XV. Trade Compliance
In accordance with the North American Customs Department requirements for C-TPAT compliance, the Company has adopted these requirements for their supply partners that produce products for the Company outside of the United States of America. It is the expectation of the Company that all domestic suppliers of products, tooling and or services to the Company work to become C-TPAT compliant, if they supply the Company product imported from outside of the United States.
All business partners/suppliers eligible for C-TPAT certification (carriers, ports, terminals, brokers, consolidators, etc.) must provide the Company’s Trade Compliance Specialist with documentation (e.g., C-TPAT certificate, SVI number, etc.) indicating they are C-TPAT certified. For those business partners not eligible for C-TPAT certification, SRK requires written/electronic confirmation demonstrating they are meeting C-TPAT security criteria (e.g. contractual obligations via a letter from a senior officer attesting to compliance; a written statement from the supplier demonstrating their compliance with C-TPAT security criteria or an equivalent accredited security program administered by a foreign customs authority). For all those business partners/suppliers that are not C-TPAT certified or certified by an equivalent accredited security program administered by a foreign customs authority must complete a C-TPAT Questionnaire on an Annual basis and return it to SRK’s Trade Compliance Specialist (due 30 days from receipt).
Security processes and procedures should be consistent with C-TPAT security criteria to enhance the integrity of the shipment from the point of origin. At the point of stuffing, container integrity must be maintained via written procedures to protect against the introduction of unauthorized material and/or persons. All sea containers and trailers must be thoroughly inspected for any foreign matter that is not intended to be shipped to the Company. If a container or trailer is designated for inspection entering the USA and is found to contain a contaminant, all related delays and costs will be at the supplier’s expense regardless of the established incoterms.
Procedures must be in place to verify the physical integrity of the sea container structure prior to stuffing to include the reliability of the locking mechanisms of the doors. A seven point inspection process must be conducted for all containers prior to stuffing:
1. Front Wall
2. Left Side
3. Right Side
6. Inside/Outside Doors
Procedures must be in place to verify the physical integrity of the trailer structure prior to stuffing, to include the reliability of the locking mechanisms of the doors. A Ten-point inspection process must be conducted for all trucks/trailers prior to stuffing:
1. Fifth Wheel Area – Check natural compartments/skid plate
2. Exterior – front/sides
3. Rear – bumper/doors
4. Front Wall
5. Left Side
6. Right Side
9. Inside/Outside Doors
A high security (HS) seal meeting or exceeding PAS ISP 17712 standards must be affixed to all loaded containers bound for the United States. Suppliers must have written procedures stipulating how seals are to be controlled and affixed to the loaded containers. Only designated associates should distribute container seals for integrity purposes.
Containers must be stored in a secure area to prevent unauthorized access and or manipulation. Written procedures must be in place for reporting and neutralizing unauthorized entry into containers or storage areas.
Physical Access Controls
An identification system must be implemented for positive identification and access control of employees, visitors and suppliers. Procedures must be in place to challenge and address unauthorized and/or unidentified persons within the facility. Visitors must present identification for documentation purposes upon arrival.
Fencing – Perimeter fencing should enclose the areas around the cargo handling and storage facilities. All fencing must be regularly inspected for integrity and damage.
Lighting – Adequate lighting must be inside and outside the facility including the following areas: entrance and exits, shipping/receiving storage areas, fence lines and parking areas.
Parking – Private passenger vehicles must be prohibited from parking in or adjacent to shipping/receiving areas or warehouse areas.
Building – All buildings must be constructed of materials that resist unlawful entry. The integrity of the structures must be maintained by periodic inspection and repair.
Pre-employment Verification/Background Checks
Background checks and investigations need to be conducted for prospective associates. Application information, such as employment history and references must be verified prior to employment.
Security Training and Threat Awareness
Suppliers must have a documented security training and threat awareness program to recognize and foster awareness of potential threats posed by terrorists. All associates must be made aware of the procedure with specific details on recognition and reporting methods. Specific training should be provided to all associates responsible for maintaining cargo integrity, recognizing internal conspiracies and protecting access control.
North American Free Trade Agreement (NAFTA) Part Content Certification Form (PCC Form)
In compliance with the North American Free Trade Agreement (NAFTA), all suppliers must submit a “Part Content Certification” Form (PCC Form). This form must be submitted to SRK’s Customs Specialist prior to the start of mass production, as well as, on an annual basis (due 30 days from receipt), for all parts for the life of the parts.
