“… agents initiated more than 2,700 investigations into the illegal export of U.S. munitions and sensitive technology. These investigations resulted in 326 arrests, 326 indictments, and 237 convictions, which is more than any other U.S. federal law enforcement agency.”
ROBERT JACKSTA, DEPUTY ASSISTANT COMMISSIONER, U.S. CUSTOMS AND BORDER PROTECTION, DEPARTMENT OF HOMELAND SECURITY
There are a number of government programs and initiatives to facilitate trade. The following overviews are of those in place in the United States, Canada, and the European Union.
The International Traffic in Arms Regulations (ITAR)
Rather than a program to facilitate trade, the Department of State, Directorate of Defense Trade Controls (DDTC) registration is a requirement to conduct trade.
DDTC is responsibility for the control of the permanent and temporary export and temporary import of defense articles and services is governed primarily by 22 U.S.C. 2778 of the Arms Export Control Act (“AECA”) and Executive Order 11958, as amended. The AECA, among these other requirements and authorities, provides for the promulgation of implementing regulations, the International Traffic in Arms Regulations (ITAR).
- Businesses required to register all manufacturers, exporters, and brokers of defense articles, related technical data and defense services as defined on the United States Munitions List (USML) are required to register with the Directorate of Defense Trade Controls (DDTC).
Registration does not confer any export rights or privileges, but is a precondition for the issuance of any license or other approval for export.
The Department adopted a three-tier registration fee schedule in September 2008. Fees for registrants exempt from income taxation, including universities, may be reduced to the first-tier registration fee.
- Registration Renewal
In the event a registrant allows their registration to expire, the registrant is solely responsible for ensuring exports or temporary imports do not occur until the registration is reinstated by DDTC. Registrations must be current to apply for licenses, other approvals, or to use ITAR exemptions.
- When Registration is No Longer Required
When a company is no longer in the business of manufacturing, exporting or brokering defense articles or defense services, the company must notify DDTC in writing at least 30 days prior to the expiration of registration.
- Changes in Registration Information
A material change is a change in information contained in the DS-2032 Statement of Registration. Examples of material changes include, but are not limited to, ineligibility changes, changes to name, address, or senior officers; the establishment, acquisition or divestment of a U.S. or foreign parent, subsidiary, or affiliate; a merger; or, the addition or deletion of USML categories.
Customs Trade Partnership Against Terrorism (C-TPAT)—U.S.
The U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) is the counterpart of the Canadian Partners in Protection (PIP). It was designed to enhance border security, combat organized crime and terrorism, increase awareness of customs compliance issues, and help detect and prevent contraband smuggling. C-TPAT is a voluntary program that requires participants to improve security of their supply chain and internal compliance standards to meet U.S. Customs security guidelines.
C-TPAT membership is a prerequisite for the FAST border program.
To maintain membership in C-TPAT, U.S. Customs and Border Protection mandates that member importers ensure that their business partners are actively analyzing their personnel, supply chain, and production and distribution facilities and that these facilities and internal processes are meeting or exceeding U.S. Customs’ C-TPAT security requirements. Satisfying this mandate requires an on-going process to obtain, store, and validate data about suppliers’ membership in C-TPAT, PIP and other security accreditation programs. This can prove to be a labor intensive administrative burden.
Partners in Protection Program (PIP)—Canada
Partners in Protection (PIP) is a Canadian government compliance and security certification. PIP is the counterpart of C-TPAT, the U.S. Customs-Trade Partnership Against Terrorism program. The program goals are similar—they seek to enlist private industry to help enhance border and trade chain security, combat terrorism, and detect and prevent smuggling.
PIP is one of the prerequisites for participation in Free and Secure Trade (FAST), the expedited border clearance program. Beyond access to the highly valued FAST program, PIP benefits include preferential treatment by other PIP members, enhanced supply chain security and corporate compliance.
To gain certification companies must meet government-set compliance and supply chain security standards.
Free and Secure Trade (FAST)—U.S. and Canada
The Free and Secure Trade (FAST) program is a joint initiative between the Canada Border Services Agency (CBSA) and U.S. Customs and Border Protection (CPB). It enhances border and trade chain security by ensuring compliance through certification and, in return, makes cross-border commercial shipments simpler and subject to fewer delays.
