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Importers Seek Short- and Long-Term Improvements to In-Bond System

Wednesday, July 29, 2020
Sandler, Travis & Rosenberg Trade Report

Nearly three years after U.S. Customs and Border Protection adopted regulatory changes aimed at improving the in-bond process, importers, carriers, and their agents are calling for additional changes and raising concerns about an increase in CBP enforcement actions. They have also outlined a long-term strategy for modernizing how in-bond shipments are handled.

The in-bond process allows imported goods to enter one U.S. port of entry without appraisement or payment of duties and be transported by a bonded carrier to another U.S. port of entry or other authorized destination where the goods are entered or exported. There are three types of in-bond transportation entries: immediate transportation, which allows goods arriving at one port of entry to be transported to another where an entry must be filed; transportation and exportation, which allows goods to be imported at a U.S. port for transit through the U.S. to another U.S. port where the goods are exported without payment of duties; and immediate exportation, which  allows cargo that has arrived at a U.S. port to be immediately exported from that same port without the payment of duties.

In September 2017 CBP amended its regulations to enhance its ability to regulate and track in-bond goods and to simplify and facilitate the in-bond process. Requirements under this rule included electronic filing of in-bond applications, additional information on such applications, and new timeframes for transporting in-bond goods between U.S. ports and reporting or updating in-bond records. Many of the rule’s provisions were subsequently delayed for various reasons before being implemented in July 2019.

Despite these changes, however, importers are still experiencing a number of challenges with the in-bond process. Members of CBP’s Commercial Customs Operations Advisory Committee outlined some of those issues at a July 15 meeting, specifically mentioning the timing of notifications in the Automated Commercial Environment, conveyance arrival capability in air manifest, piece-level in-bond arrival capability, and FIRMS code improvements.

ST&R’s Lenny Feldman, who serves as co-chair of COAC during its current term, said importers raised these issues not only because they are inhibiting the flow of in-bond shipments, resulting in delays and additional costs, but also because they are areas where importers are seeing an increase in CBP enforcement actions, including liquidated damages claims. “A lot of these violations are administrative errors that should be substantially if not completely mitigated and don’t pose any sort of threat to security or federal revenue,” Feldman said. “Importers are still dealing with manually-based business practices and processes at the same time they’re trying to comply with the new regulations. We’re just asking CBP to make some technical changes that will help them do that.”

For example, Feldman noted, the 30-day clock for arriving an in-bond shipment currently continues to run even if the goods are placed under a hold by CBP or another regulatory agency. Instead, importers want the clock to be paused until they have the ability to move the cargo once a release is issued at the port of destination. The clock should also stop if congestion on the rail ramps at the point of origin delays the movement of the goods to the in-bond location.

Another easy change, Feldman said, would be to allow in-bond entries to be amended or updated instead of deleted and then re-submitted when a change is necessary.

COAC members also outlined a longer-term in-bond modernization strategy that sets forth specific regulatory, policy, and technical changes designed to achieve increased trade and CBP visibility to in-bond transactions, clarity of liability for bonded partners, automated hand-offs between trade partners, the addition of all modes of transportation to automation requirements, and national policy harmonization.

“In-bond shipments, including those involving foreign-trade zones, are vital to the successful operations of U.S. companies and can help them lower costs, both of which are important considerations during the current economic downturn,” Feldman said. “We’re grateful to CBP for continuing to partner with the trade to improve this system now and into the future.”

For more information on utilizing in-bond capabilities or responding to in-bond enforcement measures, please contact Lenny Feldman at (305) 894-1011.

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