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Going Global

Going Global. ISA & ACE Partnership Programs with U.S. Customs. About Renfro Corporation. Privately held corp. founded in 1921 & headquartered in Mount Airy, NC One of the world’s largest designers, manufacturers, and distributors of socks Employs ~5,000 people worldwide

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Going Global

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  1. Going Global ISA & ACE Partnership Programs with U.S. Customs

  2. About Renfro Corporation Privately held corp. founded in 1921 & headquartered in Mount Airy, NC One of the world’s largest designers, manufacturers, and distributors of socks Employs ~5,000 people worldwide Manufacturing locations: NC, SC, AL, Mexico, India, Pakistan, Turkey, China Distribution Centers: NC, SC, the Netherlands, Mexico, Canada Imports to the USA 7 years ago, were virtually nil….but today…. Participates in CTPAT, ACE and ISA

  3. Brands & Customers

  4. Renfro Importing Timeline:From Domestic to International • 1921-2000: “What’s a Customs Broker?” era • 2000: Began importing regularly from Central America • 2001: Began importing regularly from Mexico & Pakistan • 2002: Developed International Sourcing Department and expanded to global sourcing • March 2003: signed C-TPAT MOU • February 2004: the Great Sock Detention • April 2004: C-TPAT certification received • June 2004: Applied to ISA • January 2005: ISARM meeting held • July 2005: Accepted into ISA • July 2005: Joined Automated Commercial Environment

  5. ACE ACE is the next generation of technology designed to enhance national border security and expedite lawful trade. It automates and consolidates border processing. Through tools like the ACE Secure Data Portal, unprecedented integration of information and communication between CBP, the trade community, and other participating government agencies is provided through a single, integrated, on-line access point. –Customs Website

  6. Requirements: • Internet Connectivity • Complete POA • Sign Terms & Conditions Document • Request for Multiple Business Categories if needed • Sign Interconnection Security Agreement • Complete Account Data

  7. Benefits of ACE • Periodic Monthly Statements (You can do the acronym on your own…) • Example of Account based ideology rather than traditional transactional based ideology • Interface between Customs, importers and OGAs • Significant Activity Log for communicating issues • Allows importers to designate Customs Brokers • Allows truckers to file e-manifests at ~40 border ports • Lots of cool data and reports for compliance geeks… • Additional modules will be added in future, including FTZ, recon, additional reporting functions, and more detailed exam information

  8. Release Shipment Hold and Examine Flow of Intelligence at Border Station Customs’ vision for ACE CBP Officer decides to: As trucks approach border, Radio Frequency signal transmitted to ACE CBP Officer at primary checksACEscreen for results of Screening and Targeting analysis OR

  9. PMS is a feature of ACE which promotes account based processing PMS allows you to: Move from a transaction-by-transaction payment process to an interest-free periodic monthly statement process. Roll-up individual entry summaries for goods that are either entered or released during the previous month and pay on the 15th business day of the following month. View the statement as it is being built. Periodic Monthly Statement:

  10. Periodic Monthly Statements See complete details of statements for analysis Drilldown to Entry Detail on Statement • Monthly total of duties, taxes, and fees that the importer owes Drilldown to Daily Statement Detail • Daily totals of duties, taxes, and fees that comprise the monthly statement • All the individual entries that make up a daily statement

  11. Trade Reports: Examples • Cargo Entry Details Report • Cargo Entries by HTS Number Report • Cargo Entry Lines by Filer Code Report • Cargo Exam Details by Date Range Report • Cargo Exam Details Report • Team Review Details by Date Range Report • Team Review Details by Entry Number Report • Entry Summary Lines by Port of Entry Code Report • Entry Summary Lines by Filer Code Report • Filer Activity Summary – Top 5 Ports • Importer Activity Summary – Top 5 Filers • Summary of HTS Numbers by Value Report • Summary of IR Numbers by Date, by Value Report • Summary of IR Numbers by Number of Cargo Exams Report • Summary of Filer Codes by Number of Cargo Exams Report • Summary of Consignee Numbers by Date, by Value Report • Summary of Filer Codes by Value Report • Summary of Filer Codes by Number of Team Reviews Report

  12. Entered Value by COO (2004)

  13. ACE Assessment • Overall, it is a good tool for importers with little investment required (other than time) & promises to offer more functionality in the future • Not always the most intuitive system to use • If you pay lots of duty, the PMS float will be worthwhile (that’s us, textile guys) • Reports are useful and may offer a better, more accessible data source than the FOIA ITRAC requests (but data details may be limited) • Essential for trucking companies using Mexican & Canadian border crossings • Customs is providing some training so check with your account manager for availability

