Contractors involved in the Federal Government’s procurement of information technology (IT) systems should consider taking affirmative steps to prepare for significant legal uncertainties arising from a confusing provision enacted by Congress to combat Chinese cyber-espionage. The new provision, which Congress recently included in the “must-pass” appropriations measure that averted a government shutdown, generally prohibits certain [...]
Contractors involved in the Federal Government’s procurement of information technology (IT) systems should consider taking affirmative steps to prepare for significant legal uncertainties arising from a confusing provision enacted by Congress to combat Chinese cyber-espionage. The new provision, which Congress recently included in the “must-pass” appropriations measure that averted a government shutdown, generally prohibits certain agencies from acquiring IT systems that potentially have even a remote connection to the Chinese government. The White House expressed concerns about the provision, but these concerns did not prevent the President from signing the larger package. U.S. businesses, particularly in the high-tech sector, have been critical of the provision, and the White House reportedly has indicated that it may seek to modify or even drop the provision in future years. In the meantime, however, the provision is the law of the land, and contractors should be aware of its potential effects.
Background
Section 516 of the FY 2013 Continuing Appropriations Act, which funds the Federal Government through September 30, 2013, generally prohibits the Departments of Commerce and Justice, as well as NASA and the National Science Foundation, from acquiring IT systems “produced, manufactured or assembled” by entities that are “owned, directed or subsidized by the People’s Republic of China.” Agencies may only make such acquisitions if the head of the agency, in consultation with the FBI, assesses the risks of cyber-espionage associated with the acquisition and certifies to Congress that the acquisition is “in the national interest of the United States.”
The House Appropriations Committee originally added the legislation during its consideration of the FY 2013 spending measure in April 2012. While the Senate version did not include such a provision, it was nevertheless among the provisions that survived into the final package presented to the President. Although the measure applies only to procurement of IT systems throughout the remainder of FY 2013, now that the template has been set, it is possible that similar prohibitions could be included in future appropriations measures.
Click here to read the complete article.
Source: Lawrence A. Schneider & Paul A. Howard | Arnold & Porter LLP
The buzz over BRICs (Brazil, Russia, India and China) may have been replaced by news of CIVETS (Colombia, India, Vietnam, Egypt, Turkey ans South Africa), but opportunities still abound in all these countires, Make sure you’re ready to begin trading with these busy markets- join I.E.Canada for its upcoming international webinars. Sign up for one [...]
The buzz over BRICs (Brazil, Russia, India and China) may have been replaced by news of CIVETS (Colombia, India, Vietnam, Egypt, Turkey ans South Africa), but opportunities still abound in all these countires, Make sure you’re ready to begin trading with these busy markets- join I.E.Canada for its upcoming international webinars. Sign up for one or take advantage of the savings and sign up for an entire series!
Series I
1) Importing into Russia
April 11, 2013 1:00pm – 2:30pm EST
2) Importing into Japan
April 25, 2013 1:00pm – 2:30pm EST
3) Importing into India
May 9, 2013 1:00pm – 2:30pm EST
CLICK HERE for more information and to register.
Series II
1) Importing into Turkey
June 6, 2013 1:00pm – 2:30pm EST
2) Importing into Vietnam
June 20, 2013 1:00pm – 2:30pm EST
3) Importing into South Africa
July 11, 2013 1:00pm – 2:30pm EST
CLICK HERE for more information and to register.
Member Registration Rate: $150/session or 3 for $300 (full series)
Non-Member Registration Rate: $200/session or 3 for $500 (full series)
A Voluntary Self-Disclosure (VSD) is when companies willingly disclose a violation or a suspected violation of the U.S. Foreign Trade Regulations (FTR). This disclosure is accompanied by the corrective actions taken in Automated Export System (AES), it means you must correct shipment information or file for shipments that were not filed previously. Submitting a VSD [...]
A Voluntary Self-Disclosure (VSD) is when companies willingly disclose a violation or a suspected violation of the U.S. Foreign Trade Regulations (FTR). This disclosure is accompanied by the corrective actions taken in Automated Export System (AES), it means you must correct shipment information or file for shipments that were not filed previously.
Submitting a VSD with the U.S. Census Bureau provides you the opportunity to mitigate potential penalties, as well as document discovered errors and corrections. If violations are known, you are strongly encouraged to file VSDs to ensure proper due diligence with the FTR. See section 30.74.
