The Bureau of Customs and Border Protection (CBP) issued a Notice of Proposed Rulemaking (NPRM) in the Federal Register on January 2, 2008, pertaining to the long-awaited Advance Trade Data Elements, or the “10+2.”1 CBP expects that these additional data elements, some of which would be required from importers and others from ocean carriers, will further improve high-risk targeting of cargo entering the United States. CBP seeks written comments on the proposed rule by March 3, 2008.

Usinig this NPRM, CBP proposes that importers and carriers be required to electronically transmit to CBP additional information about cargo traveling to the United States by vessel via an Importer Security Filing no later than 24 hours before the cargo is laden aboard a vessel destined for the United States.2 The Importer Security Filing can be handled by the importer or a designated agent, such as a customs broker, who obtains a bond and has access to the Automated Broker Interface or the Automated Manifest System (AMS).

Responsibility and Accuracy for Importer Security Filing Data

CBP emphasizes in the NPRM that the importer is ultimately responsible for the timely, accurate and complete submission of the Importer Security Filing, regardless of whether the importer uses an agent for filing. If the importer or fi ler discovers that information presented on the Importer Security Filing is incorrect before the goods arrive in the United States, it is required to update the fi ling with more accurate information. The proposed regulations also allow for the withdrawal of an Importer Security Filing if a shipment is no longer intended to arrive in the United States.

Treatment of Confidential Business Information

In response to the trade community’s concerns about the unauthorized release of business proprietary information presented to CBP in the Importer Security Filing, including the importer of record number, CBP states that it will keep this information confi dential. CBP is proposing to amend 19 C.F.R. § 103.31a to include the Importer Security Filing elements, vessel stow plan and container status message to the list of information that is per se exempt from disclosure under 19 C.F.R. § 103.12(d) unless CBP receives a request for the records pursuant to the Freedom of Information Act and the owner of the information expressly agrees in writing to its release.

Summary of Required Importer Data Elements

The 10 data elements that importers will be required to transmit in their Importer Security Filing for each shipment are as follows:3

(1) Manufacturer (or supplier) name and address. This is the name and address of the entity that last manufactures, assembles, produces or grows the commodity, or the name and address of the supplier of the fi nished goods in the country from which the goods are exported. Simply providing the Manufacturer Identifi cation Number is insuffi cient, because it does not include the complete address of the manufacturer and CBP believes this information is critical to effectively targeting high-risk cargo.

(2) Seller name and address. This is the last known entity by whom the goods are sold or agreed to be sold.

(3) Buyer name and address. This is the last known entity to whom the goods are sold or agreed to be sold. If the importer is not the purchaser, the name and address of the owner of the goods must be provided.

(4) Ship-to name and address. This is the fi rst party scheduled to physically receive the goods after release from CBP’s custody.

(5) Container stuffi ng location. This is the name and address(es) of the physical location(s) where the goods were stuffed into the container. For break bulk shipments, the name and address(es) of the physical location(s) where the goods were made “ship ready” must be provided.

(6) Consolidator (stuffer) name and address. This is the name and address of the party who stuffed the container or arranged for the stuffi ng of the container. For break bulk shipments, it is the party who arranged for the goods to be made “ship ready.”

(7) Importer of record number/FTZ applicant identification number. This is the party who is liable for payment of all duties and responsible for meeting all statutory and regulatory requirements because of the importation of the goods. For goods intended to be delivered to an FTZ, the CBP-assigned number of the party fi ling the FTZ documentation with CBP may be provided instead of the importer of record number.

(8) Consignee number(s). These are the entities on whose account the merchandise is shipped.

(9) Country of origin. This is the country of manufacture, production or growth of the article and should be the same country that appears on CBP Form 3461.

(10) Commodity HTSUS Number. The HTSUS must be provided to the six-digit level, but may be provided up to the ten-digit level.

Comments on the Importer Security Filing from the Trade

The Federal Register notice included several pages of comments that CBP received from the trade on the 10+2 topic, with responses from CBP to each. Within these comments, CBP noted that the agency will be providing guidance to the trade in the form of FAQs and other outreach. CBP stressed that if the importer does not know an element that is required pursuant to the proposed regulations and CBP’s guidance, it must take steps necessary to obtain the information. If the importer believes that a required data element does not exist for a transaction, CBP notes that the importer should request a ruling from CBP before it is time to submit the Importer Security Filing.

