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"Shap" Talk
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May 2003 - Issue #14
In This Issue:
Customs and INS Functions Transferred to Department of Homeland Security
Treasury Department Retains Legal Authority Over Customs Revenue
Canadian Customs To Implement 24-Hour Advance Notification Rule
AES Licensing Requirements
FDA Announces Public Meeting on Bioterrorism Act
Formal Entry Now Required for Certain FDA Regulated Products
U.S. Domestic Steel Industry Hosts Steel Trade Seminar
CBP Set to Begin Next Phase of 24-Hour Rule - Enforcement Actions
Customs' Website Includes Updates to 24-Hour Rule FAQ's
Customs Posts Q&A's to Website Regarding CSI
International and Domestic Transportation Update
C-TPAT Consulting Services
"Shap" Talk Editorial
Trade Industry News
Customs and INS Functions Transferred to Department of Homeland Security
Customs’ functions, as well as certain other agencies’ functions, have been split between two bureaus: the new Bureau of Customs and Border Protection and the Bureau of Immigration and Customs Enforcement (the revised name for the Bureau of Border Security). Both bureaus report to the Directorate of Border and Transportation Security within the Department of Homeland Security.
Bureau of Customs and Border Protection, formerly U.S. Customs Service - The United States Customs Service no longer exists in name. On March 1, 2003, the border inspection functions of the U.S. Customs Service, the Immigration and Naturalization Service, and the Agriculture and Plant Health Inspection Service, along with the U.S. Border Patrol, were transferred and reorganized into one agency, the Bureau of Customs and Border Protection (BCBP or CBP).
The priority mission of the CBP is to prevent terrorists and terrorist weapons from entering the United States; the objective is to improve security at America’s borders and ports of entry, as well as extending the zone of security beyond our physical borders. The twin goals of the CBP and DHS are to increase security and to facilitate the flow of legitimate trade and travel.
Additional information regarding the Bureau of Customs and Border Protection is available at the following websites: http://www.customs.ustreas.gov/ and http://www.cbp.gov/xp/cgov/toolbox/about/mission/cbp.xml
Bureau of Immigration and Customs Enforcement, formerly Bureau of Border Security - On March 1, 2003, the agency functions of the U.S. Customs Service (USC), the Federal Protective Service (FPS), and the former Immigration and Naturalization Service (INS) were also transferred and reorganized into the Bureau of Immigration and Customs Enforcement (BICE).
BICE combines the enforcement and investigative arms of the Customs Service, the former INS, and the FPS. It will focus on the enforcement of immigration and Customs laws within the United States, the protection of specified federal buildings, and air and marine enforcement.
Additional information is available at the following website: http://www.cbp.gov/xp/cgov/enforcement/investigative_priorities/bice.xml
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Treasury Department Retains Legal Authority Over Customs’ Revenue
The Treasury Department has issued Order No. 165-09, effective February 28, 2003 (published in the Federal Register / Vol. 68, No. 44 / Thursday, March 6, 2003) stating that the Secretary of Treasury retains the same legal authority over Customs’ revenue functions that it possessed prior to the transfer of the Customs Service to the new Department of Homeland Security (DHS). The revenue authority previously delegated to the Commissioner of Customs as an official of the Department of Treasury, however, is now being delegated to the Secretary of Homeland Security.
The Treasury Department stated that the order was necessary in light of the Homeland Security Act of 2002. The order preserves the ability of the DHS to continue to perform Customs’ revenue functions. The Treasury Department also states that it is studying the proper allocation of Customs revenue authorities and is consulting with the Administration and Congress in this regard.
To view the Federal Register, Vol. 68, No. 44 / Thursday, March 6, 2003, please see the following website: http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-5359.pdf
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Canadian Customs To Implement 24-Hour Advance Notification Rule
The Canadian Minister of National Revenue announced that Canada would be implementing a 24-hour advance cargo notification rule for marine cargo importation beginning April 2004.
The 24-hour advance notification represents the time frame by which ocean carriers and freight forwarders will be required to submit data to Customs electronically before loading cargo at the foreign port. The data will be processed through automated targeting systems. Based on risk assessment, the Canadian Customs and Revenue Agency (CCRA) will identify certain containers for examination prior to loading.
