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A Conversation with Renate Jalbert
Managing Director, Customs Regulatory Affairs, FedEx Express Canada

With global trade and security requirements growing correspondingly, Canadians and Americans have been compelled to review their supply chain strategies in North America and abroad. This interview is an abridged and edited version of an interview with Ms. Renate Jalbert focusing on questions suggested by members of LQ's Advisory Board.

This interview is the first of a two-part series. The second part, to be published in Volume 12 Issue 4 (September) will examine new resources logisticians can apply to meet heightened security requirements in their supply chains.

Greater emphasis is now placed on supply chain security and importers are making investments to meet security guidelines of C-TPAT and PIP. Trade facilitation benefits are offered in return from the United States and Canadian Customs for those voluntarily participating in these programs. But there are limitations, particularly at the land-border crossings where border infrastructure at various ports limits expedited clearances for certified C-TPAT and FAST members. What can be done to overcome these limitations?

There are limitations that relate to the border infrastructure and these limitations tend to get the majority of the press due to border delays. There is a funnel effect at the border and a lot of congestion largely because the infrastructure is dated and no longer accommodates the current volumes of traffic. However, there is a commitment under the Security and Prosperity Partnership to invest in infrastructure improvements at these border crossings. These essential solutions are, however, long term and extensive.

The governments of the United States and Canada have committed to using the C-TPAT and the Partners in Protection Program as well as the FAST programs as the facilitative methods to move goods with more ease and great certainty across the border.

We are also seeing an increased emphasis on the value of technology in the form of transponder cards, or reliance on information under the Advanced Commercial Program, with Customs requiring more information about goods or, conversely, less information under the FAST program. What CBSA and CBP want is information, either pre-approved under the FAST application or through information declarations in advance of arrival under the ACI/ACE program.

You must be certified under FAST in order to benefit from a relatively easy flow of goods across the border. FAST release is based on the premise that Customs have the information from the certified importers, carriers and drivers when the truck reaches the primary inspection line. When utilizing a FAST dedicated lane, the movement across the border will be rapid. Basically, FAST certification is the green light for transborder movements.

Many importers are unaware of the benefits of FAST. Certified importers represent a small percentage of Canada's total importer population, where every importer must determine the value of seamless and predictable cross-border movements to their business processes. Investment in Customs facilitative programs is a wise choice in today's security focused customs environment.

There is a lack of awareness pertaining to shipments destined for the United States as well; with a relatively small number of U.S. non-resident importers C-TPAT certified. The United States is clear on their position: If you lack C-TPAT certification, you will have problems getting across the border. Nevertheless, importers and exporters still seem hesitant to commit to these programs.

What is the greatest hurdle to increasing the level of participation?

I think businesses under estimate the value and over estimate the size of the investment that's required to implement them. It's important to put this into context. Importers and exporters need to better understand the benefits of FAST certification.

It is also important to compare these benefits with existing and future release programs. With advance commercial import requirements on the horizon for all modes of transportation, the benefits of FAST release are becoming clearer. After all, the goal is to eliminate all other release procedures, excepting FAST and the Advance Commercial Information (ACI).

Please elaborate on the development of the ACI Program.

CBSA is committed to a phased implementation plan for ACI for all modes of transport, such as maritime transportation, air transport, trucking, rail, as well as businesses engaged in importing; they all have different time lines for ACI implementation. The ACI Program for the ocean/maritime transport was implemented in 2004, followed by air in 2006. Truck and rail and importer advance reporting rules are scheduled for the future. CBSA continues to develop the program through extensive consultations with industry stakeholders.

As ACI rolls out, importers and carriers will be obligated to provide substantial and accurate information in advance of their arrival at the border. Errors in information or a failure to file the information within the prescribed advance time frames will result in clearance delays. The information and messaging to customs must be managed, adding more processes, cost and time to the import requirements of carriers and ultimately importers.

ACI adds an additional layer to the customs clearance process and forces carriers, importers and customs broker business models to change. Under ACI, reporting at arrival is no longer acceptable. Instead, the required information must be gathered in advance from various systems or paper processes and developed into a dynamic, electronic pre-departure reporting program.

For a pre-certified FAST importer, ACI is not an issue. CBSA virtually uses a company's business registration number as a key into Canada, versus a requirement to have nearly every detail about the cargo, the driver, the truck and the conveyance trailer crossing the border.

If an importer wishes to opt out of ACI, they must commit to the compliance levels and business processes required to become certified under FAST. Systems are required using the FAST and CSA programs to link an importer's internal accounting practices to Custom's records. There are other investments as well. For example, you must have information regarding each of your company's suppliers and keep your profile, which includes these records, consistently updated with CBSA. These are significant investments in resources, but they yield important benefits, such as releasing goods by means of your company's importer number, self-assessing duties and taxes, and exemption from the ACI requirements.

In a North American context there is a big difference between the release procedures of today and those of the past. The United States has split their requirements regarding their ISA versus C-TPAT programs to facilitate release at the border. You can choose to be C-TPAT, and you will not be required to participate in the ISA program.

Regarding Canada's regulations, you must be part of the PIP and the CSA program in order to benefit from FAST.

As the ACI rolls out its application to the trucking and rail sector, (which is several years away), there will be some synergies allowing goods to move across the border faster. With the detailed cargo, conveyance and driver data available electronically in advance, the custom's border processing times are expected to be reduced.

Customs on both sides of the border have committed to the development of a single window interface that will allow data capture of other participating agencies' requirements into the "custom's declaration". The single window is long overdue and will further simplify the customs reporting and clearance process, reusing data and eliminating the manual paper reporting that is in place today for many of the other government participating agencies.

