On February 2, 2003, U.S. Customs will be implementing the so-called “24-hour rule,” which went into legal effect on December 2, 2002. With this rule, U.S. Customs will now require carriers and non-vessel operating common carriers (NVOCCs) to transmit certain cargo data to U.S. Customs 24 hours before the cargo is laden aboard a ship bound for the U.S. at a foreign port.
This rule is one more step in U.S. Customs’ strategic plan to “move the border” into the foreign countries of origin, making them our first line of defense against terrorism. You can find more details about the 24-hour rule at the Customs’ website.
With this article, I want to focus on the responsibilities of U.S. importers to assist their suppliers and supply chain partners comply with certain aspects of this rule.
As part of its enforcement efforts under this rule, U.S. Customs will be keying on the description of the cargo. If the cargo is not properly described, then the container will not be loaded on the vessel!
This has a real impact on NVOCCs who, in the past, routinely described cargo as “consolidated cargo” or “freight all kinds.” They used these generic descriptions both to preserve the confidentiality of the contents of a consolidated container and to save time. These types of descriptions—along with many others such as apparel, auto parts, foodstuffs, plastic goods and tools—will no longer be acceptable.
How is Customs screening descriptions? They are simply using the description that is already used when cargo enters the United State: the Harmonized Tariff Schedule description! (See my article “What's So Important About Classification?”) The importer of record is 100 percent responsible for correctly classifying imported products.
To eliminate the chance that their shipments will be delayed due to insufficient description, every importer should immediately take the following steps to ensure that their imported cargo is correctly described:
- Establish a product matrix with the product name, identifying catalog number or other description, the correct HTSUS number, and the HTSUS description for each imported product.
- Supply the applicable parts of this matrix to your suppliers and require them to describe each invoice line item with sufficient detail so that Customs can identify the cargo by cross-referencing the appropriate HTSUS description.
- Require your suppliers to place the HTSUS number following each item on the commercial invoice and packing list.
- In cases of EXW or FOB shipments, provide the importer-selected forwarders with the product matrix.
In addition to updating product descriptions, regular importers should become certified under the Customs-Trade Partnership Against Terrorism (C-TPAT) as soon as possible. (See my article “U.S. Customs, Security, and Some New Year’s Resolutions.”) For more information about C-TPAT, visit the U.S. Customs website.
All participants in C-TPAT must certify to U.S. Customs that their own internal security and monitoring procedures meet acceptable standards. Once accepted into the program, importers enjoy a decreased risk of cargo inspection because Customs regards certified importers to be a lower security risk. In addition, Customs is more likely to give C-TPAT participants the “benefit of the doubt” when enforcing the 24-hour rule and other regulations.
Not only should importers become certified under C-TPAT, they should make sure their entire supply chain is also C-TPAT certified. Just as Customs is more likely to give importers the benefit of the doubt with certification, they are also more like to do so with other entities such as ship lines, NVOCC’s, forwarders and brokers. By doing business only with C-TPAT certified entities, importers greatly increase their chances for smooth, delay-free movement of import cargo.
As we go forward into 2003, look for many more initiatives and regulations to affect your import program. Informed importers will stay abreast of these changes and, above all, make sure that their own houses are in order! See my article “What is Reasonable Care?” for some hints on how to proceed.
Finally, I want to pass on a note to exporters: You can look for upcoming changes in U.S. export regulations that mirror the level of control—if not the detail—of import controls!