Kelly Global Logistics Inc The REAL 102 ISF

Kelly Global Logistics Inc.

The “REAL” 10+2 /ISF Is Almost Here Will You Be Ready?

Why was 10+2 / ISF enacted ?

ISF Rule Was Published in Fed Register on November 25, 2008 • 10+2 filing requirements have been in effect since January 26, 2009. (60 days following date of publication of Interim Final Rule) • On January 26, 2010, CBP will enforce the 10+2 Importer Security Filing rule (everyone is getting one year to practice!!). • There are provisions within the Interim Final Rule for timing and interpretation flexibility for certain data elements. • CBP have been hosting public outreach meetings to educate the trade community and have been closely monitoring ISF filings during the oneyear enforcement grace period. • The period for Public Comments on the flexibility provisions ended on June 1, 2009.

Interim Final Rule / 10+2 / ISF SUMMARY: Ocean carriers bringing cargo to the United States are required to transmit certain information to Customs and Border Protection (CBP) about the cargo they are transporting prior to lading that cargo at the foreign ports. The purpose of the ISF is to help prevent terrorist weapons and weapons of mass destruction from being transported to the United States. The required information is reasonably necessary to improve CBP’s ability to identify highrisk shipments so as to prevent smuggling and ensure the safety and security of the U. S. public.

Basically - What Is 10+2 / ISF ? • Importers are required to submit an Importer Security Filing containing ten (10) data elements (Actually 11 data elements if you include the B/L#). • Ocean Carriers are required to submit Vessel Stow Plan and Container Status Messages in relation to U. S. bound containers.

Who are the Responsible Parties for 10+2 / Security Filings ? Also…. What Type of Cargo Movements Are Covered ? ISF IMPORTER: CARRIER: �arty causing goods to enter limits of P a port in the US: could be the owner, purchaser, consignee, or agent (e. g. customs broker). �argo arriving in U. S. by vessel C of U. S. ports owner, purchaser, (i e containerized and Ro. Ro) �or “Freight Remaining on Board” F (FROB), the vessel operating carrier is considered the ISF importer. �ransportation & Export, Immediate T Export, and FTZ cargo, the document filer is considered the ISF importer (Vessels are exempt from these requirements if they are carrying exclusively bulk or break bulk cargo. )

Responsibilities of the Vessel Carriers • Vessel Carrier Must File 2 types of data: - Vessel Stow Plan - Container Status Messages • If the vessel carrier is going to file as an importer, they must obtain relevant data elements from the Shipper. (Vessels are exempt from these requirements if they are carrying exclusively bulk or break bulk cargo. )

The 2 Specific Vessel Carrier Requirements Vessel Stow Plan: When: Transmit VSPs within 48 hours after the vessel departs from last foreign port. For voyages less than 48 hours, VSPs are due prior to arrival at the US port. How: Via CBP-approved electronic data interchange system (i. e. , AMS, secure file transfer protocol or email) Vessel information: Vessel name and IMO number (Int’l Maritime Organization #), vessel operator, voyage number Container Information: – Container operator – Equipment number – Equipment size and type – Stow position – Hazmat code (if applicable) – Port of lading – Port of discharge

The 2 Specific Vessel Carrier Requirements (continued) Container Status Message When: Submit via SFTP when specific event occurs and no later than 24 hours after carrier enters CSM in its equipment tracking system. NOTE – CSMs are required for empty containers. Includes: – – – Event code being reported Container number Date/time of event being reported Status of the Container (empty or full) Location where the event occurred Vessel identification associated with the message

The 2 Specific Vessel Carrier Requirements (continued) The Events For Which CSMs are required are: – – – – – Booking Confirmed Terminal Gate Inspection Arrives/Departs a Facility (“Gate-in, Gate out”) Loaded or Unloaded from a Conveyance (“Loaded-on, Unloadedfrom”) Departs from or Arrives at a Port (“Vessel Departure, Vessel Arrival”) Intra-terminal Movement Ordered Stuffed or Stripped Confirmed Stuffed or Stripped Shopped for Heavy Repair

