What’s in Your Inbox from CBP?

The following alert is the second installment from Birgit Matthiesen for a planned series of cross-border trade updates.


Dateline: Montreal, PQ, March 20, 2015

The new highway being constructed from Montreal to the Vermont border is nearly finished. As one approaches the city from the Champlain Bridge, the skyline is sleek and modern, practically shouting from the top of its famed Mont-Royale that its leaders are ready for business and, indeed, moving full speed ahead. From aerospace to high-end fashion, this community is all about forging its competitive edge in the US marketplace and beyond.

The companies we met were bullish about the opportunities in the US market — opportunities that go beyond a good product at a good price. Their approach is to shape a strategic and long-term corporate brand that will protect their market share, while introducing the company to new customers and industry markets. These are exciting times for them and they realize that, in order to play best in the US market, they must adhere to the rules at first base — the US border.

During the meetings, a number of companies raised concern about recently received “CF-28s” from US Customs and Border Protection (CBP). In short, this notice is transmitted to an importer of record and is generally a request for more information about a product being shipped into the US — from a classification or valuation confirmation to a request for technical data on the product and/or its component parts. It also is used to determine the true country of origin and whether a trade agreement preference has been properly used by the importer.

CF-28s are usually sent from the local CBP office to the company’s broker or logistics department. But this does not mean that other divisions of the company should take its arrival in the mail lightly. It is more than a request for information. It could lead to far more. Companies have correctly expressed worry that the use of the innocuous looking CF-28 portends more serious consequences — that it flags a Customs audit is in the works (or even that CBP is contemplating a penalty). As in the tax world, a CBP audit is not something to be taken lightly.

The Montrealers we met with last week understood that just because they ship a NAFTA-qualifying product does not mean that their import compliance burden is lessened — to the contrary in many instances. For this reason, CBP’s new approach to audits and the expanded scope of its audit programs are now on the agendas of Canadian boardrooms from Montreal to La Malbaie and across Canada. On the dark side, an audit is resource draining and rife with possible penalty notices. But on the bright side, a company that is well organized to mitigate its US import risk exposure is also one that knows it has the best corporate brand to offer its US customers and supply chain. And that is their competitive advantage in a changing US regulatory and market environment.