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International Business NewsMarch 2019
Making changes in European logisticsPosi Lock Puller, Inc.
Also in this issue:Tips for proper Product Classification/Country Profile: Pakistan
Posi Lock CEO,Tamara Somerville
Posi Lock employees unload product at their Brussels, Belgium warehouse.
Recipient of President’s E Awardfor Export Service
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You may contact Matt at (816) 842-6701 # 229 or email: [email protected]
Matt Haerer
2 Held & Associates/ Savino Del Bene
3 Publisher’s Letter
4 Feature – Posi Lock Puller, Inc.
5 Posi Lock Puller cont’d, Commerce Bank
6 Export & Import Classification Tips
7 Tips cont’d, More About Posi Lock
8 What Brexit could mean for US exporters
9 More Posi Lock cont’d, Transimpex
10-12 Country Profile: Pakistan
Posi Lock Puller makes a big change in European logistics.
IBNewsmag TM: cover image
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One of the most challenging aspects of exporting is determining your correct Harmonized Tariff Schedule (HTS) or Schedule B product classification number to arrive at your product’s duty rate.
It isn’t always as straightforward as selecting a pre-determined number from the US Census Schedule B tables. Check out Sean Murray’s Tips columns on this subject on page 6 of this edition of IBNewsmag.
In some cases, the importer may classify your product slightly differently from what you, as the exporter, has determined. And that can adversely impact your duty rate on imports into the country concerned.
Ultimately, you as the manufacturer and exporter, must make the best decision on your HTS number, taking into consideration the Schedule B, how your importer is expected to classify your product and your own product knowledge. As Posi Lock Puller CEO, Tamara Somerville, put it, “I keep a file on our classifications and continually research to see if anyone is changing or challenging ‘pullers’. Ours is a really difficult class, but there have been challenges; so, every now and then I find something on the Internet.”
Posi Lock Puller is our featured exporter in this edition. Ms. Somerville decided to open a European warehouse to better serve the company’s European customers and distributors – a real change in logistics.
We present Pakistan in our Country Profile. Under the welcoming guidance of Pakistani Prime Minister, Imran Khan, the country is working hard to shed its enigmatic image and reach out to American exporters and tourists.
International Business News
page 3March 2019
Posi Lock Puller, Inc., a small to medium-sized enterprise (SME) located in Cooperstown, North Dakota, manufactures gear and bearing pullers that it ships to customers in other countries. Now celebrating its 41st year, the company is a “leading manufacturer of pullers in the world,” according to Posi Lock CEO, Tamara Somerville.
While the company works with distributors in Europe and other global locations, including the Middle East and African markets, many of its dis-tributors don’t stock inventory. This makes timely shipping a real barrier to expanding sales in Europe which is a key market for Posi Lock.
To overcome high shipping costs, meet demand-ing purchase timelines and better serve the Euro-pean market, they opened a new warehouse and showroom last month in Brussels. In the process it completed its first large shipment to this new site in Belgium.
Posi Lock CEO, Tamara Somerville, said, “By biting the bullet and establishing our first warehouse in Europe, we can now meet buyer needs faster and become more price competitive for European
customers,” she explained. “We now offer our dis-tributors and customers the opportunity to visit our showroom and see our product line - including the 100-ton puller.”
A North Dakota manufacturer of gear and bearing pullers makes a big change in European logistics
Posi Lock Puler’s new Brussels area location showroom.
PH-100T, 100 Ton Hydraullic Puller Systems provide maximum pulling force in applications requiring high-force removal of large gears, pulleys, wheels, sleeves and other press-fit parts.
IBNewsmagTM
March 2019page 4
The company leases warehouse space just outside of Brussels and has an enclosed parking area to receive and send shipments. It features a first-floor showroom and an auditorium for sales and training presentations on a second level.
When its first 40-foot container docked in Antwerp last month, Ms. Somerville and her nephew were on hand to receive it, supervise its unloading and accompany the 30-minute truck ride to Brussels. There they unloaded the container and set up the warehouse for business.