Eligible goods arriving for certified companies and transported by approved carriers using registered drivers are cleared into Canada or the United States with greater speed and certainty, resulting in reduced costs. Dedicated FAST lanes mean shorter waits. This is particularly important at the busiest crossings. Where there are no dedicated lanes, and in times of increased security alert, FAST shipments also jump queue, moving ahead of other shipments waiting to cross the border.
Authorised Economic Operator (AEO)—EU
An AEO is a business involved in the international supply chain which has proved themselves to be compliant and trustworthy, and where applicable, safe and secure. AEOs benefit from facilitations for customs controls or simplifications for customs rules or both, depending on the type of AEO certificate. There are three certificate types:
- Customs Simplifications. AEOs are entitled to benefit from simplifications provided for under the customs rules. more +
- Security and Safety. AEOs are entitled to benefit from facilitations of customs controls relating to security and safety at the entry of the goods into the customs territory of the Community, or when the goods leave the customs territory of the Community. more +
- Customs Simplifications/Security and Safety. AEOs are entitled to benefit from both simplifications provided for under the customs rules and from facilitations of customs controls relating to security and safety (a combination of the above).
The introduction of AEO status is the EU response to the need to secure international supply chains and the introduction of Customs-Trade Partnership Against Terrorism (C-TPAT) in the USA. AEO is based on, and is compatible with, the World Customs Organization’s SAFE Framework of Standards which is being implemented by Customs authorities across the globe.
The criteria for a Customs simplification AEO also provide a common and harmonized set of criteria for granting customs simplifications across the EU. That is, once a Member State has granted a trader (economic operator) AEO status, this status is recognised across all Member States.
Who can apply?
Customs Self-Assessment (CSA)—Canada
The Canada Border Services Agency (CBSA) launched the Customs Self-Assessment (CSA) program in December 2001. The program was developed to enhance the Agency’s effectiveness in processing an increasing volume of goods crossing the border. The program provides low-risk, pre-approved companies, which have a history of good compliance, with an expedited border clearance process (FAST) and a streamlined accounting and payment process for imported goods. CSA improves the CBSA’s understanding of its commercial clients and eliminates many of the traditional import impediments which means processing low-risk shipments from the U.S. and Mexico more quickly. Importers approved to participate in the CSA program also enjoy the benefits of:
- a streamlined accounting and payment process for all imported goods; and,
- a streamlined clearance process for eligible goods when an approved carrier and driver registered with the Commercial Driver Registration Program (CDRP) are involved.
CSA also means that businesses can take better advantage of their own business systems. The streamlined accounting and payment process gives importers the ability to use their own business systems and processes to trigger trade data and revenue reporting. For Canadian companies whose main concern is expediting shipments into the U.S., the benefit of the Canadian Customs Self-Assessment (CSA) program is access to the joint U.S. Canada FAST border clearance program. Faster clearance means faster delivery at a lower cost.
CSA application process
During the application process, the CBSA conducts checks to ensure that applicants are low risk (i.e. have a good compliance history) and completes a review of their accounting and payment systems to ensure that applicants meet program requirements. If they do not, the CBSA identifies necessary system modifications. The approval process includes:
Importer Self-Assessment (ISA)—U.S.
ISA is a voluntary approach to trade compliance. Developed by Customs and Border Protection (CPB) in 2002 the Importer Self-Assessment (ISA) program provides the opportunity for importers who have made a commitment of resources to assume responsibility for monitoring their own compliance with CBP laws and regulations in exchange for benefits.
To be eligible for ISA, the importer must be a known business to CBP and a resident party of the United States. To be a known business means that the importer has imported goods into the United States during the two years prior to the date the application is submitted.
The business entity must be physically established, located, and managed within the United States. It carries on business and has the general authority to do so without the approval of another person outside the United States. The importer must maintain separate books and records for its U.S. operations, prepare separate financial statements, maintain accounts for the imported goods, and is responsible for payment of import duties and taxes. In addition, an importer must:
The importer may meet the requirements of the ISA program by using internal resources or using an objective third party exercising due diligence and reasonable care. The ISA program is primarily based on the development and use of established business practices and internal control designed specifically for an importer’s CBP operations. The importer may structure internal controls and procedures to meet its individual needs.