Under both US Imports and Exports Law and Regulation, the importer/exporter is required to “exercise reasonable care” or perform “due diligence”. Among others, see the US Customs Modernization Act, which established the reasonable care standard. See 19 U.S.C. §1484, which requires the importer of record to use reasonable care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable CBP to properly assess duties, collect statistics and determine if any other applicable legal requirements have been met. The “reasonable care” requirement was added to 19 U.S.C. §1484 by the Customs Modernization and Informed Compliance Act (“Mod Act”), passed as part of the North American Free Trade Agreements Implementation Act, Pub. L. 103-182 § 637, Sect. 621, 107 Stat. 2057 (1993), passing on December 8th, 1993, and entering into force on January 1, 1994.
While there are no specific evidentiary requirements to support reasonable care in most cases, there are scores of published “best practices”. The implementation of a robust internal Control Program, which we talked about in our previous trade compliance post. We explained more fully the concept of COSO internal controls, as well as the common elements in a trade compliance program that supports these concepts. Notably, this month, we focus on the small yet highly important matter of gaining upper management, notably C-suite, support for these programs. To help further support this concept as a best practice, see also the US Bureau of Industry and Security (“BIS”, a division of the Department of Commerce, “DOC”) that has regulatory oversight for commercial exports, with respect to best practices in an Export Management & Compliance Program (“EMCP”), where “Management Commitment” is the first element, noting that:
Management Commitment: Senior management must establish written export compliance standards for the organization, commit sufficient resources for the export compliance program, and ensure appropriate senior organizational official(s) are designated with the overall responsibility for the export compliance program to ensure adherence to export control laws and regulations.
As a trade compliance professional, and even more importantly if you are an Empowered Official (“EO”, Title 22, Code of Federal Regulations §120.25), it is your responsibility to draft, present, assure execution, and provide appropriate distribution of such a written commitment from senior management. In our Annual Trade Compliance Calendar, we see December as the ideal month to seek this written commitment from upper management to comply with US Imports and Exports law, so that any changes in upper management can be accounted for timely, and the upcoming year can begin with a renewed commitment throughout the organization.
Moreover, you will rest and relax far more easily over your own winter holidays knowing that you have the documentary evidence to prove that you are not fighting the good fight alone, that there is a commitment from on high in your organization, and that all your efforts are properly supported. Remember: if it’s not in writing, it didn’t happen, so get that Upper Management Statement of Trade Compliance Support TODAY!