[0:00] Welcome to FDA imports, cross-border compliance with Attorney Benjamin L. England.
[0:06] Hello, everyone, and welcome back to FDA imports, cross-border compliance with Attorney Benjamin L.
[0:13] England, men as a former FDA attorney with over 40 years at the intersection of FDA, customs,
[0:19] and federal regulatory enforcement, and today we're taking a closer look at the new
[0:24] importer of record requirements proposed under the latest executive order, and what they
[0:30] could mean for companies importing into the United States.
[0:33] I'm Sean O'Connor, and Ben, welcome back.
[0:37] Thanks.
[0:38] Good to see you.
[0:39] Good.
[0:40] We can talk about this again.
[0:41] It has some far-reaching implications.
[0:42] It seems like from our earliest conversation, why does the new executive order play so much emphasis
[0:53] on importers' record?
[0:55] So the importer of record, good question, importer of record, is a particular, plays a particular
[1:01] role in the importer transaction.
[1:03] The importer of record is a person who is responsible for the compliance of the goods.
[1:10] Now, so who could be, let's stick about the transaction, goods coming to the United States,
[1:15] the importer of record is the one who hires the customs broker to file the entry with customs,
[1:20] and the customs broker is acting kind of like an accountant would for your taxes, right?
[1:24] It is filing them electronically for you, but your taxes.
[1:29] In the same way, a customs broker is filing the customs entry, but it's the importer of records
[1:34] goods, and usually this is a person who has to have enough interest in the goods, so there's
[1:41] certain eligibility requirements that are associated with it.
[1:44] They have to have enough interest in the goods to be sure that they understand the value
[1:50] of the goods for purposes of evaluation, and therefore duty, compliance in terms of
[1:54] admissibility, like for FDA, for instance, if I don't own the goods, if I don't have any
[1:59] interest in the goods, and I'm just standing in your shoes, then I may or may not care so
[2:04] much about whether or not registrations or labeling or or or or adulteration issues exist
[2:09] because they're not my goods, right?
[2:11] So they don't want that.
[2:12] So the importer of record has to have enough interest in the goods to make sure that I'm
[2:16] interested enough to comply with the law.
[2:19] So that's why the importer of record is so critical, right?
[2:21] The constanee is the first is a person who receives the goods, and they might be the person
[2:27] buying it next, right?
[2:29] But like I might I would be the importer of record because I I'm responsible for the compliance
[2:34] and I'm dropshipping them to you.
[2:36] I may not take possession of the goods, but I'm still the importer of record.
[2:40] So it's the one on the record responsible for compliance, responsible for paying duties, responsible
[2:45] for all the proper declarations.
[2:47] So this is a very key person in the transaction, and of all too often I think the president's
[2:53] view is and probably one advice from Treasury and from customs is that is that these rules are
[2:59] sort of like not observed very well.
[3:02] And almost anybody seems like they're the importer of record, even though they don't have
[3:05] enough enough good enough interest in the goods, or they might have a record, right?
[3:11] They may have some prior problems or whatever, and there's never been a been a reason why
[3:15] they couldn't still be an importer of record and all that changes.
[3:19] Are the new bonding requirements and tangible U.S. asset requirements, are those going
[3:27] to have an impact on importers in practice?
[3:31] Yeah, so the bond is when I import goods, I have to post a bond.
[3:36] The importer records responsible for posting a bond.
[3:39] They are the principle, the bonding, the bond principle.
[3:44] They are responsible for making sure that everything is compliant, and if they're not, they
[3:50] also have certain obligations that they have agreed to in the bond agreement, like for instance
[3:55] to pay duty, to make goods available for inspection, to make sure they're properly marked, so like
[4:01] origin statements, those kinds of things, and labeled guaranteeing that if there's a proper
[4:08] demand to read delivery that they'll bring the goods back, and that's where the FDA comes
[4:11] in.
[4:12] They refuse cargo, customs demands read delivery of the goods, and that's a bond condition.
[4:18] And so I have to post a bond, and my bond has to be sufficient to cover any liquidated damages
[4:23] that might arise if I fail to meet my obligations under the bond.
[4:27] So if I fail to read deliver that I'm supposed to be able to pay the government up to three
[4:32] times the value of the goods, not duty, the value of the goods, right?
[4:39] Some penalties go to how much duty is due.