Tips When Submitting Voluntary Self-Disclosures
- Address to: Chief, Foreign Trade Division. Make sure that your letter is on company letterhead, contains a point of contact, a detailed description of when and how the violations occurred, any mitigated circumstance, and the corrective actions taken.
- Disclosures For Multiple Years. When correcting or filing shipment information into the AES for time periods (up to five years), begin with the most current year (e.g., 2013, 2012, 2011, etc.)
- Provide Complete Descriptions. You must include a description of the error and correction. The detailed account should include an accurate description of the type(s) of violation(s) that occurred. It can be included as an attachment to the letter or may be sent later (via mail or e-mail). Preferably submit in Excel format.
Make sure that you have all the information when submitting a disclosure. VSDs that do not have all the pertinent information might not be used for a mitigating factor. Complete procedures for filing VSDs can be found here.
I.E.Canada, in partnership with LSCI Inc., introduces its Trusted Trader Webinar Series. Our 3 ninety minute sessions will delve into and demystify the Canada Border Services Agency’s (CBSA) Customs Self Assessment (CSA) Program. Gain the knowledge and tools needed to determine how this Trusted Trader program can benefit your company in addressing the increasing demands [...]
I.E.Canada, in partnership with LSCI Inc., introduces its Trusted Trader Webinar Series. Our 3 ninety minute sessions will delve into and demystify the Canada Border Services Agency’s (CBSA) Customs Self Assessment (CSA) Program. Gain the knowledge and tools needed to determine how this Trusted Trader program can benefit your company in addressing the increasing demands of an ever changing Canadian import landscape, where mandatory importer Advanced Trade Data requirements for all modes of transport loom in 2014 under eManifest (the third phase of CBSA’s Advance Commercial Information program), delays grow at the border and the potential for audits and penalties for non-compliance increases. Our member experts from industry, the CBSA and the service provider community will share their unique perspectives, experiences, as well as the cost and time-saving advantages of having successfully integrated CSA into their businesses’ logistics and trade compliance strategies. It is easier to adopt than you think!
The sessions are:
Trade Compliance Program Overview: What’s Available & How to Maximize It
February 27, 2013 1:00pm – 2:30pm EST
Speakers: Michelle Bunbury, Senior Manager, Trade Management Services, UPS-SCS
Hear an overview of Partners in Protection (PIP), Customs Self Assessment (CSA) and Trade Benefits (formerly the CBSA Partners in Compliance pilot) as an alternative to Advance Commercial Information (ACI), including eManifest requirements and mandatory importer Advanced Trade Data (ATD) in all transport modes for July 2014. There will also be a case study presentation on How CSA fits into my compliance program.
Customs Self-Assessment (CSA) Program: It’s Easier to Apply for Than You Think and Applying for CSA- What to Expect
March 6, 2013 1:00pm – 2:30pm EST
Speakers: Natalie Rochon, Senior Program Officer, CSA/FAST Importer Compliance, CBSA; Susan Subryan, Customs Compliance Coordinator, L.V. Lomas Limited
A presentation and case study dispelling the myths of the CSA application process as well as the costs associated with adopting this Trusted Trader program.
CSA, Modernizing and Automating Your Importation Environment, Let’s Get Started!
March 13, 2013 1:00pm – 2:30pm EST
Speakers: Louis Sauvé, IT Director, LSCI Inc.; Ruheda Karim, Manager, Customs and Compliance, Deeley Harley-Davidson Canada
A presentation on the nuts & bolts of transitioning systems to CSA followed by a case study: Soup-to-Nuts, the Path I Followed
I.E. Canada Member Registration Rate: FREE
Non-Member Registration Rate: $75 per session
Webinar login information will be sent prior to each session. Click here to register.
The CBSA manages compliance with the Tariff Classification, Tariff Treatment, Valuation, and Origin programs using the following two post-release verification processes: 1) Random Verifications; and 2) Targeted Priorities. Random Verifications Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including: • Risk assessment; • [...]
The CBSA manages compliance with the Tariff Classification, Tariff Treatment, Valuation, and Origin programs using the following two post-release verification processes: 1) Random Verifications; and 2) Targeted Priorities.
Random Verifications
Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including:
• Risk assessment;
• Establishing client service activities;
• Revenue assessment; and
• Promoting voluntary compliance.
