Planes, Trains and Automobiles... well...Trucks Anyway - Relaying Cargo Data Electronically to US Customs

Having been holed up at home for days with a terrible flu, I have found many interesting, if not amusing, topics have run through my head (not to mention random dreams, which, not to worry, I will not be discussing in the blog).

One trade related topic that crossed my mind had to do with notifications to US Customs regarding cargo arriving to the U.S. It turns out that specific federal regulations exist mandating the transmission of data on incoming cargo not only when transported by vessel or airplane, but also by railroad and truck.

As I found the data transmission rules a bit curious, I've decided to share them with you below.

1) Commercial vessels (ships): US Customs must receive a declaration of a vessel's cargo 24 hours before the cargo is laden (loaded) aboard the ship at the foreign port. [19 CFR 4.7]

This rule actually seems a bit extreme to me but I recognize the idea is to catch suspect cargo before it ever gets near the coast of the U.S. Given the nature of how container ships are a series of stacked container boxes, it would be difficult to search a container while out at sea. Interestingly however, if that needed to be done, US Customs works with the US Coast Guard and together, they conduct cargo inspections out in the “territorial waters” of the U.S., which, in everyday language means, out up to 12 miles from the actual coast of the U.S.

2) Commercial air carriers (planes): Incoming airborne commercial cargo is subject to 2 different rules under 19 CFR 122.48a:

If arriving from a foreign port, then data must be received no later than 4 hours prior to the aircraft's arrival in the U.S.

If arriving from a port or place in North America, information must be received by US Customs no later than the aircraft's departure.

3) Railroad: US Customs must receive cargo data no later than 2 hours prior to the cargo's arrival at the first port of arrival in the US [19 CFR 123.91]

4) Truck: Depending on the electronic data relaying system used by the carrier, U.S. bound trucks with commercial cargo must notify US Customs no later than 30 min., or one hour, or a lesser authorized period, prior to the cargo's arrival at the first port of arrival in the U.S. [19 CFR 123.92]

Outgoing cargo is likewise subject to rules governing notification to US Customs. Under 19 CFR 192.14, irrespective of its mode of transport, transmission to US Customs of export cargo information must be made through the Automated Export System as follows:

Vessels: 24 hours prior to departure
Air Carriers: 2 hours prior to departure
Truck: 1 hour before arrival at the border
Train: 2 hours before arrival at the border

As with so many of US Customs regulations, all of its general rules have specific ones when dealing with particular types of cargo. For example, in dealing with exports of defense articles, which require certain US Dept. of State licenses, the time frames for reporting export information are stricter for all modes of transit except vessel, which remains the same. [22 CFR 123.22]

For air or truck shipments, export information must be transmitted to US Customs at least 8 hours prior to departure (as compared to 2 hours prior to departure, and 1 hour before arrival at the border, respectively).

For rail shipments, export information must be electronically filed at least 24 hours prior to departure (as compared to 2 hours before arrival at the border).


Questions or comments about notifications to US Customs for inbound or outbound cargo? Feel free to email me at clark.deanna@gmail.com

CPSC and Children's Lead Content Update

Certain types of imported children's merchandise are subject to the regulations of the Consumer Safety Product Commission (CPSC). Through its rules, it attempts to reduce risks such as choking hazards, textile flammability risks, and lead paint risks. In the case of lead paint, for example, CPSC mandates an importer certify that certain maximum allowable levels of lead are not exceeded in children's products on what is commonly known as a General Certificate of Conformity.

Another area it overseas deals with lead content in children's articles.

CPSC will soon make available its “Statement of Policy: Testing and Certification of Lead in Children’s Products.” Last week, a draft of this policy statement was circulated around the Commission for a vote to approve the current draft for publication, or to approve the draft subject to certain changes.

The Statement will provide guidance on the testing and certification of children’s products for compliance with the lead content (not paint) limits under section 101(a) of the Consumer Safety Product Improvement Act (CPSIA), Public Law 110-314. This section provides that a maximum lead limit by weight for any part of a children’s product, i.e., intended for children 12 and under, will not exceed 600 parts per million (ppm) as of February 10, 2009, 300 ppm by August 14, 2009, and 100 ppm as of August 14, 2011, if technologically feasible.

Given that the 300 ppm maximum is the current mandate, any children’s product found to exceed this limit will be considered a banned hazardous substance under the Federal Hazardous Substances Act. This means that imports in violation of this limit will be banned from entering the U.S., and domestic retailers found seeling violative merchandise will be subject to civil penalties.

To follow developments on CPSIA, go to CPSCs website.