[4:41] Some of them go to how much the value of the goods are, but the import value of the goods
[4:47] times three is what I'm supposed to be able to cover, but most customs bonds aren't high
[4:53] enough to cover that.
[4:54] In fact, most customs bonds are $50,000 bonds, and if I bring in anything that's anything
[4:59] that is less than what, $16,000, $17,000, times three, I'm over 50, right?
[5:06] So I'm over 50,000.
[5:08] So the bond's not actually sufficient to cover it.
[5:10] So the bond amount being increased increases the risk to the importer if there's a problem
[5:16] because customs can grab the bond.
[5:18] They don't even have to ask you.
[5:19] They go right to the surety, and the surety has to cough up the money, and then the surety
[5:23] sues you for the loss.
[5:25] So that's how the bonding pieces, the other, the asset requirement, well, how is, how is
[5:31] customs going to get its money if I'm the importer of record, and I don't have any money,
[5:35] right?
[5:36] But they expect you to have a certain minimum amount of assets in the United States
[5:40] why?
[5:41] So customs can get them if they need to, rather than they're never going to get them if my
[5:45] assets are ever in the EU, but they're in here, they can get them.
[5:50] But it's very, very meaningful because it gives them the government teeth, right?
[5:54] They have the ability to actually get the money.
[5:57] How, when you look at these new ownership and beneficial ownership disclosure requirements,
[6:03] but if, you know, what if you've got a pretty complex corporate structure, which I'm guessing
[6:08] isn't very uncommon in this world?
[6:12] What happens?
[6:13] Yeah.
[6:14] So it's going to be unnecessary now, well, not now, I mean, first of all, if you go, you
[6:18] know, for those of you listening to this episode 38, you go back and look at episode 37,
[6:22] and you'll see what we talked more generally about this, but in a very high level, what the
[6:27] government, what the president is trying to do is trying to identify who should
[6:33] be the importer and who we're going to hold responsible if they, if there's a, if the
[6:38] laws are violated.
[6:39] And so the actual owner could very well as like, I might, I might be technically an owner
[6:46] on paper, like I, with a pro forma invoice, but I don't actually have any true beneficial
[6:51] interest in the goods, you do, right?
[6:54] It might be that you actually own the goods and you're in Australia, right?
[6:59] So you actually own the goods, I'm just receiving them and acting as the importer of record
[7:04] for the purposes of getting the goods into the country.
[7:07] And you actually are the ones that have a beneficial interest in the goods of something
[7:11] goes wrong with the goods, it hurts you, not really me, right?
[7:15] So they want me to have a beneficial ownership interest.
[7:20] And if I don't, they want me to disclose who does, right?
[7:24] Because they want to make sure that they get your information if you're the one with
[7:28] the beneficial, with the beneficial interest.
[7:32] And that matters because of what the order is also doing, which is requiring things that
[7:37] affect you as the foreign non-resident importer of record.
[7:42] So that's why they're trying to make certain who, who actually has the interest of how do
[7:47] we make certain that we make them responsible and make sure we have their money before we
[7:52] let the goods in.
[7:53] And so that's essentially at the root of like why the executive order draws a distinction
[7:59] between like US importers of record versus foreign importers of record, it's just access
[8:07] to that, access to that capital.
[8:11] Yeah, most of the things that many of the items in the order are actually designed to address
[8:20] what the president and customs quite frankly have believed for a long time.
[8:24] And by the way, so have the sureities, right, the sureities underwrite the bond.
[8:29] So for me to get a bond is an insurance premium basically.
[8:32] So I go to an insurance company and I get and I pay the insurance company a premium in order
[8:37] for them to issue the bond as the sureity, right, to customs.
[8:43] Customs then I sign it because I'm the principal, but the surety is the one who is guaranteeing
[8:49] payment to customs, okay?
[8:51] It's kind of like if I get arrested and I need to get a bail bondsman in order to bail
[8:55] me out, right?
[8:56] I pay the bail, about bondsman, let's say I have a $10,000 bail, I pay the bondsman $500 bucks
[9:03] and he guarantees or she guarantees I'll show up to the judge, right?
[9:08] So what happens if I don't show up, the bail bondsman has to come get me and bring me or he
[9:13] has to pay the bond, the 10 grand, right?
[9:16] So it's the same thing.
[9:18] Okay.
[9:19] So the sureties are very interested in this as well, right?
