The Food Safety Modernization Act (FSMA) was covered in the March edition of the

J-Report but we thought it would be a good time to revisit some of the items that are of

particular interest to importers and remind you that there are timelines of

implementation for various sections of the act. Well, the clock has been ticking. Since

its introduction on January 4th, 2011 the FDA has been hard at work to accomplish

some key focus areas of development. For instance, by January of 2012, the FDA will

have had one year to create final regulations and guidance for Importer Accountability.

Although the formal regulations and guidance are not yet published, the crux of the is-

sue forces importers to have insight into their entire supply chain from start to finish.

Foreign suppliers will be subject to a verification process. It should be mentioned that

verification is something entirely different than certification. Verification of foreign

suppliers are based on risk-assessment methods across the board whereas certification

implies a specialized process that is designated by the FDA under specific circumstances.

So now what? When do we get our answer?

How many of you food importers who are currently subject to FDA requirements are also C-TPAT certified? The FMSA outlines some very similar details in the Foreign Supplier Verification Program (FSVP) that are also found in C-TPAT guidelines. While C-TPAT is a voluntary program, the FMSA isn’t; and any importers who are subject to the realm of these regulations will likely have an enormous level of planning and fact-finding to do. On the other hand, if you are already C-TPAT certified, how current is your risk assessment? The FDA has a running list of FAQ’s and as of this writing, there are new questions and answers that have been added. The FAQ can be accessed at: http://www.fda.gov/Food/FoodSafety/FSMA/ucm247559.htm#Imports

Connecting you to the world www.johnsjames.com

November 2011

Volume 5 Issue 11 The J-Report Information and News from the World of Compliance and Logistics

OFFICE LOCATIONS

ATLANTA, GA 404-762-5556

CHARLESTON, SC 843-554-6400

CHARLOTTE, NC 704-357-6901

JACKSONVILLE, FL 904-356-9646

KNOXVILLE, TN 865-544-0530

SAVANNAH, GA 912-232-0211

IMPORT Food Safety Modernization Act

C-TPAT & The Foreign Supplier Verification Program

EXPORT Warrantees And How They Affect Your Shipping

Servicing Warranties

Overseas Do you have a distributor

or agent in your foreign

markets?

Have you discussed an

agreement with this party

to help facilitate a

warranty service in the

foreign market?

Page 2 The J-Report Information and News from the World of Compliance and Logistics

When a business sells a product to a customer, that customer expects a certain level of

performance by that product and many times the seller will attach a warranty that not

only denotes a standard of quality; but a guarantee that the specific product will

achieve the objective the customer expects. Warranties have legal implications and it

is up to the seller to define and determine the legal nature of the language within this

guarantee. What we aim to do here is discuss the potential aspects of shipping and

logistics that can account for a significant cost in the facilitation of the warranty.

Picture this scenario: An exporter ships a product to England that carries a 100% replacement warranty at no cost to the customer. The product is found to be defective and breaks, so the customer asks the

exporter to replace the good. The exporter is now responsible for getting the product shipped from the customer’s door which can entail...

Paying for export formalities Foreign transport

10+2 filing Air and/or ocean charges

U.S. Customs Clearance Possible duties

Delivery back to the fulfillment location for repair or replacement. When product ships back to England under the warranty all of the same charges will be

undertaken for transport, customs clearance, delivery and yes, British Customs Duties. Why are duties due on products that were previously imported? Every import whether it’s the first time

or a re-import stands alone and is treated as another transaction. Not only are duties paid on

the market value of the goods, but also for the cost of repairs if the product was not registered with the exporting country’s Customs Administration prior to exportation. Another layer of cost

is VAT (Value-Added Tax). The British Customer is the holder of the VAT# and would be responsible for the payment of additional VAT or seeking relief or exemption from British HM

Revenue & Customs. Either way, a cost to the customer is involved and the firm may take a stout position to seek compensation of this cost due to the warranty agreement.

Exporters should always research the legal implications that a warranty carries in

destination markets but furthermore, you should consider the practical aspects that

involve the actual movement of the goods for any repair or replacement. Sometimes

the exporter may have little to no import experience at all and this thrusts the

organization into a potentially expensive learning curve.

U.S. Export Considerations Repairs vs. Replacement

Repairs are only to be reported

for articles previously exported and returned for repair or

alterations. The reported value should include the total cost of

repair, including parts and labor. Documents should include a

statement to the effect of “Product replaced under warranty, value for EEI

purposes” The repair may fall under an entirely different

Schedule B# (i.e., 9801.10.0000)

Replacements under warranty

should report the actual value of the replacement parts and

include a similar statement mentioned above. The

Schedule B# should be the actual # for the product being

replaced.

We would like to

acknowledge the

contributions of the

following JSJ

employees, wishing

them a happy

anniversary in November

Trade News Russia’s Entrance to the WTO?

John S. James Co. Employee Anniversaries

Page 3 Volume 5 Issue 11

Terry Moultrie 19 yrs

Alu Claxton 17 yrs

Cheryl Bomar 12 yrs

Fran LaMuraglia 10 yrs

Francesca LaMuraglia (Lah-mur-AHL-eeyuh), a.k.a. “Fran” to those other than her mother, is the 8th of 10 children born to Italian/Irish Catholic parents in New Jersey. She is an identical twin (she’s the one on the right) with a gregarious laugh and sunny personality. An avid athlete in her younger days, the love of sports of all kinds burns within her. She can probably tell you who’s the number one ranked team in any sport. When she was 11, her family moved to North Carolina where her father worked in the hosiery industry. Prior to joining the “James Gang”, Fran followed in her father’s footsteps and worked in the warehousing and distribution side of the hosiery sector. In

2001, Fran was hired to work as JSJ implant for one of our Foreign-Trade Zone clients. Based in our Chattanooga, TN office, Fran had dual duties as an FTZ and import administrator. She has worked in our offices & operations in 4 cities across 3 states. Self-described as “Gumby”, Fran’s flexibility has been an asset as she has relocated 6 times in 10 years for the good of JSJ and our clients. We joke that one never knows where Fran will turn up next. But for now, Fran’s talents and personality add energy, enthusiasm and a great deal of humor to the Savannah staff. If you have worked with Fran before, you must already be aware of her contagious humor and larger than life persona. Tell Fran you read some interesting articles as well as her spotlight in the J-Report!

John S. James Co. Employee Spotlight

Caleb Taylor 9 yrs

Jennifer Beddow 4 yrs

Kim Holland 1 yr

Robin Selgren 1 yr

The World Trade Organization has approved the accession process for Russia’s entrance into the WTO to move forward according to the current terms of agreement negotiated between the WTO and Russia. The accession package will be submitted for approval during the next Ministerial Conference slated for December 15th-17th. Russia is a member of the BRIC economies and has made significant economic gains due to its tremendous wealth of natural resources and energy exports. The growth of the middle class and the lessening of some trade barriers has allowed an organic consumer growth movement that is hungry for world-class goods. Part of the WTO agreement is that Russia will lower its current tariffs on a wide range of goods, allow foreign banks to establish subsidiaries, and allow 100% foreign-owned companies to engage in wholesale, retail and franchise sectors. Russia’s membership to the World Trade Organization has been a long time in coming, it applied to the WTO in June or 1993. For any of you importers or exporters who had previously entertained market opportunities in the past but found preventative tariff and non-tariff barriers, perhaps you will find more receptivity and open doors in the future. Other key markets where you may find more opportunity could be Belarus and Kazakhstan, since each of these nations have formed a single Custom Union that effectively “removed” all borders of trade between these nations.