Legal Lookout     January 2008

10+2: Customs and Border Protection’s simple math creates complex problems

by Steve Block

Earlier this year, U.S. Customs and Border Protection (“Customs”) issued a notice of proposed rulemaking, currently the subject of comments, regarding possible new requirements for reporting particulars about inbound cargo. The concept involves lining up ten new hoops importers must jump through to get their cargo cleared through Customs’ Automated Targeting System (“ATS”), and two new ones on the already complex obstacle course carriers operate on. The program is known as “10+2,” a title that might imply a simple, trouble-free system. However, industry’s reaction suggests it would be anything but that.

ATS has already gotten its share of bad press. The centralized and computerized system originally was enacted to process inbound international freight, taking advantage of technology that would allow coordinated analysis of threat, administration of security, and implementation of law enforcement if/when needed.

But when Customs decided a couple years ago to apply this technology to travelers crossing the Canadian and Mexican borders, civil rights groups immediately cried foul. It’s one thing to be “targeting” cargo coming from overseas; it’s quite another to do so against American tourists coming home from a Cinco de Mayo celebration. Despite some concessions and promises from the feds regarding privacy and usage of acquired intelligence, the dickering continues.

10+2, if adopted, would add new terms to the “24-Hour Rule” which was implanted not long after 9/11. That rule, too, was the subject of some importer heartburn, as it mandated that shippers and importers advise Customs of every cargo’s exact destination a full day before stowage on a vessel (a detail larger importers don’t always know that early). The 24-Hour Rule also forces international players to rely on Customs’ promise to keep business secrets confidential, which some folks have a tough time embracing.

The Security and Accountability for Every Port Act of 2006 (the “SAFE Port Act”) went into effect on October 13, 2006, and required Customs to gather data beyond what the 24-Hour Rule currently gets from shippers and carriers heading stateside. If adopted, the new reg would require importers to state the following ten items a full day before their freight is even placed on a U.S.-bound vessel: (1) manufacturer’s/supplier’s name and address; (2) seller’s name and address; (3) buyer’s name and address; (4) “ship-to” name and address; (5) container stuffing location; (6) consolidator’s/stuffer’s name and address; (7) the importer of record; (8) consignee number(s); (9)country of origin; and (10) the commodity’s HTSUS (Harmonized Tariff Schedule number). Considerable detail about some of these items also is required in the electronic reporting.

Carriers would have to present within 48 hours after departure (1) a vessel stow plan for vessels headed to the States; and (2) container status messages, which would ensure the feds keep abreast of the chain of each container’s possession en route to the U.S. Like importers, carriers would have to provide detail about their data submissions.

Customs makes a good argument that the additional information would facilitate the agency’s efforts to combat terrorism, and is necessary for compliance with the SAFE Port Act. Moreover, Customs is quick to point out that C-TPAT membership would still produce that friendly nod of approval at the border, and would ensure favorable treatment by Homeland Security on complications.

While no one minimizes the importance of fighting terrorism, the shipping community has issued less than favorable reviews of the proposed new regs. The European Shippers’ Council (“ESC”) thinks the burdens created by 10+2 would be too much hassle for shippers on the Continent – especially those with high volumes – to live by. In addition to trade secrecy concerns, ESC points out that the 10+2 program would go far beyond what earlier was recommended by the World Customs Organization.

Others complain that no matter how well-intended the program might be, some of the extensive data it would require simply isn’t available that early in the process. Moreover, the more info Customs requires under early-deadline conditions, the more techno-savvy all concerned have to be. The costs of keeping more computer geeks on staff (along with additional hard and software) don’t make the program any more inviting.

Like so many other counterterrorism issues of the modern era, 10+2 calls for a balancing act between valid government and social concerns on the one hand, and the capacities, realities and interests of the trading community on the other. The proposed program demonstrates a need for better technology and government regulation of industry activities in ways that would ease the burden on those who want to join in the effort to prevent another terrorist tragedy.


Ref: Notice of proposed rulemaking, available at http://a257.g.akamaitech.net/7/257/2422/01jan20081800/
edocket.access.gpo.gov/2008/E7-25306.htm; and The Security and Accountability for Every Port Act of 2006 (P.L. 109-347)