Targeted Priorities
Targeted priorities are determined through a risk-based, evergreen process, meaning that new targets are added throughout the fiscal year. Targeted priorities may also be carried over from previous years. The current targeted priorities are:
Tariff Classification HS Number(s)
1.Pet Toys | 9503.00.90
2.Steel T-Posts | 7308.40.00.90
3.Fresh Cut Flowers | 0603.19.00
4.Safety Headgear | 6506.10.10.90
5.Wheel Rims and Spokes | 8714.92.00
6.Other Food Preparations | 2106.90.95
7.Dextrins and Other Modified Starches | 3505.10.90
8.Tariff Item 9948.00.00 (Televisions and Other Consumer Goods) | 9948.00.00
9. Coconut Milk | 1106.30.00; 2008.19.90 and 2106.90.10.20 Continue reading »
The top investment focus for over 75% of discrete manufacturing companies is the move to Global Trade Management platforms or solutions that integrate data sharing and workflows with internal users and a myriad of countries, suppliers, carriers, and trading partners. This Sector Insight focuses on the key process and technology differentiators identified as supply chain [...]
The top investment focus for over 75% of discrete manufacturing companies is the move to Global Trade Management platforms or solutions that integrate data sharing and workflows with internal users and a myriad of countries, suppliers, carriers, and trading partners. This Sector Insight focuses on the key process and technology differentiators identified as supply chain executive priorities and used within the discrete industry segment to improve Global Trade Management processes and product flow across an increasingly more global, multi-tier, and complex network.
Discover how Best-in-Class companies:
• Insure Alignment with Trade Regulation
• Boost Corporate Performance with Analytics
• Increase Speed to Market
Click here to download the research paper.
Source: Aberdeen Group
In the current global economic downturn, many companies have been hit hard with falling orders and rising costs – a double whammy so to speak. For the immediate short term, there does not appear to be an end in sight to the bad economic news. Many companies are looking to reduce costs, but often neglect [...]
In the current global economic downturn, many companies have been hit hard with falling orders and rising costs – a double whammy so to speak. For the immediate short term, there does not appear to be an end in sight to the bad economic news. Many companies are looking to reduce costs, but often neglect to review their international trade activities. There are certainly savings to be made here.
Customs duty and other import-related taxes can be manageable costs, if you assess your operations to determine the different elements. Many companies don’t know the true extent of their import duties and taxes, simply because they are often hidden in the Cost of Goods Sold account. For some companies, the true cost may be higher than the corporate tax cost, particularly during a downturn when profits are reduced.
You can start by looking at your cross border transactions for the past year, which will give you a good snapshot of your international trade activities and costs. Next, you can take proactive steps to determine if these costs can be legitimately reduced, and how best to accomplish it.
Here are a few key areas you may consider reviewing:
Many companies do not take full advantage of available bilateral and multilateral preferential trade agreements, due to concerns about liability for errors, complex qualification rules, increased compliance burden and risks, or just a lack of awareness of the opportunity. A well-structured claim for preferential tariff treatment can provide huge cost savings, particularly as the ASEAN rules have been amended to make qualification more straightforward and potentially simpler.
Click here to read the complete article.
Source:
Michael Fung | PricewaterhouseCoopers WMS Pte Ltd.
Business World Online
When you get a deep cut, do you simply put on a band-aid or do you go to the hospital to get stitches that you really need? Stitches take time and are more costly – but, your bleeding will stop and your cut is less likely to re-open. With a band-aid – you’re likely to [...]
When you get a deep cut, do you simply put on a band-aid or do you go to the hospital to get stitches that you really need? Stitches take time and are more costly – but, your bleeding will stop and your cut is less likely to re-open. With a band-aid – you’re likely to re-open your wound and/or get an infection. You get stitches if you know what’s good for you!
Compliance is similar in that there may be a quick fix for the current issue; however, if you don’t stop the bleeding and get stitches, you will be in trouble in the long-run, and the bleeding won’t stop.
On a daily basis, different companies call me to discuss issues they are having with U.S. Customs and Border Protection (CBP). For instance, today, a company called me discussing a CBP 28 – Request for Information, and thereafter a CBP 29 – Notice of Action received from CBP. The issue was an underlying classification issue. Bottom line, they had never done any Pre-Compliance on the Harmonized Tariff Schedule’s (HTS) they were using for their imported merchandise. They said the infamous line – that’s why I hired a broker. Important to note that this just does not cut it with CBP.
Click here to read the complete article.
Source: Becker & Poliakoff P.A.
In today’s global economy, the transportation of goods could have significant customs implications. Moreover, customs duties can have a direct impact on the bottom line. Unfortunately, importers often overlook or mismanage duties and customs compliance, which can result in significant and unnecessary duty costs. Below, we’ve outlined the top 10 customs-related issues facing Canadian importers. [...]