Responsibilities of the Importer For In-Transit Cargo Commonly Referred to as FROB, IE, or TE : Importer Must File 5 data elements via an ISF 5 Data Elements Required for ISF: 1. Booking Party - name and address 2. Ship to Party - name and address 3. Commodity HTSUS number (6 digits minimum) 4. Foreign Port of Unlading at Final Destination 5. Place of Delivery (city code)

Responsibilities of the Importer (continued) For regular cargo or Free Trade Zone (FTZ) cargo, importer must file Importer Security Filing ( ISF) containing 10 data elements 10 Data Elements Required For ISF: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Importer of Record # or FTZ Applicant # Consignee # Seller name and address Buyer name and address Ship to Party name and address Manufacturer (Supplier) name and address Country of Origin Commodity HTSUS # (6 digit minimum) Container Stuffing Location name and address Consolidator (Container Stuffer) name / address

ISF Filing – Deadlines for Importers Importer Deadlines For Filing ISF Importer (regular/FTZ shipments) File 24 hrs before cargo loaded onto vessel: 1. Importer of Record Number 2. Consignee Number 3. Seller (Owner) name/address 4. Buyer (Owner) name/address 5. Ship To Party 6. Manufacturer (Supplier) name/address 7. Country of Origin 8. Commodity HTSUS – 6 digits ASAP but no later than 24 hours prior to arrival 9. Container Stuffing Location name/address 10. Consolidator (Stuffer) name/address ISF Importer (in-transit shipments) File “ 5” data elements 24 hours before cargo is loaded onto the vessel.

Flexibility Provisions – Based on Interim Final Rule Flexibility Provisions For 6 Data Elements: “Interpretation of the Data” flexibility for manufacturer/supplier, ship-to party, country of origin, and HTSUS number: Where data elements are not known prior to lading, filer may initially report a range of logical responses based on best facts available 24 hours prior to lading of cargo, but the filer must update the ISF with accurate responses no later than 24 hours prior to arrival of the cargo at a U. S. port. “Timing of the Provision” flexibility for container stuffing location and consolidator: Report as early as possible but no later than 24 hours prior to arrival of the cargo at a U. S. port.

Filing Deadlines for Carriers CARRIER DEADLINE FOR FILING Vessel Stow Plans 48 hours after departure from last foreign port Container Status Messages 24 hours after message entered in carrier’s equipment tracking (Vessels are exempt from these requirements if they are carrying exclusively bulk or break bulk cargo. )

General ISF-10 Filing Criteria • One ISF importer per filing *. • One Importer of Record Number per filing **. • Must be part of the same shipment. • Must be arriving on the same vessel / voyage. * In most cases, the ISF Importer and the Importer of Record Number will be the same. ** The ISF Importer must insure that their importer ID number has been registered with CBP via the CBP Form 5106 process.

General ISF-10 Filing Criteria (continued) • ISFs are to be done at the “lowest” bill of lading level that has been (or will be) recorded in the vessel AMS system. CBP will accept an ISF at either the house bill of lading level or regular (i. e. , simple, straight) bill of lading. - A single ISF may cover multiple bills of lading. - While ISF filings may naturally match up with CBP Form 3461 Entries, there is no actual requirement that they do so.

Where Can the Importer Obtain the Required Data ? Item Description Element Definition vs. Customs Entry Requirements Element found on existing documents such as…… 1 Manufacturer Equivalent to 3461 requirement PO/Invoice/Shipping Notice 2 Seller Equivalent to invoice requirement PO/Invoice/Shipping Notice 3 Buyer Equivalent to invoice requirement PO/Invoice/Shipping Notice 4 Ship to UNIQUE PO/Invoice/Shipping Notice 5 Container Stuffing Location UNIQUE Contracts/Routing Systems/ Shipping Notice 6 Consolidator UNIQUE Contracts/Routing Systems/ Shipping Notice 7 Importer of Record Equivalent to 3461 requirement PO/Invoice/Shipping Notice 8 Consignee Equivalent to 3461 requirement PO/Invoice/Shipping Notice 9 Country of Origin Equivalent to 3461 requirement PO/Invoice/Import Systems 10 Commodity HTSUS Number Equivalent to 3461 requirement PO/Invoice/Import Database

