During last week’s ACI customs conference held in Washington
DC, I had the pleasure of presenting with two seasoned trade professionals, Ken
Weigel of Alston and Bird LLP and Chris Colford of Mitsui & Co. (USA), on
advanced topics in classification and compliance considerations.
In addition to nuances between the classification of a part
that involved the same construction but had a different way of being installed,
myself and Chris focused on other governmental agency (“OGA”) requirements, and
the importance of understanding the impact that a product’s classification
could have on packaging, labeling, and shipping requirements, as well as other
necessary declarations, whether upon importing into the US or when importing
into another country.
Key takeaways of reoccurring themes across panels centered
on the following.
1.
Emphasizing
the importance of compliance to upper management.
Trade compliance is complicated and the
costs involved can make it a subject that management may want to run away from. No surprise. Taking the explanation beyond the mere
necessity to do so however, and showing the value that the investment in a
compliance program brings to a company in whatever form it may, e.g., in terms
of risk mitigation, reputation building, duty savings benefits etc., is
key. If your company does not already
have a Compliance Steering Committee, key organizational partners on this team include the Finance, Trade Counsel and the Transportation/Logistics
roles.
2.
Communication
across the organization.
This is important for not only for compliance purposes but
also for cost savings. I’ll give you two
examples.
Example 1. Is
a low duty rate better than a free one?
Obviously it’s not, which is why where a company’s invested in the set
up of importing under a free trade agreement ("FTA"), it’s imperative that the
Purchasing Dept. be aware of this effort so that they don’t opt for buying a
cheaper product from a country other than the one (or ones) eligible under the chosen FTA as the resulting duty liability could end up being greater
than the cost savings of sourcing from that other country.
Example 2. The
Marketing Dept. wants to highlight every feature in a big way, which is a good
thing as that is what they are tasked to do.
The problem is, if what they are promoting about the product is not
actually truthful, the company can run into some issues of misleading
advertising claims, which could lead to penalties and fines, but it can also
lead to unnecessary spending in order to change the already-paid-for marketing
that needs to be redone. Bottom line - make sure your departments are communicating
with one another.
3.
Conduct
internal and vendor audits.
From sampling methods to managing expectations, the
importance of reviewing the efficacy of internal processes and reexamining
vendor performance to ensure compliance with contractual terms was highlighted
across the conference panels.
Recommendations included to:
a)
Put expectations into the service provider’s
contract and to conduct an annual validation of them
b)
Conduct a day+ long seminar to train them
c)
Request necessary “proofs” on areas where
questions could come back for verification by your business, e.g., certain export documents or a
NAFTA certificate
Key takeaways aside, there were some other areas of interest
which included the much talked about Trans-Pacific Partnership Agreement or
“TPP,” and the questionable likelihood that it will actually come to fruition
this year given that we are in an election year (and no one wants to have to
vote on it), along with the usage of the Centers for Excellence and Expertise (CEE) and the notice that all importers will be tied one of the CEEs across the country by the end of 2016 based on the type
of goods imported, at least that is what they are aiming for
according to Susan Dalpe of CBP.
Lastly worth noting, while not all of the efforts for usage
of the “single window” for import/export communications with the government are
on track for timely implementation, one that is very much on track is that of
the transition from the Automated Export System (AES) for export filings to
that of US Customs Automated Commercial Environment (ACE).
Questions/comments? Post below or email me at clark.deanna@gmail.com
