Month: June 2013

FDA and Food Products Refused Entry into Other Countries

The Food and Drug Administration (FDA) has issued a final rule on May 29, 2103 on the Prior Notice (PN) requirement of submitting the name of any country that has refused entry to a food product prior to importation to the United States. The final rule is identical to the interim rule isseud on May 5, 2011. The law that mandates this data element, the Food Safety Modernization Act (FSMA), was signed into law on January 4, 2011. Although the FDA has largely been lenient of this requirement the past two years, it is expected that the agency would ramp up enforcement with the publication of its final rule. 

This additional information helps the FDA make better informed decisions in managing potential risks of imported food into the country. This information along with other Prior Notice elements provided to the FDA in advance of the arrival of goods is used to review, evaluate and asses the information, and determine whether to inspect the imported food. Failure to comply may result in refusal of admission to your food import into the country.
In order to comply with this requirement, Great World suggests that our customers indicate on their shipping documents whether or not an article has been refused entry by any country. The following statements or something similar could be used:
  • Shipment has not been refused by any other country prior to importation into the United States.
  • Shipment was refused by (Name of Country) prior to importation into the United States.
Although the FDA does not require the importer to provide the reason the entry product was refused by another country, the FDA may pursue the reason for refusal. An option to consider would be to provide an explanation on your commercial invoice or on an accompanying document to every shipment.
Great World thanks you for your time. If you have any questions, please do not hesitate to contact us.
 
Sources:

  
 
-John Christopher Jimenez

 Customs Entry Writer

Great World dba GWL

218 Littlefield Ave., South San Francisco, CA 94080

Dir +1 650-762-9668 | Tel 650-873-9050 x1024 | Fax 650-873-7029 | johnj@gwlcorp.com (gchat)

Freight Insurance?

MOL Comfort

MOL Comfort

The recent accident involving the MOL Comfort is a reminder to the importing community about the risks involved in international shipping. The picture you are seeing above really is that of a vessel splitting in two. If you don’t believe it, take a look at the following pictures:

MOL Comfort: Front Half

MOL Comfort: Front Half

MOL Comfort: Rear Half

MOL Comfort: Rear Half

 

 

 

 

 

 

 

 

 

The vessel was sailing in the Indian Ocean when it encountered inclement weather. We still don’t have details explaining how the vessel split in two. At this moment, MOL has contracted with a salvage company to try to rescue as much of the cargo and hull as possible. MOL has already confirmed that some containers may have been lost or damaged, although they indicate that currently, a majority of the containers are still on the vessel.

While accidents like these are rare, they do happen. The question for those in the trade community is whether or not it is worthwhile to purchase freight insurance. While those in the trade community understand that freight insurance protects against potential damage, loss, or theft of cargo, many are unaware that freight insurance can also cover against General Average claims.

In cases like those involving the MOL Comfort, the carrier will almost certainly declare General Average. In such cases, those with cargo interest on board the vessel are required to help pay for losses and damages to the vessel. This can end up being a double whammy as not only does the owner of the cargo have potential losses related to damaged / lost / late delivery of cargo, but they have to pay the carrier to help make up for the damage / loss of the vessel.

If you don’t have freight insurance to cover your cargo, it is worth discussing with whomever helps arrange your transportation. Freight insurance may or may not make sense for different members of the trade community. Everyone has to make their own separate evaluation.

-Jimmy Ting

jimmyting@gwlcorp.com

tel: 650-873-9050 x1019

 

 

 

 

More Information on Customs Enforcement of ISF Penalty Provisions

I was at a Customs seminar this morning. One of the issues discussed with our local members of Customs was ISF penalties and the confusion regarding how Customs plans on issuing penalties.
Apparently Customs will take a two pronged approach with penalties. The first step will be taken at the local port level. Customs officers at the local port level will initiate penalties. The second step will be taken on a national level. Once the penalty is issued, Customs at a national level will review the penalty before formally sending it out.
What does this practically mean? My personal take at this moment is that there may be variation from port to port on when penalties are issued. As I mentioned in my previous post about ISF enforcement, there are a few different possibilities for an ISF to be considered non-compliant.
Option 1.) The ISF may never have been filed.
Option 2.) The ISF may have been filed late. Note there are many possible reasons this could have happened.
Option 3.) The ISF may have been filed incorrectly (AMS bill of lading number being the top culprit). Most ISF filers usually catch the incorrectly filed ISF’s, but mistakes still happen.
If penalties are initiated at a port level, I could definitely see some ports taking a tougher, hard-line approach than another ports. Here in San Francisco, the local Trade Program Manager for U.S. Customs has indicated to us that they will go after extreme offenders. Importers who have large numbers of shipments with ISF non-compliance. I would hope that other ports will follow this thought process. I think the reality is that most large importers are the ones who are already compliant. The non-compliant importers tend to be small, one-time or first-time importers. Whether or not Customs at a national level will be able create uniformity in the assessments of ISF penalities is difficult to predict.
Regardless, the warning is now out there. Importers and ISF filers need to get their ISF filings straightened out right away.
-Jimmy Ting
jimmyting@gwlcorp.com
tel: 650-873-9050 x 1019

GSP set to expire on July 31, 2013

We are six weeks away from GSP expiration (July 31, 2013). It seems like it was just yesterday (2011) that we went through this process and here we are again. The reality is that the debate to renew GSP is extremely complicated. Congress has its fair share of legislation to pass. The likelihood of GSP renewal before expiration seems slim at this moment.