Additional comments and CBP’s responses are summarized below:

  • Question: Will Customs-Trade Partnership Against Terrorism (C-TPAT) members be exempt from the Importer Security Filing requirement?

Response: CBP responded that all cargo, including that of C-TPAT members, would be subject to these requirements. CBP added that C-TPAT member shipments would likely be readily and expeditiously cleared, and not further delayed due to additional CBP scrutiny.

  • Question: Will the Importer Security Filing data elements and defi nitions align with those of the World Customs Organization (WCO) SAFE Framework?

Response: Yes, CBP stated that it is working with the WCO to develop an amendment process to enable the WCO Framework of Standards to adapt to changes in the international security environment. CBP aims to make the data elements consistent with the WCO Data Model.

  • Question: Can one Importer Security Filing be submitted for multiple bills of lading?

Response: Yes, under the proposed rule, CBP states that where there is a single shipment to one importer of record that includes multiple bills of lading, only one Importer Security Filing is necessary. The manufacturer (or supplier) name and address, country of origin and commodity HTSUS number elements, however, must be linked to one another at the line item level.

  • Question: Will importers participating in the Automated Commercial Environment (ACE) be relieved of the Importer Security Filing requirements if repetitive low-security-risk shipments are imported?

Response: CBP indicates that the Importer Security Filing is required for all shipments. As CBP continues to develop ACE, however, “the agency will continue to make enhanced fl exibility for the trade a top priority.” Furthermore, CBP will not delay the implementation of the regulations for this initiative until the fi lings can be performed through ACE. 

  • Question: Will the use of a foreign freight forwarder to conduct the Importer Security Filing constitute “customs business”?

Response: CBP indicates that an agent’s transmission of the Importer Security Filing to CBP alone would not constitute “customs business,” as defi ned in 19 C.F.R. § 111.1.

  • Question: Will CBP allow entry to be made when the Importer Security Filing is submitted? Response: Under the proposed rule, an importer would be able to submit the entry and/or entry summary data via the same electronic transmission as the Importer Security Filing. If an importer chooses to do so, the consolidated submission of both must be fi led by the party entitled to make entry pursuant to 19 U.S.C. § 1484 on its own behalf or a licensed customs broker. It should be noted, however, that CBP does not intend to extend the fi ve-day minimum entry and selectivity time frame for entry release and FTZ admission purposes to after the confi rmed departure of the vessel from its last foreign port to the United States.

Phase-in Enforcement

As with the 24-Hour Rule implemented a few years ago, CBP will adopt a phase-in enforcement process for the proposed regulations. Through the phase-in enforcement process, CBP states that it will work with the trade to ensure informed compliance. Although comments to CBP suggested that the phase-in period should require fewer than the full 10 data elements, CBP disagrees and states that all of the data elements will be required during the phase-in period.

Bond Condition Amendments

CBP is proposing to amend the regulations covering certain bond conditions to provide for payment of liquidated damages in the event of violations of the newly proposed regulations. The liquidated damages amounts for such violations would be consistent with those for violations of the advance cargo information requirements. Specifi cally, CBP would like to amend 19 C.F.R. § 113.62 to include a condition in which the principal of the bond agrees to comply with the proposed Importer Security Filing requirements. Failure to comply would require the principal and surety (jointly and severally) to pay liquidated damages equal to the value of the merchandise involved in the default. A substantially similar amendment is proposed to 19 C.F.R. § 113.73, the FTZ operator bond.

Although a good deal of the information in the NPRM has been presented to the trade in the past and is certainly not surprising, the fact that this initiative has reached this point and will soon become a regulation, in one form or another, means 10+2 is a reality. Accordingly, companies are wise to determine how the advance data elements will be gathered and managed internally to ensure compliance with CBP requirements. Additionally, note that although the proposed rule currently applies only to vessel cargo, it is CBP’s intent that the regulations will be expanded to all modes of transportation at a later date. At this time, providing written comments to CBP that address additional topics not mentioned in the Federal

Register notice or that assist CBP to further clarify the proposed regulations may help the trade make an impression on CBP that could result in a favorable outcome for the trade once the fi nal regulations are issued.