Shap Talk 04 - July, 2002

"Shap" Talk

July 2002 - Issue #4

In This Issue:

Senate Passes Trade Act of 2002
Importer Self-Assessment (ISA) Program
Bureau of Export Administration (BXA) is Renamed and Refocused
West Coast Labor Unrest Looms Large
Public Health Security and Bioterrorism Preparedness and Response Act of 2002
Shapiro NVOCC Update

Trade Industry News

Senate Passes Trade Act of 2002

The United States Senate second session of the 107th Congress has passed its version of the House of Representatives bill H.R. 3009, known as the Trade Act of 2002, on May 23, 2002. Highlights of the bill include reinstatement of the Generalized System of Preferences (GSP) program, a proposal to “reinstate and enhance certain provisions” of the Andean Trade Preference Act (ATPA) as well as a proposal to extend the expiration of Customs user fees.

The legislation would reinstate the GSP program for non-African Growth and Opportunity Act (non-AGOA) beneficiary countries, which provides duty-free treatment of certain commodities from countries with GSP beneficiary status, through December 31, 2006. The GSP-non-AGOA program expired last September 30, 2001. The proposal would reinstate the program retroactively, thus making any duties paid after September 30, 2001 eligible for refund. The bill requires that the request for refund be made within 180 days from the date of enactment of the bill.

The GSP-AGOA program was not rescinded last year and has continued to remain in effect without change.

The Trade Act of 2002 would also “prohibit the President from designating any country” that has not taken action to support the prevention of terrorism as eligible for the GSP program. Other amendments to the GSP statutes include a new definition of worker rights, which includes the ban “on the worst forms of child labor and [discrimination]".

Scheduled to expire September 30, 2003, the bill would extend the expiration date of Customs user fees as set forth in the Consolidated Omnibus Budget Reconciliation Act of 1985 through December 31, 2010. These fees include the merchandise processing fee (MPF) and harbor maintenance fee (HMF), among others.

The House and Senate are expected to resolve the differences between the two versions of the bill over the summer.

Source: "Details of Senate-Passed Trade Act of 2002 (Part II – GSP and Customs User Fee Provisions)" Broker Power, Inc., International Trade Today, Ref: 02061810, dated June 18, 2002.

Importer Self-Assessment (ISA) Program

On June 17, 2002, U.S. Customs announced the launch of a new compliance program called the Importer Self-Assessment (ISA) program. The ISA program is a partnership between U.S. Customs and importers to improve trade compliance. Interested and eligible importers may participate in the program on a voluntary basis. ISA is built on trust and recognizes importers who are willing to assume responsibility for self-assessment in exchange for less Customs oversight.

The benefits of participation include training, guidance and consultation by Customs, if requested, as well as fewer Customs examinations.

To be eligible for ISA, the importer must be a resident importer of the United States, must have two years of importing experience previous to the date of application, and must be a member of the Customs-Trade Partnership Against Terrorism (C-TPAT) program.

A detailed explanation of the ISA program including an ISA Overview, the ISA Handbook, a list of Frequently Asked Questions, Points of Contact and complete application instructions are available on the Customs website at http://www.customs.treas.gov/impoexpo/impoexpo.htm Included in the ISA Handbook is a copy of the ISA Memorandum of Understanding, referred to as the MOU, which appears in appendix C, and a copy of the ISA Questionnaire, which appears in appendix D.

The MOU outlines the responsibilities of the importer for participation in the program. Customs will outline their expectations of the importer and conduct a risk assessment of the importer to determine whether an on-site consultation and review of the company’s internal controls are necessary. The consultation will provide assistance and training as well as determine if the applicant is ready to assume the responsibilities of self-evaluation.

The ISA Questionnaire is used by the importer to provide Customs with detailed information relating to the internal controls of the company. The questionnaire asks if controls and procedures have been implemented in specific areas of concern. If controls have not been implemented, the importer is asked whether they have plans to implement and if so to provide a projected target date.

Importers are encouraged to review the section of the handbook entitled “Guidance for Developing Internal Controls”, in order to get a greater understanding of the control requirements recommended by Customs.

