By Joan Koenig and James Sawyer

The New Year is a time for looking forward to the coming year and identifying ways to make your life better.  While you reflect on the changes you want to make, don’t forget that it is also a great time to take some steps to help maximize the effectiveness of your trade compliance program.

Here are some steps that may help you improve your trade compliance program, avoid unnecessary surprises, and perhaps even find some new savings opportunities in the new year!


  • Prepare and submit your 2012 self-classification report for any exports of Information Security (i.e., encryption) products that you self-classified and exported under License Exception ENC in 2012.  This report is due by February 1, so don’t wait! 
  • File a request with U.S. Customs and Border Protection (CBP) to provide for confidential treatment of key inward and outward manifest information.  If you’ve already done this, watch out for mandatory biannual renewal requirements, and take the time to review company and affiliate names currently protected, submitting updates or amendments as needed to obtain the broadest protection. 
  • Establish (or renew) relationships throughout your organization, including:
    • Renew lost connections with your friends in Accounts Payable and remind them how important they are to keeping the company compliant by communicating debit/credit memo adjustments, auditing payments to declared value, and other key compliance issues. Taking them out to a nice new year’s lunch couldn’t hurt! 
    • Make new friends in the Finance Department with the owner of the fixed asset ledger to help identify capital assets located outside the United States that may be used to produce imported merchandise. 
    • Reach out to potential training targets to recommend training in 2013 for those you do not commonly interact with, e.g., individuals who handle the company’s mergers and acquisitions, human resource personnel, engineering, purchasing and others to make sure that their training stays up to date and that new hires are aware of trade compliance issues.  An ounce of training is worth a pound of procedures and can save everyone time, effort, and headaches.  Get on their calendar before it fills up! 
    • Have you hugged your in-house counsel this year?  They are key partners in covering trade compliance issues in supply, distribution, and sales agreements, and licensing agreements with potential royalties. 


  • Request your Importer Trade Activity Report (ITRAC) from CBP and your Automated Export System (AES) data from Census.  Review those reports for potential errors, as well as possible opportunities.  Waiting until February should allow sufficient time for the data to be updated by the Government and allow you to receive complete data for calendar year 2012.  Once you have your trade data, you should:
    • Review broker filer codes to identify unauthorized brokers and export filers who might be unauthorized and ensure that outstanding POAs are properly revoked.  If your brokers and forwarders have the authority to assign sub-agents (which is typically not a good idea), you may be surprised who is acting on your behalf. 
    • Investigate duty preference claims that were made but not authorized (e.g., imports under the NAFTA or other FTA where the goods were not qualified by your trade compliance team). 
    • Look for new opportunities to save.  Does your ITRAC data indicate that you are importing from Korea?  Singapore?  Australia?  Chile?  Central America?  Perhaps it is time to revisit Free Trade Agreement (FTA) and other duty preference program opportunities. 
    • Look for anomalies in the trade data and take action to correct errors and avoid costly penalties.  Are your related party designations accurate?  Are you claiming NAFTA with the country of export identified as China?  
    • Review a sample of your AES data to ensure that all data is complete and accurate.  Remember that you have an ongoing obligation to correct errors, and the sooner you find a systemic error, the fewer “bad” filings you will have to correct. 
    • Schedule a meeting with your primary customs brokers and ensure that they have your latest and greatest tariff classification database, other government agency (OGA) requirements, customs broker guidelines, and duty preference program instructions.  They also have personnel turnover, so make sure you know the individuals who are acting on your behalf. 

First Quarter

  • Kick the tires on your internal controls and policies:
    • Are all of the links in your online procedures still accurate and working? 
    • Ensure that your current internal controls reflect actual business practices.  If not, time to update those procedures to reflect reality. 
    • Update your organization chart to reflect personnel changes. 
    • If you have an Encryption Registration Number or Directorate of Defense Trade Controls (DDTC) registration, review to ensure that all material changes that occurred during the year were reported to the relevant agencies (DDTC registration changes are due within 5 days of the occurrence, but better late than waiting until your registration renewal). 
    • Take a stroll through the warehouse to review country of origin markings and look for potential labeling issues. 
    • Do a batch denied-parties screen of your vendors, customers, service providers, and others to ensure that no SDN changes slipped by you during the year. 
    • Identify any new risks coming your way.  Any new FTAs on the horizon?  Thinking about implementing a GSP program?  
    • Is it finally time to join Reconciliation rather than struggle with periodic disclosures or surprises from your finance and procurement teams? 

Everyone’s New Year’s resolutions will be different, but we hope that the above will provide food for thought.  We are always available to help answer questions or provide additional support to help make your trade compliance program best in class.

Have a happy, healthy and compliant new year!

Source: Customs & International Trade Alert