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					 Importer Security Filing
         (10 + 2)


Proposed Rules Overview


 NOTE: This presentation has
audio embedded in each slide.
There is a five second delay on
     each before it starts.
Notice of Proposed Rulemaking

 • On January 2, 2008 the Department of Customs and Border
   Protection published a notice of proposed rule making covering
   requirement of advanced security filings by importers and ocean
   carriers.

 • The NPRM is intended to fulfill the requirements of section 203
   of the Security and Accountability for Every Port Act of 2006
   (SAFE Port Act) and section 343(a) of the Trade Act of 2002.

 • This legislation requires that the Secretary of Homeland
   Security acting through the Commissioner of Customs and
   Border Protection (CBP) promulgate regulations requiring the
   electronic transmission of data elements for the purpose of high-
   risk targeting of cargo bound for U.S. ports.
Notice of Proposed Rulemaking

 • Within the NPRM CBP is proposing that importers electronically
   transmit 10 data elements, plus bill of lading numbers, to be
   using for targeting purposes. This data must be transmitted 24
   hours prior to loading at the port of origin.

 • Similar to the Container Security Initiative (CSI), The 24 Hour
   Rule and the Customs-Trade Partnership Against Terrorism
   (C-TPAT) the regulations are designed to enhance national
   security while protecting the economic vitality of the United
   States.

 • Since 2003 ocean carriers have been submitting shipment data
   24 hours prior to sailing from the foreign port. This is commonly
   known and referred to as the “24 hour rule”.
Current Status

 • In late 2004 COAC (Advisory Committee on Commercial
   Operations of Customs and Border Protection and Related
   Homeland Security Functions) forwarded their recommendations to
   Customs and Border Protection.

 • This proposed rule is informally referred to as 10+2, however, that
   name has been replaced by “Importer Security Filing”.

 • Since January the NPRM had been in a “public comment period”,
   which is required by law. Industry groups requested that CBP
   extend this comment period by an additional 30 days.

 • It is apparent that Customs intends to move quickly with
   implementation, as evidenced by the short extension to the
   comment period of only 15 days as opposed to the 30 days that had
   been requested. The extended comment period ended on March
   18th of 2008.
Overview

 • Ocean carriers currently submit manifest data 24 hours prior to
   sailing. The proposed rules are quite different from the 24-Hour
   Rule in that the importer, not the carrier, is legally responsible for
   the accurate and timely transmission of the required elements.

 • An ISF (Importer Security Filing), of at least 10 data elements,
   must be made no later than 24 hours prior to loading of any
   container and most break bulk cargo at a foreign port.

 • CBP has indicated that they will not “approve” or “reject” these
   transmissions. They will only acknowledge that the transmission
   was made.

 • Without proper management and communication it is possible for
   a container to be loaded with no ISF filed resulting in a penalty
   equal to the value of the cargo. There is no indication that CBP
   will stop a container from loading if there is no ISF filed.
The Importer

 • CBP defines the importer is as “the party causing the goods to
   arrive within the limits of a port in the United States”.

 • Neither the supplier nor freight forwarder is responsible to file
   the data. Though they may choose to allow a broker to transmit
   the data the importer is ultimately solely responsible for the
   timeliness and accuracy of the filing.

 • FROB (Foreign Cargo Remaining on Board) is not exempted
   from the requirement to file an ISF. For these shipments the
   importer is construed as the carrier.

 • Foreign Trade Zone (FTZ) cargo, cargo to be immediately
   exported (Immediate Exportation – IE), and cargo moving in
   bond to be exported (Transportation and Exportation – T& E) is
   also not exempted from the requirement to file an ISF. For this
   type of cargo the importer is construed as the party filing the in-
   bond or FTZ documentation.
The Carrier

  • The carrier is required to provide the “+ 2” data elements.

  • The carrier must transmit a stow plan no later than 48 hours
    after departure.

  • Additionally the carrier must transmit container status messages
    (CSM).
     – Within 24 hours of the reported event.
     – CSMs reflect events such as booking, arrival or departure
       from a facility, intra-terminal movement and
       loading/unloading.
     – CSM data will not be publically available.

  • There is no indication in the NPRM that the carrier would know if
    the ISF has been transmitted. CBP will have to address this.
    The cost to hold the container would be minor compared to a
    penalty in an amount equal to the value of the cargo.
QUESTIONS??

 We will pause for a moment and address a few of the most frequently
 asked questions.


 Please press your spacebar to continue
Frequently Asked Questions

 Why do I have to worry about this, won’t our broker take care of it?
     – V. Alexander will be able to make the ISF filings on behalf of our
       customers, however, there is a lot of work to be done by both of us
       to insure that there is proper flow of documentation and information
       along with absolute cooperation from your suppliers. Proper set-up
       on the front end and proper on-going maintenance and
       communication are the keys to a successful ISF program.