The Following Parties May File an ISF • ISF Importer = Party causing the goods to enter limits of a U S port – Owner, purchaser, consignee, or agent (e. g. customs broker) – Vessel Carrier for FROB cargo – Document filer for in-transit cargo (IE, TE, FTZ) • One party must submit all data elements. • Importer may self-file or designate an agent—ISF filing is not considered customs business, so agents do not have to be customs brokers. • Filer must be able to access CBP approved data systems (i. e. , ABI or AMS) and obtain basic importation and entry bond. • If the filer is unable to reasonably verify the data elements required, the filer may submit information on the basis of what it reasonably believes to be true. • ISF filer must update or correct any unverified or conditional ISF information before the goods arrive within the limits of a port in the United States.

Requirements For ISF Bond • ISF filings require a continuous customs bond (can be the importer’s bond or the agent’s bond). The following types of bonds have been amended to cover the new ISF requirements: – – – Basic Importation and Entry Bond § 113. 62 Basic Custodial Bond § 113. 63 International Carrier Bond § 113. 64 Foreign Trade Zone Operator Bond § 113. 73 New “Importer Security Filing Bond” Appendix D § 113. • Single Transaction Bonds will be accepted on a case by case basis. • Beginning January 26, 2010, CBP may assess liquidated damages for 10+2 violations against the filer’s bond in the amount of $5, 000 per violation.

BILL OF LADING NUMBER • Identifier commonly known as the “ 11 th” Element. • Required as part of the ISF Filing. The ISF Importer, or their agent, must obtain this information and provide it to CBP as part of the ISF filing no later than 24 Hours prior to vessel lading for ISF-10 filings. • Absolutely necessary to properly link the Importer Security Filing (ISF) to the U. S. Customs manifest data system (AMS).

ISF Filers Will Receive the Following Automatic Messages From CBP • CBP will return one of the following system messages to the ISF filer for all ISF filed: – – Accept with Warning Conditional Acceptance Reject • A unique identification number will be returned for all ISF filings that have been accepted. • After filing, CBP will issue bill of lading “match” or “no match” message: “no match” messages will be periodically updated by CBP. • If ISF is rejected, filer will be notified of reason via an automated error code messaging system.

Automatic Messages to Carrier Via AMS • A status notification of “ISF on File” will be sent to the issuer of the bill of lading (e. g. NVOCC or carrier) and all second notify parties at the house or regular bill level. • The vessel operator, vessel operating carrier and NVOCCs are not required to verify that an ISF has been filed against a bill of lading. • The NVOCC or carrier will not be able to access the ISF. Only the ISF filer can access actual data elements of the filing.

What To Do After The ISF Is Filed? What to do after the ISF is filed? • Filer will receive a Unique Identification Number for each ISF. • In order to verify accuracy and completeness importers should obtain the ISF Unique Identification Number and a copy of the ISF filing itself from the filer How to Amend or Change the ISF Information? • ISF Filer must use the ISF Unique Identification Number to delete the ISF or to replace or update any information on the existing filing. • ISF filer is required to update and/or correct initial ISF before the vessel enters the port limits. • Port Director permission is required to change port for IE/TE. • Port Director permission is required to change in-bond to a consumption entry.

Key Enforcement Points of 10+2 • January 26, 2009 to January 25, 2010: – Industry and trade must comply with 10+2 requirements. – CBP will hold public outreach meetings for informed compliance. – CBP will not issue penalties against the bond securing the ISF nor will they issue “no load” messages for violations. • Beginning January 26, 2010: – CBP will issue penalties against the bond securing the ISF in the amount of $5, 000. – CBP will issue “no load” messages if applicable. • CBP has stated: “If circumstances warrant, CBP reserves the right to take any and all actions required to protect the security of the U. S.

Mitigation of Potential Penalties in 2010 • During the first year (2009), CBP will monitor all ISF submissions for timeliness, accuracy, and completeness and will work with any noncomplying ISF filer in order to help them adhere to the new requirements. • CBP will consider an entity’s progress in the implementation of the rule during the delayed enforcement period as a mitigating factor in any enforcement action following the delayed enforcement period. In other words…. all the ISF’s the importer files in 2009 will be considered as positive mitigating factors to penalties that may be levied against the importer in year 2010.

