COPPERSMITH GLOBAL LOGISTICS
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July 2009

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Greetings!

We are into the second half of the ISF delayed compliance period and many importers have yet to start filing their ISF.  For those that have, they will tell you there has been a learning curve and some are still grappling with timely and complete filings.  See the article below on penalties and mitigation guidelines. 

 Contact your Coppersmith import analyst to get started now!

In addition to your security filing, you should be considering how secure you are with your freight arriving in one piece free from theft or damage while in transit.  See our featured article on a recent General Average claim by the steamship company and how Coppersmith can quote you very competetive rates on cargo insurance and help protect your financial interest.

 Finally, in this edition we cover OGA Alphabet Soup.  In today"s environment for safety of the products we use both domestically and globally, agencies responsible for product safety are feeling pressure from the public and Congress to better enforce laws and regulations already on the books, or be faced with new legislation to enact laws with more teeth for compliance and penalties.  Review some of the current information and link to websites for more details.
ISF - Importer Security Filing
Half way through the delayed compliance period. 
 As previously reported, CBP has been working through the details and processing of the ISF's.  They're encouraging everyone to get on board during the 1 year delayed compliance period, which ends January 26, 2010.
 
ISF Mitigation Guidelines Published 7/ 17
There are four situations that may initiate the issuance of liquidated damages: the importers' failure to file an ISF as required by law; a late submission; an inaccurate submission; and the failure to withdraw a filing. Where law enforcement goals are clearly compromised, such as smuggling attempts, fraudulent activities, terrorist activities, and other actions clearly contrary to law, importers can expect to receive no consideration of circumstances for mitigation.
Failure to File an ISF:
 CBP indicates that they may choose one of several paths for those shipments where there is a complete failure to file an ISF: the issuance of a Do Not Load (DNL) message to the carrier at the foreign port of lading; withholding permission issued to the carrier to unload the subject goods at the first U.S. port of arrival; delay in issuing permission to unload at the first U.S. port of arrival; issuance of a seizure notification; withholding Customs release of the goods allowing the goods to move to General Order (G.O.); and the issuance of a liquidated damages case.
An Inaccurate Submission of Information on an ISF:
A liquidated damages case will be issued in the amount of $5,000. 
In this area CBP has clearly attempted to allay fears by indicating that they will take into consideration how and from whom the ISF importer obtained the information for use in the ISF and the importer's ability to commercially verify the information received. CBP will continue to allow parties to present information that they believe to be reasonably true at the time of filing, and will continue to be flexible as long as the importer is able to demonstrate that it has taken measures to verify the information to the extent commercially possible. Additionally, CBP acknowledges that some data is beyond the control of the importer, such as rolled bookings and vessel diversions. In those cases CBP will take these factors into account when issuing liquidated damages cases.

If there are successive filings of the ISF data to perfect or correct the data transmitted, CBP will consider only the filing closest to the allowed filing timeframe, which is typically the last ISF filed, for the purposes of issuance of liquidated damages. This clearly indicates that there will not be a per transmission penalty issuance. CBP also acknowledges that data may change somewhat during the transaction itself, and that the correction process is designed to allow for reporting of changed information prior to arrival in the U.S.
A Late Submission of an ISF:
A liquidated damages case will be issued in the amount of $5,000. 
As CBP expected, the phase-in period has demonstrated several commercial challenges in obtaining all of the information required in a timely manner. CBP indicates that they will be fair in evaluating the timeliness of the filing and will continue to work with those parties who have participated in the process to date. The filing of provisional data is always an option for importers and by only utilizing the filing closest to the timeline of filing for the issuance of liquidated damages.  CBP encourages all importers to file data based on that which is commercially available to meet the timelines.
 
The Failure to Withdraw a Filing:  A liquidated damages case will be issued in the amount of $5,000. CBP has indicated that it is important that importers and filers withdraw an ISF when it is known to be invalid. This may be a result of the cancellation of an order, the discovery of a significant change in the information necessitating a new ISF filing, a complete change in routing, or for other commercial reasons.
 