In today’s global economy, the transportation of goods could have significant customs implications. Moreover, customs duties can have a direct impact on the bottom line. Unfortunately, importers often overlook or mismanage duties and customs compliance, which can result in significant and unnecessary duty costs.
Below, we’ve outlined the top 10 customs-related issues facing Canadian importers.
1. Origin preferences Although imported goods can be subject to customs duties, preferential origin treatments such as the North American Free Trade Agreement (NAFTA) can provide significant duty relief to importers.
Canada has numerous multilateral, bilateral and unilateral origin-based relief mechanisms in place. Importers should be aware of and take advantage of any applicable origin-based duty relief opportunities. Otherwise, they can face significant unnecessary duty outlays that have a clear impact on the bottom line.
Importers who do take advantage of origin-based duty relief opportunities need to ensure that they manage them appropriately. This includes having valid and complete documentation and the respective rules of origin need to be followed. Failure to properly apply and document preferential origin-based duty treatments could result in significant duty costs and, in some cases, duty relief could be revoked.
Importers can leave significant duties on the table and be subject to significant compliance-related costs if they do not manage matters appropriately.
Read the complete article here.
Source: Ernst & Young | Financial Post
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes the foremost “best practice” shared by leading traders. “The first best practice is that corporate leadership has identified trade compliance as a priority. Leading firms actually build compliance in as part of their corporate [...]
Reynold Martens, Executive VP, GHY International and author of the series of white papers on Integrated Trade Compliance Strategy development describes the foremost “best practice” shared by leading traders.
“The first best practice is that corporate leadership has identified trade compliance as a priority. Leading firms actually build compliance in as part of their corporate doctrine. Why is that? Well, because the consequences of non-compliance are very significant and the upside of compliance is very positive.
Some studies indicate that up to 40 percent of companies do not have senior management that is aware of trade compliance and that is a bit perplexing. The ones that do make it a priority do make that decision for a number of different reasons.”
“Number one is brand and reputation. People want to do the right things for the right reasons and brand reputation in a global environment is more important than ever today.
Secondly, financial risk mitigation… Who wants to have a surprise and a penalty or something that comes across their desk or on their balance sheet that’s not expected and compromises their profitability?
Thirdly, operational excellence is becoming the norm in businsses today. Lean business systems, lean processes, and cost management are mantras that are being used in most businesses today. Compliance is a part of that.
Fourthly, profitability. Compliance has a way of helping companies stay profitable and avoid unprofitable losses which gives them an edge in the marketplace.
Finally, it’s legally required; it’s part of due diligence. You can’t not be compliant and expect to ‘get away with it.’ Again, it is the right thing to do for all the right reasons.”
So, where does trade compliance fit in your leadership’s hierarchy of corporate priorities?
An ongoing project being conducted by U.S. Customs and Border Protection could yield significant changes for customs brokers. CBP states that the key concept of its Role of the Broker Initiative is to meaningfully transform the relationship between the agency and brokers by recognizing their role as a communicator and force multiplier to increase compliance, [...]
An ongoing project being conducted by U.S. Customs and Border Protection could yield significant changes for customs brokers.
CBP states that the key concept of its Role of the Broker Initiative is to meaningfully transform the relationship between the agency and brokers by recognizing their role as a communicator and force multiplier to increase compliance, especially for small and medium-sized importers.
There are two major projects underway as part of this initiative: redesigning the customs broker regulations in 19 CFR Part 111, and allowing brokers to pre-certify applicants for the Importer Self-Assessment program.
Broker Regulations Rewrite
CBP states that its broker regulations have not kept up with advancements in technology and its own trade facilitation goals. The agency is attempting to address this deficiency through regulatory amendments that will (a) clarify brokers’ responsibilities related to importer validation and provide greater visibility of importers, (b) modernize the regulations to align with current electronic capabilities and business practices, (c) reinforce the broker’s responsibility to exercise due diligence in conducting business and (d) “professionalize” the customs broker by introducing a continuing education requirement. CBP officials have said the updated regulations will also include provisions on due process proceedings for brokers, including penalties and suspension and revocation of licenses; establishing bona fides and broker relationships with unlicensed parties; and business model alignment between the trade and CBP, including conducting customs business within the geographic bounds of the U.S. and rethinking the district permitting requirements.
