Six months after Customs and Border Protection moved to active enforcement of Importer Security Filing rules amid suggestions that the sky would collapse for many importers, the sky looks to be right where it’s always been. In fact, says Richard DiNucci, director of cargo control, the level of compliance with the regulatory program is pleasantly high.
“I hate to say it, but it’s pretty boring. It’s gone pretty well,” DiNucci said. “I know there are some out there who said this would not work. We heard the ‘sky is going to fall’ scenario.”
But, he said, “We’re not sending out ‘Do Not Load’ messages left and right. Containers didn’t start stacking up all over the world. The sky did not fall; we never slowed things down.”
Directed for security purposes to improve information on goods coming into the United States, Customs published the final regulations for ISF, also known as the 10+2 rule, two years ago, ushering in a period of adjustment and trepidation over compliance. It allowed one year for importers to get on track for compliance before the agency would phase in enforcement this year.
Under the rule, importers and ocean carriers provide 12 data elements that are not on a ship’s manifest. Among the 10 importer data elements are such details as the name and address of a foreign supplier, and where their cargo is stuffed in containers. Customs says the additional data helps identify shipments that are at risk for tampering by terrorists.
DiNucci said Customs worked closely with the trade industry to craft a rule that everyone can live with. That hasn’t kept importers from feeling nervous about what comes next. Customs is still trying to nudge importers into compliance, but it won’t be long before the agency applies more force. DiNucci said Customs would begin to assess liquidation damages on the most flagrant violators by the fourth quarter of this year.
Importers remain concerned about the requirements and the potential for disruptions to inbound supply chains. In a recent Journal of Commerce Webcast on Customs penalties, half of the questions from the audience were about ISF and the prospect of penalties.
“The majority of importers are trying to make sure they comply. They want to get an idea of what’s in store in the event that they have an error,” trade attorney Robert Pisani said. He applauds Customs for its extended efforts to educate traders and to work with them to correct reporting problems.
Customs received more than 6 million filings in 2009, and some 4.8 million already this year. DiNucci said a big reason the ISF implementation has gone so smoothly is that large-volume importers got on board early. It took time for them to thread their import data along many supply lines, but they got the job done. Critics complained that ISF compliance would harm small and medium-sized importers, but Customs has received ISFs from more than 150,000 importers, and most of them are companies that may make a handful of entries each year.
Still, DiNucci said much of the credit for the acceptance for ISF goes to large, high-volume importers that took some six months to gather and organize data from a complex web of supply lines. “It’s a tribute to them that they got it done. The large importers are also good citizens. They know we did this for a reason,” he said.
Customs is sending warning letters to violators, Pisani said. If importers don’t make the corrections Customs wants, the agency will have a paper trail of infractions to justify the liquidated damages claims.
“If you get a letter, it’s your wake-up call. You’re not doing your filings, or you’re not doing them correctly,” Pisani said. “Like any new penalty regime, there’s a track record on you.” He said one of the biggest problems seems to be with mismatched data. Carriers file the master bill of lading, but importers are sometimes slow to file house bills that contain the security data. “It’s what’s needed to drill down to find what the contents of a container are.”
DiNucci said non-vessel-operating common carriers that lack automated manifest systems have had some trouble with timely filing, but ISF may be the incentive they need to automate. The rule requires importers and carriers to file 24 hours before a ship leaves port, but Customs is being flexible about timeliness — within limits.
“We’re trying not to be overly bureaucratic about looking at the clock and saying, ‘Uh-oh, it’s 25 minutes late!’ We’re trying to be equitable and common-sensical about how we enforce the rules,” DiNucci said. However, if importers linger two days, they have trouble.
“This is not about penalties; it’s about getting the data to Customs so they can improve their targeting,” Pisani said. “I think they’ve been consistent in that message. So far, you’re not seeing a bunch of liquidated damages going out because the January date passed. It’s a measured approach that recognizes there are logistical hurdles to overcome.”
Contact R.G. Edmonson at firstname.lastname@example.org.