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Dispatch
September/October 2002 |
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Homeland Security is such a broad term for a vast array of programs that are each designed to protect the U. S. from threats of disaster. In this issue we will take a closer look at the main programs that Customs has implemented in the wake of 9/11 and how the import/export community can participate.
We also take a look at the Paperless Drawback Prototype Test, another program prompted by the attacks of 9/11. Who can apply and what types of drawback will be accepted are some of the questions we try to answer. If you have a pertinent question or topic you would like us to address in a future issue, please email us today. And if you find Dispatch of value, please forward it to your colleagues using the Forward to Friend form located at the end of this newsletter. Thank you.
Carolyn Indreboe
President
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Paperless Drawback Prototype Test
On September 27, U.S. Customs announced plans to conduct a prototype test
to determine the feasibility of filing paperless drawback claims. What does this mean to you? What do we know about this program?
Who Can Apply?
For this testing period, only those drawback filers who file claims at the New York/Newark Drawback Center may participate. (Drawback claimants who wish to participate in this prototype program must have submitted applications to Customs no later than October 28, 2002.)
Why Only New York/Newark Drawback Center?
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In response to last years terrorist attacks that destroyed the New York Customhouse at 6 World Trade Center, Customs is hoping to reconstruct those drawback claims lost in the attacks. By focusing in on this one region, Customs can hopefully assess the feasibility of a nationwide electronic drawback-filing program.
Is It A Viable Program?
It is obviously too early to say at this point. But I, and many people I've spoken with in the industry, believe what Customs has outlined is unusable. As structured, it is useless for manufacturing substitution because Customs does not have any edit checks for basic statutory compliance - except for the date of initial export. Any paperless program for duty drawback should insure that the basic criteria for validation is met and should also capture as much important data as possible for statistical purposes. The proposed program from Customs doesn't seem to offer either of these. It is unlikely that Customs decision makers will approve another test a year from now, therefore it is critical that Customs address the program's shortcomings and get it right the first time.
What's next?
In spite of the programs shortcomings, it appears that Customs is going to continue with the test by accepting applications from the drawback community for all types of drawback claims. Customs may just cover their tracks by not approving certain types of drawback for this program - without actually coming out and saying why. We'll just have to sit back and watch.
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Protecting The Global Trade Network
Customs Brokers and Freight Forwarders Invited to Join C-TPAT
Customs announced recently that it has entered phase three of the Customs Trade Partnership Against Terrorism, otherwise known as C-TPAT. As a result, Customs Brokers, Air Freight Consolidators, Ocean Transportation Intermediaries and Non-Vessel Operating Common Carriers (NVOCC) may now participate in this program. C-TPAT pledges to create an alliance between the government, business and the trade community to create a stronger relationship that will heighten overall supply chain security practices.
Safekeeping our Commonwealth
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Helpful Hint
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Check Your Claims!
Check the details, claim details that is. Check and double check your drawback claims to insure that all data is included before sending them in to Customs.
"U.S. Customs rejects 90% of the claims that are submitted because of incomplete data."
According to one U.S. Customs liquidator, 90% of the claims that come across their desk are rejected because filers are neglecting to include all the necessary data their claims require.
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This type of program is not new, of course, with U.S. Customs having created a successful partnership with the private sector as early as the mid-1980's to curb the problem of drug smuggling into the U.S. In April of 2002, U.S. Customs Service Commissioner Robert C. Bonner announced the launch of C-TPAT, a new initiative in the U.S.'s fight against terrorism. With 16 million containers arriving annually into the country's 301 ports of entry, it is of the utmost importance that a program such as C-TPAT is in place to thwart out terrorism.
Importers Were Given First Crack at Membership
C-TPAT was first offered to importers, with more than 230 companies agreeing to participate by July of this year. Customs subsequently opened up the program to the transportation community including Air, Rail and Sea Carriers.
"Brokers and Forwarders can now apply for membership
to Customs Trade Partnership Against Terrorism"
For those Carriers already participating in the Customs Carrier Initiative Program (CIP), it will be necessary for them to apply for participation in C-TPAT. (CIP is a program set up by the Commissioner in 1984 to respond to the increase in smuggling of various drugs in the Southern Florida area.) Although it may seem like a duplication of efforts, the C-TPAT program actually focuses on the enhancement of security practices to better handle terrorist threats, whereas CIP focuses on security from a narcotics smuggling standpoint. Those carriers currently participating in CIP can expect expedited enrollment into the C-TPAT program since they've already consented to the stringent security standards required of CIP participants.
Trucking Industry is Next in Line
The C-TPAT program is not yet available to the trucking industry. However, Customs is working with both the Canadian and Mexican governments to create a processing system to be used in conjunction with the current industry partnership programs. This new program, currently known as Free and Secure Trade (FAST), will become the first step for the implementation of C-TPAT along the Canadian border. The U.S. government and Mexico are developing a similar program to be implemented along the Mexican border. Both programs should be in place in the near future. Eventually, C-TPAT membership will be offered to Port Authorities, Terminal Operators, Warehouse Operators and Manufacturers.
Voluntary Membership Includes Major Benefits
While C-TPAT is voluntary, there are a number of benefits for taking part. Participants see faster processing and reduced inspections, which in turn means quicker movement of cargo at the borders, keeping the flow of goods in the "fast lane". All carrier participants accepted into the C-TPAT program will also benefit from reduced exams and the assignment of an Account Manager.