Over the next few months CBP will conduct nine webinars to gather input from importers and brokers on the specific changes that should be made. CBP is looking especially to receive comments regarding (a) relations with unlicensed parties and the use of powers of attorney to assign and clarify responsibility for customs transactions, (b) the development and administration of a continuing education requirement, and (c) how to allow for maximum flexibility in broker operations to take advantage of modern business practices and information technology while protecting U.S. revenue and deterring commercial fraud. Once this information gathering process is complete CBP will begin drafting an advance notice of proposed rulemaking, although officials have given no indication of when that process might be completed. Continue reading »
Reynold Martens, Executive VP of GHY International and author of a white paper series on Integrated Trade Compliance Strategies discusses the changes at Customs and Border Protection (CBP) in the United States and the Canada Border Services Agency (CBSA) that international traders need to be aware of and highlight the need for an Integrated Trade [...]
Reynold Martens, Executive VP of GHY International and author of a white paper series on Integrated Trade Compliance Strategies discusses the changes at Customs and Border Protection (CBP) in the United States and the Canada Border Services Agency (CBSA) that international traders need to be aware of and highlight the need for an Integrated Trade Compliance Strategy.
“It’s always been about collecting revenue, but in recent years and especially after 9/11, national security and regulatory interests have been morphed together to create a new approach to managing imports and exports. Not that this wasn’t in place to some extent before 9/11, but that event really pushed this concept forward and accelerated the growth of all the various programs U.S. and Canadian Customs now have in place to detect non-compliance.
There are two major tracks our cross-border customs agencies take to look at compliance verification: one is a transactional review and that takes places as the shipments are entering or exiting the country; the second one is the audit stream where they’re coming in and doing regular audits looking for tariff, value, origin, other government department compliance and business systems linkages.
What it’s really done is shifted the onus for compliance onto the importer and the trader to be diligent and take measures to ensure that all the practices that they have in place for their imports and exports are compliant with all the global regulations which are now much more intensive and have fairly severe consequences attached to them in terms of fines and penalties. Additionally, there are all kinds of other commercial repercussions involved such as lost profitability of a particular shipment or even loss of reputation because this is a legal requirement as well, so companies tend to look at compliance as something that can be a benefit to their brand.”
Importers in the retail and consumer products sectors should be carefully reviewing their trade compliance policies and procedures as Canada Border Services Agency (CBSA) is scrutinizing customs compliance in a number of areas — including declarations of origin, tariff classification and customs valuation. Failure to meet these requirements under the Customs Act (Act) can result in [...]
Importers in the retail and consumer products sectors should be carefully reviewing their trade compliance policies and procedures as Canada Border Services Agency (CBSA) is scrutinizing customs compliance in a number of areas — including declarations of origin, tariff classification and customs valuation.
Failure to meet these requirements under the Customs Act (Act) can result in the imposition of administrative monetary penalties, seizures and ascertained forfeitures, the assessment of duties, taxes and penalizing interest, and the denial of duty-free access to the Canadian market. Of particular concern for retailers with just-in-time business models, non-compliance significantly disrupts cross-border product flow and can cause lengthy and costly delays in getting your product into the hands of Canadian consumers.
Getting the Price Right: Customs Valuation Vulnerabilities
In particular, we are observing increased CBSA audit and enforcement activity regarding customs valuation i.e., the value of goods declared for purposes of calculating customs duties and taxes owing on importation. In this context, common areas of compliance vulnerability include:
- related party transactions — in order to use the price paid to a related vendor importers must be able to demonstrate that the price was not influence by the relationship; in certain circumstances, and provided they have properly documented and supported their methodology, importers may be able to use as a “base” the price established in accordance with income tax transfer pricing principles, subject to a number of adjustments;
- transfer pricing adjustments — adjustments or “true-ups” to related party transaction pricing may also trigger specific customs obligations to correct past entries and remit additional customs duties, taxes and interest;
- post-importation payments (subsequent proceeds) — CBSA is aggressively reviewing payments made by importers that at first instance may appear unrelated to the price of the goods; as highlighted in further detail in Importer Alert: New CBSA Guidelines on Post-Importation Payments and Management and Administration Fees, unless certain conditions are satisfied, CBSA will determine that management and administrative fees paid by the importer should be included in the customs valuation of imported goods;
- other adjustments to the price paid — in addition to subsequent proceeds, the Act requires the addition of a number of other amounts to the price paid or payable by the importer to the extent that they are not already included in the price when determining value for duty; these include commissions and brokerage paid by the purchaser of the goods (excluding buying commissions), packing costs, assists such as tools and dies and engineering and art and design work, certain royalties and license fees and transportation and insurance costs relating to the transportation of the goods to place from which they are shipped directly to Canada; and
- proper use of other customs valuation methods — in some circumstances, the price paid or payable by the importer cannot be used and other methods under the Act must be considered in sequence; these include the transaction value of identical or similar goods, the computed value (cost-plus), the deductive value (resale value-minus), and, if those cannot be applied, the residual method; using these other valuation methods can be complex and time-consuming and, in cases of uncertainty, importers may wish to seek CBSA rulings to confirm their approach.
