September 2003 - Issue #18
In This Issue:
FDA Progress Report - Security of Food Supply
C-TPAT and CSI Expansion Update
Single Entry Bond Required for ADD/CVD Duties of 5% or Greater
Vietnam Textile Visa Requirements
EU's Proposed Advanced Electronic Notification of Import/Export Data
Export Enforcement - Lists to be Checked by Exporters
Steel Imports - Tariff Rate Quota Update
Proposed Manifest Confidentiality Rule Withdrawn by Customs
Transportation Update
Shapiro's Ocean LCL Consolidation Service
Shapiro's Insurance Services
Trade Industry News
FDA Progress Report - Security of Food Supply
On July 23, 2003, the Food and Drug Administration (FDA) described its current strategies in fighting terrorist threats to foods in its report entitled Ensuring the Safety and Security of the Nation’s Food Supply. It also announced that $5 million in funding would be available to support research that focuses on reducing possible threats to the U.S. food chain.
The primary strategy is to drastically increase the number of inspections of imported foods by more than 500%. According to the FDA, about 20% of all imported goods in the U.S. are food and food products -- this represents a total of over 8 million food shipments from over 200,000 different manufacturers each year. Due to the increasing number of examinations, the FDA is increasing its staff by placing an additional 300 employees at U.S. ports of entry and has consequently exceeded its year-end goal of 48,000 food import examinations by 14,000. The FDA is currently present at 90 ports of entry and has increased the number of inspections by more than five times since 2001.
The FDA noted on its report that, in order to achieve maximum safety and security of imported food products, it would focus on a 10-point food security program. The program focuses on the following areas (not all inclusive):
- Import Strategic Plan & OASIS: FDA’s Import Strategic Plan (ISP) focuses on analyzing information derived from various sources, such as foreign and domestic inspectional operations, in order to assess and address the risk associated with imported foods. Its ultimate goal is to ensure public health and safety by reducing the chance that unsafe food products will enter into the U.S. market. In addition, the FDA is developing new enhancements to the Operational Administrative System for Import Support (OASIS) with the purpose of performing real-time screening to help identify inspection resources.
- Bio-terrorism Act regulations: The FDA issued four major rules that included the registration of food facilities, prior notice of imported food shipments, administrative detention, and records of establishment and maintenance.
- Bio-terrorism Act regulations: The FDA issued four major rules that included the registration of food facilities, prior notice of imported food shipments, administrative detention, and records of establishment and maintenance
- Industry guidance and preventative measures: The FDA has issued new guidance documents which focus on measures that companies are able to take in order to prevent or reduce the risk of terrorist actions towards the food market. The guidance documents address food producers, processors, transporters, importers, retail food establishments, fluid milk processors, and the cosmetics industry.
- Vulnerability assessment: Under the Operational Risk Management (ORM) method, the FDA is able to evaluate the possible consequences of product-agent scenarios due to potential tampering, criminal, or terrorist activity.
On January 6, 2004, USDA declared notice of Extraordinary Emergency since it was concluded that the State of Washington might be incapable of taking appropriate actions to quarantine and dispose of animals that may be exposed or infected with BSE. The notice of Extraordinary Emergency allows the Secretary of Agriculture to take certain actions to prevent the dissemination of BSE.
Sources: “FDA Issues Progress Report on Steps Taken to Ensure Safety and Security of Food Supply” appearing in International Trade Today dated August 5, 2003 and “FDA Says Import Exams Up Sharply This Year” appearing in Sandler, Travis, & Rosenberg's WorldTrade/Interactive dated July 25, 2003.
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C-TPAT and CSI Expansion Update
With the purpose of measuring its effectiveness and overall achievement, the General Accounting Office (GAO) has issued a report analyzing the Bureau of Customs and Border Protection’s (CBP) execution of the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) programs. The CBP rapidly developed CSI and C-TPAT in order to strengthen supply chains and reduce the vulnerability of trade carriers to terrorist activities.
Although both CSI and C-TPAT programs were designed fairly quickly to immediately respond to terrorist threats, the CBP received strong support and participation from the trade community. During the first year, more than 1,700 companies agreed to participate in the C-TPAT program; fifteen governments allowed the CBP to place personnel at 24 ports for the CSI program.
The current challenge involves managing the development of these programs, considering the increasing importance of protecting the international economy and trade. The CBP projects a speedy continuation of expansion of CSI and C-TPAT to additional countries and companies, in conjunction with other C-TPAT program phases, such as validations. In order to support the expansion, the CSI budget will increase from $4.3 million to more than $61 million for 2004, while the C-TPAT staff will grow from 10 to greater than 160 employees by the end of next year.