Samuel Shapiro & Company, Inc offers consulting services to assist importers with the assessment, development and implementation of a qualified compliance program. Please call 1.800.695.9465 x 226 for details.

Bureau of Export Administration (BXA) is Renamed & Refocused

The Commerce Department's Bureau of Export Administration has been renamed Bureau of Industry and Security (BIS) to more accurately reflect the agency’s current scope of responsibility.

The organization's mission includes export licensing and enforcement, defense trade advocacy, and critical infrastructure protection. The main responsibility continues to be to monitor technology exports that have potential military uses. Additionally, it is the lead Commerce Department agency for homeland security and critical infrastructure protection.

Shapiro remains committed to working closely with BIS and other government agencies to uphold its homeland security efforts. Shapiro has recently added filters to its automation system to automatically check against BIS’ Denied Parties List and other government agency lists to ensure that none of its customers are unknowingly doing business with parties that represent a threat to U.S. security and infrastructure.

West Coast Labor Unrest Looms Large

Prudent importers and exporters are hoping for the best but bracing for the worst as the July 1 deadline nears for the West Coast’s International Longshore and Warehouse Union (ILWU) contract. Most importers and exporters surveyed do not expect that a new contract will be signed by the July 1 deadline. Major importers and exporters that would be affected by costly work slowdowns at west coast ports are urging waterfront employers to continue their negotiations past July 1, even if longshoremen choose to engage in costly work slowdowns as has occurred in past negotiation periods.

As peak season for imports of back-to-school and Christmas merchandise nears, many importers have made full use of all-water services from Asia that transit the Panama Canal and call directly at east coast ports to avoid their cargo backing up at west coast ports. Many retailers have established distribution centers on the east coast in recent years so that they can avoid west coast congestion.

The ILWU and the Pacific Maritime Association began negotiations on May 13, but over one month later, very little progress has been reported. Demands include enhanced technology to increase productivity and a change in outdated work rules. Shippers and brokers are hoping that the existing contract will be extended until a new agreement is signed so that employers can respond more effectively to the work slowdowns.

Public Health Security and Bioterrorism Preparedness and Response Act of 2002

To improve the ability of the United States to prevent, prepare for, and respond to bioterrorism and other public health emergencies H.R. 3448 was signed into public law No: 107-188 by President Bush on June 12, 2002. For the importing community, this means the Food and Drug Administration, under Title III of this bill to protect the food supply and the drug supply entering the United States, will effect a number of new requirements. At this time, Food and Drug officials report they have no concrete requirements prepared. FDA has eighteen months to develop the manner in which these new requirements will be implemented. We have listed below many of the new requirements that will affect the importing community. We encourage all importers to view the bill in its entirety at http://thomas.loc.gov by placing H.R. 3448 as the search.

The Act serves to protect the safety and security of the Food and Drug supply. Specifically,

It gives high priority to increasing the number of inspections for the purpose of enabling the Secretary to inspect food offered for import at ports of entry into the United States, with the greatest priority given to inspections to detect the intentional adulteration of food.
It permits an officer or qualified employee of the Food and Drug Administration to order the temporary detention (in a secured facility) of any article of food that is found during an inspection, examination, or investigation if the officer or qualified employee has credible evidence or information indicating that such article presents a threat of serious adverse health consequences or death to humans or animals, but only if the Secretary or an official designated by the Secretary approves the order.

Such a detention could be for a reasonable period (not to exceed 20 days), unless a longer period (not to exceed 30 days) is necessary, to enable the HHS Secretary to institute specified actions regarding that food.