Applications for membership in C-TPAT can be found on-line. Note that each industry has it's own application with industry-specific instructions.
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The Container Security Initiative (CSI) Goes Overseas
Approximately, six million fully loaded cargo containers arrive by ship at various seaports throughout the U.S. every year. This number represents nearly half of all incoming trade. Other countries, such as Japan, Singapore and the U.K., are even more dependent on sea container traffic.
In January 2002, the Container Security Initiative (CSI) was established to insure that terrorists have not infiltrated cargo entering the U.S. Customs is entering into partnerships with other governments worldwide to identify "high-risk" cargo containers and prescreen those containers at the foreign port before they are sent on to the United States. (A "high-risk" container is one that could be used by terrorists to conceal weapons or even the terrorists themselves.)
What Exactly will The Initiative Do for Security
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Helpful Hint
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Federal Register On-line
Did you know that updates are available each day from the Federal Register?
Follow this link to the Federal Register and you will be taken to the government's daily updates on issues such as International Trade Administration and Presidential Documents.
It is here, for example, that the import/export community learned of Customs' Paperless Drawback Prototype Test.
Keep abreast of late-breaking news with the click of your mouse!
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The main element of the CSI program is to place U.S. Customs inspectors at the various foreign seaports. Known as "CSI Ports," these foreign countries agree to work with the U.S. in the screening of U.S.-bound cargo containers. U.S. Customs inspectors will be working along side their foreign counterparts to pre-screen and target high-risk cargo containers using radiation detectors, large-scale x-ray and gamma ray machines, minimizing the threat of terrorism.
"Six million fully loaded cargo containers arrive by ship
at various seaports throughout the U.S. every year."
Customs plans to conduct security screenings during a window of time referred to as "down time," which is usually a several-day period when containers are sitting in a terminal yard waiting to be loaded on to a vessel. Additionally, security screenings do not need to be performed a second time in the United States, cutting days off of the shipping cycle. The CSI program is clearly a necessary security program that global shipping cannot do without.
By August - Five Ports In Partnership With U.S.
As of August, the United States had partnered with five nations that have agreed to implement the CSI program. These countries include Canada, which assisted the U.S. with the concept, and The Netherlands, Belgium, France and Germany. These countries represent five of the top twenty ports worldwide including the ports of Rotterdam, Antwerp, Le Havre, Bremerhaven and Hamburg.
Customs' goal is to obtain partnerships with the top twenty ports around the globe, representing nearly seventy percent of all containers shipped to the U.S. The first group of Customs "targeting" personnel set up shop in late August at the Port of Rotterdam, Europe's largest seaport. U.S. Customs personnel are working side-by-side with Dutch Customs, targeting and screening outbound cargo heading to U.S. ports. The "targeting" personnel observe security inspections of those "high risk" containers performed by the host nation personnel. Once these containers are deemed secure, they are sealed using tamper-proof seals. Additional methods of tamper proofing are being developed with the assistance of the Department of Transportation.
Next Step - "24-hour" Regulation
The "24-hour" regulation, proposed in August, would require ocean carriers to transmit manifest information 24 hours in advance of lading at a foreign port, for cargo being shipped to the United States. Information for this proposed program would come, in part, from the Automated Manifest System, which provides the majority of the information already. The "24-hour" regulation will eliminate vague descriptions such as "freight of all kind" - FAK and "said to contain" - STC currently used to describe some cargo shipments. In doing away with these non-specific cargo descriptions, Customs will be in a better position to target and secure containers that pose a threat to the U.S.
According to Customs officials, the "24-hour" regulation under CSI would complete the targeting of potential high-risk containers before arriving on U.S. shores. Manifest information will be processed using the U.S. Customs Automated Targeting System (ATS). A sophisticated system capable of sorting and processing large quantities of information very quickly, the ATS helps Customs determine which containers are high risk. Currently, about 97% of cargo containers entering the U.S. annually receive some form of advance manifest information. All this information is currently being run through ATS, which gives the cargo a risk assessment score in a matter of seconds, prior to entering the U.S. Under CSI, Customs is proposing to go one step further by implementing ATS before cargo containers ever leave a foreign port.
Customs has come a long way in just a short period of time. At the rate they're going, they will achieve their goal of converting the top 20 seaports to "CSI Ports" in no time at all.
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Industry News & Events
Customs Export Compliance and Enforcement Seminar
AAEI—American Association of Exporters and Importers and National Association of Export Companies
New York, NY
November 13, 2002
Members and nonmembers are welcome.
NAFTA and the Border: Ten Years Later
AAEI—American Association of Exporters and Importers
Laredo, Texas
November 18-19, 2002
Customs Regulations and Procedures
Sponsored by: Foreign Trade Assn. of Southern Calif.
Hacienda Hotel
525 Sepulveda Blvd., El Segundo, CA
6-9pm Mondays, Sept. 9 - Dec. 16 (2 Tuesday dates)
Contact: Anita Saunders foreigntrade@earthlink.net
Tel: 323.730.1011; Fax: 323.730.1088
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About Dutycalc
Dutycalc Data Systems is a Software and Consulting Company that designs, develops and implements management support systems for the Import, Export and Brokerage Communities. Our primary area of focus is Duty Drawback and the implementation of our fully automated Drawback System. Dutycalc is the leading drawback software company—with more than 200 systems implemented throughout the U.S.
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