Although the final rule has not yet been published, 10+2 has already become a hot topic of conversation in international trade news. The SAFE Ports Act of 2006 requires Custom and Border Protection (CBP) to find a method to discover and report data elements to identify high-risk imports for inspection. The “10+2” requirement is being developed as a mechanism to obtain this information prior to the loading of ocean cargo at foreign ports. CBP has been working with various trade groups such as AAEI, COAC, NCBFAA, ICPA and others to formulate requirements that will provide the most useful data with the least amount of intrusion, expense and effort from the trade.
The current proposal will require importers of products shipped as ocean cargo to supply CBP with ten additional data elements 24 hours prior to loading:
· Manufacturer Name and Address
· Seller Name and Address
· Container Stuffing Location
· Consolidator Name and Address
· Buyer Name and Address
· Ship to Name and Address
· Importer of Record Number
· Consignee Number
· Country of Origin of the Goods
· Commodity Harmonized Tariff Schedule Number
In addition to the 10 data elements outlined above, CBP will require ocean carriers to provide two additional data sets to complete the security filing.
· Vessel Stow Plan
· Container Status Messages
Because the 10+2 elements are not found in one document or location, collection of this information will likely result in additional work and increased cost for the importer. The new requirements create questions for importers.
1. Who will be responsible for submitting this data?
The answer to this question will depend on structure of each importer’s organization. In the draft documents, the importer is responsible for the first ten elements and the carrier is responsible for the other two. The importer may select a broker or other trade intermediary to act as the reporting party; however, there may be additional costs incurred from the broker for this service. The importer may develop a process that that combines the collection of 10+2 elements with the information necessary for the customs entry and other compliance requirements. Some importers may take this a step further by self-filing customs entries. The bottom line is that the data must be collected and reported and someone must be assigned responsibility for this new task.
2. Will your company be able to provide all of this information 24 hours before your ocean cargo is loaded?
Looking at the importer’s list there are pieces of information that are more readily available because they are currently required for the entry summary. The country of origin is required on the commercial invoice and for the entry summary. The importer also knows its own importer number. On the other hand, the name and address of the consolidator and the container stuffing location may require a little more work, as this information is not required on any Customs documentation or for recordkeeping. While the HTS number is required on the entry summary, there may be situations in which not all of the information is known about the product when it is shipped; therefore, the importer may not have completed the classification process. We’ll provide some suggestions on how to start collecting this data at the end of this article.
3. What will happen if data elements are not transmitted?
Until the final rule is published, this question will continue to invite additional questions. If the data is not transmitted, will the container be detained? What if only one element is missing? Will importers and carriers be tempted to make up data? How will the data be verified? As you can see, there are more questions that will hopefully be addressed in CBP’s final document.
4. Why can’t someone create one set of data elements that will be acceptable for all international uses?
After the 10+2 security filing rule is passed, there will be two sets of data elements required for movement of cargo, yet the data is not consistent. The WCO SAFE Framework is designed to facilitate trade and to protect against the threats of terrorism internationally. However, the WCO SAFE Framework contains reporting requirements that do not match the 24-Hour or 10+2 requirements. Having multiple sets of required data creates additional collection and reporting costs. It would be beneficial for all parties if an agreement could be worked out that would reduce the duplication and create more uniform reporting requirements.
The final rule is likely to be published in the Federal Register this fall, possibly in October. After the final rule is published in the Federal Register, CBP officials have stated that they plan to implement the 10+2 program over 12 month period to allow the trade to make changes to software, procedures and physical processing. Collecting and filing the data elements will require improved communication and cooperation between carriers, importers, brokers and other trade participants. The trade community has been working together to find ways to obtain and report the information. Even though the processes and procedures vary from importer to importer, the following list provides some useful suggestions for importers to consider:
1. Work with purchasing and other supply chain personnel to develop mechanisms to collect the data. The purchase order and other contracts are an ideal place to start because they are often used to provide information to sellers and they can be used to require that the seller supply certain information.
2. Develop processes that will link classifications to purchase orders. Many importers have systems that will match the HTS number to the purchase order as specific parts are listed. For importers that do not have HTS numbers assigned to all parts, the purchase order could be used to start the classification process so that the HTS number is available before the product is shipped.