The Canadian 24-Hour Rule is consistent with the U.S. 24-Hour Rule in that both are concerned with identifying high-risk cargo before it leaves a foreign port. The Canadian 24-Hour Rule will be implemented by April 2004, allowing the CCRA, carriers/freight forwarders, and importer/broker communities time to prepare their business operations and systems for implementation.
A copy of the CCRA press release is available at: http://www.ccra-adrc.gc.ca/newsroom/releases/2003/apr/cargo-e.html
Source: “Canadian Customs Announces 24-Hour Rule for Marine Cargo” from International Trade Today dated April 11, 2003.
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AES Licensing Requirements
The National Customs Brokers and Forwarders Association of America (NCBFAA) held its annual conference in March 2003. During the discussions, the Bureau of Customs and Border Protection (BCBP) advised that a licensing program would be implemented for companies filing export documentation through the Automated Export System (AES). C. Harvey Monk Jr., chief of the agency’s foreign trade division announced that the program is scheduled to be published in the Federal Register this spring; the final rule is expected in early 2004.
The intent of the licensing program is to ensure AES filer accountability. Failure to file export documentation, or intent to provide false information, is subject to fines of up to $10,000.00 or a jail term. AES filing will become mandatory for all export cargo data by the middle of the year 2004. The licensing program is scheduled to be fully operational by that time.
Proposed requirements for the program include the need for at least one licensed individual per filing location. Additionally, the license(s) will need to be renewed every five years, and the licensed individual(s) must have 40 hours of continuing education during the five-year period. The licensed individual must be at least 21 years old, a U.S. citizen, be able to provide a Social Security number, pass a background check, and pass an examination to be administered by the Bureau of Customs and Border Protection.
Sources: NCBFAA Conference, in attendance Samuel Shapiro & Company, Inc.; Untitled Article appearing in the Journal of Commerce, dated March 2003.
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FDA Announces Public Meeting on Bioterrorism Act
The Food & Drug Administration (FDA) has announced that it will hold a satellite downlink public meeting on May 7, 2003. The topics will include two proposed regulations associated with the implementation of Title III of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. Satellite viewing locations will be available free of charge.
The public meeting is intended to provide information relating to the two regulations as well as an opportunity to ask questions or to provide comment. The proposed regulation topics are Administrative Detention (Section 303 of the Bioterrorism Act) and Maintenance and Inspection of Records for Food (Section 306 of the Bioterrorism Act).
Additional information is available at the FDA website - http://www.cfsan.fda.gov/~lrd/fr030408.html or contact Louis Carson - Food and Drug Administration at (301) 436-2277.
Samuel Shapiro & Company, Inc. will be hosting an FDA Bioterrorism seminar in the months ahead. Details will follow as they become available.
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Formal Entry Now Required for Certain FDA Regulated Products
Under Operation Liberty Shield, the Food and Drug Administration (FDA) has increased surveillance activities of its food and cosmetic programs in an effort to enhance oversight and reduce security risk. As a result, the Bureau of Customs and Border Protection (BCBP) has issued an Administrative Message outlining the "formal entry" requirements, effective immediately and irrespective of value, for any products classified in the following Harmonized Tariff categories:
0401.10.00.00, 0401.20.20.00, 0401.20.40.00, 0401.30.02.00,
0401.30.05.00, 0401.30.25.00, 0401.30.42.00, 0401.30.50.00,
0401.30.75.00, 0703.20.00.10, 0703.20.00.20, 0703.20.00.90,
0704.10.20.00, 0704.10.40.00, 0704.10.60.00, 0704.20.00.00,
0704.90.20.00, 0704.90.40.20, 0704.90.40.40, 0705.11.20.00,
0705.11.40.00, 0705.19.20.00, 0705.19.40.00, 0705.21.00.00,
0705.29.00.00, 0709.10.00.00, 0709.20.10.00, 0709.20.90.00,
0709.40.20.00, 0709.40.40.00, 0709.40.60.00, 0709.70.00.00,
0709.90.30.00, 0709.90.91.00, 0712.90.40.20, 0712.90.40.40,
0904.20.20.00, 0904.20.40.00, 0904.20.60.10, 0904.20.60.20,
0904.20.73.00, 0904.20.76.00, 0904.20.80.00, 0905.00.00.00,
0906.10.00.00, 0906.20.00.00, 0907.00.00.00, 0908.10.00.00,
0908.20.20.00, 0908.30.00.00, 0909.10.00.00, 0909.20.00.00,
0909.30.00.00, 0909.40.00.00, 0909.50.00.00, 0910.10.20.00,
0910.10.40.00, 0910.20.00.00,
0910.30.00.00, 0910.40.20.00, 0910.40.30.00, 0910.40.40.00,
0910.50.00.00, 0910.91.00.00, 0910.99.20.00, 0910.99.40.00,
0910.99.50.00, 0910.99.60.00, 1207.40.00.00, 1207.50.00.00,
1207.91.00.00, 1207.99.01.90, 1211.90.40.40, 1211.90.60.00,
1211.90.90.20, 1211.90.90.31, 1211.90.90.40, 1211.90.90.50,
1211.90.90.80, 1211.90.90.90, 1212.20.00.00, 1212.99.10.00,
1212.99.90.00, 1901.10.15.00, 1901.10.30.00, 1901.10.60.00,
1901.10.75.00, 2002.90.80.50, 2005.10.00.00, 2009.11.00.20,
2009.11.00.40, 2009.11.00.60, 2009.12.25.00, 2009.12.45.00,
2009.19.00.00, 2009.21.20.00, 2009.21.40.20, 2009.21.40.40,
2009.29.00.20, 2009.29.00.40, 2009.31.10.20, 2009.31.10.40,
2009.31.20.20, 2009.31.20.40, 2009.31.40.00, 2009.31.60.20,
2009.31.60.40, 2009.31.60.60, 2009.39.10.00, 2009.39.20.00,
2009.39.60.20, 2009.39.60.40, 2009.39.60.40, 2009.39.60.60,
2009.41.20.00, 2009.41.40.20, 2009.41.40.40, 2009.49.20.00,
2009.49.40.20, 2009.49.40.40, 2009.50.00.10, 2009.50.00.90,
2009.61.00.20, 2009.61.00.40, 2009.61.00.60, 2009.69.00.40,
2009.69.00.60, 2009.71.00.10, 2009.71.00.20, 2009.71.00.90,
2009.79.00.10, 2009.79.00.20, 2009.80.20.00, 2009.80.40.00,
2009.80.60.10, 2009.80.60.20, 2009.80.60.90, 2009.80.80.31,
2009.80.80.39, 2009.90.20.00, 2009.90.40.00, 2106.90.48.00,
2106.90.52.00, 2106.90.54.00, 2106.90.99.87, 2201.10.00.00,
2201.90.00.00, 2202.10.00.20, 2202.10.00.40, 2202.10.00.60,
2202.90.30.00, 2202.90.35.00, 2202.90.36.00, 2202.90.37.00,
2204.30.00.00, 2206.00.15.00, 2206.00.90.00, 2936.90.00.00,
3304.10.00.00, 3304.20.00.00, 3304.30.00.00, 3304.91.00.10,
3304.91.00.50, 3304.99.10.00, 3304.99.50.00, 3401.30.10.00,
3401.30.50.00
Questions concerning FDA examinations should be directed to your local FDA office. Additional contacts at the headquarters level are Carl Nielsen and Joseph McCallion; they can be reached at (301) 443-6553.
If you are unsure whether or not your commodity falls within this listing, please e-mail the Shapiro Consulting Team at consulting@shapiro.com.
Sources: “Customs Administration Message 03-1298" dated April 15, 2003.
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U.S. Domestic Steel Industry Hosts Steel Trade Seminar
The United States domestic steel industry held an April 2003 Steel Identification, Classification and Trade Law Seminar in Charleston, South Carolina, which was presented to the Bureau of Customs and Border Protection and national customhouse brokers. A representative of Samuel Shapiro & Company, Inc. was in attendance. Steel trade seminars offer an opportunity for Customs and the trade community to stay current on various steel issues and to initiate discussions pertaining to legal concerns with experienced attorneys who specialize in the field.
