Welcome SBS Group of Companies Neville Peterson LLP

Welcome SBS Group of Companies Neville Peterson LLP Customs Regulatory Review November 6, 2008 SBS Group of Companies

Agenda • • Welcome & Introductions CBP Trade Strategy – SBS 10+2 and Your Import Supply Chain - SBS Customs Enforcement Priorities and How to Cope – Neville Peterson • Cocktail Reception SBS Group of Companies

CBP Trade Strategy A Look At The Numbers Post 9 -11 trade facts between 2001 and 2007: Ø Imported goods grew by more than 65% in annual imported value. Ø CBP processed approximately 10 million inbound vessel containers and more than 31 million entries in 326 ports. SBS Group of Companies

CBP Trade Strategy A Look At The Numbers - Continued ØGoods were received by over 810, 000 importers with the top 3, 000 importers accounting for 73% of all imported value. ØThe United States trades with almost every country in the world with Free Trade Agreements and Preferential Trade Programs continuing to drive increases in the complexity of trade laws. SBS Group of Companies

CBP Trade Strategy A Look At The Numbers So, what does this tell us? As global trade continues to increase in volume and va so does the complexity of managing risk and security. As a result, we see a shift in the language of CBP’s strategic goals. SBS Group of Companies

CBP Trade Strategy High Level Strategic Goals – Comparison of Five Year Objectives Objective 1 2005 – 2010 2009 – 2013 Preventing Terrorism At Ports of Entry. Facilitate Legitimate Trade Into the United States and Ensure Compliance. 2 Preventing Terrorism Enforce U. S. Trade Laws Between Ports of Entry. and Collect Accurate Revenue. 3 Unifying As One Border Agency. SBS Group of Companies Advance National and Economic Security. Source: CBP Five Year Strategic Plans, FY 2005 -2010, 2009 -2013

CBP Trade Strategy High Level Strategic Goals – Comparison of Five Year Objectives Objective 2005 – 2010 2009 – 2013 4 Facilitating Legitimate Intensify Modernization of Trade and Travel. CBP’s Trade Processes. 5 Protecting America and Its Citizens 6 Modernizing and Managing SBS Group of Companies Source: CBP Five Year Strategic Plans, FY 2005 -2010, 2009 -2013

CBP Trade Strategy A Deeper Look at Facilitating Legitimate Trade Level 2 Objectives 2005 – 2010 2009 – 2013 1 Modernize automated import, export and passenger processing systems to improve risk assessment and enforcement decision -making. Improve risk assessment and targeting based on advance information to identify and facilitate compliant imports. SBS Group of Companies Source: CBP Five Year Strategic Plans, FY 2005 -2010, 2009 -2013

CBP Trade Strategy A Deeper Look at Facilitating Legitimate Trade Level 2 Objectives 2005 – 2010 2 Utilize state-of -the art technologies and processes to leverage resources and to conduct examinations of all potential highrisk cargo, conveyances and passengers. SBS Group of Companies 2009 – 2013 Strengthen partnerships with the trade community, other U. S. government agencies, and international organizations to ensure compliance. Source: CBP Five Year Strategic Plans, FY 2005 -2010, 2009 -2013

CBP Trade Strategy A Deeper Look at Facilitating Legitimate Trade Level 2 Objectives 3 SBS 2005 – 2010 Enforce all U. S. trade, immigration, drug, consumer protection, intellectual property and agricultural laws and regulations at the borders. Group of Companies 2009 – 2013 Expand pre-entry and post-release verification programs to reduce cargo delays at the border. Source: CBP Five Year Strategic Plans, FY 2005 -2010, 2009 -2013

CBP Trade Strategy So, what does this mean to importers? • Additional Complexity – programs such as the proposed Importer Security Filing (10+2) will expand import requirements and push them further upstream in your supply chains. You will need to expand your process with suppliers and third party logistics providers to meet new requirements. SBS Group of Companies

CBP Trade Strategy So, what does this mean to importers? • Stronger Emphasis from CBP on Enforcement and Financial Penalties CBP will utilize revamped technology and better – information to target non-compliant importers. Importer’s internal compliance programs and record keeping processes will become even more important than they are today. SBS Group of Companies

Importer Security Filing (10+2) Importer Security Filing Defined The Importer Security Filing (ISF) is an electronic transmission of 10 data elements sent by the importer or their designated agent 24 hours prior to loading of containerized ocean cargo at the foreign port of lading. SBS Group of Companies

Importer Security Filing (10+2) Proposed Penalty for Failure to Comply If the principal (importer of record) fails to comply with the proposed importer security filing requirements, the “principal and surety (jointly and severally) would pay liquidated damages equal to the value of the merchandise involved in the default” SBS Group of Companies

