Go for Broker

Go for Broker
Obtaining a U.S. license to do customs brokerage work isn't easy.

By Chris Gillis

      So, you want to be a licensed U.S. customs broker.
      Then you'll need to pass an exam administered by Customs and Border Protection, and ' warning ' you'd better be prepared because it won't be easy. And just because you may already work for a broker or importer doesn't mean you automatically pass the test.
      'Study, study, read, read is the answer,' said Albert Saphir, a licensed broker and president of Weston, Fla.-based ABS Consulting, a firm specializing in customs broker and freight forwarder matters. 'It is all about the regulations and quickly finding the right answers. The customs broker test has very little to do with day-to-day operations.'
      'I had a classmate in law school with no background in the industry. She studied for six weeks and passed it the first try,' recalled Don Luther, executive director of 19CFR Trade Consulting, who took the test nine years ago and passed. 'I think some experienced people get tripped up by their practical understanding of day-to-day activities, and forget that what it says in the regulations is what matters on the exam.'
      In fact, some people may take the exam two, three or more times to pass it.
      The purpose of the exam, as authorized by Title 19 of the U.S. Code of Federal Regulations 111.13(a), is to determine an individual's knowledge of customs and related laws, regulations and procedures, bookkeeping, accounting and other related matters. CBP has a vested interest in ensuring the test is sufficiently comprehensive, since a broker's work is critical, detailed and complex.
      The vast majority of people employed in today's U.S. customs brokerage or import industry work under the supervision of a designated broker license holder for compliance purposes. CBP estimates the number of active broker licenses in the United States to be about 11,000.
      The broker exam covers a wide array of interrelated import topics, including entry, classification, trade agreements, valuation, broker responsibilities, quotas, country of origin, protests, marking, prohibited and restricted merchandise, duty drawback, intellectual property rights, and other government agencies. It consists of 80 multiple choice questions, each with one correct answer.
      The exam is considered 'open book,' meaning every answer is available within the written materials permitted on site during the test. Recommended materials to have on hand during the test include:
      ' Latest versions of the Harmonized Tariff Schedule of the United States and 19 CFR.
      ' Customs and Trade Automated Interface Requirements (CATAIR), particularly the appendices for valid codes, metric conversions, valid entry numbers, common errors, Census warning messages, drawback errors and the glossary of terms.
      ' Instructions for preparing CBP Form 7501.
      ' Customs-Trade Partnership Against Terrorism (C-TPAT) minimum security criteria for customs brokers.
      ' Submission changes for supplemental information letters and post entry amendments.
      ' Remote location filing eligibility requirements.
      ' Directives covering monetary guidelines for setting bond amounts, amendments for certain merchandise subject to antidumping/countervailing duty cases, instructions for deriving manufacturer/shipper identification code, entry summary acceptance and rejection policy, ultimate consignee at time of entry or release, Census interface-processing procedures, and standard guidelines for the input of names and addresses into Automated Broker Interface files.
      Laptops and other electronic devices are not allowed during the exam.

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      Preparing for the test is intense. 'I studied after work three to four hours on weekdays and another six to eight hours a day on the weekends for a total of 25 to 30 hours a week,' said Mark Wahl, a 22-year-old systems engineer with Honda Precision Parts of Georgia, who passed the broker exam his first time in April.
      'I'm convinced that anyone who can read and write could pass this exam, given unlimited time,' Luther said. 'However, the test is scheduled for four hours, no exceptions. This averages out to three minutes per question to complete it on time.'
      With these time constraints, he said it's essential to familiarize yourself with the written materials allowed during the test to know where to find the answers quickly. He also recommends using tabs on key tariff chapters and sections, and highlighting key text, such as how many days to file an entry, information on the broker triennial report, definitions of assist, and important tariff chapter notes. 'But don't over-tag or over-highlight. The point of this is to make certain a few things stand out,' he said.
      CBP provides on its Web site previous broker exam questions and answers.
      'Study all the old exams,' Luther said. 'You'll see questions repeated or recycled with small variations.
      'Take them as practice tests,' he added. 'Reverse-engineer them to determine what regulatory items are commonly used as answers and highlight these in your regulations. You can also learn what tricky chapter and section notes are often used in classification questions. Learn and highlight these rules.'

