What is Advance Commercial Information (ACI)?

ACI is about getting the information to CBSA prior to shipments arriving in Canada at the first point of arrival (or in the foreign port for Marine in some cases). CBSA will use the information to make release decisions taking into account ALL information regarding the shipment. Mandatory HS for all commodities, except CSA/FAST participants.

Advance Commercial Information (ACI)
 All other existing expedited release mechanisms such as First, RMD, will be eliminated on full implementation of ACI  Phase 1 – Marine, offshore, April 2004.  Phase 2 – Air & Marine from U.S. Dec 2005  Phase 3 – Highway & Rail modes targeted for 2007.  Increased pre-arrival reporting data (EDI) will be required for ACI shipments  The only alternative to CSA/FAST

ACI Proposed Reporting Times
• ACI Phase 1 • Marine mode – Marine Carriers are currently required to transmit (EDI) marine cargo data to the CBSA 24 hours prior to the loading of the cargo in the foreign port.

ACI Proposed Reporting Times
• • ACI Phase 2 December 2005 Air mode - 4 hours prior to arrival

 Air mode - (for flights less than 4 hours) “Wheels up”, at time of take-off;  Marine mode from the U.S – Carriers & freight forwarders must transmit 24 hrs prior to arrival, or at time of departure if voyage is less than 24 hrs

ACI Proposed Reporting Times
 ACI Phase 3 Targeted for 2007
 Highway mode - (Non-Fast shipments) At least 1 hour prior to arrival at the frontier.  Highway mode - (FAST shipments) no advance reporting requirement Canada bound.  Rail mode – at least 2 hours prior to arrival

ACI Phase 3
Carrier • Transmits cargo/conveyance data electronically within designated advance timeframes. Applies to import and in- transit shipments. Freight forwarder • Transmits housebill data (if applicable) in same timeframes as primary cargo which will provide detail information needed for risk assessment e.g. actual consignee, shipper, precise description of goods.

ACI Phase 3

If “Hold For Exam” or “Hold For More Information” is issued goods must be held at the first point of arrival for examination. If information is not provided electronically, the CBSA must decide on appropriate action for each mode, example : turn truck around, AMP, etc.

ACI- The End State
• Importer/broker will transmit advance importer data electronically (via PARS or importer data set), including all 10 digit HS codes.

ACI- The End State
• 100% Electronic Pre-Arrival Transmission from carriers, freight forwarders, importers/brokers

• Data processed and examination decisions made prior to first point of arrival for all modes • Goods will release or be examined at the first point of arrival

Before 9/11
Importer Compliance was key Trade Statistics and paying the proper amount of Duties and GST was the focus Speed of clearance for Compliant importers was the carrot

Before 9/11
Importer Compliance was considered as lacking in Canada C.C.R.A. decides to use an “post audit” method to scrutinize compliance. A series of penalties is instituted to leverage ongoing compliance with Customs rules and regulations. A.M.P.S.: “Administrative Monetary Penalty System”

Before 9/11
A.M.P.S. A series of graduated penalties designed to create incentives to maintain Customs Compliance. Make an error – pay a fine. The size of the fine depended upon past performance. Compliance! Compliance! Compliance! If you did not want to pay A.M.P.S. penalties, and have your goods delayed at the border you had to demonstrate Compliance to Canada Customs.

What Is Compliance?
Invoice #1234 Purchase Order # 4444 Date Supplier Amt:$1000 Qt 4 Item Engines PO #:4444 Waybill

#8888 Engines PO # 4444

B3
#123456789 CADEX Qt Item 4 Engines REF: PO # 4444 HS#;8407.32.00.90 V.F.D:$1000. INV # 1234

Amt:$1000 Qt 4 Item Engines

Consistency and accuracy in each step of a shipments journey !

General Ledger Subledgers Journals

Receipt #333 Date Qt 4
Date Supplier Amt $1000
ABRT

Item Engines Amt: $1000

Inv # 1234

REF: # Inv # 1234 PO # 4444

Benefits of Compliance
If an importer was able to demonstrate compliance consistently;
3. No A.M.P.S. Penalties. 4. Clearance times would be short as your record will reflect

your compliance to Customs

5. Compliant Importers can enjoy Customs Action Plan /

Commercial Re-engineering initiatives.

Commercial Re-engineering
New Approach to the report, release and accounting of goods.

