Automated Manifest System AMS C Jonathan Benner Troutman

Automated Manifest System (“AMS”) C. Jonathan Benner Troutman Sanders LLP Washington, D. C. 22 March 2004 Stamford, Connecticut

AMS - DESCRIPTION • On December 5, 2003, the Bureau of Customs and Border Protection (“CBP”) issued regulations requiring “carriers” to submit to CBP advance electronic cargo Information prior to its being brought into the U. S. , in accordance with the Trade Act of 2002 • AMS is a CBP-approved electronic data interchange system, which receives cargo information reasonably necessary to enable high -risk shipments to be identified to ensure cargo safety and security and to prevent smuggling

AMS - DESCRIPTION • As of March 4, 2004, all “carriers” must submit to CBP their cargo declarations electronically via AMS. On March 1, 2004, CBP granted a 30 -day grace period for bulk and exempted break-bulk cargoes and passenger vessels to comply with the AMS requirements and, after April 2, 2004, CBP will enforce penalties against them. • Timing: Containerized cargo and non-exempted breakbulk cargo must submit their AMS declarations 24 hours prior to loading at the foreign port. Bulk and exempted break bulk cargoes must submit their AMS declarations 24 hours prior to arrival in the U. S. (for voyages more than 24 hours) or at the time of sailing (for voyages less than 24 hours).

AMS - DESCRIPTION • CBP regulations state that the master who fails to provide the required manifest information in a timely fashion, or who transmits any document that is forged, altered, or false may be liable for civil penalties of $5, 000 for the first violation, and $10, 000 for each subsequent violation, in addition to penalties applicable under other provisions of law, such as denial of preliminary entry or denial of unlading.

AMS - BASIC REQUIREMENTS The cargo declaration must state: • • The last foreign port before the vessel departs for the U. S. Carrier’s SCAC code (discussed below) Carrier-assigned voyage number Date the vessel is scheduled to arrive at the first U. S. port Numbers and quantities from the carrier’s BL First foreign port where carrier receives cargo destined to the U. S. Description or HTS numbers and weight for cargo classification

AMS - BASIC REQUIREMENTS The cargo declaration must state (cont’): • Shipper’s name and address or identification number from all BL, and the identity of the foreign vendor, supplier, manufacturer, or other similar party and its foreign address • Name and address of the consignee or identification number from all BL. If the cargo is shipped “to order of [a named party], ” carrier must report as consignee the name “to order” • Vessel name, country of documentation, and IMO vessel number • Foreign port where the cargo is laden on board • Internationally recognized hazardous material code, if applicable

AMS - BASIC REQUIREMENTS In addition to the cargo declaration, “carriers” must: • Have a Standard Carrier Alpha Code (SCAC) issued by the National Motor Freight Traffic Association, in Alexandria, VA • Have an Activity Code 3 International Carriers Bond an Activity Code 2 Custodial Bond, if business practices involve creating in-bond shipments. These bonds may be obtained from any U. S. Department of Treasury-approved surety companies • Foreign entities that do not have a U. S. federal tax number or social security number must have a CBP-assigned number to identify the foreign entity on the bond application • File with CBP the date and time of departure from foreign port via AMS 24 hours after departure (for voyages more than 24 hours) or at time of sailing (for voyages less than 24 hours)

ISSUES CLARIFIED BY CBP’S FAQS REVISED AS OF MARCH 1, 2004 • • AMS requirement applies to vessels commencing voyages on or after 4 March 2004 Penalties for non-compliance will not be assessed against break and exempted break-bulk cargoes and passenger vessels until 2 April 2004 “Carrier” must submit a letter of intent to join the AMS program on the carrier’s letterhead, and which contains its contact information and office location Definition of “Carrier” - The entity that controls the vessel

ISSUES CLARIFIED BY CBP’S FAQS REVISED AS OF MARCH 1, 2004 • If cargo has been diverted to a foreign port prior to arrival in the U. S. , carrier must amend the previous bill indicating the change in vessel information. • If carrier skips foreign port and diverts directly to the U. S. , carrier must notify CBP at the designated first port of arrival as soon as it realizes the vessel will not make the foreign port call. Carrier must also retransmit the manifest with corrections. Upon arrival, cargo will be placed on hold until CBP reviews documents. Penalties may be assessed.

ISSUES CLARIFIED BY CBP’S FAQS REVISED AS OF MARCH 1, 2004 • Bond – A single bond is valid for one entrance and one clearance for one transaction at one port. A continuous bond is valid for all conveyances controlled by the bonded entity. • Agent can enter cargo declaration information on behalf of carrier, but agent must use carrier’s SCAC code and bond information. Carrier remains liable for the content and timeliness of the data. • Geographic reach – AMS does not apply to cargoes between Puerto Rico and the U. S. , but does apply to cargoes between Guam (and other U. S. possession and territories) and the U. S.

UNANSWERED QUESTIONS • • • Carrier Definition – Unclear who the carrier is in case of time charter, voyage charter, etc. Can the owner of the loaded cargo be a “carrier”? Is the owner or the shipper responsible for providing the cargo details to the vessel’s port agent?

UNANSWERED QUESTIONS • • • Can the parties to a charter agreement designate between them the party responsible to file the cargo information (e. g. , from the time charterer to the head owner of the vessel or its management company)? Date and time of departure from foreign port via AMS - How and where should carrier file this information? Vessel diversion (to the U. S. or to a foreign port) – when and how submission to CBP of the cargo manifest and date and departure information via AMS be made?

UNANSWERED QUESTIONS • • Commercially sensitive information – sometimes cargo retains more information concerning the destination than the owner of the vessel. Can owner and cargo be assured that the destination information will be held confidential by CBP during the voyage? Scheduled meeting with CBP’s representatives to discuss these and other open issues on March 30, 2004