Going Global
ISA & ACE
Partnership Programs with U.S. Customs
About Renfro Corporation
Privately held corp. founded in 1921 &
headquartered in Mount Airy, NC
One of the world’s largest designers,
manufacturers, and distributors of
socks
Employs ~5,000 people worldwide
Manufacturing locations:
NC, SC, AL, Mexico, India, Pakistan,
Turkey, China
Distribution Centers:
NC, SC, the Netherlands, Mexico, Canada
Imports to the USA 7 years ago, were
virtually nil….but today….
Participates in CTPAT, ACE and ISA
Brands & Customers
Renfro Importing Timeline:
From Domestic to International
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1921-2000: “What’s a Customs Broker?” era
2000: Began importing regularly from Central America
2001: Began importing regularly from Mexico & Pakistan
2002: Developed International Sourcing Department and
expanded to global sourcing
March 2003: signed C-TPAT MOU
February 2004: the Great Sock Detention
April 2004: C-TPAT certification received
June 2004: Applied to ISA
January 2005: ISARM meeting held
July 2005: Accepted into ISA
July 2005: Joined Automated Commercial Environment
ACE
ACE is the next generation of technology designed to
enhance national border security and expedite lawful
trade. It automates and consolidates border processing.
Through tools like the ACE Secure Data Portal,
unprecedented integration of information and
communication between CBP, the trade community,
and other participating government agencies is
provided through a single, integrated, on-line access
point. –Customs Website
Requirements:
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Internet Connectivity
Complete POA
Sign Terms & Conditions Document
Request for Multiple Business Categories if needed
Sign Interconnection Security Agreement
Complete Account Data
Benefits of ACE
• Periodic Monthly Statements (You can do the acronym on
your own…)
• Example of Account based ideology rather than traditional
transactional based ideology
• Interface between Customs, importers and OGAs
• Significant Activity Log for communicating issues
• Allows importers to designate Customs Brokers
• Allows truckers to file e-manifests at ~40 border ports
• Lots of cool data and reports for compliance geeks…
• Additional modules will be added in future, including FTZ,
recon, additional reporting functions, and more detailed exam
information
Flow of Intelligence at Border Station
Customs’ vision
for ACE
CBP Officer
decides to:
As trucks
approach border,
Radio Frequency signal
transmitted to ACE
CBP Officer at primary
checks ACE screen for results of
Screening and Targeting analysis
Release Shipment
OR
Hold
and
Examine
Periodic Monthly Statement:
PMS is a feature of ACE which promotes account based
processing
– PMS allows you to:
• Move from a transaction-by-transaction payment process
to an interest-free periodic monthly statement process.
• Roll-up individual entry summaries for goods that are
either entered or released during the previous month and
pay on the 15th business day of the following month.
• View the statement as it is being built.
Periodic Monthly Statements
See complete details of statements for analysis
Drilldown to Entry
Detail on Statement
Monthly total of duties, taxes,
and fees that the importer owes
Drilldown to Daily Statement Detail
Daily totals of duties, taxes, and fees
that comprise the monthly statement
All the individual
entries that make up
a daily statement
Trade Reports: Examples
• Summary of HTS Numbers by Value
Report
• Summary of IR Numbers by Date, by
Value Report
• Summary of IR Numbers by Number
of Cargo Exams Report
• Summary of Filer Codes by Number
of Cargo Exams Report
• Summary of Consignee Numbers by
Date, by Value Report
• Summary of Filer Codes by Value
Report
• Summary of Filer Codes by Number
of Team Reviews Report
• Cargo Entry Details Report
• Cargo Entries by HTS Number Report
• Cargo Entry Lines by Filer Code Report
• Cargo Exam Details by Date Range Report
• Cargo Exam Details Report
• Team Review Details by Date Range Report
• Team Review Details by Entry Number
Report
• Entry Summary Lines by Port of Entry Code
Report
• Entry Summary Lines by Filer Code Report
• Filer Activity Summary – Top 5 Ports
• Importer Activity Summary – Top 5 Filers
Entered Value by COO (2004)
ACE Assessment
• Overall, it is a good tool for importers with little investment
required (other than time) & promises to offer more
functionality in the future
• Not always the most intuitive system to use
• If you pay lots of duty, the PMS float will be worthwhile (that’s
us, textile guys)
• Reports are useful and may offer a better, more accessible data
source than the FOIA ITRAC requests (but data details may be
limited)
• Essential for trucking companies using Mexican & Canadian
border crossings
• Customs is providing some training so check with your account
manager for availability
ISA: Importer Self Assessment
Importer Self Assessment
“ISA is a voluntary approach to trade compliance.
The program provides the opportunity for
importers who have made a commitment of
resources to assume responsibility for
monitoring their own compliance in exchange
for benefits.”