[9:22] Because they are the ones that being getting stuck when a non-resident importer of record signs
[9:28] the bond agreement is sitting like you over in Australia and they stiff customs and then customs
[9:34] comes with the surety and then they stiff you or you stiff them, they were the surety.
[9:39] Because what are they going to do?
[9:40] So you're in Australia?
[9:41] Well, for $50,000 maybe they would, right?
[9:43] Yeah.
[9:44] For $150,000 they probably would, but they got to enforce that.
[9:47] So it's all designed to not allow this sort of you as a non-resident importer of record
[9:53] to not feel the risk of something going wrong with the entry, they want you to feel it.
[9:59] And so that's why they require you to have a certain amount of money here, right?
[10:04] You have to show asset disclosure, the proof you have enough assets in order to cover it
[10:08] if case in case there's something wrong.
[10:10] And the bond has to be sufficient too.
[10:12] They want to inflict some pain if you're, you know, scurrying the rules.
[10:17] I get it.
[10:18] Okay.
[10:19] What about, I mean, you're steeped in this stuff and one of you can walk through an example
[10:24] of a company say that, you know, qualifies as an importer of record today, but might have
[10:30] trouble meeting the new requirements if they're implemented.
[10:34] Most non-resident importers of record quite frankly, right?
[10:38] I mean, yeah, the fact of the matter is most non-important.
[10:42] But the rules have been the same, whether you are a domestic or a non-resident resident
[10:47] or non-resident importer.
[10:48] So it didn't really matter, you know, there was no distinction in existence was indistinguishable.
[10:56] And so, in fact, you might remember when we talked about the Ipa duties that the importer
[11:02] of record was the one who was allowed to sue for Ipa duty refunds, which means if you're
[11:08] a non-resident importer record, you could sue for your Ipa duties, right?
[11:12] So they're treated the same.
[11:14] This is going to change all of that.
[11:16] So even though, like I've talked of importers who feel like this is going after companies that
[11:21] are selling, like shipping small shipments into the United States, like these 321 entries,
[11:27] we've talked about those.
[11:28] Those are the entries which come in informally because they're so small, there's not much
[11:32] value and there's very little in terms of bond and so that tends to come in informally.
[11:36] And this executive order also changes that, none of them know more of that.
[11:40] So a lot of importers feel like it's mostly going to hurt them.
[11:43] No, unless you have assets in the United States in order to cover customs risk on your
[11:48] importation with compliance of those goods, it's going to affect you as a non-resident
[11:54] corporate importer record.
[11:56] If I've got three or four different, you know, facilities all around the world, right?
[12:01] I could have four or five non-resident importer records, importers of record.
[12:06] Now, if customs requires all of them to have sufficient assets, that could be a problem,
[12:11] right?
[12:12] So it may change the way that the corporations then start filing their entries.
[12:17] And so the answer is most non-resident importer records are going to be affected by this
[12:23] actually quite significantly.
[12:25] And you need to get advice on it because, first of all, the rules haven't come out, so
[12:28] you've got to pay attention to that and you've got to be involved in the comment period
[12:32] because it's going to seriously affect you.
[12:35] And then you're going to need to have someone here who's going to be able to help you understand
[12:39] these rules and comply with them.
[12:40] So what would you tell companies to be doing now to prepare for these proposed importer
[12:47] record changes before they get finalized?
[12:50] And you mentioned the comment period for sure, right?
[12:53] Participating.
[12:54] Yeah, I mean, you have the rule piece of it, right?
[12:56] You have the notice and comment period that's going to apply.
[13:00] Although this administration, I've seen it, I've seen it put some regulations through
[13:04] pretty fast.
[13:05] I mean, usually it takes years to get a regulation done, but this agency, this administration
[13:10] doesn't seem to have difficulty in prompting the agencies to get them done quickly.
[13:15] So I think they'll come out relatively quickly and like in months, by the way, it was 180
[13:20] days.
[13:21] The president gave Customs 180 days from the time the order of a sign which was June the
[13:24] 3rd.
[13:25] So 180 days is going to put you in early December, which is basically around the corner,
[13:29] right?
[13:31] So that's not that far away.
[13:33] So there's a couple of things.
[13:34] One, obviously, no, what's going on, two, you might need to rethink about whether or not
[13:39] you want to have a be a resident importer record.
[13:43] You might actually consider opening a business here and putting staff here, which by the way
[13:47] would do what?