The GAO made recommendations to the CBP in the areas of personnel, achievement measures, and overall strategy to ensure the programs’ long-term success:
- Personnel: As the CBP hires additional staff, it must establish a plan to manage the personnel in order to achieve its goals;
- Measures: The CBP has not created a method to measure the programs’ achievements and effectiveness, and therefore, must focus on the development of performance measures;
- Strategy: Because both programs were designed and implemented in a swift fashion, the CBP failed to focus on long-term goals. For example, the CBP does not have a current plan to allow it to establish accountability for $73 million in projected expenses for 2004.
- Our Consulting Team can provide you with assistance in becoming a certified C-TPAT partner. For more information on how we can help you, please contact our Consulting Team at consulting@shapiro.com.
Source: “GAO Reports on Expansion of CSI and C-TPAT Container Security Programs” appearing in International Trade Today dated August 5, 2003.
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Single Entry Bond Required for ADD/CVD Duties of 5% or Greater
The Bureau of Customs and Border Protection (CBP) has issued an administrative message to remind all field offices of the need for a single entry bond (SEB) on entry summaries when the antidumping/countervailing (ADD/CVD) duty meets or exceeds a rate of 5%.
Customs explains that they will accept the importer’s continuous bond as insurance for the normal entry requirements, but will not accept the duty liability established by the ADD/CVD merchandise. The SEB is a protection in addition to the importer’s continuous bond and serves to provide adequate coverage for ADD/CVD duties in those instances where the Department of Commerce instructions allow for “bonding.” Customs also states that they have no jurisdiction to waive the requirement for a single transaction bond when the ADD/CVD rate meets or exceeds 5%.
Questions regarding the requirement for SEBs may be directed to Ms. Christine Furgason at (202) 927-2293, or to our Compliance Team at compliance@shapiro.com.
Source: Bureau of Customs and Border Protection (CBP) Administrative Message 03-1859 dated July 25, 2003.
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Vietnam Textile Visa Requirements
The governments of the United States and the Socialist Republic of Vietnam agreed on July 17, 2003 to establish a new Export Visa Arrangement for certain cotton, wool, and man-made fiber textiles and textile products subject to quota limits.
The Committee for the Implementation of Textile Agreements (CITA) has announced that effective August 11, 2003, a visa will be required for the entry of textiles and apparel produced or manufactured in Vietnam. The CITA has directed the Bureau of Customs and Border Protection to prohibit entry of goods into the territory of the United States for which the government of Vietnam has not issued an appropriate export visa.
The CITA notice, including a copy of the visa stamp and highlights of Vietnam’s visa arrangement, can be reviewed at http://otexa.ita.doc.gov/fr2002/vietvis.htm.
Sources: Bureau of Customs and Border Protection (CBP) Administrative Message 03-1902 dated 7/31/03; Federal Register / Vol. 68, No. 146 / dated Wednesday, July 30, 2003, pages 44748-5.
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EU's Proposed Advance Electronic Notification of Import/Export Date
The European Commission (EC) is proposing to simplify administration and strengthen security at its external borders. The European Union (EU) is fully aware that traded goods can sometimes be dangerous, posing a threat to the health and well being of European consumers. The EC advises that these considerations must be integrated into the daily routine of Customs authorities, without impeding the flow of goods crossing its external borders. The Commission's communication sets out its plans to strengthen the role of Customs.
Customs' enhanced role in managing security at the EU's external borders is the keystone of a new EC communication and proposal to amend the EU Customs Code. The Commission has proffered another communication, setting out an action plan for a thorough revision of Customs procedures with two goals: radical simplification and modernization via the adoption of electronic transmission systems. These are the first stages of a process that, over time, will provide the EU public with more effective protection from dangerous goods coming into the EU; it will also serve to promote trade.
The proposal requires traders to provide Customs authorities with information on goods before they are imported into or exported from the European Union. This information would take the form of an electronic summary declaration. It would be used as a basis for selecting goods for reviews prior to arrival at the border, thus enabling shipments to cross more quickly when they do arrive. In regard to the requirements it imposes, this measure is similar to the United State's 24-hour rule (Canada is set to follow suit, soon), but this proposal can be implemented in a very flexible way so that it responds to business's needs. Details will follow in the provisions for implementing the Customs Code.
For more in depth information on this proposal, please refer to Europa: The European Community On-Line web site at http://europa.eu.int/index_en.htm#
The corresponding documents are:
EC Press Release (dated 07/24/03) available at: http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/03/1100|0|RAPID&lg=EN&display=
EC proposal for regulation amending Community Customs Code available at:http://europa.eu.int/comm/taxation_customs/EN_ACTE-FINAL.pdf
EC Communication on role of customs in integrated management of external borders (security for goods) available at:http://europa.eu.int/comm/taxation_customs/EN-final.pdf
EC Communication relating to simple and paperless environment available at:http://europa.eu.int/comm/taxation_customs/5289-FINAL-EN.pdf
Sources: “EC Proposes Advance Electronic Submission of Information for Imports and Exports, Etc. ” appearing in International Trade Today dated August 8, 2003; Europa: The European Community On-Line website at http://europa.eu.int/index_en.htm#
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Export Enforcement - Lists to be Checked by Exporters
Each government agency is responsible for maintaining and updating its respective directory of dubious entities. Following is a list of links to several directories to be consulted in order to avoid business transactions with unauthorized/subversive parties. Companies, entities, and persons included in the directories are sanctioned by the U.S. government and may not export goods from the United States or receive exported goods from the United States. Exporters are responsible for ensuring that all export transactions are properly authorized.
