So You Want to Be a Customs Broker

TCB Blog Customs Brokers Requirements.jpg

As international traders become more familiar with US import and customs clearance processes, many have questions about how their customs brokers became qualified to handle this type of work.  Although every broker’s experience is different, there are some common similarities.

First, every US customs brokerage firm must have at least one corporate officer (or partner, if the firm is a partnership) who holds an individual US customs broker’s license.  A licensed broker can also operate as an individual “sole practitioner” without forming a corporation or partnership.  When a customs brokerage firm has a separate legal existence as a corporation or partnership, the firm must also have a customs broker’s license in its own name. 

Both individual and corporate (or partnership) customs broker licenses are issued by US Customs and Border Protection (CBP).  Once issued, these licenses remain valid until revoked.  Each licensed individual and firm must file a status report with CBP every three years.  If this status report is not filed within the allowed time period, the license is revoked by operation of law. 

Unlike most other professional licenses, the individual customs broker’s license does not have any specific requirements for:

  • education

  • training

  • experience

Instead, someone who wants to become a customs broker must meet a very short list of requirements:

  • US citizen

  • at least 21 years old

  • not a US Government employee

  • pass the customs broker licensing examination

  • pass a very detailed background check

The customs broker licensing exam is given twice a year, nationwide, in April and October.  It is an “open book” test, and the applicant is expected to bring copies of the Harmonized Tariff Schedule of the US, the Customs Regulations, and other specific references which can be consulted during the exam.  The time allowed for the exam is four and a half hours.

Recent versions of the exam have contained 80 questions, each worth 1.25 points, for a maximum possible score of 100 points.  A passing grade is 75 points. 

Topics covered by the exam questions can vary substantially from one exam to another, but typically include:

  • broker compliance

  • marking

  • intellectual property rights (patents, trademarks, and copyrights)

  • fines and penalties

  • customs entry process (including use of the Automated Commercial Environment)

  • anti-dumping and countervailing duties (ADD and CVD)

  • customs bonds

  • duty drawback

  • powers of attorney

  • bonded cargo facilities (including Foreign Trade Zones and warehouses)

  • classification

  • valuation

  • free trade agreements

The “pass rate” for the customs broker licensing exam has varied greatly over the years.  For some exams, the nationwide “pass rate” has been as high as about 35 percent, and for others as low as 2 to 3 percent.  During recent years, the average “pass rate” has typically been about 15 to 20 percent.

These “pass rates” are relatively low, compared to other professional licensing examinations, such as the:

  • medical license exam – 80 to 95 percent

  • bar exam – 55 to 70 percent

  • certified public accountant exam – around 50 percent

  • chartered financial analyst – 45 to 55 percent

Because the customs broker exam is so difficult, many people find that familiarity with the processes of international trade and customs clearance – both the theoretical and practical aspects – is extremely helpful.  So, a high proportion of those who pass the exam have at least some previous experience in customs brokerage, international trade and transportation, and/or related areas.  Those who do not pass can take it again, as many times as they choose to.

Anyone who passes the exam can submit an application for an individual customs broker’s license, at any time within the following three years.  Someone who passes the exam, but did not meet the other qualifications for a broker’s license at that time, may wait until s/he does meet them to submit a license application.  (Qualifying events may include reaching the age of 21, becoming a US citizen, and/or no longer being employed by the US Government.)

Customs broker license applicants are subjected to a very detailed background investigation, which is intended to identify anyone who may have a history of criminal conduct, failure to meet financial obligations, or other disqualifying characteristics.  After the applicant’s investigation is completed, and presuming no disqualifying information is found, CBP formally issues the license.

After receiving an individual customs broker’s license, most brokers use their expertise to help clients and non-licensed customs brokerage employees deal with customs-related issues including:

  • customs clearance of import shipments

  • customs (and other regulatory agency) compliance

  • classification and valuation of merchandise

  • serving as qualifiers for a customs brokerage firm’s corporate (or partnership) license and permit

  • international trade and transportation consulting

The team at Transmark Customs Brokers is ready to put our expertise to work for our valued clients.  We hope the above may provide some additional insight into some of what is behind the individual and corporate customs broker licenses posted on the wall of the TCB office.