I tend to shy away from commenting on U.S. Customs and Border Protection’s proposed rules. The final rule invariably ends up being more palatable than the proposal, and I end up making unwarranted recommendations. In the case of the proposed rules for filing advanced trade data elements, I will make an exception.

Let me back up and explain what I am talking about. At the end of 2006 Congress passed and the President signed the SAFE Port Act. This legislation contained a requirement that Customs (CBP) collect additional trade data elements on import shipments.

To fulfill this new requirement CBP has proposed a rule requiring 10 additional data elements be reported by the importer and two from the carrier prior to importation into the USA. Hence the name: “10+2.” Customs refers to these as “advanced trade data elements.”

The elements that will be required of importers are:

1. Manufacturer Name and Address
2. Seller Name and Address
3. Container Stuffing Location
4. Consolidator Name and Address
5. Buyer Name and Address
6. Ship to Name and Address
7. Importer of Record Number
8. Consignee Number
9. Country of Origin of the Goods
10. Commodity Harmonized Tariff Schedule Number (six digit)

The elements to be required from the carrier are:

1. Vessel Stow Plan
2. Container Status Messages

You will note I have stated these are “additional data elements.” The so-called 24-hour rule that became effective in 2002 has already required a considerable amount of manifest information be reported to CBP prior to arrival into the U.S. These data elements include:

Current Required Manifest Data

1. Bill of Lading Number
2. Foreign Port Prior to Departure to U.S.
3. Carrier SCAC
4. Carrier Assigned Voyage Number
5. Date of Arrival at First U.S. Port
6. U.S. Port of Unlading
7. Quantity
8. Unit Measure of Quantity
9. First Foreign Place of Receipt
10. Commodity Description (HTS/6 optional)
11. Commodity Weight
12. Shipper Name
13. Shipper Address
14. Consignee Name
15. Consignee Address
16. Vessel Name
17. Vessel Country
18. Vessel Number
19. Foreign Port of Lading
20. Hazmat Code
21. Container Numbers
22. Seal Numbers
23. Date of Departure from Foreign Port
24. Time of Departure from Foreign Port

The period for commenting on the proposal closed in February of 2007. Customs is now promulgating the rule and we are waiting on the Notice for Proposed Rule Making (NRPM) from them. (Don’t ask. The method in which our federal government promulgates rules and regulations is lengthy and tedious.)

Why am I bringing this proposed rule to your attention?

Because of the mandate from Congress, CBP will release some version of a rule that will require importers and carriers to submit some variation of the above data elements. This is not a case of if, rather a case of when.

My concerns for the importing community fall into two categories:

1. Can the importer obtain the data in a timely fashion?
2. How will the importer manage and control the reporting of the data?

Let us address each of these questions:

Can the importer obtain the data in a timely fashion?

Most of the trade data elements will be easily obtained. A few may pose a challenge.

For commercial reasons importers often do not know the actual manufacturer of their goods. Intermediaries such as trading companies are reluctant to share the data with their clients.

The structure of some import supply chains makes availability of six-digit HTS codes a challenge. Current 24-hour rules allow the carrier some latitude merely to report an accurate description of goods. The enhanced requirement will create difficulties for some.

Other import supply chains drop ship their product to their customers. Obtaining any information from a customer can be a touchy situation.

Yes, these data elements exist but getting at them in a timely fashion may require extraordinary effort on behalf of the importer.

How will the importer manage and control the reporting of the data?

It is hoped the NPRM will resolve the logistics of the process, but as currently envisioned the importer and carrier will have to submit a security filing (SF) that is above and beyond the 24-hour rule’s requirements and precedes the creation of a customs entry.

Administratively this appears to create one more event the importer or the importer’s agent will need to manage. With additional work comes additional cost.

The data requirements also push the importer very close to providing a complete customs entry prior to cargo arrival. The only additional data elements required to complete the entry include:

Additional Data Required to Complete an Entry

1. Entry Number/Type
2. Entry – Port/Entry
3. Filer Code
4. Importer of Record
5. Ultimate Consignee
6. Surety Number
7. Filing Date & Time
8. Importing Carrier
9. Vessel Name
10. Country of Origin
11. Exporting Country
12. Exporting Date
13. Foreign Port Arrival
14. Estimated Arrival Date
15. Entry Value
16. HSUSA (10)
17. Manufacturer ID

This begins to blur the security filing processes with the customs entry and calls into question long-practiced business practices regarding when an entry is filed and who should file it.

How will an importer prepare?

Each import supply chain differs from the next but the following suggestions will help facilitate transition to the “10 + 2” rule.

1. Ensure classifications are linked to purchase orders (PO) and available prior to placing the order.
2. Share PO data including the HTS codes with carriers, forwarders and brokers to ensure data is accurately reported to CBP at all levels.
3. Develop confidentiality and non-compete agreements with intermediate suppliers ensuring access to factory information.
4. If the ultimate consignee is a company other than your own such as a customer, collect the appropriate information and share it with carrier and broker.
5. Consider developing a business process that combines the security filing with the customs entry. This may be the time for importers to even consider doing self-filing of customs entries.

Why the urgency? The final rule isn’t published yet.

It is my belief that, whatever the supply chain, “10 + 2” will stretch all importers’ abilities to comply.

The above list of suggestions was simple for me to develop. I appreciate the difficulties some of you will face integrating these solutions into a complex supply chain. Clearly, some of the suggestions require IT resources and alterations to key business systems. None of these are simple or quick changes for your companies.

As you read this, you may be in the beginning stages of budgeting projects for your upcoming fiscal year. I suggest you include within your budget the resources necessary to implement systems and procedural changes to your importing process.

You can learn more about the “10 + 2” issue at the CBP website. I encourage all of you to peruse this website periodically to learn of any changes to the proposal.