Exporters are advised to check the Federal Register publication and each agency's web site routinely for changes to these lists. Export sanctions, generated by the appropriate agency, are published in the Federal Register, and are the official source of information on unauthorized parties.
With the threat of increased terrorism incidents around the world, exporters need to be confident that they are not dealing with any person or entity registered on the following lists. If you believe you have information concerning an illegal export, call the Office of Export Enforcement at 1-800-424-2980. All information will remain strictly confidential.
Sources: "Blocked, Denied, Entity and Debarred Persons Lists" http://www.customs.gov/xp/cgov/export/persons_list/ appearing on Customs website; "About Export Enforcement -Lists to be Checked" http://www.bxa.doc.gov/complianceandenforcement/index.htm#ltc, appearing on the Bureau of Industry and Security website.
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Steel Imports - Tariff Rate Quota Update
The Bureau of Customs and Border Protection has posted to its website an updated list of steel commodities that are excluded from steel products subject to tariff rate quotas. All previous notices have now been consolidated into one grouping. The changes are highlighted in bold font. The list also provides the following additional items:
- reporting instructions
- countries that are exempt from the program
- entry into or transfer out of foreign trade zones
- countervailing and antidumping duties
- claiming retroactive benefits.
Once tariff rate quota levels have been reached, importers are allowed to continue importing steel products subject to the quota, but at a higher rate of duty. The updated list can be reviewed at http://www.cbp.gov/ImageCache/cgov/content/import/textiles/qbt/qbt2003/2003_2d543_2edoc/v1/2003_2d543.doc
Sources: QBT Notice 2003-543 "Updated Listing of all exclusions subject to a tariff rate quota provided under the Steel 20", posted to CBP website dated August 8, 2003; "CBP Issues New Updated List of Al Section 201 Steel Exclusions Subject to a TRQ", appearing in International Trade Today dated August 13, 2003.
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Proposed Manifest Confidentiality Rule Withdrawn by Customs
The Bureau of Customs and Border Protection has announced the withdraw of its proposed rule that would have allowed third party service providers to file cargo manifest confidentiality requests provided that they were authorized to do so by their clients.
The shipper's cargo manifest data is a matter of public record afforded under the Tariff Act of 1930. Last year's implementation of the 24-Hour Rule has since made additional data elements available to the public. This concerns many importers.
The 24-Hour Rule requires carriers to transmit cargo manifest data to Customs in the United States prior to loading the containers onto vessels docked in foreign ports. The advanced notification allows Customs to reduce terrorist threats by prescreening cargo for weapons and contraband in advance of their arrival at U.S. borders.
Under current Customs regulations, only the importer, consignee, authorized employee, attorney, or official of the importer or consignee is allowed to file a confidentiality request to keep pertinent data from public disclosure. The proposed rule, had it been enacted, would have provided third party service providers, which include non-vessel operating common carriers (NVOCC's) and vessel carriers, with the authority to request that the data remain confidential.
Customs' decision to withdraw its proposal was based on the lack of consensus within the trade community regarding the value of the information, as well as the administrative burden the proposal would have caused Customs and U.S. importers.
Sources: "CBP Withdraws Proposed Rule to Allow Additional Parties to File Biennial Certifications Requesting Confidentiality for Importer's Vessel Cargo Manifest Information" appearing in International Trade Today dated August 15, 2003; “Customs Withdraws Proposed Manifest Confidentiality Rule” appearing in The Journal of Commerce On-Line, dated August 13, 2003.
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Transportation Update
Import
The bunker surcharge from Mediterranean ports will increase from $128.00 per TEU to $176.00 per TEU on September 6, 2003. The previous reduction was short-lived.
Volume from Asian ports remained strong during July and August. Vessels are still sailing at near 100% capacity. Increased strings of vessels from Asia to the East Coast have helped alleviate a space problem, as of this writing.
Ocean carriers from Northern Europe are positioning themselves for increases in October. Messages indicate that carriers will increase rates by $400.00 per 20’ container and $500.00 per 40’ container. It remains to be seen if the marketplace will accept the full increase. Capacity has been reduced in the North Atlantic trade lanes, heightening demand.