North American Free Trade Agreement (NAFTA) Certificate of Origin
In compliance with the North American Free Trade Agreement (NAFTA) all suppliers from Canada, Mexico, or the United States must submit a NAFTA certificate of origin. The NAFTA certificate of origin must be submitted to SRK’s Trade Compliance Specialist prior to the start of mass production, as well as, on an annual basis (due in conjunction with PCC Form), for all parts for the life of the parts. This certificate must be fully completed for all items SRK purchases from Mexico, Canada, or the United States and MUST be in English. If the part(s) do not qualify for NAFTA, a letter must be sent on company letterhead stating the part(s) do not qualify. This letter must include the HS Number, country of origin and the effective term, up to but not exceeding 1 year.
When a new supplier, product, and/or part is added or a process change accrues a new certificate of origin must be submitted.
A NAFTA certificate of origin is not the same as a certificate of origin. Do not use one for the other
Country Of Origin
Every article of foreign origin entering into the United States must be legibly marked with the English name of the country of origin unless an exception from marking is provided for in the law.
How to Determine Country of Origin
The Country of Origin of non-textile imported products is determined based on where an article was wholly obtained or produced, or where it was last substantially transformed.
Wholly Obtained or Produced
The country of origin for a wholly obtained product is the country where the product wasgrown, manufactured, or produced. When the manufacture or production of the product occurs in more than one country, the “substantial transformation test” must be applied to determine the products country of origin.
Substantial Transformation Test
Under the substantial transformation test, a products country of origin is determined by where the good was last substantially transformed into a new and different article of commerce, such that it gained a new name, character, or use.
It is important to note that the last country of processing may not be the country of origin of the product. Similarly, the country of export is not necessarily the country of origin of the product.
Country of Origin Guidelines
The Origin of an article will affect its admissibility, the rate of duty, it’s entitlement to special duty or trade preference programs (such as GSP. NAFTA & CBI), antidumping, and government procurement.
Unless an exception applies, all goods or foreign origin, and their containers, must be marked clearly and conspicuously in English with the country of origin or the article.
The failure to properly mark an article or its container with its country of origin can result in the delay of the release of the goods, or cause Customs to demand the articles be returned to Customs Custody. The failure to timely return the goods (or more), to Customs Custody can result in the assessment of liquidated damages equal to the value of the goods and special marking penalties equal to 10% of the value of the merchandise may apply.
Any Suppliers shipping to SRK from a foreign country must make sure the country of origin is listed (visibly) on the following:
· Each Individual Carton
· Outside wrap/covering (if applicable)
· Packing List
· Commercial Invoice
Marking of Country of Origin on U.S. Imports
Acceptable Terminology and Methods for Marking
The purpose of marking
To inform the ultimate purchaser in the United States of the country in which the imported article was made.
Determining the ultimate purchaser
The ultimate purchaser is generally the last person in the United States who will receive the article in the form in which it was imported.
If the article will be used in manufacture, the manufacturer or processor in the United States is the ultimate purchaser if the processing of the imported article results in a substantial transformation of the imported article, becomes a good of the United States under the NAFTA Marking Rules (19 CFR Part 102), or becomes a good of the United States under the textile rules of origin (19 CFR 102.21), as applicable.
Definition of “country”
Country means the political entity known as a nation. Colonies, possessions, or protectorates Outside the boundaries of the mother country may be considered separate countries.
Definition of Country of Origin
The Country of Origin is the country of manufacture, production, or growth of the article.
Altering the article in a second country can change the country of origin
The country of origin of an article may be changed in a secondary country if one of the following occurs:
1. If the further work or material added to an article in the second country constitutes a substantial transformation. A substantial transformation occurs if a new article with a different name, character, and use is created.
2. For a good from a NAFTA country: if under the NAFTA Marking Rules (19 CFR Part 102) the second country is determined to be the country of origin of the good; or
3. For an article considered to be a textile or apparel product (regardless of whether it is a good from a NAFTA country): if the country of origin is determined by the general rules set forth In 19 CFR Part 102.21 to be the second country. For purposes of determining whether a textile or apparel product is from Israel, the general rules in 19 CFR 12.130 apply.
Necessity for the words made in or product of to precede the name of the country of origin
The phrase “made in” is required only in the case where the name of any locality other than the country or locality in which the article was manufactured appears on the article or its container and may mislead or deceive the ultimate purchaser. The marking “made in (country)” or other words of similar meaning must appear in close proximity to, and in comparable size letters of, the other locality to avoid possible confusion.
Use of the words “assembled in” may be used to indicate the country of origin of an article where the country of origin of the article is the country in which the article was finally assembled.
“Assembled in” may be followed by the statement “from components of (the name of the country or countries of origin of all the components).”
Size of Marking
The marking must be legible. This means it must be of an adequate size, and clear enough, to be read easily by a person of normal vision.