Importer Security Filing (10+2) The “ 10” to name 1 Manufacturer name 6 Shipaddress and 2 Seller name and address Container stuffing location 7 4 Consolidator name and address 9 5 Buyer name and address 3 SBS Group of Companies 8 10 Importer of record number Consignee number Country of origin of the goods Commodity Harmonized Tariff Schedule #(6 digit)

Importer Security Filing (10+2) The “ 2” CBP will require ocean carriers to provide two additional data sets to complete the security filing: ØVessel Stow Plan ØContainer Status Messages SBS Group of Companies

Importer Security Filing (10+2) Building the “ 10” Managing Proactively Inside the Import Supply Chain Manufacture Sellers Order Placement Source Buyers Information Flow Order Fulfillment Ship/Import Receipt/Distribute Keys for Success Map Import Supply Chain SBS Group of Companies Develop Supplier Profiles Develop Part/SKU Database

Importer Security Filing (10+2) Building the “ 10” Managing Proactively Inside the Import Supply Chain Keys for Success Map Import Supply Chain SBS Group of Companies • Identify Stakeholders • Confirm Document Flows • Identify Information Gaps

Importer Security Filing (10+2) Building the “ 10” Managing Proactively Inside the Import Supply Chain Keys for Success Develop Supplier Profiles SBS Group of Companies • Identify & Document Complete Manufacturer Addresses • Identify & Document Complete Seller Addresses • Identify Container Stuffing Locations

Importer Security Filing (10+2) Building the “ 10” Managing Proactively Inside the Import Supply Chain Keys for Success Develop Part/SKU Database SBS Group of Companies • HTS pre-import classification of parts or SKU’s

Importer Security Filing (10+2) The Role of SBS In This Process The SBS Advantages: • Our tool provides a globally accessible web application – all stakeholders can have controlled access. • Our tool provides a means to maintain a parts/SKU database tied to HTS classifications. • We can manage and monitor supplier performance in meeting these requirements. SBS Group of Companies

Importer Security Filing (10+2) The Role of SBS In This Process The SBS Advantages: Continued • We can provide economical options for training suppliers on the new process and requirements. • We are able to integrate 10+2 data elements with the ocean automated manifest system where required • Deliver a highly integrated system • We can leverage the information provided in this filing to provide a higher degree of visibility to your global supply chain. SBS Group of Companies

John Peterson Neville Peterson LLP SBS Group of Companies

Data Element Definitions • Manufacturer (or supplier) name and address. The name and address of the entity that last manufactured, assembled, produced, or grew the commodity, or the name and address of the supplier of the finished goods in the country from which the goods are leaving. In the alternative, the name and address of the manufacturer (or supplier) that is currently required by the import laws, rules and regulations of the U. S. (i. e. , entry procedures) may be provided (this is the information that is used to create the existing manufacturer identification (MID) number for entry purposes). Seller name and address. The name and address of the last known entity by which the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided. • Buyer name and address. The name and address of the last known entity to which the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided. • Ship to name and address. The name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody. SBS Group of Companies

Data Element Definitions • Container stuffing location. The name and address (or addresses) of the physical locations where the goods were stuffed into the container. For break bulk shipments, the name and address (or addresses) of the physical locations where the goods were made "ship ready" must be provided. • Consolidator (stuffer) name and address. The name and address of the party who stuffed the container or arranged for the stuffing of the container. For break bulk shipments, the name and address of the party who made the goods "ship ready" or the party who arranged for the goods to be made "ship ready" must be provided. • Importer of record number/FTZ applicant identification number. Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the entity liable for payment of all duties and responsible for meeting all statutory and regulatory requirements incurred as a result of importation. For goods intended to be delivered to an FTZ, the IRS number, EIN, SSN, or CBP assigned number of the party filing the FTZ documentation with CBP must be provided. The importer of record number for importer purposes is the same as "importer number" on CBP Form 3461. SBS Group of Companies

Data Element Definitions • Consignee numbers. IRS number, EIN, SSN, or CBP assigned number of the individuals) or firms in the U. S. on whose account the merchandise is shipped. This element is the same as the "consignee number" on CBP Form 3461. • Country of origin. Country of manufacture, production, or growth of the article, based upon the import laws, rules and regulations of the U. S. This element is the same as the "country of origin" on CBP Form 3461. • 1 HTS number at 6 digit level. Duty/statistical reporting number under which the article is classified in the HTS. The HTS number is required to be provided to the 6 digit level. The HTS number may be provided up to the 10 digit level. This element is the same as the "H. S. number" on CBP Form 3461 and can only be used for entry purposes if it is provided at the 10 digit level or greater. SBS Group of Companies