 When will the regulations go into effect?
     – The effective date is unknown at this point. CBP will consider the
       input provided during the public comment period which ended on
       March 18. We know that they are receiving a substantial response
       but we also know that CBP is under pressure to move quickly on
       this program. While no one knows for certain, a publication of final
       rule making as early as May 15 certainly seems possible. CBP
       acknowledges the need for a “phase-in period” but has not
       provided any details as to length or structure.

 Will a shipment be stopped from loading if an ISF is not filed?
     – There is no indication within the NPRM as to CBP issuing no-load
       messages in cases where the ISF was not transmitted. This will
       have to be addressed in the Notice of Final Rule Making.
The “10”

 • The ten data elements are:

    1. Manufacturer (or Seller) Name and Address
       • Entity that last manufactures, assembles, produces, or grows the
         commodity, or name and address of the supplier of the finished goods
         in the country from which the goods are leaving.
    2. Seller Name and Address
       • Name and address of the last known entity by whom the goods are sold
         or agreed to be sold. If non-purchase then the name and address of the
         owner of the goods.
    3. Buyer Name and Address
       • Name and address of the last known entity to whom the goods are sold
         or agreed to be sold. If non-purchase then the name and address of the
         owner of the goods.
    4. Ship To Name and Address
       • Name and address of the first deliver-to party scheduled to physically
         receive the goods after they have been released from customs custody.
The “10”

 • The ten data elements are (continued):

    5. Container Stuffing Location
       • Name and address(es) of the physical location(s) where the goods were
         stuffed into the container. For break bulk cargo, report the name and
         address of the physical location where the goods were made “ship ready”.
    6. Consolidator (Stuffer) Name and Address
       • Name and address of the party who stuffed the container or arranged for
         the stuffing. For break bulk cargo, report the name and address of the
         physical location where the goods were made “ship ready” or who
         arranged for the goods to be made “ship ready”.
    7. Importer of Record Number / FTZ Application Identification
       Number
       • IRS, EIN, SSN or CBP assigned number of the entity liable for payment of
         all duties and responsible for meeting all statutory and regulatory
         requirements incurred as a result of importation. For goods intended to be
         delivered to a FTZ, report the IRS, EIN, SSN or CBP assigned number of
         the party filing the FTZ documentation.
The “10”

 • The ten data elements are (continued):

    8. Consignee Number(s)
       • IRS, EIN, SSN or CBP assigned number of the individual(s) or firm(s) in
         the United States on whose account the merchandise is shipped.
    9. Country of Origin
       • Country of manufacturer, production, or growth of the article based upon
         the import laws, rules and regulations of the United States.
    10. Commodity HTSUS Number
       • Duty/Statistical (tariff) number under which the article is classified in the
         Harmonized Tariff Schedule of the United States (HTSUS). This is
         required at the six digit level at a minimum.


 • The Manufacturer (or supplier) name and address,
   country of origin and commodity HTSUS number must
   be linked to one another at the line-item level!
The Data

 • The data elements must be transmitted no later than 24 hours prior
   to the cargo being laden on board the vessel at the foreign port.
   This will likely require a dramatic change from the way information
   and documentation flow in the typical supply chain today.

 • Must be based on “best information” available at the time of filing,
   however all 10 data elements are required with the initial filing.

 • The importer is required to amend the ISF if any information
   changes prior to entering the limits of a port in the United States.

 • Due to the sensitive nature of the ISF data it is considered highly
   confidential. It will not be publically available, even to the importer.
   Also, the data is for targeting purposes only and will not be used for
   commercial enforcement purposes by CBP.
Frequently Asked Questions

 Is it true that importers are not allowed to access their own
       information???
       – While this is true and CBP will not allow importers nor their agents
          to query the transmitted data, the ISF filing information will be
          available to clients within their VNET account.

 I don’t have any idea who or what the “stuffer” is, how am I supposed to
     get this information?
     – V. Alexander will provide Internet-based software that will allow the
         supplier to provide shipment information in time for the ISF
         transmission. Shippers will have a web based portal very similar to
         the VNET portal that clients use today.

 What if a my supplier ships the cargo and we did not know about it?
    – In this case the importer would be subject to a penalty up to the
       value of the cargo. This punctuates the absolute necessity that the
       importer have control of their supply chain and require that the
       supplier work within our Internet-based system.
Other Comments

 • ISF filing is not required on bulk cargo.

 • Current proposed rules only apply to ocean cargo, however, other
   modes of transport will be considered in the future.

 • CBP is proposing changes to the importer’s bond. Under the new
   bond format the importer would agree that if they fail to comply with
   the ISF requirements the principal and surety (jointly and
   separately) would pay liquidated damages equal to the value of the
   merchandise.

