If you are responsible for customs compliance at an importing company, or if you are a customs broker consulting with your clients, among of the most important things to be aware of and properly declare are “assists”.
The official definition of “assists” is found in Part 152.101 of the Customs Regulations. I have my own definition (which is close to the official one) that can be used for identifying assists:
An “assist” is something of value, provided at no charge or artificially reduced price by the importer to the foreign supplier and is used to make the imported articles.
To be an “assist” for Customs purposes, the item in question must meet all three of the underlined phrases of the definition. (It must also fall within one of the four categories of “assists” – but that is another article.)
Now that you have defined “assists”, how do you find them?
“Assists” are not likely to appear on the foreign supplier’s invoice. Your customs broker will not independently learn of them and tell you. It is also unlikely that someone in your company is going to call you to tell you that they have some “assists” that need to be declared. If any of these things do happen, be sure to go out and buy a Powerball ticket because it is your lucky day.
Instead, you have to look for them – but where?
A CBP Regulatory Auditor may go to the financial records of the company. They will be looking for records of procurements of tooling or research and development. They may also be looking for payments to foreign suppliers outside of the regular invoice payments for the goods. The latter may fall into what is known as non-recurring charges. While technically not “assists” (they are treated as additions to value by CBP), non-recurring charges are handled like “assists.”
Following the practices of Regulatory Audit is a good idea. But where else should you look? In my experience working for importing companies I have discovered where there are some good places to search for possible “assists.”
Procurement. All customs compliance personnel need access to foreign purchase orders. They will tell you a lot you need to know – such as unit costs of the goods, price changes, discounts, bonus payments, commissions, and Incoterms. Purchase orders may also help identify “assists.”
Many purchase orders will have a section titled Buyer’s Deliverables or similar language (the Buyer is of course the importing company). There it will describe what things the Buyer will be providing to the foreign supplier – drawings, software, etc. (which may be export control issues). It may also list any tooling or component parts and materials provided by the Buyer. There should also be a delivery schedule. Look for the schedule of things to be delivered by the Buyer to see if it includes anything that could be an “assist.” If it appears “assists” are being provided, then determine whether they are provided at no charge and which party is responsible for the export freight.
If there are any non-recurring charges, they will be shown in the Consideration and Payment portion of the purchase order. Non-recurring charges may go by many names, including tooling charge, engineering charge, set-up fee, management fee, etc.
Something else to look for is a reference on a purchase order saying something like “Seller is authorized to use tool no. 12345 previously provided on purchase order no. 54321 for use in production of the XYZ assembly.” That should cause you to look up the referenced order and import entries associated with that order to see if the tool was ever declared. (If not you may have a Prior Disclosure situation.)
Shipping. Any tools, materials or drawings provided to a foreign supplier will go out (hopefully) through shipping. Therefore, a good place to look for “assists” is in the shipping records. Whether they are electronic or hard copy you will need access to those records. It is helpful if the records are set up by country of destination and consignee. That way you can narrow the search to only the foreign suppliers that are in question. If the records are set up chronologically, or some other method, the search will be much more difficult. If there are no shipping records – or if they are not maintained for at least 5 years – the company may also have Census and export control issues.
What to look for in the export shipping records is anything that looks like an “assist” such as export documents for shipment of tools, equipment, parts, materials, software, drawings, and the like. Note, whether the items are provided without charge or are being sold to the foreign company, this may determine whether or not they are “assists.” Also note, whether the items are shipped prepaid or collect, because any prepaid freight and insurance is added to the cost of an “assist.”
Property. This is the function that tracks the company’s capital equipment. Their records may prove useful in a couple of ways. The property records should indicate the location of the equipment. If the records show it is located at one of the company’s domestic facilities there is no “assist” issue. If the records indicate it is located at a foreign facility, or at the premises of a foreign supplier, you have a potential “assist” to investigate.
If you have found some “assists” in your company, and they consist of capital equipment and tools, the property records should indicate their current book value. That will be useful in determining the value of the items as “assists.” The records may indicate that the equipment is fully depreciated. That may mean it is not an “assist” at all, but be aware that there are some other issues associated with this that need to be checked out.
Export Compliance. This is the function that takes care of export licensing and license exemptions. Many exports of equipment and parts require export licenses or license exemptions/exceptions. The same goes for exports of technical data and software. Temporary licenses or exemptions/exceptions for equipment may indicate “assists” are being provided. If there are licenses and agreements for technical data and technology you may need to look further to determine whether it is of the type that may be considered an “assist.”
If your company doesn’t have export controlled products, or if you are also the export control person, this particular task may be much simpler.
“Assists” can be found hiding all over the place. You need to be resourceful to find them all. I hope this has given you some ideas on where to look.