[13:48] It would increase employment in the United States, right?
[13:51] Think about what would happen if all these non-resident importers decided to open up offices
[13:56] and hire staff, right?
[13:58] Because they needed to have someone here who could be in the business, but that's going
[14:04] to mean assets.
[14:05] It's going to mean exposing, that's going to mean assets, it'll mean exposing your business
[14:09] to certain risk.
[14:11] And Customs and the president's view is, well, you should be exposed to that risk.
[14:16] Domestic importers are exposed to it.
[14:18] They're here.
[14:19] They're assets are all here.
[14:21] So I would expect that you might consider opening up an entity here to be the resident
[14:27] importer record.
[14:30] And that probably will have less, it'd be less painful.
[14:34] It also shows your willingness to work with the agency.
[14:37] Compliance, you've got to make sure your compliance is right, because all of these things are going
[14:40] to be, there's going to be increased penalties, increased liquidated damages claims, a whole
[14:45] lot less mitigation, which means a lot more liability, and then you have to have the assets
[14:49] to cover that.
[14:51] So it's a compliance is how you avoid tapping, somebody tapping your assets, right?
[14:56] The way that you avoid that is by not having penalty cases and not having liquidated damages
[15:01] cases.
[15:02] Well, that's compliance.
[15:03] So that's pretty critical is make sure your compliance is in order.
[15:06] A lot to consider, but you helped make it clear, that's for sure, and I'm no expert.
[15:12] So thanks very much, man, for running through this.
[15:17] I know we'll talk about more in the future, but you know, for today, we're out of time.
[15:22] Thanks for your expertise, thanks for being here, and I look forward to connecting on a future
[15:26] episode.
[15:27] Yep.
[15:28] Good to see you.
[15:29] Good to see you.
[15:30] That's it for today's episode of FDA imports, cross-border compliance.
[15:34] If you want more information or if you want to connect with Ben directly, visit FDA imports.com.
[15:40] You can reach him there.
[15:42] As always, we appreciate you listening and just to make sure you don't miss any future
[15:46] episodes, be sure to subscribe, share a link to the episode with a colleague in the import
[15:52] export business.
[15:54] That would make you a hero, and that's about it.
[15:58] I'm Sean O'Connor.
[15:59] Have a great day.
[0:06] Hello, everyone, and welcome back to FDA imports, cross-border compliance with Attorney Benjamin L.
[0:13] England, men as a former FDA attorney with over 40 years at the intersection of FDA, customs,
[0:19] and federal regulatory enforcement, and today we're taking a closer look at the new
[0:24] importer of record requirements proposed under the latest executive order, and what they
[0:30] could mean for companies importing into the United States.
[0:33] I'm Sean O'Connor, and Ben, welcome back.
[0:37] Thanks.
[0:38] Good to see you.
[0:39] Good.
[0:40] We can talk about this again.
[0:41] It has some far-reaching implications.
[0:42] It seems like from our earliest conversation, why does the new executive order play so much emphasis
[0:53] on importers' record?
[0:55] So the importer of record, good question, importer of record, is a particular, plays a particular
[1:01] role in the importer transaction.
[1:03] The importer of record is a person who is responsible for the compliance of the goods.
[1:10] Now, so who could be, let's stick about the transaction, goods coming to the United States,
[1:15] the importer of record is the one who hires the customs broker to file the entry with customs,
[1:20] and the customs broker is acting kind of like an accountant would for your taxes, right?
[1:24] It is filing them electronically for you, but your taxes.
[1:29] In the same way, a customs broker is filing the customs entry, but it's the importer of records
[1:34] goods, and usually this is a person who has to have enough interest in the goods, so there's
[1:41] certain eligibility requirements that are associated with it.
[1:44] They have to have enough interest in the goods to be sure that they understand the value
[1:50] of the goods for purposes of evaluation, and therefore duty, compliance in terms of
[1:54] admissibility, like for FDA, for instance, if I don't own the goods, if I don't have any
[1:59] interest in the goods, and I'm just standing in your shoes, then I may or may not care so
[2:04] much about whether or not registrations or labeling or or or or adulteration issues exist
[2:09] because they're not my goods, right?
[2:11] So they don't want that.
[2:12] So the importer of record has to have enough interest in the goods to make sure that I'm
[2:16] interested enough to comply with the law.
[2:19] So that's why the importer of record is so critical, right?