CBSA detects compliance failures in these areas through a number of monitoring mechanisms, including desk audits and the more comprehensive compliance verifications. These are carried out by CBSA on a random basis as well as by targeting priority areas — further detail can be found in CBSA’s Trade Compliance Post-Release Verifications — January 2012. A number of retail and consumer products are currently on CBSA’s priority target list.
Mitigating Risk Exposure
There are a number of actions that retail and consumer product importers can take to address the significant risks in this area, including:
- conducting an assessment of your current trade compliance status, include past contraventions, current procedures, testing and sampling of transactions;
- developing and implementing clearly articulated and readily accessible trade compliance manual and procedures that are regularly reviewed and updated;
- appointing senior officer(s) responsible for the implementation and enforcement of trade compliance policies and procedures;
- educating and training appropriate officials on trade and customs requirements;
- internal procedures for reporting potential trade compliance violations;
- using, as appropriate, CBSA’s voluntary disclosure process for relief from monetary penalties, penalizing interest and other enforcement action;
- using, as appropriate, CBSA’s ruling process to obtain additional comfort; and
- regular reviewing, testing and enhancement of processes and procedures to ensure continued full compliance.
In light of CBSA’s increased enforcement in this area and the highly competitive and just-in-time nature of the Canadian retail and consumer products sector, a robust trade and customs compliance program is now viewed as a competitive advantage in the Canadian marketplace — it ensures the smooth and timely flow of product across the border and protects against costly penalties and other CBSA enforcement action.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific questions relating to this article should be addressed directly to the author.
Contact: John W. Boscariol | McCarthy Tétrault LLP
I.E.Canada’s 2nd Annual Ontario Regional Conference aims to provide participants with the knowledge and skills needed to succeed in today’s rapidly changing global trade environment. On Day 2 of the conference (May 15), GHY’s Executive Vice President Reynold Martens will present a session entitled “Integrated Trade Compliance Strategies: 7 Best Practices of Leading Traders.” In [...]
I.E.Canada’s 2nd Annual Ontario Regional Conference aims to provide participants with the knowledge and skills needed to succeed in today’s rapidly changing global trade environment.
On Day 2 of the conference (May 15), GHY’s Executive Vice President Reynold Martens will present a session entitled “Integrated Trade Compliance Strategies: 7 Best Practices of Leading Traders.”
In a world of increasingly complex international supply chains, trade compliance expectations placed on Canadian importers and exporters have never been higher. Companies that integrate effective compliance remediation mechanisms into their processes of governance, business operations, sourcing and sales, will benefit from reduced regulatory risk and enjoy competitive advantage. This presentation unpacks the essential elements required to make it happen.
Following is the feature article from the CBP FY 2011 Report on Import Trade Trends Say the words, “September 11, 2001,” and images of death and destruction come immediately to mind. With nearly 3,000 people killed in those terrorist attacks, on that day “the highest priority became preventing terrorists and terrorist weapons from entering our [...]
Following is the feature article from the CBP FY 2011 Report on Import Trade Trends
Say the words, “September 11, 2001,” and images of death and destruction come immediately to mind. With nearly 3,000 people killed in those terrorist attacks, on that day “the highest priority became preventing terrorists and terrorist weapons from entering our country,” then-U.S. Customs Service Commissioner Robert C. Bonner said.
Less visible, but with longer-term effects, was the attacks’ crippling impact on the U.S. economy. By driving two passenger planes into the twin towers — targeting the financial capital of the U.S.—al-Qaida symbolically targeted not only Americans, but the American way of life, specifically travel and trade. A 2002 Congressional Research Service report noted that the long-term costs of increased security would likely be “greater impediments to the free movement of goods, services, and capital….(which) have contributed immeasurably to the integration of the world economy and its efficient functioning.”
