Pre-Trade Compliance Consultants Discuss CBP "10+2" and You

U.S. Customs and Border Protection (CBP) has published on January 2, 2008 a Notice of Proposed Rulemaking (NPRM) requiring importers and carriers to electronically submit additional information on cargo before it is brought into the United States by vessel. The Security Filing, also known as "10+2," is another step in the Department of Homeland Security's (DHS) strategy to better assess and identify high-risk shipments to prevent terrorist weapons and materials from entering the United States.

While the aim of the initiative is indeed noble, importers and their forwarders / brokers should understand how this initiative affects them. The proposed regulation will require a single party designated by the importer of record to submit an Importer Security Filing (ISF) containing the following ten data elements at the lowest bill of lading level:

1. Manufacturer (or supplier) name and address
2. Seller (or owner) name and address
3. Buyer (or owner) name and address
4. Ship-to name and address
5. Container stuffing location
6. Consolidator (stuffer) name and address
7. Importer of record number/foreign trade zone applicant identification number
8. Consignee number(s)
9. Country of origin, and
10. Commodity Harmonized Tariff Schedule number (6 digit)

The ocean carrier will be required to submit (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).

The good news is that most of these elements are already included in existing entry documentation. The bad news is that CBP will require importers or their agents to transmit this information (ISF) to CBP no later than 24 hours before cargo is laden aboard a vessel destined to the United States.

Can your supply chain handle these requirements?

• Can your foreign seller or its agents provide you with this info prior to lading?
• How will you know that the HTS is compliant?
• Can you provide the container stuffing info 24 hours prior to lading?
• Do you know the buyer of your cargo prior to entry?

These are the importer's requirements and your forwarders / brokers are not responsible for managing this initiative - you are! If you are not already, you should be discussing these requirements with your broker now. How will "10+2" affect you?

For more information on “10+2” and pre-trade compliance please visit us at http://www.wearecompliant.com

Trade Compliance - What You Don't Know CAN Hurt You

Dual-use items are any items that can have both military and commercial applications. These items may appear to be innocuous but, in the hands of the wrong people, can be used for destructive purposes. Examples of dual-use items include communications equipment, machine tools, handcuffs, information security, electronics, lasers, and encryption software. In addition, there are thousands of metals, compounds and chemicals that are controlled because they can be used for military applications.

Many firms whose primary business is not considered 'sensitive' are unaware of their obligations under the EAR. Companies are proud to export U.S. products overseas but many have never given much thought to the consequence of these activities or the need for trade compliance consulting.

The penalties for violations of export laws can be severe. Companies considered household names have paid significant fines for violations of U.S. export laws. Many smaller companies have been penalized as well. Recent examples include a Florida company having paid a $1,102,200 civil penalty for illegal exports of fingerprint equipment and other crime control items and a New Jersey-based freight forwarder was sentenced to a $250,000 criminal fine and five years probation as well as a $399,000 administrative penalty for the shipment of items to India without the required export license.

The penalties for violations have recently been increased in an effort to improve trade compliance with the BIS regulations. On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act. The Act provides for civil penalties amounting to the greater of $250,000, or twice the value of the transaction that is the basis of the violation, that may be imposed for each violation of IEEPA. Willful violators can expect criminal penalties including fines up to $1,000,000 and/or up to 20 years in prison.

Questions Every Exporter Must Ask

· Have we had all of our items, technology and software classified by the BIS or other competent expert?

· Do we know our customer (i.e. do we check our customers against the government lists of denied parties, specially designated nationals, and other required databases)?

· Have our employees involved in export transactions received the necessary training to ensure compliance?

· Do we have adequate recordkeeping practices in the event of a BIS enforcement audit?

· Do we have a formal export trade compliance program in place to ensure compliance to U.S. laws and regulations?

Maintaining control of your exports is not a cost of doing business. Aside from being the 'right thing to do', it can save money, avoid negative publicity and improve export shipment flows. What you don't know can hurt you.