Where to begin

' Contact the National Customs Brokers and Forwarders Association of America (www.ncbfaa.org) and/or its regional affiliates for information about available customs broker license preparatory courses. ' Access the U.S. Customs and Border Protection Web site (www.cbp.gov), or contact the agency's Broker Management Branch in Washington, D.C., at (202) 863-6543, for details about taking the customs broker license exam. ' Links for downloads of previous broker license exam questions and answers, and details about cancellations and revocation of broker licenses are available at www.AmericanShipper.com/links.

      CBP told American Shipper in an e-mail it doesn't seek a desired pass rate for the broker license exam. The pass rate for the April exam, for example, was 11 percent.
      'CBP is more concerned that the exam is fair rather than target a specific pass rate,' the agency said. 'Over the past 20 years, the pass rate is about 20 percent but has ranged from 3 percent to 65 percent. (There were two exams in one year that had over 60 percent pass rate because the previous exams were reused.) CBP plans on creating questions that deal with real-life situations and try to make them pertinent to broker-related functions.'
      CBP estimates it issues about 500 broker licenses a year.

Sought After. The license has increasingly become an asset to customs brokers and importers alike.
      How many licensed brokers should a customs brokerage firm have on staff depends on the scope of its business and types of import commodities it clears, Saphir said.
      'I would encourage a broker to have one licensed broker for every three to four entry writers to provide good oversight and training,' he said. 'Today, a lot also depends on the technology used by the broker, and again on the complexities and difficulties of the commodities. Some brokers specialize and only let licensed brokers with specific knowledge handle certain import accounts.'
      Saphir said he's noticed an increase in importers seeking to hire licensed brokers for their compliance operations. 'The importers feel they are better trained and educated, and it is a competitive advantage to have the license,' he said.
      Jonathan Fee, an attorney with law firm Alston & Bird LLP in Washington and a long-time instructor of classes catering to the customs broker license exam, said when he first started teaching in 1989, the most of his students worked for brokers. Today, half are importer employees seeking their broker licenses.
      'It's of the utmost importance to be knowledgeable about your products and the associated regulatory compliance issues,' said Timothy D. Brotzman Sr., manager of international transport and dangerous goods compliance with Sparks, Md.-based McCormick & Co.
      The spice importer and manufacturer has a licensed broker on staff within its foreign trade group. 'The license is a recognized credential for importers and regulators alike,' Brotzman said.
      Luther warned that license holders should avoid situations where their license is used in operations they don't adequately supervise. 'That's a good way to lose your license,' he said.
      A broker's license never expires; the license holder must file only a status report every three years (2009 was the last time it was due). If the license holder fails to file the report and pay the associated fee, CBP will suspend the license. The license is revoked if after notification about the suspension the license holder doesn't submit the report within 60 days. Between people dying, failing to file the triennial status reports and voluntarily surrendering licenses, the number of license holders on record is 'fairly consistent,' CBP said.

Now Wait. Passing the broker exam is the first of two significant steps in the process of obtaining a broker license. The second step is the background investigation.
      'When you become a licensed customs broker, you're sort of a deputy Customs official in some ways,' Luther said. 'You're potentially handling lots of money and sensitive information. A crooked broker could conceivably assist in a criminal enterprise, so they want to prevent that.'
      CBP Commissioner Alan Bersin announced plans in May to release $1 million from his personal reserve account to significantly accelerate the process of issuing customs broker licenses. Daniel Baldwin, assistant commissioner for trade, said the agency eventually wants to shorten the processing time to 45 to 60 days, but in a follow-up correspondence a CBP spokesperson said 90 days is a more realistic initial target.
      The improved turnaround is the result of an agreement between CBP and Immigration and Customs Enforcement (ICE) to streamline how background investigations are conducted. Delays presently are common because the administrative background investigations have a low priority with ICE and are compounded by the use of paper fingerprint cards that are forwarded to the FBI for criminal history checks.
   The vetting function will now be the responsibility of CBP and most checks will simply involve an interview of the subject rather than contacting neighbors, friends and colleagues for reference checks as is typically done for government security clearances.
      The funds from Bersin will be used to automate part of the vetting and fingerprinting process to allow these functions to be performed by CBP staff and speed issuance of the license. The Office of Global Enrollment, which handles fingerprinting and interviews of participants in trusted traveler programs, will manage the verification.
      Bersin said correcting the broker license process demonstrates his commitment since taking office in March to quickly find solutions to long-festering problems affecting the trade community. Brokerage firms have complained that they have a hard time replacing or adding staff needed to maintain business with importers. The length of time it takes to obtain a license also prevents people from earning a livelihood, he said.