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NAEP 2009 Annual MeetingNAEP 2009 Annual Meeting

Sarah ReynoldsAmerican River Intl.

Import / Export Compliance Workshop

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Post 9/11 InitiativesPost 9/11 Initiatives

1. CSI 1. CSI

2. CTPAT2. CTPAT

3. Importer Security Filing3. Importer Security Filing

4. Transportation Security Admin.4. Transportation Security Admin.

04/19/23 2

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Container Security InitiativeContainer Security Initiative

CSI is a program intended to help increase

security for containerized cargo shipped to

the United States from around the world.

CSI addresses the threat to border security

and global trade posed by the potential for

terrorist use of a maritime container to

deliver a weapon

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Container Security InitiativeContainer Security Initiative

January 17, 2002 U.S. Customs Service’s Commissioner Bonner announces CSI.

January 17, 2003 – 18 ports are committed to participate in CSI.

Currently 58 ports and 35 countries participate March 1, 2003 – US Customs Service becomes

US Customs & Border Protection

Container Security Initiative Container Security Initiative

Three Core Elements of CSI are:Identify high risk containers based on advance information and strategic intelligencePre-screen containers at the earliest possible pointUse technology to quickly pre-screen containers that may pose a risk for terrorism

Container Security InitiativeContainer Security Initiative

Key Benefits of CSI:

Increases the security of the global trading systemSignificantly increases the ability to intercept containers that may pose a risk for terrorismEnhances safety and security for all

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Importer Security FilingImporter Security Filing

Formally known as 10 + 2 Effects Ocean Shipments Only 10 Data Elements to be Provided by the Importer 2 Data Elements to be Provided by the Carrier Electronically transmitted data Advance shipment data will produce more effective

and more vigorous cargo risk assessment Interim Final Rule was announced by DHS on

Nov.24th 2008

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Importer Security FilingImporter Security Filing

Became effective January 26th 2009 The Interim Final Rule includes a delayed

compliance date of 12 months after the interim final rule takes effect.

During this time Customs will show restraint in enforcing the rule.

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C-TPATC-TPAT

Customs Trade Partnership against Terrorism

Joint government business initiative to build cooperative relationships that strengthen overall supply chain and border security

Raises level of global security Decreased delays in the import process

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C-TPATC-TPAT

Every importer, exporter, manufacturer, customs broker, NVOCC and warehouse proprietor should join this partnership in a proactive effort to raise the bar on security standards in the U.S

Provides a competitive edge in the Industry Decreased delays in the import process Expedited customs clearance Mitigating factor in determining penalty amount

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C-TPATC-TPAT

Tier I – Certification

Tier II - Validation

Tier III - Exceeding Minimum Security Practices

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C-TPATC-TPAT

ISA – Self Importer Assessment

Is one of the privileges offered to C-TPAT

members. The program give the importer an

opportunity to perform a self analysis of their

compliance standards and provide their findings

to CBP for review

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TSA-Transportation Security AdministrationTSA-Transportation Security Administration

• Sensitive Security Information

• Increased inspections in the field

• 50% screening of all cargo on passenger planes by Feb 2009

• 100% screening by August 2010

• STA (Security Threat Assessment)

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ImportImport

The Customs Modernization Act of 1993

Reasonable Care

Due Diligence

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The Customs Modernization Act of 1993The Customs Modernization Act of 1993

The Mod Act was a congressional act that

outlined and redefined Customs regulations

and introduced new legislation in reference

to the importers responsibilities. The Mod

Act also introduced a warning prior to audit

enforcement as to the future Customs

towards increasing compliance levels.

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ImportImport

Reasonable Care

• Defined as that degree of care that a person of

ordinary prudence would exercise in the same

manner or similar circumstances

• Legal responsibility of importer and his agent

(Customs Broker)

• Mandated by the Customs Modernization Act

and passed into law December 8th 1993

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Fines and PenaltiesFines and Penalties

Reasonable Care

Penalty for importers failure to meet Reasonable Care Standards

Domestic value or twice the duty, whichever is less

If duty free the penalty is calculated at 20% of the value

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Import – Recordkeeping Import – Recordkeeping

All records which pertain to the merchandise and are maintained in the normal course of business..

