Do you import jewelry, or serve as a broker for a jewelry importer? If so, then Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) will be of particular interest to you. Section 1502 of Dodd-Frank addresses the problem of the exploitation and trade of “conflict minerals” sourced from the eastern Democratic Republic of the Congo (DRC). Conflict minerals include gold, columbite-tantalite (coltan), cassiterite (tin), wolframite (tungsten) or their derivatives.
Section 1502 instructs the Securities and Exchange Commission (SEC), in consultation with the Department of State (State Department) to promulgate regulations requiring certain companies to report annually on their due diligence activities on the source and chain of custody of conflict minerals. Specifically, the State Department is instructed “to provide guidance to commercial entities seeking to exercise due diligence on and formalize the origin and chain of custody of conflict minerals used in the products and on their suppliers to ensure that conflict minerals mused in the products of such suppliers do not directly or indirectly finance armed conflict or result in labor or human rights violations.”
The SEC intends to issue regulations pursuant to Section 1502 of Dodd-Frank by the end of 2011. In the meantime, the State Department has urged that companies begin to perform their due diligence on the source and chain of custody of conflict minerals they are using in production of products and importing into the U.S. The agency instructs that such due diligence will provide useful information that will assist the State Department and the SEC in meeting Dodd-Frank’s goal of preventing further conflict in the eastern DRC. In its Guidance Statement, http://www.state.gov/e/eeb/diamonds/docs/168632.htm, the State Department has suggested that “companies should begin immediately to structure their supply chain relationships in a responsible and productive manner to encourage legitimate, conflict-free trade, including conflict-free minerals sourced from the DRC and the Great Lakes region.”
The State Department encouraged companies to follow Organization for Economic Cooperation and Development (OECD) guidance and framework when developing and implementing their own due diligence plans:
• Establish strong company management systems;
• Identify and assess risk in the supply chain;
• Design and implement a strategy to respond to identified risks;
• Conduct supply chain due diligence at specific points in the chain (preferably by independent third party); and
• Report on findings from supply chain due diligence.
The State Department will consider whether to revise its Guidance Statement after the SEC issues its regulations.
Tuesday, July 26, 2011
Thursday, July 14, 2011
CBP Changes PEA to PSC When Using ACE
U.S. Customs and Border Protection (CBP) recently announced a new National Customs Automation Program Test regarding ACE Entry Summary, Accounts & Revenue (ESTR IV) capabilities. Importantly, under the ESAR IV test, CBP will permit importers to file post-entry corrections of specific type of ACE entry summaries prior to liquidation. Those participating in the test will be able to submit a PSC for existing ACE formal (type 01) entries and Antidumping/Countervailing (type 03) entries.
CBP has explained that such post-summary corrections (PSCs) replaces the Post-Entry Amendment (PEA) procedures currently used by importers to amend entry summaries prior to liquidation, which had permitted an importer to file an individual amendment letter or a quarterly tracking report covering certain errors. As of Sept. 22, 2011, CBP will stop accepting PEAs to correct entry summaries filed under ACE.
CBP has explained that if an importer must make a post-summary correction, the PSC filed through ABI should contain all of the data elements in the original entry summary. It will constitute a complete replacement of that entry summary, or any prior PSCs to that original entry summary. The PSC will be processed through all existing validations including Census warnings. Thus, one who files a PSC is conducting “customs business” as defined in 19 C.F.R. § 111.1.
Those ACE Portal Account owners who have the ability to select “portal” as their mode of communication will also have the ability to customize PSC data elements on the ACE entry summary, permitting further customization of existing entry summary reports. Such additional PSC data elements include PSC indicator, PSC filer, PSC reason codes at both the header and line level and an accelerated liquidation request indicator.
CBP has provided the following list of criteria that an importer needs to meet to file a PSC on an existing ACE entry type 01 or 03:
• The entry summary to be amended must not be liquidated.
• Duty must have been fully paid on the entry or be revenue free.