Location of Marking
The marking should be located in a conspicuous place. It need not be in the most conspicuous place, but it must be where it can be seen with a casual handling of the article. Markings must be in a position where they will not be covered or concealed by subsequent attachments or additions. The marking must be visible without disassembling the item or removing or changing the position of any parts.
Life of the Marking
The article should be marked as indelibly and permanently as the nature of the product will permit. Marking that will not remain on the article during handling or for any other reason except deliberate removal is not a proper marking.
Abbreviations and Variant Spellings
Abbreviations that unmistakably indicate the name of a country, such as “Gt. Britain” for Great Britain or “Luxemb” for Luxembourg, are acceptable. Variant spellings which clearly indicate the English name of the country of origin, such as “Brasil” for Brazil and “Italie” for Italy are acceptable. However, it is always preferable to spell out the country’s name in full, because any abbreviation may be a cause for confusion.
However, “E.C.” or “E.U.” for European Community or European Union, respectively, are not acceptable abbreviations since they do not indicate the individual country of origin of the good.
Forms of Marking
Acceptable forms of marking
The best form of marking is one which becomes a part of the article itself, such as branding, stenciling, stamping, printing, molding, and similar methods.
Other forms of marking will also be acceptable if it is certain that the marking will remain legible and conspicuous until the article reaches the ultimate purchaser in the United States. It is important that this marking withstand handling. This means it must be of a type that can be defaced, destroyed, removed, altered, obliterated, or obscured only by a deliberate act.
Use of tags
When tags are used, they must be attached in a conspicuous place and in a manner that assures that, unless deliberately removed, they will remain on the article until it reaches the ultimate purchaser.
Use of Adhesive Labels
Labels may be used in some instances, but this is not a recommended form. Often labels become loose due to weather, unsatisfactory adhesive, or other conditions. If this happens, the importer may be subject to the expense of remarking the merchandise.
Marking of Combined Articles
An article that is to be combined with another article in the United States but which will retain its identity and will not undergo a change in origin must be marked “(Name of imported article) made in (country).”
Marking of Containers
Usual containers imported filled must be marked with the name of the country of origin of the contents of the usual container, unless the contents are marked with the country of origin and the usual containers can be readily opened for inspection of the contents.
Usual containers imported empty to be filled may be excepted from individual marking if they reach the person or firm that will fill them in a carton or other container marked with the country of origin.
Unusual containers imported empty, to be filled in the United States, must be marked “Container made in (country).”
The container in which an imported article will ordinarily reach the ultimate purchaser. Usual containers or holders are not required to be marked with their own origin when imported filled.
Usual containers, which are goods from a NAFTA country, are not required to be marked with their own origin, whether or not filled.
These may include containers not ordinarily sold at retail with their contents, or containers which have further use or value after their contents are consumed. Unusual types of containers must be marked to indicate their own origin when imported filled, in addition to any marking required to indicate the origin of their contents. For example, a vase made in France containing candy made in England must be marked: “Vase made in France, candy made in England.”
Special Statutory Marking
Special Markings requirements for other articles
Pipes and pipe fittings of iron, steel or stainless steel must be marked by means of die stamping, cast-in-mold lettering, etching, engraving, or continuous paint stenciling. If it is commercially or technically infeasible to mark by one of these five methods, the marking may be done by an equally permanent method of marking, or, in the case of small-diameter pipe tube and fittings, by tagging the bundles.
Compressed gas cylinders designed for use in the transport and storage of compressed gases must be marked by means of die stamping, molding, etching, raised lettering or an equally permanent method of marking.
Manhole rings or frames, covers, and assemblies thereof must be marked on the top surface by means of die stamping, cast-in-mold lettering, etching, engraving, or an equally permanent method of marking.
Articles Not Requiring Marking
Articles excepted from marking by 19 U.S.C. 1304
A. An article that is incapable of being marked;
B. An article that cannot be marked prior to shipment to the United States without injury to the article;
C. An article that cannot be marked prior to shipment to the United States except at an expense economically prohibitive of its importation;
D. When the container of an article reasonably indicates the article’s origin; that is, the marked container reaches the ultimate purchaser unopened;
E. The article is a crude substance;
F. The article is imported for use by the importer and is not intended for sale in its imported or any other form;
G. The article is to be processed in the United States by the importer, or for his account, in such a manner that any marking would be permanently concealed, obliterated, or destroyed;
H. When the ultimate purchaser, by reason of the article’s character or by reason of the circumstances of its importation, necessarily must know, or in the case of a good from a NAFTA country, reasonably must know, the country of origin of such article even though it is not marked to indicate its origin;
I. The article was produced more than 20 years prior to its importation into the United States;
J. Articles of a class or kind (listed below) imported in substantial quantities for a five year period immediately preceding January 1, 1937, and which were not required to be marked.
