1. Customs Bonds Latest News and Challenges
August 24, 2018
Presented by:
Christie Brush – Avalon Risk Management

2. Air Cargo Advance Screening (ACAS) Went into effect on June 12, 2018
Latest News
Air Cargo Advance Screening (ACAS)
Went into effect on June 12, 2018
Requires the submission of advanced air cargo information on shipments arriving in the United States from a foreign location
Previously a voluntary process in which many airlines already participated globally
Now mandatory for airlines flying to the United States

3. Shipper Name and Address Consignee Name and Address Cargo Description
Latest News
ACAS data elements:
Shipper Name and Address
Consignee Name and Address
Cargo Description
Total Quantity
Total Weight
Air Waybill Number

4. Challenges

5. Import Bond Calculation
Reviewers
10% of duties, taxes and fees paid or payable in previous 12 months
Analytical
Reviewers plus
Open bills, surety payments, etc.

6. CBP Revenue Division Review
Monthly review (import continuous bonds)
Forecasting a large increase in letters by 4th quarter
CBP will be sending a CSMS out advising to forecast bond amounts.
STB Insufficiency
GAO Audits

7. Termination/Replacement 15-day termination time frame
What is the process?
Termination/Replacement
15-day termination time frame
Bonds rendered insufficient
“Fast Terms”
Only one continuous bond allowed

8. Aggregate Liability Issues “Stacking” or Aggregate Liability
Surety Requirements
Underwriting
Financial Guarantee
Collateral Issues
Aggregate Liability Issues
“Stacking” or Aggregate Liability

9. Relationship with customs broker Historical review
Underwriting Tools
Relationship with customs broker
Historical review
Automated Surety Interface Data
CBP information availability
ACE Portal Information (Importers/Brokers)

10. ADD/CVD Estimated Duty Sections 232 and 301 Free Trade Agreements FDA
Surety Highest Risks
ADD/CVD
Estimated Duty
Sections 232 and 301
Free Trade Agreements
FDA

11. Redelivery issues (FDA, Quota, or Marking)
Bond Claims
Liquidated Damages
Redelivery issues (FDA, Quota, or Marking)
Non-filing/Non-Payment of Duty
Debit Vouchers
TIB Issues
Increased Duty Bills
ADD/CVD
Classification/Rate Advance
Preferential Treatment Denial

12. Liquidated Damage Claims
FDA
Once refused by FDA, must be exported or destroyed within 90 days
Customs will issue a demand for redelivery within 30 days
Failure to redeliver such products will ordinarily result in Customs issuing a claim for liquidated damages
Broker E&O Exposure

13. CBP’s Focus on AD/CVD as PTI
CBP protects U.S. national economic security at our borders
The U.S. Government levels the playing field for U.S. manufacturers by collecting AD/CVD duties on imports sold at unfair low prices and/or subsidized by foreign governments
CBP enforces AD/CVD laws and penalizes those who attempt to evade AD/CVD duties

14. Top 10 Countries for AD/CVD
100 80 60 40 20
ADD Cases CVD Cases
Information based from US ITC website
There are over 40 countries that have active AD/CVD cases;
China represents 40% of all active AD/CVD cases.

15. Evasion Methods & Challenges
Goods mimic legitimate production, use established routes to add legitimacy
Transshipment
Falsifying documents, product marking, and/or trans-loading containers to mask true country of
origin
Undervaluation Falsifying documents to undercut CBP must identify similar non- price and avoid duties arbitrary values, or find clear
evidence of false claims
Misclassification
Incorrect classification and/or misdescription to avoid duties
Often secondary to some other scheme, AD/CVD cases determined by “scope,” not classification
Smuggling
Undeclared or under-declared goods
Requires shipment-specific intel
Gray Areas
Incorrect case claims, Importer/Purchaser arm’s length transactions, product engineering
Loopholes are not “illegal,” appearance of compliance, limited response options
Parties involved in transshipment are often in foreign countries outside of CBP’s jurisdiction
Importers dissolve before action can be taken, and re-emerge under new guise
Opportunities for fraud due to:
Enticement from producers and competition within industry
Overcapacity and B2B networking

16. Questions?

17. Thank You! Christie Brush cbrush@avalonrisk.com (713) 343-0893
(713)