The seminar focused primarily on the urgent need to deter illegal imports and to promote fair trade. There are now more than 200 steel antidumping and countervailing duty cases against suspect suppliers. Antidumping/countervailing duties are imposed in an effort to provide the domestic industry with a legal remedy against unfairly traded imports that injure or threaten the U.S. industry. In addition, the President has imposed increased tariff rates on certain steel commodities (via Section 201 of the Trade Act of 1974, which allows the President, Congress, or the industry itself to request protection against inexpensive/detrimental steel imports) with the intention of limiting importation of steel, to protect the U.S. industry from further decline.
The 2002 calendar year registered the weakest steel market since 1995. There is currently a world surplus of 300 million net tons of steel; the U.S. steel industry is having a difficult time surviving in this extremely competitive market. From 1998 to 2000, excess foreign steel-making capacity has averaged more than twice the level of average U.S. consumption. While the President’s Steel Program has aided price recovery, the U.S. steel industry is restructuring via mergers and acquisition discussions aimed at further consolidating the industry.
Sources: Steel Identification, Classification, and Trade Law Seminar, in attendance Samuel Shapiro & Company, Inc.
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CBP Set to Begin Next Phase of 24-Hour Rule - Enforcement Actions
The Commercial Operations Advisory Committee (COAC) of the Bureau of Customs and Border Protection (CBP) held its quarterly meeting in Washington, D.C. on April 4, 2003. A representative of Samuel Shapiro & Company, Inc. was in attendance. During the meeting, Commissioner Bonner stated that the 24-Hour Rule is having "beneficial effects and continues to increase our ability to identify risks." He added that overall compliance with the program is high and that disruptions are low. The Commissioner also announced that CBP is set to begin the next phase-enforcement of the 24-Hour Rule. This effort is intended to identify omissions and egregious inadequacies. Scheduled to begin in May 2003, CBP enforcement actions, namely issuing penalties and "Do Not Load" orders, are intended to ensure complete and timely receipt of data in order to satisfy the objectives of the program.
The 24-Hour Rule requires sea carriers to electronically transmit detailed descriptions of the contents of containers intended for U.S. entry 24 hours prior to the arrival of the vessel. The Rule also requires complete descriptions of the name and address of the consignee. Inadequate descriptions include those left blank or stating "to order" with no additional notifying party. CBP also intends to issue penalties for transmissions citing "Freight Remaining on Board" (FROB).
Source: COAC Quarterly Meeting, in attendance Samuel Shapiro & Company, Inc.
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Customs' Website Includes Updates to 24-Hour Rule FAQ's
On April 11, 2003, the Bureau of Customs and Border Protection (CBP) posted a revised set of "Frequently Asked Questions" (FAQ's) regarding the 24-Hour Advanced Cargo Manifest Rule. Customs originally posted the FAQ's in December 2002 with subsequent updates in January, February, and March of 2003. Additional updates are expected to follow.
A complete list of FAQ's is available at http://www.customs.ustreas.gov/ImageCache/cgov/content/import
/carriers/24hour_5frule/24hour_5ffaq_2edoc/v5/24hour_5ffaq.doc .
Source: "Customs Issues April 11th Version of its 24-Hour Rule FAQ" appearing in International Trade Today dated April 15, 2003.
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Customs Posts Q&A's to Website Regarding CSI
The Bureau of Customs and Border Protection (CBP) has posted to its website a series of questions and answers (Q&A's) regarding the Container Security Initiative (CSI).
The CSI program was launched by CBP to enhance the safety of imported cargo. CSI secures a vulnerable link in the chain of global trade--the oceangoing sea container. Customs advises that a proactive stance in screening sea containers prior to reaching the United States will contribute substantially to their efforts to secure U.S. borders against dangers that might be introduced through commercial traffic.
Recognizing that trade is vital to the world economy, while also accommodating the need for efficiency in global commerce, Customs has implemented a program designed to achieve a more secure maritime trade environment . A critical element in the success of this program will be the availability of advance information to perform sophisticated targeting.
Customs identified some of the "mega-ports" that send containers to the United States, and has aggressively solicited their participation in the CSI. The ports were identified based on their volume of sea container traffic destined for the U.S.; however, they are not restricted to only these locations. Risk assessments and trade analysis will play an important part in future deployments.