From: Focus on low risk Interviewing Travelers Minimal Transaction data & release Transactional Verification Domestic Requirements Seizures

To: Focus on high risk Pre-registering Travelers Pre-arrival, targeting data & frontier release Periodic Verification Int’l Requirements Graduated Penalties.

Customs Self Assessment
A partnership between importers, carriers and the C.B.S.A. Proven Compliance = Improved Clearance Times

C.S.A.
If importer proves compliance, trucks carrying their goods can pass through the border without stopping. How to prove Compliance?
5. Demonstrate to Customs that commercial systems can

detect importation when the goods are received.

6. Show ability to account for the shipment to Customs, or

ability to transfer the information to Customs broker so they can account for the goods.

7. Utilize CSA approved carriers using CSA approved drivers.

C.S.A.
Streamlined accounting and payment process for all goods imported by approved importers. - Consolidated B3 utilized - B3 is transmitted once a month and payment is once a month And the option of…….

C.S.A.
Streamlined clearance for eligible goods imported by approved importers, using approved carriers and registered drivers CSA Approved Importer CSA Approved Carrier CSA Approved Driver Immediate Clearance

CSA
• To qualify….
• Head office in Canada or operate a branch office in Canada • Two years of importing history without major infractions • Can provide senior mgmt representation that business systems will • support CSA program requirements. • Are prepared to invest in business systems.

Commercial Driver Registration Program
• Driver registration will allow Canadian Customs clearance to be easier for pre-approved drivers. • Allows for CSA participation by approved drivers and carriers. • Driver’s Immigration admissibility is pre-determined • CDRP photo ID card presented at the border and passage is tracked electronically.

Post 9/11
United States closed their borders. False impression that some or all responsible terrorists arrived in the U.S. via Canada. Security was subsequently added as an necessary part of what has to be demonstrated to Customs.

Post 9/11
United States Customs Service
Robert C. Bonner Commissioner, U.S. Customs and Border Protection

Formerly reporting to Treasury Department, changed to reporting to newly created “U.S. Department of Homeland Security” Changed name to U.S. Customs & Border Protection. Demonstration of Security became even more of a focus.

C.B.S.A. acted as a trade facilitator and a collector of tax for the Canadian Government

US Customs exists to protect the American people and protect the country

Importing into Canada is a right

Importing into the United States is a privilege

Post 9/11
The United States CBP mandated that border security for freight entering the United States was the highest priority.

Canada was under pressure both economically and politically to change their focus from just Revenue Collection to include Security.

Post 9/11
Canadian mandate of Commercial Re-engineering was to continue but with an added dimension:

Security!

Isn’t Being Compliant Enough?
• In order to be considered a “low risk” with U.S. and Canadian Customs in the past “compliance” was the rule of thumb. • If a company followed the rules and regulations regarding importing and exporting, one could expect a reasonable inter-action with Customs to get goods cleared through Customs, and on their way to their destination.

Compliance AND Security
With the new focus on deterring Terrorism and Organized Crime, demonstrating to the Customs Authorities that a Company is compliant with Customs Regulations is no longer enough.

A Company must also demonstrate they are a Security conscious importer and exporter as well. Compliance + Security = Low Risk Importer/Exporter

Compliance AND Security

Paradox:

Free Trade - Security

How to demonstrate Security?
Canada: Partners In Protection “P.I.P.”

United States:

Customs Trade Partnership Against Terrorism “C-T.P.A.T”

Partners In Protection – Voluntary “P.I.P.”
A co-operation between private industry and private industry to enhance border security, combat organized crime and terrorism, increase awareness of Customs Compliance Issues, and help detect smuggling. Complete a Participant Information Document A goodwill agreement; “Memorandum of Understanding” is agreed to and signed between the organization and C.B.S.A.

Partners In Protection – “P.I.P.”
A security questionnaire must be completed and returned to CBSA within 60 days of signing the MOU. This questionnaire gives CBSA an executive summary and self-assessment of the company’s security processes

• Security Concerns should include:
Conveyance Security: Integrity should be maintained to protect against the introduction of unauthorized personnel and materials Should include examination of all accessible areas and procedures for dealing with unauthorized activity if discovered

Physical Security: All buildings and yards should be designed to resist unlawful entry May include perimeter fences, adequate lighting, locks on internal doors, windows, gates, etc.

