.

- Get regular exercise, eat healthy and getting at least 6 hours of sleep
Developing and keeping good habits such as regular exercise, avoiding sugar, chips and junk food helped me study effectively. Consuming too much sugar, chips and other junk food cause sudden spikes in your blood sugar which leaves the body feeling sleeping. Studying then becomes a need to sleep. It’s also important to eat well – lots of vegetables, omega 3 and protein keep the body rested and mind sharp. Regular cardiovascular exercise also keeps the brain sharp and a great anti-stress mechanism.

- Limit computer and Internet time
Surfing the Internet and checking email are huge time wasters. Give yourself 10-15 minutes during your break to catch up on email, work or read the news. When the times’ up, it’s back to reading.

- Make it a game, fun experience and create rewards
Studying for the exam can be a very isolating several months experience. It’s also stressful, intense and tear-your-hair out frustrating experience (in my case particularly). I treated this as a learning experience when I was frustrated. Instead of re-reading the section and taking more quizzes I’d take a short break and study a section I enjoyed such as country of origin. When I returned to my original source of anxiety, the concepts made more sense. Some people reward themselves for hard work by buying CDs or going out for a nice meal. I preferred hitting the coffee shops for a few hours and catching up with old friends. Those conversations gave me additional insight on studying for the exam. Find a healthy balance between work and play. All work and no play will eventually lead to study rebellion.

- Keep it simple, stupid
There is some amount of analyzing involved in answering the questions. But in general read the question for what they’re asking. On classifications don’t overanalyze or read too much. Follow the instructions. When it says “best possible answer,” choose the best one even if the logic doesn’t make sense.

- Don’t forget to incorporate fun into a study plan
Studying has to be fun otherwise you won’t succeed. You also have to be personally motivated to succeed and pass the test. Ask yourself why you’re studying and taking the test. It’s helpful to frame the test not as just a test but as the next step on the ladder. I look at the exam as a “gateway to the world.” Eventually I’d like to work abroad transferring my skills and assisting other countries with navigating complex import rules. Passing the customs’ exam and becoming licensed is part of conquering the ladder.

- It can take a few tries to pass
This isn’t a tip on how to study. I’m reminding people that it’s just a test. It will be given again. And life goes on. Give yourself credit and feel good about all the studying you’ve done even if it doesn’t work out. You tried your best and there’s no other way around. But aim and strive to study and take the test once. Too many times and you’re going to be wasting money and time.

 

International trade in less than 140 characters?

I’m Twittering again. After deleting my old account and taking time to rethink how I’d like to use Twitter, well I’m back.

So what can I say about international trade in less than 140 characters?

Here’s a snapshot:

- the Customs regulations are not kidding when they say your broker’s license can be revoked/cancelled at any time. Jan 2nd Federal Register

- saw revolutionary road this weekend and very disappointed by lack of nuance. random trade bit from movie: frank wheeler was a longshoremen!!

-Simon Winchester’s latest book “The Man Who Loved China,” takes us on a fascinating global journey. http://tinyurl.com/SimonWinchester

- He writes in last Sunday’s parade magazine on how America can maintain its edge. Parade: http://tinyurl.com/Simon-Parade

I’m hoping to see more from the international trade community on twitter. It’s a very useful and clever way of communicating with people all over the world.

 

RIP Lit Chung Pak

My grandfather at the U.S. China Trade Development Council office

My grandfather, Lit Chung Pak, passed away on October 31st, 2008 after a diverse career in education, trade and newspapers. He was 77.

I wanted to share my tribute.

Dear Grandpa,

Your passing has left a huge void and presence in my life. There is not a single day that goes by where I’m not reminded of your presence, laughter, words of wisdom, knack for detail and organization, commanding presence and thoughts about the world, U.S. and China trade and current affairs.

