Announcement of Program Test: Importer Compliance Monitoring Program

DEPARTMENT OF THE TREASURY

Customs Service

Announcement of Program Test: Importer Compliance Monitoring

Program

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This notice announces Customs plan to conduct a test regarding

the Importer Compliance Monitoring Program (formerly known as the

Importer Self-Governance Program) with limited participation. The

program is intended to promote compliance with Customs laws and

regulations regarding cargo processing and will afford mutual benefits

to both Customs and the import community. Public comments concerning

any aspect of this planned test are solicited.

EFFECTIVE DATES: The program test will commence no earlier than July 1,

1998, and will continue through June 30, 1999. Written requests to

participate in, and comments on, the program test must be received by

June 1, 1998.

ADDRESSES: Written requests to participate in the program test, and

written comments regarding any aspect of the planned test, should be

addressed to William F. Inch, Regulatory Audit Division, U.S. Customs

Service, 1300 Pennsylvania Ave., N.W., Room 6.3A, Washington, D.C.

20229.

FOR FURTHER INFORMATION CONTACT: William F. Inch, (202) 927-1100;

Joseph C. Palmer, (312) 353-1213, Ext. 106; or Richard A. Fuller, (281)

985-6781.

SUPPLEMENTARY INFORMATION:

Background

Since passage of the Customs Modernization provisions (107 Stat.

2170) contained in the North American Free Trade Agreement

Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993),

the primary goal of the trade compliance process has been to maximize

importer compliance with U.S. trade laws, while facilitating the

importation and entry of admissible merchandise. To meet these

challenges, Customs has undertaken a comprehensive effort to review,

improve, and redesign the trade compliance process using established

business practices, re-engineered tools, and new methodologies that

improve customer service without compromising the enforcement aspect of

the Customs mission.

One of the new methodologies developed is the compliance assessment

procedure. This procedure allows Customs to determine the level of

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compliance based on an overall assessment of a company's import

operations. While the compliance assessment procedure provides both

Customs and the company with an accurate benchmark concerning the

adequacy of systems/internal controls and the degree of importer

compliance, it focuses primarily on the company's last business year

prior to the time the compliance assessment was conducted.

Over time, however, events can occur within a company (e.g.,

mergers, system changes, loss of key personnel) that may potentially

have an effect on its compliance. Accordingly, the Importer Compliance

Monitoring Program (ICMP; formerly known as the Importer Self-

Governance Program) was developed to allow interested importers to

assess their own compliance with Customs laws and regulations. Over the

past several months and after public consultations, Customs has

identified necessary policies and procedures as bases to test this new

program, pursuant to Sec. 101.9(a) of the Customs Regulations (19 CFR

101.9(a)), which permits the implementation of a test program or

procedure designed to evaluate the effectiveness of new technology or

operational procedures regarding the processing of passengers, vessels,

or merchandise. The purpose of this document is to describe the

proposed operation of the ICMP and to invite comments on, and requests

to participate in, the planned ICMP test.

Proposed Importer Compliance Monitoring Program

In general, the ICMP is designed to enhance the cargo processing of

participating importers. The ICMP is voluntary and does not require a

company to have undergone or be scheduled for a Customs compliance

assessment. Once notified of acceptance into the program, a

consultation process will begin with Customs. This is necessary to

ensure that all parties have a mutual understanding of the importer's

business practices and the importer's corresponding relationship to the

program.

Similar to a compliance assessment performed by Customs, the ICMP

is a systemic overview of a company's import operations and includes

both process and transactional reviews of those operations. Ideally, a

group independent of the company's importing function should conduct

these reviews; use of outside professionals for this purpose is not

required but may be done at the discretion of the importer. Process

reviews include an annual preparation or updating of the flowchart and

narrative of the company's import process. In addition, a macro test of

value information is conducted to ensure that the company's import

transactions and those recorded in Customs systems are in general

agreement. Transactional reviews utilize statistical sampling

methodologies that are fully coordinated with Customs during the

consultation process. Sampling errors will be evaluated based on the

number of errors and their materiality and, where applicable, a

compliance improvement plan will be prepared and submitted to Customs

outlining actions taken or proposed to correct the cited deficiencies.

