JPMorgan Chase Vastera Warns Shippers Of Mandatory Tariff Code Changes
COMPANY TO RECLASSIFY 700,000+ COMPONENTS ON BEHALF OF EXISTING CUSTOMERS
Dulles, VA, September 12, 2006 – JPMorgan Chase Vastera, a leading provider of global trade management solutions, is warning importers and exporters to prepare now for mandatory tariff code changes that go into effect January 1, 2007. The company urges international shippers to start the process of updating their product classifications immediately in anticipation of changes to the Harmonized Tariff System (HTS) in order to avoid supply chain bottlenecks, possible sanctions and unexpected duty increases. In addition, JPMorgan Chase Vastera reports that it expects to reclassify more than 700,000 components on behalf of its existing customers by year's end.
Every five years or so, the World Customs Organization updates the Harmonized Tariff System (HTS) nomenclature at the international (6-digit sub-heading) level to reflect changes in trade patterns and technology. The HTS updates, effective January 1, 2007, are massive. The changes will likely revise companies' import cost structures, and will require significant administrative effort to implement. If that effort is not timely, it will result in cash flow difficulties and has the added potential for increased import costs and sanctions as well as disruptions to the supply chain. Of the 97 HTS chapters, changes will be made to 83. "More than 85% of the sections of the HTS will have changes. Assuming a company does nothing prior to January 1, 2007, its whole database of classifications may become unusable," said Bernie Hart, global product executive, JPMorgan Chase Vastera. "We provide companies with instant access to global trade experts with in-depth expertise in every country in which they do business. In addition, by outsourcing product classification to trade experts, organizations are freed to focus on their core competencies instead of the complexities of global trade operations."
Accurate HTS code assignment is critical as it determines the manner in which a product is taxed when shipped across borders. JPMorgan Chase Vastera advises manufacturers to start preparing now for these changes as key processes such as product classifications, special trade program qualifications and certificate of origin solicitations will be affected. This will affect importers, manufacturers who use imported products, and those organizations that take advantage of any of the 170+ free trade agreements that exist today.
"In previous HTS updates the changes were typically minor or involved an entire classification. This allowed "one-for-one mapping" when updating of HTS classifications. However, "one-for-one" mapping will not always be possible with the new changes," said Hart. "Most importers and exporters will need to review each material and good to determine the appropriate classification. For an organization with 5,000 parts, such a review is a significant burden. For an organization with 50,000 parts or more – that's a nightmare."
For a free copy of JPMorgan Chase Vastera's white paper "2007 HTS Updates – Prepare Now!", please visit www.jpmorganchase.com/visit/vastera/whitepapers
About JPMorgan Chase Vastera's International Product Management Solution
JPMorgan Chase Vastera offers a number of global trade outsourced solutions designed to help clients reduce their global trade operating costs, enhance regulatory compliance, capitalize on preferential trade programs, increase speed in their global supply chain and improve supplier sources. JPMorgan Chase Vastera's International Product Management offering is a modular compliance process solution that results in accurate Harmonized Tariff Schedule (HTS) code assignment, critical to determining how a product is taxed or what licenses are required when shipped across borders. JPMorgan Chase Vastera classifies products for its clients in order to minimize duty payments, get goods across borders more efficiently, and establish global product classification databases for its clients. Goods are classified to fulfill global trade regulations and address antidumping and countervailing laws, as well as laws of other government agencies.
About JPMorgan Chase Vastera
JPMorgan Chase Vastera is the worldwide leader in providing solutions for Global Trade Management (GTM). The company's GTM solutions help clients drive cost savings and supply chain efficiencies while improving compliance with government regulations and service levels to end customers. JPMorgan Chase Vastera's GTM solutions include: TradeSphere™ (software), Trade Management Consulting (business process consulting), and Managed Services (business process outsourcing). With over 400 clients throughout the world, many of the world's largest corporations utilize their GTM solutions. For more information, please visit www.jpmorganchase.com/vastera.
In April, 2005, Vastera was acquired by JPMorgan Chase Bank and combined with the Logistics and Trade Services businesses of JPMorgan Chase's Treasury Services unit. The Treasury Services (www.jpmorganchase.com/ts) business of JPMorgan Chase is a top-ranked, full-service provider of innovative payment, collection, liquidity and investment management, trade finance and logistics, commercial card and information solutions to corporations, financial services institutions, middle market companies, small businesses, governments and municipalities worldwide. With more than 50,000 clients and a presence in 36 countries, JPMorgan Treasury Services is the world's largest provider of treasury management services.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.3 trillion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity. Under the JPMorgan, Chase and Bank One brands, the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the Internet at www.jpmorganchase.com.