CBP Posts its Answers to Trade Questions from the November 2005 Trade Symposium (Part IV)

This is Part IV of a multi-part series of summaries on this document and highlights CBP's answers to questions on the Importer Self Assessment (ISA) program and intellectual property rights (IPR) protection. See future issues of ITT for additional summaries.

What is being done to increase staffing in OR&R and Regulatory Audit so that cases are processed quickly and efficiently? CBP states that the Office of Strategic Trade and Regulatory Audit do not anticipate receiving any new positions. However, Regulatory Audit has instituted a new audit process over the last year, Quick Response Audits, that effectively increases its coverage of the importing community. Quick Response Audits are narrowly focused audits addressing a single issue of an importer and take significantly less auditor time to complete. CBP anticipates an increase in Quick Response audits in future Audit Plans as it refines the process.

Will ISA be a Tier III C-TPAT best practice? CBP states that ISA will not be a Tier III Customs-Trade Partnership Against Terrorism (C-TPAT) best practice.

What are the differences between C-TPAT and ISA and why do we need both? CBP states that C-TPAT focuses on supply chain security whereas ISA is instrumental in trade compliance. Ordinarily, for companies that have joined these programs, C-TPAT is handled on the security side of the business and ISA is managed under the customs operations division. ISA is intended to offer supplemental benefits to importers in the trade compliance area while promoting compliance by importers.

ISA benefits. In response to questions about benefits under the ISA program, CBP states that it has been working with groups such as the petroleum, aerospace, and textile industries to create benefits that are common to their particular industry and will continue to work with all interested industry groups. The ISA benefits matrix was recently posted to the CBP Web site for the advantage of all ISA members. CBP states that it plans to add to that list since benefits negotiated by any industry are available to all ISA participants. CBP notes one caveat to all of these benefits-while one of the benefits of ISA is removal from the comprehensive audit pool, ISA participants may be subject to an on-site review of a specific issue related to an identified trade compliance risk, sometimes called a quick response audit. CBP states that in such instances, it will work with the ISA partner to determine a mutually acceptable course of action wherever possible to minimize the impact. While CBP views its ISA partners as the most compliant importers, it cannot offer a blanket exemption from all oversight procedures.

(See ITT's Online Archives or 11/23/05 news, 05112310, for BP summary on CBP's announcement of new benefits for ISA participants.)

ISA participants. In response to a question regarding which areas of the process a prospective ISA applicant should focus, CBP states that a participant must maintain an internal control system that demonstrates the accuracy of CBP transactions. CBP states that the company must also be ISA ready-that is, be able to respond "yes" to the questions in the ISA questionnaire where applicable and provide the necessary supporting attachments to indicate the company has an acceptable level of internal controls over its CBP transactions and other ISA requirements. CBP urges participants to visit the ISA web page to retrieve the ISA questionnaire and the document relating to internal controls, which will give a comprehensive overview of the minimum ISA requirements.

ISA applicants. In response to questions relating to the number of ISA applicants, approvals, whether CBP had a "target" number of members and the requirements for the program, CBP states that as of December 2005, there were 144 applicants and 94 approved members. The ISA Review Board meets once a month to approve applicants for the program and are currently considering about 6 a month, although CBP expects that number to rise in the future. CBP states that it does not have a target number to achieve but its goal is to enroll all of the most compliant importers into the program.

ISA application process. In response to questions concerning the time frame from application to approval for an ISA applicant, CBP states that by revising the questionnaire and ensuring that all documentation is in place before processing the application, CBP has been able to streamline the process. CBP states that sometimes the process is delayed by scheduling conflicts over the application review meeting (ARM), additional documentation requirements, or a final report is completed just after a monthly ISA Review Board meeting. CBP states that it can generally complete an ISA application within 120 days.

How will the port import specialist see that a company is part of ISA? CBP states that the port import specialist has access to a list of C-TPAT and ISA members.

What is the biggest problem for international piracy and are there specific industries that are targeted more? CBP states that the top products seized by the Department of Homeland Security (CBP and U.S. Immigration and Customs Enforcement (ICE)) for IPR violations include luxury goods such as apparel, handbags, shoes, watches and perfumes, electrical articles, electronics and computer hardware, toys and games, and pharmaceuticals. CBP notes that stopping the flow of fake goods is a priority trade issue for CBP, and as the leading border enforcement agency, CBP is an important player in the Bush Administration's Strategy Targeting Organized Piracy (STOP!), a coordinated interagency effort to improve IPR protection in the U.S. and around the world. With its STOP! initiatives, CBP identified new approaches to IPR enforcement to complement traditional targeting and exams. Key CBP initiatives are IPR risk modeling and post-entry verification ("IPR audits"). Compared to traditional approaches, these initiatives are more focused on entities involved in IPR fraud and identifying business practices linked to counterfeiting and piracy. CBP states that it has improved its ability to identify high-risk shipments and companies while facilitating the flow of legitimate trade.

Have auditors found IPR violations and what happens with the IPR owner when a violation is found? CBP states that audits have identified IPR violations among importers of electronics, household electrical products, toys, motorized cycles, and textiles. Auditors have also often found inadequate internal controls over potentially IPR infringing imports. Depending on the audit findings, CBP states that remedial and/or enforcement actions are taken as appropriate, which may include working with the importer to establish a system of internal controls to prevent future violations, increased examinations, and/or the issuance of penalties.

(See ITT's Online Archives or 12/30/05, 01/05/06 and 01/09/06 news, 05123005, 06010510, and 06010910, for Parts I-III in this multi-part series of summaries.)

CBP answers to Trade Symposium questions (dated 12/23/05) available at http://www.cbp.gov/linkhandler/cgov/import/communications_to_trade/trade_2005/answers_qcards.ctt/answers_qcards.doc.