10 + 2

Presented by:

Merit Tremper

•10 + 2 is intended to improve the ability of Customs and Border Protection (“CBP”)to identify high-risk shipments to the United States.

 •10 + 2 will require importers to electronically submit to CBP , in addition to

AMS, (ten elements),by the importer (Importer Security Filings--“ISF”)24 hours before the cargo is laden on board a vessel.

 •The carrier must provide 2 elements:

a) a stow plan and b) Container Status Messages recording the location of containers in the shipping cycle.

 •2 of the 10 elements are directly NVOCC relevant:

a) Where(location) was the container stuffed? and; b) Who stuffed or arranged for stuffing the container?

What is 10 + 2 ?

WHAT ARE THE 10 ELEMENTS?

(1) Manufacturer (or supplier) name and address. (2) Seller name and address. Name and address of the last known entity by whom the goods are sold or if not sold, the name and address of the owner of the goods must be provided.  (3) Buyer name and address.Name and address of the last known entity to whom the goods are sold or if the goods are not purchased, the name and address of the owner. (4) Ship to name and address. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody. (5) Container stuffing location.Name and address(es) of the physical location(s) where the goods were stuffed into the container.

WHAT ARE THE 10 ELEMENTS?(continued)

(6) Consolidator (stuffer) name and address. Name and address of the party who stuffed the container or arranged for the stuffing of the container. (7) Importer of record number. Internal Revenue Service (IRS) number.

(8) Consignee number(s).Internal Revenue Service (IRS) number.

(9) Country of origin.Country of manufacture, production, or growth of the article.

(10) Commodity HTSUS number.Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS) to the 6 digit level.

WHO CAN SUBMIT THE ISF (TEN ELEMENTS) ?

•The importer would be able to submit it’s ISF directly if they obtain a bond.

•The importers authorized agent as long as the agent has the appropriate bonds.

•ISF to be accomplished on the Automated Broker Interface (“ABI”) or the Automated Manifest System (“AMS”).

•ABI Is the current Customs Broker platform; AMS is a platform for NVOCC’s or certified AMS NVOCC’s.

PENALTIES IN THE 10+2 ENVIRONMENT

•CBP is proposing to amend 19CFR113.64.where by the principal(NVOCC) agrees to comply with the proposed Importer Security Filing (IFS) requirements if the principal elects to provide the filings on behalf of the importer,as defined in the regulations. The Principal and Surety (jointly and severally) would agree to pay liquidated damages equal to the value of the merchandise involved in the act of default. •If CBP prevails on the penalty provision, the indemnification agreements become more important.

WHAT PARTY IS RESPONSIBLE FOR ISF ?

No matter who submits the ISF, the importer remains responsible to CBP for the accurate and timely filing.

WHO IS THE IMPORTER FOR NON-TRADITONAL SHIPMENTS?

•For traditional shipments, Importers are defined as the party causing goods to arrive within the limits of a port in the United States. •For foreign cargo remaining on board (FROB), the Importer is construed as the carrier (VOCC). •For immediate exportation (IE) in-bond shipments the Importer is the party filing the documentation with CBP. •For transportation and exportation (T&E) in-bond shipments, the Importer is the party filing the documentation with CBP.•For goods to be delivered to a Foreign Trade Zone (FTZ), the Importer is the party filing the documentation with CBP.

Client interaction •If you haven’t yet, begin tomorrow •Remember: Each supply chain is different

Information Technology Issues •Engage with your vendor •Record formats, data exchanges, 6-digit or 10-digit

HTS, to scrunch or not to scrunch, ABI or AMS, with entry data or without

•When do we start testing

Training •How do we prepare our employees?

ISF: Getting Ready

Antitrust Alert from the NCBFAA

ISF: The Process

What do you need to act for the Importer?•Bond and POA

Where do you get the information? How do you get the information? When do you file?

•ASAP - You must be available 24/7/366 How do you file?

•ABI and/or AMS •With 3461 and/or 7501

Liability issues Currently, you file and CBP says “acknowledged” •You say, “OK to load” What about CBP taking some of the liability?

ISF: The Brokers Sell

Confidentiality •Mfr, Seller, Shipper, Consignee, EIN, SS#, IRS#, invoice details Broker bound legally – others aren’t

Filing party must make correction Consistency

•Do you really think CBP won’t compare the ISF to the Entry and Summary! With penalties like these, wouldn’t you rather rely on

someone who knows CBP! Reporting

Brokers are a constant, and we know what our clients need

Preparing for 10+2 in Real Life

Brokers & Forwarders

Your clients will be turning to you – will you be ready?

Will you require new systems and programming and maybe a new network of support

This is a double-edge sword

Source of new business and clients

Can lose business and clients if you cannot support

Things that Brokers and Forwarders need to know!

Do I understand the proposed rule?

Do my employees understand the proposed rule

Preparing for the change

Major IT developments – or outsource this effort?

How’s your network? Are there overseas offices and agents who can assist?

Contractual and business issues:

New or amended powers of attorney?

Revised contracts

Pricing for services

Final Thoughts

This is not going away. In the near future 10+2 will take effect. We are projecting early 2009!