What are the consequences for regulated commodities like food?

Today, the pre-release of Canadian Food Inspection Agency (CFIA) regulated commodities is based on regulations that have existed since the late 1990s and requires a combination of electronic and manual reporting. However, the pre-arrival and CFIA pre-clearance rules have not been uniformly enforced. With heightened potential for pandemics and terrorism in the food chain, as well as more visibility in the supply chain, there is more will to enforce these regulations. In effect, regardless of what is being imported, the pre-arrival and pre-departure reporting requirements push the Customs and other agency points of access farther away from the physical border to a place as early as possible in the supply chain.

Should CBSA entertain simplified programs to develop greater business involvement?

There is a lot of discussion about FAST Platinum, FAST Light or other hybrids of the original FAST program. Under the Security and Prosperity Partnership, Canadian, U.S. and Mexican governments have committed to the secure flow of goods and to harmonizing commercial processes. This includes: expanding the scope of eligible goods, all modes of transport and origins as eligible for FAST/CSA program to ensure more participants will enter the FAST program. Ultimately, FAST facilitates the movement of goods criss-crossing the border, whether by land or an inland port. And, if the infrastructure improvements are ten years away, you must have something in place in the interim in order to improve the processing of these goods.

You said that Canadians were required to be certified with both ACI and FAST. Why didn't the United States require compliance with both of these certification programs?

Both governments have agreed to the same principles: facilitate trade and secure the supply chain. Advance commercial information into the United States is known as ACE, and Advance Commercial Importing into Canada is known as ACI. FAST is Free and Secure Trade and is applicable to both the United States and Canada. ACI or ACE requires the detailed transactional advance reporting while FAST allows for less data elements and expedited movement at the point of border reporting.

Both programs require a decision to participate. As a carrier, you must be prepared to offer both FAST and ACI/ACE options to your customers. Ultimately, it is the importer who drives the method of clearance.

Some Canadian companies perceive specific application imitations; for example, there are importers who are saying, "I am prepared to invest in implementing these procedures as they pertain to a percentage of my volume of trade, which originates in the United States. But how do I deal with the rest of my goods from around the world that I want to import? Do I process these through the existing stream or ACI in the future?"

It is not effective to have dual operating requirements and procedures, and the Canada Border Services Agency (CBSA) is taking stock of this.

FAST/CSA certification is a lengthy process, and requires the commitment and involvement of total business. It is important to work with a CBSA assigned client services representative as an applicant works follows the steps to become FAST certified. Success depends on CBSA and the applicant understanding each other's specific business rules, procedures, processes and controls. FAST has been a very beneficial program for FedEx as a carrier and for our FAST certified customers.

How far back can you be audited?

An importer or customs broker is responsible for making their records available for seven years. For a carrier, it is three years. FAST/CSA is a business and customs partnership. As a FAST importer the obligation for compliance is yours. You must understand and stay current with Custom's requirements and regulations. You are required to report changes in your business. Have there been changes in management, or do you have new suppliers? These and all other pertinent business changes must be reported to maintain a current profile with CBSA. If you have a systemic problem concerning a compliance issue you must report and correct it.

Can you identify other potential obstacles?

The largest obstacle to the program is a lack of awareness about its benefits, which include operational efficiencies.

Instead of extensive government reviews, which can be daunting, more importers are looking for an opportunity to self-audit to detect compliance issues internally and implement preventative and corrective actions. This allows importers to manage their own resources in accordance with their business demands as opposed to going through the intensive government reviews (Focused Assessment in the United States & Importer Verification in Canada).

CSA does not easily lend itself to all industries, but it is a pre-requisite for Canadian participation in FAST. What opportunities exist to simplify CSA requirements to open it up more readily for a larger segment of industry? How can facilitation programs like FAST have a more reasonable set of pre-requisites placed against it to allow more importers to achieve a higher level of compliance status more readily?

As we've noted in this interview, CBSA is looking to expand the FAST program, to include origins and other government departments, making it more appealing to an importer so that the FAST program might apply to all of their importers instead of the United States exclusively.

The U.S. Homeland Securities Customs Trade Partnership against Terrorism program (C-TPAT and CBSA's PIP programs are critical elements of the FAST program). In order to qualify for FAST, commitment to both C-TPAT and PIP are necessary. The U.S. program, although voluntary, mandates a verifiable secure supply chain. In essence, your business partners must either be C-TPAT certified or meet the secure supply chain requirements. A gap in the trade chain compromises the integrity of the entire supply chain and will put your certification at risk. The Canadian PIP program is based on a memorandum of understanding, and is not yet as onerous as C-TPAT, but expect changes, as PIP will become more harmonized with C-TPAT.

Often, there is a lack of internal corporate knowledge and expertise to understand these programs and their requirements and how to maintain compliance. As a result, many companies often look for external resources to provide these services.

This interview is the first of a two part series. Volume 12 Issue 4 (September) will review new resources logisticians can apply to meet heightened security requirements in their supply chains.

For information about the following terms and programs, please click here.

Canadian Programs

  • The Canada Border Services Agency (CBSA)
  • Smart Border Accord and the Customs Action Plan
  • The Advanced Commercial Information (ACI)
  • Customs Self Assessment (CSA) programs
  • Free and Secure Trade (FAST)
  • Partners in Protection (PIP)

U.S. Programs

  • The Importer Self-Assessment Program (ISA)
  • Customs-Trade Partnership Against Terrorism (C-TPAT)
  • Status Verification Interface (SVI)
  • The Security and Prosperity Partnership (SPP)