This seminar was given to the International Trade Club of Chicago on November 18, 2011. It focuses on the role of the Customs broker in the international supply chain. The topics cover the mechanics of a Customs clearance, the different security and functional considerations of importing and features a slideshow of images of cargo insurance issues.

1. The Basics of Importing:
Customs Documents and
Procedures
Scott Alan Case, LCB
Vice President, Sales and Marketing
The Camelot Company
November 18, 2011

2. Customs Entry Processes and
Procedures
• Show the process involved in moving
goods to the U.S.A. and clearing Customs
• Detail the parties involved
• Explain the mechanism of a Customs
clearance
• Customs programs for importers
• Advanced Manifest Rules

3. The Importing Process

4. The Importer
• The party who purchases goods for
importation into a country and/or
who stands responsible for the
processing and correctness of the
customs entry and payment of
customs duty, if any.

5. Importer of Record vs.
Ultimate Consignee
• Importer of record is responsible for the
duties, taxes and fees associated with the import
transaction.
• The ultimate consignee is the recipient of the
goods and must be named.
• Why do we need this?
September 11th

6. The Shipping Process

7. The Exporter
• In general, a person or company
who sells or ships/delivers goods
to a buyer or recipient in another
country.

8. The Shipping Process

9. The Freight Forwarder
• A person or company
which arranges for the
transportation of goods as
agent on behalf of a
shipper.

10. The Shipping Process

11. The Customs Broker
• A person or firm who acts as an agent of
an importer (and sometimes an exporter)
for purposes of arranging customs
clearance, payment (or refund) of
duty, and/or in-bond transit or export of
imported goods.

12. Customs and Border Protection
• Branch of government under the control
of the Department of Homeland Security
responsible for collecting, protecting and
defending the revenue of the United
States government and securing our
borders while facilitating legitimate trade.

13. Customs Task:
• In addition to collecting, protecting and
defending the revenue of the United
States government, Customs also collects
STATISTICS.
• As the gatekeeper for imports, Customs
collects the trade statistics which the
government uses in negotiations with
foreign countries and to set tariff rates and
quotas for imported merchandise.

14. Customs Task:
• Customs also must balance the
importance of keeping trade flowing with
keeping out illegal drugs and
contraband, protecting trademarks and
copyrights and preventing smuggling.

15. Customs therefore plays the roles of:
• Police officer
• Historian
• Gatekeeper

16. The Shipping Process

17. Power of Attorney
• A power of attorney is the document which allows a
Customs broker to sign Customs forms on an importer’s
behalf. These documents include entries, entry
summaries, add slips, etc.
• A power of attorney can be formal or informal, but it does
require the signature of an officer of the corporation who
is authorized to legally bind the corporation.
• Brokers required to validate POA’s by Customs
nowadays, expect more requests for supporting
documentation.

18. Documents for Customs
clearance:
Transport document (bill of lading, air
waybill, truck pro)
Invoice
Packing list
Special documents if applicable

19. Invoice requires:
Description of goods that can be
understood by an examining Customs
officer
Quantity of goods shipped
Cost per unit
Total value
Assists (if any)

20. Packing List requires:
How are the goods packed
What is where
Helps Customs in the event of an
examination to find what they want to look
at

21. Participating Government
Agencies
Fish & Wildlife (www.fws.gov)
Food & Drug Administration (www.fda.gov)
Department of Transportation (www.dot.gov)
Environmental Protection Agency (www.epa.gov)
Agriculture Department (www.aphis.gov)
Consumer Product Safety Commission
(www.cpsc.gov)

22. Bond
• A guarantee for payment of duties and
taxes, usually underwritten by a surety.
There are two types of bonds. A
continuous bond is good for one calendar
year from the date of filing. A single
transaction bond is for a single entry.

23. Surety
• An insurance company who will
assume liability for non-payment
of duties or penalties in the event
an importer defaults to Customs
or another government agency.
• It’s a parachute for Customs!

24. Continuous bond
• A continuous bond is good for one calendar year
from the date of acceptance by Customs. This
bond is written for ten percent of the anticipated
Customs duties which will be paid in one
calendar year, with a minimum amount of
$50,000. This bond can also be used at any
port of entry in the United States by a Customs
broker holding a valid power of attorney.
• Is your bond sufficient?

