International Trade (Chapter 10)

CBP is also concern with revenue collection. Revenue is determined by...

- Correct valuation (price paid or payable) - Correct classification - Country of Origin (COO) - Correct identification of merchandise - Correct identification of buyer and seller and whether or not they are related

Shipment must conform to Export Administration Regulations:

- Know the product or technology being exported - know where it is being produced - know where and to whom it is being sent - know who will use the product - know whether there are any illegal restrictions in the order, L/C or other document (ex: boycott clauses)

Criminal Penalties

- Substantial Fines (and/or) - 10+ years imprisonment EX: mclaury was head of supply chain, anything that happens during his time there affects him

Civil Penalties

- Substantial fines per occurrence - Individual and/or company sanctions

A typical cross-border shipment involves

- accurately completing and filing about 35 documents - comply with over 600 laws and 500 trade agreements that are constantly changing - interface with about 25 parties, including customs, carriers, freight forwarders, other government agencies

Trade Compliance Systems (or Global Trade Management System)

- have become a vital tool for every major importing and exporting company in the US - only way to keep current with all of the continuously changing laws, regulations, and procedures -trade compliance systems can automate the process of checking every transaction (For commercial & non-commercial products against every legal regulation before import or export)

Benefits of implementing a Trade Compliance System include:

- increased level of compliance compared to a manual process - decreased number of physical inspections by US Customs & Border Protection - Faster release of shipments by US Customs & Borders Protection - Avoidance of fines and penalties - Opportunity to interface with other systems

Why is staying up to date a major challenge for International Trade Management?

- the information changes frequently -it's often made available only in a foreign language - it's not always produced in an electronic form

Millions of shipments cross into the US anually..

-11.2 million trucks -2.2 million rail cars -7,500 foreign-flag ships making 51,000 calls on US ports - 70,334 truck, rail& sea containers arriving at 328 ports across the US

Statutory Sanctions

-Seizure and forfeiture of items in violation, including the vessels and aircraft carrying the items. -Loss of import and/or export privileges for a business unit, division, or for the entire company. -Detailed inspections of every single shipment, and delayed release by US Customs & Border Protection.

Goods are not legally entered into US commerce until:

1. Shipment has arrived within the port of entry 2. Delivery to the shipping destination has been authorized by CBP --> product may not be kept at port if there's no space; allowed to pick up product from port and store it at warehouse, but it cannot be used until CBP certifies it 3. Estimated duties have been paid

Opportunities of Global Supply Chain

Increased revenue through global business and economic opportunities -nations form trading groups EX: EU, NAFTA increased sourcing options: more potential sources of supply to choose from including potential economic opportunities

Mission of Department of Homeland Security

Prevent terrorist attacks within the United States Reduce America's vulnerability to terrorism Minimize the damage from potential attacks and natural disasters

Challenges of Global Supply Chain

Tariffs/duties, transporting goods across borders, customs, business practices and regulations vary by country, foreign markets not homogeneous even within country

Import Process

When a shipment reaches the US, the Importer of Record (i.e., the owner, or purchaser) will file entry documents at the port of entry.

CBP protects the US through...

active inspections at ports of entry; physically at port with documentation

Import/ Export Process Flow

anytime there is an export in the US, there is an import somewhere else; if there is an import in the US, there is an export elsewhere **Parallel

Managing international trade activities is a

complex process

CBP has a strong base of..

industry partnerships and technology to safeguard the American public and promote legitimate international commerce -- Certified Cargo Screening Program:if people have a good track record, they get categorized as a safe shipper and they are expediated, so not all their products are constantly checked; Company who is part of this program has been identified as secure supply chain user

Trade Compliance

is a major concern and dozens of laws, regulations and rules have to be checked and complied with for every import and/or export transaction

Technology

is defined as the specific information necessary for the development, production or use of a commodity **usually, technology is even more strictly controlled than a commodity

Department of Homeland Security's first priority

prevent the entry of terrorists and instruments of terrorism, while simultaneously ensuring the efficient flow of lawful traffic and commerce

U.S. Customs and Border Protection's mission is to...

safeguard America's borders thereby protecting the public from dangerous people and materials while enhancing the Nation's global economic competitiveness by enabling legitimate trade and travel. they work to secure and facilitate imports arriving in the US, accommodating the increasing volume and complexities of international trade "pushing the borders back"

On March 1st, 2003, DHS assumed responsibility for

securing our nation's borders and transportation systems which straddle 350+ official ports of entry and connects our homeland to the rest of the world

Established in 1789, U.S. Customs and Border Protection (CBP) controls...

the import process; It is the gateway agency for more than 20 other government agencies each of which has some control over various aspects of international trade.

Deemed Export

the release of technology or source code that is subject to the Export Administration Regulations, to a foreign national located in the United States. EX: Company gives a foreigner here on a visa encrypted software on a surface--illegal **does not have to occur outside of country** An intentional or unintentional export of controlled technology can easily occur within the walls of your company, even if located within the borders of the United States. **Need a license but need to identify who, what, where** Proper controls are needed to ensure that any such export occurs legally (proper licenses&approvals) and does not expose you or your company to penalties

International Trade Management

trade regulations and related content are at the heart of ITM, but staying up-to-dat is a major challenge

Businesses violating trade regulations face fines of...

up to 40% of the value of the merchandise for "negligence", which can mean simply failing to keep certain necessary records

Release can be...

visual, oral, on the job training, systems access, etc. ^^scientists from India or China must have restricted access to chemical labs

Export Process

when a shipment is ready to be exported, the shipper will file export documents for the goods' at the port of departure -Must complete and submit a Shippers Export Declaration (SED) - Submit a Commercial invoice for the product