For questions about CPSC or any importation issues, feel free to email me at clark.deanna@gmail.com

Radioactive Wooden Tables?

Yes, the attempted importation of radioactive tables made out of contaminated wood cut from a forest near the Chernobyl Nuclear Power Plant in the Ukraine was but one of the anecdotal stories shared during my recent visit to the Port of Newark. It is the second largest port in the country (if you combine the Long Beach and Los Angeles ports which come in at #1) and the largest port on the east coast of both North and South America.

Typically, 1.5 million containers (those stackable boxes on cargo ships) come through the port each year, although with the economic downturn, container traffic is down 30% this year. I went with a group of OWIT-NY members and we agreed that with all of the multiple activities occurring, many of us felt like kids out on a field trip!

Arriving at the port’s container terminals, you can’t help but notice all of the activities and in particular, all of the trucks. Hundreds of trucks come in and out of the port dropping off “stuffed” (loaded) containers, returning empty ones, and departing with those that have been “unladen” from (taken off of) a vessel.

At first glance, it seems to be a bustling city of funky looking objects including piles of chassis (the two-wheeled physical frame that a container connects to for transportation on a truck), stacks of empty containers, including refrigerated ones, also known as “reefers,” and most notably, “straddle carriers” (these giant, ridiculously tall, fast moving, wheeled contraptions that were as tall as the height of 4 containers, and which reminded me of one of the Imperial Stormtrooper “vehicles” out of the Star Wars Episode IV movie) which, among other things, takes a container and drops it onto the chassis of a truck.

Of particular interest were the risk detection devices, including the radiation detection machines in the form of an archway that all of the exiting trucks drove under as they departed the terminal. We got a personal inside look at a mobile detection unit, known as a VACIS (Vehicle and Cargo Inspection System) exam machine, and the imaging retrieved from it. It showed what was essentially an x-ray image of a container of “personal effects” which in everyday language simply means, household goods.

Once the image zoomed in to see the cargo in greater detail, we could see that there were numerous rifles inside! As US Customs put it, it was a “good call” to pull the container for scanning, and we certainly thought it was exciting that weapons had been found (as silly as that may sound!).

On a more serious note, we did learn about US Customs Cargo Security Strategy having had the Chief of Seaport Enforcement, Kevin McCabe, sharing compliance and other priority trade issues, inc. ISF/10+2 (see 9/29 blog post) and counter terrorism initiatives.

If you’re curious to learn more about those initiatives or would like to send me your comments, feel free to do so at clark.deanna@gmail.com.

Want to Protest? What to do When You Disagree With a US Customs Decision

Protesting a US Customs decision is nothing like the protesting I did in my college days. Though similar in that it is against a government entity, it typically involves the single effort of the importer making a “Protest,” as opposed to a collective effort of many.

A “Protest” is a document that is filed with US Customs (CBP Form 19) to contest a final decision made by it concerning issues like tariff classification and duty rate, country of origin marking duties, or the appraised value of an article, among others. It is made with the Port Director at the port where the goods were entered and must be done within 180 days after the final decision.

[Note: While the regulation 19 CFR §174.12 (i.e., US Customs' interpretation of a statute) still says that a Protest must be made within 90 days, the deadline has been extended to 180 days by statute (the law) in section 2103 of the Miscellaneous Trade and Technical Corrections Act of 2004, as reflected in 19 USC §1514].

Using CBP Form 19 is recommended to ensure that all applicable information, i.e., that which is required by the government regulations set out in 19 CFR Part 174, is transmitted to US Customs. Importantly, make sure the reason for your disagreement is clearly stated together with an explanation of the nature of the claim.

On the form in Section V is an area to request that further review be taken by US Customs in the event you want to appeal the Port Director’s decision on the Protest. While most appeals are filed after an unfavorable decision, in the case of a Customs Protest, this request is made prior to a final decision on the Protest. It is also done on the Protest form itself. You therefore, may want to apply for further review so that you have preserved your ability to appeal an unfavorable decision. You can always withdraw your request for further review at a later time.

While directions are included on the form, they can be confusing, and information such as that all of the boxes in Section V must be checked “no” or further review will not be granted, is not stated in the instructions (and of course, the “no” answer must be true and correct!).

4 copies of the Protest must be filed and a fifth should be sent along if you would like Customs to return a copy to you with the protest number and date of filing noted.

