BRO-2-01-RR:IT:EC 227186 GG
Cameron W. Roberts, Esq.
Countryman & McDaniel
5933 W. Century Blvd.
11th Floor
Los Angeles, CA 90045
RE: Definition of "customs business"; 19 U.S.C. 1641; licensed
broker providing customs business services for clients of
unlicensed freight forwarder employer; permit required to conduct
customs business.
Dear Mr. Roberts:
This is in response to an inquiry made by you on August 13,
1996, concerning the meaning of the term "customs business" and
its relevance to the operations of a freight forwarder. In a
follow-up conversation with you in 1998, additional facts were
proffered to clarify the situation.
FACTS:
Company A, a freight forwarder and NVOCC, employs a licensed
customs broker who is also an attorney. This employee is not an
officer of the corporation, does not serve in the capacity of in-house counsel, and does not purport to be a permitted customs
broker. He simply represents the company on issues related to
the work of a freight forwarder/NVOCC. Occasionally, however,
clients request consultation on Customs issues. Examples of such
consultation are as follows:
1) Giving advice on the completion of NAFTA certificates of
origin. You state that "[t]he forwarder would provide copies of
the form, assist in filling the form out, but would not offer a
legal opinion' as to the country of origin or the commodity's
ability to qualify for NAFTA treatment";
2) Providing advice on the completion of export
documentation, including, but not limited to, commercial
invoices, packing lists, certificates of origin, export
registration, carnets and other documents "used in making entry
that may be available in the country of importation, including
the United States";
3) Advising clients on the relative merits of using a single
entry or a continuous bond; also assisting in the preparation of
the bond application paperwork and arranging with a surety for
the issuance of a continuous bond, if appropriate; and
4) Consulting with clients on Customs requirements of
foreign countries, such as Canada and Mexico.
At no time will the forwarder or its licensed employee sign
or file entry documents with U.S. Customs. In addition, the
forwarder will not represent that it is a permitted U.S. customs
broker to its clients.
ISSUE:
May a licensed but unpermitted individual, working as an
employee of an unlicensed freight forwarder, offer consultation
services on issues relating to importing and exporting
merchandise to clients of the freight forwarder?
LAW AND ANALYSIS:
Section 641(b)(1) of the Tariff Act of 1930, as amended (19
U.S.C. 1641(b)(1)), provides that no person may conduct customs
business (other than solely on behalf of that person) unless that
person holds a valid customs broker's license. "Customs
business" is defined in 19 U.S.C. 1641(a)(2) as:
. . . [T]hose activities involving transactions with
the Customs Service concerning the entry and
admissibility of merchandise, its classification and
valuation, the payment of duties, taxes, or other
charges assessed or collected by the Customs Service
upon merchandise by reason of its importation, or the
refund, rebate or drawback thereof. It also includes
the preparation of documents or forms in any format and
the electronic transmission of documents, invoices,
bills or parts thereof, intended to be filed with the
Customs Service in furtherance of such activities,
whether or not signed or filed by the preparer, or
activities relating to such preparation, but does not
include the mere electronic transmission of data
received for transmission to Customs.
The factual situation presented raises several related
questions. First, do any of the described services which the
licensed employee proposes to provide to clients of the freight
forwarder fall within the definition of "customs business".
Second, if so, may the licensed employee, either in his own name
or on behalf of his employer the freight forwarder, provide such
services?
1. Providing advice on and assistance with the filling out of
NAFTA certificates of origin
Section 648 of the North American Free Trade Agreement
Implementation Act (Public Law 103-182), enacted in 1993, amended
19 U.S.C. 1641 by adding the preparation of documents and forms
intended to be filed with the Customs Service, and activities
relating to such preparation, to the definition of Customs
business. The documents and forms covered by this provision must
relate to any of the activities described in the first sentence
of the definition, i.e., "those activities involving transactions
with the Customs Service concerning the entry and admissibility
of merchandise, its classification and valuation, the payment of
duties, taxes, or other charges assessed or collected by the
Customs Service upon merchandise by reason if its importation, or
the refund, rebate of drawback thereof." The preparation of
documents and forms that are not "in furtherance of" any of the
listed activities would not constitute "customs business" and
could be done by an unlicensed person.
You do not specify whether the assistance to be provided
with NAFTA certificates of origin will be connected to import or
export transactions. This is crucial because, with a few
exceptions, such as drawback, the statutory definition of
"customs business" applies only to import activities. Thus,
filling out a Customs Form 343 NAFTA Certificate of Origin for a
U.S. exporter or producer of goods being sent from the United
States to Canada or Mexico would not constitute "customs
business". However, the preparation of a CF 343 for a shipment
in-bound from Canada or Mexico relates to a transaction
concerning the entry and classification of merchandise.
Therefore, it is a customs business activity.
2. Providing advice on and assistance with the completion of
export documentation.
The preparation of export documents is discussed above. As
a general rule, unlicensed persons may prepare and sign documents
relating to an export transaction on behalf of others, because
such documents are not associated with "activities involving
transactions with the Customs Service concerning the entry and
admissibility of merchandise, its classification and valuation,
etc.". We note, however, that the definition of customs business
includes drawback transactions with Customs, which as you know
involves the exportation of merchandise. For an explanation of
the connection between drawback and the term "customs business",
please see Treasury Decision 98-16, Vol. 32, No. 10, pages 13-14,
Customs Bulletin and Decisions, March 11, 1998.
Other activities which are linked to the exportation of
merchandise may also fall under the definition of "customs
business". An example is the preparation and filing of NAFTA
duty deferral entries, required upon the exportation of affected
merchandise to Canada and, beginning in 2001, to Mexico. A NAFTA
duty deferral entry relates to the payment of duties and fees on
merchandise in its state when imported into the United States.
Although the entry is filed and any applicable duties are paid
upon exportation, the relation back to the importation places
these activities in the realm of "customs business."
3. Advising clients on the relative merits of using a single
entry versus a continuous bond; assisting in the preparation of
the bond application paperwork and arranging for a surety to
issue the appropriate bond.
Giving advice on what type of bond to use, on how to fill
out bond application paperwork, and on submitting the application
to a surety is not "customs business" and, as such, may be done
by an unlicensed person on behalf of another.
4. Consulting with clients on Customs requirements of foreign
countries, such as Canada and Mexico
Customs does not regulate the providing of advice on the
Customs requirements of foreign countries.
An unlicensed person may render advice on issues, and assist
another with the preparation of paperwork, if such activities
fall outside of the definition of "customs business".
Consequently, the unlicensed freight forwarder and its licensed
employee may advise clients on those matters discussed above
which are not considered to be "customs business". Both the
unlicensed freight forwarder and the licensed employee would be
precluded, however, from offering those services which are
considered to be "customs business". The prohibition applies to
the freight forwarder because the freight forwarder does not have
a separate broker's license and permit of its own. It is for
this reason also that the licensed employee may not transact
customs business under the freight forwarder's name. The
licensed employee will also be precluded from offering customs
brokerage services to his employer's clients under his own name,
because the employee does not have a permit to conduct customs
business. Brokers are required to have permits for each customs
broker district in which they operate. (19 U.S.C. 1641(c) and
19 CFR 111.2)
HOLDING:
A licensed but unpermitted individual may offer consultation
services to clients of his employer, an unlicensed freight
forwarder, on issues that relate to importing and exporting
merchandise but do not rise to the level of "customs business".
The freight forwarder would have to obtain its own license and
permits to advise its clients on customs business matters. The
individual broker would have to become permitted to transact
customs business under his own name.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch