cbp, fda to allow some leniency for june 15 ace deadline ...€¦ · staff to “respond to any...

WEDNESDAY, JUNE 15, 2016

Copyright© 2016 by Warren Communications News, Inc. • www.internationaltradetoday.com • 800-771-9202 • [email protected]

ACE Weekly News Brief

ACE Weekly News Brief

The source for trade compliance news A service of WARREN COMMUNICATIONS NEWS

International Trade Today’s ACE Weekly News Brief

Fast, Reliable, Comprehensive

To receive daily updates on all critical trade regulatory news topics, in addition to ACE coverage, sign up NOW for a FREE 30-day trial at internationaltradetoday.com/free_trial.

International Trade Today delivers the compliance news you need daily in an easy-to-read email and website. Sample our complete coverage for yourself today at internationaltradetoday.com.

CBP, FDA To Allow Some Leniency for June 15 ACE Deadline Until ACS OfflineCBP and Food and Drug Administration officials outlined transition procedures for the June 15 ACE

mandatory use date for most FDA cargo release and entry summary submissions, during a June 9 webinar conducted by the agencies and the National Customs Brokers & Forwarders Association of America. CBP will on June 15 begin rejecting ACE entries that are flagged for FDA but are not accompanied by partner govern-ment agency (PGA) data, a CBP official said. However, the legacy ACE remains online and available as a fallback until July 23, and CBP will handle ACS filers on a “case-by-case basis” until that date, sending error messages and reaching out to non-ACE filers to get them aboard, he said. As CBP has previously said, the agency will shut off ACS on July 23 and filers will “no longer have the ACS alternative,” the official said.

FDA will have its 24/7 help desk online by the June 15 transition date, and is currently training its staff to “respond to any concerns that may come up during the transition,” said Jessica Aranda of FDA.

http://www.internationaltradetoday.com/free_trial?src=ACE

2—ACE WEEKLY NEWS BRIEF WEDNESDAY, JUNE 15, 2016


CBP will soon send out a CSMS message announcing the phone number, she said. FDA’s A.J. Seaborn says he expects FDA will be more lenient when examining filers in audits covering the transition period. FDA is currently looking at revamping its entire filer evaluation process, Seaborn said. There’s an understanding that there “has to be flexibility and leniency in this transition period,” he said.

FDA is currently working on making its error messaging more precise and understandable so the filer better knows what to correct, though the work won’t be completed by the June 15 transition, Aran-da said. Currently, messaging is “a bit general,” at times giving the wrong impression to the filer as to the location of the error. FDA also plans to automate the paper notices of arrival it sends out when the agency conducts additional review of a shipment, Seaborn said. A proposed rule the agency plans on publishing in the “near future” will allow FDA to send out electronic versions of the notice, “allowing more expeditious notification” to the filer, importer and consignee, he said. The notices, which will be sent through FDA’s Import Trade Auxiliary Communications System (ITACS), will be account-based so there’s no chance that entry information will wind up in the wrong hands, Seaborn said.

Addressing questions surrounding the recent increase in the de minimis level from $200 to $800, Seaborn said the transition changes little from FDA’s perspective. FDA will “still focus our resources on higher-risk products coming in, regardless of the value,” and will continue to request formal entry on products valued at less than $2,500, including Section 321 shipments, for high risk products, he said. Prior notice is still required regardless of value. FDA is currently looking at its internal policies for Section 321 shipments, and working with the Border Interagency Executive Committee (BIEC) to harmonize Section 321 policies where possible, Seaborn said. Longer term, the BIEC is currently discussing the possibility of giving PGAs access to the Automated Manifest System (AMS), and how PGAs would build manifest data into their targeting and admissibility systems, he said. — Brian Feito

Miscellaneous CBP Releases (June 10, 2016)CBP issued the following releases on commercial trade and related matters:

• Reminder: June 15, 2016, Mandatory ACE Transition for FDA Data (here)• ISF Processing Delays - Resolved (here)• RESOLVED: No ACE Cargo Release edit responses (here)• RESOLVED: Legacy ACE Portal Connectivity Issues (here)

EPA ACE Filing Likely Not Ready for Summer, CPSC Filing Not Until End of Decade, Officials Say

ARLINGTON, Va.—As the Food and Drug Administration readies for CBP’s June 15 deadline for filing of FDA entries and entry summaries in ACE, other agencies have further to go before their partner government agency (PGA) filing capabilities become available, government officials said during a panel discussion at the American Association of Exporters and Importers annual conference. Despite indications from CBP that the Environmental Protection Agency would be among the agencies scheduled for ACE filing this summer, EPA now looks like it won’t be ready until closer to the end of the year, one EPA official

http://1.usa.gov/1ZEhPln

http://1.usa.gov/1ZEhSxC

http://1.usa.gov/1ZEhuPz

http://1.usa.gov/1ZEhyPA



said. Likewise, the Consumer Product Safety Commission, though nearing the start of its e-filing pilot, may not be ready for full ACE filing until 2019 or 2020, the commission’s import director said.

Several long-running EPA pilots are still ongoing, including on non-road vehicle imports and pesticide notices of arrival, both of which are limited to nine participants, as well as unlimited pilots on ozone-depleting substances and Toxic Substances Control Act submissions. While EPA’s non-road vehicle and engine pilot is full, and there’s only room for one more participant in the notice of arrival pilot, EPA’s TSCA filing pilot is “wide open,” and with only a “handful of elements” it’s “easy to do,” Roy Chaudet of EPA said.

Though EPA was listed as one of the PGAs set for summer deployment in ACE, a slate of regula-tions the agency has to issue first will make meeting that goal unlikely, Chaudet said. EPA is “working very closely” with CBP to issue new regulations allowing electronic filing for non-road vehicles and engines, pesticides and toxic chemical imports, Chaudet said. However, the agency has yet to issue even proposed rules and allow time for public comment, so final regulations are a ways off, he said. “With no proposed rule on the street yet and we’re in June, I think summer is pretty tight,” Chaudet said, adding that final rules will be published and electronic filing allowed by the end of the year.

Importers of CPSC-regulated products are looking at a longer time frame before they can file PGA data in ACE, said Jim Joholske, of CPSC’s Office of Import Surveillance and Inspection. The commis-sion selected nine importers for participation in its e-filing “alpha” pilot, and those importers will bring along their customs brokers and software developers. CPSC is in the final stage of programming and test-ing before the pilot is set to begin on July 2, Joholske said. The pilot is scheduled to last six months, after which the commission will analyze the results and make any necessary changes, including to the five data elements it is tentatively requiring in ACE. CPSC staff then plans to begin a “beta pilot” in 2017, open to around 100 companies, before it moves into the final rulemaking process, Joholske said. Any final rule requiring ACE filing of CPSC data probably won’t happen until 2019 or 2020, he said. “We’ve got a ways to go.”


• CBP Seizes Over $2.9 Million in Counterfeit Designer Jewelry (here)• ACE Production ABI Queries Deployment June 9 (here)• ACE PRODUCTION deployment June 9 (here)

Upcoming CBP Regulations To Clarify Overhaul of Drawback Process in Recent Customs Law

ARLINGTON, Va.—Upcoming CBP regulations are needed to address several areas left unclear by major changes to drawback in recently enacted customs reauthorization legislation, a government official and industry executives said during a June 7 panel discussion at the American Association of Exporters and

http://1.usa.gov/24CFHXP

http://1.usa.gov/24CGsQE

http://apps.cbp.gov/csms/viewmssg.asp?Recid=21825&page=&srch_argv=&srchtype=&btype=&sortby=&sby=


Sales

William R. Benton .................................. Sales DirectorAgnes Mannarelli .............. National Accounts ManagerBruce Ryan ........................................ Account ManagerDavid Warren .................................... Account ManagerJim Sharp .......................................... Account ManagerMatt Long .......................................... Account Manager

Albert WarrenEditor & Publisher 1961–2006

Paul Warren ............................. Chairman and PublisherDaniel Warren ............................... President and EditorTim Warren .........................................Managing EditorBrian Feito ...........................................Associate EditorBrian Bradley ....................................... Assistant Editor

(ISSN 1932-6289)PUBLISHED BY WARREN COMMUNICATIONS NEWS, INC.

Warren Communications News, Inc. is publisher of International Trade Today, Communications Daily, Warren’s

Washington Internet Daily, Consumer Electronics Daily, Television & Cable Factbook, Cable & Station Coverage Atlas,

and other specialized publications.

Send news materials to [email protected]: 202-872-9200 Fax: 202-318-8984

www.internationaltradetoday.comEmail: [email protected]

Copyright © 2016 by Warren Communications News, Inc.

EDITORIAL & BUSINESS HEADQUARTERS2115 Ward Court, N.W., Washington, DC 20037

Importers annual conference. CBP still needs to decide how to handle changes in classification that occur between entry and the filing of the drawback claim and changes to “lesser of” limitations on drawback. The overhaul, the biggest for drawback since 1930, presents opportunities but also poses challenges for both in-dustry and the government, and more changes are on the way as drawback is automated in ACE, they said.

The Trade Facilitation and Trade Enforcement Act of 2015, enacted Feb. 24, created a new simpli-fied framework whereby substitution drawback will be allowed for most goods with the same eight-digit HTS subheading, and the deadline for most drawback claims will run five years from the date of importa-tion. Over a decade in the making, the drawback provisions take effect two years after enactment, on Feb. 24, 2018, and allow for an additional grace period of one year, until Feb. 24, 2019, during which drawback claims may be made under either the old or the new statute.

CBP now needs to issue regulations to “iron out” how the new drawback process will work, said Michael Cerny of Cerny & Associates. One consideration the law does not address is how to handle chang-es in classification that take place after the HTS number is originally declared on an entry. While making drawback claims based on a straightforward HTS classification will simplify the process in most situations, there will also be situations in which a ruling or court decision has been issued, or a protest or disclosure filed, that will change the HTS number before the drawback claim is filed, resulting in a drawback claim based on HTS provisions not reflected in the claimant’s records. CBP is “going to have to find a way to deal with that in the regulations,” Cerny said.

Another issue that needs to be addressed by CBP regulations is the “lesser of” concept and its ex-tension in the new law to manufacturing substitution drawback, Cerny said. Already familiar to users of unused merchandise drawback, the new law says claims for unused substitution drawback may only be for 99 percent of the lesser of (i) the duties, taxes and fees paid on the imported merchandise or (ii) the amount of duties, taxes and fees that would apply to the exported or destroyed article if the exported or destroyed article were imported. The language focusing on the duties, taxes and fees paid on a hypothet-ical import is problematic, said Cerny, who hopes CBP will issue regulations that focus on the product’s value instead.

The new law’s extension of the “lesser of” rule to manufacturing substitution drawback, limiting claims to the lesser of the designated import or the substitute component, is a big change for manufacturers, which will now have to keep track of the value of their component parts for drawback purposes, Cerny said. CBP was against the extension of the rule, not seeing any risks in the manufacturing drawback process that would justify it, said Maryanne Carney, national drawback field specialist at CBP. CBP legal staff know “they need to tackle this in the regulations with good explanations,” Carney said. Though some may have thought manufacturing rulings issued by CBP were going away, the agency now thinks it will need them in some form, though it still isn’t sure what form that will be, she said. “That’s why we’re going to have two

mailto:ittnews%40warren-news.com?subject=News%20for%20International%20Trade%20Today

http://www.internationaltradetoday.com

mailto:staff%40warren-news.com?subject=Contact%20International%20Trade%20Today



years to work on these regulations,” Carney said. “Stay tuned, there’s a lot more that’s going to come out on this particular issue.”

One change that some had seen as major—the extension of liability for drawback claims to the im-porter record—will have less of an impact than some feared, Cerny said. Though importers are now jointly and severally liable, CBP will go after them last, first attempting to recover excessive drawback from the surety and then the claimant. Also, the importer is only liable for their portion of the claim, and not any additional penalties, Cerny said. “Savvy importers” will protect themselves by requiring claimants of draw-back on their imported merchandise to get a surety bond covering the claims and a written agreement with the potential claimant, he said. Importers with potential third-party drawback claims may also want to work with customs brokers, who can see sensitive information from both the claimant and the importer and keep it confidential, Cerny said.

Beyond the drawback provisions of the new customs reauthorization law, major changes also are coming to drawback as a result of its automation in ACE, the panelists said. Chief among these is electronic proof of export, Cerny said. The law required CBP to allow use of electronic export information (EEI) in ACE as proof of export, but what could streamline the process even more is the potential to use the out-bound manifest, which would prove the date of importation as well as fact, he said. CBP is currently “build-ing the framework” to validate electronic drawback claims with information filed in the ACE Automated Export System and export manifest systems, Carney said, though it is not “hooking up” the systems yet.

Electronic drawback will also allow CBP to act more quickly on claims, Carney said. There’s a “lot more validation right up front,” so rejected claims will be sent right back to the claimant, without having to wait for a CBP drawback specialist to it, she said. The quick turnaround is going to be a challenge for CBP, which currently has a backlog of more than 12,000 claims in New York alone, Carney said. Complicating matters, CBP is for several years going to have claims filed in ACE that are based on consumption entries filed in the legacy Automated Commercial System. All in all, it will “take a while to smooth out,” but “in the end I think that’s a win for us,” Carney said.

Another coming change is CBP’s simplification of the entry types applicable to drawback, Carney said. Today, drawback entries are filed under six different entry types, 41 through 46, depending on the type of drawback being claimed. CBP will debut a new entry type, 47, which will cover all drawback, and include a box to check the provision of law under which the claim is being filed. — Brian Feito

Live Entries Must Be Filed on Paper at LAX Cargo Office, CBP LA SaysAll live entries filed in ACE at Los Angeles International Airport (LAX) should be dropped off at

the Team 754 drop slot in the lobby of the CBP LAX cargo office in Los Angeles, CBP LA said in a public bulletin. As ACE cargo release “is considered a paperless program,” brokers and filers will be required to submit, in a green folder, “CBP Form 7501 or 7501A with a check attached, to the Financial Team,” the bulletin said. “The invoice, packing list, and remaining supporting documents shall be uploaded onto the Document Image System (DIS). No check or cash collections of any type should be submitted to Selectivi-ty or Import Specialist teams drop slots,” CBP LA said.

Email [email protected] for a copy of the bulletin.

mailto:[email protected]




• ACE PRODUCTION Filing Exercises for 6/15 mandatory date (here)• ACE PRODUCTION deployment, Tuesday June 7, 2016 @ 0500 ET, will impact ACE Cargo

Release & Entry Summary processing (here)• HTS not listed in AD/CVD record (here)

CBP’s July 23 ACE Quota Deadline Seen Rockier Than Recent Smooth TransitionsARLINGTON, Va.—A host of potential quota issues and a lack of industry testing is causing some

anxiety in the trade community over the approaching July 23 deadline for filing entries and entry summa-ries for most remaining entry types in ACE, said industry executives speaking June 6 at the American Asso-ciation of Exporters and Importers annual conference. Mirroring concerns recently voiced by CBP officials over the July 23 mandatory use date, one software developer on the panel said she expects the “hard cu-tover” for quota to cause more problems than were seen during the recent March 31 and May 28 mandatory use dates.

CBP has long planned the abrupt transition for quota, which will see quota capabilities come online for the first time in ACE at the same time that the quota is no longer allowed in the legacy Automated Com-mercial System. Despite an industry push to somehow allow live filing of entries subject to quota before ACS is no longer available as a fallback, the hard cutover is necessary because the agency can’t keep track of quota fill rates in two systems at the same time, Sandra Langford-Coty of OHL said.