Questions or comments? Feel free to email me at clark.deanna@gmail.com

Risky Business? FTC Enforcement of its Identity Theft Program Starts Nov. 1, 2009

Prior to practicing International Trade Law, had I been asked about international trade and which government agency is responsible for oversight of imports, I probably would have identified US Customs and no others. It turns out multiple agencies have jurisdiction over varying types of imports, just as various rules imposed on business' by agencies other than US Customs can impact a businesses operations. The Federal Trade Commission's (FTC) Red Flags Rule (Rule) is one such rule.

Thanks to today’s technologically saavy commercial environment, information exchanges and business transactions - whether domestic or international - now take only a fraction of time that they once did.  These modern conveniences have not come without consequence however, and just as the ease of conducting business has increased, so has the threat of identity theft.  So much so, that the Internal Revenue Service (IRS), FTC, and now even the U.S. federal courts have all implemented protocols in an effort to reduce these risks.

With enforcement of the Rule beginning on November 1, 2009, the FTC has mandated that certain businesses and organizations implement a written identity theft program in order to catch “red flags” of this risk in a company’s day-to-day operations.

US Customs has long required certain vetting and identity confirming procedures of freight forwarders, customs brokers, and other related trade partners, and through the implementation of Customs-Trade Partnership Against Terrorism, commonly known as “C-TPAT,” it has taken its identity confirmation efforts to an even greater level.  The benefit to having met US Customs' compliance mandates is that much of what is required under the Rule has already been largely addressed by many of you in the trade community.

The Rule mandates that each “financial institution” and “creditor” that has a “covered account” implement, or incorporate into its already existing compliance program, an identity theft program that would enable businesses to catch “red flags” of potential risks of identify theft.

While freight forwarders and customs brokers do not typically fall within the definition of a “financial institution,” many will qualify under the FTC’s definition of a “creditor.” A creditor is defined as a business or organization that “regularly defer[s] payment for goods or services or provides goods or services and bill customers later." [16 CFR Part 681.2(b)(1)]

Therefore, if you provide services for which you later bill and receive payment for after the services have been performed, you are subject to the Rule.  This is because you will be considered to have extended credit for having done the work without receiving payment upfront.  While the FTC is considering making certain exemptions from this rule, e.g. with law firms, none have yet been made with respect to freight forwarders or customs brokers, nor is it likely that it will occur.

A “covered account” is defined as an account that a creditor “offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks.” [16 CFR Part 681.2(b)(3)(ii)]

Examples the FTC gives of covered accounts include that of a sole proprietorship, a small business account, or a single transaction consumer account, as they may be vulnerable to identity theft as a result of actions such as the ability to remotely access an account via the internet or telephone.

Implementation of an Identity Theft Prevention Program

Any prevention program must be meaningful and explicitly state what targeted measures will be taken to make it more difficult to steal an identity. Training your staff to sight red flags and identify new threats, along with mechanisms for dealing with these risks, should be specified.  Periodic review of the prevention program must be clear, and the audit or review of procedures by an identity theft expert may be considered on a incremental basis.

The Rule gives a four part framework for designing an identity theft prevention program.  It requires the creation of, or updates to an existing, identity theft prevention program to

1.Identify Red Flags in Your Business: Include realistic ways to spot “red flags” in your business’ day-to-day operations through the implementation of reasonable policies and procedures, whether it comes in the form of a warning from a credit company, a suspicious document, or suspicious personal identifying information;

2.Detect Red Flags in Day-to-Day Operations: Program should actually detect “red flags” as identified by your business, be it for new or existing accounts;

3.Prevent and Mitigate Identity Theft: Describe appropriate actions to be undertaken upon discovery or detection of a “red flag”; and,

4.Update Your Program: Describe how a re-evaluation of the identity theft program will be periodically undertaken to account for potential new risks.

The program must be designed to prevent, detect, and mitigate identity theft in connection with the opening of new accounts and the operation of existing ones. Your program must be appropriate to the size and complexity of your business or organization and the nature and scope of its activities.

--Fighting Fraud with the Red Flags Rule – A How to Guide for Business (2009)

Once the prevention program is in place, additional requirements, include:

1. Approval of the program and a description of its incorporation into the daily operations of your business, by the Board of Directors of your business, or alternatively, an appropriate senior level employee;

2. A statement regarding the responsible party for the implementation and administration of the identify theft prevention program;

3. Staff training, as appropriate; and,

4. Contractor’s compliance monitoring, as appropriate.

Many of you may be unaware of how to implement this Rule into your existing operational practices. Feel free to email me with your questions or comments if you require any assistance at clark.deanna@gmail.com.

For more information on the Red Flags Rule, go to the FTC's website.

You can also find a useful article on this Rule here.