3. Work with the information technology department to develop methods to capture and retain required data. There may be interfaces with carriers, brokers and other trade partners available to transfer this information, which will reduce administrative costs involved in developing new programs.
4. Participate with others in the trade community to share best practices.
5. Check the CBP web site and other sources of information regularly for updates.
The current proposal will require importers of products shipped as ocean cargo to supply CBP with ten additional data elements 24 hours prior to loading:
· Manufacturer Name and Address
· Seller Name and Address
· Container Stuffing Location
· Consolidator Name and Address
· Buyer Name and Address
· Ship to Name and Address
· Importer of Record Number
· Consignee Number
· Country of Origin of the Goods
· Commodity Harmonized Tariff Schedule Number
In addition to the 10 data elements outlined above, CBP will require ocean carriers to provide two additional data sets to complete the security filing.
· Vessel Stow Plan
· Container Status Messages
Because the 10+2 elements are not found in one document or location, collection of this information will likely result in additional work and increased cost for the importer. The new requirements create questions for importers.
1. Who will be responsible for submitting this data?
The answer to this question will depend on structure of each importer’s organization. In the draft documents, the importer is responsible for the first ten elements and the carrier is responsible for the other two. The importer may select a broker or other trade intermediary to act as the reporting party; however, there may be additional costs incurred from the broker for this service. The importer may develop a process that that combines the collection of 10+2 elements with the information necessary for the customs entry and other compliance requirements. Some importers may take this a step further by self-filing customs entries. The bottom line is that the data must be collected and reported and someone must be assigned responsibility for this new task.
2. Will your company be able to provide all of this information 24 hours before your ocean cargo is loaded?
Looking at the importer’s list there are pieces of information that are more readily available because they are currently required for the entry summary. The country of origin is required on the commercial invoice and for the entry summary. The importer also knows its own importer number. On the other hand, the name and address of the consolidator and the container stuffing location may require a little more work, as this information is not required on any Customs documentation or for recordkeeping. While the HTS number is required on the entry summary, there may be situations in which not all of the information is known about the product when it is shipped; therefore, the importer may not have completed the classification process. We’ll provide some suggestions on how to start collecting this data at the end of this article.
3. What will happen if data elements are not transmitted?
Until the final rule is published, this question will continue to invite additional questions. If the data is not transmitted, will the container be detained? What if only one element is missing? Will importers and carriers be tempted to make up data? How will the data be verified? As you can see, there are more questions that will hopefully be addressed in CBP’s final document.
4. Why can’t someone create one set of data elements that will be acceptable for all international uses?
After the 10+2 security filing rule is passed, there will be two sets of data elements required for movement of cargo, yet the data is not consistent. The WCO SAFE Framework is designed to facilitate trade and to protect against the threats of terrorism internationally. However, the WCO SAFE Framework contains reporting requirements that do not match the 24-Hour or 10+2 requirements. Having multiple sets of required data creates additional collection and reporting costs. It would be beneficial for all parties if an agreement could be worked out that would reduce the duplication and create more uniform reporting requirements.
The final rule is likely to be published in the Federal Register this fall, possibly in October. After the final rule is published in the Federal Register, CBP officials have stated that they plan to implement the 10+2 program over 12 month period to allow the trade to make changes to software, procedures and physical processing. Collecting and filing the data elements will require improved communication and cooperation between carriers, importers, brokers and other trade participants. The trade community has been working together to find ways to obtain and report the information. Even though the processes and procedures vary from importer to importer, the following list provides some useful suggestions for importers to consider:
1. Work with purchasing and other supply chain personnel to develop mechanisms to collect the data. The purchase order and other contracts are an ideal place to start because they are often used to provide information to sellers and they can be used to require that the seller supply certain information.
2. Develop processes that will link classifications to purchase orders. Many importers have systems that will match the HTS number to the purchase order as specific parts are listed. For importers that do not have HTS numbers assigned to all parts, the purchase order could be used to start the classification process so that the HTS number is available before the product is shipped.
3. Work with the information technology department to develop methods to capture and retain required data. There may be interfaces with carriers, brokers and other trade partners available to transfer this information, which will reduce administrative costs involved in developing new programs.
4. Participate with others in the trade community to share best practices.
5. Check the CBP web site and other sources of information regularly for updates.
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