TradeLane

How long has the reconciliation program been around? The prototype – yes prototype – will celebrate its’ 16^th birthday this coming October 1^st. So imagine my surprise when I was recently contacted by an importer that had been “kicked out” of the program. Since that phone call several months ago I have been made aware of no less than five importers that have either received the “boot” or been “put on notice.”

Historically Customs and Border Protection (CBP) has put up with importers that are habitually late with their reconciliation filings. Meaning CBP – via FP&F – issues the NO FILE liqudated damages notices, the importer has their filer process and file a reconciliation entry, CBP mitigates the penalty, the importer pays the Option 1 amount, and we repeat the process again next month. Works for everyone involved right? CBP gets a little more money via the Option 1 amount, the importer doesn’t have to increase headcount or reallocate resources, and the recon filer gets more filings this way. These habitually late importers – and they know who they are – seem to have taken the stance that they would rather pay $500.00 each month for late files rather than address the problem.

As regional companies look to grow into multi-nationals in the never-ending search for new markets, an understanding of Global Trade Compliance becomes critical for several reasons.  One of the most obvious reasons is to reduce the risk of running afoul of local laws and regulations. Additionally, maintaining a consistent and reliable supply chain and taking advantage of various government programs such as Free Trade Agreements, Duty Drawback, Security Programs and other initiatives designed to benefit compliant importers and exporters speeds the supply chain and saves money. 

As companies expand into more and more markets, inevitably they reach a critical mass where the need to standardize compliance functions across multiple geographies, business units, and Customs regimes becomes apparent.  By “apparent,” we mean that you have done such a good job that you have been gifted compliance responsibilities for not 1 country, but 108. This is often a daunting task given the labyrinth of varying trade regulations. The first phase to this process is assessing the company’s current state compliance profile on a global basis, then moving to implement global frameworks to bring a level of consistency across the network.  Here are a few simple steps to get you started:

The business realities of global trade are constantly changing. Not only do importers and filers have to adapt to meet these realities, CBP does as well. The increasing complexity of global trade means more joint ventures, more complex import transactions, and simply many other situations that were not envisioned during the drafting of many import laws. These days many import transactions contain indeterminable information – that is at the time of import. More and more transactions involve adjustments to the price paid or payable that are not known until months after the import transaction occurs. Filers and ports of entry established processes and procedures for reporting these adjustments such as protests and prior disclosures. These local versions of “reconciliation” were problematic because the procedures varied from port to port, often had no legal basis, and lacked adequate financial controls.