Customs Bonds in Today’s Environment
Presented by:
Colleen Clarke
Vice President - Surety
Roanoke Trade Services, Inc.
Bruce Haskell
President and CFO
C.A. Shea & Company, Inc
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November 30. 2010
SEMINAR PRESENTERS
Colleen has been working in the industry for over 22 years. Her background
includes customs underwriting and claims, as well as marketing and CBP
relations. She is the manager of Roanoke’s independent agent unit. She has
served one term on COAC and is actively involved with ITSA and CSEC. As
the co-chair of the surety account subcommittee of the TSN, she works with
CBP on issues related to CBP automation and surety data/information.
Bruce has been working in the industry for over 26 years. He works closely
with CBP on many areas of regulation and policy as it relates to C.A. Shea &
Company’s surety business. He is the Executive Vice President of the Customs
Surety Association and is a member of the Customs Surety Executive
Committee. He serves as a Trade Ambassador for the surety industry as a
member of CBP’s Trade Support Network.
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Welcome!
• Purpose of this Seminar
– To familiarize you with the basics of CBP bonds
– To provide you with a basic understanding of CBP
bond requirements
– To help you identify new business opportunities
– Review some of the new programs and terms used
by CBP
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U.S. Customs
• The first Congress, on July 4, 1789, passed the
Tariff Act of 1789
– Authorized the collection of duties on imported
goods
• July 31, 1789, Congress established Customs
and its ports of entry
• For nearly 125 years, Customs funded the
entire government and paid for the nation’s
early growth and infrastructure
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What is a Customs Bond?
• When a CBP import bond is executed, the principal
agrees to:
–
–
–
–
–
–
–
Pay duties, taxes and other charges in a timely manner
Make or complete an entry
Produce documents and evidence as required
Redeliver inadmissible products
Rectify any compliance issues (marking)
Make merchandise available for exam
Comply with special requirements
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What is a Customs Bond?
• One standard bond form –
covers most Customs
activities
• 19CFR113 covers all bond
obligations and each activity
refers to a section of the
Regulations
• Single Transaction vs
Continuous
• Being re-designed after 25 yrs
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What is a Customs Bond?
• Single Transaction
• One entry or transaction
• Continuous
• All entries or transactions
for one year
• Liability Stacking
• Each bond year constitutes
additional liability
• Four riders to amend bond
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Bond Coverages
• Activity Code 1 - Importer/Broker
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–
–
–
–
Basic Importing – payment of Duties & Taxes
Airport Security
Importer Security Filing (ISF)
Periodic Monthly Statement (PMS)
Reconciliation – done by rider
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Bond Coverages
• Activity Code 1A - Drawback
• Activity Code 2 – Custodian of Bonded Merchandise
• Activity Code 3 – International Carrier
• Activity Code 3A – Instruments of International
Transportation
• Activity Code 4 – Foreign Trade Zone
• Other Codes rarely used
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Who Needs a Customs Bond?
• Activity Code 1
– Almost everyone imports
– US Manufacturers
– Importers
– Exported goods returned for repair
– Traffic Departments vs. Risk Management Dept
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Who Needs a Customs Bond?
• Activity Code 1A
– Write in conjunction with Activity Code 1
• Activity Code 2
– Truckers, Warehousemen, Container Freight
Stations
• Activity Code 3
– Shipping Lines, Airlines
• Activity Code 4
– Foreign Trades Zone – Operators/Lessees/Owners
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Total Active Bonds as of 9/1/2010
ACTIVITY CODE
BOND TYPE
1
IMPORTER/BROKER
1A
DRAWBACK
1040
2
CUSTODIAN OF BONDED MERCHANDISE
5537
3
INTERNATIONAL CARRIER
5654
3A
INSTRUMENTS OF INTERNATIONAL TRAFFIC
743
3A3
CARRIER OF INTERNATIONAL TRAFFIC
78
4
FOREIGN TRADE ZONE OPERATOR
672
5
PUBLIC GAUGER
45
11
AIRPORT SECURITY
14
14
MIAMI IN-BOND EXPORT CONSOLIDATOR BOND
10
15
IPR
5
16
ISF
69
17
MARINE TERMINAL OPERATOR
6
Total
BOND COUNT
155,194
169,067
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Bond Amounts
• CBP determines the bond amount
– www.cbp.gov is an excellent resource for staying
current
– Majority of all continuous import bond are at the
minimum
– CBP is re-writing the bond amount guidelines
– “Risk-Based” Bonding
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High Risk Categories (CBP)
• Textiles/Footwear – high duty amounts;
marking; classification; transhipment
• FDA entries – redelivery; STB amounts 3x
value
• ADD/CVD – High losses; long tail
• TIB – procedural and documentation issues
• Conditionally Duty Free – documentation
issues
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High Risk Categories (CBP)
• Vessel Repair – duty is 50%
• Reconciliation – long tail; documentation
issues
• Periodic Monthly Statement – duty payment
delayed; exposure to risk increased
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Where are Bonds Filed?
• Bond Team in Indianapolis
– Very strict bond filing standards – no variation
between ports
– Bond Sufficiency – 30 days to comply
– Bad Address
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Your Client and CBP
• Advantages
– Reconciliation
– Periodic Monthly Statement
• New Issues
– ISF
• Reports
– Entry/Claims Reports available from surety
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Airport Security Bonds
• Requirements
– Vendors in Airports
– Construction workers in airports
– Cleaning companies
• Bond Form
– Can use CBP 301
– Best is separate bond
– Amount is based on number of employees/badges
• Violations
– $1,000 per violation
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Claims
• What Can Go Wrong?
• Two types of Claims
– Supplemental Duty Bills
– Fines, Penalties and Forfeitures (FP&F)
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Claims
• Supplemental Duty Bills
– Duties estimated and paid at entry
– Entry liquidated (Finalized) 314 days later
– CBP determines if merchandise properly classified
– If additional duties are assessed, result is Supplemental Duty bill
– Protest if disagree – time sensitive
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Claims
• Fines, Penalties and Forfeitures (FP&F)
– Liquidated Damage Claims are for violations of
the regulations
– Some claims may be mitigated
– Common FP&F Claims
– No files/Late files
– Redelivery
– Manifest discrepancies
– Claims made on CF 5955A
– Petition if disagree – time sensitive
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Other Transportation Bonds
• Freight Forwarder
• NVOCC
• Property Broker
Covers principal’s fiduciary responsibility to it’s
clients
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Customs Bonds in Today’s Environment
YOUR QUESTIONS?
If you do not have the opportunity to have your
question addressed during the Seminar, you may
contact the presenter directly:
Colleen Clarke
Roanoke Trade Services, Inc.
[email protected]
847-969-7033
Bruce Haskell
C.A. Shea & Company, Inc.
[email protected]
908-879-0990
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