THE C-AIR TIMES
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 ISSUE #105 - 3/05/10 | ||||||
 CBP Officials Discuss 10+2 ISF Warning Letters, Finalization, Etc. at February COAC Meeting - Broker Power Inc.During the February 25, 2010 Departmental Advisory Committee on Commercial Operations of U.S. Customs and Border Protection and Related Homeland Security Functions (COAC) meeting, CBP officials provided an update on 10+2.
The following are highlights of the CBP-COAC discussions on 10+2: CBP Has Not Started Issuing ISF Warning Letters
In January 2010, CBP announced that during the first quarter of its enforcement of 10+2, it would be issuing warning letters and talking to filers (instead of issuing liquidated damages) for ISF issues.
A CBP official stated that CBP has not yet started issuing warning letters, and he noted there are certain sensitivities over the issue of who receives a warning letter and for what reason. Various COAC members noted the importance of importers and/or sureties receiving warning letters in addition to filers. Dallas Notice on 10+2 Enforcement for C-TPAT Firms Concerns COAC Members
COAC members, while expressing appreciation for CBP’s gradual enforcement plans for 10+2, noted concern about a CBP document (issued by Dallas CBP at the end of January 2010) which contained talking points with respect to 10+2 enforcement.
According to the CBP Dallas/Fort Worth public notice, at the start of the second quarter of full enforcement, C-TPAT companies that demonstrate low compliance rates will be notified by CBP Headquarters at the executive level (i.e., VP or CEO) that they risk establishing a pattern of non-compliance and may be jeopardizing their C-TPAT status. The public notice further stated that, as CBP moves into the remaining quarters, CBP will consider revoking, suspending, or reducing the C-TPAT status of C-TPAT companies that remain non-compliant. COAC members expressed concern that the trade was not engaged before this policy went out and noted that C-TPAT members should have been advised of the policy. COAC also asked CBP to send something to the C-TPAT members clarifying CBP’s position on the ISF-C-TPAT link issue. CBP officials did not respond to COAC’s request or concerns. ISF Six Year Statute of Limitations Concerns COAC Member
At the meeting, a COAC member addressed the issue of the statute of limitations for ISF liquidated damages. According to that COAC member, since the goal of the ISF is to increase security, initiating a liquidated damages claim five or six years after the shipment has been released doesn’t really serve that purpose.
(CBP’s 10+2 FAQs state that “pursuant to 28 USC 2415, the statute of limitations for ISF liquidated damages is six years from the date of the breach of the bond. CBP will not limit its authority to enforce the ISF requirements.”) The COAC member noted that COAC is going to have further dialogue with CBP on this issue. CBP officials did not respond to this member at the meeting. CBP Addresses Concerns on Format, Detail, Error Codes in Progress Reports
According to a CBP official, CBP continues to send out ISF progress reports on a monthly basis and has covered about 900 of the filers.
Format. A CBP official stated that CBP has looked at the format of the monthly progress reports in light of the trade’s request for more detailed, useful information. The official noted that CBP is looking at a couple of report variations which it hopes will allow the trade to use the reports to work with filers on errors and rejects. He official further stated that CBP is also looking at an Excel spreadsheet format for the reports to allow greater data manipulation by trade. Transaction level detail. A COAC member expressed satisfaction that CBP has listened to COAC’s suggestions regarding transaction-level detail and more user friendly formats for the progress reports. According to a CBP official, C-TPAT Tier 3 members will see additional transaction level information in their progress reports first. The COAC member noted that this level of detail should eventually be made available to all ISF importers. Error code list. In addition, a COAC member thanked CBP for providing the trade with the tools to interpret the progress report data, especially making an error code list available on the CBP Web site. However, one COAC member emphasized that it would like CBP to make the error code list easier to find on CBP’s Web site. Incorporation of ISF Information into ACE Sought by Some COAC Members
During the meeting, certain COAC members expressed the desire to have CBP look into ways to incorporate ISF information into the Automated Commercial Environment.