• If duty is owed because of the PSC, it must be deposited at time of filing PSC.
• The entry summary must be in “accepted status,” meaning it passed all technical edits and validations by CBP and Census.
• The entry summary must be in CBP control.
• The PSC must be transmitted within 270 days of date of entry.
• The PSC cannot be filed within 20 calendar days of the scheduled liquidation date of the entry summary.
• The entry summary cannot be under CBP review.
• The entry summary that has been flagged for reconciliation may only be corrected by a PSC that does not affect the flagged issue.
• A text explanation and at least one reason code are required for each PSC.
• An unlimited number of PSCs may be filed for any one entry, provided all the above criteria are met.
There are a number of data elements that may not be changed via the filing of a PSC, including:
• A type 03 entry (AD/CVD) may not be changed into a type 01 entry
• Importer of record
• Consolidated summary indicator
• District/port of entry
• Cargo release certification request indicator
• Live entry indicator
• NAFTA indicator
• Reconciliation issue code
• Preliminary statement print date
• Periodic statement month
• Statement client branch identifier
• Location of goods code
• Any release detail, e.g., release entry filer code, release entry number)
PSC cannot be filed in place of a prior disclosure, which are still to be filed according to 19 C.F.R.§ 162.74. More information can be found at 76 Fed. Reg. 37136 (June 24, 2011).
CBP has explained that such post-summary corrections (PSCs) replaces the Post-Entry Amendment (PEA) procedures currently used by importers to amend entry summaries prior to liquidation, which had permitted an importer to file an individual amendment letter or a quarterly tracking report covering certain errors. As of Sept. 22, 2011, CBP will stop accepting PEAs to correct entry summaries filed under ACE.
CBP has explained that if an importer must make a post-summary correction, the PSC filed through ABI should contain all of the data elements in the original entry summary. It will constitute a complete replacement of that entry summary, or any prior PSCs to that original entry summary. The PSC will be processed through all existing validations including Census warnings. Thus, one who files a PSC is conducting “customs business” as defined in 19 C.F.R. § 111.1.
Those ACE Portal Account owners who have the ability to select “portal” as their mode of communication will also have the ability to customize PSC data elements on the ACE entry summary, permitting further customization of existing entry summary reports. Such additional PSC data elements include PSC indicator, PSC filer, PSC reason codes at both the header and line level and an accelerated liquidation request indicator.
CBP has provided the following list of criteria that an importer needs to meet to file a PSC on an existing ACE entry type 01 or 03:
• The entry summary to be amended must not be liquidated.
• Duty must have been fully paid on the entry or be revenue free.
• If duty is owed because of the PSC, it must be deposited at time of filing PSC.
• The entry summary must be in “accepted status,” meaning it passed all technical edits and validations by CBP and Census.
• The entry summary must be in CBP control.
• The PSC must be transmitted within 270 days of date of entry.
• The PSC cannot be filed within 20 calendar days of the scheduled liquidation date of the entry summary.
• The entry summary cannot be under CBP review.
• The entry summary that has been flagged for reconciliation may only be corrected by a PSC that does not affect the flagged issue.
• A text explanation and at least one reason code are required for each PSC.
• An unlimited number of PSCs may be filed for any one entry, provided all the above criteria are met.
There are a number of data elements that may not be changed via the filing of a PSC, including:
• A type 03 entry (AD/CVD) may not be changed into a type 01 entry
• Importer of record
• Consolidated summary indicator
• District/port of entry
• Cargo release certification request indicator
• Live entry indicator
• NAFTA indicator
• Reconciliation issue code
• Preliminary statement print date
• Periodic statement month
• Statement client branch identifier
• Location of goods code
• Any release detail, e.g., release entry filer code, release entry number)
PSC cannot be filed in place of a prior disclosure, which are still to be filed according to 19 C.F.R.§ 162.74. More information can be found at 76 Fed. Reg. 37136 (June 24, 2011).
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