To read the entire BIS Press Release please follow this link: $1.5M for Illegal Exports
The Commerce Department’s Bureau of Industry and Security (BIS) announced that a California based company and its wholly-owned UK subsidiary have agreed to a $1.5 million civil penalty to settle allegations that it committed violations of the Export Administration Regulations (EAR) related to the unlicensed export and reexport of U.S.-origin equipment and software to Iran, Syria and Sudan. The illegally exported items are controlled by the Commerce Department for National Security and/or Anti-Terrorism reasons and as encryption items. Iran, Syria and Sudan are designated as State Sponsors of Terrorism. A strong penalty was sought in this case because the violations involved Iran, Syria and Sudan, were ongoing over a period of years, and occurred with the company's knowledge.
To read the entire BIS Press Release please follow this link: $1.5M for Illegal Exports
The U.S. Consumer Product Safety Commission (CPSC) announced that a New Jersey based company has agreed to pay a $2 million civil penalty to the government. The penalty settles charges that the company knowingly failed to report to CPSC, as required by federal law, information about a defect and an unreasonable risk of serious injury with compact fluorescent lamps.
After numerous complaints about glass separating from the body of the lamps and striking people and objects, and attempting multiple design changes to fix the problem, the company failed to report the matter to CPSC. The incidents resulted in 10 reports of lacerations and seven reports of property damage.
In addition to paying the $2 million civil penalty, the company has agreed to implement and maintain a compliance program to ensure compliance with the Consumer Product Safety Act (CPSA) and a related system of internal controls and procedures.
To read the entire CPSC Press Release please follow this link: $2M Civil Penalty for Defective Lamps
The U.S. Department of Justice (DOJ) has announced that a Japanese based company has agreed to plead guilty and to pay a $2.35 million criminal fine for its role in a conspiracy to fix prices and rig bids on certain plastic interior trim automotive parts installed in cars sold to U.S. consumers.
According to the felony charge filed today in the U.S. District Court of the Eastern District of Kentucky, the company based in Nagoya, Japan, and others conspired from as early as June 2004 until at least September 2012 to fix prices and rig bids on parts sold to Toyota Motor Corp., including certain of its subsidiaries and affiliates in the United States and elsewhere.
To read the entire DOJ Press Release please follow this link: $2.35M for Price Fixing
The Bureau International des Containers (BIC) has announced Mr. Stephen L. Caldwell of the United States as the winner of the 2015 BIC Award, in recognition of more than 30 years’ dedication to improving international security, including more than a decade focused on intermodal supply chain security and resilience. The BIC’s Board of Directors cited Mr. Caldwell’s promotion of strategic, risk-based, and cooperative container security programs on behalf of the US Government and the broader international maritime supply chain system, when making the selection.
Founded in 1933, the mission of the BIC is to promote the safe, secure and sustainable expansion of containerization and intermodal transportation. The annual BIC Award honors individuals or organizations for significant contributions towards these goals.
For more than a decade Mr. Caldwell has evaluated international security programs for the United States Congress, including the past decade as Director of Maritime and Supply Chain Security Issues at the U.S. Government Accountability Office (GAO). He worked closely with the U.S. Congress and federal agencies, and various other stakeholders involved in cargo container and intermodal transportation security. Mr. Caldwell has a global understanding of supply chain security issues, having worked seven years overseas and conducted over 50 visits to more than 30 countries as part of his work on maritime supply chain security, and other issues. Congratulations Stephen!
To read the entire BIC Press Release please follow this link: Stephen Caldwell BIC Award
The U.S. Department of Justice (DOJ) announced that a French power and transportation company, was sentenced to pay a $772,290,000 fine to resolve criminal charges related to a widespread corruption scheme involving at least $75 million in secret bribes paid to government officials in countries around the world, including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.
The company pleaded guilty on Dec. 22, 2014, to a two-count criminal information charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls. The penalty represents the largest-ever criminal foreign bribery fine.
To read the entire DOJ Press Release please follow this link: $772M Criminal Fine to Resolve FCPA
The office of United States Trade Representative (USTR) has published a list of products that are at risk of losing their Generalized System of Preferences (GSP) status. The list is based on import data from January to September and includes any product whose imports during that period:
For an Adobe copy of the list please follow this link: USTR GSP Warning List
The Business Insider recently published an article on the 27 jobs that are most damaging to your health. Weighing in at number 6 on that list was Immigration and Customs Inspectors, with an overall unhealthiness score of 59.3.
