Transcript Document 7240510

Customs Highlights
 NAFTA Verification Audit Highlights
 Mexican Foreign Trade Rule Changes
Increased NAFTA Verification Audits
Authority to Conduct Audits
Under 19 U.S.C. 1509 any person who imported or
knowingly caused the importation of merchandise into
the customs territory of the U.S., exported
merchandise, or knowingly caused the exportation of
merchandise to a NAFTA country; must provide the
records required by law or regulation to the U.S. CBP
with a reasonable time after demand.
Claiming NAFTA Preferential Treatment
1.
2.
3.
4.
5.
Make a written declaration based on a valid
certificate of origin
Possess a valid certificate of origin at the time of
the declaration
Maintain documentation in the U.S., including the
certificate of origin, relating to the imported good
Provide the certificate of origin to U.S. Customs on
request
Promptly make a corrected declaration when
requested
NAFTA Verifications
 NAFTA verifications generally begin with the
issuance by CBP of a Form 28 requesting specific
information to verify the NAFTA claim
 If the response to the Form 28 is incomplete,
insufficient, or raises a “red flag”, then a Form 29 is
usually issued also.
 NAFTA verifications can be as simple as providing
explanations and documentation to a Form 28 or as
complicated as including all NAFTA products for 5
years
Red Flags (1/5)
 Importer has insufficiently
documented, poorly defined, or no
internal controls for accurately
declaring NAFTA preferences
 Importer does not interact with broker on NAFTA
issues
 Importer relies on one employee to handle NAFTA
 Importer customs staff lacks knowledge of NAFTA
Red Flags (2/5)
Importer offers unreasonable
explanations to CBP
 Previous negative determinations on the
same merchandise
 Importer fails to cooperate with CBP
 Significant variance between the
importer’s data and custom’s data

Red Flags (3/5)
 Customs shows history of problems with
NAFTA claims
 One importer representative dominates
NAFTA preference claims without
management oversight
 There is no monitoring of the Classification
procedure or records process that serve as the
basis for NAFTA claims
Red Flags (4/5)
 There is a sharp increase of NAFTA
imports from a prior period
 The importer and the NAFTA producer
are related
 The importer’s reliance on the
information certified in the certificate of
origin is not reasonable
 The CO is incorrectly prepared
Red Flags (5/5)
 The blanket CO is signed subsequent to the
beginning of the blanket period claimed
 The exporter preparing the CO is not the
producer of the goods
 There are changes in classifications from
one time frame to another for a
considerable portion of an importer’s
imports
Examples of Best Practices (1/4)
 The importer’s
internal controls over
NAFTA claims:
Are in writing
 Include procedures for
monitoring & feedback
 Are monitored by
management

 One manager is
ultimately responsible for
control of the import
department. That
manager has knowledge
of the Customs matters
and the power to ensure
that internal control
procedures are
established & followed
Examples of Best Practices (2/4)
 Importer conducts &
documents periodic
reviews of NAFTA,
and uses the results to
make corrections to
entries and changes to
the import operations
as appropriate
The importer’s
internal controls
involve a verification
process to determine
the merchandise
qualifies for NAFTA
 Internal controls
ensure that COs &
related documents are
kept for 5 years

Examples of Best Practices (3/4)
 Importer has
procedures in place to
furnish Customs
copies of applicable
certificates of origin
when requested

The importer
performs an annual
review of specific
rules of origin to
remain current with
NAFTA regulations
Examples of Best Practices (4/4)
 The importer has
procedures to obtain
COs from all NAFTA
suppliers prior to
initial import date of
any of the
merchandise covered
by the CO

Importer maintains a
NAFTA database or
listing of imported
merchandise that
would readily identify
transactions that claim
NAFTA preference