Fontana International Services, Inc.
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PRESENTATION AT THE
31ST INTERNATIONAL PRECIOUS METALS INSTITUTE CONFERENCE
MIAMI, FLORIDA, U.S.A.
JUNE 9 – 12, 2007

TIPS FOR QUICK U.S. CUSTOMS RELEASE

To those of you visiting: Welcome to Miami - my hometown. I hope you are enjoying the Conference and I am delighted the weather has cooperated.

I am Susanne Fontana - a U.S. Customs Broker and Freight Forwarder. My company is Fontana International Services (with an emphasis on Service). I plan to present some observations and knowledge of how my industry interfaces with yours.

I joined IPMI over a year ago; and I am proud to be a member of your group. I have learned much from my affiliation, especially from John Bullock. Thank you, John!


TIP ONE: Furnish Detailed And Complete Documentation Prior To Export.

Research the requirements for your product to be imported into the United States before shipping it. There is a procedure for obtaining binding rulings from U.S. Customs. I like to call this “Know Before You Stow.”

All cargo coming into or transshipping the United States must have an entry of some type regardless of whether the cargo is free of duty. There are many different types of entries, depending upon what is to be done with the cargo. However, most precious metal destined for consumption or further processing in the United States requires a formal consumption entry. Most importers employ a Customs Broker to help them fulfill this requirement.

Send documentation to your Customs Broker prior to exportation. This allows questions to be answered and discrepancies to be corrected before arrival of cargo.

An invoice, an air waybill (or bill of lading), and a Customs Bond are the minimum documents required to prepare a Customs entry and obtain release of imported cargo.

It is imperative the invoice is a detailed reflection of the transaction. It should be in English or have a translation included. It should show who sold or exported it; who bought it or is the consignee; where and when the sale was complete or when and from where the merchandise was shipped. It should show the price paid or willing to be paid, the terms and currency of the transaction, and the country of origin of the merchandise. The country of origin is where the product was actually produced, grown, mined, etc., and may differ from the country of exportation. The country of exportation is where the cargo begins its journey to the United States without contingency of diversion.

The product shipped should be specifically described in its condition as it will be imported into the United States. For instance, if scrap gold jewelry is gathered for export from Colombia, put into a free zone and melted into bars for ease of handling and initial estimate of gold content, it should be invoiced as “bars of scrap gold jewelry.” The air waybill should also show the same description as the invoices. When there is a conflict between the invoice and the air waybill, Customs is compelled to examine the cargo.

The invoice must contain a packing list upon it or as an attachment. Packing lists are extremely important especially where there is a variety of products. Customs can assess duties and fees upon an entire shipment based upon the product taking the highest rate if the items are not distinctly itemized in a packing list. This is called “co-mingling.”

Products should be marked with the country of origin in a conspicuous place as legibly, indelibly, and permanently as the nature of the article will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article, unless specifically exempted. If they are specifically exempted, the packing should be marked.


TIP TWO: Choose Your Customs Broker Wisely.

What is a Customs Broker; what are their obligations to clients; how much can you trust them (they know your secrets)?

Customs Brokers have to meet stringent requirements and be knowledgeable in all aspects of the regulations and procedures of Customs; they are tested; and investigated before a license is granted. They are frequently audited and must report any new or departing employees to Customs for their investigation as to suitability.

After licensing, Customs Brokers are primarily the agents for the importers who employ them. They are many times the importers only liaison with Customs. They review import invoices, packing lists, licenses, certificates and other required paperwork. They translate the information into Customs language, and prepare appropriate documentation for presentation to Customs for cargo release and then present the follow-up documents and duties and fees required. They may also file protests or other administrative remedies on behalf of an importer. They work even harder than that. They prepare Customs Bonds, advise importers about the technical requirements of importing, and arrange delivery of cargo as instructed by the importer.

Customs Brokers must be authorized by the importer of record (our client) to act on their behalf in executing documentation for presentation to Customs. The form is specific and is not general. A Broker is not in compliance and has the possibility of losing their license if this form is not executed and on file with them.

Individuals, domestic corporations, partnerships, sole proprietorships, and foreign companies can be importers of record for Customs purposes. Each has distinct requirements and limitations.

Customs Brokers have an obligation to retain import records for five years after the date of entry. So, remember the fees we charge also cover storing your records for five years.

Under Section 111.24 of the Customs Regulations, records and business of clients serviced by Customs Brokers are to be considered CONFIDENTIAL. The broker must not disclose the contents or information connected with the records to any persons other than those clients, their surety (bond) company, or duly authorized and accredited officers or agents of the United States, except on subpoena by a court of competent jurisdiction.

There are fines, penalties, and possible loss of license if this trust is breeched.

This section and our integrity is what enables us to perform simultaneously for competitors and should be reassuring to our clients. We are required not to reveal anything about one client to the other.

In speedy Customs releases, it is not who you know, but what you know and who knows you. Customs does not grant favors because you know someone. In a crisis, they will work with you if they know you are competent and have consistently performed within the Regulations. It is important to choose a Customs Broker with consistent integrity and honor.


TIP THREE: Realize the unforeseeable may happen.

