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

Title & Content

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LIVINGSTON INTERNATIONAL

GLOBAL TRADE MANAGEMENT

FREIGHT SERVICES

TRADE CONSULTING

MANAGED SERVICES

TRADE AUTOMATION

BROKERAGE SERVICES

Let’s start with the basics!

Title & Content (Numbers)

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Trade is not always as it appears…..

Trade Compliance Encompasses All Functions

External

Operations

Sales & Marketing, Engineering

Finance, Tax & IT

Human Resources

Legal & Trade Compliance

Executive

Value End Use

End User Destination

Preferential Treatment Quantity License Origin

Sales & Marketing Pricing

Rebates Discounts

End User Info Promotions

Samples After Sales Support

Returns Customer Service

Order Entry

Engineering Technical Specs Design Intent

R&D End Use

Prototypes Samples

Finance/Tax Invoicing Records

Cost Royalties

License Fees Transfer Pricing

Valuation Adjustments

Tone Control Support

Objectives Resources

Risk Assessment

Visa Status Nationalities

Denied Parties

Shipping & Receiving Marking

Quantities

Sourcing MSAs

Pricing

Purchasing Suppliers Records

Manufacturing Raw Materials

Indirect Materials Machinery & Equip Sub-components

Origin Assists

Logistics Inco-terms

Goods Movements

Oversight Special Programs

Classification Certificates for Origin

Suppliers Invoice Origin

Security

Customs Brokers Data

Records Admin Present.

Carriers & Agents Shipping Docs

Security Commissions

Trade Compliance Responsibilities

Title & Content (Numbers)

Use this slide if you need numbered formatting of

content.

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content area. Consider breaking content over

multiple slides if needed.

See alignment instruction on the

left of this slide.

Alignment:

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need more space in the content area you

can extend the height of the content box

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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

Title & Content (Numbers)

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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)

Title & Content (Numbers)

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content.

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content area. Consider breaking content over

multiple slides if needed.

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left of this slide.

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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

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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.

Title & Content (Numbers)

Use this slide if you need numbered formatting of

content.

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content area. Consider breaking content over

multiple slides if needed.

See alignment instruction on the

left of this slide.

Alignment:

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can extend the height of the content box

so that the top edge aligns with this arrow.

What is required to make entry?

• Invoice, Packing List and Bill of Lading

• Easy right?

• Not so fast!

Title & Content (Numbers)

Use this slide if you need numbered formatting of

content.

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multiple slides if needed.

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left of this slide.

Alignment:

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can extend the height of the content box

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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?

Title & Content (Numbers)

Use this slide if you need numbered formatting of

content.

Be concise. Try an avoid having titles that span

more than 2 lines.

Try and avoid cramming in too much content in the

content area. Consider breaking content over

multiple slides if needed.

See alignment instruction on the

left of this slide.

Alignment:

If your title only spans one line and you

need more space in the content area you

can extend the height of the content box

so that the top edge aligns with this arrow.

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

Title & Content (Numbers)

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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

Title & Content (Numbers)

Use this slide if you need numbered formatting of

content.

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left of this slide.

Alignment:

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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?