Posi Lock custom designs pullers and for domestic and global customers in addition to its standard line of pullers, which can be seen on its website – www.posilock.com.
IBN
Puller systems with Power Team components
Removing front input shaft bearing
Ms. Somerville assists with unloading the first container for their new warehouse and showroom location in Brussels, Belgium.
International Business News
page 5March 2019
Harmonized Tariff Schedule of the United States (HTSUS) classifications or Schedule B Numbers are required for US Census export reporting through the Automated Export System (AES), while HTS classifications are required for importation into foreign countries.
Sometimes a product may be classified one way for US export purposes and another for import into the foreign country. Is there a “correct” classification? How do you determine the correct classification? Some key concepts:
1. Except for a relatively small number of clas-sifications, the HTSUS and Schedule B can both be used for Census AES export reporting. So, a company need not separately classify the same product for both import and export, we recom-mend using the HTSUS classification for imports and exports unless the product falls into one of the exceptions.
2. The drafters of the Harmonized Tariff Schedule (HTS) believe that there is one “correct” classi-
fication for each product. Thus, the HTS classi-fication of a product should be the same for US import, US export, and foreign market import purposes. In practice, that is true for most products, but is not always true.
Customs authorities in different countries can – and sometimes do - interpret the same words differently. For example, some countries dif-ferently interpret the scope of HTS provisions for “food preparations” and “beverages.” This means that it is sometimes correct for a product to be classified under different HTS provisions for U.S. export and foreign import purposes.
3. The Harmonized Tariff Schedule is “harmo-nized” for the first six digits. Countries can add country-specific detail after the first six digits. Therefore, HTS classifications should be the same for the first six digits but can and will differ after that.
4. It is generally the exporter’s responsibility to correctly classify exports and the importer’s responsibility to correctly classify imports. If the importer does not properly classify imports, then the general rule is that they are liable for the error, any underpaid duties, and potentially also penalties.
Tips on proper classification for export and import By Sean Murray, Esq.
IBNewsmagTM
March 2019page 6
5. Tariff classifications should be supported by written diligence that explains how the classifi-cation was determined. If a customs authority challenges a tariff classification, then the written diligence can be used to support the classifica-tion or, if the classification is incorrect, help protect against penalties by demonstrating that the company tried to be correct. The written diligence should cite the applicable HTS General Rules of Interpretation, HTS section and chapter notes, and, if available, customs administrative rulings or binding tariff information (BTIs).
6. Export control classifications to determine export licensing requirements (i.e., Export Control Classification Numbers [ECCNs]) are separate and distinct from HTS and Schedule B classifications.
Tariff classification is always extremely important for importers and exporters because it determines the applicable duty rate, which then determines the customs duties owed and the ability to apply
free trade agreements (FTAs) and other measures to avoid or minimize customs duty exposure.
However, accurate tariff classification is even more important in the current trade environment because the additional duties on steel and alumi-num under Section 232, the Section 301 additional duties on Chinese products, and the retaliatory duties imposed on US products by other countries are generally based on tariff classification.
An incorrect tariff classification can expose a company to unnecessary duties or result in substan-tial duty bills or penalties for failing to correctly pay these additional duties at the time of importation.
Sean Murray is a classifica-tion attorney with Miler & Company.
You can reach him at [email protected] with your questions.
In 1974, Dean Somerville, founder of Posi Lock, oper-ated a machinery repair shop and a farming operation. He saw a need for a self-aligning, universal puller that would remove gears and bearings safely and quickly. With his inventive spirit and mechanical background, he developed the unique Posi Lock Safety Cage design. The Posi Lock puller was immediately recognized as a significant advance in the gear and bearing puller in-dustry.
More about Posi Lock (Positive Lock) Puller, Inc.
