CBP and the New Administration: What it Means to Importers. Presented to USFIA Columbus, OH. April 05, 2017

Transcription

1 CBP and the New Administration: What it Means to Importers Presented to USFIA Columbus, OH. April 05, 2017

2 What We Know About the New Political Agenda NAFTA Uncertain Future Promised repeal or renegotiation. Article 2205 of NAFTA provides that {a} party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. The Trade Act of 1974 provides that after any withdrawal from a covered agreement, impacted tariff rates must remain unchanged for one year. Executive Order Omnibus Report on Significant Trade Deficits Requires the Commerce Department and U.S. Trade Representative to create a report that targets every form of trade abuse and every nonreciprocal practice that contributes to the U.S. trade deficit within 90 days. The report will deliver the causes of U.S. trade deficit by country and product and will form the basis for future decision making by the administration. Executive Order on Establishing Enhanced Collection and Enforcement of Antidumping and Countervailing Duties and Violations of Trade and Customs Laws -Requires Secretaries of Homeland Security, Commerce, Treasury, and USTR develop a plan that requires importers deemed to pose a risk to the revenue of the U.S. to provide security for ADD/CVD duty liability through bonds and other measures. That plan must be delivered in 90 days. -To ensure enforcement of laws protecting IPR holders from the importation of counterfeit goods, the Secretaries of Treasury and Homeland Security must take steps to ensure that CBP share with rights holders any information necessary to determine whether there has been an IPR infringement or violation; and any information regarding merchandise voluntarily abandoned. -Priority Enforcement: The Attorney General, in consultation with the Secretary of Homeland Security, must develop recommended prosecution practices and allocate appropriate resources to ensure that Federal prosecutors accord a high priority to prosecuting offenses related to violations of trade laws.

3 What We Can Expect Revisions to NAFTA terms Crackdown on imports from China and Mexico Increase in ADD/CVD safeguard actions Death of the Transatlantic Trade and Investment Partnership (TTIP) More aggressive approach to enforcement of American trade laws outside of international dispute mechanisms such as WTO. Robust use of U.S. trade remedy laws, sections of which give the President unilateral authority to put in place safeguard tariffs or other actions to selectively restrict imports. Key Message: More Aggressive Approach

4 What Are CBP s Priority Trade Issues? ADD/CVD Import Safety IPR Revenue Textiles/Wearing Apparel : Enforcement of FTA s Trade Agreements We can expect comprehensive trade enforcement in all of these areas. CBP announced plans to hire almost 24,000 CBP officers and more than 21,000 Border Patrol agents in FY Key Message: We must ensure our Compliance programs are not dated and require review.

5 Regulatory Audit Gains a New Perspective Importer audits are conducted under the direction of a CBP headquarters office the Office of Regulatory Audit which falls within the Office of Trade. In 2016 CBP made an interesting change hiring an outsider to head up Regulatory Audit. By appointing Robert C. McMillan as the Executive Director, CBP brought a corporate perspective to the government audit process. Prior to joining CBP, Mr. McMillan had over twenty years of experience in the private sector in audit, finance, ecommerce, and transformation within the health care, financial services, and consumer products industries. As head of the Regulatory Audit division, McMillan oversees the work conducted in the Regulatory Audit Regional Offices and Field Offices. CBP s website states that the Regulatory Audit Regional Offices are responsible for auditing major importers and other entities involved in international trade compliance with laws and regulations governing the importation and exportation of merchandise. The Regulatory Audit link brings you to a list of the regional offices and their areas of specialization which include trade fraud, product safety, intellectual property rights protection, drawback, free-trade programs, foreign trade zones, and importer self-assessment, among other areas.

6 CBP Audit Processes and Priorities CBP has several different audit processes which are used to audit importers. Choice of processes is influenced by an importer s volume, value, and revenues (duties primarily) paid to CBP as well as the complexity and therefore risk of non-compliance of their imports. CBP looks at whether the imports fall within one of their Primary Trade Initiatives--pre-established high-risk categories of imports. As mentioned, current priority trade Initiatives are antidumping and countervailing duties, import safety, intellectual property rights, revenue, textiles and apparel, and trade agreements. CBP officers such as those in the CEE s can also recommend an importer for an audit if they have concerns. So audits can come as a result of factors that an importer can control and those over which they have little control.