The person I am today is largely inspired and influenced by your work. It’s no surprise that I started my career in journalism and ended up in trade. You were a voracious reader of all kinds of publications. When I came over to visit it was common to find stacks of newspapers even ones several weeks old by your bedside. You found the Chinese-language daily newspapers to be reading material of choice on current events and enjoyed watching several Chinese television stations and comparing and contrasting coverage of key issues.

I still remember my visits to the newspaper office on Kearny Street during the summer. I was in awe at the stacks of papers, telephone lines ringing and how you handled the numerous daily demands. You would offer me a copy of the latest paper or point to the headline. I’d decline a copy knowing my Chinese reading skills were subpar compared to yours. But you still nudged the paper in my direction.

You cared and supported me enormously throughout my life. I remember coming home on my 24th birthday to find a bowl of noodles on the table. You shared how noodles are a symbol for longevity and how by eating them, my life will be full of wonderful things to come.

I am the person today because of everything you did to shape and influence my growth. I love and miss you so much. It’s been a year and a half since you’ve passed. The family talks about you often whether it’s the food you enjoyed, your family in Indonesia, reading the newspaper and listening to the busy lives of your grandchildren.

There is so much I want to tell you every day whether it’s the minor accomplishments such as running daily to train for the Oakland Marathon (I did miss 2 days because of evening commitments but I won’t make it a habit.) or something exciting I found in Chinatown. I sometimes forget you’ve left us. There were times I would call grandma and ask her about you. It’s like you never left. Then I remember the numerous hospital visits to bring you flax seed oil, cottage cheese and fresh strawberries from the market.

Your presence is greatly missed.

Love,
Janet

 

What’s that classification?

Those of us who work on the import side have the pleasure and excitement of determining classification codes. Yep, that’s right. Classification. The word itself makes people groan and complain.

Oddly enough I find classification to be interesting. Classification is similar to tackling the Sunday New York Times Crossword (brutal!) or Sudukou which is just as difficult and challenging.

At the doctor’s office for a Lasik Eye Surgery consultation I found myself sitting among a roomful of ocular machines. The technician needed some more time before running the tests so I started to ask a few questions. This got me thinking about trade and machine classifications (Ch. 85 anyone?).

So I put on my Customs hat and asked where the machines were made, how often they replace the lasers and machines and how long they’ve had them. I looked for the Country of Origin marking (1304 U.S.C. or Part 134 in the Regulations) which is defined as “the country of manufacture, production or growth of any article of foreign origin entering the U.S.”

The machines are manufactured by Oculus and Zeiss, a company infamous for its sharp camera lens among other optical products.

I came back to the office to determine the classification. Chapter 85 (Electrical machinery and equipment and parts thereof … ) doesn’t apply so I moved on to Ch. 90 (Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof).

I checked the Customs Rulings site for guidance only to find a protest in 1999 by Topcon in Japan. and after reading the product sheet for the Oculus Pentacam … well I don’t have an answer.

Any guesses on the classification?

 

The Box – BBC News Documents Container Shipments

Riding BART can be fun sometimes because it allows me to share my knowledge of international trade with others who may not be familiar. Every time the train passes by the West Oakland station my excitement is inevitable. I start to point out the stacks of colorful ocean containers from the major shipping lines sitting at the Port of Oakland to other nearby BART passengers and explain that I work in in the business.

For those of us who want an inside look at the world of ocean containers, The BBC News is documenting the life of a shipping container around the world for a year. Their goal is to share stories about globalization and the international economy.

They have posted a Q&A addressing concerns about the high visibility of the BOX that would give smugglers a chance to bring illegal contrabrand, CO2 emissions and the GPS system used to track the location of the box.

There are also several short videos tracking the Box leaving the port and headed to the whiskey factory.

To track The Box’s location – check out Where is The Box?

 

Trade’s impact on food crisis

As most of us have heard by now, food prices are skyrocketing. Countries are curbing exports of foods so their population has enough to eat. There was even a story recently about reverse food exports – people were sending rice to relatives in countries where the grain was scarce.