CBP Issues Progress Report For Each Importer of Record • All ISF’s must be filed on time, they must be accurate, and they must be complete. If not, importer will be penalized. • CBP is sending to the filer Progress Reports each month that grade each importer on the above three criteria. • The report tracks the ISF’s filed as “accepted” or “rejected”. • The report tracks the rejection rate frequency and indicates an “error code” that can be used to help determine why the ISF was rejected. • The report tracks if the ISF was filed 24 hours prior to the merchandise being loaded onto the vessel. • The report tracks if the ISF has a valid AMS Bill of Lading number linked to the filing.

Example of the ISF Progress Report

10+2 Recommended Actions

10+2 Recommended Actions Importers are recommended to: • Determine what entity will file the ISF - Self File - Broker Filer - Third Party ISF Agent • Inform all supply chain partners on 10+2 requirements • Develop a process for collecting required data elements from supply chain partners and make sure they are sent to the ISF filer. • Confirm the process with the ISF filer for electronic submission of required data elements.

10+2 Recommended Actions Importers are recommended to (continued) • Develop a process where you review the Progress Reports and determine what data element is causing most of your errors. • Develop a process when corrections or changes to ISF have to be communicated to the ISF filer and timely submitted to CBP. • Review/amend as needed all POAs and written instructions with ISF broker filers. • Review/execute all POAs, written instructions, and confidentiality agreements with third party ISF agents (non brokers). • Revise/amend foreign supplier/vendor agreements to require supplier/seller support for data collection.

Part Two: C-TPAT

C-TPAT : Customs-Trade Partnership Against Terrorism • C-TPAT is a voluntary government-business initiative to build cooperative relationships that strengthen and improve the overall international supply chain and U. S. border security. • C-TPAT recognizes that CBP can provide the highest level of cargo security only through close cooperation with the ultimate owners of the international supply chain such as importers, carriers, consolidators, licensed customs brokers, and manufacturers. • Through this initiative, CBP is asking businesses to ensure the integrity of their security practices and communicate and verify the security guidelines of their business partners within the supply chain.

Business Types that Can Apply For C-TPAT Benefits 1. Importers 2. Customs Brokers 3. Sea Carriers 4. Air Carriers 5. Rail Carriers 6. Highway Carriers 7. Mexican and Canadian Manufacturers 8. Long Haul Carriers in Mexico 9. Third Party Logistics Providers (3 PL) 10. Air Freight Consolidators and Ocean Transportation Intermediaries and Non-Vessel Operating Common Carriers (NVOCC)

Part Three: Consumer Product Safety Commission – CPSC Consumer Product Safety Improvement Act of 2008 - CPSIA

Certifications of Conformity • Sometimes Certifications of Conformity are referred to as Certificates of Compliance. • Certificates of Conformity will be mandatory in 2010. • Certificates of Conformity for adult garments and textiles are based on a reasonable testing method. • Certificates of Conformity for children’s garments are based on third party testing method.

Tracking Labels • All children’s products manufactured on or after August 14, 2009 require a tracking label. • The tracking label must be permanently attached to the product. • The tracking label must be legible for the life of the product. • There is excellent information on the CPSC website that explains the tracking label requirements in great detail.

Peru Trade Promotion Agreement – PTPA UPDATES • 10/26/2009: Congress members Max Baucus and Charles Grassley urges President Obama to conclude negotiations on a Trans-Pacific Strategic Economic Partnership Agreement (TPP) which would include the country of Peru. • 10/13/2009: Trade groups urge extension of Andean Trade Preferences for Colombia and Peru…. but not for Bolivia and Ecuador. • 10/6/2009: U. S-Peru FTA : “Interim Commercial Availability Procedures” Webinar now available on the OTEXA website. • 10/6/2009: The Office of the U. S. Trade Representative (USTR) announces 2010 sugar TRQ allocations for Peru at 43, 175 metric tons raw value.

Thank You Davis Barlow, CHB Director of International Compliance Kelly Global Logistics Inc. Tel. (305) 591 7321 Email: Dbarlow@kglogistics. com

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