Initiatives by Customs to institute container security measures are underway at both domestic and participating foreign ports. "Ports that have signed declarations" and are in "various stages of implementation" include:
Hong Kong Shanghai Singapore Rotterdam Pusan Bremerhaven Tokyo Genoa Yantian Antwerp Nagoya Le Havre Hamburg La Spezia Felixstowe Algeciras Kobe Yokohama Malaysia Sweden
Additional information on the CSI program is available at the CBP website http://www.customs.ustreas.gov.
Source: "Bureau of Customs and Border Protection Posts Q&A's on CSI to its Web Site" appearing in International Trade Today dated April 4, 2003.
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International and Domestic Transportation Update
Fuel Charges:
By the end of April, most air carriers will have reduced their fuel surcharges to and from all destinations. From the euro currency zone in Europe, the rate will revert to .15 euros per kilo. From Asia, the fuel surcharge in Taiwan is up to 21 cents per kilo and in Hong Kong the rate will be going down to 16 cents per kilo. Most air export cargo carriers from the United States will charge 15 cents per kilo. Ocean Carriers have not announced any reductions at this time; there is the likelihood of a reduction if the fuel index continues to fall. Ocean carriers review their bunker fuel surcharges every 30 days.
Ocean Transportation Rates:
Carriers took major increases from Europe in April. The announced increases were $400.00 per 20’ container and $500.00 per 40’ container in the North Atlantic trade lanes. Most carriers took increases from $300.00 to $400.00. Carriers from Italy and Spain generally held their increases of $200.00 per 20’ container and $300.00 per 40’ container. Vessels from Northern Europe are continually overbooked even with the increase; it can take up to two or three weeks to obtain a booking to the East Coast. Additionally, truckers servicing the port of Valencia, Spain have announced a 15% increase in the local trucking costs.
Rates from Asia are still expected to increase significantly by May 1, 2003. It was previously reported that carriers would have increases of $500.00 per 20’ container and $ 700.00 per 40’ container. It seems as if these rates might have been underestimated, as many carriers are sticking to a general rate increase of up to $700.00 per 20’ container and $900.00 per 40’ container to East Coast ports in the United States. In addition, carriers are maintaining their announced Peak Season Surcharges effective in June of $225.00 per 20’/ $300.00 per 40’/ $340.00 per 40’ HC. The carriers are advising major U.S. importers that, if they want space on their vessels, they will have to agree to the increase. As of this writing, carriers appear to be winning this battle. Importers from Asia can expect the increases to take effect on May 1, 2003. Space availability will be the overriding issue this year from Asia, especially China.
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Shapiro Products & Services
C-TPAT Consulting Services
Customs has intensified efforts to encourage all importers to voluntarily participate in the C-TPAT program. Samuel Shapiro & Company, Inc. offers comprehensive C-TPAT assessment and consulting services. For more information, please contact compliance@shapiro.com or 1-800-695-9465, Ext. 281.
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"Shap" Talk Editorial
"Déjà Vu All Over Again" -Yogi Berra
By M. Sigmund Shapiro
When I was a lad, as W. S. Gilbert once said, I used to attend board meetings of the New York Customs Brokers’ Association (now the NCBFAA) that were normally held at Fraunces Tavern on Pearl Street. The restaurant was a stone’s throw from the Custom House on Bowling Green, so I sometimes had occasion to visit there, since it handled many functions for Customs headquarters in Washington, D.C., along with the daily paper shuffling required to clear imports and exports
When the World Trade Center was completed, Customs moved in, and the Custom House languished in disrepair. Pat Moynihan saved it from demolition, and ultimately created a Native American museum, after extensive and very authentic renovation. It is a fascinating exhibit.
As trade and automation expanded, Customs' day-to-day operations moved to JFK Airport and the New Jersey seaports, leaving the Trade Center as a “back office” operation that did not deal with the public on a daily basis.
The horrors of 9/11 virtually destroyed Customs' facilities in the Trade Center.
Just recently, Customs announced that they would move some functions back into the Bowling Green building, including interface with the trading public.
Can lunch in Fraunces Tavern be far behind?
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