  14. ISA: Importer Self Assessment

  15. Importer Self Assessment “ISA is a voluntary approach to trade compliance. The program provides the opportunity for importers who have made a commitment of resources to assume responsibility for monitoring their own compliance in exchange for benefits.” –Customs’ website description

  16. ISA Application Process • Complete Application & Questionnaire • Have documented controls and procedures • Visit by Customs ISA Assessment team—ISARM • Review of ops, procedures, feedback, recommendations • Report/recommendation by ISA team to supervisors • Upon supervisor approval, submitted to ISA panel for decision • If accepted, must annually certify compliance • Time from application to decision could be 5-6 months • As of February 2006, there were ~150 applicants & ~100 approvals

  17. Focused Assessments—the ISA Alternative • Enforcement Based Approach • Can be time-consuming depending on your business and complexity • Assessments can now also focus on one area in some cases, such as preferential trade program compliance (see QRA)

  18. Quick Response Audits (QRAs) Quick Response Audits (QRA) are single-issue audits with a narrow focus. These audits are designed to address a particular limited objective within a reasonably short period of time. QRA is a term used to cover a variety of audits that will have limited objectives as opposed to the complete evaluation of a company's Customs and Border Protection (CBP) activities in the focused assessment program. Because audit objectives vary among QRA, a universal audit program cannot be established and used for all QRA. Examples of a QRA might be an audit of an importer's CBP operations to determine if there is a potential for unlawful transshipment or an audit of the company’s controls concerning intellectual property rights.

  19. Import ProgramKey Elements • Executive level support & policy • Documented controls and procedures • Customs Compliance Committee • Pre-entry audits (classifications, value issues, etc) • Post-entry audits (7501 audits) • Monthly Post-entry comprehensive audits (from PO to receiving & final payment) reported to high levels in the organization • Semi-annual audits by Internal Auditor • Feedback/reviews of Customs Brokers • Packaging COO and fiber content audits • Control systems for Assists • 3rd party pricing studies • Screening of business partners (C-TPAT) • Security surveys and factory visits (C-TPAT) • Factory visits for C-TPAT, origin issues, transshipping, etc. • Training, training, training…internally & externally • 3rd party assessments of topics as deemed necessary (NAFTA, C-TPAT) • Automated auditing of system info versus broker/7501 info being developed

  20. Is ISA Right for YOU? • Depends…..every importer is different • Do you have good internal controls? • Do you havedocumentedcontrols & procedures? • Do you have executive level commitment? • Do you have a good relationship with Customs? • Are you “conservative” with your compliance program? • Do you already “audit, audit, audit…”? • Would you prefer to have some control over which audit pool you are in?

  21. Decision Factors in Joining ISA • Resource allocation (time, cost, predictability) • Control • Conservative nature • Existence of solid programs • Cooperative relationship with Customs • Benefits

  22. Benefits of ISA • Removal from Focused Assessment Audit pool • Requires better internal controls, systems and compliance—so mistakes are reduced • Greater collaboration between the importer and Customs • Puts “a face” on Customs for your top management and vice versa • Better relationship between Account Manager & Importer • Chance to make Customs an advocate rather than an adversary • Opportunity to demonstrate the value of your Compliance Program (to Customs and Internally) • Feedback from Customs on your controls in a non-audit setting • Opportunity to elicit resources to meet your company’s compliance needs • Increased prior disclosure benefits & other potential benefits • Opportunity to identify cost savings through streamlining of compliance processes, EDI automation, fewer post-entry corrections, avoiding fines/penalties, reduced classification errors, etc.

  23. 2005: The year of the Rooster and the End of Quotas

  24. And the arrival of China Safeguards • Multiple safeguard actions filed and accepted, leading (finally) to a comprehensive textile agreement between the US & China • Re-established old school quota systems • China & US agreed to an ELVIS solution • Safeguards Valid through end of 2008

  25. Challenges & Risks to Importers due to China safeguards • Operational issues—new logistical decisions, new sourcing decisions (Hong Kong, Macau, Taiwan, etc) • Cost changes / fluctuations of currency, labor costs, etc. • Quota availability & cost uncertainties • Trans-shipment threats • Detentions, seizures, penalties, oh my! • Know your vendors, are they reliable? Trustworthy? • Does the Macau factory actually exist?

  26. Alternatives to China

  27. Alternatives to China

  28. Suggestions for Multi-Country Processing / High Risk Trans Shipping Situations • Seek binding ruling on proposed operations, be sure your COO assumption is correct (it also lets Customs know your plans) • Know your vendor well! • Validate the factory • Ensure vendors understand the extent of record-keeping requirements to validate COO • Be prepared for the request for production records • Have vendor produce records as a test. Can they? • Talk to Customs, let them know what you’re going to do.

  29. Shameless Product Plug…. Buy Fruit of the Loom Socks!

  30. Thank You

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