Continued Outreach to SMEs, Timely FAQ Updates Promised by CBP Officials
During the course of discussions with COAC, CBP officials expressed their commitment to continued outreach, especially for small and medium-sized enterprises. A CBP official also noted that CBP has been updating its 10+2 frequently asked questions document more frequently.
Updated 10+2 Statistics on Filing, Timeliness of ISFs
During the meeting, a CBP official noted that CBP has received over 5.5 million ISFs (from 2,300 ISF filers and from 141,000 unique importer of record numbers). The CBP official also stated that on a monthly report basis, 70-75% of the ISFs are filed timely.
Duty-Free Import Benefits at Stake for Certain Countries and Products
Sandler Travis & Rosenberg PA March 25 Deadline for Comments on GSP Eligibility
U.S. importers, trade associations and foreign governments have until 5:00 p.m. on March 25 to submit comments to the Office of the U.S. Trade Representative concerning the eligibility of certain goods for duty-free treatment under the Generalized System of Preferences. These comments may seek to preserve, reinstate or revoke this treatment.
The U.S. GSP program includes provisions, known as competitive need limitations, that trigger the removal of duty-free treatment if imports of a covered product from a beneficiary developing country exceed certain limits. For calendar year 2009, these limits are (a) 50% of the value of total U.S. imports of the product from all countries or (b) $140 million. Once the president determines that a CNL has been exceeded, GSP duty-free treatment for the subject article must be terminated no later than July 1 of the next calendar year. However, CNL waivers are permitted for products that are imported in de minimis quantities. In addition, duty-free treatment may be reinstated for products that no longer exceed the CNL. USTR is therefore accepting comments from interested parties on the following potential modifications to GSP eligibility, based on import data for calendar year 2009. De Minimis Waiver - The president may waive the 50% CNL with respect to an eligible article imported from a BDC if the value of total imports of that article from all countries did not exceed $19.5 million. Redesignation Request - If imports of an eligible article from a BDC ceased to receive duty-free treatment due to exceeding a CNL in a prior year, the president may redesignate that article for duty-free treatment if imports in the 2009 did not exceed the CNL. Potential Revocation of a Current CNL Waiver - A CNL waiver remains in effect until the president determines that it is no longer warranted due to changed circumstances. However, the president should revoke any CNL waiver that has been in effect with respect to an article for five years or more if the BDC's exports of that article to the U.S. exceeded (a) $210 million (1.5 times the applicable CNL value limit) or (b) 75% of the value of total U.S. imports of that article. A list of products that may qualify for one of these actions can be found on USTR's Web site.  $2 Million Civil Penalty for Importing Unsafe Children’s Products and Toys - Sandler Travis & Rosenberg PAThe Consumer Product Safety Commission announced March 2 that a U.S.-based company has agreed to pay a $2.05 million civil penalty to resolve allegations that it violated federal laws and regulations involving the safety of children’s toys and other products. These violations include importing, distributing and selling toys with illegal levels of lead content, illegal levels of lead paint and phthalates, small parts on toys intended for children younger than three years old, and products that lack required warning labels.
