The following is from the 24 October 2012 edition of the Journal of Commerce.
HUNTINGTON BEACH, Calif.— With Customs and Border Protection especially vigilant today in enforcing commercial trade regulations, a customs consultant told footwear industry executives meeting in Huntington Beach that adhering to CBP’s reasonable care directives is just as important today as when the concept was introduced almost 20 years ago.
CBP’s importer reasonable care requirements are contained in the Customs Modernization Act of 1993. They recognize that the agency, with scarce resources, must enlist the support of importers in fostering commercial compliance and securing the supply chain, said Rennie Alston, chief operating office at American River International.
The reasonable care requirements are a checklist of actions and preventative measures importers should take to secure their supply chains going back to when their products leave the overseas factory. CBP benefits when importers adhere to these provisions because the agency can devote its resources to targeting potentially risky shipments from shippers and importers that are not trusted partners.
Importers also benefit by demonstrating reasonable care. “If there is a Customs action, it will result in mitigation of penalties,” Alston told the annual conference of the Footwear Distributors and Retailers of America.
Importers demonstrate reasonable care when they implement pro-active measures such as consulting with customs attorneys or other experts. Importers may ask CBP specialists for binding rulings when they are going to bring a new product into the country. Even if importers rely on customs brokers to file their entry documents, they should still have compliance personnel in-house that understand Customs requirements and can oversee the daily interaction with brokers.
Customs penalties for filing inaccurate or incomplete entry documentation can be the payment of double duties, or 20 percent of the value of the merchandise if it is not dutiable. However, when there is an error, an importer that can demonstrate and document its adherence to reasonable care provisions should be able to mitigate the penalties, Alston said.
Customs is a stickler when it comes to duty payment because it has been a duty-collection agency since its founding in 1789. Therefore, importers and their brokers should be especially careful in assigning value to imports and listing quantities.
Some importers make the mistake of allowing brokers to do all of the work with little or no supervision. Brokers indeed assume liability for certain errors they commit, but the importer is responsible for sharing complete and accurate information on shipments with brokers, and importers ultimately take on most of the responsibility when there is a Customs audit. “Supervision and control falls on the lap of every importer,” Alston said.
Contact Bill Mongelluzzo at [email protected]. Follow him on Twitter @billmongelluzzo.