COAC set to weigh in on mandatory ô10+2ö trade data
U.S. Homeland Security officials intend to mandate that all importers electronically transmit key pieces of transaction data about their cargo shipments when the agency publishes this spring a proposed rule for an advance security filing, according to Richard F. DiNucci, a program manager at U.S. Customs and Border Protection.
Until recently it has been unclear whether any new data filing requirements for importers would be mandatory or a best practice for the Customs-Trade Partnership Against Terrorism, a voluntary program in which shippers gain expedited clearance by demonstrating strong controls over their shipping processes and suppliers.
The SAFE Port Act signed into law four months ago requires the Department of Homeland Security to issue regulations within one year for collecting advance electronic shipping data prior to vessel loading. But the ambiguity of the language left some doubt as to how broadly the requirement would apply.
DiNucci erased any doubt that the rulemaking would cover all importers during a presentation at the American Association of Exporters and Importers’ winter conference in New Orleans late last month. He said the rule will be phased in over a nine to 12-month period to help importers adjust to the new requirement once a final rule is published, possibly by early fall.
‘If you are an importer who ships by ocean, your life is going to change permanently,’ said Arthur Litman, vice president of regulatory affairs at FedEx Trade Networks. ‘I don’t think I can overstate how big an impact this is going to have on the whole supply chain.’
Today, the Commercial Operations Advisory Committee (COAC) meets in Washington to present industry recommendations to DHS on the types of data elements and ways to collect them that will enhance security pre-screening used to sort containers for automated inspections overseas and at home. A subgroup of experts has forwarded 26 recommendations to COAC covering data definitions, parties who will send the data, transmission method, implementation phase, formal regulations and other issues, said Bruce Leeds, senior export/import advisor for Boeing Co., and COAC’s liaison to Customs and Border Protection.
At the same time, CBP accepted outside comments through today in preparation for its draft notice of proposed rulemaking.
CBP unveiled at the last COAC meeting in early November the 10 data elements it wants from cargo interests 24 hours prior to vessel loading. They are:
* 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.
* Commodity’s six-digit Harmonized Tariff Schedule number.
Since then CBP has refined some of its definitions. CBP will now accept the supplier’s name and address as a fallback if the manufacturer is unknown, according to FAQs posted last week on the agency’s Web site. Similarly, importers will be allowed to provide the owner’s name and address in lieu of the seller or buyer when those are not available, such as when someone ships personal effects or household goods. The container stuffing location is an address, and the consolidator field will be the name of the company responsible for coordinating or packing the container.
The country of origin can be difficult to determine for products with intermediate manufacturing steps in multiple locations. But John Jurgutis, a program analyst, said CBP is considering origin as the spot of last manufacture. CBP will also accept the 10-digit HTS code, according to the Web site. That extra flexibility is a concession to the trade community, which wanted to be able to use the existing product codes in corporate trade databases without having to squeeze them down to the six-digit tariff classification.
The trade community is pushing hard for CBP to clearly define the elements so they are understood by people who don’t speak English as their primary language, Litman said told the AAEI gathering.
Leeds declined to reveal most of the subgroup’s preliminary recommendations, but did say the subcommittee wants COAC to remain engaged throughout the rulemaking process to help CBP iron out implementation issues. The COAC subcommittee also prefers that importers select a single entity to submit their security filing, although the filer may aggregate information from multiple sources. The industry panel is open to having multiple filers in the future if CBP can find a workable solution to pulling the data together, he said.
CBP, however, seems flexible right now with regard to the multiple filer option because the trade community is not of a single mind on the matter. The Web site states that multiple filers may provide the filing.
In future phases, Leeds said he envisions adding an account-based filing system in which top-tier C-TPAT companies or repetitive filers do not have to submit all the data elements for each transaction because they are already stored in the importer’s electronic account with CBP.
The industry also wants some kind of confirmation from CBP that their filings have been accepted in its system so the carriers can load their freight on the vessel, Leeds added.
Import-export professionals are worried about how some aspects of the advance data requirements are shaping up. One area of concern is the proposed requirement that country of origin, tariff classification number and manufacturer information all be linked as a package the way they are on the customs entry form.
The level of detail sought by CBP in this instance has been described as comparable to the Internal Revenue Service requiring an individual or business to bundle its expense lines for certain categories on the tax return to help the agency identify violations.