Access Control: Prohibit access to shipping loading dock and cargo areas. Controls should include identification of employees Integrity should be maintained to protect against the introduction of unauthorized personnel and materials Should include examination of all accessible areas and procedures for dealing with unauthorized activity if discovered

Procedural Security • Procedures to protect against non-reported materials being introduced in the supply chain • Enhanced Cargo handling procedures and monitoring of incoming and outgoing goods • Conduct random security assessments of controls within supply chain and implement procedures for notifying Customs of any anomalies or illegal activities detected or suspected.

Manifest Procedures and Data Protection: Must ensure documentation is timely, accurate and complete. Implement measures to protect electronic assets and computer access. Maintain secure storage of unused forms to prevent unauthorized use.

Personnel Security: Employment Screening of prospective employees should include background checks and application verification

Education and Training Awareness: Encourage active employee participation in security issues and controls. Implement a security awareness program including cargo integrity and unauthorized access

Partners In Protection – “P.I.P.”
Available to entire trade community

A C.B.S.A representative will be assigned to the Partner and after implementation will meet periodically to exchange information.

“P.I.P.”: Benefits…..
1. 2. 3. 4. 5.

Shipments and travelers will be processed more quickly Improved Security Levels Firm’s staff will become more familiar with Customs requirements C.B.S.A. Security personnel will examine firm’s security levels and assist with suggestions Enhanced reputation for the company by demonstrating a willingness to work with Customs (CBSA).

“P.I.P.”: Benefits….. con’t
6. Coupled with an excellent compliance record will result in reduced examination rates. 7. Better Communication with CBSA 8 Ability to join FAST (CSA + PIP = FAST)

9 Decreased clearance times in the new A.C.I. environment

“P.I.P.”: Benefits….. con’t
10. As many countries (like the G7) are moving to standardize trade data and involving businesses in programs to minimize security threats, participation in PIP (and C-TPAT) will provide companies with competitive advantages in several global economies

Free and Secure Trade (F.A.S.T.)
• FAST is a harmonized program between the CBSA, Citizenship and Immigration Canada (CIC) and the U.S. Bureau of Customs & Border Protection (CBP) • Built on the pre approval and risk assessment aspects of CSA and PIP, FAST shipments for approved FAST Importers, transported by approved FAST Carriers, using FAST registered drivers will be cleared with greater speed and certainty.

Free and Secure Trade (F.A.S.T.)
• FAST is a available to Importers, carriers and Drivers who have demonstrated a history of compliance with all Customs laws, and have acceptable books, records, and audit trails. • Canada and US have agreed to align their Customs commercial programs along the shared border. • Free flow of low risk, legitimate trade.

Free and Secure Trade (F.A.S.T.)
• • • • • • • • • Available Locations: Canada Stanstead (55), Quebec Lacolle, Quebec Queenston Ont Fort Erie, Ontario Windsor, Ontario Sarnia, Ontario Emerson, Manitoba North Portal, Saskatchewan Coutts, Alberta Pacific Highway, British Columbia United States Derby Line, VT Champlain, NY Lewiston NY Buffalo NY Detroit MI Port Huron MI Pembina, ND Portal, ND Sweetgrass, Montana Blaine WA

Benefits: • • • • • •

Free and Secure Trade (F.A.S.T.)

Reduces Info requirements for each customs clearance Eliminates need to transmit data for each transaction Dedicated lanes for FAST clearances Reduces rate of border inspections Trade compliance verified away from border Streamlines accounting and payment processes for approved importers (Canada Only)

(F.A.S.T.) Requirements
Canada Partners in Protection + Customs Self Assessment PIP + CSA = FAST United States Customs – Trade Partnership Against Terrorism C-TPAT

Free and Secure Trade (F.A.S.T.)
• Border Requirements • Into Canada 3 bar coded data elements 1- FAST Approved Importer 2- FAST Approved Carrier 3- FAST Approved Driver (FAST card must be shown)

Free and Secure Trade (F.A.S.T.)
• FAST Approved commercial drivers will be given FAST placards on their trucks • This placard along with the driver showing his FAST card will place the truck in a dedicated FAST lane at Customs.

Future of Canadian Customs Clearance
Advanced Commercial Information – A.C.I. or Free and Secure Trade – F.A.S.T.

Customs Perception of a Company’s Security levels will affect both types of clearances