Five Compliance Checks Every Multinational Company Needs to Consider for … Customs Compliance

As an accompaniment to our biweekly series on “What Every Multinational Should Know About” various international trade, enforcement, and compliance topics, we are introducing a second series of quick-hit pieces on multinational company compliance best practices. Give us two minutes, and we will give you five suggested compliance best practices that will benefit your international regulatory compliance program.

Now that Customs collects full electronic data on all imports, its ability to identify potential underpayment of tariffs and pursue other violations of Customs requirements is greatly enhanced. To deal with this new reality, here are five things that frequent importers should consider examining to ensure their Customs compliance reflects the new enforcement reality:

Enhance/Implement a Customs Compliance Program. It is surprising that even some large importers do not have a Customs compliance program in place, or they have compliance measures that are dated or not well adapted to current import patterns. If your company does not have a detailed Customs manual that is tailored to its products, pattern of imports, and highest-risk imports (USMCA imports, those from China, etc.) or has let its Customs compliance manual get out of date, then it probably is time to update your Customs compliance measures. Remember, if your Customs compliance consists of thinking that “the Customs broker will take care of everything,” then you have no Customs compliance program.
Conduct a Classification and Valuation Review. Importers should regularly review the items they commonly import, confirm the accuracy of HTS classifications, and keep the results in a comprehensive Customs Classification Index. These classifications should be maintained in a tariff classification database that is available to Customs brokers, freight forwarders, or any other party responsible for ensuring correct entry. Importers also should review the methodologies used to calculate the ad valorem value of entries, including whether the valuation includes all off-invoice items, such as royalties and assists.
If You Import from Related Parties, Confirm You Have a Customs Transfer Pricing Study. Customs requires that imports from related parties be valued in accordance with market pricing. Notably, Customs does not accept IRS transfer pricing studies to benchmark-related party pricing for purposes of establishing transaction value.
Conduct an Antidumping and Countervailing Duties Product Review. Frequent importers should carefully review their entries to ensure they have identified all potentially applicable antidumping or countervailing duty orders, including through an accurate identification of the country of origin of goods that fall within the scope of any AD or CVD orders.
Evaluate FTA Claims. Importers should review any FTA or duty preference program instructions to determine their accuracy. Common issues to confirm are whether the regional content requirements are met, whether required certificates of origin are at hand at the time of entry, and that all required documentation to support claimed free trade preferences is maintained for five years.

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