[2:21] The constanee is the first is a person who receives the goods, and they might be the person
[2:27] buying it next, right?
[2:29] But like I might I would be the importer of record because I I'm responsible for the compliance
[2:34] and I'm dropshipping them to you.
[2:36] I may not take possession of the goods, but I'm still the importer of record.
[2:40] So it's the one on the record responsible for compliance, responsible for paying duties, responsible
[2:45] for all the proper declarations.
[2:47] So this is a very key person in the transaction, and of all too often I think the president's
[2:53] view is and probably one advice from Treasury and from customs is that is that these rules are
[2:59] sort of like not observed very well.
[3:02] And almost anybody seems like they're the importer of record, even though they don't have
[3:05] enough enough good enough interest in the goods, or they might have a record, right?
[3:11] They may have some prior problems or whatever, and there's never been a been a reason why
[3:15] they couldn't still be an importer of record and all that changes.
[3:19] Are the new bonding requirements and tangible U.S. asset requirements, are those going
[3:27] to have an impact on importers in practice?
[3:31] Yeah, so the bond is when I import goods, I have to post a bond.
[3:36] The importer records responsible for posting a bond.
[3:39] They are the principle, the bonding, the bond principle.
[3:44] They are responsible for making sure that everything is compliant, and if they're not, they
[3:50] also have certain obligations that they have agreed to in the bond agreement, like for instance
[3:55] to pay duty, to make goods available for inspection, to make sure they're properly marked, so like
[4:01] origin statements, those kinds of things, and labeled guaranteeing that if there's a proper
[4:08] demand to read delivery that they'll bring the goods back, and that's where the FDA comes
[4:11] in.
[4:12] They refuse cargo, customs demands read delivery of the goods, and that's a bond condition.
[4:18] And so I have to post a bond, and my bond has to be sufficient to cover any liquidated damages
[4:23] that might arise if I fail to meet my obligations under the bond.
[4:27] So if I fail to read deliver that I'm supposed to be able to pay the government up to three
[4:32] times the value of the goods, not duty, the value of the goods, right?
[4:39] Some penalties go to how much duty is due.
[4:41] Some of them go to how much the value of the goods are, but the import value of the goods
[4:47] times three is what I'm supposed to be able to cover, but most customs bonds aren't high
[4:53] enough to cover that.
[4:54] In fact, most customs bonds are $50,000 bonds, and if I bring in anything that's anything
[4:59] that is less than what, $16,000, $17,000, times three, I'm over 50, right?
[5:06] So I'm over 50,000.
[5:08] So the bond's not actually sufficient to cover it.
[5:10] So the bond amount being increased increases the risk to the importer if there's a problem
[5:16] because customs can grab the bond.
[5:18] They don't even have to ask you.
[5:19] They go right to the surety, and the surety has to cough up the money, and then the surety
[5:23] sues you for the loss.
[5:25] So that's how the bonding pieces, the other, the asset requirement, well, how is, how is
[5:31] customs going to get its money if I'm the importer of record, and I don't have any money,
[5:35] right?
[5:36] But they expect you to have a certain minimum amount of assets in the United States
[5:40] why?
[5:41] So customs can get them if they need to, rather than they're never going to get them if my
[5:45] assets are ever in the EU, but they're in here, they can get them.
[5:50] But it's very, very meaningful because it gives them the government teeth, right?
[5:54] They have the ability to actually get the money.
[5:57] How, when you look at these new ownership and beneficial ownership disclosure requirements,
[6:03] but if, you know, what if you've got a pretty complex corporate structure, which I'm guessing
[6:08] isn't very uncommon in this world?
[6:12] What happens?
[6:13] Yeah.
[6:14] So it's going to be unnecessary now, well, not now, I mean, first of all, if you go, you
[6:18] know, for those of you listening to this episode 38, you go back and look at episode 37,
[6:22] and you'll see what we talked more generally about this, but in a very high level, what the
[6:27] government, what the president is trying to do is trying to identify who should
[6:33] be the importer and who we're going to hold responsible if they, if there's a, if the
[6:38] laws are violated.
[6:39] And so the actual owner could very well as like, I might, I might be technically an owner
[6:46] on paper, like I, with a pro forma invoice, but I don't actually have any true beneficial
[6:51] interest in the goods, you do, right?
[6:54] It might be that you actually own the goods and you're in Australia, right?