Any person entitled to be claimant for this food if it were seized would be able to appeal such a detention order.
It provides for the debarment of importers for repeated or serious food import violations.
It directs the Secretary by regulation to require that any facility (domestic and foreign) engaged in manufacturing, processing, packing, or holding food for consumption in the United States be registered with the Secretary.
If the facility were not registered, that food would be held at the port of entry in a secure facility (as appropriate) and would be withheld from delivery to the importer, owner, or consignee until the foreign facility is so registered.
If the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals, it permits the Secretary of HHS, (Health and Human Services) to have access to and copy all records relating to such article that are needed to assist the Secretary in determining whether the food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals.
It also authorizes HHS to issue regulations requiring such persons to establish and maintain, for not more than two years, such records as are needed for inspection to allow HHS to identify the immediate previous sources of the food and immediate subsequent recipients of food, including its packaging.
It requires food importers to give the Secretary specified prior notice (including specified information about the source of the food) of the importation of any food for the purpose of enabling the food to be inspected. HHS will determine the advance notification period. The HHS regulations require that the below information be provided by a specified period of time in advance of the time of the importation of the food, or the offering of the food for import, which would be no less than the minimum amount of time necessary for the HHS to receive, review and appropriately respond to such notification and not more than five days.
Prior notice for the article of food includes the:
Manufacturer and shipper of the article;
Grower of the article (if known within the specified advance period of time that this information is required to be provided - see below);
Country in which the article originates;
Country from which the article is shipped; and
Anticipated port of entry for the article.

The Act provides that food imports for which information is not provided be refused admission. Specifically,

It requires any food imported or offered for import without the submission of the above information to be refused admission into the U.S. and to be held at the port of entry in a secure facility (as appropriate). Additionally, it would not allow such food to be delivered to the importer, owner, or consignee until the required information is submitted to the HHS and the HHS examines the information and determines that it is in accordance with these submission requirements.
It permits the Secretary to require the owner or consignee of food refused admission by FDA into the United States, but not ordered to be destroyed by them, to affix to the container of the food a label that clearly and conspicuously bears the statement: UNITED STATES: REFUSED ENTRY.
It prohibits an importer from port shopping with respect to food that has previously been denied entry.
If the Secretary has credible evidence or information indicating that a shipment of imported food presents a threat of serious adverse health consequences or death to humans or animals, it requires the Secretary to provide notice regarding such threat to the appropriate States.

To protect the drug supply, it amends the Federal Food, Drug, and Cosmetic Act (FFDCA) to mandate annual registration, through electronic means, of foreign manufacturers and importers engaged in the import of drug and device products into United States. It also mandates a chain of possession identification (manufacturer, processor, packer, distributor, and other possessors) for those firms that seek to import components of drugs, devices, food additives, color additives, or dietary supplements for further processing and export. As well, it requires certificates of analysis for components containing any chemical substance or biological substance intended for export.

Under the General Provisions Relating to Upgrade of Agricultural Security, it authorizes the Secretary of Agriculture to utilize existing authorities to give high priority to enhancing and expanding the capacity of the Animal and Plant Health Inspection Service to conduct specified inspection activities.

It authorizes the Secretary to utilize existing authorities to give high priority to enhancing and expanding the capacity of the Food Safety Inspection Service to conduct food safety inspection activities.

This law also authorizes the imposition of penalties for violations of certain food provisions. Shapiro will advise once the method for reporting these requirements are made public by the various Government Agencies. We wanted to advise our importers of the information that will be required and what action will be taken in order to prepare for these new regulations.

Detailed information pertaining to this bill can be found at http://thomas.loc.gov.

Source: "Congress Passes Bioterrorism Bill (Part I – New Requirements for Imported Food Shipments)" Broker Power, Inc., International Trade Today, Ref.02060305, dated June 3, 2002

Shapiro Products & Services

Shapiro NVOCC Update

Shapiro’s NVOCC is continuing to expand its scope and options of service by signing extremely competitive FCL contracts with top tier carriers such as Hapag Lloyd, K-Line, and American President Lines (APL) for both export and import services.

Using our Hapag Lloyd contract, Samuel Shapiro & Company, Inc. can provide lower rates with shorter transit times. For example, our customers in the Southeast area can enjoy an eight-day transit time from Charleston to Hamburg and a nine-day transit time from Savannah to Genoa. Our customers in the Mid-Atlantic area can enjoy direct service from Baltimore to all major North European & Scandinavian ports.

Our contracts have also expanded our options to the Far East, with Mid-Atlantic area shippers now enjoying several options for shipping direct all water service to major Asian ports direct from Baltimore (no more barge to Norfolk!), with lower costs and better transit times for Shapiro’s NVOCC customers.

Shapiro’s NVOCC is a viable option for shippers who may not need forwarding services but are looking for moderately priced transportation options. Please contact the export department in Baltimore at 1-800-695-9465 for details.