Monday, October 29, 2007

Is Your Company Still Thinking About C-TPAT Membership?

Are you one of the importers, brokers or other trade participants who hasn’t signed up for C-TPAT? What are you waiting for? Although participation in C-TPAT requires commitment of time and resources, the initial steps for participation are much easier now than they were for early members. The pioneers of the early C-TPAT programs didn’t have the benefit of the resources that are available now. As a result of hard work by the trade and CBP, companies contemplating C-TPAT membership today have a wealth of resources available to them. So, let’s take a look at some issues that companies consider when looking at participation.

Why Companies Should Participate in C-TPAT

C-TPAT is not mandatory and participation may not be necessary for companies that rarely import and export; however, C-TPAT has numerous benefits and some of the other companies in your supply chain may require that you join in order to do business with them. Other reasons to join include:

· Participation demonstrates good corporate citizenship.
· Participation reduces potential for negative publicity and protects your company’s image.
· Procedures required for participation assist in reducing inventory loss and increases the visibility of the supply chain.
· Membership provides expedited cargo release.
· C-TPAT requires participation by nearly all of the business units within an organization, which promotes increased understanding and cooperation between departments.
· Participants receive reduced numbers of cargo inspections.
· Membership is a prerequisite for account-based processes such as Importer Self-Assessment.

A recent independent study conducted by the University of Virginia on behalf of U.S. Customs and Border Protection reported that “95 percent of respondents indicated they are likely to remain in C-TPAT.”

What Will it Cost?

The expenses vary depending on the current procedures in place; however, some of the common areas that require the most investment of time and money include:

· Improvement or implementation of physical security features such as electronic access, cameras, fences and other security procedures,
· Maintenance of the physical security features and security officers, and
· Training and education for staff.

How Can Boskage Help?

Third parties can assist importers, brokers and carriers in creating C-TPAT programs; however, no one can do C-TPAT for you. Boskage provides some excellent tools that will make the process easier and less expensive.

The Corporate C-TPAT Manual for Importers contains over 100 policies and procedures that address each of the security criteria. Although the manual was written for importers, the format and most procedures can be altered to work for brokers.

The manual contains policies, procedures, and a summary for all of the C-TPAT criteria for importers and are arranged in the same order as provided by CBP in the Security Link Portal. Just take the information you compiled from the questionnaire and other sources and create your narrative using our examples. Once you are satisfied the narratives adequately reflect the status of your operations, enter them into the portal.

In addition to the policies and procedures, the manual contains a C-TPAT Project Plan and Organizer to assist you in organizing your C-TPAT process from the time you decide to apply for membership through your first annual review of processes and procedures. The Project Plan outlines processes and provides helpful hints to keep your project moving forward. The Organizer in spreadsheet format will help you to assign projects and keep track of due dates.

Click HERE to view the Table of Contents and a Sample Procedure.

In addition to the procedure manual, Boskage offers an online C-TPAT training course that can be used to explain the entire process to employees and helps satisfy education and awareness requirements. Even if your company has already applied and been accepted as a C-TPAT member this course will help your employees understand the process involved in becoming a member and the responsibility of importers once they obtain membership. C-TPAT is an ongoing process for organizations involved in international trade. If your organization has not applied for C-TPAT membership, this course will provide valuable information on the requirements for membership.

Click HERE to view information about bcpLearning’s C-TPAT Compliance Course.

Don’t Forget Export Compliance!

For years, export professionals said that exporting was simpler than importing, but I never believed them. When working with imports, you only need to consider U.S. laws. Considering the Code of Federal Regulations, the USC, HTSUS and the information published by Customs, that’s more than enough to keep track of.

Compare that with working with exports. Not only do you have to consider all of the U.S. regulations enforced by the BIS, Department of State and Commerce Department, but you also have to consider the laws of the countries where you export products. One thing that is similar is responsibility. Just as importers are responsible for the declarations made to Customs, responsibility for export compliance rests with the exporter.

Penalties - Don’t Let Them Happen to You

Export penalties are on the rise. The Bureau of Industry and Security publishes a report listing the names of parties who have violated the export laws and the amounts of the penalties. To see the list of violators, go to the BIS web site where they have a publication titled, “Don’t Let This Happen to You.”

Not only are the penalties high, there is a proposal to increase the current amounts. The table below shows the current and proposed amounts for violations of export laws. As an additional penalty, companies may be barred from exporting for a period of time.
Current EAA PenaltiesProposed EAA Penalties
Criminal Maximum(Corporate)$1 Million or 5 times the value of exports involved
$5 million or 10 times the value of exports involved
Civil Maximum(Corporate)$11,000 per violation (prior to March 2006)
$50,000 per violation (after March 2006 under IEEPA)
$120,000 for national security violations
$500,000 per violation

How Much Does Export Compliance Cost?
Exporting is a necessity to survive in today’s global economy. Undertaking appropriate due diligence, training and export compliance measures is required to be competitive and successful. While third parties may be able to assist in compliance efforts, exporters cannot outsource liability for compliance. Even sophisticated international companies have found that failure to abide by U.S. Export Control laws and regulations can result in confiscation of goods by customs and the assessment of substantial civil and criminal penalties.

Companies involved in exporting must be fully aware of their responsibilities under the Export Administration Regulations. It is the responsibility of the exporter to be up to date on the U.S. EAR and to comply with U.S. laws governing export transactions.