After the founding of U.S. Customs and Border Protection in 2003, responding to terrorism effectively became a thorny challenge for the agency charged with defending America’s borders. On the one hand, total vigilance would seem to demand virtually closing down the borders for a total inspection of every person, package and container coming through. As one CBP officer remarked, “I don’t want to be the one responsible for letting someone in [who would go on to commit an attack].”
Yet if nothing and no one can enter the country without a full, hands-on inspection, the terrorists would win a shattering victory of another kind. The dual imperatives to keep dangerous people and things out while allowing legitimate travel and trade to flow in led agency officials to adopt the phrase, “a balanced approach to security and facilitation.” It became almost axiomatic that these two goals were opposed, in a sense, and that managing them was a delicate dance. Leaders of the agency tried to reassure the trade in particular that security would not trump competitiveness. In 2006, then-Commissioner W. Ralph Basham articulated a CBP theme of increasing importance, that security could be a win for industry.
In his words, “Companies are realizing collateral benefits from improved security…and are moving more goods across international borders faster and more efficiently.”
Intuitively, the mission of revenue collection does not exactly mesh with the enforcement of border security. When CBP Commissioner Alan D. Bersin assumed leadership in 2010, the contradiction dissolved completely. As he stated to the U.S. Chamber of Commerce in 2011, “At CBP, we believe security and facilitation of international travel and trade are actually the same phenomenon.”
An insightful new article in this month’s Canadian Lawyer magazine describes the evolving and sometimes contentious relationship between compliance and legal functions within many organizations today as they determine how best to deal with the various challenges presented by an increasingly complex and demanding regulatory environment when it comes to international trade. Obviously, there is [...]
An insightful new article in this month’s Canadian Lawyer magazine describes the evolving and sometimes contentious relationship between compliance and legal functions within many organizations today as they determine how best to deal with the various challenges presented by an increasingly complex and demanding regulatory environment when it comes to international trade.
Obviously, there is no “one size fits all” model of how the compliance function is best handled within an organization; much depends on a variety of factors such as size, available resources, corporate culture, and so on.
As noted by a retired RBC consultant quoted in the article, “There are all kinds of models for compliance and it’s a moving target.”
While that is certainly undeniable, there is also a growing awareness of the fact that compliance frequently involves an overlapping “convergence point” wherein the implications of compliance across different aspects of the business calls for a more holistic approach to not only ensure that senior management is fully apprised of all relevant compliance issues affecting the organization, but that effective risk mitigation protocols are being implemented as needed at all levels of the business.
Compliance and how it fits with the legal department in an organization is undergoing somewhat of a review in corporate circles these days. In part, it may be due to the increase in regulatory legislation and globally due to politics, but there are others. According to John Boscariol, leader with McCarthy Tétrault LLP’s international trade and investment law group, there is a laundry list of things that should encompass compliance and the legal department should be aware of them and make sure senior management knows they are being monitored. He refers to this as “compliance convergence.”
Boscariol says compliance requires senior management commitment to drive it and there should be structured tools to help back it up including a compliance manual and guidelines. It also means having an authoritative senior officer responsible for compliance. From there, you need training and education for employees, officers, board members, and business partners. A good compliance regime also includes internal audits, reviews, and investigations, covers voluntary disclosures, contract reviews, mergers and acquisition due diligence, and the screening of customers, suppliers, and all other business partners.
Boscariol says where the convergence point comes is really about knowing who you’re doing business with as supplier, customer, creditor, debtor, or what your product or technology service is used for and by whom. “It brings together issues like economic sanctions, export controls, anti-money laundering, anti-terrorism rules where you’re going to be doing the same things, compliance-wise, within your organization to protect it going forward,” he says.
Essentially synonymous with what we describe in this space as an “Integrated Trade Compliance Strategy,” Boscariol’s concept of “compliance convergence” likewise calls for a greater level of awareness about compliance issues between various aspects of the business and more efficient information-sharing that transcends isolated functional silos – a common problem highlighted in our first White Paper and subsequently explored in more depth here.
Responding to frequent requests made over the years by clients, the International Trade Law Group of the firm Cassels Brock & Blackwell LLP (which notably includes former Ontario Premiers David Peterson and Mike Harris), has recently published a handy overview of Canada’s international trade law regime that provides a “non legalistic” outline of the key [...]
Responding to frequent requests made over the years by clients, the International Trade Law Group of the firm Cassels Brock & Blackwell LLP (which notably includes former Ontario Premiers David Peterson and Mike Harris), has recently published a handy overview of Canada’s international trade law regime that provides a “non legalistic” outline of the key elements of the Canadian system.
