On February 22, 2012, U.S. Customs and Border Protection (CBP) published a notice of proposed rulemaking that would make significant changes to the way in-bond shipments are processed. Currently, in-bond cargo may be transported through the U.S. without the appraisement or the payment of duties, provided that the appropriate bond is obtained and a transportation entry is filed with CBP. The transportation entry accounts for the cargo while en route in the U.S. The in-bond merchandise is then entered for consumption, entered for warehouse, or exported.

The proposed rule would tighten up the in-bond process to enable better tracking of cargo and ensure the payment of duties if dutiable merchandise is not exported as reported in the in-bond entry paperwork. According to a 2007 U.S. Government Accountability Office (GAO) report, in-bond shipments account for 30 to 60 per cent of all imports that move through U.S. ports.

Under the new regulation, carriers or their agents would be required to report additional information, file in-bond applications electronically and implement other in-bond shipment process changes. Some of these changes are noted below:

• In-bond entries will be filed electronically; paper applications will only be accepted for merchandise trans­ported by pipeline.

• Additional information required would include the six-digit Harmonized Tariff Schedule number and information relating to the safety and security shipment.

• A 30-day maximum time frame to transport goods between U.S. ports, for any mode of transportation except pipeline, would be established.

• Carriers deviating from their declared destination port would be required to report the change electronically.

• Within 24 hours of arrival at the destination port or port of export, carriers would be required to report the arrival and location of goods.

• Assessment of liquidated damages against carriers or other authorized parties for the unauthorized removal of a container/truck seal (in-bond movements require a seal.)

Further upgrades to CBP’s Automated Commercial Environment will be necessary to implement these reforms. The impetus for the rulemaking comes from the 2007 GAO report identifying that CBP had difficulty closing out bonds and collecting duty for these types of shipments because a systematic process was not in place. Comments from the public are currently being accepted by CBP and must be filed by April 23, 2012.

For the complete version of the proposed rule or instructions on submitting comments, visit www.federalregister.gov/articles/2012/02/22/2012-2819/changes-to-the-in-bond-process.

—    With files from A.N. Deringer, Inc.