Must be maintained in the United States Must be kept for five years from the date of

entry All records must be maintained as outlined in

CFR163 (a)1(a) listing. Customs forms 7501, 3461, 4333

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Import Recordkeeping Import Recordkeeping

Penalties for failure to keep records:

$100,000 or 75% of dutiable value for each release for willful failure

$10,000 or 40% of the dutiable value for each release for negligence

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Export Export

U.S. Principal Party in Interest: the person in the United States that receives the primary benefit, monetary or otherwise, of the export transaction.

U.S. manufacturer , U.S. seller, U.S. order party

Foreign company CANNOT be the USPPI unless they are in the U.S. at the time the goods are obtained/purchased for export.

A freight forwarder may not be the USPPI!!

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ExportExport

• Automated Export System/Electronic Export Information

• Canada (30.36)– NO EEI 30.36

• $2500 and under (30.37a)– NO EEI 30.37a

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Two Types of ExportsTwo Types of Exports

Export Transaction:

USPPI files the Electronic Export Information (EEI)record or authorizes a U.S. Forwarder, or other agentto file the EEI via AES (Automated Export System)

Routed Export Transaction:

Foreign principal party in interest (FPPI) authorizesa U.S. Forwarder, other agent or USPPI to file theElectronic Export Information (EEI)

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ExportExportUSPPI Responsibilities:

Files or authorizes U.S. forwarder, or other agent to file the EEI

Provides Power of Attorney / written authorization

Responsible for schedule B and license determination

Obtain copy of the EEI filed by forwarder

USPPI may obtain POA from FFPI to complete & file the EEI record

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ExportExportForwarder Responsibilities:

File export information via the AES

Upon request provide USPPI with copy of the filed EEI

Provide ITN to the carrier

Obtain a POA or written authorization from the FFPI to file the EEI

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ExportExport

AES pre-departure filing time frames

Vessel: 24 hours prior to loadingAir: no later than 2 hours prior to departureTruck: no later than 1 hour prior to arrival at the

borderRail: no later than 2 hours prior to arrival at the

borderMail: no later than 2 hours prior to export

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ExportExport

• USPPI or authorized agent who knowingly:Fails to fileFiles false and misleading informationContinues to participate in illegal activities

• Fines:Up to $10,000 per violationImprisonment for not more than five yearsBoth

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ExportExport

USPPI or authorized agent or carrier:

• Late filingsUp to $1,100 per each day delinquency or up to a

maximum

of $10,000 per violation• Other violations:

Up to $10,000 per violation

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Export RegulationsExport Regulations Export Administration Regulations / Dept of Commerce

BIS / Bureau of Industry & Security / Export Administration Regulations

FTSR / Foreign Trade Regulations / Bureau of Census / Dept of Commerce

OFAC / Office of Foreign Assets Control

ITAR /Intl Traffic in Arms Regulations / Dept of State

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Export Compliance ManagementExport Compliance Management

Scope of Export Administration Regulations (EAR)• Denied Parties• Know Your Customer• Red Flags• Restrictive Trade Practices (Anti-boycott

Compliance)• Export Commodity Control Numbers (ECCN)• Commerce Control List (CCL)• Recordkeeping Requirements• Penalties for Violations

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Scope of the Export Administration RegulationsBureau of Industry & Security

Scope of the Export Administration RegulationsBureau of Industry & Security

Reexports Transfer of Technology (Deemed Exports) Foreign Subsidiaries All U.S. origins items wherever located U.S. origin parts, components, materials or other

commodities integrated abroad into foreign-made products.

Certain foreign-made direct products of U.S. origin technology or software

U.S. persons abroad

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Deemed Exports / Transfer of Technology Deemed Exports / Transfer of Technology

Deemed Export RuleAn export of technology is “deemed” to take place when it is

released to a foreign national within the United States.

Release of TechnologyTechnology is “released” for export when it is available to

foreign nationals for visual inspection ( such as reading technical

specifications, plans, blueprints, etc.) when technology is

exchanged orally; or when technology is made available by

practice pr application under the guidance of persons with

knowledge of the technology.