25. Single entry bond
• A single entry bond is written on a per shipment
basis and the amount of the bond varies based
on the type of entry.
– The bond for general merchandise is written for the
value of the goods, plus the duty.
– For quota merchandise and merchandise subject to
other government agency approval, the bond is
written for three times the value of the merchandise.
• Single entry bonds for ISF + entry can get
expensive.

26. Cargo Insurance
• Do you have it? You might not get full recovery without
it. Rates vary by mode of transport and commodity.
• Why you need it: carriers limit their liability.
– Ocean (COGSA): $500/package
– Trucker: $0.50/lb, $50/shipment maximum
– Airline: 19 Special drawing rights (+/- $20/kg)
• Written for CIF + 10% to insure coverage for freight and
goods. Optional duty coverage available.
• If importing high values per conveyance or
shipment, check with insurer for vessel or shipment
limitations.

27. Reviewing the invoice
• Broker reviews invoice to check
description, values, currency and country
of origin.
• Assists?
• Special things

28. Classification
• The classification of imported merchandise is determined
using the GRI’s, or General Rules of Interpretation.
1. The table of contents and indices are for guidance only.
Classification is determined based on the terms of the
headings and chapter notes.
2. An item is what it is first, and a part of something else
second.
3. When two or more headings apply, the item is classified
as whatever falls last in the tariff. (for example, sets).

29. Harmonized Tariff

30. Country of Origin
• Required for Customs
• Used for a variety of reasons
– Duty Rate
– Potential transshipment
– Regulatory control
– Admissibility

31. Manufacturer’s ID
ISO code of country
First three letters of first name
First three letters of second name
First four numbers in street address
First three letters in the name of the city
A manufacturer’s ID CAN be different from the
country of origin.

32. Important Data Elements:
Importer’s federal ID number
Ultimate consignee ID number
C-TPAT membership (and level, either certified
or validated)
Tariff number
Country of origin
Manufacturer’s ID
Carrier
Security data on file (ISF, AMS, other targeting
history)

33. Entry / Immediate Delivery

34. The Clearance Process
CBP
Paperless Entry Entry Documents Required
Release Examine
Release Seize / Hold

35. Entry Summary

36. Entry summary
MUST be paid within 10 working days from the
date of release
Entry summary shows calculation of
duties, taxes and fees due to Customs
• Failure to pay means penalty—around $100.00
• Surety pays if importer refused…then surety
subrogates
• If broker is paid but does not pay
Customs, importer is liable for the duty a
SECOND TIME.

37. Entry summary
Moral of the story? Pay Customs
directly, either via ACH (Automated
Clearinghouse) or send checks
payable to Customs and Border
Protection to the broker to attach to
entry summaries.

38. Post-entry
• Liquidation
– The final computation of duties and taxes by CBP
where they ―agree‖ and move it to the cabinet.
– Happens by statute 314 days from the date of entry.
• Importers should request liquidation reports from
their brokers or sureties to make sure entries
ARE liquidating.
– Great way to see if CBP is snooping around is if your
entries aren’t liquidating automatically.

39. Post-entry continued
• What if something was done wrong?
– Informal and quick way to get duty refunded is
through the filing of a Post-Entry Amendment
(PEA) where a refund can be issued prior to
liquidation.
– After liquidation, a protest must be filed. If the
protest is late by one day, it’s lost.
– If the broker can’t write the check for the
overpayment, consult a Customs attorney.

40. Entry Types:
• Consumption
• Quota
• Anti-dumping / Countervailing
• Temporary Importation (manufacturing or
display / testing)
• Carnet
• Warehouse
• Drawback

41. Duty Free Opportunities
• Tariff engineering
• Selective country
sourcing
• Preferential trade
programs

42. Trade Programs
• NAFTA
• GSP (requires minimum 35% of regional value)
• Free Trade Agreements
(Panama, Korea, Colombia)
• African Growth and Opportunities Act (AGOA)
• Regional discussions (Transpacific Partnership)

44. C-TPAT: Customs Trade Partnership
Against Terrorism
• The goal of C-TPAT, as well as other
Customs initiatives is to provide greater
security and prevent the introduction of
unauthorized material (including weapons
of mass destruction) into the United States.