This tip is given with the assumption you are informed about the import requirements for your product; your documentation is in order and uniform; your product complies with requirements for packing, country of origin marking, hazardous handling, and the 400 or so other United States government agency laws, regulations, and procedures which Customs enforces (such as Food and Drug Administration, Department Of Agriculture, Department Of Transportation, Environmental Protection Agency, Fish And Wildlife Service, Federal Trade Commission, Federal Communications Commission, and so on). There also may be state or local governmental requirements, such as over-the-road weight limits or alcohol and tobacco licensing and taxation. And, last but not least, you must have a competent Customs Broker to trust and who knows how to interfacing with Customs on your behalf.

After 48 years of serving international trade, I can sincerely state no rules, regulations, or procedures concerning importations remain constant. They are ever changing. And, of course, it seems the change usually happens with no warning and especially when your most urgent shipment arrives and is awaiting Customs release.

When changes are announced with a little lead time before implementation, we can get ready for them. As an example, the Wood Packing Act required fumigation and special marking of certain wood used in packing and was a major Global change. The Act, at its extreme, provided authority for the return of airplanes with their cargo if only one piece on the plane was not in compliance.

However, we had time to prepare. We notified our clients and we all were aware. None of our clients had a problem from any country around the world. And, it is a good act. Beetles were destroying forests and something had to be done.

Not withstanding, sometimes there are sudden changes, such as what happened recently to all the Armored Guard Services handling currency through Miami International Airport.

For as long as I can remember, paper currency has been handled by Armored Guard Services without benefit of a Customs Broker. Suddenly and without warning, Customs required currency importations or currency transshipments through Miami to be processed through a Customs Broker. Billions in currency came to a halt at Miami International Airport until Customs Brokers were mobilized.

We met with Customs on behalf of our Armored Guard Services and resolved that issue fairly fast. Customs reverted to traditional clearances through the Armored Services.

Also and suddenly, Customs would only allow high-value shipments to be processed as regular cargo (meaning releases could take a day or more). We also resolved that issue. Customs will now process high-value shipments as if they were perishable and they will accept walk-through presentations after normal hours. Processing usually takes less than half an hour.


TIP FOUR: Establish an ACH account with Customs. Your Customs Broker will help you.

Under section 111.29 of the Customs Regulations, Customs Brokers must have diligence in correspondence and in paying monies to U.S. Customs—and there are time limits. However, please be aware and I quote from that section:

“…If you are the importer of record, payment to the broker will not relieve you of liability for Customs charges (duties, taxes, or other debts owed Customs) in the event the charges are not paid by the broker…”

Unfortunately, in the past there have been times Customs Brokers have stolen duties or misappropriated them, causing importers to have to pay again and sometimes landing the Customs Broker in prison. On the other side, Customs Brokers are not obligated to pay Customs if the importer has not paid—we are required to submit documentation in a timely manner with an explanation, but not to advance funds.

An automated clearinghouse account with Customs helps keep the funds under control. Many clients are fearful of allowing Customs into their bank account. However, you can establish a separate account specifically for payment. Also, there are procedures for making payments once a month.


TIP FIVE: Obtain A Continuous Bond.

All formal entries, whether or not free of duty, must have a Customs Bond, or cash in trust with Customs in a comparable amount. Customs bonds are generally prepared by Customs Brokers on behalf of their clients.

A Customs Bond is similar to an insurance policy to the benefit of Customs. It guarantees all duties will be paid and the merchandise is in compliance with all regulations, including compliance with other government agency regulations administered for them by Customs.

There are many types of bonds for uses beside regular importations. However, two types of bonds generally are used with formal entries for consumption (or nationalization/entry into the United States): single entry bonds and continuous bonds.

Briefly, single entry bonds are usually in the amount of the value of the shipment, plus duties and other fees. They cover one shipment. Continuous bonds are in a minimum amount of $50,000 and cover all shipments for a year in any port. In order to obtain many of the benefits and programs offered by Customs, a continuous bond is required.

There are broader qualifications and amounts for different shipment types (for items conditionally free of duty, warehouse entries, transportation entries, entries with dumping duties, or other government agency requirements (to name a few), the amounts may be reduced or increased).


TIP SIX: Obtain Cargo Insurance To Cover General Average.

This pertains to shipments via ocean freight. There is an old Maritime Law called the Law Of General Average—and it is still in effect and is applied. The law provides for sharing the amount of loss or damage to any cargo or vessel among all who have cargo aboard. So, even if you self-insure, please arrange for this clause and coverage in a cargo insurance policy.


TIP SEVEN: Set Forth And Follow Compliance Programs

Your industry is among the most monitored by Homeland Security. It is imperative you establish and follow a strict compliance program and know with whom you are doing business.

To receive favored treatment, it is imperative you join C-TPAT: Customs And Trade Partnership Against Terrorism. If you or your Customs Broker is not a participant, there is a future possibility you will no longer receive “paperless” treatment for your importations. In other words, all documentation will be reviewed before release instead of just some of it. The gentlemen from Homeland Security gave a wonderful overview and will assist you in getting started if you have not already. I also can assist you in getting started.



Are there any questions?

Thank you. I wish you good luck and fortune in your business ventures. If I can be of service in any way, please feel welcome to call me.

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