Reports of sampling errors may be treated as prior disclosures under

Part 162 of the Customs Regulations. Test participants are expected to

retain all applicable documentation pertaining to these reviews. As

necessary, Customs will validate the importer's ICMP process and

transactional reviews.

Draft Program Manual

For those companies interested in participating in this test, as

well as those companies wishing only to provide comments to Customs, a

draft ICMP manual will be available on Customs Internet Website. The

Universal Resource Locator (URL) or address for the Customs Internet

Website is http://www.customs.ustreas.gov. The manual provides detailed

ICMP policies and procedures, including additional information

regarding anticipated program benefits accruing to both participants

and Customs. Customs welcomes any and all comments regarding this

document and its contents.

Selection of Test Participants

The test will continue for a period of one year. No more than 50

companies will be allowed to participate in the ICMP test, and Customs

will select the participants in accordance with the criteria set forth

below.

There are three primary selection criteria that will be applied in

the following order:

(1) Companies residing within the Top 250 importers ranked by

entered value in descending order within a Primary Focus Industry (PFI)

that have a Customs assigned Account Manager;

(2) Companies residing within the Top 250 importers ranked by

entered value in descending order within a PFI that do not have a

Customs assigned Account Manager; and

(3) Companies not ranked within the Top 250 importers of any of the

PFI's will be selected on the basis of the highest total entered value.

Under criteria (1) and (2), if companies have the same numerical

ranking in different PFI's, then the company with the highest total

entered value will be selected.

Customs will notify each company in writing of its acceptance or

nonselection to participate in this test no later than June 15, 1998;

companies not selected will be informed of the general reason(s) for

non-selection. If an applicant is denied participation, the applicant

may appeal in writing to Director, Regulatory Audit Division, Office of

Strategic Trade, U.S. Customs Service, 1300 Pennsylvania Avenue, N.W.,

Washington, D.C. 20229, within 10 days of notification by Customs.

To assure the best results possible for evaluation purposes, it is

anticipated that those companies selected to participate in the ICMP

test will complete all related requirements during the one-year test

period. However, because of the voluntary nature of this program, a

company may discontinue its participation in the test at any time.

Removal From Test Participation

During the one-year test period, the appropriate field director of

Regulatory Audit may remove a company from participation in the test

for misconduct involving the following:

(1) Failure by the company to comply with ICMP requirements; or

(2) The presence of documented or alleged fraud, other

investigative activity, or failing to follow applicable Customs laws

and regulations.

Any decision proposing to remove a company from participation in

the test may be appealed in writing to the Director, Regulatory Audit

Division, Office of Strategic Trade, U.S. Customs Service, 1300

Pennsylvania Avenue, N.W., Washington, D.C. 20229 within 30 days of

such action. The notice of proposed removal will apprise the company of

the facts or conduct warranting removal. Should the company appeal the

notice of proposed removal, it should address the facts or conduct

charges contained in the notice and state how it does or will achieve

compliance. However, in the case of willfulness or where public health

interests or safety are concerned, the removal may be effective

immediately.

Program Consultation

One of the cornerstones of the ICMP is consultation afforded the

importer by Customs. Prior to beginning the test, Customs will meet

with each selected participant to discuss the company's

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import operations. At this meeting, the nature and frequency of work to

be accomplished during the test period will be identified, thus,

assuring effective planning and assignment of company and Customs

resources and timely completion of the test.

Comments and Evaluation of Test

Customs will review all public comments received concerning any

aspect of the proposed program test and finalize requirements and

procedures in light of those comments before commencing the test.

Approximately 90 days after conclusion of the test, evaluations of the

test will be conducted and final results will be made available to the

public upon request.

Dated: April 20, 1998.

William F. Inch,

Director, Regulatory Audit Division.

[FR Doc. 98-10886 Filed 4-23-98; 8:45 am]

BILLING CODE 4820-02-P