Posi Lock CEO Tamara Somerville told IBNewsmag that “My father actually had a farm repair shop and wanted to go hunting but had a combine to repair and was using a traditional puller that kept slipping off. He told a friend, “If someone would invent a puller that actually worked, they would sell a million of them!” His buddy told him to invent one! So, he did! And that is how Posi Lock Puller came to be.
Today, Posi Lock Puller, Inc. is a woman-owned busi-ness. Tamara Somerville, Dean’s daughter and Posi Lock’s CEO, continues to develop strong international alliances around the globe. Under Tamara’s leader-ship, Posi Lock became a global leader in the power transmission and motion control (PT/MC) industry for heavy weight pullers.
“We serve the Automotive, Agricultural, DIY, Industri-al, MRO, Mining, and Construction… basically EVERY industry. Think about where “maintenance” is needed – from golf courses, hospitals, hotels, restaurants, mining equipment (big industry for us), schools, bus depots, train stations, nuclear plants, ships of all sizes, casinos… yes, those slot machines have bearings inside
Posi Lock, continued on page 9
page 7March 2019
What Brexit could mean for US exporters to the UKEverything remains very in flux with Brexit. After the British Parliament defeated Prime Minister May’s deal with the European Union for a second time, it narrowly supported a request to the EU for an ex-tension. EU leaders agreed to delay the March 29 deadline by two weeks, giving the UK until April 12 to pass the deal or indicate a way forward. If the deal passes, the UK has until May 22 to adopt remaining legislation.
If the UK agrees to a deal, there will be Transition period (currently envisioned as 21 months with the UK fully leaving the EU in December 2020.) The UK would remain bound by EU rules and enjoy its benefit but would not have a voice in EU decision-making. During this time, EU and UK leaders would negotiate the terms of their future economic rela-tionship, while businesses and citizens begin prepar-ing in an orderly fashion for post-Brexit realities.
Amanda Sloat discussing Brexit updates with members of Kansas City’s International Relations Council.
American exporters wishing to sell in the UK must continue to abide by EU rules, classifications, duties and taxes throughout this transition period.
Amanda Sloat, Robert Bosch Senior Fellow in the Center on the US and Europe at the Brookings Institution in Washington, DC. She writes and speaks regularly on Brexit with publications at www.brookings.edu/experts/amanda-sloat.
IBNewsmagTM
March 2019page 8
of them!, bowling alleys, elevators, sewing machines, snow mobiles, automotive repair, plants/factories, ag-ricultural equipment… this is what got us our start,” said Ms. Somerville.
“Everything that moves (even a door handle) has a gear, bearing, wheel, pulley, sprocket… something on a shaft that at some point in time may become damaged… and needs to be replaced; or perhaps whatever is behind that item may need to be repaired, so you need to remove the “press fit item”, i.e. the gear/bearing, etc., in order to make the repair. Most of us typical homeowners will never have a need to use a puller (we call a repairman.) A puller isn’t a normal tool like a screwdriver or hammer. I wish it was!
We individuals don’t use pullers! Professional mechan-ics use pullers! Now take down a wall with my Sawzall- yes, indeed I will do that! Those DYI people who like to repair their lawnmowers, snowmobiles, motorcycles, cars, agricultural equipment- yes, they will use pullers,” she explained.
In 2002, Ms. Somerville brought home the Export Achievement award from the US Department of Com-merce for the company’s successful export activity. Over her career, she helped Posi Lock become an SBA Export-er of the Year; and she was recognized among Prairie Business’s Top 25 Women in Business. In 2016, she was recognized as one of the top 100 women in manufactur-ing across the USA by the Manufacturing Institute. An extraordinary exporter and an extraordinary woman!