The company will also be required to retain an independent product safety coordinator to assist in the creation of a comprehensive product safety program, conduct a product audit of merchandise to determine testing and certification requirements, and develop and establish procedures for compliance and reporting. Until the company demonstrates that it has sufficient knowledge of and is in compliance with CPSC safety standards and testing requirements, it will be prohibited from importing or entering into U.S. commerce, directly or indirectly, any toy or other children’s product. A CPSC press release notes that the company, which has conducted business in the U.S. since 2005, had been previously issued letters of advice from the Commission after examinations at ports and inspections turned up violations. Many of these violations occurred prior to the enactment of the Consumer Product Safety Improvement Act, which reduced allowable limits of lead and phthalates and increased the CPSC’s ability to seek higher penalties. Trade Group Concerned About CBP Use of Requests for Information/Notices of Action
Sandler Travis & Rosenberg PA The American Association of Exporters and Importers wrote to U.S. Customs and Border Protection recently regarding CBP’s use of forms CBP 28, Request for Information, and 29, Notice of Action. The group wrote that its members have raised two concerns: CBP declaring that the issuance of these notices precludes a prior disclosure, and language on these forms implying that a formal investigation is open when in fact that might not be the case. For example, the letter stated, there have been recent instances where CBP has declared that the issuance of a CBP 28 and/or 29 should be interpreted by the importer that an investigation has begun, despite offering no proof that a formal investigation had been initiated, and has denied a prior disclosure on that basis. In addition, recent CBP 28s have been issued by the ports with language like “…failure to provide information could lead to penalties under 19 USC 1592” or “this office is investigating the classification of…”. AAEI members have heard that CBP is pointing to this language to deny the benefits of a prior disclosure even though both of these statements are generic and do not necessarily mean that a formal investigation has been opened. AAEI is therefore requesting that CBP:
CBP: Drawback Proposal Withdrawn; Centralized Filing of Continuous Bonds; AGOA Certificate of Origin - Sandler Travis & Rosenberg PA
Drawback Proposal Withdrawn. U.S. Customs and Border Protection has withdrawn an October 2009 proposed rule designed to eliminate situations where imported merchandise subject to federal excise tax is effectively allowed into the U.S. 99% free of that tax through the application of a drawback claim. CBP states that this proposal is being withdrawn to permit further consideration of the relevant issues involved. A number of lawmakers had objected to the proposal and called for its withdrawal, stating that it could hinder exports of U.S. wine.
The proposed rule would have precluded the filing of a substitution drawback claim for internal revenue excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise or where the substituted merchandise was the subject of a different claim for refund or drawback of tax under any provision of the Internal Revenue Code. The rule would also have added a basic importation and entry bond condition to the CBP regulations to foster compliance with the amended drawback provision. CBP said these proposed amendments were necessary to protect the revenue by clarifying the relationship between drawback claims and federal excise tax liability. CBP explained that in recent years it has received and approved a number of substitution drawback claims involving imported bottled and bulk wine and domestically-produced wine in which imported wine is effectively introduced into the U.S. market free of 99% of federal excise tax. Given the present statutory and regulatory structure within which these claims are administered, CBP was concerned that other products subject to excise tax under the IRC (distilled spirits, beer, tobacco products, cigarette papers and tubes, imported taxable fuel and petroleum products) could also be the subject of such drawback claims where the excise taxes have been refunded, remitted or not paid. This would be contrary to congressional intent to not allow multiple drawback claims on the exportation or destruction of goods. CBP Issues New Informed Compliance Publication on Ball Bearings - Sandler Travis & Rosenberg PA
U.S. Customs and Border Protection has posted to its Web site a new informed compliance publication on the classification of ball bearings, roller bearings and parts thereof. This publication covers the history and development of bearings, types of bearings, parts of bearings, and antidumping and countervailing duties. CBP emphasizes that the material in this publication is provided for general information purposes only. Because many complicated factors can be involved in customs issues, CBP states, importers may wish to obtain a CBP ruling or obtain advice from an expert who specializes in customs matters, such as a licensed customs broker, attorney or consultant. Informed Compliance Publications - Ball Bearings  Hapag-Lloyd to Raise India Rates - The Journal of Commerce
Rates from India to Europe, North America to India will rise April 1
Hapag-Lloyd in April will seek rate increases on two trade lanes affecting the Indian Subcontinent. A rate increase on the westbound trades from the Indian Subcontinent to Europe will be $200 per 20-foot equivalent unit, effective April 1. The rate increase will apply to all cargo moving from India, Pakistan, Bangladesh and Sri Lanka to destinations in North Europe and the Mediterranean. The new hike comes on top of a similar increase Hapag-Lloyd applied on the same trade lane as of Feb. 22. The German carrier will also increase rates on cargo shipped from the United States and Canada to the Indian Subcontinent and the Middle East, effective April 1. Rates on the North America-India route will go up by $240 per dry TEU and $300 per dry FEU. On reefer shipments, rates will increase by $400 per TEU and $500 per FEU.
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