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Deemed Exports / Transfer of Technology Deemed Exports / Transfer of Technology

Technology

Technology is specific information necessary for the development, production or use of a product

If the technology does not qualify for treatment under EAR 99and no license exception is available, U.S. entities must apply foran export license under the “deemed export” rule when both of the following conditions are met:• They intend to transfer controlled technologies to foreign

nationals in the U.S.• Transfer of the same technology to the foreign national’s

country

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Deemed Exports / Transfer of Technology Deemed Exports / Transfer of Technology

Any foreign national is subject to the “deemed export”

rule except a foreign national who is:

• Granted permanent residence as demonstrated by the issuance of a permanent residence visa ( Green Card)

• Granted U.S. citizenship • Granted status as a “protected person” ( political

refugees and political asylum holders)

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ExportExport

• EAR 99

Items subject to the EAR, but not specified on the Commerce Control List.

NLR – No license required.

Must check General Prohibitions 4 –10.

• NLR

When an item is not listed on the Commerce Control List (CCL), but is under the scope of the EAR. When an item is listed on the CCL but does not require a license to the destination AND no General Prohibitions apply to the export.

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Export Export

• Commerce Control List

(dual use items // Dept. of Commerce// BIS)

• Export Commodity Control Number

• Reason for Control

• Country Chart

• License Exceptions

• Example : 4A994 / Computers

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Commerce Control List Commerce Control List

• Categories 0 – Nuclear Materials,

Facilities & Equipment 1 – Materials, Chemicals,

Microorganisms & Toxins

2 – Material Processing 3 – Electronics 4 – Computers 5 – Telecommunications &

Info Security 6 – Lasers & Sensors 7 – Navigation & Avionics 8 – Marine 9 – Propulsion Systems,

Space Vehicles & Related equip.

• Groups

A – Equipment, Assemblies & Components

B – Test, Inspection & Production Equipment

C – Materials

D – Software

E - Technology

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Sanctioned and Embargoed CountriesSanctioned and Embargoed Countries

Cuba, No Korea,

Iran, Rwanda, Syria, Sudan

Need to check the BIS and OFAC websites

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Destination Control StatementDestination Control Statement

Destination Control Statement (DCS) must be entered on

the invoice and on the bill of lading, air waybill, or other

export control document that accompanies the shipment

from its point of origin in the U.S. to the ultimate consignee

or end use abroad. The DCS is required for all exports from

the U.S. of items on the Commerce Control List that are

not classified as EAR99. At a minimum, the DCS must

state:

“These commodities, technology or software were exported from the United States in accordance with the Export Administration

Regulations. Diversion contrary to U.S. law is prohibited”

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Know Your Customer / Red FlagsKnow Your Customer / Red Flags

Red Flag Indicators – a check list to discover possible violations

of the Export Administration Regulations:

• Customer is reluctant to offer information about the end use

• Product’s capabilities do not fit the buyer’s line of business

• Technical incompatibility in the country of import

• Paying cash where terms of sale would normally require financing

• Freight Forwarder is listed as delivery site

• Abnormal shipping route

• Routine installation, training or maintenance services are declined

• Packaging is inconsistent with the stated method of shipment or destination

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Know Your Customer/Five Basic QuestionsKnow Your Customer/Five Basic Questions

In Order to be Compliant BIS asks Five Basic Questions • 1. What is Being Shipped• 2. What is the Value / Quantity• 3. Where is it Going? • 4. Who is it Going to?• 5. What Will it be Used for?

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Denied Parties ListingsDenied Parties Listings

• Department of Commerce

*Denied Parties List

*Unverified List

*Entities List• Department of Treasury – Office of Foreign Asset

Controls (OFAC)

*Designated Nationals List• Department of State

*Debarred Nationals List

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Export Recordkeeping Export Recordkeeping

All records must be maintained for a period of 5

years from the expiration date of the export license

or other approval or from the date of export. All

export docs, A-Z from request for quotation order

to commercial invoices to license applications to

receivable records to airbills to AES/ EEI copies.

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Fines and PenaltiesFines and Penalties

Violations of the EAR may be subject to both criminal and administrative penalties.

Criminal penalties can reach up to 20 years imprisonment & $1 million per violation

Administrative penalties can reach the greater $250,000 per violation or twice the amount of the transaction that is the basis of the violation

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Best PracticesBest Practices

• Senior Management

• Designate a point person

• Standard Operating Procedures

• Technology

• Training and Education

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ReviewReview

Summary, Questions and Open Discussion