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Posi Lock, continued from page 7
page 9March 2019
PROFILE:Pakistan
A Few Practical Tips for Doing Businessin PakistanOverview
• Pakistan is the home of one of the world’s oldest civilizations (Urdu Valley).• It was part of the former British colony which also included India.• Pakistan and India have fought wars in 1947-48, 1965 and 1999 and are constantly on alert. The major cause of the wars has been the disputed Kashmir area which consists of Muslim, Hindu and Buddhist populations.• Pakistan is located in southern Asia bordering the Arabian Sea with India in the east, Iran and Afghanistan in the west and China in the north. It is primarily a Muslim nation. It has a large English-speaking population both in urban and rural areas.• Size: Slightly less than twice the size of California. • Population Distribution: The Indus River Valley contains a major portion of the population. The Punjab is the most densely populated province.
• Population: 208 million (July 2018 est.) Popula- tion Growth: 1.4% (2018 est.) Literacy Rate: 58%• Government: Federal parliamentary republic Capital City: Islamabad.• Non-Stop Flight Availability – None presently, negotiations underway.
General Business Culture• Pakistan is a hierarchical society.• People are respected because of their age and position.• Older people are viewed as wise and are granted respect.• Pakistanis expect the most senior person, by age or position, to make decisions.• Titles are very important and denote respect. It is expected that you use a person’s title and surname until invited to use a first name.• Not a culture where first names are commonly used, except among close friends.• Men shake hands with each other. Most times, women hug and kiss.• When a man meets a woman, they generally shake hands.• Pakistanis take their time during greetings and ask about the person’s health, family, and busi- ness success.• If invited to a Pakistani’s home, bring the hostess a small gift such as good quality choco- lates.
IBNewsmagTM
March 2019page 10
• Gifts are presented using both hands and not opened when received.• If invited to a home you will most likely have to remove your shoes.• Check to see if the host is wearing shoes. If not, remove yours at the door.• Dress conservatively.• Greet elders first.• Eat only with the right hand.
Business Etiquette• Appointments are necessary and should be made, in writing, 3 to 4 weeks in advance. Meetings with private companies can often be arranged with less notice.• The best time to schedule meetings is in the late morning or early afternoon.• Try not to arrange meetings during Ramadan since workdays are shorter.• Tea is generally served at meetings.• When invited to a home, arrive approximately 15 minutes later than the stipulated time when invited to dinner or a small gathering.• You should arrive at meetings on time and be prepared to be kept waiting.• Private sector personnel who are accustomed to working with international companies often try to be punctual but are not always successful.• It is not uncommon to have a meeting cancelled at the last minute or even once you have arrived.• Pakistanis often have an open-door policy, even during a meeting, therefore, there may be fre- quent interruptions. • Business meetings are formal and do not start until after prolonged inquiries about health, family, etc.• During the first of several meetings, business may not be discussed at all. A relationship must be developed first.• Decisions are generally made slowly. Do not try to speed up the process since it will offend the other party.• Several layers of the bureaucracy generally have input.• Final decisions are made by the highest-ranking person.• Pakistanis are generally very good negotiators.• Price is often a determining factor
• Pakistanis strive for decisions where both parties win.• Maintain indirect eye contact while speaking.• Do not use high-pressure tactics.• Discussions may be intense and even revert to Urdu (the national language). It is important to remain calm.
Business Cards• Business cards are exchanged right after the initial introduction.• Include any advanced university degrees or professional honors on your card• Business cards are exchanged using the right hand only or with two hands.• Make a point of studying any business card you receive before putting into your business card holder.
Religion and Business• Islam is practiced by a majority of Pakistanis and governs their personal, political, economic and legal lives.• Muslims pray five times a day – at dawn, noon, afternoon, sunset, and evening.• Since Friday is the Muslim holy day, everything is closed.• During the holy month of Ramadan all Muslims must fast from dawn to dusk and are only per- mitted to work six hours per day. Fasting includes no eating, drinking, cigarette smoking, or gum chewing.
Working Hours• According to federal law, normal working hours per day are 8 hours and should not exceed 48 hours per week. By including the lunch and prayer time in hours of work, working hours should not exceed 9 hours a day.
EconomyThe economy is very dependent on agriculture and textiles and apparel.