The New York Times published an interesting story a few days ago on this very issue. Check it out here: <a href=”http://www.nytimes.com/2008/06/30/business/worldbusiness/30trade.html?_r=1&ref=worldbusiness&oref=slogin”Hoarding Nations Drive Food Costs Even Higher.”

A related The Global Wheat Tradedescribes the contrasts between what the wheat farmers in the US and Nigeria are experiencing.

Those of us who live in California with its yearlong Mediterranean climate know how lucky we are to have local access to a variety of food including rice. Prices have gone up for flour, oil, sugar, milk and meat but we are not starving.

So how do we balance the needs for our population and the needs of other countries? Can the US grow enough to feed other developing and poorer countries? How do we control trade policy or rationalize shipping fresh fruit thousands of miles so someone in Indonesia won’t starve? Would people in developing countries such as Africa be better off growing what they can and simply living off those supplies?

Barbara Kingsolver wrote an interesting op-ed for the Washington Post last year on this issue. She quotes a scientist named Vandana Shiva from the Research Foundation for Science, Technology and Natural Resource Policy on the topic of Indian farmers are forced to grow foods for export instead of their traditional local economy.

The food crisis is getting worse each day. I read in magazines about growing sustainable communities and buying local. The solution for some countries temporarily is to find creative ways of building sustainable and self-reliant communities. This idea works in Scotland or Chile but what about drier regions such as Africa or Haiti?

 

International Trade and New Orleans

I’m always excited to learn about international trade and its impact on a particular city even when I’m on vacation.

A few weeks ago I took a trip to New Orleans through One Brick to help restore homes damaged by Hurricane Katrina. Thanks again to One Brick, a nonprofit providing volunteer opportunities commitment free, for organizing the trip. I had an amazing time and enjoyed meeting so many wonderful people who are committed to restoring the area and returned despite the amount of tragedy and grief they suffered.

My assignment took me to the St. Bernard project in Chalmette, Louisiana, 40 miles south of New Orleans. I stayed at Camp Hope, formerly a school converted into a housing dorm for people helping with the relief efforts.

During my first night, St. Bernard Parish resident Stephen Gonzales was telling me about the history, culture and food of New Orleans. Steve explained the Gulf Coast is home to the largest jumbo-size shrimp and the largest volume. I started to explain how cheap imports from Asian countries flooded grocery stores and why I couldn’t find US-specific or even local seafood in grocery stores. It also reminded me of how special trade agreements on imports and exports of food can be particularly challenging.

In my quest to learn more about imports and its impact on Louisiana’s seafood industry, I discovered a few things:

- According to statistics from the National Oceanic and Atmospheric Administration, there was 504 pounds of shrimp caught on the Gulf Coast, compared to 325 pounds the previous year.

- U.S. Senator David Vitter testified at April’s U.S.-China Commission on Seafood Safety and Trade and introduced a bill that would add to the safety of imported seafood. According to Sen. Vitter’s office, the Imported Seafood Safety Enhancement Act of 2008 , imported seafood would be denied entry if it violates the standards of the Federal Food, Cosmetic and Drug Act or any federal law regarding food safety. There are also additional measures in the bill for additional safety precautions.

- Unfortunately, most of the Gulf Coast shrimp doesn’t reach our grocery stores because of cheaper imports from China and Thailand. But now that antidumping duties are being levied on imports, Chinese exports have slowed.

Check out some related articles on Louisana’s shrimp industry and their efforts to make ease the burdens of imported seafood.

China seafood exports expected to decline

Gas prices and cheap imports driving some fisheries out of business.

 

Port of New Orleans considers expansion

The Sunday Times Picayune covers the possible expansion of the Port of New Orleans.

According to the article, there is debate whether container shipments will continue to increase compared to pre-Katrina levels. Critics also say the port doesn’t have the capacity and need distribution centers for retailers to hold their goods before releasing them to individual stores.

Advocates for expansion forecast increased business in the future from the Panama Canal expansion expected for 2014.

The full article can be found at the Times Picayune site here.