CBP urged to consider account-based 10+2 filing

An unaffiliated collection of international trade professionals has mapped out a way for the U.S. government to allow importers to pre-file information on an account basis rather than for each transaction to comply with the pending 10+2 rule requiring advance ocean shipment data for security screening.

The alternative approach was offered as a way to reduce filing redundant data and improve data accuracy.

Customs and Border Protection is in the final stages of developing a rule for an Importer Security Filing to be transmitted 24 hours prior to vessel loading at an overseas port. The controversial rule will require importers or their agents to electronically submit 10 data categories of data about their manufacturers, logistics providers, customers and cargo, and liner carriers to submit stow plans and status messages for containers in their custody.

10+2 is a reference to the split responsibility for the dozen information sets.

Many shippers and their freight management providers have questioned the security benefit of the additional information and expressed concerns about the cost of setting up information systems, third-party filing fees, and cargo delays while importers track down origin and destination information that may not be readily available through normal business channels.

CBP should give importers the option of setting up an online account pre-populated with supply chain partner and cargo data, according to the draft proposal obtained from the agency's Commercial Operations Advisory Committee.

Account-based pre-filing is a much more effective way to ensure that the right data is presented to CBP and meaningful risk assessment occurs before a U.S.-bound shipment leaves a foreign port, the draft document said. CBP's proposal allows for importers to correct the data elements before the shipment reaches the United States, but the drafters said that approach increases the chances that CBP will rely on the wrong information for targeting decisions. A case in point is when cargo is resold to a third party while in transit, potentially resulting in the need to update four pieces of information.

Submitting corrections after the vessel has sailed defeats the purpose of filing advance data in the first place, since the opportunity to 'push the border out' has already been missed. High-risk shipments will arrive at a U.S. port without having been properly screened for terrorist threats, the ad hoc working group said.

CBP is already moving to the account-based approach for revenue collection in the rollout of its next-generation computer system, the Automated Commercial Environment. Importers can pay duties and fees on a monthly basis rather than for each transaction. CBP has also set up accounts for voluntary participants in the Customs-Trade Partnership Against Terrorism to manage their compliance with program requirements.

Under the proposal, importers would upload a comprehensive list of their manufacturers, sellers, container stuffing locations, buyers, along with contact information, as well as countries of product origin, commodity tariff codes and other elements. As with C-TPAT and other programs, importers would have to demonstrate their ability to maintain timely and accurate information in their profile at least 24 hours prior to vessel loading for the privilege of using an account.

Similar data summaries could be constructed for exceptions such as freight remaining on board and bonded shipments transported to another port for re-export, it said.

CBP would create an ISF account number and importers would require their foreign suppliers to provide the number to the consolidator or ocean carrier at the time of booking. The carrier in turn would submit the ISF number along with the manifest, which is already required to be filed 24 hours in advance of lading via the Automated Manifest System.

CBP would issue ISF transaction numbers acknowledging receipt of shipment-based filings to companies not participating in the account-based system and carriers would submit these numbers along with the manifest to maintain a consistent process.

The working group said such an approach improves security because it minimizes the chance of the importer inadvertently tipping off potential terrorists in researching missing information to meet the transactional data requirements. The account approach gives CBP the time to investigate any red flags and advise the importer on how to proceed if an anomaly turns up. And it allows the importer to take corrective actions in advance of an order being placed or vessel loading which otherwise would lead to costly delays.

Several trade associations and importers, including another technical advisory group to CBP called the Trade Support Network, requested in comments filed earlier this year to the rulemaking docket that CBP create a voluntary account-based filing system. The new proposal goes one step further by outlining a way to make the concept work.

Bruce Leeds, senior export/import manager for Boeing and COAC's primary liaison to CBP, asked agency officials during a meeting in Seattle to consider the proposal.

CBP officials, observing radio silence on policy matters regarding the rulemaking since its publication in order to meet legal requirements for impartiality, did not react to the idea.

Several factors are working against adoption of the account-based filing system, not the least of which is the timetable to get a rulemaking out as soon as possible to meet a congressional mandate.

The proposed 10+2 rulemaking is now being reviewed by the Department of Homeland Security's general counsel in preparation for submitting it soon to the Office of Management and Budget for approval, program director Rich DiNucci, told COAC members. He did not predict when a final rule would be published, but officials have previously stated the process could be completed by late this summer or fall.

CBP officials could be reluctant to make changes that would add several months to building a system to implement the final rule, especially as any extra programming would drain resources from the next-generation Automated Commercial Environment that is already suffering delivery delays.

In mid-July DiNucci's team released the second set of draft technical requirements for the proposed security measure and is taking import industry feedback on how to program its systems to best support the necessary messaging between CBP and individual companies.

CBP has already received about 50,000 informal, or proxy, security filings from dozens of volunteers participating in a testbed called the Advance Trade Data Initiative, DiNucci said. The agency has also received about 500 to 600 stow plans and about 75 million container status messages.

Border security officers are starting to incorporate the stow plans into their screening procedures and have had some success identifying unmanifested containers and resolving those documentation issues with ocean carriers and U.S. ports, DiNucci said. Collection of the stow plans is working smoothly, he added.

One thing we've shown with ATDI is that we can actually manage that level of data without choking CBP systems, DiNucci said.

However, the amount of data collected so far is a fraction of the expected amount at full implementation of the rule.