California Apparel News

Come Jan. 26, all importers bringing in goods transported on ships will have to change the way they do business when the federal government ushers in new customs regulations.

For years now, U.S. Customs and Border Protection has been trying to figure out a way to make the nation’s ports safer. Everyone is concerned about what could end up in those metal cargo containers. Some fear terrorists could hide weapons of mass destruction. Others fear dirty bombs.

Months after the Sept. 11, 2001, terrorist attacks, government officials started mapping out rules and regulations that could help them get a handle on what is sailing over the ocean to our ports.

The result is a new regulation called the 10+2 Rule, an import security filing requirement that is basically a list of 10 items importers must supply to customs 24 hours before their goods are put on a ship overseas. The other two items are provided by the ocean carriers. Right now the rules don’t apply to air cargo.

This information gives customs officials a big heads-up on what to expect when cargo containers are unloaded at the docks. “Their feeling was, if it is going to go bang, we would rather have it go bang in Hong Kong and not in the Port of Los Angeles,” said Arthur Litman of Customs Advice, who was speaking at a Jan. 8 seminar organized by the California Fashion Association in conjunction with the Los Angeles office of law firm Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt.

Many apparel importers are aware of the changes and have been preparing to comply with the new regulations. The good news is that customs is cutting importers some slack. The government will be flexible about enforcement during the first year and won’t start issuing fines until Jan. 26, 2010. But there can be consequences for those who don’t comply right away, such as 100 percent inspection of cargo or bureaucratic delays.

“We’ve been gearing up for this and reading up,” said Tracy Gale of Stony Apparel in Los Angeles, one of the seminar attendees. Stony Apparel makes clothing for children and teens.

Brian Weitman, chief executive of STC-QST Inc., which imports pocket lining and interfacing for garment makers, attended the seminar with three other staff members to make sure everyone is up to speed. “We have no choice but to comply,” Weitman said.

The 10 items importers need to supply seem simple enough. Richard Wortman, a customs and international-trade attorney at Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, noted that 95 percent of these items should be available when making out a purchase order. And they should be supplied right away.

Consolidated concerns

However, one situation that causes concern is when importers’ goods are consolidated with another shipment inside the same container. That happens when importers’ shipments aren’t big enough to fill one full container.

In consolidated shipments, there is the possibility that if one company fails to supply customs with the needed information 24 hours before sailing, the entire container could sit in a warehouse until the information arrives. “No one can afford for goods to sit for a week or 10 days until the next boat comes. At some point, there will be delays, and they will cost money,” Wortman said.

Learning to comply with the regulations, experts said, can give companies a competitive edge because their goods won’t be hung up in customs or on some overseas dock. “If I were an importer, I would be talking with my customs broker and asking them, ’What are you doing for me on Day One?’ and ’What do you need from me?’” Wortman advised.

The most confusing section of the 10+2 rule is the part discussing who should be classified as the ISF importer, the person who actually submits the importer security filing (ISF) to customs before the goods are shipped. This could be a U.S. customs broker, an overseas customs broker, a freight forwarder, an agent or the importer in the United States. Companies have to figure out whom to designate for that role. The tricky part about this is the person who files the data is the only person who can update that data or have access to it, besides customs, after the ship sails.

Also, the ISF importer must be secured by a bond.

“That creates a lot of questions about whom you are giving this information to,” said Heather Litman, a customs and international-trade attorney at Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt. “We lately have seen theft of importer-identification numbers for false entries, kind of like credit-card fraud. You should very seriously consider the person you choose.”

The New Security Filing Information Requirements for Importers

Importers or their agents must file the following data to U.S. Customs and Border Protection either through an Automated Broker Interface (ABI) or an Automated Manifest System (AMS). The first eight items must be sent 24 hours before cargo is loaded on a ship. The last two items can be sent no later than 24 hours before the cargo arrives at a U.S. port.

1. Importer-of-record number (tax ID number)2. Consignee number3. Seller name and address4. Buyer name and address5. Ship-to party6. Manufacturer name and address7. Country of origin8. Commodity numbers (the first six digits of the harmonized tariff system numbers)9. Container-stuffing location10. Consolidator name and address

These last two items must be supplied by the ocean carrier and not the importer:11. Vessel stow plan no later than 48 hours after departure12. Container-status message data within 24 hours of creation or receipt