–Customs’ website description
ISA Application Process
• Complete Application & Questionnaire
• Have documented controls and procedures
• Visit by Customs ISA Assessment team—ISARM
– Review of ops, procedures, feedback, recommendations
• Report/recommendation by ISA team to supervisors
• Upon supervisor approval, submitted to ISA panel for
decision
• If accepted, must annually certify compliance
• Time from application to decision could be 5-6 months
• As of February 2006, there were ~150 applicants &
~100 approvals
Focused Assessments—the ISA Alternative
• Enforcement Based Approach
• Can be time-consuming depending on your
business and complexity
• Assessments can now also focus on one area
in some cases, such as preferential trade
program compliance (see QRA)
Quick Response Audits (QRAs)
Quick Response Audits (QRA) are single-issue audits with a
narrow focus. These audits are designed to address a
particular limited objective within a reasonably short period
of time. QRA is a term used to cover a variety of audits
that will have limited objectives as opposed to the complete
evaluation of a company's Customs and Border Protection
(CBP) activities in the focused assessment program.
Because audit objectives vary among QRA, a universal audit
program cannot be established and used for all QRA.
Examples of a QRA might be an audit of an importer's
CBP operations to determine if there is a potential for
unlawful transshipment or an audit of the company’s
controls concerning intellectual property rights.
Import Program Key Elements
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Executive level support & policy
Documented controls and procedures
Customs Compliance Committee
Pre-entry audits (classifications, value issues, etc)
Post-entry audits (7501 audits)
Monthly Post-entry comprehensive audits (from PO to receiving & final
payment) reported to high levels in the organization
Semi-annual audits by Internal Auditor
Feedback/reviews of Customs Brokers
Packaging COO and fiber content audits
Control systems for Assists
3rd party pricing studies
Screening of business partners (C-TPAT)
Security surveys and factory visits (C-TPAT)
Factory visits for C-TPAT, origin issues, transshipping, etc.
Training, training, training…internally & externally
3rd party assessments of topics as deemed necessary (NAFTA, C-TPAT)
Automated auditing of system info versus broker/7501 info being developed
Is ISA Right for YOU?
• Depends…..every importer is different
• Do you have good internal controls?
– Do you have documented controls & procedures?
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Do you have executive level commitment?
Do you have a good relationship with Customs?
Are you “conservative” with your compliance program?
Do you already “audit, audit, audit…”?
Would you prefer to have some control over which
audit pool you are in?
Decision Factors in Joining ISA
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Resource allocation (time, cost, predictability)
Control
Conservative nature
Existence of solid programs
Cooperative relationship with Customs
Benefits
Benefits of ISA
• Removal from Focused Assessment Audit pool
• Requires better internal controls, systems and compliance—so mistakes are
reduced
• Greater collaboration between the importer and Customs
– Puts “a face” on Customs for your top management and vice versa
– Better relationship between Account Manager & Importer
– Chance to make Customs an advocate rather than an adversary
• Opportunity to demonstrate the value of your Compliance Program (to
Customs and Internally)
• Feedback from Customs on your controls in a non-audit setting
• Opportunity to elicit resources to meet your company’s compliance needs
• Increased prior disclosure benefits & other potential benefits
• Opportunity to identify cost savings through streamlining of compliance
processes, EDI automation, fewer post-entry corrections, avoiding
fines/penalties, reduced classification errors, etc.
2005: The year of the Rooster and the End of Quotas
And the arrival of China Safeguards
• Multiple safeguard actions filed and accepted,
leading (finally) to a comprehensive textile
agreement between the US & China
• Re-established old school quota systems
• China & US agreed to an ELVIS solution
• Safeguards Valid through end of 2008
Challenges & Risks to Importers
due to China safeguards
• Operational issues—new logistical decisions, new
sourcing decisions (Hong Kong, Macau, Taiwan, etc)
• Cost changes / fluctuations of currency, labor costs, etc.
• Quota availability & cost uncertainties
• Trans-shipment threats
– Detentions, seizures, penalties, oh my!
• Know your vendors, are they reliable? Trustworthy?
– Does the Macau factory actually exist?
Alternatives to China
Alternatives to China
Suggestions for Multi-Country Processing / High Risk
Trans Shipping Situations
• Seek binding ruling on proposed operations, be sure
your COO assumption is correct (it also lets Customs know
your plans)
• Know your vendor well!
– Validate the factory
• Ensure vendors understand the extent of recordkeeping requirements to validate COO
• Be prepared for the request for production records
• Have vendor produce records as a test. Can they?
• Talk to Customs, let them know what you’re going to
do.
Shameless Product Plug….
Buy Fruit of the Loom Socks!
Thank You