7 Audit Processes and Priorities: Focused Assessments The most comprehensive audit is a Focused Assessment. Around for quite some time now, CBP is well practiced in conducting these audits. The FA is risk-based and generally covers a broad, comprehensive scope of import requirements. The process includes an Internal Control Questionnaire about the company's organizational structure and internal controls related to Customs transactions. The questionnaire is designed to give the audit team a general understanding of the company's import operations and internal control structure as well as to inform the audit candidates of the areas on which the assessment may focus. The results of the questionnaire, interviews with company officials and Customs personnel, survey of company procedures, and limited testing will be used to determine the effectiveness of the company s internal control system. A review of selected transactions, called the Pre-Assessment Survey (PAS), of the company's importing operations and internal controls will be used to determine whether more extensive testing is necessary. Any additional testing will be done in the Assessment Compliance Testing (ACT) phase of the Focused Assessment. Sampling can expand if CBP determines that a more comprehensive review is prudent. While there is no pre-determined duration, a FA typically takes between 6-12 months.

8 Audit Processes and Priorities: Quick Response Audits Smaller in scope are CBP s Quick Response Audits (QRA). These are singleissue audits with an obviously narrower scope than the FA. These audits are designed to address a specific objective within a short period of time and are generally the result of referrals by other CBP or Homeland Security offices. There are different types of audit processes which fall under the QRA program. The newest process is called the Survey Audit. CBP sends the target company a questionnaire and uses the responses along with interviews and walk-throughs of selected entries to understand the company s import process. Companies who receive this questionnaire need to appreciate the importance and consequences of this correspondence from CBP Regulatory Audit. Although not technically an audit by Government Auditing Standards, CBP will issue a close out letter, and depending upon the findings, the Survey Audit can be a source of a recommendation for a full audit.

9 Audit Processes and Priorities: Surveys The Survey consists of three parts: Informed Compliance Letter Questionnaire Walk through A recipient of an Informed Compliance Letter may be targeted for the Survey process. The questionnaire covers questions designed to assess an importer s internal controls.

10 Benefitting from the Importer Self-Assessment CBP offers importers a formalized program of self-monitoring and disclosure to CBP. This program is called the Importer Self-Assessment Program. A primary benefit to importers of the ISA program is that the participating company is withdrawn from the FA audit pool. So, barring egregious violations, ISA participants can expect not to have a Focused Assessment. However, CBP could conduct a Quick Response Audit if a specific are of concern is identified.

11 How Can Importers Ensure Full Preparation? Conduct a Classification and Valuation review: Create a database that is shared with your Customs broker; review valuation calculations Conduct an ADD/CVD product review. There are hundreds of cases listed at Ensure that your company can certify non reimbursement of ADD duties and certify accordingly. Failure to do so may result in doubling of ADD duties. Conduct an FTA Claim review: Ensure that your product qualify for preferences; pay special attention to regional content requirements, and that required certificates of origin are in your receipt at the time of entry. Monitor and audit suppliers to assess risk of importing products produced by forced labor. The U.S. Department of Labor publishes an annual list, by Country and Product possibly produced by forced labor. Key Message: Don t wait for a CBP inquiry, timeframes in which to supply information are short, goods can be seized, and penalties issued.

12 Other Proactive Steps You Can Take To be prepared, there are proactive steps an importer can take to be ready for an audit. CBP has begun sending letters to select importers advising them of the Informed Compliance Publications. CBP is exercising its shared responsibility mandate from the Mod Act by notifying importers of their responsibilities, some of which are articulated in these publications. Readily available, these documents can be a source of information and insight into what CBP expects of importers. Some are more accurate and current than others and there are almost 100 topic-specific volumes. Using the audit questionnaire as a map, importers should review it, identify the responsible parties for the various questions and formulate responses. This process will help pull together the internal team involved in customs compliance, clarify areas of responsibility, find areas of strong and weak internal controls, and allow the company the opportunity to formulate and implement process improvements. Key Message: Ask And Expert. Sometimes being prepared means knowing where to turn for help.

13 ANY QUESTIONS?