Effective Dec. 2, 2002 , U.S. Customs began requiring ocean carriers to present cargo manifest information 24 hours prior to lading at the foreign port. This new requirement facilitates security screening of high-risk containers in foreign ports under U.S. Customs’ Container Security Initiative (CSI), which U.S. Customs describes as “a critical component of the President’s Homeland Security Strategy.”  The new rule should be of interest to companies shipping goods from Me xico to the United States because, as discussed below, Customs will soon develop regulations requiring the advance submission of electronic information about goods shipped to the United States by truck, rail and air carrier.

The Ocean Manifest Rule

   Under the new rule, ocean carriers and participating non-vessel operating common carriers (NVOCCs) are required to submit specific manifest information 24 hours before lading.  Failure to meet the rule’s requirements may result in penalties and claims for liquidated damages against the carrier or NVOCC.  Moreover, if carriers do not present the information on the prescribed declaration form on time, U.S. Customs may delay issuance of a permit to unlade the entire vessel in the United States until it receives all information.  It may also decline to issue a permit to unlade the specific cargo for which a carrier failed to file the required declaration.

   Ocean carriers must present the required information on a Cargo Declaration (Customs Form 1302) or electronic equivalent.  Participants in the Automated Manifest System (AMS) must present the information electronically.

   The required information includes:

   •The last foreign port before departing for the United States .

   •The carrier’s Standard Carrier Alpha Code (SCAC).

   •The carrier-assigned voyage number.

   •Date of scheduled arrival at the first U.S. port.

   •Numbers and quantities for master or house bills of lading.

   •The first foreign port where the carrier takes possession of cargo destined to the United States .

   •Precise description, or HTS number to the six-digit level, and weight of the cargo or, for a sealed container, the shipper’s declared description and weight.  Generic descriptions, such as STC (said to contain), FAK (freight of all kinds) and “general cargo” will not be allowed.

   •The shipper’s name and address or, after implementation of the Automated Commercial Environment (ACE) system, the shipper’s identification number assigned by that system.

   •The complete name and address of the consignee, owner, owner’s representative, or such person’s identification number assigned by ACE.

   The vessel name, country of documentation, and vessel number.

   The foreign port where the cargo is laden.

   •The hazardous material code, where applicable.

   •Container numbers.

   •Seal numbers.

   Perhaps the greatest potential problem presented by the new rule, beyond the uncertainty about potential delays and costs, is that importers and consignees may suffer harsh consequences for noncompliance by carriers whose actions are beyond their control.  Carriers may suffer penalties imposed by U.S. Customs, but importers and consignees will suffer more costly losses arising from the delayed delivery, or nondelivery, of their imported merchandise.  If U.S. Customs had imposed its declaration requirements on importers and consignees, it would have created a different set of implementation and compliance problems, but at least the consequences of noncompliance would fall more directly on the offending parties.

Expanding the Advance Manifest Rule

   U.S. Customs proposed the ocean carrier manifest rule in August 2002, just two days after enactment of the Trade Act of 2002, which includes a provision, at section 343, requiring the Treasury Secretary to promulgate regulations providing for the advance transmission to U.S. Customs of information pertaining to all cargo destined for importation into the United States .  Customs held a series of public meetings in January 2003 to begin the process of developing regulations to impose mandatory advance submission of electronic cargo information for air cargo, truck cargo, rail cargo, and sea cargo.

   Section 343 of the Trade Act of 2002 states that requirements to furnish information should be “imposed on the party most likely to have direct knowledge of that information.”  This suggests that the importer or consignee who orders imported merchandise might be the preferred source of information describing merchandise destined for the United States , rather than the carrier who merely contracts to transport it.  Section 343 also requires consideration of the differences among cargo carriers that arise from varying modes of transportation, as well as different commercial and operations characteristics, and technological capacities between carriers.  Section 343 does not require that the new regulations provide for 24-hour advance information as seen in the ocean carrier manifest rule.

   Companies operating trucks to transport cargo from Me xico to the United States should closely follow and participate in U.S. Customs’ development of regulations governing the submission of advance information.  While the public meetings have already taken place as this article goes to press, Customs will solicit public comment on the proposed regulations that it develops. 

   Section 343 provides a good legal basis for Me xican concerns to demand that U.S. Customs’ final regulations limit the minimum advance submission time for cargo arriving by truck because it sometimes takes only hours for a truck to be loaded and reach the border.  Me xican concerns may also want to encourage U.S. Customs to make shippers, rather than carriers responsible for compiling and submitting the advance cargo information.  The language of Section 343 supports this type of rule.  Both shippers and trucking companies could benefit from assignment of responsibility to shippers because shippers are in the best position to know the details of the cargo being shipped in advance. 

  We could advocate that if shippers assume the responsibility for presenting the information U.S. Customs should allow the information to be submitted even before the specific transporting truck is known.  While this would create some additional responsibility for shippers it would also make delays in cargo clearance due to a trucking company’s lack of information less likely and it would allow for reasonable advance preparation and submission of information.  Me anwhile, the trucking companies’ obligation may be to accept cargo for carriage only if the shipper shows proof that information about the cargo was submitted to U.S. Customs.  If necessary for U.S. Customs’ purposes, the trucking company could supplement the electronic information with details about the specific vehicle and route and any updated information about the cargo.

The Advance Manifest Rule and other voluntary programs

   Finally, U.S. Customs should be urged to consider the interrelationship between new requirements for submitting advance electronic cargo information and existing trade-partnership programs.  For example, Customs should aim to enhance rather than diminish the Land Border Carrier Initiative Program, which focuses on narcotics interdiction, and the Line Release program that makes expedited clearance available to participating carriers at the U.S.- Me xican border. 

   On the Canadian border, the Free and Secure Trade program (FAST) has opened with the promise of expedited clearance for approved U.S. bound highway carriers.  Approval requires participation of carriers in the Customs-Trade Partnership Against Terrorism and requires the special approval of individual commercial truck drivers.  The implementation of regulations requiring the electronic submission of cargo information too far in advance of arrival at a port could delay the movement of cargo even by carriers who have been approved for these partnership programs.  It may, therefore, be appropriate for Customs to adopt a sliding scale regulation that requires less onerous advance reporting for partnership program participants.  We believe this type of regulation would be consistent with Section 343.

   One of Me xico ’s greatest advantages as a manufacturing venue for United States bound goods is its geographic proximity and the ability to quickly deliver finished products and materials from Me xico to the United States .  It is, therefore, important to Me xican concerns that any new regulations requiring the advance submission of electronic information about U.S. bound goods not substantially reduce the ability of shippers and carriers to promptly load and move goods to and across the border.