Mitigation Amounts: There is a possibility of a total of $10,000 in liquidated damages per ISF filing. These may be mitigated based on several factors. For the first violation, CBP may cancel the liquidated damages case for the payment of $1,000 - $2,000. For second and subsequent violations, CBP may cancel the liquidated damages case for the payment of $2,500.
 
Mitigation Factors:
 CBP will outline six mitigation factors for use in determining cancellation of liquidated damages cases. A summary is provided below:
  • Evidence of progress in implementing ISF compliance during the phase-in period.
  • The number of ISFs compared with the number of violations.
  • C-TPAT Tier 3 and Tier 2 importers will receive consideration of up to 50 percent mitigation for violations.
  • The importer has demonstrated that remedial actions have been taken to address the circumstances surrounding the violation.
  • Inaccurate filings due to circumstances beyond the importer's control, such as vessel diversions and rolling bookings completely due to carrier actions.
  • Receiving incorrect information from another party in the supply chain. If this information is found to be incorrect at a date later than allowed under the correction timeline. Under certain circumstances the liquidated damages may be canceled without payment.
Aggravating Factors: 
There are four aggravating factors that will be outlined in the guidelines. A      summary is provided below:
  • The lack of cooperation with CBP.
  • Smuggling attempts and other actions contrary to law in association with the shipment.
  • Multiple errors on one ISF.
  • A rising error rate calculated over all ISFs.
Bond Guidelines Due 
Bond Guidelines are still being worked on internally at CBP and are expected to be issued a few weeks after the mitigation guidelines. While the mitigation guidelines do spell out a likely limit of liability in that there is a possible total of $10,000 in liquidated damages that may be issued, the Single Transaction Bond process and the ISF stand alone Continuous Bond limit of liability is expected to be fully outlined in the Bond Guidelines.
 
OGA Alphabet Soup
Report on Other Government Agency requirements for Import and Export
USDA-APHIS-Lacey Act Update:  
Oct. 1, 2009-March 31, 2010 (phase III): in addition to phase II, HTS headings 4402 (wood charcoal), 4405 (wood wool [excelsior]), 4410 (particle board), 4411 (fiberboard of wood), 4412 (plywood, veneered panels), 4413 (densified wood), 4414 (wooden frames), 4415 (packing cases, boxes, crates, drums), 4416 (casks, barrels, vats, tubs), 4419 (tableware and kitchenware), 4420 (wood marquetry; caskets; statuettes), 4701 (mechanical wood pulp), 4702 (chemical wood pulp, dissolving), 4703 (chemical wood pulp, sulfate), 4704 (chemical wood pulp, sulfite), and 4705 (combination mechanical and chemical).  Lacey Act Information
 
 CPSC - Consumer Product Safety Commission
On Friday, January 30, 2008, The Consumer Product Safety Commission ("CPSC") announced a decision to stay the enforcement of certain provisions of the Consumer Product Safety Improvement Act of 2008 ("CPSIA"), Public Law 110-314.T
The "CPSIA" established a new General Certificate of Conformity requirement for all products that are subject to an existing standard, ban, etc., manufactured on or after November 12, 2008. The certifications were required by manufacturers (including importers) of products subject to an applicable consumer product safety rule.This stay will remain in effect until February 10, 2010.
This stay does not alter or postpone the requirement that all products meet applicable consumer product safety rules as defined in the CPSA or similar rules, bans, standards, or regulations under any other Act enforced by the Commission. The stay alters only the testing and certification required by subsection 14(a) of the CPSIA.
What's New With CPSIA

Census July 2009 Newsletter
Includes Info on CBP AES Penalties, Export Compliance with EAR, Etc.
 The Census Bureau has posted to its Web site the July 2009 issue of its Automated Export System (AES) Newsletter.
CENSUS NEWSLETTER

FDA NEWS On July 15, 2009, officials from the Food and Drug Administration provided a status update on two separate but linked systems, PREDICT (Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting) and ITACS (Import Trade Auxiliary Communications System).
 