To read the entire Business Insider article please follow this link: 27 Jobs that are Most Damaging to your Health
The U.S. Federal Reserve Board has announced a $58 million penalty and consent cease and desist order against a German bank related to violations of U.S. sanctions. The actions were taken by the Federal Reserve for unsafe and unsound practices at the bank. The firm did not have sufficient policies and procedures to ensure that activities conducted at its offices outside of the United States complied with U.S. sanctions laws and were reported in a timely manner in response to inquiries by the Federal Reserve Bank of New York. The Federal Reserve's order is being issued in conjunction with an action by the New York State Department of Financial Services for violations of various New York state laws. The total penalty issued by both agencies is $258 million.
To read the entire Federal Reserve Press Release please follow this link: $258M for Sanction Violoations
Last month U.S. Customs and Border Protection (CBP) published an Interim Final Rule in the Federal Register titled, “Automated Commercial Environment (ACE) Filings for Electronic Entry/Entry Summary (Cargo Release and Related Entry)”. Seems innocuous enough, until that is you get to paragraph H (page 61281); where CBP proposes to eliminate hybrid entries. What is a hybrid entry and why should I care you ask? In part the Federal Register paragraph reads:
Importers currently can file required forms electronically to a CBP-authorized electronic data interchange system, by paper, or a combination of both (hybrid filing). When importers file a paper or hybrid entry, they fill out the required documents on their computer, print the documents, and then send the documents to their broker or to the port of entry by either mail or a courier. CBP is considering proposing a rule to require importers to choose between submitting the required entry and entry summary documentation (including ITDS Agency documents) entirely electronically or entirely by paper. CBP would no longer accept any hybrid filings, except in limited circumstances. This would mean that if an importer files one paper document not covered by the limited exceptions, the entire filing, including the report to CBP, must be on paper.
This ill-timed and ill-advised proposal comes at a time when CBP and the entire trade community have made great progress on rolling out CBP’s next-generation system known as the Automated Commercial Environment (ACE). The system has been under design and development since the late 1980’s and will ultimately be the engine for the International Trade Data System (ITDS). The ITDS platform will become the “single window” through which the government and trade exchange data and messages on import and export consignments. To fully develop and deploy ITDS requires bringing almost forty other federal agencies (known as PGA’s or Partnering Government Agencies) to the table to discuss their requirement and data specifications. Some of those other agencies over the years have resisted and/or come along kicking and screaming; until President Obama signed an Executive Order on February 19, 2014 requiring them to participate by December 2016. Now the laggard agencies are in a scramble to get their requirements and specifications written and to get the necessary programing accomplished. And of course, there needs to be adequate time devoted to proper testing or the consequences could be disastrous.
But now, in their haste to force the trade’s hand and before some of the PGA’s have even completed coding their portion of ITDS, CBP throws down this almost laughable ultimatum to the trade. I could hardly believe my eyes when I first read it. As we are all of the verge of successfully completing the ACE deployment after toiling for seventeen long years to deploy the system; what’s the rush? CBP’s proposal to eliminate hybrid entries and force “all electronic” or “all paper” is not only a disservice the trade community but to CBP as well. It begs several questions? First, what’s happened to the common sensed phased-in approach CBP has used for other trade programs? Where’s the partnership? Are the more than 300 CBP Ports prepared to go back to a blizzard of paper? How many CBP employees even know how to process a paper entry? When the paper is delivered what will happen to it? Will a CBP employee rekey into a system? That seems redundant, counterproductive and very expensive. What happens if the CBP employee doing the keying makes an error? What happens if CBP is unable to keep up with the volumes of paper? Why is the elimination of hybrid entries necessary? What purpose does it serve? Just to make a point that you’re in a big hurry now after seventeen years? For the sanity of all involved and the continued flow of commerce, the capability to process hybrid entries is needed until ACE and ITDS are completely and fully deployed and tested. CBP should be encouraged to continue ACE implementation with a level-head and keeping flexibility and facilitation foremost in their mind.
If this article has inspired you to write comments you may download an Adobe copy by following this link CBP Federal Register Notice – Proposal to Eliminate Hybrid Entries. Remember, you have until November 12 to submit your comments. You may submit comments electronically, identified by docket number USCBP–2015–0045, by visiting the Federal eRulemaking Portal. Follow the instructions for submitting comments.