CBP’s instruction ‘could cause an importer to pay their forwarder the equivalent for filing an entry’ because of all the extra work involved, said Susan Kohn Ross, a partner in the Los Angeles-based trade law firm of Rodriguez O’Donnell Ross Fuerst Gonzalez & Williams.
‘People in the trade feel that they ought to set the programming up so the programming can do the mix and matching. I shouldn’t have to pay someone to transmit to you what is essentially entry-level data ‘ when the risk assessment could be done through an algorithm on the computer,’ she said in an interview.
Importers have raised the flag that the security filing is essentially duplicating on the export side a large portion of the customs entry process on the import side, and are seeking some kind of streamlined benefit to reduce paperwork and expedite freight handling. Litman reinforced CBP statements that the agency is ‘very open’ to the possibility of adjusting the entry process in light of the advance data rule to provide an early release of goods.
Confidentiality issues surrounding the sharing of information also have trade professionals on edge. The SAFE Port Act provides for safekeeping commercial data, but companies want further assurances from CBP, Litman said.
The ’10+2′ rule also brings back memories of the advance manifest rulemaking process when non-vessel-operating common carriers were concerned about having to give their customer information to carriers to file. NVOs eventually were given access to the carrier’s Automated Manifest System and many file that way to prevent carriers from back-selling vessel space to their customers.
The multiple-filer model helps importers who do not want to provide import information to the overseas freight forwarder. In many cases the importer may not want to share its customer information with the manufacturer and the exporter may not want the buyer to know the manufacturer it uses.
Brokers work for importers, while forwarders typically work for the exporter.
‘It wouldn’t surprise me if we start seeing some service bureaus crop up, but largely the filing will be done by the foreign freight forwarder,” Kohn Ross said.
‘A lot of how this plays out will depend on what the brokerage community does. If they figure ways to provide the information through data rather than documents on the U.S. side, in a timely fashion, then a lot of concerns will be alleviated about confidentiality,’ she said.
The advance data requirement ‘is really going to cause the split between the haves and have-nots. The big guys will figure out a way to do it. And the small guys will be at the mercy of his exporter or his forwarder,’ Kohn Ross added.
CBP Commissioner Ralph Basham pledged in December that the advance data would only be used by CBP for antiterrorism purposes and not for compliance, and the law also spells out the security reason for the rule.
‘But there are those who are willing to bet that if there is a difference between the security filing and the 7501 (entry document) that it maybe will not go unnoticed,” Litman said.
Another big issue is that seven of the 10 data elements are not part of the data set espoused by the World Customs Organization, which is trying to promote a global standard for trade security to ease the burden for companies operating in multiple countries.
Also troubling, according to Litman, is that the importer is being held liable for the security filing and there are instances where the importer doesn’t know all the information. Examples are when the buyer or shipping destination changes in transit, the shipping order is to deliver duty-paid and the goods go to a warehouse until they are sold, or goods are returned from overseas for repairs.
‘The only time origin is really important is in trade agreements, or for textiles or exports to prohibited end users,’ Kohn Ross said, questioning the need for the data in a security filing.
As for enforcement, DiNucci said CBP’s goal is to work with importers and their agents to identify problems collecting the data and iron out automation issues during the phase-in period. After the rule goes into full effect CBP can issue ‘do not load’ messages, conduct container exams based on the added risk due to incomplete data or issue penalties for continuous filing of inaccurate or late data. Informed compliance will even continue in some cases beyond the final implementation deadline.
‘There is no intent to start hammering importers. The object of this is not to bollix up the logistics process,’ DiNucci said.
The AAEI requested in a letter to Deputy Commissioner Deborah Spero last month that CBP conduct a pilot program and fully study the ‘cost, benefit and feasibility’ of requiring additional data elements before moving forward with such a significant rule.
CBP has indicated it plans to expand the advance data requirement to other modes of international transport after it gets the system for ocean trade off the ground. It also plans to treat bulk and breakbulk shipments differently than containerized ones, according to the FAQ section.
The other two elements in ’10+2′ refer to container status messages and the onboard stow plan to be provided by the ocean carrier through the existing Automated Manifest System.
COAC set to weigh in on mandatory ’10+2′ trade data