Complicating matters are changes to when CBP will recognize a shipment’s presentation date for the purposes of quota allocation, said Langford-Coty. Pre-ACE, filers have “lived and breathed” by the time stamp on Form 7501, but beginning on July 23, CBP will consider presentation to occur when the entry is accepted or the conveyance is arrived. That can be “challenging,” because “not all carriers arrive things timely,” Langford-Coty said. Importers could lose their quotas if the carrier doesn’t immediately tell CBP the shipment has made it to port, she said.

CBP has said it will allow three days “for these kinds of hiccups to get worked out,” and for com-modities with quotas that fill and close immediately after opening the agency will send electronic messages on fill rates and whether the importer made quota, Langford-Coty said. Nonetheless, the change is “very concerning” for customs brokers, which currently have the “security blanket” of pre-filing a quota entry with CBP and having the agency check for errors, avoiding mistakes that “would lose my client their quota and me my job,” she said. Brokers want to be able to file three days early, especially for quick-filling quo-tas like sugar. Otherwise, “it’s a lot of risk and a lot of lost sleep,” she said, adding that importers of quota merchandise should press their brokers to participate in the ongoing ACE quota pilot.

As of the July 23 deadline, ACE cargo release and entry summary will be mandatory for entry types 02, 07, 12, 21, 22, 31, 32, 34, 38, 61, 62, 63, 69 and 70. CBP’s previous deadlines have gone relatively quietly, and while the upcoming June 15 deadline for Food and Drug Administration entries in ACE “will

http://apps.cbp.gov/csms/viewmssg.asp?Recid=21821





be a little challenging,” importers are comfortable by now with what information they need to get to their brokers. However, given the lack of testing for quota entries, the July 23 date is “a little bit scarier,” Celeste Catano of Kewill said. “There could be some hiccups,” she said. “I don’t think this one is going to go as smoothly as some of the previous ones.”

Though CBP says it will begin shutting down ACS entry filing capabilities after July 23, Catano doesn’t anticipate the agency will totally shut the legacy system down. Rather, CBP will probably put a message in ACS saying you can’t file anything. That way, the agency will be ready to revert back to ACS if something isn’t working, though “I wouldn’t count on that as a fallback,” Catano said.

As the switch from ACS to ACE becomes complete on July 23, CBP will have completed a “giant step backwards” by taking the Automated Invoice Interface offline and moving to invoice submission via the docu-ment imaging system, said Heather Conner-Garofalo of Teva, a pharmaceutical importer. While AII was a data transmission method, DIS requires the manual process of getting a PDF version of an invoice and sending it to CBP. That manual process can be “really awful” for importers and brokers with invoices that can exceed 100 pages in length, Amy Magnus of A.N. Deringer said. Despite the “move to a manual process,” CBP current-ly doesn’t anticipate creating a “new” AII until after core ACE capabilities are completed, Catano said, which means brokers and importers will have to wait until 2017 at the earliest. — Brian Feito


• DEA Supplemental Guidance for ACE V2.3, May 10, 2016 (here)• ATF Supplemental Guidance for ACE V1.12, May 19, 2016 (here)• SO message timing causing different statuses for same PGA data/line (here)

To order with the discount, call 1-800-771-9202 today

30 years of covering every important development in trade regulation delivers one source for everything you need to know regarding the Trade Facilitation and Trade Enforcement Act.

News Successful Trade Professionals Read

The Customs Reauthorization Compliance Guide from International Trade Today is now available at a special $20 discount for NCBFAA members. Copyright© 2016 by Warren Communications News, Inc. • www.internationaltradetoday.com • 800-771-9202 • [email protected]

International Trade Today ’s

CUSTOMS REAUTHORIZATION COMPLIANCE GUIDE

Everything You Need to Know About The Trade Facilitation and Trade Enforcement Act




http://www.internationaltradetoday.com/

cbp, fda to allow some leniency for june 15 ace deadline ...€¦ · staff to “respond to any...

Documents