Best Practice for Effective Customs Clearance

Rick Walker
V. Alexander & Co., Inc.

Taking a serious approach in a constantly changing landscape. The complexities of international trade are continually growing. More data than ever is required to clear cargo through U.S. Customs and the myriad of other government agencies that play a pivotal role in the import clearance process. There are many obstacles to maintaining a compliant import program and there are serious consequences if you don’t.

We all live in a world where we are continually asked for more data. Have you noticed that every retail store wants your email address and sometimes even more? Big Brother is watching us. I recently picked up a pair shoes on display in a shoe store where I regularly shop. I didn’t buy them, but before I had even gotten home, I received a text message from that store with a picture of the exact shoe I was considering, and asking me to reconsider, this time with a discount. Really? How did they know? We won’t ponder that here but suffice it to say that our activities are being monitored.

When it comes to the various government agencies involved in import transactions, it’s much the same. They watch import transactions and they want your data! It’s not necessarily a bad thing and there can be distinct advantages but importers should be prepared for the challenges.

Over the last several years, CBP gradually replaced its aging Automated Commercial System (ACS) with the new Automated Commercial Environment (ACE). ACE is a secure trade portal that changes the way the importing community interfaces with CBP and other federal agencies.

Now that ACE is here, many other government agencies are opting to use the ACE interface (piggyback, if you will) to collect additional data of their own. These agencies are referred to as Participating Government Agencies and their data requirements have grown substantially as a result of ACE. They now have a data pipeline that they didn’t have before and they are taking full advantage of it! The Food and Drug Administration and the National Highway Traffic Safety Administration are two of the primary PGA’s that use ACE capabilities to their full advantage. Others are USDA, EPA, etc. It’s worth noting that FDA now requires the electronic transmission of substantially more data elements than before and NHTSA has transitioned from a previously submitted paper form to up to 18 data elements transmitted electronically. More agencies are on the way!

Data, data, yes more data. Coordinate with your Customs Broker and get ready!

Many data fields require completion before transmission of the entry to FDA and CBP. These data fields vary between the commodity types but typically consist of the following:

• Commodity & Subtype
• Product Code
• Country Code identifying where the product was produced, sourced, grown or harvested
• Product Description
• Names & Addresses of Manufacturer, Shipper, Importer, Delivered-To Party
• Contact Information
• Estimated Arrival Date & Time

For imported items subject to Prior Notice Filing, pertinent data requirements include:

• Country of Production or Place of Growth; Country of Shipment
• Names and Addresses of PN Transmitter, Submitter, Owner, Ultimate Consignee; if Applicable: Grower or Consolidator;
• FSV Container Number
• Quantity, Packaging
• Affirmations of Compliance, if required
• Anticipated Port of Arrival

Trust is a key element in any successful partnership. You can confidently place your trust in your Customs Broker to process your clearances with the latest technology and communication tools available and to ensure your shipment data is provided in the most efficient, cost-effective and compliant means possible. That said, don’t rely on your Customs Broker to understand everything about your product. The relationship between the importer and Customs Broker is governed by the law of “agency”. You are the principal and the Customs Broker is the agent. You, as principal, must direct the activity of the Customs Broker.

A well-written and comprehensive standard operating procedure is the order of the day. The SOP should mandate regularly scheduled internal audits of your broker’s activities and filings on your behalf and establish key performance indicators to ensure your instructions are being followed and your requirements are being met.

Here are some top best practices for effective Customs clearance:

• Verify the FDA product code your Customs Broker is using is correct and that the description and packaging details are being reported properly.
• Understand the local FDA rules at the port of entry. These can vary from port to port and can affect the delivery of your cargo!
• Know which party will be filing the FDA Prior Notice – shipper, importer, broker? It’s critical to meet the date requirements to reduce delays.
• Use FDA’s Import Trade Auxiliary Communication System to monitor the FDA clearance status of your shipments.
• Verify the name and address of the ACTUAL manufacturer and list it on the commercial invoice along with the correct facility registration number.
• Make sure your Customs Broker knows who serves as the Foreign Supplier Verification Program (FSVP) importer.

These are just a few of the issues to consider. As with most business partnerships, detailed and timely communication is the key to success. Know each other’s roles and always strive for better quality. It’s a continual process.

Conclusion: CBP has been taking a more aggressive posture with the passage of the Trade Facilitation and Trade Enforcement Act of 2015, signed into law Feb. 24, 2016. It is the first comprehensive authorization of CBP since the Department of Homeland Security was created in 2003, with the overall objective to ensure a fair and competitive trade environment. Greater regulatory enforcement activities can be expected. You, as the importer, must continually measure and oversee your compliance. It’s more important than ever to take charge of your importations and put in place procedures and practices with your Customs Broker that will ensure quick release of your international cargo with maximum compliance. 

Since 1946, V. Alexander & Co., Inc., headquartered in Memphis, Tenn. has provided global trade services for their clients around the globe. In addition to Customs clearance, international freight forwarding and transportation services, the company provides educational services to their clients to keep them informed in the ever-changing world of international trade.

Rick Walker is vice president of V. Alexander & Co., Inc. For many years he has been a licensed Customs Broker and Certified Customs Specialist. Rick may be reached at (865) 970-4720 ext. 4117 or at rwalker@valexander.com.