Art, works of.
Articles classified under subheadings 9810.00.15, 9810.00.25, 9810.00.40 and 9810.00.45, Harmonized Tariff Schedule of the United States.
Articles entered in good faith as antiques and rejected an unauthentic.
Bearings, ball 5/8-inch or less in diameter.
Blanks, metal, to be plated.
Bodies, harvest hat.
Bolts, nuts, and washers.
Briarwood in blocks.
Briquettes, coal or coke.
Buckles, one-inch or less in greatest dimension.
Cellophane and celluloid in sheets, bands, or strips.
Chemicals, drugs, medicinal and similar substances, when imported in capsules, pills, tablets, lozenges, or troches.
Cigars and cigarettes.
Covers, straw bottle.
Dies, diamond wire, unmounted.
Flooring: not further manufactured than planed, tongued and grooved.
Flowers, artificial, except bunches.
Glass, cut to shape and size for use in clocks, hand, pocket, and purse mirrors, and other glass of similar shapes and sizes, not including lenses or watch crystals.
Glides, furniture, except glides with prongs.
Hooks, fish (except snelled fish hooks).
Hoops (wood), barrel.
Leather, except finished.
Metal bars, except concrete reinforcement bars; billets; blocks; blooms; ingots; pigs; plates; sheets, except galvanized sheets; shafting, slabs, and metal in similar forms.
Mica not further manufactured than cut or stamped to dimensions, shape or form.
Nails, spikes, and staples.
Natural products, such as vegetables, fruits, nuts, berries, and live or dead animals, fish, and birds, all the foregoing which are in their natural state or not advanced in any manner further than is necessary for their safe transportation.
Nets, bottle, wire.
Parchment and vellum.
Parts for machines imported from some country as parts.
Plants, shrubs and other nursery stock.
Posts (wood), fence.
Rags (including wiping rags).
Rails, joint bars, and tie plates covered by subheadings 7302.10.10 through 7302.90.00, Harmonized Tariff Schedule of the United States.
Rope, including wire rope; cordage; cords; twines, threads, and yarns.
Scrap and waste.
Shingles (wood) bundles of—except bundles of red cedar shingles.
Skins, fur, dressed or dyed.
Skins, raw fur.
Stamps, postage and revenue, and other articles covered in subheadings 9704.00.00 and 4807.00.00, Harmonized Tariff Schedule of the United States.
Staves (wood), barrel.
Ties (wood), railroad.
Tiles, not over one inch in greatest dimension.
Weights, analytical and precision, in sets.
Wire, except barbed.
Other articles not required to be marked with the country of origin
See the following:
Articles valued at not more than $200 that are passed without the filing of a customs entry.
Articles brought into a foreign trade zone or a bonded warehouse for immediate exportation or for transportation and exportation.
Products of American fisheries which are free of duty.
Products of possessions of the United States.
Products of the United States exported and returned.
Bona fide gifts from persons in foreign countries, provided the aggregate value of articles received by one person on one day and exempted from the payment of duty should not exceed $100 retail value.
Goods of a NAFTA country that are original works of art.
Ceramic bricks; diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, electronic integrated circuits and micro assemblies that are goods of a NAFTA country.
Certain coffee and tea products.
Certain spice products.
Silk scarves and silk fabric.
When an article is not required to be marked with the country of origin, the immediate container must be marked
Unless that article is excepted from marking under clause (F), (G), or (H) indicated above, or the article is specifically not subject to the statutory marking requirements of 19 U.S.C. 1304.
Articles that are to be repacked in the United States are subject to the marking requirements of 19 U.S.C. 1304
Unless the repacker is the ultimate purchaser.
Obligations of an importer concerning the marking of repacked goods
If an article is intended to be repacked in new containers for sale to an ultimate purchaser after its release from U.S. Customs and Border Protection custody, the importer must certify that if he does the repacking, he shall not obscure or conceal the country of origin marking, or that the new container will be properly marked. If the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer must certify that he/she will notify the subsequent purchaser or repacker (in writing) of the marking requirements.
Failure to comply with the certification requirements may subject the importer to additional duty and penalties.
Sanctions for Not Marking
Articles that are not marked with the English name of their country of origin at the time of their importation into the United States shall be subject to additional duties unless properly marked, exported, or destroyed under CBP supervision prior to liquidation of the entry.
Criminal penalties for removal of markings
Any person who removes, destroys, alters, covers, or obliterates with the intent of concealing the country of origin marking on an imported article could be subject to prosecution and criminal penalties.