In previous years when GSP has been allowed to expire, importers temporarily paid duty at the normal Column 1 General rate during the period between expiration and renewal. Once GSP was renewed, duties were refunded (without interest). There is no guarantee that the policy of refunding duty will continue. In fact CBP explicitly does not commit to refunding of duties.

The current debate to renew GSP is complicated by a number of trade related issues.

  • GSP benefits are skewed towards countries that many politicians feel no longer need the benefits. Top six beneficiaries in 2011 (based on GSP duty-free import value) are the following countries. You can make your own assessment of whether you think these countries should still qualify as developing and require the aid of U.S. duty benefits. (Source: USITC Trade Dataweb, http://dataweb.usitc.gov, and Harmonized Tariff Schedule, 2012.)
    • India
    • Thailand
    • Brazil
    • Indonesia
    • South Africa
    • Philippines
  • For some of these countries (India in particular), some U.S. Congressman argue that their lack of respect of intellectual property rights as well as their protectionist policies (discriminating against foreign goods) should disqualify them from GSP benefits.
  • In the case of some of the more developed countries on the GSP list, there is an argument to remove them from the list in favor of separate Free Trade Agreements. The advantage of separate FTA’s with individual or regions of countries is that it would allow for an exchange of benefits between the United States and the foreign country, theoretically benefiting U.S. exporters as well as U.S. importers. I would caution that FTA’s take an extremely long time to get signed and approved (often bogged down by domestic as well as foreign politics).
  • As we saw with the previous GSP renewal in 2011, there may be domestic manufacturers adversely affected by GSP who will fight against the renewal or at the least for for minimization of benefits.

The Congressional Research Service published a GSP report on January 9, 2013 to help prepare Congress for the debate on renewal. It is worth reading to get a general understanding of the background of the debate as well as the options that Congress is reviewing.

-Jimmy Ting

Great World

jimmyting@great-world.com

tel: 650-873-9050 ext.1019

Customs to Begin Issuing Penalties for ISF Non-Compliance???

I’m putting question marks on the title of this posting as CBP’s two sentence posting on the CSMS messaging systems has left many in the importing community waiting for details. Here is a copy of the CBP message in entirety:

In order to achieve the most compliance with the least disruption to the trade and to domestic port operations, CBP has been applying a measured and commonsense approach to Importer Security Filing (ISF or 10+2) enforcement. On July 9, 2013 CBP will begin full enforcement of ISF, and will start issuing liquidated damages against ISF importers and carriers for ISF non-compliance.

Please visit http://www.cbp.gov/xp/cgov/trade/cargo_security/carriers/security_filing for more information and send questions to security_filing_general@cbp.dhs.gov.

If you actually visit the CBP website above, you will not currently find any new additional information about ISF filings. The open ended nature of the CBP message is leaving the importing community with number of unanswered questions.

1.) Is CBP going to focus on serial offenders who regularly and consistently fail to file ISF or are they going after each and every ISF non-compliance issue? How will they handle regular importers who might happen to have a late filing once every 100 shipments?

2.) Is CBP going to focus penalties on non-filing OR are they also going to be concerned with late filing of ISF?

3.) How is CBP going to handle possible clerical errors? How is CBP going to handle ISF’s that were filed on time, but with incorrect AMS matching of bills of lading?

Until these questions are answered, the importing community must assume the worst. That every possible instance of ISF non-compliance is subject to penalties. Here are some steps that I would recommend for the importing community.

1.) Importers need to make certain of who is the party responsible for making sure that the ISF is filed on time and correctly for each shipment. There could be multiple parties who maintain partial responsibility. For example, the freight forwarder may be responsible for getting ISF information to the importer in a timely and correct manner. The importer may be responsible for sending this information to the Customs Broker. 

2.) The importing community must make sure they keep records of just when the ISF information are sent over to the party responsible for the ISF filing.

3.) The importing community must make sure that the ISF information they receive is accurate. The #1 leading cause of ISF discrepancy that we see is a bad/incorrect AMS bill of lading number. When we receive an AMS bill of lading number that is not on file, there are two possible reasons that the number is not on file:

  • Either the bill of lading number is incorrect (bad or missing number). OR
  • The AMS filer (carrier or NVOCC) has not yet filed the bill of lading with AMS.

Whenever the ISF filer received a “bill not on file” message, the filer cannot assume that the bill of lading number they used was either correct or incorrect. It is entirely possible that they used the correct number, but the AMS filer just hasn’t completed their AMS filing yet. The ISF filing party must double-check with whomever gave them the ISF information to make sure that the number is accurate and be vigilant about each ISF filing until they receive the “bill on file” message.

Customs may have intentionally left their message vague and open-ended in order to reserve the right to penalize for any ISF non-compliance. Based on the number of messages and phone calls I have received from the importing community about this issue, I would hope that Customs will soon send out a follow up message clarifying how they intend to penalize importers.

Stay tuned. I will send updates when I receive them.

-Jimmy Ting

Great World

jimmyting@great-world.com

t: 650-873-9050 x1019