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Trade Compliance Alert: The Government Has Increased Your Corporate Risk of Importing and Exporting

Ned Blinick

Co-Founder, 3rdwave

The government seems to be making life easier for people. The implementation of Centers of Excellence and Expertise (CEEs) and the Automated Commercial Environment (ACE) have made it dramatically easier for companies to access expertise and have a "one-stop shop" for all data requirements. Life as an importer or exporter should be much easier. They have also made life easier for their agencies, given that data has just been centralized. It looks like this very well could be 'An Iron Fist in a Silk Glove' scenario.Let's begin the discussion by looking at "The Silk Glove" of the CEEs and ACE:CEEs have centralized the entry processes and provide expertise for specific industries related to CBP and other Partner Government Agencies (PGAs). They will intervene in the case of a dispute with CBP over fast shipment delays and have proven to increase the speed by which these disputes are resolved. They provide expertise and knowledge for their industry members. These benefits are significant and should not be minimized. They are a major improvement over the way things used to be done.ACE enables companies to provide data in a more streamlined process, as well as access data and reports. Companies are now able to see and understand their Importer and Exporter profiles. Companies that choose to have a good trading record are now, more than ever, able to do so and commit to improving it.These are real benefits to companies. However, there is another side to the CEE story which is not often presented but has real consequences.The CEEs and ACE: a Powerful tool for Trade Enforcement - "The Iron Fist"I have written quite extensively over the past months on how the implementation of the CEE by CBP has changed the way CBP evaluates and profiles importers. If someone wanted the understand it they need only read this comment by the Director of the Apparel, Footwear and Textile, AFT CEE, Eric Batt in an interview with Janet Labuda of Vandergrift Customs:

"The full expansion (of the AFT CEE sic) enabled us to realign employee resources at over 35 ports of entry and allowed us to streamline uniformity in service to industry partners, as well as redirect our enforcement efforts based on risk segmentation on a national level." (The emphasis is mine)

He could not be more clear. The ability to profile importers at a national level has increased and CBP is better able to enforce compliance. The implications for the importer are clear. Either comply or you will be penalized.Is this just scare mongering? I truly believe that the game has changed for global supply chain and trade compliance practitioners. The unprecedented ability of ACE to collect data and the CEEs to interpret that data dramatically changes the levelling of the playing field. CBP now captures incredible amounts of data, analyzes it and can take action in a much more focused manner.In a practical sense, it means that any government agency involved in either the import or export of products are able to access "all" the relevant information on the importer, exporter, freight forwarder, customs broker, carrier, etc. and develop a pretty comprehensive risk and compliance profile. Where information pre-ACE was scattered among many different CBP ports and Partner government agencies importers were safer.What will happen if your risk profile places you on the risky quadrant of the regulatory agency radar screen?I predict:

  • you will become BFFs with your CEE rep and the regulatory agents you will spend a lot of time responding to their very intrusive questions.
  • products will face higher levels of inspection and delays at the borders.
  • the cost of both importing and exporting product will increase.
  • fines and penalties will be levied if the profile is negative.

So, what is an importer or exporter to do to insure that they stay on the rights side of CBP and the other PGAs?

  1. Document and manage your import and export processes.
  2. Monitor the processes to ensure that they are being administered correctly.
  3. Review your processes and take corrective action
  4. Document any changes to the process.
  5. Ensure that your master data - Accounts and Products are properly profiled to support the regulatory agency requirements.
  6. Capture and review pre-shipment information from suppliers and 3rd party logistics providers to ensure timeliness of the information.
  7. Review all shipment documentation to ensure that it supports the ACE entry requirements.
  8. Prepare Advice notifications for Agents - either the Customs Broker (imports) or Freight Forwarders (exports).
  9. Audit (statistically) entries submitted by your Agents to confirm that they are accurate and timely.
  10. Review your Proof of Delivery detail to confirm that quantities submitted for the entry is consistent with quantities received.
  11. Advise regulatory agencies of any material discrepancies that have happened post-entry.
  12. Respond immediately to any regulatory agency request for information and be able to support it with documentation.

For most supply chain specialists and trade compliance professionals I expect that they see business as usual as an option. I would posit that if your company is not actively managing your import and export trade and trade compliance processes to meet the regulatory changes that CEEs and ACE encompass, its level of risk has increased.

About 3rdwave:

3rdwave simplifies global trade through automation. 3rdwave is a GTM platform that minimizes manual data entry, streamlines business process, and provides contextual information enabling its users to make informed decisions to reduce global supply chain risk. It's a cloud-based platform, resulting in minimal IT resources for quick implementation. 3rdwave ensures that companies meet the highest levels of GTM execution and Trade Compliance conformance.

Ned Blinick is Chief Product Officer of He has been involved in global trade for too many decades and he loves making the global supply chain simpler for everyone. If you would like to engage with Ned he would really enjoy the opportunity of communicating with you or your boss. He can be reached at (416) 510 8800 ext 234 or at