[6:59] So you actually own the goods, I'm just receiving them and acting as the importer of record
[7:04] for the purposes of getting the goods into the country.
[7:07] And you actually are the ones that have a beneficial interest in the goods of something
[7:11] goes wrong with the goods, it hurts you, not really me, right?
[7:15] So they want me to have a beneficial ownership interest.
[7:20] And if I don't, they want me to disclose who does, right?
[7:24] Because they want to make sure that they get your information if you're the one with
[7:28] the beneficial, with the beneficial interest.
[7:32] And that matters because of what the order is also doing, which is requiring things that
[7:37] affect you as the foreign non-resident importer of record.
[7:42] So that's why they're trying to make certain who, who actually has the interest of how do
[7:47] we make certain that we make them responsible and make sure we have their money before we
[7:52] let the goods in.
[7:53] And so that's essentially at the root of like why the executive order draws a distinction
[7:59] between like US importers of record versus foreign importers of record, it's just access
[8:07] to that, access to that capital.
[8:11] Yeah, most of the things that many of the items in the order are actually designed to address
[8:20] what the president and customs quite frankly have believed for a long time.
[8:24] And by the way, so have the sureities, right, the sureities underwrite the bond.
[8:29] So for me to get a bond is an insurance premium basically.
[8:32] So I go to an insurance company and I get and I pay the insurance company a premium in order
[8:37] for them to issue the bond as the sureity, right, to customs.
[8:43] Customs then I sign it because I'm the principal, but the surety is the one who is guaranteeing
[8:49] payment to customs, okay?
[8:51] It's kind of like if I get arrested and I need to get a bail bondsman in order to bail
[8:55] me out, right?
[8:56] I pay the bail, about bondsman, let's say I have a $10,000 bail, I pay the bondsman $500 bucks
[9:03] and he guarantees or she guarantees I'll show up to the judge, right?
[9:08] So what happens if I don't show up, the bail bondsman has to come get me and bring me or he
[9:13] has to pay the bond, the 10 grand, right?
[9:16] So it's the same thing.
[9:18] Okay.
[9:19] So the sureties are very interested in this as well, right?
[9:22] Because they are the ones that being getting stuck when a non-resident importer of record signs
[9:28] the bond agreement is sitting like you over in Australia and they stiff customs and then customs
[9:34] comes with the surety and then they stiff you or you stiff them, they were the surety.
[9:39] Because what are they going to do?
[9:40] So you're in Australia?
[9:41] Well, for $50,000 maybe they would, right?
[9:43] Yeah.
[9:44] For $150,000 they probably would, but they got to enforce that.
[9:47] So it's all designed to not allow this sort of you as a non-resident importer of record
[9:53] to not feel the risk of something going wrong with the entry, they want you to feel it.
[9:59] And so that's why they require you to have a certain amount of money here, right?
[10:04] You have to show asset disclosure, the proof you have enough assets in order to cover it
[10:08] if case in case there's something wrong.
[10:10] And the bond has to be sufficient too.
[10:12] They want to inflict some pain if you're, you know, scurrying the rules.
[10:17] I get it.
[10:18] Okay.
[10:19] What about, I mean, you're steeped in this stuff and one of you can walk through an example
[10:24] of a company say that, you know, qualifies as an importer of record today, but might have
[10:30] trouble meeting the new requirements if they're implemented.
[10:34] Most non-resident importers of record quite frankly, right?
[10:38] I mean, yeah, the fact of the matter is most non-important.
[10:42] But the rules have been the same, whether you are a domestic or a non-resident resident
[10:47] or non-resident importer.
[10:48] So it didn't really matter, you know, there was no distinction in existence was indistinguishable.
[10:56] And so, in fact, you might remember when we talked about the Ipa duties that the importer
[11:02] of record was the one who was allowed to sue for Ipa duty refunds, which means if you're
[11:08] a non-resident importer record, you could sue for your Ipa duties, right?
[11:12] So they're treated the same.
[11:14] This is going to change all of that.
[11:16] So even though, like I've talked of importers who feel like this is going after companies that
[11:21] are selling, like shipping small shipments into the United States, like these 321 entries,
[11:27] we've talked about those.
[11:28] Those are the entries which come in informally because they're so small, there's not much
[11:32] value and there's very little in terms of bond and so that tends to come in informally.
[11:36] And this executive order also changes that, none of them know more of that.
[11:40] So a lot of importers feel like it's mostly going to hurt them.