PREDICT
will replace the admissibility screening portion of FDA's legacy OASIS system for processing import entries. It is a rule-based expert system to assess information from multiple sources and determine which shipments carry the highest risk.
PREDICT will improve the "hit rate" for exams and samples by (partial list):
 
         Scoring each entry line on the basis of risk factors and surveillance requirements
         Increasing the number of automated, real-time, risk-based "may proceed" decisions, thereby giving entry reviewers more time to manually evaluate higher-risk lines
         For those lines not given an automated "may proceed," providing reviewers with the line scores and the reasons for those scores
 
Poor Data Quality or Missing Data Will Increase Risk Score
 
FDA officials emphasized that when PREDICT comes online, the quality of entry data will be very important. Poor data quality or missing data will increase the risk scores for subsequent entry lines.  Higher risk scores increase the likelihood of examination and/or sampling by FDA.

"Click" on the link below and see a summary of what FDA looks for when reviewing entries.  It is critical that you and your suppliers provide us this information to submit to FDA or there will be an increased likelihood of examinations and/or samplings under this new system.
Issue: 3
In This Issue
ISF
OGA Alphabet Soup
CARGO INSURANCE

 

CARGO INSURANCE
WHY? 
 The following letter is not that uncommon.  In addition to suffering a loss due to General Average if your cargo is damaged or stolen while intransit the SS Co., Airline and/or Trucker has limited liability and you as the cargo owner are required to prove the loss or damage was caused directly by the carrier.  You may also have to settle for pennies on the dollar.
If you are insured under Coppersmith's Open Cargo Policy this is not neccesary. 
 
CALL TODAY FOR A QUOTE
 

UPDATE: INCIDENT INVOLVING MOL PROSPERITY
Dear APL Customer:
We write to update you on the incident involving the MOL Prosperity, which is carrying your cargo BL # XXXXXXXXXXX.
The ship's operator, Mitsui O.S.K. Lines (MOL), has informed us that while the situation is under control, firefighting procedures are ongoing. As part of these efforts cargo hold 7 has been flooded.
Your freight was not located in or close to cargo hold 7 but it will be subject to significant delays as the owners of the MOL Prosperity, Shoei Kisen Kaisha Ltd, have declared General Average. General Average is a long established, internationally-recognized legal procedure where the vessel owners, charterers and cargo owners are required to share the cost of "any extraordinary sacrifice or expenditure . . . voluntarily and reasonably made or incurred in time of peril to preserve the ship and cargo."
Therefore, we strongly recommend you inform your freight insurance provider that your cargo is subject to a General Average declaration.
 

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"This newsletter is for clients of Coppersmith Global Logistics and is for informational purposes only.  Topics contained herein are taken from numerous sources and are edited to provide an overview of the subject and should not be solely relied upon for implementation or compliance purposes.  Where possible we provide sources for more detailed information."

 
 
 
 

EPA

TSCA - Toxic Substance Control Act
 
 
FIFRA -  Federal Insecticide, Fungicide, and Rodenticide Act
 
 
 
 
 

DEA - Office Of Diversion Control

Import/Export
 
 
 
 

Fish & Wildlife Service

Import/Export
 
 
 
 
 
 

House Bill Would Triple Harbor Maintenance Tax to Fund Freight Infrastructure Projects
Legislation introduced recently in the House would nearly triple the Harbor Maintenance Tax in an effort to generate about $2.7 billion a year for freight infrastructure improvement projects. Rep. Laura Richardson, D-Calif., said the Making Opportunity via Efficient and More Effective National Transportation (MOVEMENT) Act of 2009 (H.R. 2355) would fund projects to "improve the movement of goods, mitigate environmental damage caused by the movement of goods, and enhance the security of transported goods." She said that after meetings with fellow lawmakers as well as business leaders and stakeholders she decided that increasing the HMT, rather than imposing a new fee on containerized cargo, would be "the most equitable way to generate and distribute revenue" for these projects.

H.R. 2355 would increase the HMT from 0.125% to 0.4375% of the value of commercial cargo entering through any seaport or inland port. Commercial cargo entering the customs territory of the U.S. other than by port use, following foreign port use, would be assessed a 0.3125% HMT. Shipments originated from Canada or Mexico would not be subject to the tax.

Maggie Smith Ranney
Coppersmith Global Logistics