So, how much does export compliance cost? With the current penalty structure at $1 million for criminal penalties and civil penalties at $50,000, the better question might be "what is the cost of non-compliance?" If you hire the right people and implement the proper procedures, the cost to maintain compliance is much less than the cost of non-compliance. That’s why it’s important to be aware of the costs and consequences of not being informed about exporting.

Click HERE to check out our export publications.

Click HERE for more info about Export Compliance.

We are currently looking for new authors to develop eLearning courses and compliance procedures. If you have experience in export compliance and the ability to translate regulations into an understandable format, please click HERE.

Wednesday, October 17, 2007

Potential Answers for the October 2007 Customs Broker's Exam

As many people sit on pins and needles waiting to see the answers posted for the most recent Customs Broker’s Exam, our very own Wizard has taken the exam and provided a list of possible answers and related regulations where the answers were found. We never know when CBP will post the answers and the wait feels like forever. The answers for the April 2007 Exam were not posted until the middle of June leaving many people little time protest questions and receive answers prior to the October exam.

We invite you to post your answers, explanations, arguments and other comments. Obviously, Boskage Commerce Publications cannot guarantee the accuracy of these answers since CBP has the one and only answer key, but the Wizard has an excellent record of achieving a score of better than 90%.

Click HERE to view a copy of the Wizard’s answers for the October 2007 Exam!

Note: The Wizard had the most difficulty answering the questions highlighted in purple.

Tuesday, October 9, 2007

Trade Trivia: CBP Top Importer Errors

Have you ever wondered how CBP auditors know exactly where to look for importer violations? How do they get to be so smart? Actually, it’s not a big secret. After performing thousands of assessments, CBP identified a list of errors that are typically found during these reviews.

In case you were wondering about the most common errors and what Customs will be looking for when they come knocking on your door, we’ve provided the list. If you really want to test your trade smarts, try listing the errors you think are the most common before looking at our list, then see how close your list matches CBP’s list. If you haven’t reviewed these areas in your company lately, you might want to go take a look.

Common Importer Errors Identified During Focused Assessments:

· Manufacturing Assists
· Additions to Price Actually Paid or Payable
· Non Dutiable Costs
· Merchandise Classification
· Special Trade Programs
· Classification Claims under 9801 and 9802
· Related-Party Transactions
· Buying Commissions
· Recordkeeping

Click HERE for more detail on each of these errors.

Tuesday, October 2, 2007

Brokers Breaking the Law

Now that the Customs Broker’s Exam is over, those who passed the exam will be notified and a background investigation will be performed. Will this investigation uncover anything that would prevent any of the aspiring applicants from receiving a license? Even after you receive your license, it comes with the responsibility to continue to obey Customs laws and regulations. For those who are considering taking the exam, you too must consider your actions because certain deeds could prevent you from obtaining your license.

Those of you who have studied for the exam are quite familiar with the grounds for denial or revocation of a broker’s license found in 19 CFR 111.16 and 19 CFR 111.53. The provisions of the regulations that are the focus of this article are related to criminal, dishonest or unethical conduct along with violation of any law enforced by Customs and knowingly aiding in the violation of Customs laws.

As you read this, many of you may be thinking that we're foolish to suggest that a Customs broker would commit a crime and risk losing his or her license. Are we foolish? No. Regrettably, the actions of just a few brokers created the opportunity for this discussion.

In June 2007, licensed customs brokers were among 29 people arrested for participating in a scheme to import counterfeit goods such as Nike shoes, Rolex watches and other goods. Those arrested included distributors, freight forwarders, customs brokers, owners and managers of customs-bonded warehouses, and managers of a customs exam site. These people were named in criminal complaints for conspiring to smuggle more than 950 shipments of high-quality knockoffs through New York City, Long Beach, Calif., Texas and other ports of entry. The counterfeit goods were estimated to have an approximate value of $700 million if authentic. Officials said it was one of the largest plots in recent history involving corrupt Customs brokers. The government licenses the brokers to inspect paperwork provided by importers and to clear merchandise for delivery to wholesalers. If found guilty, the defendants face prison sentences of five to 20 years. Additional information about this incident can be found on the ICE web site.

Customs and Border Protection (CBP) enforces laws relating to the protection of trademarks and copyrights. Articles that infringe on a properly registered trademark or copyright are subject to detention and/or seizure. Infringing articles may consist of articles that use a protected right without the authorization of the trademark or copyright owner or articles that copy or simulate a protected right.

Articles bearing marks that are counterfeit or that inappropriately use a federally registered trademark are subject to seizure and forfeiture. The importation of articles intended for sale or public distribution bearing counterfeit marks may subject an individual to a civil fine if the registered trademark has also been recorded with CBP. Articles bearing marks that are confusingly similar to a CBP recorded registered trademark are subject to detention and seizure. As you learned from the above incident, participants can also be arrested and charged with a crime that carries a prison sentence.

If a client or other party contacts you about importing counterfeit goods “Just Say No.” The next time a street vendor tries to tempt you to purchase a pair of Nike athletic shoes or a pair of Ray Ban sunglasses at a price that is too good to be true, think about the consequences and “Just Say No.” Obtaining that Customs Broker’s License is hard work, so don’t jeopardize your license, opportunity to make a living or reputation by participating in counterfeiting or any other illegal activity.