[11:43] No, unless you have assets in the United States in order to cover customs risk on your
[11:48] importation with compliance of those goods, it's going to affect you as a non-resident
[11:54] corporate importer record.
[11:56] If I've got three or four different, you know, facilities all around the world, right?
[12:01] I could have four or five non-resident importer records, importers of record.
[12:06] Now, if customs requires all of them to have sufficient assets, that could be a problem,
[12:11] right?
[12:12] So it may change the way that the corporations then start filing their entries.
[12:17] And so the answer is most non-resident importer records are going to be affected by this
[12:23] actually quite significantly.
[12:25] And you need to get advice on it because, first of all, the rules haven't come out, so
[12:28] you've got to pay attention to that and you've got to be involved in the comment period
[12:32] because it's going to seriously affect you.
[12:35] And then you're going to need to have someone here who's going to be able to help you understand
[12:39] these rules and comply with them.
[12:40] So what would you tell companies to be doing now to prepare for these proposed importer
[12:47] record changes before they get finalized?
[12:50] And you mentioned the comment period for sure, right?
[12:53] Participating.
[12:54] Yeah, I mean, you have the rule piece of it, right?
[12:56] You have the notice and comment period that's going to apply.
[13:00] Although this administration, I've seen it, I've seen it put some regulations through
[13:04] pretty fast.
[13:05] I mean, usually it takes years to get a regulation done, but this agency, this administration
[13:10] doesn't seem to have difficulty in prompting the agencies to get them done quickly.
[13:15] So I think they'll come out relatively quickly and like in months, by the way, it was 180
[13:20] days.
[13:21] The president gave Customs 180 days from the time the order of a sign which was June the
[13:24] 3rd.
[13:25] So 180 days is going to put you in early December, which is basically around the corner,
[13:29] right?
[13:31] So that's not that far away.
[13:33] So there's a couple of things.
[13:34] One, obviously, no, what's going on, two, you might need to rethink about whether or not
[13:39] you want to have a be a resident importer record.
[13:43] You might actually consider opening a business here and putting staff here, which by the way
[13:47] would do what?
[13:48] It would increase employment in the United States, right?
[13:51] Think about what would happen if all these non-resident importers decided to open up offices
[13:56] and hire staff, right?
[13:58] Because they needed to have someone here who could be in the business, but that's going
[14:04] to mean assets.
[14:05] It's going to mean exposing, that's going to mean assets, it'll mean exposing your business
[14:09] to certain risk.
[14:11] And Customs and the president's view is, well, you should be exposed to that risk.
[14:16] Domestic importers are exposed to it.
[14:18] They're here.
[14:19] They're assets are all here.
[14:21] So I would expect that you might consider opening up an entity here to be the resident
[14:27] importer record.
[14:30] And that probably will have less, it'd be less painful.
[14:34] It also shows your willingness to work with the agency.
[14:37] Compliance, you've got to make sure your compliance is right, because all of these things are going
[14:40] to be, there's going to be increased penalties, increased liquidated damages claims, a whole
[14:45] lot less mitigation, which means a lot more liability, and then you have to have the assets
[14:49] to cover that.
[14:51] So it's a compliance is how you avoid tapping, somebody tapping your assets, right?
[14:56] The way that you avoid that is by not having penalty cases and not having liquidated damages
[15:01] cases.
[15:02] Well, that's compliance.
[15:03] So that's pretty critical is make sure your compliance is in order.
[15:06] A lot to consider, but you helped make it clear, that's for sure, and I'm no expert.
[15:12] So thanks very much, man, for running through this.
[15:17] I know we'll talk about more in the future, but you know, for today, we're out of time.
[15:22] Thanks for your expertise, thanks for being here, and I look forward to connecting on a future
[15:26] episode.
[15:27] Yep.
[15:28] Good to see you.
[15:29] Good to see you.
[15:30] That's it for today's episode of FDA imports, cross-border compliance.
[15:34] If you want more information or if you want to connect with Ben directly, visit FDA imports.com.
[15:40] You can reach him there.
[15:42] As always, we appreciate you listening and just to make sure you don't miss any future
[15:46] episodes, be sure to subscribe, share a link to the episode with a colleague in the import
[15:52] export business.
[15:54] That would make you a hero, and that's about it.
[15:58] I'm Sean O'Connor.
[15:59] Have a great day.
