MGTA Presentation Presented by: Joe Burks jburks@livingstonintl.com
Agenda Welcome Who is Livingston? Level Setting ISF Border, Air & Ocean Clearances Compliance Concerns Bonding ACE Recordkeeping Penalties Q&A
LIVINGSTON INTERNATIONAL GLOBAL TRADE MANAGEMENT TRADE CONSULTING MANAGED SERVICES TRADE AUTOMATION FREIGHT SERVICES BROKERAGE SERVICES
Let s start with the basics!
Trade is not always as it appears..
Trade Compliance Responsibilities Sales & Marketing, Engineering Operations Sales & Marketing Pricing Rebates Discounts End User Info Promotions Samples After Sales Support Returns Customer Service Order Entry Sourcing MSAs Pricing Logistics Inco-terms Goods Movements Purchasing Suppliers Records Engineering Technical Specs Design Intent R&D End Use Prototypes Samples Shipping & Receiving Marking Quantities Value End Use End User Destination Preferential Treatment Quantity License Origin Manufacturing Raw Materials Indirect Materials Machinery & Equip Sub-components Origin Assists Finance/Tax Invoicing Records Cost Royalties License Fees Transfer Pricing Valuation Adjustments Customs Brokers Data Records Admin Present. Carriers & Agents Shipping Docs Security Commissions Finance, Tax & IT External Visa Status Nationalities Denied Parties Oversight Special Programs Classification Certificates for Origin Suppliers Invoice Origin Security Tone Control Support Objectives Resources Risk Assessment Human Resources Trade Compliance Encompasses All Functions Legal & Trade Compliance Executive
Typical Supply Chain Flow Numbers represent transaction change Text represents security touch point.
World Customs Organization (WCO) Stands at 180 countries representing 98% if global trade. WCO declares 2016 to be the year of Digital Customs. Automated clearance systems. Single Window Did you know you can subscribe to their magazine? http://www.wcoomd.org/en/media/wco-news-magazine/subscriptions.aspx Take Away? Recent US marking for Beef from Canada was taken to the WTO where they approved retaliatory acts if the US did not repeal. Just published "Guide for the technical update of Preferential Rules of Origin As global borders continue to shrink they will have a greater impact.
Importer Security Filing
Importer Security Filing Commonly called ISF or 10+2 10+2 defines the 10 elements required to be filed by the importer(or their agent) and the 2 are to be filed by the carrier. Ocean only Talk of implementing Air, Rail and Truck but nothing yet. Must be filed at least 24 hours before sailing CBP ruled it is NOT doing customs (HQ H045695)
So What Data is Required? The ten elements are as follows: 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 10.Commodity Harmonized Tariff Schedule number to six (6) digits The two elements are: 1. Vessel Stow Plan 2. Container Status Message
So What is the Impact? Failure to comply can lead to penalties. Penalty is $5k per filing. Note that if the same transaction has multiple errors the max fine is $10k While CBP has threatened to issue penalties no known penalties have been issued. Warnings have been issued. Don t forget about your bond! If you are a large importer you may have to increase your bond. When filing you may get a Bond Insufficiency notice.
Border, Air & Ocean Entries - Compliance Concerns
Are All Entries the Same? No. Border entries typically cost less to process. More competition and goods move faster Air Freight and Ocean entries cost more to process. Less competition and larger entries Entry types should be reviewed to determine risk! 01 = Consumption Entry 02 = Consumption Entry Quota/Visa 03 = Consumption Entry ADD/CVD 06 = Consumption Entry FTZ 11 = Informal Entry There are 41 types. Entry type 03 has the greatest risk due to Anti-Dumping Duties and take years to liquidate. Entry type 11 has the lowest risk and liquidate upon entry.
What is required to make entry? Invoice, Packing List and Bill of Lading Easy right? Not so fast!
Documents required for entry. While it seems straight forward that Invoice, packing slip and BOL are all that is required but: The terms of the agreement may change what is required? Incoterms can change the value. Are you using a Free Trade Agreement? Must have document at time of entry. What about First Sale for Export? Do you have the documents to support the First Sale transaction? Do you have a customer agreement that requires additional documents to be included?
Key Entry Document Fields to pay attention to: All fields are important but these are fields that should be audited. 2 Entry Type - Did they get it right? 13 Manufacturer ID - Common errors! 23 Importer Number - Make sure it is your number! 29 HTS and ADD/CVD - HTS is used to base the duty rate - ADD/CVD increase duties and risk exposure. 32A Entered Value - Value of the merchandise. - May or may not be invoice value!!
Bonds
Bonds A customs bond is required for importation into the United States. The bond is issued by a Surety Company as with any other type of bond. If your imports grow then you may be required to increase the bond amount. The basic purpose of a Customs Bond is the same as any other bond. If you fail to pay the government for duties, penalties or other fee s they will go against your bond.
ACE
Automated Commercial Environment Huge changes in 2016. Currently CBP using the Automated Commercial System. CBP is migrating to Automated Commercial Environment. So what does that mean? Do you use the ACE Portal for metrics and data? (If not, then why not?) Historically it would take about 20 days for data to show on the ACE Portal. With ACE being the entry system it will show up in about 5 days. All brokers are required to migrate to the new system for entries. Problems? They have delayed the program already. PGA s are not ready!
ACE Portal If you don t have an account you should apply! What data is stored out there? There are MANY reports. Even a data extract. My favorite is AM008 Entry detail. I modified to include Mode of Transportation, MPF, Other Tax and several other fields. What did it tell me? o Was the MID used correctly or did another broker use a different MID. o Consistency in HTS application. o Application of Special Programs. o 9801 Entries
Recording Keeping
Recordkeeping Don t forget about record keeping! All records must be kept for 5 years. Not shorter and not longer! Government publication on record keeping. http://www.cbp.gov/sites/default/files/documents/icp027.pdf A1A list 19 CFR Part 163 Interim (a)(1)(a) list. 5 pages! Basically any document involved in the import. Includes but not limited to Purchase Req, Purchase Order, Invoices, bills of lading and Payments Anti-Dumping/Countervailing and Drawback require longer periods.
Penalties Record Keeping
Penalties For failure to maintain or produce (a)(1)(a) list records: Willful: Not to exceed $100,000 PER release or 75% of the appraised value, whichever is lower. Negligence: Not to exceed $10,000 per release or 40% of the appraised value, whichever is lower. In addition, if these records relate to goods eligible for reduced or free duty rates, the merchandise shall be liquidated at the full column one rate. If the goods are already liquidated, they shall be reliquidated (up to two years from the demand date) at the full column one rate.
Questions?