U.S. Customs and Border Patrol (CBP) is one of the world's largest law enforcement organizations. Its mission is to protect the United States from terrorism and other threats while at the same time facilitating legal international trade and travel. To do that, every day more than 60,000 people are enforcing hundreds of laws that impact trade.
The importance of trade to the economic vitality of the United States is recognized in the CBP's mission statement - "To safeguard America's borders thereby protecting the public from dangerous people and materials while enhancing the Nation's global economic competitiveness by enabling legitimate trade and travel." But enabling can often seem like restricting as those hundreds of laws being enforced slow or prevent the movement of products.
Two items are key to understanding the relationship between CBP and the businesses conducting trade. The CBP expects "informed compliance" and "reasonable care" on the part of the trading community.
Informed compliance means that the CBP has the responsibility to make regulations clear, and businesses have the responsibility to conduct activities in compliance with all U.S. laws and regulations. Compliance in this case is voluntary, but it speeds up processes and benefits everyone. Complying with laws implies a level of knowledge and expertise about how to do so. Doing what is required often means hiring experts and developing staff in-house who know what to do to successfully complete transactions. Required documentation has to be completed accurately, and goods have to be packaged for shipping in a way that facilitates movement and also enforcement activities. Importers have to deal with tariff codes that vary across types of products and places of origin.
Reasonable care is situationally determined, but it is an explicit requirement for all importing firms. Transactions differ, partners differ, risks fluctuate, but the importer has to conduct business in ways that comply with regulations. It starts with knowing what products were ordered, what they are made of, and from whom they were purchased. Valuations matter, countries of origin matter, as does complying with intellectual property laws, FDA regulations, and much more.
Reasonable care can point to the need to use experts to facilitate transactions, even though the importer is ultimately legally responsible for complying with the law. For small businesses, this is often part of the services of their freight forwarders, but other types of expertise may be required. Many professions have evolved to facilitate international business activities, among them customs brokers, lawyers and accountants.
Ongoing education is critical for informed compliance. Regulations change, and what was acceptable may not be any longer. On the positive side, what used to be required may no longer be or new ways of doing things may evolve that reduce transactions costs. Businesses have to rely on their hired experts and internal staff to manage change. Demonstrating internal control over import transactions is key to showing informed compliance and reasonable care.
The CBP enforces laws and conducts compliance assessments, similar to an audit, but of a company's importing activities. A compliance assessment means an interdisciplinary team of CBP experts examines all of an importer's systems that related to CBP activities - financial, logistical, and other records and practices are examined and a measurement of compliance is ultimately determined. By law, companies must be given advance notice of an assessment and an estimate of its duration. They also must be notified of its findings. Firms that comply are told so. Firms that do not comply are offered a plan to come into compliance. Firms found in serious violation of the laws are subject to further investigation and penalties.
Trade assistance organizations often offer training at little or no cost to help keep businesses informed, especially when regulations change. For small companies, getting connected to a network of experts and to other companies in their region that face similar challenges is a great way to start building better trade practices. The CBP website www.cbp.gov has a number of resources, including links to basic guides for importing and exporting (http://www.cbp.gov/trade/basic-import-export).
Be proactive about trade. Recognize that it is something that has to be managed and commit to getting systems and partners in place to do that well. Good practices enable better business and show reasonable care.