Subjects covered include the following: Trade Remedies in Canada; Exports and Import Controls and Economic Sanctions; Other Export and Import Restrictions; Canada’s Controlled Goods Program; Trade Controls in Agriculture; Canada’s Trade; Agreements Program; Foreign Investment; NAFTA Investment Claims; Government Procurement; Inter-Provincial; and, Trade Barriers in Canada.
With regards to the issue of trade compliance and penalties, the guide has this to say:
“The foregoing description shows that the present international situation is extremely fluid and Canada’s export controls and sanctions regimes are frequently modified to account for this. Because criminal penalties apply where the trade and business prohibitions are transgressed, it becomes essential for any business engaged in international dealings in troubled areas or in trade in sensitive items to be aware of the general nature of the system. Given the unsettled international situation, Canadian laws change and those changes need to be carefully watched.”
The 24-page booklet can be downloaded by clicking here (or on the graphic).
After our first year creating the International Trade Compliance Strategy blog, we want to share a short video introduction with you about our organization and the unique value proposition we deliver in terms of helping companies facilitate their international trade activities across North America and around the world.
After our first year creating the International Trade Compliance Strategy blog, we want to share a short video introduction with you about our organization and the unique value proposition we deliver in terms of helping companies facilitate their international trade activities across North America and around the world.
Customs enforcement has developed drastically over the last decades to keep pace with the tremendous increase in international trade and transport, the growing awareness of trans-national organized crime and, more recently, the threat of terrorism. This has led to an increased awareness in Customs administrations that national and international co-operation is essential. This co-operation is [...]
Customs enforcement has developed drastically over the last decades to keep pace with the tremendous increase in international trade and transport, the growing awareness of trans-national organized crime and, more recently, the threat of terrorism. This has led to an increased awareness in Customs administrations that national and international co-operation is essential. This co-operation is based to a large degree on the sharing of information between Customs Services. More recently, the value of sharing information with the business sector and other law enforcement agencies has also been recognized as being of prime importance. All of this information is the basis for risk management, now generally regarded as the best approach to Customs controls in the current international trading environment.
Enhanced screening of pre-arrival information is the most effective means of promoting the flow of legitimate trade while identifying high-risk containers, cargo and passengers for examination. While 100% examination is impossible with present resources, it is feasible for Customs services to guarantee that virtually all data will be adequately screened for indications of risk. This allows the appropriate application of resources to focus on high-risk shipments for examination prior to goods arriving at a port of entry.
It is always important to remember that although it is possible to define common risk indicators and profiles; it is not possible to specify universal coefficients for the risk indicators because risks and threats change depending on several variables, just as laws, criminal organizations, importers and industries do. Furthermore, it is important to emphasize that the presence of one risk indicator does not necessarily indicate a high risk shipment or person rather; a combination of several indicators increases the probability of the presence of risk.
The WCO Framework of Standards to Secure and Facilitate Global Trade also has, as one of its core elements, a requirement that all Members implementing the initiative employ a consistent risk management approach to address threats to the trade supply chain.
Standardized Risk Assessments (SRAs) are an important part of the Customs intelligence function and contribute to the efficient and effective functioning of Customs services which in turn benefits international trade facilitation efforts.
Definition: The area of Risk within the Customs environment contains many specific definitions of equal importance which are listed below:
Risk: The potential for non-compliance with Customs laws.
Risk analysis: Systematic use of available information to determine how often defined risks may occur and the magnitude of their likely consequences.
Risk areas: Those Customs procedures and categories of international traffic which present a risk.
Risk assessment: The systematic determination of risk management priorities by evaluating and comparing the level of risk against predetermined standards, target risk levels or other criteria.
Risk indicators: Specific criteria which, when taken together, serve as a practical tool to select and target movements for their potential for non-compliance with Customs law.
Risk management: Logical and systematic method of identifying, analyzing and managing risks. Risk management can be associated with any activity, function or process within the organization and will enable the organization to take advantage of opportunities and minimize potential losses.
Risk profile: A predetermined, comprehensive and relevant combination of characteristics or risk indicators, based on information which has been gathered, analyzed and categorized.
Risk profiling: The means by which Customs put risk management into practice. It replaces random examination of documents and goods with planned and targeted working methods that use profiles as a basis.
Standardized Risk Assessments (SRAs): These Assessments produce risk indicator products for use by Customs officials for the purpose of targeting goods and conveyances in their daily work.
Source: Global Facilitation Partnership for Transportation and Trade – The United Nations Trade Facilitation Network