To download an Adobe copy of this article please follow this link: One Step Forward Two Back
Trade Innovations CEO Michael Laden's article, The Necessity of a Secure Supply Chain was recently featured in Cargo Security Magazine in Peru. The article is reprinted below. To download an Adobe copy of the entire 40-page magazine please follow this link: Cargo Security Magazine
To download an Adobe copy of the article please follow this link: The Necessity of a Secure Supply Chain
In the United States, the tragic terrorist events of September 11, 2001 forever altered the way we process and think about global commerce. To be sure, the proliferation and scourge of smuggling has been a problem for many years, but in a post September 11th environment, the concerns related to a secure supply chain grew exponentially. The smuggling of drugs, counterfeit goods, laundered money and/or human smuggling was now overshadowed by concerns about a “nuke in a box”. What if a terrorist organization could successfully penetrate and exploit an otherwise legitimate supply chain to introduce a nuclear weapon or a weapon of mass effect, such as anthrax?
In the weeks and months following the September 11th attacks, the legacy U.S. Customs Service (now called U.S. Customs and Border Protection or CBP) engaged the trade community in an effort to best determine how to secure the supply chain. Initially CBP considered creating a mandatory security program that would apply to all shippers and all U.S. imports. But then, common sense and their consultation with the U.S. trade community altered that approach. To be successful, it was widely believed that such a program should be voluntary, not mandatory. The thinking was that a voluntary program would incentivize those companies who want to do the right thing and come forward willingly; in the end such a program would help CBP identify the “known” consignments from the “unknown”. Conversely, if the program were made mandatory, all U.S. importers would be required to undertake the minimum supply chain security requirements; and the result would not help CBP differentiate from a “trusted shipper” versus a new or “unknown shipper”.
Additionally the U.S. trade community was very vociferous in their beliefs that compliance with trade laws and supply chain security are mutually exclusive; that is each pillar should stand on its own merit. While highly compliant companies are more likely to also have a robust security program, the “price of admission” into a supply chain security should not be dependent on rigorous compliance audits or tax inquiries. Such obstacles do little for incentivizing companies to participate in a program and blur the bright lines of distinction between compliance and security. After much thought and deliberation, CBP correctly adopted the right approach and today the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) program is a voluntary program devoid of measured compliance metrics.
The C-TPAT model was actually borrowed from the Business Anti-Smuggling Coalition (BASC), which may also be known in other countries as the Business Alliance for Secure Commerce. In the late 1990’s, as the drug smuggling problem into the U.S. became more pervasive and the cartels began to exploit otherwise legitimate supply chains to move their illicit contraband, CBP developed BASC. It was a voluntary security program designed to harden a supply chain to protect against unlawful contamination. After the attacks of September 11th, the BASC model was essentially retrofitted from an anti-drug smuggling program to be an anti-terrorism program designed to prevent and/or detect the unlawful introduction of any kind of contraband into the supply chain.
So, the U.S. C-TPAT program is a direct outgrowth of the terrorist attacks of September 11th, and is one of many layers of supply chain security adopted by CBP. Today, the U.S. C-TPAT program has been widely recognized as one of the most successful private and public partnerships ever created. The program has more than 10,000 members and offers benefits to those companies in good standing. Some of the other supply chain security layers that complement C-TPAT are, the Container Security Initiative (CSI), radiation portal monitoring at foreign ports, the Importer Security Filing (ISF), and the advanced targeting of inbound containers.
In June of 2005, the Brussels based World Customs Organization (WCO) adopted the SAFE Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework). The WCO is made up of 180 customs administrations around the world and its members are responsible for managing 98% of the world’s global trade. Once adopted, other customs administrations around the world began designing and implementing their versions of supply chain security regimes. Today, there are a number of different supply chain security programs that have been fully implemented by some of the WCO Members; others are still being designed and deployed. Once implemented, the U.S. (along with other WCO Members having security programs in place) begin to negotiate Mutual Recognition Agreements (MRA’s); whereby each customs administration validates the security requirements and practices of the other. To date, the U.S. has signed a total of ten (10) MRA’s:
The WCO, to which Peru is a signatory, offers its members a number of tools and guidance to assist in the creation of a meaningful supply chain security program. Under the guise of the WCO SAFE Framework, Peru created an AEO program in 2012, the program however has been met with timid results and only a small number of Peruvian companies who may qualify have joined the program. This might be because applying for Peru AEO status is also accompanied by a strenuous tax assessment; in my opinion it is similar to being punished for trying to do the right thing. Peruvian customs authorities would be well-advised to reconsider this approach. I realize that the term or word “partnership” is foreign to many customs authorities, but I am a fervent believer that a true partnership between the public and private sector must be the cornerstone of any meaningful supply chain security program.
