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American Shipper

Panel warns stricter commercial compliance looms

Panel warns stricter commercial compliance looms

   Importers, exporters, customs brokers and freight forwarders should not focus solely on security compliance to the exclusion of commercial compliance, attendees at a trade conference in Los Angeles heard Monday.

   A panel of experts in import and export compliance warned those in attendance at Tradewatch 2006, held by the Foreign Trade Association of Southern California, that the regulatory audit branch of Customs and Border Protection will be increasing its scrutiny of importers. Census inspectors will also focus more sharply on export irregularities in 2006.

   Robert Allen, regional field director of regulatory audit for CBP Los Angeles, said strengthening internal controls are the best way to ensure that companies either stay away from commercial audits, or pass them with minimal fuss.

   'The focus is on high-risk,' Allen said. 'Material discrepancies, total volume of imports and major accounts will be most highly scrutinized.'

   The audits, and Census investigations into export compliance, can have stiff consequences, if not major monetary penalties, said Todd Smith, western area leader for customs and international trade practice for KPMG.

   'When you convey risk assessment to your CFO, they're only worried about the bottom line,' he said. 'So a penalty of $10,000 might not faze them. But it's your duty to convey to them that it could have downstream effects, like preventing that company from trading for a week.'

   Smith urged those in the crowd to have U.S. principal party and interests apply for the importer self-assessment program, which essentially gives shippers immunity from Customs audits, provided their documents are in order.

   Meanwhile, Susan Kohn Ross, a customs attorney in Los Angeles, said export compliance will become increasingly important as Census officials mandate online filing of export declarations through their Automated Export System in the first quarter of 2006.

   As for imports, she said it's particularly important for large importers to keep their ducks in a row.

   'In theory, the rules are supposed to be across the board,' Ross said. 'In reality, what a small company is able to do is different than what a large company is. Other than Fortune 500 companies, compliance isn't even on the radar.'

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