In order to broaden its offerings, Pakistan is imple-menting economic reforms, developing the energy sector, travel & tourism and attracting foreign investment. Much of the population is under 25 years old.
• GDP: $1.061 trillion (2017 est.)
International Business News
page 11March 2019
• GDP Growth Rate: 5.4% (2017 est.)• Unemployment Rate: 6% (2017 est.)• Exchange Rate: 1 US Dollar = 140.18 Pakistani Rupees (3/21/19) Labor Force: 64m (2017 est.)• Labor Force Makeup: Agricultural - 42.3%, Manufacturing - 22.6%, Services- 35.1% (2015)• Major Industries: Textiles and apparel, food processing, pharmaceutical, surgical instru- ments, construction materials, paper products, fertilizer, shrimp
International Trade• Total Exports: $32 B (2017 est.) • Major Exports: Textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sporting goods, chemicals, surgical instruments, carpets and rugs • Major Export Partners: US - 17.7%, UK - 7.7%, China - 8%,• Germany - 5.8%, Afghanistan - 5.2%, UAE - 4.5%, Spain - 4.1% (2017 est.) • Total Imports: $53B (2017 est.) • Major Imports: Petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel• Major Import Partners: China- 27.4%, UAE - 13.7%, US - 4.9%, Indonesia - 4.3%, Saudi Arabia - 4.2 (2017)
Sampling of English Language News Websites
• Dawn- general news - www.dawn.com• The Nation- general news - www.nation.com.pk • The News International - general news - www.thenews.com.pk • Daily Times -general news - www.dailytimes.com.pk • Business Recorder - financial daily - www.brecorder.com
Sampling of Pakistani Companies• Fauji Fertilizer - fertilizer- Rawalpindi - www.ffc.com.pk • Millat Tractors- tractors etc. – Lahore - www.millat.com.pk • Pakistan Oilfield Ltd. - independent oil consort- ium – Rawalpindi - www.pakoil.com.pk • Archroma Pakistan - dyes and chemicals etc. - Karachi - www.archroma.com.pk
• Agriauto Industries Ltd. - components (automo- tive, motorcycle, ag equipment) – Karachi - www.agriauto.com.pk• Cherat Packaging Ltd. - paper and polypropyl- ene bags – Karachi - www.gfg.com.pk • Ferozsons Laboratories Ltd. - pharmaceuticals, biotech, sales rep -Lahore - www.ferozsons-labs.com• Ghandhara Industries Ltd. - pickup trucks and buses – Karachi - www.gil.com.pk • Ismail Industries Ltd. - snack foods – Karachi - www.ismailindustries.com.pk • DG Cement – cement - Lahore - www.dgcement.com • Agha Steel - iron and steel products – Karachi- www.aghasteel.com• Descon - engineering and construction – Lahore - www.descon.com • General Tyre – tires – Karachi - www.gentipak.com • Karachi Shipyard & Engineering Works - State- owned shipbuilder – Karachi - www.karachishipyard.com.pk• Lakson Group – conglomerate - manufacturing and services – Karachi - www.lakson.com.pk • Voice Mobile - mobile phones – Karachi - www.voicetel.com.pk • Engro Corporation - fertilizers, foods, chemicals, energy etc. – Karachi - www.engro.com
Public Holidays 2019:• Kashmir Day: February 5• Pakistan Day: March 23• Labor Day: May 1• Ramadan 2019: begins on May 5• Eid al-Fitr (End of Ramadan) June 5 - 7• Eid- al- Adha (Feast of Sacrifice) starts on August 12 and 13 • Independence Day: August 14 • Ashura (Muhurran) starts September 9 and ends September 10 • Iqbal Day: November 9 • Milad un Nabi/The Prophet`s Birthday: Novem- ber 10 • Quiad-e-Azam Day: December 25
By Paul MastilakInterMark3, Inc.
IBNewsmagTM
March 2019page 12
