10 + 2: Back On Topic

By now it is old news that Customs and Border Protection has published the interim final rule on the new Security Filing popularly known as 10+2. I'm going to assume that if you find you way to this blog you know what 10+2 is all about. If not, read this 55 page notice. So, I'm just going to post a few observations:

Regarding enforcement, Customs has said that it will show restraint during a transition period as importers and carriers implement 10+2 systems. This restraint, though, is dependent on a showing that importers are making satisfactory progress on good faith efforts to implement the requirements. This period of flexibility will last for about a year from the effective date of the rule. That means until about January 26, 2010. After that, an importer's compliance efforts can be considered as a mitigating factor in an enforcement action.

In case you are wondering, enforcement of 10+2 (technically known as Importer Security Filing, Vessel Stow Plan, and Container Status Message Requirements) will apparently rely mostly on liquidated damages claims. This means new conditions need to be added to customs bonds requiring that the principal (i.e., the importer) comply with the reporting requirements. Failure to comply might result in liquidated damages equal to the value of the merchandise. Similar requirements will be added to international carrier bonds. Violations relating to the vessel stow plan may result in liquidated damages of $50,000. Violations relating to the container status message may result in liquidated damages of $5,000 for each violation up to $100,000 per vessel arrival.

Customs has expressed a willingness to be flexible with respect to some of the required data. According to its Fact Sheet:
In lieu of a single specific response, importers may submit a range of responses for each of the following data elements: manufacturer (or supplier), ship to party, country of origin, and commodity HTSUS number. The ISF must be updated as soon as more accurate or precise data becomes available and no later than 24 hours prior to the ship's arrival at a U.S. port.

For example, questions had been raised about changes in the ship to party that might occur while the goods are in transit. So, that flexibility might be helpful.

There will also be some flexibility on the timing of reporting certain data. Again, according to the Fact Sheet:


The ISF will also need to include two data elements that must be submitted as early as possible, but no later than 24 hours prior to the ship's arrival at a U.S. port. These data elements are:

  • Container stuffing location; and
  • Consolidator
One last thing that surprised me: there were comments filed suggesting that CBP adopt a 100% screening of cargo approach in lieu of this data collection. I get that 100% cargo screening would reduce the risk of the tools of terrorism reaching the U.S. in a cargo container. I also get that the 10 + 2 proposal is intended to improve CBP's ability to target risky shipments and avoid delays for legitimate trade. What surprised me was that someone commented in favor of 100% screening. Usually when this comes up in informal conversation the context is that anyone in Congress who thinks that 100% screening is a good idea does not understand trade and that it would lead to devastating delays. I'm not certain that is true. There are pilot screening programs ongoing, so we need to see how they work. I'm just registering my surprise that someone went on the record suggesting it as an alternative.

What do you think, is more screening a better alternative to the Importer Security Filing and Additional Carrier Requirements?

Comments

Post a Comment

Popular posts from this blog

CAFC Decision in Double Invoicing Case

The Federal Circuit has issued a decision on the merits in United States v. Inn Foods, Inc.  There had been a previous decision on jurisdiction, which was followed by a trial at the Court of International Trade and then this appeal on the substance. The initial issue is whether Inn Foods' invoicing practice amounts to fraud.  Inn Foods had been receiving an invoice from growers in Mexico that had a relatively low sales prices on it.  Subsequent to entry, Inn Foods created a second invoice at something more similar to market value, retaining the original invoice number, and paid at that higher amount.   Superficially, this looks like a standard-issue double-invoicing scheme.  But, in the age of reconciliation, is it really more like a provisional pricing mechanism?  It might have been possible to make that argument had Inn Foods adjusted its entries accordingly.  It didn't and the loss of revenue was approximately $624,000.  Based on testimony and evidence indicating both knowl
Read more

Target on Finality

Image
In the last post , about the Federal Circuit’s very important decision on due process and allegations of evasion of antidumping duties, I made a snarky, offhand comment that the government believes “liquidation is magic.” That was in the context of the government arguing that Customs’ liquidation of entries mooted an appeal, thereby taking away the importer’s right to further judicial review. I said that knowing full well that I still needed to write this post summarizing Target Corp. v. United States in which Target made what I want to be a valid and righteous argument that Customs’ improper liquidation of entries at a favorable rate of antidumping duty prevents the Court of International Trade from ordering Customs to collect the legally applicable duties. But it turns out that while liquidation is an important legal step, in at least one unusual circumstance it is not sufficiently powerful to overcome the full force of an Article III court. Understanding this case requires a lot
Read more

CAFC: EAPA Process Really Does Violate Due Process

Image
Hot on the heels of my complaining about how the EAPA law and process is stacked against importers, the Court of Appeals for the Federal Circuit has issued an important decision that will have a major impact on how those cases work. If you are unfamiliar with evasion cases under the Enforce and Protect Act and how Customs and Border Protection handles them, go back and look at these two posts: Part 1 , Part 2. Royal Brush Manufacturing, Inc. v. United States , is the decision in an evasion case against Royal Brush involving pencils allegedly transshipped from China through the Philippines. Customs determined that there was evasion of an antidumping duty order based in part on evidence that was not disclosed to Royal. Specifically, Customs sent a representative to the facility in the Philippines to photograph the interior and provide a report. Customs refused to disclose all the photographs to Royal. Moreover, CBP's report concluded that the facility did not have sufficient capacit
Read more