Trade Compliance Glossary

Import Terms

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HTS Code (Harmonized Tariff Schedule) An HTS code is a 10-digit number that classifies a physical good for U.S. import purposes and determines its duty rate. Classification follows the General Rules of Interpretation (GRI) of the Harmonized Tariff Schedule of the United States, administered by U.S. Customs and Border Protection under 19 U.S.C. § 1202. The same product can sometimes be classified more than one defensible way, which is one of the most common sources of compliance risk.

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Country of Origin Country of origin is the country where a product was wholly obtained, or where it last underwent a "substantial transformation," for customs purposes. Marking requirements are governed by 19 CFR Part 134, and origin determines eligibility for trade agreement preferences — it is not always the same as the country a product ships from.

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Customs Bond A customs bond is a financial guarantee, backed by a surety and governed by 19 CFR Part 113, that an importer will pay duties, taxes, and fees owed to U.S. Customs and Border Protection. Most regular importers use a continuous bond covering all entries over a 12-month period rather than a single-entry bond per shipment.

Importer of Record (IOR) The importer of record is the party legally responsible, under 19 U.S.C. § 1484, for ensuring an imported shipment complies with all U.S. laws, including accurate classification, valuation, and country of origin declarations. This responsibility sits with the importer even when a licensed customs broker files the entry on their behalf.

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ISF 10+2 (Importer Security Filing) ISF 10+2 is a CBP filing requirement under 19 CFR § 149 for ocean cargo, requiring importers to submit 10 data elements and carriers to submit 2, at least 24 hours before cargo is loaded onto a vessel bound for the U.S. Late or inaccurate filings can trigger monetary penalties independent of any entry-related issues.

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Commercial Invoice A commercial invoice is the primary document CBP uses to verify the value, origin, and description of imported goods, and its required contents are defined under 19 CFR 141.86. Missing or inconsistent invoice data is one of the most common causes of entry delays and compliance findings.

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Incoterms Incoterms are a standardized set of trade terms, published by the International Chamber of Commerce, that define which party is responsible for shipping costs, risk, and insurance at each stage of a transaction. The current version, Incoterms 2020, affects duty liability and documentation requirements as much as it affects logistics.

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Customs Broker Power of Attorney (POA) A customs broker POA is a legal document, governed by 19 CFR Part 141, Subpart C, authorizing a licensed customs broker to file entries and communicate with CBP on an importer's behalf. It does not transfer legal responsibility for compliance; that responsibility remains with the importer of record.

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Export Terms

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ECCN (Export Control Classification Number) An ECCN is a code that classifies an item for export control purposes under the Export Administration Regulations (EAR), based on the Commerce Control List at 15 CFR Part 774 and administered by the Bureau of Industry and Security (BIS). It determines whether an export license is required based on the item, the destination country, the end user, and the end use.

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Schedule B A Schedule B number is a 10-digit code used to classify exported goods for U.S. statistical reporting purposes under the Foreign Trade Regulations, 15 CFR Part 30, and maintained by the Census Bureau. It is related to, but not identical to, the HTS code used for imports of the same product.

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EEI / AES Filing Electronic Export Information (EEI) is the export data required for most shipments over certain value or licensing thresholds, filed through the Automated Export System (AES) under 15 CFR Part 30. Filing requirements and exemptions depend on the value, destination, and classification of the goods.

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ITAR (International Traffic in Arms Regulations) ITAR, set out at 22 CFR Parts 120–130, governs the export of defense articles, defense services, and related technical data, and is administered by the U.S. Department of State's Directorate of Defense Trade Controls. Items controlled under ITAR are listed on the U.S. Munitions List (22 CFR Part 121) and generally require a license for export, regardless of destination.

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EAR (Export Administration Regulations) The EAR, at 15 CFR Parts 730–774, governs the export of dual-use items — those with both commercial and potential military applications — and is administered by the Bureau of Industry and Security. Most commercial exports fall under the EAR rather than ITAR, though some products require review under both frameworks.

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Denied Party Screening Denied party screening is the process of checking customers, end users, and other transaction parties against U.S. government restricted and denied party lists before completing an export transaction, an obligation arising under multiple regimes including the EAR (15 CFR Part 744) and OFAC sanctions programs (31 CFR Chapter V). It's a required due diligence step, not an optional best practice, for compliance with U.S. export regulations.

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Freight Forwarder's Power of Attorney / Shipper's Letter of Instruction A freight forwarder POA authorizes a forwarder to act on an exporter's behalf for filings made under the same authority governing EEI, 15 CFR Part 30, while a Shipper's Letter of Instruction (SLI) provides shipment-specific details the forwarder needs to prepare documentation correctly. Both documents shift logistics tasks to the forwarder, not legal responsibility for export compliance.

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Certificate of Origin A certificate of origin is a document certifying the country in which an exported good was produced, often required to claim preferential duty treatment under a free trade agreement in the destination country — for USMCA specifically, certification requirements are set out in 19 CFR Part 182. Requirements vary by destination and by the trade agreement being claimed.

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Compliance Concepts

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Reasonable Care Reasonable care is the legal standard importers must meet under 19 U.S.C. § 1484 when classifying, valuing, and declaring imported goods, regardless of whether a customs broker is used. A documented classification rationale and consistent internal procedures are the clearest way to demonstrate reasonable care if CBP asks.

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Prior Disclosure / Voluntary Self-Disclosure A prior disclosure is a voluntary notification to CBP, under 19 CFR § 162.74, or to BIS, under 15 CFR § 764.5, that a compliance violation occurred, made before the government discovers it independently. A timely and complete prior disclosure can substantially reduce penalty exposure compared to a violation the government finds first.

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Post Summary Correction (PSC) A Post Summary Correction is a CBP filing used to correct an already-submitted entry summary, such as a misclassification or valuation error, before liquidation under 19 CFR Part 159. It's one of the standard tools for fixing an identified compliance issue going forward, distinct from a formal prior disclosure.

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Trade Compliance Program A trade compliance program is a documented set of policies, procedures, and internal controls governing how a company handles classification, recordkeeping, and customs or export declarations. There's no single federal mandate requiring one, but given the reasonable care standard under 19 U.S.C. § 1484, a documented program is the clearest evidence of compliance — and it protects institutional knowledge that would otherwise leave when an experienced employee does.

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This glossary is provided for general educational purposes and does not constitute legal advice. Regulatory citations are current as of publication; consult the official CFR or your attorney for the applicable current text.

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