45. C-TPAT: Customs Trade Partnership
Against Terrorism
• Participants
– Carriers
– Freight Forwarders
– Customs Brokers
– Importers
– Truckers
– Foreign Terminal Operators

46. C-TPAT: Customs Trade Partnership
Against Terrorism
• Reasons to Participate
– Better visibility with Customs
– Quicker releases under the new
Automated Commercial
Environment (ACE)
– Fewer incidences of
examinations under ACE
– ―Get out of jail free card‖

47. Where To Go For Information
www.cbp.gov

48. Container Security Initiative
• Customs is also working to EXTEND America’s borders
overseas to screen cargo at the origin before it has even
arrived in the United States. Their goal is the Container
Security Initiative (CSI).
• Now deployed at 53 overseas ports covering 86% of US-
bound maritime containers.
• 150 CBP officers deployed.

49. Container Security Initiative
Facts about container imports into the USA:
• In FY 2009, U.S. Customs processed 6.3 million vessel
entries, down from 7.3 million in FY 2008.
• The entered value of those goods was $692 billion, down
25% from the prior year.
• FY 2010 projections are for that amount to rebound to
$752 billion.

50. FY 2009 Import Facts
• Total value of imports processed by CBP was a little
more than $1.7 trillion, a 25% decrease from the year
prior.
• 31% of imported goods were dutiable and represented
$29.5 billion in revenue, a 15% decline from FY 2008.
• Customs processed 26 million entries.
• China finally surpassed Canada as the top trading
partner of the United States in 2009 and will continue to
increase its lead in 2010.

51. Another Tool:
The 24-Hour Rule
• Called such because basic manifest level data
must be transmitted to CBP twenty-four hours
before a vessel is loaded at a foreign port
destined for USA.
• Different time requirements for air, truck and rail.
• If CBP issues ―no-load‖ message at origin, CSI
kicks in and CBP officers, in conjunction with
local law enforcement, screen the container
either using intrusive or non-intrusive means.

52. And Customs’ Latest
Targeting Tool…
X-ray device?

53. And Customs’ Latest
Targeting Tool…
Dogs?

54. And Customs’ Latest
Targeting Tool…
Dionne Warwick and the Psychic Friends
Network?

55. Importer Security Filing
a.k.a ―10 + 2‖
• Data Elements ―The ten‖
– Manufacturer’s name and address
– Seller’s name and address
– Container stuffing location
– Consolidator’s name and address
– Buyer’s name and address

56. Importer Security Filing
a.k.a ―10 + 2‖
• Data Elements ―The ten‖ con’t:
– Ship to name and address
– Importer of record ID number
– Consignee ID number
– Tariff number to six digits
– Country of origin

57. Additional Security Pilots
• CBP announced Simplified Entry Pilot for air. Ocean and
truck to follow in 2012.
– C-TPAT membership required.
– Reduced number of data elements submitted at time of
entry.
– Only certain types of entries will be allowed.
• Air cargo pilot in conjunction with TSA.
– Last October’s incidents with packages from Yemen set it in
motion.
– TSA working with integrators and airlines to get manifest
data to screen prior to departure from origin.
– 10 + 2 for air? NOT happening, but working to get additional
data and expand the pilot to additional countries &
participants.

58. ―Miscellaneous‖
• Carrier year in review (2011 and beyond).
• Government sharing of import data.
• Changes in Customs treatment of importers /
trends from counsel.
• Antidumping / countervailing cases.
• Living documents are your best defense in an
audit.
• Read. Read. Read. Everything.

59. Customs Entry Processes
and Procedures
• Show the process involved in moving goods to
the U.S.A. and clearing Customs
• Detail the parties involved
• Explain the mechanism of a Customs clearance
• Customs programs for importers
• Upcoming trade issues.

60. PORT ELIZABETH
VACIS

61. RECEIVER
TOWER
GAMMA RAY
EMITTER
CONTROL
BOOTH
RAILS
Vehicle And Container Inspection System

62. THE WAY YOU SEE THEM
THE WAY YOU SEE THEM
A 40 FOOT CONTAINER ON TRANSPORTER

63. THE WAY WE SEE SOME OF THEM!
CONTAINER
CAB
CARGO

64. THE WAY YOU SEE CONTAINERS
ON RAIL CARS

65. VACIS IMAGE OF HOPPER CAR
SOUTHERN BORDER OF THE U.S.

67. VACIS IMAGES OF VEHICLES CONTAINING CONTRABAND

95. Thank You
Scott Alan Case
(847) 737-6963
s.case@camelotcompany.com
Twitter: @camelotcompany