Air carriers from Europe have announced increases of approximately 4% for October. Airfreight rates from Asia have begun their annual spike. Rates jumped nearly 16% in mid-August. Rates are expected to continue to climb as the peak season gets into full swing.
Export
Airfreight carrier rates have continued to remain low, due to space availability to most European and Asian markets. Rates are especially competitive on passenger aircraft moving from Atlanta and Dulles International Airport. The pending legislation regarding screening of all cargo on passenger planes could pose a problem in the future. Ocean freight rates have remained stable. Carriers continue to discuss the possibility of raising rates in the fall.
International Transportation News
The proposed German Highway Toll on domestic and foreign trucks over twelve tons has been postponed until November 2003. The German government will apply a fourteen cents per mile charge on domestic truck traffic. This will raise transportation costs for trucks operating in Germany by as much as 15%. The government is trying to force more cargo off of the autobahn and onto the rail or barge systems.
Europe has suffered through a major heat wave and dry spell this summer. This heat wave has reduced water levels to record lows on rivers, dramatically impacting barge traffic services. Barge service providers cannot operate at full cargo capacity. Carriers are adding a Low Water Surcharge to barge shipments on the Rhine and Elbe Rivers.
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Shapiro Products & Services
Shapiro's Ocean LCL Consolidation Services
In early June 2003, Samuel Shapiro & Company, Inc. and its partner in Hong Kong, Hong Kong Data Express, began a direct less-than-container-load (LCL) consolidation service from Hong Kong to Baltimore. Our present program utilizes Hyundai & NYK service via Long Beach, with a transit time from Hong Kong to Baltimore of 21 days. The cut-off day is Wednesday and vessels sail on Sunday. We are also accepting cargo from Southern China’s Guangdong Province. Cargo is received in Shenzen and sent in bond directly to our Hong Kong CFS Station.
This service will help accelerate the arrival of LCL cargo into the Mid-Atlantic region. Normally, LCL cargo into Baltimore arrives in bond from New York. Due to congestion and customs delays in New York, cargo can take one week or more to arrive in Baltimore. Our consolidated service cargo, once it arrives in Baltimore, is available at Superior Transfer. Cargo is usually available at the warehouse within one to two days after arrival. We are, in turn, sending cargo in bond to Philadelphia within 2 days of availability in Baltimore.
In mid-July 2003, Shapiro began an LCL consolidation service from Italy to Baltimore with its partner in Italy, M.P. International. All cargo is received in Milan and sails weekly from La Spezia to Baltimore on Mediterranean Shipping Company vessels. Service is direct with a transit time of 16 days. This is the only direct LCL service into Baltimore from Italy. (Most consolidations from Italy arrive in New York and containers are broken down there and then moved in bond to Baltimore, Philadelphia, and Boston. Cargo can take from 7 to 14 days to travel from New York to Baltimore.) Our consolidation is a great way to serve clients in the Mid-Atlantic region.
Our consolidation service is a great alternative if your cargo is destined to Maryland, all points in Pennsylvania, Southern NJ, Delaware, Virginia, West Virginia and Eastern Ohio.
For more information on our consolidation services, please contact our Transportation Team at Marketing@shapiro.com.
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Shapiro's Insurance Services
How familiar are you with the risks associated with transporting cargo? Why not test your knowledge? Ask yourself these important questions:
•Do you know that insurance is not provided in standard transportation costs?
•Do you know where your obligations begin in relation to insurance coverage?
•Do you know that if an overseas party provides insurance, you may only be receiving limited or minimal coverage?
•Do you know that carriers limit their liability in the event of a loss? In most instances, the limited liability amounts will not cover the value of the cargo. They will only pay $500 per package or customary freight unit if shipping via ocean. They will only pay $20 per kilo (actual weight) if shipping via air.
If you answered NO to one or more of these questions, you are in danger of taking a financial loss.
Why put yourself in this position? Samuel Shapiro & Company, Inc. is available to assist with all of your insurance needs. We stress the importance of acquiring appropriate insurance coverage for your merchandise because we understand the risks involved in transporting cargo.
We can assess your needs and assure that you are purchasing the proper amount of coverage in order to alleviate these kinds of risks. We offer competitive, door-to-door, all-risk coverage throughout the world. We pride ourselves on outstanding customer service; we also offer “value-added” services to save our customers time and money.
Based on the Incoterm/Terms of Sale utilized for your transaction, we will advise where your risks and/or obligations begin. We purchase large volumes of insurance, allowing us to offer competitive rates. We work with a transportation insurance broker; therefore we are often able to insure high-risk commodities. If there were to be a claim, it would be filed and processed in the United States. It is much easier to communicate claim information within the U.S. than it is to report to and negotiate with an overseas party.
For more information on the insurance services that we provide, please contact us at info@shapiro.com or call 1-800-695-9465, extension 221.