Research data published by Transparency International and the Freightwatch International Threat Assessment characterize Peru as having many opportunities for improvement in the area of corruption and security. As such, Peru is viewed by the rest of the world as a medium-high to high risk country as it is related to supply chain security. In order to maintain its competitive advantage in the global trade markets much needs to be done to improve the integrity and security around Peruvian exports. Carrying a high risk rating means that most imports to the U.S. from Peru will be fully scrutinized; often resulting in substantial delays and extra costs for the U.S. importer. This dilutes Peru’s ability to compete with countries that already have meaningful supply chain security programs in place, or lower risk ratings.
The tragic events of September 11th fully illuminated the necessity for increasing the security around all supply chains, for all modalities. The U.S. government and the U.S. trade community have made a quantum leap forward in this regard, and today many other countries around the globe are following that lead by developing their own versions or iterations of a supply chain security program.
About the Author
Michael Laden is the Chief Executive Officer of Trade Innovations, Inc., a Minneapolis, MN based consultancy. He is a recognized expert in the customs compliance and the supply chain regulatory environment and he has more than 35 years of experience in the international trade industry. Prior to founding Trade Innovations in 2005, Mr. Laden was the Director of Global Trade Services for Target Corporation. He has been licensed as a customs broker by U.S. Customs and Border Protection (CBP) since 1981. Mr. Laden is also credited with developing some of the most creative and ingenious customs compliance programs, policies and procedures; allowing his employer to achieve unprecedented levels of compliance, while lowering associated landed costs.
In 2001, Mr. Laden was instrumental in the design and development of the Customs-Trade Partnership Against Terrorism (C-TPAT) program. His article, The Genesis of the U.S. C-TPAT Program: Lessons Learned and Earned by the Government and Trade was published in the World Customs Journal, Volume 1, Number 2; September 2007.
Mr. Laden has testified before the House Ways and Means Committee and the House Subcommittee on Appropriations concerning Customs Commercial Operations and Enforcement Policies. He also appeared as a witness before the Senate Governmental Affairs Committee on matters related to container security and operations in a post September 11th environment. Mr. Laden has been a featured speaker on CBP and related matters before many national organizations. He travels extensively and has taught the fundamentals of importing to thousands of foreign suppliers and manufacturers worldwide.
 World Customs Organization SAFE Framework of Standards to Secure and Facilitate Global Trade, June 2015
 World Customs Organization Guidelines for Developing a Mutual Recognition Arrangement/Agreement
U.S. Customs and Border Protection (CBP) has opened the Automated Commercial Environment (ACE) 2015 Customer Satisfaction Survey. It will be open until November 9, 2015. CBP encourages all trade community members and stakeholders to take 5-10 minutes to complete the survey. Your feedback will provide valuable insight for CBP into the operational benefits of ACE, and help identify areas that need improvement. Please provide additional comments that explain your responses, if applicable. Your responses allow CBP to identify areas of success and areas for improvement. It also helps CBP prioritize development efforts and improve communications with ACE users.
To take the survey please follow this link: CBP 2015 ACE Satisfaction Survey
U.S. Customs and Border Protection (CBP) has posted information from the October 29, 2015, the Automated Commercial Environment (ACE) Reports User Interface Webinar to its web site.
This webinar provides a brief overview of the upcoming enhancements to ACE reports, including a new home page, revised training resources page, and a more intuitive navigational structure, scheduled to deploy on October 31, 2015. To access the webinar recording, please follow this link: CBP ACE Reports Webinar
The U.S. Department of Justice (DOJ) has announced that three people in New Mexico have been charged with violating the Indian Arts and Crafts Act (IACA) by conspiring to import and fraudulently sell Filipino-made jewelry as Native American-made. The indictment charging the three defendants is the result of an ongoing federal investigation led by the U.S. Fish and Wildlife Service into an international scheme to violate the IACA that included a law enforcement operation yesterday during which 16 search warrants were executed in New Mexico and California and related investigative activity took place in the Philippines.
To read the entire DOJ Press Release please follow this link: Three Charged with Fraud
Michael Laden is a Founder and Principal of the firm. He is a licensed customs broker and has been toiling in the international trade industry for almost 40 years. His full bio can be found on the ABOUT US page.