 Long Island Import Export Association Impact of Trade Compliance on Importers & Exporters *connectedthinking

CTPAT Proposal AEO (Authorized Economic Operator – EU Program) FTA Compliance (Free Trade Agreement) Topics to Be Discussed

© 2008 PricewaterhouseCoopersSlide 3 C-TPAT  C-TPAT is a voluntary government-business initiative to build cooperative relationships that strengthen the overall international supply chain and U.S. border security.  C-TPAT is centered around the concept that the highest level of security can only be achieved through close cooperation with the ultimate owners of the supply chain— importers, carriers, brokers, warehouse operators and manufacturers.

© 2008 PricewaterhouseCoopersSlide 4 Where is Customs Going With C-TPAT?  Already in progress:  Detailed verifications of applications  Tighter container seal control  Tighter documentation control  New security criteria - importers now seeking to join the C-TPAT program will need to meet or exceed the new security criteria before they will be certified.  Wish list:  Smart containers and possibly even tracking systems  Extensive screening (initial & ongoing) of personnel. This includes both foreign and domestic locations.  Security/C-TPAT requirements by importers for their entire supplier base and logistics providers.

© 2008 PricewaterhouseCoopersSlide 5 C-TPAT & Supply Chain  Financial & compliance costs to ensure the integrity of security practices and communication of security guidelines to business partners within the supply chain  The supply chain, for C-TPAT purposes, is defined from point of origin manufacturer/supplier/vendor through to point of distribution.  Customs has acknowledged that its likely that at least portions of C-TPAT may become mandatory in the near future (e.g., regulations pertaining to seals)

© 2008 PricewaterhouseCoopersSlide 6 Customs “10 + 2” Proposal  Importers required to submit an Importer Security Filing containing certain data elements (the “10” of the “10 + 2”)  Carriers would be responsible for a vessel stow plan and container status messages (the “2” of the “10 + 2”) 1. Manufacturer/Supplier name and address 2. Seller name and address 3. Buyer name and address 4. Ship to name and address 5. Container stuffing location 6. Consolidator (stuffer) name and address 7. IOR/FTZ applicant identification number 8. Consignee number 9. Country of Origin 10. HTSUS number (6-digits)

© 2008 PricewaterhouseCoopersSlide 7 Customs “10 + 2” Proposal  Financial & compliance costs to develop procedures to comply with additional filing requirements  Communication of procedures and requirements to business partners within the supply chain  Potential Supply Chain Delays

© 2008 PricewaterhouseCoopersSlide 8 AEO  The EU Commission, following the US and SAFE (the WCO framework of standards), initiated its safety and security program ‘the authorised economic operator’ by publishing security amendments in the Community Customs Code, making these amendments directly applicable for all Member States.  The AEO concept is an initiative of the EU Commission:  In realizing faster and better-targeted customs controls under a common risk- management framework  In controlling supply chains that only contain reliable trade partners  In adapting the WCO Framework of standards to ensure trade facilitation (instead of trade disruption)  Along with pre-departure and pre-arrival information  Governed through and by electronic data-exchange

© 2008 PricewaterhouseCoopersSlide 9 AEO  The ‘authorised economic operator’ concept is a status (voluntary program), based on granting a company one of three possible certificates:  The certificate ‘customs’ (simplified procedures)  The certificate ‘safety’ (securing the supply chain)  The certificate ‘customs and safety’ (a combination)  Most Member States have started with the development of an AEO certification scheme based on self-assessment.  Main concerns expressed are:  Mutual recognition (EU level and internationally)  Enforceable nature of the certificate, and the different approach between Member States (AEO shopping)  Use of other certification schemes

© 2008 PricewaterhouseCoopersSlide 10 Managing Global FTA Compliance  Impact both buyer and seller  Cost of sales/purchase price  Import & export licenses  Impact of compliance  Usage of numerous agreements and maintenance of compliance programs  Burden of collecting supporting data and certificates  Supply chain considerations (e.g. landed cost analyses)

Thank you. © 2008 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.  Worldtrade Management Services 300 Madison Avenue New York, NY (646)