 • Any party, with the proper power of attorney and properly bonded,
   is able to submit the ISF provided that they establish an electronic
   connection with CBP through ABI or AMS. Carriers are allowed to
   file ISF transmissions, however, many have indicated that they do
   not plan to provide ISF filing services. Most importers will elect to
   have their broker handle the ISF filing.
Supply Chain Timing




 Typically containers are loaded and the vessel has sailed before the
 supplier prepares commercial documents. After the ISF rules become
 effective suppliers will be forced to prepare documentation in the short
 2 to 4 days between loading the container and when
 the container is loaded on board the vessel.
VNET ISF Solution – Setup

V. Alexander is developing software to accommodate these new rules!




 •   The VNET Global Desktop facilitates total collaboration of all parties from the
     supplier, to the forwarder, your V. Alexander account team as well as cartage
     companies.
VNET ISF Solution – The Process




 •   When the rule is enacted our clients will be able to see and manage all ISF
     transactions within their VNET accounts.
 •   V. Alexander will manage the flow of communication and data and documentation
     between the importer and supplier.
Questions and Comments
Frequently Asked Questions
 1. Can the supplier, a forwarder or the Customs Broker take
    responsibility and assume liability for this ISF?
    –    No. While it is allowable for another party properly bonded and
         under power of attorney to file the ISF with CBP, the importer is
         always and ultimately responsible for timely and accurate ISF
         transmission.

 2. If the bill of lading has a description such as “auto parts” can only
    one tariff number be used to cover generic auto parts?
    –    No. The NPRM requires the commodities to be broken out to at
         least the six digit HTS number level. Further, the manufacturer and
         country of origin must be associated to each HTS number. In this
         case auto parts may consist of many different HTS level
         classifications and would need to be reported individually.

 3. Will there need to be one ISF per bill of lading or can multiple bills
    of lading be consolidated to one ISF?
    –    As long as the bills of lading consist of one shipment to one
         importer CBP is inclined to allow multiple bills of lading on one ISF.
Frequently Asked Questions

4. Will CBP provide a method for importers to file the ISF over the
   Internet or manually?
   – No. The NPRM only allows for electronic submission of data
        via ABI or AMS.

5. What could happen if it is discovered after the cargo has sailed
   that an ISF was not transmitted or it is transmitted late?
   – The importer would be subject to paying liquidated damages
       equal to the value of the merchandise.

6. A penalty in an amount equal to the value of the cargo is very
   severe. Is this really possible?
   – Yes, the NPRM clearly describes that the penalty for filing
       violations will be in an amount equal to the value of the
       cargo. This underscores the necessity for proper attention
       and management of the supply chain.
Frequently Asked Questions

 7. If any information changes or the merchandise is sold in transit
    does this have to be reported to CBP?
    – Yes. Any changes to the originally filed ISF and any changes
        that occur prior to the vessel entering the limits of a US port
        must be transmitted to CBP.

 8. If an importer is C-TPAT certified will they receive any special
    consideration or exemption from the ISF rules?
    – No. CBP is not proposing to allow exemption from, or alteration
        of, the requirement that C-TPAT partners submit an ISF.

 9. Will the regulations have a “phase-in” period?
    – The NPRM mentions the possibility of a phase in period but this
      has not been defined.
Frequently Asked Questions

 10. If the carrier fails to submit the “+2” information or customs has a
     problem with that data will it delay my cargo?
     – It is unknown at this time if problems with the carrier’s
         transmission would have any adverse affect on the movement
         of the cargo.

 11. Our responsibilities and exposure is great. Will we be given the
     opportunity to review , and perhaps approve the ISF information.
     – Clients will be able to review and direct amendments of ISF
       data within their VNET account. A client can have as much or
       little direct control over the data as they desire including the
       ability to approve ISF information prior to transmission.

 12. Will this also affect air shipments?
     – Currently the NPRM only affects ocean shipments. However, it
       does indicate that CBP will be looking to extend the rule to
       other modes of transport in the future.
Frequently Asked Questions

 13. Will the VNET ISF portal be capable of accepting data transfers of
     either purchase order information or supplier invoice information?
     – V. Alexander currently electronically communicates with
        importers, suppliers and agents globally. Our ISF module will
        be capable of accepting data in many different common file
        formats including XML, EDI and flat file.

 14. This is very sensitive data for our company, how do I know this
     will be kept confidential?
     – The NPRM is very clear that all ISF data will be used for
        targeting purposes only and will not be publically available to
        any party outside of CBP.

 15. We do know have some of this data and it will be burdensome to
     collect it, can the shipper be responsible for some data?
     – No, the importer is solely responsible for providing a complete
       and accurate transmission to CBP.
Frequently Asked Questions

 16. How Much Will this Cost?
 Until CBP publishes the final rule for ISF and all of the filing
     requirements are known, it is difficult to estimate the cost for a
     filing. Certainly some of the factors that will determine the cost will
     be:

 •   Scope of what is required by the final rule.
 •   Number of different items in a shipment.
 •   Who files the ISF transmission
 •   The complexity of the supply chain
 •   Cooperation from the supplier as well as the timeliness and
     accuracy of the data they supply.
 •   Ability to obtain advance commercial documentation electronically
 •   Having a complete, updated and accurate parts dictionary
 •   Client ability to keep the supplier database current
Questions and Comments



  We welcome your questions and comments!

  Please email Marc Torrence mtorrence@valexander.com

  To participate in a public discussion of ISF please visit our recently
  released discussion board at http://www.importersecurityfiling.com

				
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